PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No. )
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___ Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
EDISON INTERNATIONAL
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PRELIMINARY COPY
EDISON INTERNATIONAL
LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AND
JOINT PROXY STATEMENT
ANNUAL MEETING
APRIL 15, 1999
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PRELIMINARY COPY
EDISON INTERNATIONAL LOGO
March 8, 1999
DEAR SHAREHOLDER:
You are invited to attend the Edison International annual meeting of
shareholders. The meeting will be held on Thursday, April 15, 1999, at 10:00
A.M., at The Industry Hills Sheraton Resort and Conference Center, One Industry
Hills Parkway, City of Industry, California. Your voting instructions and the
1998 Annual Report are enclosed with this Joint Proxy Statement.
At the meeting, we will vote on a proposed Bylaw amendment to reduce the
maximum and minimum size of the Board, and we will elect 14 Directors who will
be responsible for the direction of Edison International's affairs until the
next annual meeting.
Your Board of Directors and Management recommend that you vote "FOR" the
approval of the Bylaw amendment, and "FOR" the nominees for Directors listed in
the Joint Proxy Statement.
Whether or not you expect to attend the annual meeting, it is important
that your shares be represented. We are pleased to offer you three options to
designate who may vote your shares and your voting preferences: (1) you may
complete, sign, date and return the enclosed proxy card by mail; OR you may
follow the instructions on the card and vote (if you are a registered
shareholder, or a shareholder through the Southern California Edison Company
Stock Savings Plus Plan) (2) by telephone or (3) via the internet. If you are
eligible for voting by telephone or the internet, there is a special number
assigned to you on the proxy card to safeguard your vote. Voting by telephone
and the internet is available 24 hours a day, 7 days a week, but only until 5:00
p.m. on April 13, 1999, for Stock Savings Plus Plan shareholders.
Your continued interest in the business of Edison International is
appreciated.
John E. Bryson
Chairman of the Board
And Chief Executive Officer
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IMPORTANT
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In order to assure the presence of a quorum of shareholders at the annual
meeting, please complete, sign, date and mail the enclosed card promptly; or (if
you are a registered shareholder, or a shareholder through the Southern
California Edison Company Stock Savings Plus Plan) give your instructions by
telephone or the internet as described on the enclosed card. If you mail the
enclosed card, please sign (do not print) your name exactly as it appears on the
card. When signing as attorney, executor, administrator, trustee or guardian,
include your full title. Please have an authorized officer whose title is
indicated sign for corporations, charitable institutions and governmental units.
For partnerships, have a partner sign and indicate partnership status.
<PAGE>
PRELIMINARY COPY
EDISON INTERNATIONAL LOGO
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD
APRIL 15, 1999
The Edison International annual meeting of shareholders will be held at
10:00 A.M. on Thursday, April 15, 1999, at The Industry Hills Sheraton Resort
and Conference Center, One Industry Hills Parkway, City of Industry, California.
At the annual meeting, shareholders will consider and vote on:
Item No.1. Bylaw Amendment to Reduce Maximum and Minimum Board Size;
Item No.2. Election of Directors -- The names of the Director nominees are:
John E. Bryson Luis G. Nogales
Winston H. Chen Ronald L. Olson
Warren Christopher James M. Rosser
Stephen E. Frank Robert H. Smith
Joan C. Hanley Thomas C. Sutton
Carl F. Huntsinger Daniel M. Tellep
Charles D. Miller Edward Zapanta;
Item No.3. Any other business that may properly come before the meeting.
Shareholders of record at the close of business on February 16, 1999, are
entitled to notice of and to vote at this annual meeting. The following
individuals will be admitted to the meeting:
1. Shareholders of record on the record date, and their spouses;
2. Individuals holding written proxies executed by shareholders of
Record on the record date;
3. Shareholders who provide written verification from their
brokerage firm or other nominee that they owned stock held in
the name of the brokerage firm or other nominee (that is, stock
held in so-called "street name") on the record date, and their
spouses; and
4. Other individuals with the approval of the Secretary of
Edison International.
Dated March 8, 1999.
For the Board of Directors,
BEVERLY P. RYDER, Secretary
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PRELIMINARY COPY
EDISON INTERNATIONAL
SOUTHERN CALIFORNIA EDISON COMPANY
JOINT PROXY STATEMENT
INTRODUCTION
This Joint Proxy Statement is provided to the Edison International and
Southern California Edison Company ("SCE") shareholders for their annual
meetings. The annual meetings will be held jointly at 10:00 A.M., Pacific
Standard Time, on Thursday, April 15, 1999, at The Industry Hills Sheraton
Resort and Conference Center, One Industry Hills Parkway, City of Industry,
California. This Joint Proxy Statement discusses the matters to be voted on by
the shareholders at the annual meetings.
GENERAL INFORMATION
Solicitation of Proxies
The Boards of Directors of Edison International and SCE are soliciting
proxies from their shareholders for use at their annual meetings, or at any
adjournment or postponement of the meetings. Proxies allow properly designated
individuals to vote on your behalf at an annual meeting. This Joint Proxy
Statement, proxy forms, voting instructions and the respective 1998 Annual
Reports are being distributed together beginning March 8, 1999, to Edison
International and SCE shareholders.
Proxy solicitation costs will be paid by Edison International and SCE.
Directors, officers and other employees of Edison International and/or SCE may
solicit proxies by mail, in person or by telecommunication, for no additional
compensation (except for customary overtime pay, when applicable). Brokers,
fiduciaries, custodians and other nominees (which we collectively call
"Nominees") will be reimbursed for their reasonable out-of-pocket costs of
sending proxy materials to beneficial owners of Edison International and SCE
stock and obtaining voting instructions. We call these beneficial owners "street
name shareholders." If you hold shares in your own name rather than "street
name," you are a registered shareholder. In addition, Corporate Investment
Communications, Inc., will assist Edison International and SCE in the
solicitation of proxies from shareholders for an aggregate estimated fee of
$10,000 plus reasonable out-of-pocket expenses.
Record Date and Voting Securities
The Boards of Edison International and SCE have chosen the close of
business on February 16, 1999, as the record date for determining shareholders
entitled to receive notice and vote at their annual meetings. As of the record
date, there were ___________ shares of Edison International Common Stock,
without par value ("Edison International Common Stock"), outstanding and
entitled to vote. As of the record date, the SCE shares outstanding and entitled
to vote were 434,888,104 shares of SCE Common Stock, without par value ("SCE
Common Stock"), ___________ shares of SCE Cumulative Preferred Stock, $25 par
value ("SCE Cumulative Preferred Stock"), and ___________ shares of SCE $100
Cumulative Preferred Stock, $100 par value ("SCE $100 Cumulative Preferred
Stock").
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Voting Rights and Quorum
Each share of Edison International Common Stock is entitled to one vote on
each item of Edison International business. On each item of SCE business, each
share of SCE Cumulative Preferred Stock is entitled to six votes, each share of
SCE $100 Cumulative Preferred Stock is entitled to two votes, and each share of
SCE Common Stock is entitled to one vote. Fractional shares, such as those held
in the SCE employee benefit plan known as the Stock Savings Plus Plan ("SSPP")
and the Edison International shareholder plan known as the Dividend Reinvestment
and Stock Purchase Plan, may not be voted. All shares of SCE Common and
Preferred stocks will vote together as one class. As of the record date, the
holders of the Edison International Common Stock have the right to cast a total
of ________ votes. As of the record date, the holders of the SCE Cumulative
Preferred Stock have the right to cast a total of ________votes; the holders of
the SCE $100 Cumulative Preferred Stock have the right to cast a total of
_______votes; and the holder of the SCE Common Stock has the right to cast a
total of 434,888,104 votes. Voting together as a class, the SCE Shareholders
have the right to cast a total of _____ votes.
A quorum is required to transact business at the annual meetings. The
presence, in person or by proxy, of shareholders entitled to cast at least a
majority of the votes which all shareholders are entitled to cast constitutes a
quorum. If you properly return your proxy by mail, by telephone or via the
internet, you will be considered part of the quorum even if you abstain from
voting or withhold votes. If you are a "street name shareholder," and the
Nominee holding your shares votes or gives a proxy to vote your shares on any
matter in any way, including abstentions and withhold votes, you will be
considered part of the quorum -- even if your Nominee does not vote or give a
proxy to vote your shares on another matter.
The vote required to amend the Bylaws to reduce the maximum and minimum
size of the Board and the method used to tabulate that vote is described under
"Item No. 1 -- Edison International and SCE Bylaw Amendment -- Required Vote."
The vote required to elect the Directors and the method used to tabulate that
vote is described under "Item No. 2 -- Election of Directors of Edison
International and SCE -- Nominees for Election as Directors and Required Vote."
If you are a shareholder of record or a shareholder through the SSPP, by
voting as described below under "Proxies," you will authorize the proxies or
SSPP Trustee to vote your shares according to your instructions. You will also
give authority to vote your shares on any other matter that may be presented at
the meeting. If you do not indicate your voting preferences on your returned
card, the card instructs the proxies and SSPP Trustee to vote your shares "For"
the Bylaw amendment and "For" the election of the Boards' nominees for
Directors. SSPP shares for which no instructions are received may be voted by
the Trustee in its discretion. If you are a "street name shareholder," you will
indicate your voting preferences on a separate card(s) received from your
Nominee, or by telephone or via the internet if offered by your Nominee. Your
broker may have authority to vote your shares on certain matters without
instructions from you. If your broker indicates to us on a proxy card that the
broker lacks discretionary authority to vote your shares on a matter, we call
this a "broker nonvote" on that matter.
First Chicago Trust Company of New York will act as the inspector of
election for the annual meetings and will tabulate all proxies and votes
received. To protect the confidentiality of votes cast under the SSPP, Edison
International will not have access to any voting instructions given
by the SSPP participants, and voting results will only be reported in the
aggregate.
Proxies
You may give a proxy to vote your shares or give voting instructions (if
you are a shareholder through the SSPP) in one of three ways: (1) By mail by
completing, signing, dating and mailing the enclosed proxy/voting instruction
card, (2) By telephone (if you are a registered shareholder, or a shareholder
through the SSPP) by calling toll free 1-800-OK2-Vote, or if located outside the
U.S. and Canada by calling 201-324-0377, entering your own unique control number
shown on the enclosed instruction card, and following the instructions provided,
or (3) Via the internet (if you are a registered shareholder, or a shareholder
through the SSPP) by accessing the world wide web site, www.vote-by-net.com,
entering your own unique control number shown on the enclosed instruction card,
and following the instructions provided. If you hold shares in "street name,"
you will receive a separate card(s) from your Nominee to indicate your voting
preferences, or you will provide instructions by telephone or via the internet
if offered
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by your Nominee. Under California law, you may transmit a proxy by
telephone or the internet if authorized by you or your attorney in fact.
You can revoke your proxy by writing to the Secretary of Edison
International or SCE, at 2244 Walnut Grove Avenue, P.O. Box 800, Rosemead,
California 91770 (the mailing address of the principal executive offices), by
voting again via mail, telephone or the internet, or by attending the meetings
and voting in person. Your last vote will be the vote that is counted.
Attendance at the annual meetings will not by itself revoke a proxy.
Attendance
Attendance at the annual meetings is limited to those individuals described
in the letter from the Secretary at the front of this Joint Proxy Statement. A
shareholder of Edison International and/or SCE that is a corporation,
partnership, association or other organization or entity will be limited to
three authorized representatives at the annual meetings.
Board Recommendation
The Edison International Board and the SCE Board respectively approved the
Bylaw amendment to reduce the maximum and minimum Board size and recommend that
their shareholders vote FOR adoption of the amendment. They also recommend the
election of their nominees for Directors presented in this Joint Proxy
Statement.
ITEM NO. 1--EDISON INTERNATIONAL AND SCE BYLAW AMENDMENT
Introduction
The Edison International and SCE corporate Bylaws currently provide that the
size of the Boards of Directors shall be from 15 to 20 directors. The Boards
would like to amend these Bylaws to reduce the range to a minimum of 9 and a
maximum of 17 directors, effective immediately. These amendments require
approval by the shareholders of each company. The text of the proposed Bylaw
amendment is attached to this Joint Proxy Statement as Appendix A.
Reasons For And Effect of Amendment
Edison International and SCE believe that the currently authorized Board size of
15 to 20 members is not necessary for the best interest of the companies and
their shareholders. A smaller Board should:
o Promote efficiencies in management of the business;
o Be appropriate for present day business operations;
o Result in ongoing savings; and,
o Facilitate communications and decision making.
The Boards are authorized to select the exact number of directors that will
comprise the Boards within the range approved by the shareholders. The exact
number of directors is currently 16. With 2 of the current directors retiring
(Messrs. Shannon and Watkins), the Boards have reduced the exact number of
directors to 14, subject to shareholder approval of the proposed Bylaw
amendment. If the shareholders do not approve the reduced Board range, the
Boards have fixed the exact number of directors at 15, which is the minimum
number of directors that can comprise the Boards under the current Bylaws. The
proposed Bylaw amendment will be presented to the respective shareholders first
at the annual meeting for a vote. If the amendment is adopted, then a Board of
14 directors will be elected. If the Bylaw amendment is not adopted, a Board of
14 directors will be elected, but the Board will seek qualified candidates to
fill the vacancy created by the 15th position as soon as possible after the
annual meeting. Proxies cannot be voted for more than 14 directors.
Under the proposed Bylaw amendment, the Boards will not be able to increase the
Boards' size beyond 17 directors or decrease the Boards below 9 directors
without shareholder approval. The shareholders will continue to elect directors
annually. A smaller Board may result in a smaller number of Directors being
required to transact or approve business. SCE's Articles of Incorporation
provide that the holders of the preferred stock, voting as a single class, are
entitled to elect 2 Directors when six or more quarterly dividends are in
arrears with respect to any one or more series of any one or more of the classes
of preferred stock. The proposed SCE Bylaw amendment will leave these provisions
unchanged.
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Required Vote
For approval of the reduced Board range by the Edison International
shareholders, a majority of all votes entitled to be cast must be cast "FOR" the
amendment. Abstentions and broker nonvotes are considered votes entitled to be
cast and will have the same effect as votes against the proposal.
For approval of the reduced Board range by the SCE shareholders, a majority of
all votes entitled to be cast, voting together as a single class, must be
cast "FOR" the amendment. Abstentions and broker nonvotes are considered votes
entitled to be cast and will have the same effect as votes against the proposal.
Recommendation of Your Board of Directors "For" This Proposal
The Edison International and SCE Boards believe that adoption of the proposed
Bylaw amendment is in the best interests of the companies and their
shareholders. The Edison International and SCE Boards have respectively adopted
the proposed Bylaw amendments and recommend that the Edison International and
SCE shareholders vote "FOR" the proposal to reduce the range of Directors from
15 to 20 directors to 9 to 17 directors.
ITEM NO. 2 -- ELECTION OF DIRECTORS OF EDISON INTERNATIONAL AND SCE
Nominees for Election as Directors and Required Vote
Fourteen Directors will be elected to the Edison International and SCE
Boards to hold office until the next annual meetings. This reflects a reduction
in the size of the Boards due to the retirement of 2 directors, Messrs. Shannon
and Watkins. The 14 nominees receiving the highest number of affirmative votes
will be elected to the Boards. Should any of the nominees become unavailable to
stand for election as a Director, the proxies will have the authority to vote
for substitute nominees at their discretion. Votes withheld for any of the
nominees or broker nonvotes are considered votes against and will have the
effect of reducing the number of affirmative votes a candidate might otherwise
have received.
The nominees for Directors of Edison International and SCE are the same. A brief
biography of each nominee is presented below.
JOHN E. BRYSON, Chairman of the Board and Chief Executive Officer of Edison
International and SCE, has been a Director of Edison International and SCE since
1990. Mr. Bryson joined SCE in 1984. He was elected Executive Vice President and
Chief Financial Officer of SCE in 1985, and was elected to his present positions
at Edison International and SCE in 1990. Immediately prior to joining SCE, Mr.
Bryson was a partner in the law firm of Morrison & Foerster. He served as
President of the California Public Utilities Commission from 1979 to 1982, and
earlier served as Chairman of the California State Water Resources Control
Board. He is a Director of the Boeing Company, The Times Mirror Company, and the
Council on Foreign Relations, and a Trustee of Stanford University. He is a
graduate of Stanford University and Yale Law School. Age 55.
Member of the executive committees of Edison International and SCE.
WINSTON H. CHEN, Chairman of Paramitas Foundation, a non-profit charitable
corporation, and Chairman of Paramitas Investment Corporation since 1994, has
been a Director of Edison International and SCE since 1995. Mr. Chen was
Chairman of the Board of Solectron Corporation, an electronic manufacturing
service company in Milpitas, California, until 1994. He joined Solectron in 1978
as President and was elected Chief Executive Officer in 1984 and Chairman of the
Board in 1990. Solectron won the Malcolm Baldridge National Quality Award in
1991 and 1997, and was awarded the Governor's Golden State Quality Award in
1994. He is a Director of Intel Corporation and Solectron Corporation and a
Trustee of Stanford University and Santa Clara University. He received his M.S.
and Ph.D. degrees from Harvard University. Age 57.
Member of the audit and the finance committees of Edison International and SCE.
WARREN CHRISTOPHER, former Chairman and current Senior Partner of the law firm
of O'Melveny & Myers, was a Director of SCE from August 1971 through January
1977, from June 1981 through January 1993, and from May 1997 to date. He has
been a Director of Edison International from April 1988 through January 1993 and
from May 1997 to date. Mr. Christopher first joined O'Melveny & Myers in 1950
following service as a law clerk to United
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States Supreme Court Justice William O. Douglas. He has been connected with
the firm since 1950, except for intervening periods in which he provided
distinguished service to the government of the United States. Mr. Christopher
served The United States Government as Deputy Attorney General from June 1967 to
June 1969, as Deputy Secretary of State from February 1977 to January 1981, and
as the 63rd Secretary of State from January 1993 to January 1997. He is a
graduate of the University of Southern California and Stanford Law School. Age
73.
Member of the executive (Chair) and the nominating committees of Edison
International and SCE.
STEPHEN E. FRANK, President and Chief Operating Officer of SCE, has been a
Director of Edison International and SCE since 1995. Mr. Frank joined SCE in
1995, after serving five years as President and Chief Operating Officer of
Florida Power and Light Company. Prior to 1990, Mr. Frank was Executive Vice
President and Chief Financial Officer of TRW, Inc. From 1984 to 1988, he worked
at GTE Corporation as Vice President, Controller and Treasurer. In addition, Mr.
Frank held numerous financial and sales management positions with U.S. Steel
Corp., ending his career there as general manager of sales. He is a Director of
Washington Mutual, Inc., and UNOVA, Inc. He is a graduate of Dartmouth College
and received his MBA degree from the University of Michigan. Age 57.
JOAN C. HANLEY, a former General Partner of Miramonte Vineyards, has been a
Director of SCE since 1980 and a Director of Edison International since 1988.
Mrs. Hanley served as General Partner and Manager of Miramonte Vineyards from
1973 to 1998. She was a Public Affairs Consultant for Monaghan Company-Long
Point (a land development company) during 1990 and 1991. She is a Director of
the Harbor-UCLA Research and Education Institute and a Trustee of Pomona
College. Mrs. Hanley is a graduate of the University of Washington. Age 66.
Member of the finance and the nominating (Chair) committees of Edison
International and SCE.
CARL F. HUNTSINGER, General Partner of DAE Limited Partnership, Ltd.
(agricultural management), has been a Director of SCE since 1983 and a Director
of Edison International since 1988. Mr. Huntsinger has held his present position
at DAE Limited Partnership, Ltd., since the dissolution of DAE Holding, Inc., in
1986, after having served as President, Chief Executive Officer and Director of
DAE Holding since 1979. He served as President of Vetco International (equipment
supplier to offshore oil/gas industry) from 1968 to 1974. Mr. Huntsinger is a
graduate of the Massachusetts Institute of Technology. Age 69.
Member of the audit and the executive committees of Edison International and
SCE.
CHARLES D. MILLER, Chairman of the Board of Avery Dennison Corporation
(manufacturer of self-adhesive products), formerly Avery International
Corporation, has been a Director of SCE since 1987 and a Director of Edison
International since 1988. Mr. Miller joined Avery Dennison in 1964 and was
elected President and Chief Operating Officer in 1975, President and Chief
Executive Officer in 1977, Chairman of the Board and Chief Executive Officer in
1983 and to his present position as Chairman of the Board in 1998. Mr. Miller
currently serves as Chairman of the Board of Directors of Nationwide Health
Properties, United Way of Greater Los Angeles, and the Los Angeles Business
Advisors. He is Vice Chairman of the Board of the Los Angeles Sports Council and
the Southern California Committee for the Olympic Games. Mr. Miller is a member
of the Board of Pacific Life Insurance Company, The Air Group and the Amateur
Athletic Foundation of Los Angeles. He is also a member of the Board of
Governors of United Way America. In addition, Mr. Miller is a trustee emeritus
of Johns Hopkins University and Occidental College. He is on the advisory boards
of Mellon Bank, Korn/Ferry International and the Autry Museum of Western
Heritage, as well as member of the California Business Roundtable. He is past
Chairman of the Board of the Los Angeles Area Chamber of Commerce. Age 70.
Member of the audit and the compensation and executive personnel (Chair)
committees of Edison International and SCE.
LUIS G. NOGALES, President of Nogales Partners (a private equity investment
company), has been a Director of Edison International and SCE since 1993. Mr.
Nogales formed his present company in 1990, and was formerly President of
Univision (Spanish language television network) from 1986 to 1988, and Chairman
and Chief Executive Officer of United Press International from 1983 to 1986. He
is a Director of Adolph Coors Company and Kaufman and Broad Home Corporation, a
Trustee of the Ford Foundation and a former Trustee of Stanford University. He
is a graduate of San Diego State University and Stanford Law School. Age 55.
Member of the compensation and executive personnel and the finance committees of
Edison International and SCE.
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RONALD L. OLSON, Senior Partner of the law firm of Munger, Tolles and Olson, has
been a Director of Edison International and SCE since 1995. Mr. Olson joined
Munger, Tolles and Olson in 1968 after serving as a law clerk to United States
Court of Appeals Judge David L. Bazelon. He is a Director of Berkshire Hathaway,
Inc., Pacific American Income Shares, Inc., and Western Asset Trust, Inc. Mr.
Olson also serves as a director of several non-profit organizations, including
the California Institute of Technology, Rand Corporation, and the Skid Row
Housing Trust. Mr. Olson is a graduate of Drake University and University of
Michigan Law School and holds a Diploma in Law from Oxford University. Age 57.
Member of the finance and the nominating committees of Edison International and
SCE.
JAMES M. ROSSER, President of California State University, Los Angeles
("CSULA"), has been a Director of SCE since 1985 and a Director of Edison
International since 1988. Dr. Rosser has held his present position at CSULA
since 1979 following service as Vice Chancellor of the Department of Higher
Education for the State of New Jersey from 1974 to 1979 and as Associate Vice
Chancellor for Academic Affairs at the University of Kansas from 1970 to 1974.
He is a Director of Fedco, Inc., Sanwa Bank California, Americans for the Arts,
and the Los Angeles Philharmonic Association. In addition, he is past Chair of
the National Science Foundation Directorate for Education and Human Resources
Advisory Committee, a Member and Board Secretary of the Los Angeles Annenberg
Metropolitan Project, and a Board Member of the Woodrow Wilson National
Fellowship Foundation. Dr. Rosser holds three degrees from Southern Illinois
University. Age 59.
Member of the compensation and executive personnel and the nominating committees
of Edison International and SCE.
ROBERT H. SMITH, Managing Director of Smith & Crowley, Inc. (merchant banking)
since 1992, has been a Director of SCE since 1987 and a Director of Edison
International since 1988. Mr. Smith was Chairman of the Board and Chief
Executive Officer of Security Pacific Corporation until 1992. He joined Security
Pacific National Bank in 1961, and was elected Executive Vice President in 1980,
Vice Chairman of Security Pacific Corporation and Security Pacific National Bank
in 1984, President, Chief Executive Officer and Director of Security Pacific
National Bank in 1987, President and Chief Executive Officer of Security Pacific
Corporation in 1990, and assumed his final positions at Security Pacific
Corporation in 1991. He is a Director of Pinkerton, Inc., and a Trustee of Santa
Clara University and the University of Southern California. He is a graduate of
the University of Southern California and holds a Law Degree from Van Norman
University. Age 63.
Member of the finance, the compensation and executive personnel, and the
nominating committees of Edison International and SCE.
THOMAS C. SUTTON, Chairman of the Board and Chief Executive Officer of Pacific
Life Insurance Company, has been a Director of Edison International and SCE
since 1995. Mr. Sutton joined Pacific Life in 1965 and was elected President in
1987. He was elected to his present position in 1990. He is a Director of
Newhall Land & Farming Company, The Irvine Company, and PIMCO Advisors, L.P. He
is also past Chairman of the Health Insurance Association of America and the
American Council of Life Insurance. Mr. Sutton is a graduate of the University
of Toronto. Age 56.
Member of the audit and the compensation and executive personnel committees of
Edison International and SCE.
DANIEL M. TELLEP, Retired Chairman of the Board of Lockheed Martin Corporation
(aerospace industry), has been a Director of Edison International and SCE since
1992. Mr. Tellep joined Lockheed Missiles & Space Company ("LMSC"), a wholly
owned subsidiary of Lockheed Corporation, in 1955. He was elected President of
LMSC in 1984, Group President of Lockheed Missiles and Space Systems, another
subsidiary of Lockheed Corporation, in 1986, a Director of Lockheed Corporation
in 1987, and President of Lockheed Corporation in 1988. Mr. Tellep was elected
Chairman and Chief Executive Officer in 1989. In 1995, he was elected Chairman
and Chief Executive Officer of Lockheed Martin Corporation, a position he held
until December 31, 1995. He continued to serve as Chairman of
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Lockheed Martin Corporation until his retirement on December 31, 1996. He is a
Director of Wells Fargo Bank, N.A. He holds two degrees from the University of
California at Berkeley and has completed studies at Harvard University. Age 67.
Member of the audit (Chair) and the compensation and executive personnel
committees of Edison International and SCE.
EDWARD ZAPANTA, a private practice physician providing neurosurgical care in the
Los Angeles and Monterey Park communities since 1970, has been a Director of SCE
since 1984 and a Director of Edison International since 1988. Dr. Zapanta is a
Senior Medical Director with HealthCare Partners Medical Group (a managed care
medical group), and a clinical professor of surgery, neurological surgery, at
the University of Southern California. He is a Director of The Times Mirror
Company, EastWest Bancorp, Inc., and The James Irvine Foundation, and a Trustee
of the University of Southern California. He attended the University of
California at Los Angeles and is a graduate of the University of Southern
California School of Medicine. Age 60.
Member of the audit and the executive committees of Edison International and
SCE.
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Stock Ownership of Directors and Executive Officers of Edison International and
SCE
The following table shows the number of equity securities of Edison
International, SCE and Mission Capital, L.P., an affiliate of Edison Mission
Energy (an indirect, nonutility subsidiary of Edison International),
beneficially owned by the Directors and Executive Officers of Edison
International and SCE as of December 31, 1998. The table includes shares that
can be acquired through March 1, 1999, through the exercise of stock options.
Unless otherwise noted, each individual has sole voting and investment power.
<TABLE>
<CAPTION>
Amount and Nature
Company and of Beneficial
Name Class of Stock Ownership(1)
---- -------------- -----------------
<S> <C> <C>
John E. Bryson............................................. Edison International Common Stock 610,540(2)
Winston H. Chen............................................ Edison International Common Stock 11,700
Warren Christopher......................................... Edison International Common Stock 2,039(3)
Bryant C. Danner........................................... Edison International Common Stock 176,282(4)
Alan J. Fohrer............................................. Edison International Common Stock 179,612(5)
Stephen E. Frank........................................... Edison International Common Stock 213,200(6)
Joan C. Hanley............................................. Edison International Common Stock 7,832(7)
Carl F. Huntsinger......................................... Edison International Common Stock 7,306(7)
Thomas R. McDaniel......................................... Edison International Common Stock 62,971(8)
Charles D. Miller.......................................... Edison International Common Stock 7,532(7)
Edward R. Muller........................................... Edison International Common Stock 66,425(9)
......................................................... Mission Capital MIPS 2,478(10)
Luis G. Nogales............................................ Edison International Common Stock 2,265
Ronald L. Olson............................................ Edison International Common Stock 2,796(11)
Harold B. Ray.............................................. Edison International Common Stock 77,838(12)
James M. Rosser............................................ Edison International Common Stock 4,700(7)
E. L. Shannon, Jr.......................................... Edison International Common Stock 8,720(7)
Robert H. Smith............................................ Edison International Common Stock 6,121(13)
Thomas C. Sutton........................................... Edison International Common Stock 8,385(7)
Daniel M. Tellep........................................... Edison International Common Stock 10,648(7)
James D. Watkins........................................... Edison International Common Stock 2,626
Edward Zapanta............................................. Edison International Common Stock 10,734
All Directors and Executive Officers
Of Edison International as a group (32 individuals)...... Edison International Common Stock 2,128,934(14)
......................................................... Mission Capital MIPS 2,478(10)
All Directors and Executive Officers
Of SCE as a group (27 individuals)....................... Edison International Common Stock 1,800,085(15)
- ------------
</TABLE>
(1) No Director owns, no named Executive Officer owns, nor do the Directors and
Executive Officers of Edison International or SCE as a group own in excess
of 1% of the outstanding shares of any class of Edison International's,
SCE's or Mission Capital, L.P.'s outstanding equity securities.
(2) Includes 6,000 shares held as trustee with shared voting and sole
investment power, 6,000 shares held as co-trustee and co-beneficiary of
trust with shared voting and investment power, 200 shares held by spouse
with shared voting and investment power, 14,805 shares credited under the
SSPP and 583,534 shares that can be acquired through the exercise of
options. SSPP shares for which instructions are not received from any plan
participant may be voted by the SSPP Trustee in its discretion.
(3) Includes 1,000 shares held as co-trustee and co-beneficiary of trust with
shared voting and investment power.
(4) Includes 2,173 shares credited under the SSPP and 172,109 shares that can
be acquired through the exercise of options.
(5) Includes 12,703 shares credited under the SSPP and 166,409 shares that can
be acquired through the exercise of options.
(6) Includes 208,200 shares that can be acquired through the exercise of
options.
8
<PAGE>
(7) Held as trustee with shared voting and sole investment power.
(8) Includes 4,950 shares credited under the SSPP and 56,525 shares that can be
acquired through the exercise of options.
(9) Includes 64,625 shares that can be acquired through the exercise of
options.
(10) Monthly Income Preferred Securities ("MIPS") issued by Mission Capital,
L.P. Includes 280 shares held by spouse with shared voting and investment
power, and 8 shares held as co-trustee and co-beneficiary with shared
voting and investment power.
(11) Includes 1,596 shares held as trustee with shared voting and sole
investment power, and 1,200 shares held as trustee with shared voting and
investment power.
(12) Includes 2,046 shares credited under SSPP and 75,792 shares that can be
acquired through the exercise of options.
(13) Includes 2,900 shares held as co-trustee and co-beneficiary of trust with
shared voting and sole investment power and 1,000 shares held by spouse
with shared voting and investment power.
(14) Includes 7,000 shares held as co-trustee and co-beneficiary of trust with
shared voting and investment power, 2,900 shares held as co-trustee and
co-beneficiary of trust with shared voting and sole investment power, 1,200
shares held by spouse with shared voting and investment power, 68,615
shares held by trustee with shared voting and sole investment power, 86,497
shares credited to participants under the SSPP and 1,917,108 shares that
can be acquired through the exercise of options. The Edison International
Executive Officers include all of the SCE Executive Officers. Therefore,
the share ownership balances include the same information shown in footnote
(15) below.
(15) Includes 7,000 shares held as co-trustee and co-beneficiary of trust with
shared voting and investment power, 2,900 shares held as co-trustee and
co-beneficiary of trust with shared voting and sole investment power, 1,200
shares held by spouse with shared voting and investment power, 68,615
shares held by trustee with shared voting and sole investment power, 65,179
shares credited to participants under the SSPP, and 1,617,874 shares that
can be acquired through the exercise of options.
9
<PAGE>
Summary Compensation Table -- Edison International and SCE
The following table presents information regarding compensation of the Chief
Executive Officer of Edison International and SCE ("CEO"), and the other four
most highly compensated Executive Officers of Edison International and SCE, for
services rendered during 1996, 1997 and 1998. These individuals are referred to
as "Named Officers" in this Joint Proxy Statement.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE(1)
Long-Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Re- Securities All
Name Annual stricted Underlying Other
and Compen- Stock Options/ LTIP Compen-
Principal Salary Bonus sation Award(s) SARs Payouts sation
Position Year ($) $ $ (2) ($) # (3) ($) $(4)
- --------- ---- ------- -------- --------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John E. Bryson, Chairman 1998 860,000 000 70,550 (5) -- 160,000 -- 481,899
of the Board and CEO of 1997 810,000 850,500 50,196 -- 157,700 -- 224,337
Edison International and SCE 1996 750,000 787,500 1,368 -- 162,600 -- 182,633
Stephen E. Frank, 1998 565,000 000 1,109 -- 69,600 -- 61,255
President and Chief 1997 540,000 437,400 1,474 -- 78,000 -- 38,509
Operating Officer of SCE 1996 520,000 421,200 -- -- 78,800 -- 14,802
Bryant C. Danner, Executive 1998 415,000 000 77,935 -- 44,700 -- 70,530
Vice President and General 1997 395,000 364,500 50,231 -- 46,400 -- 40,346
Counsel of Edison International 1996 375,000 496,500 -- -- 47,200 -- 29,600
and SCE
Edward R. Muller, 1998 432,000 000 2,624 -- 21,160 -- 40,172
President and CEO of 1997 400,000 456,000 3,478 -- 33,300 -- 28,587
Edison Mission Energy 1996 370,000 444,000 2,621 -- 41,000 -- 23,148
Alan J. Fohrer, Executive Vice 1998 367,000 000 -- -- 44,700 -- 60,810
President and Chief Financial 1997 342,000 340,000 -- -- 46,400 -- 34,662
Officer of Edison International 1996 322,000 297,000 -- -- 47,200 -- 25,479
and SCE
Thomas R. McDaniel, 1998 345,000 000 3,043 -- 31,800 -- 56,999
President and CEO of 1997 310,000 372,000 3,119 -- 33,200 -- 24,937
Edison Capital 1996 290,000 174,000 1,375 -- 38,800 -- 21,193
Harold B. Ray, 1998 355,000 000 -- -- 43,700 -- 54,294
Executive Vice President 1997 335,000 271,350 -- -- 40,000 -- 28,509
of SCE 1996 315,000 198,500 -- -- 38,200 -- 24,267
</TABLE>
(1) For Edison International, the Named Officers are John E. Bryson, Stephen E.
Frank, Bryant C. Danner, Edward R. Muller, and Thomas R. McDaniel. For SCE,
the Named Officers are John E. Bryson, Stephen E. Frank, Bryant C. Danner,
Alan J. Fohrer and Harold B. Ray. Compensation information is provided for
years in which the Named Officer served as an Executive Officer.
(2) Includes perquisites if in total they exceed $50,000 or 10% of annual
salary and bonus, plus reimbursed taxes. Each perquisite exceeding 25% of
the total is separately described in footnotes below.
(3) The amounts shown in Column (g) are comprised of Edison International
nonqualified stock options, Edison Mission Energy affiliate options and
Edison Capital affiliate options (collectively, "Option Awards"). No stock
appreciation rights ("SARs") have been awarded. The Edison Mission Energy
and Edison Capital affiliate options are based on hypothetical shares of
affiliate stock linked to the value of each company's portfolio of
investments.
10
<PAGE>
The terms and conditions for the 1998 Option Awards are described in
footnotes to the table below entitled "Options/SAR Grants in 1998."
The following table shows the amount of each type of Option Award granted
to the Named Officers.
<TABLE>
<CAPTION>
1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------
John E. Bryson
<S> <C> <C> <C>
Edison International 160,000 128,000 125,000
Edison Mission Energy 0 14,500 19,800
Edison Capital 0 15,200 17,800
Stephen E. Frank
Edison International 69,600 78,000 78,800
Bryant C. Danner
Edison International 44,700 38,000 36,200
Edison Mission Energy 0 4,100 5,800
Edison Capital 0 4,300 5,200
Edward R. Muller
Edison International 13,300 10,500 10,200
Edison Mission Energy 7,860 22,800 30,800
Alan J. Fohrer
Edison International 44,700 38,000 36,200
Edison Mission Energy 0 4,100 5,800
Edison Capital 0 4,300 5,200
Thomas R. McDaniel
Edison International 9,300 9,000 7,200
Edison Capital 22,500 24,200 31,600
Harold B. Ray
Edison International 43,700 40,000 38,200
</TABLE>
(4) Includes contributions in 1998 to the SSPP and a supplemental plan for
eligible participants who are affected by SSPP participation limits imposed
on higher paid individuals by federal tax law, preferential interest [that
portion of interest that is considered under Securities and Exchange
Commission ("SEC") rules to be at above-market rates] accrued in 1998 on
deferred compensation; vacation sale proceeds; Employee Stock Ownership
Plan ("ESOP") dividend incentives, a component of the SSPP; electric
vehicle incentives; and benefit forfeiture allocations in the following
amounts:
<TABLE>
<CAPTION>
ESOP Electric Benefit
Plan Preferential Vacation Dividend Vehicle Forfeiture
Contributions Interest Sold Incentives Incentives Allocations
$ $ $ $ $ $
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John E. Bryson 51,269 429,124 0 1,141 0 364
Stephen E. Frank 30,049 30,606 0 0 600 0
Bryant C. Danner 23,213 47,283 0 0 0 34
Edward R. Muller 26,373 13,520 0 0 0 279
Alan J. Fohrer 21,072 39,459 0 0 0 279
Thomas R. McDaniel 21,501 28,370 6,635 382 0 112
Harold B. Ray 18,600 28,699 6,825 171 0 0
</TABLE>
(5) Includes $23,017, which is the cost of providing Mr. Bryson's benefits
under the Executive Survivor Benefit Plan.
11
<PAGE>
Option/SAR Grants Table
The following table presents information regarding Edison International
stock options and Edison Mission Energy and Edison Capital affiliate options
granted pursuant to the Edison International Equity Compensation Plan ("Equity
Compensation Plan") during 1998 to the Named Officers. No SARs were granted
during 1998.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN 1998
Grant Date
Individual Grants Value
(a) (b) (c) (d) (e) (f)
Number of % of Total
Securities Options/SARs Exercise Grant
Underlying Granted to or Base Date
Options/SARs Employees Price Expiration Present
Name Granted(#)(1)(2)(3) in 1998 ($/Sh) Date(4) Value($)(5)
- ------------------------------------------------------------------------------------------------------------------------
John E. Bryson
<S> <C> <C> <C> <C> <C>
Edison International 160,000 10% 27.25 01/02/2008 1,012,800
Stephen E. Frank
Edison International 69,600 4% 27.25 01/02/2008 440,568
Bryant C. Danner
Edison International 44,700 3% 27.25 01/02/2008 282,951
Edward R. Muller
Edison International 13,300 1% 27.25 01/02/2008 84,189
Edison Mission Energy 7,860 9% 264.13 01/02/2008 259,459
Alan J. Fohrer
Edison International 44,700 3% 27.25 01/02/2008 282,951
Thomas R. McDaniel
Edison International 9,300 1% 27.25 01/02/2008 58,869
Edison Capital 22,500 10% 148.01 01/02/2008 181,125
Harold B. Ray
Edison International 43,700 3% 27.25 01/02/2008 276,621
</TABLE>
(1) Each Edison International nonqualified stock option granted in 1998 may be
exercised to purchase one share of Edison International Common Stock. The
Edison International stock options include dividend equivalents equal to
the dividends that would have been paid on an equal number of shares of
Edison International Common Stock. Dividend equivalents will be credited
following the first three years of the option term if certain Edison
International performance criteria discussed below are met. Dividend
equivalents accumulate without interest. Once earned and vested, the
dividend equivalents are payable in cash (i) upon the request of the holder
prior to the final year of the option term, (ii) upon the exercise of the
related option, or (iii) at the end of the option term regardless of
whether the related option is exercised. After such payment, however, no
additional dividend equivalents will accrue on the related option.
The dividend equivalent performance criteria is measured by Edison
International Common Stock total shareholder return. If the average
quarterly percentile ranking of Edison International's total shareholder
return is less than the 60th percentile of that of the companies comprising
the Dow Jones Electric Utilities Group Index, the dividend equivalents are
reduced; if the Edison International total shareholder return ranking is
less than the 25th percentile, the dividend equivalents are canceled. For
rankings between the 60th and 25th percentiles, the dividend equivalents
are prorated. The total shareholder return is measured at the end of the
initial three-year period and will set the percentage payable for the
entire term. If less than 100% of the dividend equivalents are earned, the
unearned portion may be restored later in the option term if Edison
International's cumulative total shareholder return ranking for the option
term attains at least the 60th percentile.
12
<PAGE>
(2) Each Edison Mission Energy or Edison Capital affiliate option may be
exercised to realize any appreciation in the deemed value of one
hypothetical share of Edison Mission Energy or Edison Capital affiliate
stock over annually escalated exercise prices. The deemed values of the
Edison Mission Energy and Edison Capital affiliate stock are determined by
formula linked to the value of Edison Mission Energy and Edison Capital
portfolio investments less general and administrative cash costs. The
deemed values are recalculated annually. For this purpose, 10 million
shares of Edison Mission Energy affiliate stock and 5 million shares of
Edison Capital affiliate stock are deemed to be outstanding. The exercise
price of each affiliate option is initially set equal to the deemed value
of the affiliate stock on the date of grant and is annually escalated on a
compound basis thereafter by a factor reflecting the affiliate's
approximate cost of capital during the year as determined by the
Compensation and Executive Personnel Committee ("CEP Committee") of Edison
International. The annual escalation factor will be adjusted prospectively
by the CEP Committee for significant changes in the affiliate's cost of
capital. If the deemed value of a share of Edison Mission Energy or Edison
Capital affiliate stock exceeds the corresponding exercise price for any
year during the option term, the executive may exercise the vested portion
of the options during the 60-day exercise window in the second quarter of
the following year and be paid in cash the difference between the exercise
price and the deemed value of the affiliate shares.
(3) The Option Awards are subject to a four-year vesting period with one-fourth
of the total award vesting and becoming exercisable on January 2, 1999,
January 2, 2000, January 2, 2001 and January 2, 2002. The Option Awards of
certain senior executives, including the Named Officers, are transferable
to a spouse, child or grandchild. If an executive retires, dies, or is
permanently and totally disabled during the four-year vesting period, the
unvested Option Awards will vest and be exercisable to the extent of 1/48
of the grant for each full month of service during the vesting period.
Unvested Option Awards of any person who has served in the past on the
Management Committee will vest and be exercisable upon his or her
retirement, death, or permanent and total disability. (Messrs. Bryson,
Danner, Fohrer and Ray have served as members of the Management Committee
which was dissolved in 1993.) Upon retirement, death or permanent and total
disability, the vested Option Awards may continue to be exercised within
their original term by the recipient or beneficiary. If an executive is
terminated other than by retirement, death or permanent and total
disability, Option Awards which had vested as of the prior anniversary date
of the grant are forfeited unless exercised within 180 days of the date of
termination in the case of Edison International options, or during the next
60-day exercise period in the case of Edison Mission Energy or Edison
Capital affiliate options. All unvested Option Awards are forfeited on the
date of termination.
Appropriate and proportionate adjustments may be made by the Edison
International CEP Committee to outstanding Edison International stock
options to reflect any impact resulting from various corporate events such
as reorganizations, stock splits and so forth. If Edison International is
not the surviving corporation in such a reorganization, all Option Awards
then outstanding will become vested and be exercisable unless provisions
are made as part of the transaction to continue the Equity Compensation
Plan or to assume or substitute options of the successor corporation with
appropriate adjustments as to the number and price of the options.
Notwithstanding the foregoing, upon a change of control of Edison
International after the occurrence of a "Distribution Date" under the
Rights Agreement approved by the Edison International Board of Directors on
November 21, 1996, the options will vest and will remain exercisable for at
least two years following the Distribution Date. A Distribution Date is
generally the date a person acquires 20% or more of the Common Stock of
Edison International, or a date specified by the Edison International Board
of Directors after commencement of a tender offer for 20% or more of such
stock.
The Edison International CEP Committee administers the Equity Compensation
Plan and has sole discretion to determine all terms and conditions of any
grant, subject to plan limits. It may substitute cash which is equivalent
in value to the Option Awards and, with the consent of the executive, may
amend the terms of any award agreement, including the post-termination
term, and the vesting schedule.
(4) The expiration date of the Option Awards is January 2, 2008; however, the
final 60-day exercise period of the Edison Mission Energy and Edison
Capital affiliate options will occur during the second quarter of that
year. The Option Awards are subject to earlier expiration upon termination
of employment as described in footnote (3) above.
13
<PAGE>
(5) The grant date value of each Edison International stock option was
calculated as the sum of two numbers: the option value and the dividend
equivalent value. The option value was calculated to be $3.08 per option
share using the Black-Scholes stock option pricing model. In making this
calculation, it was assumed that the average exercise period was seven
years, the volatility rate was 17%, the risk-free rate of return was 5.63%,
the historic average dividend yield was 5.89% and the stock price and
exercise price were $27.25.
The dividend equivalent value of each Edison International stock option
granted in 1998 was calculated to be $3.25. This dividend equivalent value
was calculated by (a) summing the dividends (without reinvestment) over the
assumed seven-year duration of the related stock option at the annual
dividend rate of $1.00 in effect on January 1, 1998, and (b) discounting
that sum to its present value assuming a discount rate of 11.6%, which was
SCE's authorized return on common equity in 1998. This calculation does not
reflect any reduction in value for the risk that Edison International
performance measures may not be met. The calculation of the present value
of the dividend equivalents is not a prediction of future dividends or
dividend policy, and there is no assurance that the value of the dividend
equivalents realized by an executive will be at or near the value
calculated as described above.
The aggregate estimated grant date value of the Edison International
Options and the related dividend equivalents awarded in 1998 were:
Option Value Dividend Equivalent Value
$ $
------------ -------------------------
John E. Bryson 492,800 520,000
Stephen E. Frank 214,368 226,200
Bryant C. Danner 137,676 145,275
Edward R. Muller 40,964 43,225
Alan J. Fohrer 137,676 145,275
Thomas R. McDaniel 28,644 30,225
Harold B. Ray 134,596 142,025
The value of an Edison Mission Energy affiliate option was calculated to be
$33.01, using the Black-Scholes stock option pricing model assuming an
average exercise period of seven years, a volatility rate of 18.75%, a
risk-free rate of return of 5.81%, a dividend yield of 0% and an exercise
price of $482.84. The value of an Edison Capital affiliate option was
calculated to be $8.05, using the Black-Scholes stock option pricing model
assuming an average exercise period of seven years, a volatility rate of
9.16%, a risk-free rate of return of 6.08%, a dividend yield of 0% and an
exercise price of $249.58. These assumptions are based on average values of
a group of peer companies adjusted for differences in capital structure.
The actual value that an executive may realize will depend on various
factors on the date the option is exercised, so there is no assurance that
the value realized by an executive will be at or near the grant date value
estimated by the Black-Scholes model. The estimated values under that model
are based on certain assumptions and are not a prediction of future stock
price.
14
<PAGE>
Option/SAR Exercises and Year-End Value Table
The following table presents information regarding the exercise of Edison
International stock options and Edison Mission Energy and Edison Capital
affiliate options during 1998 by any of the Named Officers, and regarding
unexercised options held at year-end 1998 by any of the Named Officers. No SARs
were exercised during 1998 or held at year-end 1998 by any of the Named
Officers.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN 1998
AND FY-END OPTION/SAR VALUES
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs at
Shares at FY-End (#)(1) FY-End ($)(1)(2)
Acquired Value -----------------------------------------
on Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- ---- ------------- ----------- ----------------- -------------------
John E. Bryson
<S> <C> <C> <C> <C>
Edison International 18,600 261,609(3) 459,201/286,999 4,288,008/1,220,407
Edison Mission Energy -- -- 55,254/16,266 6,702,875/1,446,358
Edison Capital -- -- 28,914/16,066 1,129,769/568,721
Stephen E. Frank
Edison International -- -- 138,534/147,866 1,375,974/735,227
Bryant C. Danner
Edison International -- -- 136,201/82,099 1,267,930/357,445
Edison Mission Energy -- -- 18,434/4,666 2,253,418/416,423
Edison Capital -- -- 7,721/4,599 299,585/162,930
Edward R. Muller
Edison International -- -- 54,400/23,700 408,406/100,038
Edison Mission Energy -- -- 89,144/33,326 10,820,845/2,261,844
Alan J. Fohrer
Edison International -- -- 130,501/82,099 1,275,711/357,445
Edison Mission Energy -- -- 18,234/4,666 2,229,086/416,423
Edison Capital -- -- 7,721/4,599 299,585/162,930
Thomas R. McDaniel
Edison International 12,000 230,445(4) 48,800/17,700 368,043/79,163
Edison Capital -- 46,774/49,166 1,818,583/946,525
Harold B. Ray
Edison International 77,000 956,165(4) 38,801/83,099 369,376/374,487
</TABLE>
(1) Each Edison International option may be exercised for one share of Edison
International Common Stock at an exercise price equal to the fair market
value of the underlying Common Stock on the date the option was granted.
Dividend Equivalents which may accrue on the Edison International options
accumulate without interest and are paid in cash. Each Edison Mission
Energy or Edison Capital affiliate option represents a right to exercise an
option to realize any appreciation in the deemed value of one hypothetical
share of Edison Mission Energy or Edison Capital affiliate stock. The
option terms for current year awards are discussed in footnote (1) in the
table above entitled "Option/SAR Grants in 1998."
(2) Edison International options have been treated as "in-the-money" if the
fair market value of the underlying stock at year-end 1998 exceeded the
exercise price of the options. The dollar amounts shown for Edison
International options are the differences between (i) the fair market value
of the Edison International Common Stock underlying all unexercised
in-the-money options at year-end 1998 and (ii) the exercise prices of those
options.
15
<PAGE>
The aggregate value at year-end 1998 of all accrued dividend
equivalents, exercisable and unexercisable, for the Named Officers was:
$/$
-----------
John E. Bryson 2,033,566/0
Stephen E. Frank 211,800/0
Bryant C. Danner 509,045/0
Edward R. Muller 219,930/0
Alan J. Fohrer 470,737/0
Thomas R. McDaniel 235,370/0
Harold B. Ray 0/0
Edison Mission Energy and Edison Capital affiliate options are considered
in-the-money if the deemed values of the Edison Mission Energy and Edison
Capital affiliate stock, which are determined annually by formula linked to
portfolio investments, exceed prescribed exercise prices. Deemed values at
year-end are not available until the second quarter of the following year.
Therefore, amounts shown in Column (e) reflect deemed values at fiscal
year-end for 1997, the most recent data available.
(3) Includes appreciation only. The value of the dividend equivalents,
$212,226, was deferred under provisions of the Executive Deferred
Compensation Plan.
(4) Includes $109,320 and $289,290 of value realized from dividend equivalents
by Messrs. McDaniel and Ray, respectively.
Retirement Benefits Table
The following table presents estimated gross annual benefits payable upon
retirement at age 65 to the Named Officers in the remuneration and years of
service classifications indicated.
<TABLE>
<CAPTION>
PENSION PLAN TABLE(1)
Years of Service
----------------
Remuneration 10 15 20 25 30 35 40
- ------------ ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
200,000............... 50,000 67,500 85,000 102,500 120,000 130,000 140,000
400,000............... 100,000 135,000 170,000 205,000 240,000 260,000 280,000
600,000............... 150,000 202,500 255,000 307,500 360,000 390,000 420,000
800,000............... 200,000 270,000 340,000 410,000 480,000 520,000 560,000
1,000,000............... 250,000 337,500 425,000 512,500 600,000 650,000 700,000
1,200,000............... 300,000 405,000 510,000 615,000 720,000 780,000 840,000
1,400,000............... 350,000 472,500 595,000 717,500 840,000 910,000 980,000
1,600,000............... 400,000 540,000 680,000 820,000 960,000 1,040,000 1,120,000
1,800,000............... 450,000 607,500 765,000 922,500 1,080,000 1,170,000 1,260,000
2,000,000............... 500,000 675,000 850,000 1,025,000 1,200,000 1,300,000 1,400,000
2,200,000............... 550,000 742,500 935,000 1,127,500 1,320,000 1,430,000 1,540,000
2,400,000............... 600,000 810,000 1,020,000 1,230,000 1,440,000 1,560,000 1,680,000
2,600,000............... 650,000 877,500 1,105,000 1,332,500 1,560,000 1,690,000 1,820,000
</TABLE>
The Retirement Plan and SERP provide monthly benefits at normal retirement
age (65 years) based on a unit benefit for each year of service plus a benefit
determined by a percentage ("Service Percentage") of the average of the
executive's highest 36 consecutive months of regular salary and, in the case of
the SERP, the average of the highest
- --------------
(1) Estimates are based on the terms of the SCE Retirement Plan ("Retirement
Plan"), a qualified defined benefit employee retirement plan, and the SCE
Executive Retirement Plan ("SERP"), a nonqualified supplemental executive
retirement plan, with the following assumptions: (i) SCE's present
Retirement Plan will be maintained, (ii) optional forms of payment which
reduce benefit amounts have not been selected, and (iii) any benefits in
excess of limits contained in the Internal Revenue Code of 1986 and any
incremental retirement benefits attributable to consideration of the annual
bonus or participation in Edison International's deferred compensation
plans will be paid out of the SERP as unsecured obligations of Edison
International or the participating affiliate.
16
<PAGE>
three bonuses in the last five years prior to attaining age 65. Compensation
used to calculate combined benefits under the Retirement Plan and SERP is based
on base salary and bonus as reported in the Summary Compensation Table. The
Service Percentage is based on 1-3/4% per year for the first 30 years of service
(52-1/2% upon completion of 30 years' service) and 1% for each year in excess of
30. The actual benefit determined by the Service Percentage would take into
account the unit benefit and be offset by up to 40% of the executive's primary
Social Security benefits.
The normal form of benefit is a life annuity with a 50% survivor benefit
following the death of the participant. Retirement benefits are reduced for
retirement prior to age 61. The amounts shown in the Pension Plan Table above do
not reflect reductions in retirement benefits due to the Social Security offset
or early retirement.
Messrs. Danner and Fohrer have elected to retain coverage under a prior
benefit program. This program provided, among other benefits, the
post-retirement benefits discussed in the following section. The SERP benefits
provided under the prior program are less than the benefits shown in the Pension
Plan Table. To determine these reduced benefits, multiply the dollar amounts
shown in each column by the following factors: 10 years of service - 70%, 15
years - 78%, 20 years - 82%, 25 years - 85%, 30 years - 88%, 35 years - 88%, and
40 years - 89%.
For purposes of the SERP, as of December 31, 1998, Mr. Bryson had completed
14 years of service, Mr. Frank-6.75 years, Mr. Danner-16 years, Mr. Muller-5
years, Mr. Fohrer-25 years, Mr. McDaniel--27 years and Mr. Ray-27 years.
Other Retirement Benefits
Additional post-retirement benefits are provided pursuant to the Survivor
Income Continuation Plan and the Survivor Income/Retirement Income Plan under
the Executive Supplemental Benefit Program. For purposes of determining the
estimated annual benefits payable under these plans upon retirement at normal
retirement age for each of the Named Officers, which is dependent upon final
compensation, the highest compensation level in the Pension Plan Table above
($2,600,000) has been used in the examples which follow.
The Survivor Income Continuation Plan provides a post-retirement survivor
benefit payable to the beneficiary of the participant following his or her
death. The benefit is approximately 23% of final compensation (salary at
retirement and the average of the three highest bonuses paid in the five years
prior to retirement) payable for ten years certain. If a Named Officer's final
annual compensation were $2,600,000, the beneficiary's estimated annual survivor
benefit would be $598,000. Messrs. Danner and Fohrer have elected coverage under
this plan.
The Supplemental Survivor Income/Retirement Income Plan provides a
post-retirement survivor benefit payable to the beneficiary of the Executive
Officer following his or her death. The benefit is 25% of final compensation
(salary at retirement and the average of the three highest bonuses paid in the
five years prior to retirement) payable for ten years certain. At retirement, an
Executive Officer has the right to elect the retirement income benefit in lieu
of the survivor income benefit. The retirement income benefit is 10% of final
compensation (salary at retirement and the average of the three highest bonuses
paid in the five years prior to retirement) payable to the participant for ten
years certain immediately following retirement. If a Named Officer's final
annual compensation were $2,600,000, the beneficiary's estimated annual survivor
benefit would be $650,000. If a Named Officer were to elect the retirement
income benefit in lieu of survivor income and had final annual compensation of
$2,600,000, the Named Officer's estimated annual benefit would be $260,000.
Messrs. Danner and Fohrer have elected coverage under this plan.
The 1985 Deferred Compensation Plan provides a post-retirement survivor
benefit. This plan allowed eligible participants in September 1985 to
voluntarily elect to defer until retirement a portion of annual salary and
annual bonuses otherwise earned and payable for the period October 1985 through
January 1990. Messrs. Bryson and Ray participate in this plan. The
post-retirement survivor benefit is 50% of the annual amount the participant had
been receiving from the plan. Survivor benefit payments begin following
completion of the deferred compensation payments. If the named beneficiary is
the executive's spouse, then survivor benefits are paid as a life annuity, five
years certain. The benefit amount will be reduced actuarially if the spouse is
more than five years younger than the executive at the time of the executive's
death. If the beneficiary is not the spouse, then benefits are paid for five
years only. The annual amounts which would be payable to the surviving
beneficiaries of Messrs. Bryson and Ray if each retired at age 65 are
$1,260,020, and $46,324, respectively.
17
<PAGE>
Employment Contracts and Termination of Employment Arrangements
Mr. Danner executed an employment agreement when he joined Edison
International and SCE as Senior Vice President and General Counsel in 1992.
After completing three years of service, he was credited with ten additional
years of service with SCE and Edison International for purposes of determining
benefits under the SERP. Any subsequent termination of employment will be
treated as a retirement for all executive benefit programs. In addition, Edison
International and SCE have agreed to use their best efforts to make available
health care coverage until Mr. Danner and his spouse reach age 65, with Edison
International and SCE bearing the cost over the amount an SCE retiree would pay
for coverage in the SCE group plan with the highest deductible.
Mr. Frank executed an employment agreement when he joined SCE as President
and Chief Operating Officer and as a member of the Boards of Directors of Edison
International and SCE in 1995. For purposes of the SERP, he will be credited
with 1.25 years of additional service for each year of actual service up to ten
years. A deferred compensation plan account was established and credited with
$250,000 which will vest when Mr. Frank completes 5 years of service. He is also
provided two club memberships along with regular executive and employee
benefits. If Mr. Frank's employment is terminated involuntarily (other than for
cause), he will receive a severance payment equal to one year's salary plus
bonus and the deferred compensation plan credit discussed above will be vested
on a pro rata basis.
Compensation And Executive Personnel Committees' Report On Executive
Compensation(1)
The Edison International and SCE CEP Committees ("CEP Committees") have
responsibility for all executive compensation programs of the companies. The CEP
Committees are composed of the same non-employee directors named at the end of
this report.
The CEP Committees met jointly to consider executive compensation matters
for 1998. The Edison International CEP Committee determines salaries and bonuses
for Edison International officers. The SCE CEP Committee determines salaries and
bonuses for SCE officers. The salaries and bonuses of the officers of the other
Edison International subsidiaries ("Subsidiaries") are determined by their
respective boards of directors. However, the Edison International CEP Committee
reviews the salaries and bonuses of the Executive Officers of the Subsidiaries
to ensure consistency with overall Edison International compensation policies.
In addition, the Edison International CEP Committee administers the Equity
Compensation Plan pursuant to which stock options and affiliate options may be
awarded.
Compensation Policies
The executive compensation programs of Edison International, SCE and the
Subsidiaries are designed by the CEP Committees to achieve three fundamental
objectives: (1) attract and retain qualified executives; (2) motivate
performance to achieve specific strategic objectives of the companies; and (3)
align the interests of senior management with the long-term interests of the
companies' shareholders. At present, the basic components of the companies'
executive compensation program are base salaries, bonuses, stock options and
affiliate options. The companies also provide broad-based employee benefit plans
and certain other executive benefit plans.
Section 162(m) of the Internal Revenue Code of 1986 generally disallows a
tax deduction to public companies for compensation over $1,000,000 paid to their
chief executive officers and the four other most highly compensated executive
officers unless certain tests are met. The CEP Committees' general intent is to
design and administer the Edison International and SCE compensation programs in
a manner that will preserve the deductibility of compensation payments to
Executive Officers. However, this goal is secondary in importance to achievement
of the companies' compensation objectives discussed above. The CEP Committees
believe that the potential increased tax liability is of insufficient magnitude
to warrant alteration of the present compensation system which is achieving the
- ------------
(1) Notwithstanding anything to the contrary contained in any
document filed by Edison International or SCE with the SEC, or elsewhere, this
report shall not be deemed to be incorporated by reference by any general
statement incorporating this proxy statement into any filing under the
Securities Act of 1933 ("Securities Act") or the Securities Exchange Act of 1934
("Exchange Act"), except to the extent Edison International or SCE specifically
incorporate this report by reference therein, and shall not be deemed soliciting
material or otherwise be deemed filed under either of such Acts.
18
<PAGE>
desired compensation objectives while retaining the flexibility of the CEP
Committees to exercise judgment in assessing an executive's performance.
1998 Compensation Actions
The CEP Committees base their compensation actions for the companies on
data gathered through independent surveys of peer group companies. Independent
compensation consultants are retained to annually review and identify the
appropriate comparison companies and to obtain and evaluate current executive
compensation data for SCE and the Subsidiaries. For 1998, SCE planning was based
on a composite peer group of 19 U.S.-based, financially healthy electric
service, telecommunication and natural gas companies as was utilized for 1997
planning. This peer group of companies was the same as the group used last year
except one telecommunication company was replaced in the peer group by the
company that acquired it. Comparison utility companies were selected on the
basis of total assets and net sales. Although the peer group differs from the
Dow Jones Electric Utilities Group Index depicted in the Stock Performance
Graph, ten of the companies are included in the index, and the CEP Committees
believe the constitution of the peer group provides comparable and relevant
compensation data for Edison International and SCE in view of the companies'
changing business environment. The Committees recognize that the rate of change
in California has been faster than the rest of the electric utility industry,
particularly over the last several years. That distinction is diminishing as
more electric companies are facing similar competitive challenges. Because of
this, the Committees will be transitioning to greater reliance on electric
company compensation data in future years. Selecting peer groups for the
Subsidiaries was accomplished by a similar process geared to identify
appropriate comparison companies in their respective industries.
The CEP Committees' strategy for 1998 compensation planning was established
in December 1997 to generally target fixed compensation (salary and benefits)
for SCE and the Subsidiaries at the median level of their respective peer
groups. Target annual and long-term incentive opportunities were set for SCE and
the Subsidiaries at the median level, with maximum annual award opportunities of
200% of target levels for significant performance exceeding target levels. The
CEP Committees may deviate above and below established targets in individual
cases as deemed appropriate in their discretion.
Base Salaries
The CEP Committees reviewed the base salaries for Mr. Bryson and the other
Executive Officers at the end of 1997. The factors considered by the CEP
Committees at that time in setting Mr. Bryson's 1998 salary were the
relationship of his compensation to the average compensation of the other chief
executive officers of the peer group of companies, and the CEP Committees'
judgment of Mr. Bryson's performance as CEO. The Committees recognized that 1997
earnings were above target, important progress had been made in the electric
utility industry restructuring with the successful auction of ten gas-fired
power plants and the issuance of restructuring bonds under favorable terms.
Factors found to be particularly significant in 1997 were Mr. Bryson's
leadership in creating value for the corporation through an outstanding business
performance year in all respects, his development of a strong management team,
and his vision for the future of Edison International. No specific weight was
assigned to the various factors considered by the CEP Committees. The base
salary component of Mr. Bryson's compensation was raised to $860,000 which was
within 5% of the average for CEOs in the peer group. The 1998 base salaries
approved by the CEP Committees for the other Executive Officers at Edison
International and SCE increased 8% over 1997 levels.
In December 1997, the Edison International CEP Committee also reviewed the
base salaries of the Executive Officers at the Subsidiaries. Salary actions
taken by their respective boards of directors were examined in light of the
performance of the companies and survey data of competitive firms to assure
conformance with overall Edison International compensation policies. The 1998
base salaries approved by the CEP Committees for Executive Officers at the
Subsidiaries increased 9% over 1997 levels.
After 1998 salary adjustments are taken into account, the base salaries in
the aggregate of the Executive Officers at Edison International, SCE and the
Subsidiaries are within 14% of the median levels of their respective peer
groups.
19
<PAGE>
Bonus Compensation for 1998 Performance
Bonus compensation is determined on the basis of overall corporate
performance and the CEP Committees' assessment of the individual Executive
Officer's performance. Target bonuses for Executive Officers for 1998 ranged
from 25% of base salary for certain Subsidiary vice presidents to 70% of base
salary for Mr. Bryson. Maximum opportunity levels were set at 200% of target
award levels. Awards are made in the judgment of the CEP Committees taking into
account overall company results as guided by the specific performance objectives
described below.
Edison International and SCE 1998 performance objectives were adopted by
the CEP Committees prior to the beginning of the year. Three weighted areas of
achievement were identified with quantifiable target objectives as follows: (1)
financial performance weight: 30% Edison International, 30% SCE, (2) competitive
transition charge recovery and regulatory performance - weight: 30% Edison
International, 40% SCE, and (3) grow future value - weight: 40% Edison
International; operational excellence - weight: 30% SCE. The third area of
achievement for SCE focused on several key objectives including retain/grow
specified kilowatt hours of delivered sales, improve reliability measures by a
specified percentage, and achievement of key performance indicators. For Edison
International, objectives to grow future value included specific value-added
targets at certain subsidiaries, protect and enhance the value of Edison's
reputation and develop leadership capabilities at all levels. Specific
performance related goals were also adopted for each of the Subsidiaries.
The CEP Committees met in February 1999 to evaluate each company's
performance and to determine the 1998 bonuses for Executive Officers. They
considered whether the stated 1998 objectives for each performance goal were
attained and reviewed other significant events that occurred during the year.
The CEP Committees determined that Edison International had (describe
performance year for the companies).
The CEP Committees approved a 1998 bonus of $__________ for Mr. Bryson
which was ___ percent of his maximum potential award. In addition to evaluating
Mr. Bryson's overall performance as measured by the companies' results in
relation to the specific performance goals discussed above, the CEP Committees'
subjective assessment of his performance as CEO was considered. Factors found to
be particularly significant in 1998 were ______________.
The 1998 bonuses for the other Executive Officers averaged ___% of maximum
at SCE and ___% of maximum at the Subsidiaries.
Long-Term Compensation Awards
Long-Term compensation is comprised of stock options and affiliate options
and performance awards which are designed to align the long-term interests of
senior management and the companies' shareholders and reward Executive Officers
for delivering long-term value to the shareholders of the companies.
For 1998, the Edison International CEP Committee granted ten-year
nonqualified Edison International Common Stock options with dividend equivalents
linked to Edison International performance ("Edison International Options"),
Edison Mission Energy affiliate options and/or Edison Capital affiliate options.
A performance award structure was also adopted for Edison Enterprises which will
trigger deferred Edison International stock units based on 1998 performance. The
vesting period for all awards was extended from three to four years for 1998.
The 1998 awards for Mr. Bryson, Mr. Danner and Mr. Fohrer were Edison
International Options only reflecting the CEP Committee's decision to
discontinue granting a portion of their awards in the form of affiliate options.
Approximately 75% of the option awards of Executive Officers at the Subsidiaries
were allocated to their respective companies' awards, with the balance allocated
to Edison International Options. Awards were granted to Executive Officers in
the judgment of the Edison International CEP Committee guided by the survey
results described above and are not formula-driven. The number and value of
options granted in prior years was not a factor in the current year award
determination. Edison International Options covering a total of 642,600 shares,
at an option price of $27.25 per share were granted to Executive Officers in
January 1998. Edison Mission Energy affiliate options covering a total of 13,920
shares were granted to Executive Officers in January 1998 at a base price of
$264.1320 per share. Edison Capital phantom options covering a total of 22,500
shares were granted to Executive Officers in January 1998 at a base price of
$148.0095 per share.
20
<PAGE>
The Edison International CEP Committee approved a January 1998 award to Mr.
Bryson of 160,000 Edison International Options. This award reflects the CEP
Committees' commitment to link a significant portion of Mr. Bryson's
compensation directly to the value provided to shareholders by Edison
International stock and dividends. The target values established and the actual
awards granted to Mr. Bryson and the other Executive Officers were consistent
with the CEP Committees' strategy described above.
Compensation and Executive Personnel Committees of the Edison
International and SCE Boards of Directors
Charles D. Miller (Chair) Robert H. Smith
Luis G. Nogales Thomas C. Sutton
James M. Rosser Daniel M. Tellep
February 18, 1999
Compensation and Executive Personnel Committees Interlocks and Insider
Participation
Camilla C. Frost and Joseph J. Pinola were members of the CEP Committees
until their retirement from the Boards on April 16, 1998. Effective April 16,
1998, Messrs. Rosser and Smith joined the CEP Committees. The other CEP
Committees members whose names appear on the Committees' Report above were
members of the CEP Committees during all of 1998. Under applicable SEC rules,
there were no interlocks or insider participation on the CEP Committees.
21
<PAGE>
Five-Year Stock Performance Graph(1)(2)
The graph below compares the yearly percentage change in the cumulative
total shareholder return on the Edison International Common Stock with the
cumulative total return of companies in the Standard and Poor's 500 Stock Index
("S&P 500") and the Dow Jones Electric Utilities Group Index ("Dow Utilities").
The Dow Utilities contains 44 United States utility companies that are electric
or combination (electric and gas) companies. Both indices are published daily in
The Wall Street Journal. Edison International is included in both the S&P 500
and the Dow Utilities.
<TABLE>
<CAPTION>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG EDISON INTERNATIONAL, THE S&P 500 INDEX
AND THE DOW UTILITIES INDEX
Cumulative Total Rerturn
------------------------
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Edison International 100 79 99** 119 170 180
S & P 500 100 101 139 171 229 294
Dow Jones Electric Utilities 100 88 115 117 147 168
</TABLE>
* Assumes the value of the initial investment in Edison International Common
Stock and each index was $100 on December 31, 1993, and that all dividends
are reinvested.
** Ex-dividend dates have been used to determine the number of dividends
included in Edison International's cumulative total return calculation. The
ex-dividend date occurs several days prior to the record date for each
dividend payment, and is the date on which the stock begins trading at a
price that does not include the dividend. Edison International had three
ex-dividend dates in 1995 and five ex-dividend dates in 1996, even though
shareholders received four dividend payments in each year. Thus, the graph
reflects three dividends in 1995 and five dividends in 1996. If four
dividends were used for each year to determine the cumulative total return,
the Edison International dollar amount for 12/31/95 would change from $99
to $101.
(1) SEC filings sometimes "incorporate information by reference." This means
the Companies are referring you to information that has previously been
filed with the SEC, and that this information should be considered as part
of the filing you are reading. Notwithstanding anything to the contrary
contained in any document filed by Edison International or SCE, this graph
shall not be deemed to be incorporated by reference, except to the extent
Edison International or SCE specifically incorporates this graph by
reference, and shall not be deemed soliciting material or otherwise be
deemed filed under the Securities Act or the Exchange Act.
(2) The historical stock performance depicted on the graph is not necessarily
indicative of future performance. The Companies do not make or endorse any
predictions as to future stock performance or dividends.
22
<PAGE>
Certain Relationships and Transactions of Nominees and Executive Officers
Mr. Olson is a Senior Partner of the law firm of Munger, Tolles and Olson,
and Mr. Christopher is a Senior Partner of the law firm of O'Melveny & Myers.
Both firms provided legal services to Edison International and SCE in 1998.
Edison International and its subsidiaries paid Munger, Tolles and Olson an
aggregate amount of $ 5,659,123 for such services.
In 1998, WRG, a management consulting firm of which Mr. John Danner is a
partner, was paid $1,061,583 by SCE for consulting services provided in late
1997 and 1998. Mr. Danner is the brother of Bryant C. Danner.
Edison International and SCE believe that any transactions described above
are comparable to those which would have been undertaken under similar
circumstances with nonaffiliated entities or persons.
Other Management Transactions
During 1997, Edison International loaned Robert G. Foster, a Senior Vice
President of Edison International and SCE, $160,000 interest-free in connection
with his purchase of a principal residence following his relocation from SCE's
Sacramento Region Office to the Southern California Metropolitan area. Under the
terms of the loan, one-seventh of the original principal amount was forgiven in
1997, and one-seventh will be forgiven each year thereafter if Mr. Foster
remains employed with an Edison International affiliate. As of February 25,
1999, a principal balance of $114,285 remained outstanding. If Mr. Foster's
employment terminates before the end of the loan term, the remaining principal
balance owing will be due and payable. Interest will accrue on any remaining
principal balance at the Bank of America Prime Interest Rate after 90 days.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires Edison International's and SCE's
respective Directors and Officers, and persons who own more than 10% of a
registered class of Edison International's or SCE's respective equity
securities, to file ownership reports and changes in ownership of such
securities with the SEC and one designated national securities exchange.
Based on our review of such reports and written representations from the
Directors and Officers, Edison International and SCE believe that all Section
16(a) filing requirements were met during 1998. However in 1999, Mr. Tellep
filed one late report for one 1997 transaction in Edison International Common
Stock.
Committees and Compensation of the Boards of Directors
The Edison International and SCE Board Committees are the Audit Committee,
Compensation and Executive Personnel Committee, Executive Committee, Finance
Committee and Nominating Committee. The major functions of these committees are
described briefly below. The composition of each committee is the same for
Edison International and SCE.
Audit Committees. Each Audit Committee meets regularly with Edison
International or SCE management, as applicable, the independent public
accountants and the internal auditors to make inquiries regarding the manner in
which the responsibilities of each are being discharged. In addition, each Audit
Committee recommends to the Boards the annual appointment of the independent
public accountants. The Audit Committee reviews with the independent public
accountants the scope of audit and other engagements and the related fees, the
accounting principles being applied in financial reporting, the scope of
internal financial auditing procedures and the adequacy of internal accounting
controls. Each Audit Committee also monitors compliance with the Edison
International or SCE business ethics programs and established codes of conduct
and periodically reviews the status of the Companies' efforts in addressing
computer system problems and related issues raised by the year 2000 and
subsequent years.
Compensation and Executive Personnel Committees. Each CEP Committee
periodically reviews the performance and compensation of the Edison
International or SCE Executive Officers, as applicable, and approves appropriate
adjustments. The CEP Committees also participate in executive succession
planning and management development. Additional CEP Committee duties are
described in the "Compensation and Executive Personnel Committees' Report on
Executive Compensation" above.
23
<PAGE>
Executive Committees. Each Executive Committee has all the authority of the
Edison International or SCE Board, as applicable, between meetings except to the
extent limited by the California General Corporation Law.
Finance Committees. Each Finance Committee regularly reviews the financial
structure of their respective company. In addition, the Edison International
Finance Committee reviews the financial planning process and investment outlook
for Edison International and its nonutility subsidiaries, and approves certain
committed investments. The SCE Finance Committee reviews the five-year capital
expenditure outlook, financing plans, total revenue requirements, and earnings
trends of SCE as well as approving certain capital projects.
Nominating Committees. Each Nominating Committee periodically consults with
Edison International or SCE management, as applicable, reviews shareholder
suggestions of Director candidates, and makes recommendations regarding Board
composition and selection of candidates for election. Shareholder suggestions
for candidates should be submitted in writing, with biographical material, to
the Secretary, Edison International and/or SCE, P.O. Box 800, Rosemead,
California 91770.
Compensation of Directors. During 1998, each non-employee Director received
an annual retainer of $25,000 plus $1,500 for each meeting attended. Each
non-employee Director who was a member of an Executive Committee received $2,000
in 1998 plus $1,000 for each meeting of that Committee attended. Each
non-employee Director who was a member of an Audit Committee, Finance Committee,
CEP Committee or Nominating Committee received $1,000 for each meeting of those
committees attended. Each non-employee Director who was a Chairman of any of the
committees received $3,000 in 1998.
Directors serve on both Edison International and SCE Boards and the same
committees of each Board. The yearly retainers and meeting fees described above
are the total amounts paid for such service on both the Edison International and
SCE Boards. However, separate meeting fees are paid for each meeting of one of
the Edison International or SCE Boards, or one of the committees, that is not
held in conjunction with a meeting of the corresponding Board or committee. It
is the usual practice of Edison International and SCE that meetings of the
Edison International and SCE Boards, and of corresponding committees, are held
in conjunction with each other and a single meeting fee is paid to each Director
for each set of meetings.
Pursuant to the Equity Compensation Plan, which was approved by the Edison
International shareholders in 1998, each non-employee Director of Edison
International and SCE is automatically granted 500 shares of Edison
International Common Stock and 300 deferred stock units upon election or
reelection to their respective Boards. Directors serving on both Boards receive
only one award of stock and deferred stock units per year. The deferred stock
units are credited to the Director's deferred compensation plan account. Each
stock unit is equal to one share of Edison International Common Stock. Stock
units accrue dividends that will be converted to additional stock units under
the plan. The deferred stock units will be distributed in cash in a lump sum
upon the Director's retirement from the Boards unless the Director's request to
receive distribution in the form of installments over 5, 10, or 15 years was
previously approved. Resignation prior to retirement will result in a lump sum
payment.
Service accruals under the Edison International and SCE Director retirement
plans ceased at the end of 1997 for Directors elected or re-elected to the
Boards in 1998.
SCE Directors were permitted to defer compensation earned from October 1,
1985, through December 31, 1989 under the terms of the SCE 1985 Deferred
Compensation Plan for Directors. These amounts are deferred until the
participant ceases to be a Director, dies or attains a predetermined age of at
least 65, but not greater than 72. The account may be paid in installments of 10
or 15 equal annual installments or 120 or 180 equal monthly installments. If a
participant dies before payments have begun, his or her beneficiary will receive
the account payments over the term elected by the participant. In addition, the
beneficiary will receive annual payments equal to 75% of the participant's total
deferred commitment for ten years. If a participant dies after payments have
begun, the remainder of his or her account will continue to be paid to the
beneficiary. Following the completion of these payments, if the beneficiary is
the surviving spouse, the person will be entitled to a five-year certain life
annuity equal to 50% of the payments the participant had been receiving. If the
beneficiary is someone other than a spouse, the payments will be made for five
years only. All amounts payable under this plan are treated as unsecured
obligations of SCE.
24
<PAGE>
Directors are eligible to defer up to 100% of their Board compensation,
including any retainers, and any meeting fees under the Edison International
Director Deferred Compensation Plan. A grantor trust has been adopted to fund
the deferred compensation liability. Amounts may be deferred until a specified
year, retirement, death or discontinuance of service as a Director. Compensation
deferred until a specified year may be paid as a single lump sum or in 12
monthly payments. Compensation deferred until retirement or death may be paid as
a single lump sum, in monthly installments of 60, 120, or 180 months, or in a
combination of a partial lump sum and installments. Compensation deferred until
discontinuance of service as a Director may be paid as a single lump sum or in
three annual installments. All amounts payable under this plan are treated as
unsecured obligations of Edison International.
Preferential interest (interest considered under the SEC rules to be at
above-market rates) was credited during 1998 to the plan accounts of the
following Directors under the SCE 1985 Deferred Compensation Plan for Directors
and the Edison International Director Deferred Compensation Plan:
Preferential Interest
1985 Plan Director DCP
$ $
- -------------------------------------------------------------------------------
Joan C. Hanley 59,136 1,144
Carl F. Huntsinger 59,136 11,639
Ronald L. Olson 0 3,096
James M. Rosser 59,136 11,796
Robert H. Smith 0 3,252
Thomas C. Sutton 0 777
E. L. Shannon, Jr. 0 11,079
James D. Watkins 0 5,184
Edward Zapanta 59,136 674
Mr. Christopher was re-elected as a Director of Edison International and
SCE in 1997 following distinguished service as Secretary of State of the United
States. Assuming Mr. Christopher continues to be nominated and elected by the
shareholders to serve on the respective Boards of Edison International and SCE,
Director age restrictions have been waived until April 2002. Retirement and
deferred compensation benefit payments attributable to his prior service as a
Director will continue to be paid. Any additional benefits accruing during his
current term as a Director will be payable to Mr. Christopher in accordance with
the terms of the plans in effect at the time of his subsequent retirement.
Meetings and Attendance
During 1998, the Edison International and SCE Audit Committees met 4 times
each, the Finance Committees met 3 times each, the Compensation and Executive
Personnel Committees met 3 times each, the Nominating Committees met 2 times
each, the Edison International Executive Committee met 2 times, the Edison
International Board met 9 times, and the SCE Board met 7 times.
During 1998, all current Directors attended 75% or more of all Edison
International and SCE Board and applicable Committees meetings.
25
<PAGE>
Stock Ownership of Certain Shareholders
The following are the only shareholders known by Edison International or
SCE to beneficially own more than 5% of any class of either Companies' voting
securities as of December 31, 1998:
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Class of Stock Name and Address of Shareholder Ownership of Class
- -------------- ------------------------------- ---------- --------
<S> <C> <C> <C>
SCE Common Stock Edison International 434,888,104(1) 100%
2244 Walnut Grove Avenue
Rosemead, California 91770
Edison International Common Stock Wells Fargo Bank, N.A. 30,686,544(2) 8.75%
633 W. Fifth Street
Los Angeles, California 90017
</TABLE>
(1) Edison International became the holder of all issued and outstanding shares
of SCE Common Stock on July 1, 1988, when it became the holding company of
SCE.
(2) The shares reported are held in trust accounts for the economic benefit of
the beneficiaries of those accounts. Until January 1, 1999, Wells Fargo
Bank, N.A. acted as Trustee for the SSPP. Of the total number of shares
shown, 28,896,508 shares of the class, or 8.24%, were held as the SSPP
Trustee. SSPP Plan shares are voted in accordance with instructions given
by participants, whether vested or not. SSPP shares for which instructions
are not received may be voted by the Trustee in its discretion. As of
January 1, 1999, State Street Bank and Trust Company succeeded Wells Fargo
Bank, N.A., as SSPP Trustee.
INDEPENDENT PUBLIC ACCOUNTANTS
The Edison International and SCE Boards have selected Arthur Andersen LLP
as the Companies' independent public accountants for calendar year 1999.
[Subject to Board approval on February 18, 1999] Arthur Andersen LLP is an
international public accounting firm which provides leadership in public utility
accounting matters.
Representatives of Arthur Andersen LLP are expected to attend the annual
meetings, where they will have the opportunity to make a statement if they wish
and to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETINGS
To be considered for inclusion in the 2000 proxy statement, shareholder
proposals for the Edison International and SCE 2000 annual meetings must be
received by November 9, 1999.
Shareholders intending to bring any other business before an annual
meeting, including Director nominations, must give written notice to the
Secretary of Edison International or SCE, as the case may be, of the business to
be presented. The notice must be received at company offices within the periods,
and with the information and documents, specified in the Bylaws. A copy of the
Bylaws may be obtained by writing to the Secretary of Edison International or
SCE.
Assuming that the 2000 annual meetings of Shareholders are held on April
20, 2000, as currently specified by the Bylaws, the period for the receipt by
either company of written notice of other business to be brought by shareholders
before the 2000 annual meetings of Shareholders, including Director nominations,
will begin on September 10, 1999, and end on November 9, 1999.
26
<PAGE>
Availability of Form 10-K
The Edison International and SCE 1998 Annual Reports on Form 10-K,
including the financial statements and the financial statement schedules but
excluding other exhibits, will be furnished without charge to shareholders upon
written request. This report is expected to be available for distribution after
March 30, 1999. A copy may be requested by writing to the Law Department, Attn:
Corporate Governance, Edison International (or Southern California Edison
Company, as the case may be), 2244 Walnut Grove Avenue, P.O. Box 800, Rosemead,
California 91770.
OTHER MATTERS
The Edison International and SCE Boards of Directors were not aware by
February 14, 1999 (the date specified by the Bylaws for shareholders to provide
advance notice of business intended to be presented at these meetings), of any
other matters to be presented for action at the meetings.
If any other matters should properly come before the meetings, the proxies
will vote the shares represented thereby in accordance with their judgment.
Discretionary authority to do so is included in the proxy.
Dated March 8, 1999.
For the Boards of Directors,
BEVERLY P. RYDER, Secretary
Edison International and
Southern California Edison Company
27
<PAGE>
APPENDIX A
BYLAW AMENDMENT
ARTICLE III, SECTION 2
The authorized number of directors shall be not less than nine nor more
than seventeen until changed by amendment of the Articles or by a Bylaw duly
adopted by the shareholders. The exact number of directors shall be fixed,
within the limits specified, by the Board by adoption of a resolution or by the
shareholders in the same manner provided in these Bylaws for the amendment
thereof.
<PAGE>
EDISON INTERNATIONAL
PLEASE MARK VOTE IN CIRCLE IN THE FOLLOWING MANNER USING DARK INK ONLY.
The Directors recommend a vote of "FOR" Item 1 and Item 2. Withhold
1. Election of Directors: Nominees: 01-J.E. Bryson, For For For All
02-W.H.Chen, 03-W. Christopher, 04-S.E.Frank, All All Except
05-J.C.Hanley,06-C.F.Huntsinger, 07-C.D.Miller,
08-L.G.Nogales, 09-R.L.Olson, 10-J.M.Rosser, --- --- ----
11-R.H.Smith, 12-T.C.Sutton, 13-D.M.Tellep,
14-E. Zapanta
(INSTRUCTION: to withhold authority to vote for any
individual nominee, write such name or names in the space
provided below.)
--------------------------------------------------
2. Bylaw Amendment to Reduce Maximum and For Against Abstain
Minimum Board Size
--- ---- ----
Dated:
---------------------------------------------------------------------
Signature(s):
----------------------------------------------------------------
Title:
-----------------------------------------------------------------------
Important: Please sign exactly as name appears on this proxy. When signing as
attorney, executor, trustee, guardian, corporate officer, etc.,
please indicate full title.
- -------------------------------------------------------------------------------
EDISON EDISON INTERNATIONAL - ANNUAL MEETING - APRIL 15, 1999
INTERNATIONAL LOGO Edison International now offers Phone or Internet voting
Control Number 24 hours a day, 7 days a week
- --------------
On a touch-tone phone, call toll-free 1-800-OK2-VOTE (outside the US and Canada,
call 201-324-0377). You will hear these instructions:
o Enter the last four digits from your social security number.
o Enter the control number from the box above, just below the perforation.
o You will then have two options:
OPTION 1: To vote as the Board of Directors recommends on both proposals; or
OPTION 2: To vote on each proposal separately.
o Your vote will be repeated to you and you will be asked to confirm it.
Log onto the Internet and type: http://www.vote-by-net.com
o Have your proxy card ready and follow the instructions on the Internet.
o Enter the control number from the box above, just below the perforation,
and follow the instructions on the Internet.
o You will be able to elect to receive future mailings via the Internet.
Your electronic vote authorizes the proxies and/or the Southern California
Edison Company Stock Savings Plus Plan Trustee, both named on the reverse of
this card, to vote your shares to the same extent as if you marked, signed,
dated and returned the proxy card. All stock for which the plan trustee has not
received instructions by telephone or internet by 5:00 p.m. on April 13, 1999,
may be voted in its discretion.
If you have voted by phone or internet, please do not return the proxy card.
THANK YOU FOR VOTING!
<PAGE>
EDISON PRELIMINARY COPY
INTERNATIONAL Proxy/Voting Instruction Card
LOGO
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
JOHN E. BRYSON and ALAN J. FOHRER are hereby appointed proxies of the
undersigned with full power of substitution to vote all shares of stock the
undersigned is entitled to vote at the annual meeting of shareholders of Edison
International to be held at The Industry Hills Sheraton and Conference Center,
One Industry Hills Parkway, City of Industry, California, on April 15, 1999, at
10 a.m., or at any adjournment or postponement of the meeting, with all the
powers and discretionary authority the undersigned would possess if personally
present at the meeting on the matters listed on the other side.
The shares will be voted as indicated on this card. WHERE NO INDICATION IS
SHOWN, THE SHARES REPRESENTED BY THIS CARD WILL BE VOTED FOR ITEM 1 AND ITEM 2.
In addition, the appointed proxies may vote in their discretion on such other
matters as may properly come before the meeting.
VOTING INSTRUCTIONS TO THE TRUSTEE, STATE STREET BANK AND TRUST COMPANY
If I hold shares through the Southern California Edison Company Stock Savings
Plus Plan, this card also provides the following voting instructions to the plan
trustee: You are instructed to vote confidentially as described above the shares
of stock credited and conditionally credited to my account through February 16,
1999. I understand that the stock will be voted as directed provided the trustee
receives this card by 5:00 p.m. on April 13, 1999, and all stock for which the
trustee has not received instructions by the designated times may be voted in
its discretion.
YOU MAY RECEIVE MORE THAN ONE SET OF PROXY MATERIALS. PLEASE MARK, SIGN, DATE
AND RETURN ALL CARDS YOU RECEIVE PROMPTLY USING THE ENCLOSED ENVELOPES.
TO VOTE BY PHONE OR THE INTERNET, PLEASE SEE THE REVERSE SIDE OF THIS CARD.
- -------------------------------------------------------------------------------
Fold and Detach Here
ADMISSION TICKET
Edison International
Southern California Edison Company
Annual Meetings of
Shareholders
April 15, 1999 at 10 a.m.
Space is limited; doors open at 9:30 a.m.
Please present this ticket
to attend the meeting. M A P
The Industry Hills Sheraton Resort and
Conference Center
One Industry Hills Parkway
City of Industry, California
