<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
ST. JOSEPH LIGHT & POWER COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
ST. JOSEPH LIGHT & POWER COMPANY
520 FRANCIS STREET, P. O. BOX 998
ST. JOSEPH, MISSOURI 64502-0998
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 20, 1998
------------------------
The Annual Meeting of Shareholders of St. Joseph Light & Power Company will
be held at The Albrecht-Kemper Museum of Art, 2818 Frederick Avenue, St. Joseph,
Missouri, at 9 o'clock A.M., local time, on May 20, 1998 for the following
purposes:
(1) To elect three Class II directors to serve until the 2001 Annual Meeting
of Shareholders and until their successors have been elected and
qualified;
(2) To approve the 1998 Long-Term Incentive Plan;
(3) To approve the appointment of Arthur Andersen LLP as independent
auditors for 1998; and
(4) To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only holders of Common Stock of record at the close of business on April 2,
1998 are entitled to notice of and to vote at the meeting or any adjournments
thereof.
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE
ENVELOPE PROVIDED.
By Order of the Board of Directors:
GARY L. MYERS
Vice President, General Counsel and
Secretary
St. Joseph, Missouri
April 7, 1998
<PAGE>
ST. JOSEPH LIGHT & POWER COMPANY
520 FRANCIS STREET, P. O. BOX 998
ST. JOSEPH, MISSOURI 64502-0998
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
MAY 20, 1998
The accompanying proxy is solicited by the Board of Directors of St. Joseph
Light & Power Company and is for use at the Annual Meeting of Shareholders on
May 20, 1998 and any adjournments thereof. This proxy statement and the form of
proxy will be first sent or given to shareholders on or about April 7, 1998.
A shareholder who executes a proxy may revoke it at any time before it is
voted by giving written notice of the termination thereof to the Secretary of
the Company, by executing a proxy bearing a later date which is voted at the
meeting or by attending the meeting and either voting in person or revoking the
proxy by verbal or written notice to the Secretary. Proxies in the accompanying
form, properly executed and received by the Company prior to the meeting and not
revoked, will be voted as directed therein on all matters presented at the
meeting. In the absence of a specific direction from the shareholder, proxies
will be voted for the election of the named Class II director nominees, for the
approval of the 1998 Long-Term Incentive Plan, and for the approval of Arthur
Andersen LLP as independent auditors. The Board of Directors does not know of
any other matters to be brought before the meeting; however, if other matters
should properly come before the meeting, it is intended that the persons named
in the accompanying proxy will vote thereon at their discretion.
The solicitation will be made primarily by mail, but shareholders may be
solicited personally or by telephone by employees or agents of the Company who
will not receive special compensation for such services. All costs of soliciting
proxies will be borne by the Company. Upon request, brokers and nominees will be
reimbursed for reasonable out-of-pocket expenses incurred by them in forwarding
proxy material to beneficial owners of Common Stock.
The Board of Directors has fixed the close of business on April 2, 1998 as
the record date for the determination of shareholders of the Company entitled to
receive notice of and to vote at the Annual Meeting of Shareholders on May 20,
1998 and any adjournments thereof. As of April 2, 1998, 8,079,066 shares of
Common Stock were outstanding and entitled to vote. Each such share is entitled
to one vote on all matters brought before the meeting. Any shares held in the
Automatic Dividend Reinvestment and Optional Cash Payment Plan will be voted in
accordance with the direction given on the proxy.
VOTING INFORMATION
If a quorum is present, the affirmative vote of a majority of the shares
entitled to vote in the election of directors and represented in person or by
proxy at the meeting is required to elect each Class II director. Accordingly,
withholding authority to vote for a director nominee will not prevent such
nominee from being elected. In accordance with the Missouri General and Business
Corporation Law, the Company's Bylaws do not permit cumulative voting in the
election of directors.
For each matter other than the election of directors, if a quorum is
present, the affirmative vote of a majority of the shares entitled to vote on
such matter and represented in person or by proxy at the meeting is required for
approval of such matter. Accordingly, an abstention with respect to such matter
will be treated as a vote against such matter.
<PAGE>
If a proxy is marked to indicate that all or a portion of the shares
represented by such proxy are not being voted with respect to one of the matters
to be considered at the meeting, such non-voted shares will not be considered
present and entitled to vote on such matter. Accordingly, non-voted shares with
respect to a matter will not affect the outcome of such matter.
PROPOSAL 1
ELECTION OF DIRECTORS
INFORMATION ABOUT NOMINEES FOR DIRECTOR AND CONTINUING DIRECTORS
The Restated Articles of Incorporation (the "Articles") of the Company
provide that members of the Company's Board of Directors shall be divided into
three classes with each Class term to be for three years. The terms of the three
directors in Class II expire at the 1998 Annual Meeting.
The Board of Directors, upon the recommendation of its Nominating Committee,
has nominated Messrs. John P. Barclay, Jr., William J. Gremp and David W.
Shinneman for election to the Board of Directors to serve as members of Class II
until the 2001 Annual Meeting of Shareholders and upon election and
qualification of their successors. Messrs. Barclay, Gremp and Shinneman are
presently members of the Board and were elected to the office by vote of the
shareholders.
All proxies will be voted for the nominees below to serve as Class II
directors, unless authority to do so is withheld. If a nominee becomes
unavailable for election to the Board of Directors, the proxies will be voted
for the election of a substitute nominee designated by the Board of Directors.
The following information is supplied for each person nominated for election
as a director, as well as each person whose term of office as a director will
continue after the meeting. Each nominee and continuing director has been
engaged in his principal occupation for at least the last five years unless
otherwise noted.
<TABLE>
<CAPTION>
DIRECTOR
CONTINUOUSLY
NAME AND PRINCIPAL OCCUPATION AGE SINCE
- ---------------------------------------------------------------------------------------------- --- ---------------
<S> <C> <C>
Class II -- Nominees for Term Expiring in 2001:
John P. Barclay, Jr......................................................................... 68 1974
Chairman, President and Chief Executive Officer, Wire Rope Corporation of America, Inc.
(manufacturer and distributor of wire rope and wire rope products), St. Joseph,
Missouri.
William J. Gremp............................................................................ 55 1995
Managing Director and Senior Vice President, First Union Capital Markets Group (banking),
Charlotte, North Carolina since 1996; Manager and Managing Director, The Chase Manhattan
Bank Global Power Division from 1989 to 1996; Director, Protection One, Culver City,
California.
David W. Shinneman.......................................................................... 59 1994
President, Shinneman Management Company (owner and operator of McDonald's restaurants),
St. Joseph, Missouri.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
CONTINUOUSLY
NAME AND PRINCIPAL OCCUPATION AGE SINCE
- ---------------------------------------------------------------------------------------------- --- ---------------
<S> <C> <C>
Class III -- Continuing Directors for Term Expiring in 1999:
Deborah A. Beck............................................................................. 50 1997
Senior Vice President of Insurance Operations, Northwestern Mutual Life Insurance Company
(insurance company), Milwaukee, Wisconsin.
Robert L. Simpson........................................................................... 64 1983
General Partner, St. Joseph Riverboat Partners (riverboat casino), St. Joseph, Missouri
since 1994. Consultant, Hawthorn Financial Corporation doing business as Burnham Colman
McMurray Hatten & Squires (insurance brokers), St. Joseph, Missouri from 1993 to 1996;
President, Hawthorn Financial Corporation for the preceding 5-year period.
Gerald R. Sprong............................................................................ 64 1976
President and Chief Executive Officer, The Morris Plan Company of St. Joseph (financial
management and lending), St. Joseph, Missouri; Director, Chairman and Chief Executive
Officer, First Savings Bank, F.S.B., Manhattan, Kansas; President and Chief Executive
Officer, Noble Properties of Iowa, L.L.C. (ownership & management of hotels), Des
Moines, Iowa since 1996.
Class I -- Continuing Directors for Term Expiring in 2000:
Daniel A. Burkhardt......................................................................... 50 1988
General Partner, The Jones Financial Companies (investment banking and retail securities
firm), St. Louis, Missouri. Director: Essex County Gas Company, Amesbury, Massachusetts;
Mid-America Realty Investments, Inc., Omaha, Nebraska; CIP Management, Inc., St. Louis,
Missouri; Southeastern Michigan Gas Enterprises, Port Huron, Michigan.
James P. Carolus............................................................................ 47 1989
President and Chief Executive Officer, Hillyard Industries, Inc. (manufacturer of
maintenance cleaning products), St. Joseph, Missouri.
Terry F. Steinbecker........................................................................ 52 1985
President and Chief Executive Officer of the Company, St. Joseph, Missouri.
</TABLE>
- ------------------------
The Company has transactions in the ordinary course of business with firms,
including borrowings from banks, in which various members of its Board of
Directors hold directorships.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR.
COMMITTEES AND COMPENSATION OF THE BOARD OF DIRECTORS
The Executive Committee was established in January 1987 and has held no
meetings to date. The Executive Committee is empowered generally to act on any
item upon which the full Board may act with the exception of the declaration of
dividends. Messrs. Barclay, Carolus, Simpson, Sprong and Steinbecker comprise
the Executive Committee.
3
<PAGE>
The Audit Committee reviews the work of the independent auditors. Its
functions are to: recommend to the Board of Directors independent auditors to be
selected; discuss with the independent auditors the scope and results of their
audit; discuss with the independent auditors and management the Company's
accounting principles, policies and practices and its reporting policies and
practices; and discuss with the independent auditors and internal auditors the
adequacy of the Company's internal accounting controls and the Company's
financial matters. The Audit Committee held two meetings in 1997. Messrs.
Barclay, Burkhardt, Gremp, and Simpson comprise the Audit Committee.
The Compensation Committee reviews management's evaluation of the
performance of Company officers and officers' compensation arrangements;
recommends to the Board at each annual meeting of the Board a slate of officers
to be elected for the following year and the compensation level of each; and
recommends the compensation to be paid to outside directors for the following
year. The Compensation Committee held five meetings in 1997. Ms. Beck and
Messrs. Carolus, Shinneman and Sprong comprise the Compensation Committee.
The Nominating Committee establishes criteria and procedures for the
election of directors; reviews management's evaluation of any officers proposed
for nomination to the Board; reviews the qualifications of and, when necessary
and appropriate, interviews candidates who may be proposed for nomination;
recommends to the full Board not less than 90 days prior to each Annual Meeting
of Shareholders directors to be elected at such Annual Meeting of Shareholders;
recommends to the Board any changes in the structure, size or function of the
Board as such Committee deems appropriate; and performs such other duties in
connection with the election or termination of directors as the Board may
request. The Nominating Committee held nine meetings in 1997. Although the
Committee does not actively solicit recommendations from shareholders, the Board
of Directors has adopted procedures whereby shareholders may nominate candidates
for positions on the Board of Directors. These procedures are contained in the
Company's Bylaws and, among other requirements contained therein, require the
shareholder making the nomination to do so in writing to the Company's corporate
secretary at least 30 days but no more than 90 days prior to the anniversary
date of the record date for the determination of shareholders entitled to vote
in the immediately preceding Annual Meeting of Shareholders. Any nomination made
in accordance with such procedures will be considered by the Committee. Ms. Beck
and Messrs. Carolus, Shinneman and Simpson comprise the Nominating Committee.
The Strategic Planning Committee reviews management's strategic planning
processes; reviews the Company's annual Strategic Plan; provides input
concerning specific strategies to provide long-term growth; meets with
management to discuss the Strategic Plan and to monitor management's progress;
and makes an annual report to the Board of Directors. The Strategic Planning
Committee held four meetings in 1997. Messrs. Barclay, Burkhardt, Gremp and
Sprong comprise the Strategic Planning Committee.
All outside directors are compensated for services as a director at the rate
of $1,000 per month plus $600 for each board meeting attended. Each outside
director also receives $600 for attendance at each meeting of a board committee
of which he is a member. In addition, on the date of each Annual Meeting of
Shareholders each person who is an outside director immediately after the
meeting is granted a stock option to purchase 2,000 shares of Common Stock at a
purchase price per share equal to the fair market value of a share of Common
Stock on the date of grant. Each option is fully exercisable on its date of
grant and expires ten years after its date of grant. Also, each such outside
4
<PAGE>
director is also granted a restricted stock award for 1,000 shares of Common
Stock at the time of the respective director's election or reelection to the
Board of Directors. The restriction period on the restricted stock award expires
on the first to occur of the third anniversary of the date of grant and the date
the holder of the award ceases to serve as a director.
The Board of Directors held six regular meetings in 1997. During 1997, all
members of the Board of Directors attended at least 75 percent of the aggregate
number of meetings of the Board and of meetings of committees on which they
served. Also, each member of the Board of Directors has entered into an
Indemnification Agreement providing for indemnification of the director in the
event of settlement of a claim or lawsuit arising out of the performance of the
respective director's duties.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table indicates beneficial ownership of Common Stock as of
April 2, 1998 of directors, nominees for director and executive officers named
in the Summary Compensation Table below and directors and executive officers as
a group and as of February 27, 1998 for First Chicago NBD Corporation ("First
Chicago").
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
NAME (1) PERCENT OF CLASS
- ------------------------------------------------------------------------ ----------------------- -------------------
<S> <C> <C>
John P. Barclay, Jr..................................................... 19,900 (2)
Deborah A. Beck......................................................... 1,500 (2)
Daniel A. Burkhardt..................................................... 20,957 (2)
James P. Carolus........................................................ 21,135 (2)
William J. Gremp........................................................ 7,106 (2)
Gary L. Myers........................................................... 7,891 (2)
David W. Shinneman...................................................... 9,647 (2)
Robert L. Simpson....................................................... 23,000 (2)
Gerald R. Sprong........................................................ 23,563 (2)
Terry F. Steinbecker.................................................... 20,395 (2)
Larry J. Stoll.......................................................... 15,785 (2)
John A. Stuart, Jr...................................................... 6,603 (2)
Dwight V. Svuba......................................................... 10,162 (2)
All directors and executive officers as a group......................... 187,644 2.3
First Chicago NBD Corporation........................................... 430,450 5.4(3)
One First National Plaza
Chicago, Illinois 60670
</TABLE>
- ------------------------
(1) Except as set forth in Note 3 below, in each case the individual and each
member of the group has sole voting and investment discretion with respect
to the shares beneficially owned by such individual or member. The
individuals and the group have options to purchase the following number of
shares of Common Stock: Mr. Barclay, 18,000; Ms. Beck, 1000; Mr. Burkhardt,
18,000; Mr. Carolus, 18,000; Mr. Gremp, 6000; Mr. Shinneman, 8000; Mr.
Simpson, 18,000; and Mr. Sprong, 18,000.
(2) Less than one percent.
(3) First Chicago has sole voting and investment discretion as to all reported
shares except for 5100 shares as to which First Chicago has shared
dispositive power. First Chicago has advised the Company that it disclaims
beneficial ownership of all shares.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth compensation information of the President and
Chief Executive Officer and the four other most highly compensated executive
officers during 1997 (the "named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
PAYOUTS
-------------
ANNUAL COMPENSATION LTIP
----------------------- PAYOUTS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(A)(B) COMPENSATION ($)(C)
- --------------------------------------------- --------- ---------- ----------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
T. F. Steinbecker............................ 1997 $ 212,100 $ 70,676 $ 0 $ 6,225
President and Chief 1996 208,325 55,676 88,099 5,614
Executive Officer 1995 199,307 25,263 0 4,980
G. L. Myers.................................. 1997 125,000 26,250 0 3,453
Vice President- 1996 123,334 26,250 30,181 4,006
General Counsel & 1995 103,113 10,500 0 3,399
Secretary
L. J. Stoll.................................. 1997 128,100 26,901 0 3,537
Vice President- 1996 128,100 26,901 36,808 4,149
Finance, Treasurer & 1995 125,798 0 0 4,000
Assistant Secretary
J. A. Stuart, Jr............................. 1997 122,600 25,746 0 2,487
Vice President- 1996 119,957 25,746 30,181 3,905
Customer Services 1995 112,353 11,560 0 2,874
D. V. Svuba.................................. 1997 126,900 32,649 0 4,523
Vice President- 1996 125,013 26,649 34,686 4,541
Energy Supply 1995 119,296 12,190 0 4,443
</TABLE>
- ------------------------
(A) As of December 31, 1997, the value and number of restricted shares held by
the named executive officer were as follows: $101,708 for Mr. Steinbecker
--5730 shares; $34,843 for Mr. Myers -- 1963 shares; $42,494 for Mr. Stoll
-- 2394 shares; $34,843 for Mr. Stuart -- 1963 shares; and $40,044 for Mr.
Svuba -- 2256 shares, without giving effect to the diminution in value
attributable to the restrictions on such shares. Dividends are paid on these
restricted shares at the same rate and at the same time as on shares of
Common Stock.
As of December 31, 1997, the value and number of performance-based
restricted shares awarded under the Long-Term Incentive Plan (the "1994
Plan") were as follows: $267,848 for Mr. Steinbecker -- 15,090 shares;
$107,601 for Mr. Myers -- 6062 shares; $110,299 for Mr. Stoll -- 6214
shares; $102,737 for Mr. Stuart -- 5788 shares; and $107,246 for Mr. Svuba
-- 6042, without giving effect to the diminution in value attributable to
the performance criteria and restrictions on such shares. Dividends are not
paid on these shares of restricted stock so long as they are subject to
performance-based conditions.
6
<PAGE>
(B) Reflects performance-based restricted stock awards earned in 1996 under the
1994 Plan. These awards were earned for the first performance cycle --
January 1, 1994 through December 31, 1996. The dollar figures shown equate
into actual shares as follows: Mr. Steinbecker 5730 shares; Mr. Myers 1963
shares; Mr. Stoll 2394 shares; Mr. Stuart 1963 shares; and Mr. Svuba 2256
shares. These shares vest at the end of three years from the date of award,
i.e., March 17, 2000, and are reflected in the restricted stock holdings set
forth in the first paragraph of Note (A).
(C) The amounts shown in this column for the last fiscal year are derived as
follows: Mr. Steinbecker -- $1,724 Company-paid term life insurance premium
in excess of $50,000 group term amount, a tax "gross-up" of $828 on this
excess amount, and $3,673 Company-paid 401(k) Plan match; Mr. Myers -- $374
Company-paid term life insurance premium in excess of $50,000 group term
amount, a tax "gross-up" of $179 on this excess amount, and $2,900
Company-paid 401(k) Plan match; Mr. Stoll -- $382 Company-paid term life
insurance premium in excess of $50,000 group term amount, a tax "gross-up"
of $183 on this excess amount, and $2,972 Company-paid 401(k) Plan match;
Mr. Stuart -- $367 Company-paid term life insurance premium in excess of
$50,000 group term amount, a tax "gross-up" of $176 on this excess amount,
and $2,844 Company-paid 401(k) Plan match; and Mr. Svuba -- $1,071
Company-paid term life insurance premium in excess of $50,000 group term
amount, a tax "gross-up" of $514 on this excess amount and $2,938
Company-paid 401(k) Plan match.
The following table sets forth the number of shares of restricted stock,
which are subject to Stock Awards granted in 1997 for the 1997-1999 performance
cycle under the 1994 Plan.
LONG-TERM INCENTIVE PLANS -- AWARDS
IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE
PERFORMANCE OR PAYOUTS
OTHER UNDER NON-STOCK
NUMBER PERIOD UNTIL PRICE-BASED PLANS
OF MATURATION OR ------------------------
NAME SHARES PAYOUT THRESHOLD MAXIMUM
- ---------------------------------------------------------------- ----------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
T.F. Steinbecker................................................ 4,105 3 Years 4,105 8,210
G.L. Myers...................................................... 1,613 3 Years 1,613 3,226
L.J. Stoll...................................................... 1,653 3 Years 1,653 3,306
J.A. Stuart, Jr................................................. 1,582 3 Years 1,582 3,164
D.V. Svuba...................................................... 1,637 3 Years 1,637 3,274
</TABLE>
- ------------------------
(1) For each Stock Award, a Threshold Goal for each participant is established
by applying a formula of 30 percent of base salary in the case of the
President and 20 percent for all other officers. This product is then
converted to a number of shares of Common Stock by dividing this product by
the closing price of the Common Stock as of the first business day of a
Performance Cycle. At the end of a Performance Cycle, the Company's Total
Shareholder Return will be compared to that of the peer group and the amount
of a Stock Award which is earned, if any, will be determined based on the
Company's "Percentile Performance" measured against the peer group. The
percentage of the Threshold Goal for a participant which is earned will
range from (i) 0 percent (no payout) if the Company's percentile ranking of
its Total Shareholder Return is less than the 50th percentile to (ii) 200
percent if the Company's percentile ranking of its Total Shareholder Return
is at the 80th percentile or greater.
7
<PAGE>
The following table shows estimated annual pension benefits payable to the
named executive officers under the Company's non-contributory defined benefit
pension plan (the "Pension Plan") and the Supplemental Executive Retirement
Plan:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ----------------------------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$100,000............................................. $ 75,000 $ 75,000 $ 75,000 $ 75,000 $ 75,000
125,000............................................. 93,750 93,750 93,750 93,750 93,750
150,000............................................. 112,500 112,500 112,500 112,500 112,500
175,000............................................. 131,155 131,250 131,250 131,250 131,250
200,000............................................. 148,109 150,000 150,000 150,000 150,000
225,000............................................. 165,064 168,750 168,750 168,750 168,750
250,000............................................. 187,500 187,500 187,500 187,500 187,500
</TABLE>
Directors who are not employees of the Company are excluded from
participating in the Pension Plan and Supplemental Executive Retirement Plan.
Covered compensation is salary and includes substantially all compensation
shown in the salary column of the Summary Compensation Table. The pension
benefits shown above assume retirement at age 65 in 1997 and that the retiree
has elected a 50 percent qualified joint and survivor benefit and the spouse is
age 63. The pension benefits shown above are not subject to any deduction for
social security benefits received by employees or for any other offset amounts,
except as noted in the next paragraph.
The Supplemental Executive Retirement Plan provides executive officers of
the Company a supplement to the benefits payable under the Pension Plan as
limited by the Internal Revenue Code up to the amount, which when aggregated
with payments made from the Pension Plan and Social Security benefits would
equal a maximum of 75 percent of the benefit otherwise payable under the Plan
without the limitations of the Code calculated on the basis of the officer's
final annual salary. Benefits are calculated at three percent per year of final
annual salary up to a maximum of 25 years of service. The Supplemental Executive
Retirement Plan also provides that in the event of a change in control of the
Company generally defined as, subject to certain exceptions, the acquisition by
an entity of 20 percent or more of the outstanding Common Stock of the Company,
a change in the individuals who comprise the Board of Directors or approval by
the shareholders of a merger of the Company or sale of substantially all of its
assets, a participant will be credited with three additional years of service
(with total credited years not to exceed 25). At December 31, 1997, Messrs.
Steinbecker, Myers, Stoll, Stuart and Svuba had 23, 18, 23, 3 and 33 years,
respectively, of service.
Messrs. Steinbecker, Myers, and Stoll entered into employment contracts with
the Company on January 17, 1986. These contracts were amended effective December
1, 1990 and a contract entered into on the same date with Mr. Svuba, who was
elected an officer on December 1, 1990. These contracts were amended again on
November 19, 1993. Mr. Stuart entered into a contract effective May 18, 1994,
the date on which he was made an officer. Each of the above contracts were
amended effective March 20, 1996 generally to reassign job functions and titles
in accordance with the Company's February 1, 1996 reorganization. Each contract
contains a three-year term and automatically renews for annual renewable
one-year terms unless terminated by either party prior to its expiration date,
which termination in the case of the Company requires 30 months notice to the
employee. The
8
<PAGE>
Company is required to pay each named executive officer his unpaid salary (plus
provide standard benefits for a three-year period) for the remainder of a
contract term if he is terminated from employment for any reason other than "for
cause". In addition, the Company is also required to pay a "gross up" amount,
equal to any Federal excise tax levied or deemed owed, to each individual if a
payment under the contract triggers such an excise tax. Compensation in each
case is a specified minimum generally at the salary level shown in the Summary
Compensation Table and salary adjustments may be made at the discretion of the
Board of Directors. Based on the contracts' terms, the required termination
notice and the compensation currently payable under the existing employment
contracts, the maximum amounts which would be presently payable in the event of
termination to Messrs. Steinbecker, Myers, Stoll, Stuart and Svuba would be
approximately $565,600, $333,344, $341,600, $378,029 and $338,400, respectively.
In addition, the above contracts provide for indemnification to the executive
officers in the event of settlement of a claim or lawsuit against the executive
arising out of the performance of his corporate duties.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee"), composed of directors who are
not current or former officers or employees of the Company, is responsible for
making recommendations to the board of directors with respect to the Company's
officer compensation programs. The Committee has retained the services of
executive compensation consultants to provide professional assistance, data, and
advice regarding pay practices at the Company. This report describes the basis
on which 1997 compensation determinations and recommendations were made by the
Committee concerning executive officers.
Section 162(m) of the Code limits to $1,000,000 in a taxable year, the
deduction publicly held companies may claim for compensation paid to certain
executive officers, unless certain requirements are met. The Company has
reviewed this provision and has determined that the Company is not affected by
Section 162(m) because no compensation paid to any officer currently approaches
or is expected to approach $1,000,000 in the near term.
COMPENSATION PHILOSOPHY AND OVERALL OBJECTIVE OF EXECUTIVE COMPENSATION PROGRAMS
One Company compensation goal is to directly link executive compensation
with corporate performance and shareholder value, as well as benchmark the
package with comparable pay practices in the industry. Each year, the Committee,
in making compensation decisions and recommendations, and the board of
directors, in approving base salaries, review the performance of the Company and
compare it to specified internal and external performance standards. The
Committee has developed the following general compensation guidelines which
impart a philosophy that Company compensation should:
- Provide variable compensation opportunities that are linked to the
financial performance of the Company and that align executive compensation
with the interests of shareholders.
- Provide incentives to increase corporate performance and shareholder value
relative to other companies.
- Establish executive officer base pay levels, and incentive awards (from
the annual and long term plans) at the competitive market provided that
performance objectives are achieved.
9
<PAGE>
- Provide a competitive total compensation package that is "at-risk" driven
and enable the Company to attract and retain key executives.
1997 PERFORMANCE APPRAISAL AND BASE SALARY DETERMINATION
In regard to the President's compensation, the Committee makes an evaluation
in March within the framework of the Company's salary administration program and
makes adjustments accordingly. This was the methodology used for the last fiscal
year.
The Committee examined the Company's mission statement and strategic plan to
determine if the Company's objectives and goals were met for 1997. Such
objectives and goals contained in the Company's strategic plan include items
such as return on equity and increase in dividend rate. The Company's stock
performance and earnings and expense control were also considered. The Committee
also considered major challenges faced by the Company during 1997, as well as
other subjective factors. Based on the President's performance and the factors
outlined above, the Committee assigned a grade. The Committee did not assign a
weight to any of the objectives, goals or other factors considered by the
Committee when evaluating 1997 performance. Following this appraisal process,
the Committee met with the President for discussion about the compensation of
other officers.
CASH AWARDS FOR 1997
The Committee also considered cash awards to the officers in accordance with
the Officers' Annual Bonus Plan (the "Plan") approved by the Board of Directors
in March 1997. Cash awards to officers of up to 25 percent in the case of the
President and 20 percent for all other officers are earned if certain objective
performance levels are attained. These performance levels are measured against
two equally weighted performance criteria, return on equity and controllable
expenses. The Plan also encompasses an objective ratepayer protection provision
that compares the Company's residential electric rates to a peer group of
regional utilities. In addition, no award shall be made for a plan year in which
the total dividends per share payable on the Common Stock are not equal to or
greater than dividends per share for the prior plan year. The Committee examined
the performance criteria in regard to the incentive award formula and made its
awards accordingly. With respect to cash awards made for 1997, the Company met
the maximum level for return on equity and for controllable expenses. Further,
the Company increased its Common Stock dividend rate per share during the year.
As a result, an award equal to one hundred percent of the maximum was made for
the covered employees. Each award was then adjusted in accordance with the
ratepayer protection factor contained in the Plan. This factor for 1997 was 1.05
which corresponds to the Company's second to the lowest ranking in the 94th
percentile of residential rates as compared with the other regional companies.
In regard to the President, this award equaled $55,676.
Regional companies were selected because, for purposes of the Plan, the
Company believes a smaller peer group comprised of utilities in the same region
as the Company would better reflect the weather and economic conditions facing
the Company, resulting in a more accurate basis on which to measure short-term
performance. The Company believes that shareholders consider a broader array of
utilities when making investment decisions. Accordingly, for purposes of the
performance graph, the S&P 500 Index is utilized.
The peer utility group consists of regional utilities comprised of: Ameren
(formerly Union Electric and CIPSCO), Entergy Corp. (Arkansas Power & Light),
CILCORP, Commonwealth Edison Co.,
10
<PAGE>
Empire District Electric, IES Utilities, Inc., Illinova, Interstate Power,
Kansas City Power & Light, MidAmerican Energy, OGE Energy Corp. (Oklahoma Gas
and Electric), Central and Southwest (Public Service Co. of Oklahoma), New
Century Energies (Southwestern Public Service Co.), Utilicorp, and Western
Resources.
The Plan also allows the President and the Committee to award an additional
cash bonus of up to 20 percent of the total of all cash awards given for a plan
year to an officer or group of officers who have exhibited extraordinary
performance for that year. An additional award of $15,000 was made for 1997
performance in the case of Mr. Steinbecker.
LONG-TERM INCENTIVE PLAN (LTIP)
The LTIP was adopted by the shareholders in 1994. It establishes overlapping
three-year performance cycles (the first cycle running from January 1, 1994 to
December 31, 1996, the second cycle from January 1, 1995 to December 31, 1997
and so on) with the stock awards granted on the first day of a performance
cycle. These awards are not earned, however, until the Company's total
shareholder return is measured against a peer utility group (the EEI 100 Index
of Investor-Owned Electrics) and determined on the basis of its percentile
ranking. The Company officers are currently the only group eligible to
participate.
For each stock award, a threshold goal for each participant is established
by applying a formula of 30 percent of base salary in the case of the President
and 20 percent for all other officers. This product is then converted to number
of shares of Common Stock by dividing this product by the closing price of the
Common Stock as of the first business day of a performance cycle. At the end of
a performance cycle, the Company's total shareholder return is compared to that
of the peer group and the amount of a stock award which is earned, if any, will
be determined based on the Company's "Percentile Performance" measured against
the peer group. The percentage of the threshold goal for a participant which is
earned will range from (i) 0 percent (no payout) if the Company's percentile
ranking of its total shareholder return is less than the 50th percentile to (ii)
200 percent if the Company's percentile ranking of its total shareholder return
is at the 80th percentile or greater.
The Committee examined the Company's "Percentile Performance" for the
three-year performance cycle ended December 31, 1997. It determined the
Company's total shareholder return to be below the 50th percentile which equates
to an earned restricted stock award for each officer of zero.
ADOPTION OF THE 1998 LONG-TERM INCENTIVE PLAN
As set forth in detail below, the Committee has recommended and the Board of
Directors has approved a new 1998 Long-Term Incentive Plan for submission for
approval by the shareholders at the 1998 annual meeting of shareholders. The
Committee, in working with its executive compensation consultant, determined
that greater flexibility is needed in the area of variable pay as the utility
industry continues to evolve towards competition. This proposed plan will give
the Committee a framework in which to develop more "at risk" incentives for the
Company's management team and may be used in the future as both an enhanced
retention and recruitment tool.
In conclusion, the Committee believes that compensation approved by the
Committee should be a reasonable and deductible expense of the Company. Further,
the Committee affirms its commitment to the retention and recruitment of a
highly motivated, competent officer team and its integral role in the continuing
success of the Company. The Committee believes that this commitment is being met
and
11
<PAGE>
that the Company's compensation structure and benefits package are reasonable
and serve the shareholder well.
Respectfully submitted,
The Compensation Committee:
Deborah A. Beck
James P. Carolus
David W. Shinneman
Gerald R. Sprong
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<PAGE>
CUMULATIVE TOTAL SHAREHOLDER RETURN
The following line graph depicts information on total shareholder return*
over the last five years.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SAJ S&P 500 EEI 100
<S> <C> <C> <C>
1992 $100.00 $100.00 $100.00
1993 89.00 110.08 111.12
1994 93.15 111.53 98.26
1995 122.95 153.45 128.74
1996 113.16 184.54 130.29
1997 115.68 241.76 165.95
</TABLE>
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
----- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
SAJ....................................................... 100 89.00 93.15 122.95 113.16 115.68
S&P 500................................................... 100 110.08 111.53 153.45 184.54 241.76
EEI 100................................................... 100 111.12 98.26 128.74 130.29 165.95
</TABLE>
*Assumes (i) $100 invested on December 31, 1992 in each of the Company's Common
Stock, the S&P 500 Index, and EEI 100 Index and (ii) quarterly reinvestment of
dividends.
PROPOSAL 2
APPROVAL OF 1998 LONG-TERM INCENTIVE PLAN
GENERAL
The Board of Directors is proposing for stockholder approval the 1998
Long-Term Incentive Plan (the "Plan"). If the Plan is approved by stockholders,
the Company's existing Long-Term Incentive Plan and Long-Term Incentive Plan for
Non-Employee Directors (the "Existing Plans") will be terminated and no future
awards will be made under the Existing Plans. Outstanding awards under the
Existing Plans will continue in accordance with their terms.
The purposes of the Plan are (i) to align the interests of the Company's
stockholders and recipients of awards under the Plan by increasing the
proprietary interest of such recipients in the Company's growth and success,
(ii) to advance the interests of the Company by attracting and retaining
directors, officers and other employees and (iii) to motivate such persons to
act in the long-term best interests of the Company and its stockholders. Under
the Plan, the Company may grant non-qualified stock options, "incentive stock
options" (within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code")), stock appreciation rights ("SARs"), restricted
stock, bonus
13
<PAGE>
stock and performance share awards. If the Plan is approved by stockholders, the
Compensation Committee of the Board of Directors (the "Committee") will
administer the Plan and the Committee intends to adopt a resolution providing
for the automatic grant of non-qualified stock options to purchase 2,000 shares
of Common Stock on the date of each annual meeting of stockholders of the
Company and 1,000 shares of restricted stock to each non-employee director on
the date of the respective director's election at an annual meeting of
stockholders of the Company. Eight non-employee directors, five officers and
other employees are eligible to participate in the Plan. Reference is made to
Exhibit A to this Proxy Statement for the complete text of the Plan which is
summarized below.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them FOR approval of the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1998 LONG-TERM
INCENTIVE PLAN.
DESCRIPTION OF THE PLAN
ADMINISTRATION. The Plan will be administered by the Committee. Each member
of the Committee is currently a "Non-Employee Director" within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934 and is an "outside
director" within the meaning of Section 162(m) of the Code.
Section 162(m) of the Code generally limits to $1 million the amount that a
publicly held corporation is allowed each year to deduct for the compensation
paid to each of the corporation's chief executive officer and the corporation's
four most highly compensated executive officers other than the chief executive
officer. However, "qualified performance-based compensation" is not subject to
the $1 million deduction limit. To qualify as performance-based compensation,
the following requirements must be satisfied: (i) the performance goals are
determined by a committee consisting solely of two or more "outside directors",
(ii) the material terms under which the compensation is to be paid, including
the performance goals, are approved by a majority of the corporation's
stockholders and (iii) if applicable, the committee certifies that the
applicable performance goals were satisfied before payment of any
performance-based compensation is made. As noted above, the Committee currently
consists solely of "outside directors" for purposes of Section 162(m) of the
Code. As a result, certain compensation under the Plan, such as that payable
with respect to options and SARS, is not expected to be subject to the $1
million deduction limit, but other compensation payable under the Plan, such as
any restricted stock award which is not subject to a performance condition to
vesting, would be subject to such limit.
Subject to the express provisions of the Plan, the Committee will have the
authority to select eligible persons to receive awards and determine all of the
terms and conditions of each award. All awards will be evidenced by a written
agreement containing such provisions not inconsistent with the Plan as the
Committee shall approve. The Committee will also have authority to establish
rules and regulations for administering the Plan and to decide questions of
interpretation or application of any provision of the Plan.
AVAILABLE SHARES. Under the Plan, 600,000 shares of Common Stock are
available for awards, subject to adjustment in the event of a stock split, stock
dividend, recapitalization, reorganization, merger, spin-off or other similar
change or event. The number of available shares will be reduced by the sum of
the aggregate number of shares of Common Stock which become subject to
outstanding
14
<PAGE>
options, free-standing SARs, stock awards and performance share awards. To the
extent that shares of Common Stock subject to an outstanding option (except to
the extent shares of Common Stock are issued or delivered by the Company in
connection with the exercise of a tandem SAR), free-standing SAR, stock award or
performance share award are not issued or delivered by reason of the expiration,
termination, cancellation or forfeiture of such award or by reason of the
delivery or withholding of shares of Common Stock to pay all or a portion of the
exercise price of an award, if any, or to satisfy all or a portion of the tax
withholding obligations relating to an award, then such shares of Common Stock
shall again be available under the Plan. The maximum number of shares of Common
Stock with respect to which options and SARs may be granted during any calendar
year to any person is 100,000, subject to adjustment as described above.
CHANGE IN CONTROL. In the event of certain acquisitions of 20% or more of
the Common Stock, a change in a majority of the Board of Directors, or the
consummation of a reorganization, merger or consolidation or sale or disposition
of all or substantially all of the assets of the Company (unless, among other
conditions, the Company's stockholders receive 60% or more of the stock of the
surviving company) or the consummation of a liquidation or dissolution of the
Company, all outstanding awards will be "cashed-out" by the Company except, in
the case of a merger or similar transaction in which the stockholders receive
publicly traded common stock, all outstanding options and SARs will be
exercisable in full, all other awards will vest, and each option, SAR and other
award will represent a right to acquire the appropriate number of shares of
common stock received in the merger or similar transaction.
EFFECTIVE DATE, TERMINATION AND AMENDMENT. If approved by stockholders, the
Plan will become effective as of the date of such approval and will terminate
when shares of Common Stock are no longer available for the grant of awards,
unless terminated earlier by the Board of Directors. The Board of Directors may
amend the Plan at any time, subject to any requirement of stockholder approval
required by applicable law, rule or regulation and provided that no amendment
may be made without stockholder approval if such amendment would, among other
things, (i) increase the maximum number of shares of Common Stock available
under the Plan or (ii) effect any change inconsistent with the Code.
STOCK OPTIONS -- GENERAL. The Committee will determine the conditions to
the exercisability of an option. Upon exercise of an option, including an
incentive stock option, the purchase price may be paid in cash or by delivery of
previously owned shares of Common Stock.
NON-QUALIFIED STOCK OPTIONS AND STOCK APPRECIATION RIGHTS. The period for
the exercise of a non-qualified stock option or SAR will be determined by the
Committee. The exercise price of a non-qualified stock option and the base price
of an SAR will not be less than 100% of the fair market value of the Common
Stock on the date of grant of such option or SAR, provided that the base price
of an SAR granted in tandem with an option (a "tandem SAR") will be the exercise
price of the related option. The exercise of an SAR entitles the holder to
receive (subject to withholding taxes) shares of Common Stock (which may be
restricted stock), cash or a combination thereof with a value equal to the
difference between the fair market value of the Common Stock on the exercise
date and the base price of the SAR.
In the event of termination of employment or service by reason of retirement
on or after age 65 or on or after age 55 after a minimum of five years of
employment with or service to the Company ("Retirement"), each non-qualified
stock option and SAR will become fully exercisable for a period of
15
<PAGE>
no more than one year after such termination (or such other period determined by
the Committee), but in no event after the expiration of such option or SAR. In
the event of termination of employment or service by reason of death or
disability, each non-qualified stock option and SAR will be exercisable to the
extent exercisable on the date of termination for a period of no more than one
year after such termination (or such other period determined by the Committee),
but in no event after the expiration of such option or SAR. In the event of
termination of employment or service for any other reason (other than for
cause), each non-qualified stock option and SAR will be exercisable to the
extent exercisable on the date of termination, for a period of no more than
three months after such termination (or such other period determined by the
Committee), but in no event after the expiration of such option or SAR. If a
holder dies during the specified periods following termination of employment or
service by reason of Retirement, disability or for any other reason (other than
for cause), each non-qualified stock option or SAR will be exercisable to the
extent exercisable on the date of death for a period of no more than one year
after the date of death (or such other period as determined by the Committee),
but in no event after the expiration of such option or SAR.
INCENTIVE STOCK OPTIONS. No incentive stock option will be exercisable more
than ten years after its date of grant, unless the recipient of the incentive
stock option owns greater than ten percent of the voting power of all shares of
capital stock of the Company (a "ten percent holder"), in which case the option
will be exercisable for no more than five years after its date of grant. The
exercise price of an incentive stock option will not be less than the fair
market value of the Common Stock on the date of grant of such option, unless the
recipient of the incentive stock option is a ten percent holder, in which case
the option exercise price will be the price required by the Code, currently 110%
of fair market value.
In the event of termination of employment by reason of Retirement, each
incentive stock option will become fully exercisable for a period of no more
than three months after such termination, but in no event after the expiration
of the incentive stock option. In the event of termination of employment by
reason of permanent and total disability (as defined in Section 22(e)(3) of the
Code) or death, each incentive stock option will be exercisable to the extent
exercisable on the date of termination for a period of no more than one year
after such termination or date of death, but in no event after the expiration of
the incentive stock option. In the event of a termination of employment for any
other reason (other than for cause), each incentive stock option will be
exercisable to the extent exercisable on the date of termination for a period of
no more than three months after such termination, but in no event after the
expiration of the incentive stock option. If the holder of an incentive stock
option dies during the specified periods following termination of employment by
reason of Retirement, permanent and total disability or for any other reason
(other than for cause), each incentive stock option will be exercisable to the
extent exercisable on the date of death for a period of no more than one year
(or such other period as determined by the Committee), but in no event after
expiration of the incentive stock option.
Notwithstanding the foregoing, in the event of termination of employment or
service for cause, each non-qualified stock option, incentive stock option and
SAR will terminate on the date of such termination of employment or service.
BONUS STOCK AND RESTRICTED STOCK AWARDS. The Plan provides for the grant of
(i) bonus stock awards, which are vested upon grant, and (ii) stock awards which
may be subject to a restriction period ("restricted stock"). An award of
restricted stock may be subject to specified performance measures
16
<PAGE>
during the applicable restriction period. Shares of restricted stock will be
non-transferable and subject to forfeiture if the holder does not remain
continuously in the employment of the Company during the restriction period or,
if the restricted stock is subject to performance measures, if such performance
measures are not attained during the restriction period; provided, however, that
termination of employment by reason of Retirement, disability or death, will
result in the restricted stock becoming fully vested. In the event of
termination of employment for any other reason, the portion of a restricted
stock award which is then subject to a restriction period will be forfeited and
canceled by the Company. Unless otherwise determined by the Committee, the
holder of a restricted stock award will have rights as a stockholder of the
Company, including the right to vote and receive dividends with respect to the
shares of restricted stock. The maximum fair market value of shares of Common
Stock subject to a stock award which is intended to be qualified
performance-based compensation under Section 162(m) of the Code is $500,000.
PERFORMANCE SHARE AWARDS. The Plan also provides for the grant of
performance share awards. Each performance share is a right, contingent upon the
attainment of performance measures within a specified performance period, to
receive one share of Common Stock, which may be restricted stock, or the fair
market value of all or a portion of such performance share in cash. Prior to the
settlement of a performance share award in shares of Common Stock, the holder of
such award will have no rights as a stockholder of the Company with respect to
the shares of Common Stock subject to the award. Performance shares will be
non-transferable and subject to forfeiture if the specified performance measures
are not attained during the applicable performance period; provided, however,
that termination of employment by reason of Retirement, disability or death,
will result in the performance share award becoming fully vested. In the event
of termination of employment for any other reason, the portion of a performance
share award which is then subject to a performance period will be forfeited and
canceled by the Company.
NON-EMPLOYEE DIRECTOR OPTIONS AND RESTRICTED STOCK AWARDS. If the Plan is
approved by stockholders, beginning on the date of the Company's 1998 Annual
Meeting of Stockholders, the Committee intends to adopt a resolution providing
for the automatic grant to non-employee directors on the date of each annual
meeting of stockholders of (i) non-qualified stock options to purchase 2,000
shares of Common Stock at an option exercise price per share equal to the fair
market value of a share of Common Stock on the date of grant and (ii) 1,000
shares of restricted stock.
Such options will be fully exercisable on the date of grant and will expire
ten years after the date of grant. If a non-employee director ceases to be a
director for any reason, each of such director's options may be exercised for a
period of one year thereafter, but in no event after the expiration of the
option. In the event a non-employee director dies during the one-year period
after ceasing to be a director, each option may be exercised for a period of one
year after the date of death, but in no event after the expiration of the
option.
Each such restricted stock award will vest on the first to occur of the
third anniversary of the date of grant and the date the holder of such award
ceases to serve as a director. The holder of a non-employee director restricted
stock award will have rights as a stockholder of the Company, including the
right to vote and receive dividends with respect to the shares of restricted
stock.
Under the Plan, each non-employee director may elect to receive
non-qualified stock options and/ or restricted stock in lieu of all or part of
such director's cash retainer and meeting fees. The option exercise price per
share would equal the fair market value of a share of Common Stock on the date
of
17
<PAGE>
grant and the shares of Common Stock subject to an option would have a fair
market value equal to 200% of the amount of the foregone retainer and meeting
fees. Each such option will expire ten years after its date of grant, will not
be exercisable during the first year following its date of grant and will become
exercisable in one-third annual installments beginning on the first anniversary
of its date of grant. If the optionee ceases to be a director by reason of
disability, Retirement or death, each such option will become fully exercisable
until the expiration of such option. If the optionee ceases to be a director for
any reason other than disability, Retirement or death, each such option will be
exercisable to the extent exercisable on the date of ceasing to be a director
until the expiration of such option. If the optionee dies prior to the
expiration of such option, such option shall be exercisable to the extent
exercisable on the date of the optionee's death until the expiration of such
option.
The restricted stock would have a fair market value equal to 120% of the
foregone retainer and meeting fees. Such restricted stock will vest on the first
anniversary of the date of grant if the holder of such award remains
continuously in the service of the Company as a non-employee director.
Notwithstanding the foregoing, if the holder of such award ceases to be a
non-employee director by reason of disability, Retirement or death, the
Restricted Stock will vest immediately.
PERFORMANCE GOALS. Under the Plan, the vesting or payment of performance
share awards and certain awards of restricted stock will be subject to the
satisfaction of certain performance goals. The performance goals applicable to a
particular award will be determined by the Committee at the time of grant. At
present, no such awards are outstanding and, accordingly, no performance goals
have been designated by the Committee. Under the Plan, such performance goals
may be one or more of the following: return on equity, revenues, total
shareholder return, earnings per share, return on equity measures, O&M measures,
cost containment, cash flow measures, and earnings from non-utility operations.
Measures may be absolute or comparative to an appropriate peer group or index.
If the performance goal or goals applicable to a particular award are satisfied,
the amount of compensation would be determined as follows: In the case of a
performance share award, the amount of compensation would equal the number of
performance shares subject to such award multiplied by (i) the closing sale
price of a share of Common Stock on the New York Stock Exchange at the time the
performance shares vest or (ii), if such performance shares are settled in
shares of restricted stock, the value of a share of Common Stock at the time
such restricted stock vests. In the case of restricted stock awards which are
subject to one or more performance goals, the amount of compensation would equal
the number of shares of restricted stock subject to such award multiplied by the
value of a share of Common Stock at the time such restricted stock vests.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain U.S. federal income tax
consequences generally arising with respect to awards under the Plan.
A participant will not recognize taxable income at the time of grant of an
option and the Company will not be entitled to a tax deduction at such time. A
participant will recognize compensation taxable as ordinary income (and subject
to income tax withholding in the case of an employee) upon exercise of a
non-qualified stock option equal to the excess of the fair market value of the
shares purchased over their exercise price, and the Company will be entitled to
a corresponding deduction. A participant will not recognize income (except for
purposes of the alternative minimum tax) upon exercise of an incentive stock
option. If the shares acquired by exercise of an incentive stock option are held
for the longer of two years from the date the option was granted and one year
from the date it was exercised,
18
<PAGE>
any gain or loss arising from a subsequent disposition of such shares will be
taxed as long-term or mid-term capital gain or loss, and the Company will not be
entitled to any deduction. If, however, such shares are disposed of within the
above-described period, then in the year of such disposition the participant
will recognize compensation taxable as ordinary income equal to the excess of
the lesser of (i) the amount realized upon such disposition and (ii) the fair
market value of such shares on the date of exercise over the exercise price, and
the Company will be entitled to a corresponding deduction.
A participant will not recognize taxable income at the time SARs are granted
and the Company will not be entitled to a tax deduction at such time. Upon
exercise, the participant will recognize compensation taxable as ordinary income
(and subject to income tax withholding in the case of an employee) in an amount
equal to the fair market value of any shares delivered and the amount of cash
paid by the Company. This amount is deductible by the Company as compensation
expense.
A participant will not recognize taxable income at the time shares of
restricted stock are granted, and the Company will not be entitled to a tax
deduction at such time, unless the participant makes an election to be taxed at
such time. If such election is not made, the participant will recognize
compensation taxable as ordinary income (and subject to income tax withholding
in the case of an employee) at the time the restrictions lapse in an amount
equal to the excess of the fair market value of the shares at such time over the
amount, if any, paid for such shares. The amount of ordinary income recognized
by making the above-described election or upon the lapse of restrictions is
deductible by the Company as compensation expense, except to the extent the
deduction limits of Section 162(m) of the Code apply. In addition, a participant
receiving dividends with respect to restricted stock for which the
above-described election has not been made and prior to the time the
restrictions lapse will recognize compensation taxable as ordinary income (and
subject to income tax withholding in the case of an employee), rather than
dividend income, in an amount equal to the dividends paid and the Company will
be entitled to a corresponding deduction, except to the extent the deduction
limits of Section 162(m) of the Code apply.
A participant will recognize compensation taxable as ordinary income (and
subject to income tax withholding in the case of an employee) at the time bonus
stock is awarded in an amount equal to the then fair market value of such stock.
This amount is deductible by the Company as compensation expense, except to the
extent the deduction limits of Section 162(m) of the Code apply.
A participant will not recognize taxable income at the time performance
shares are granted and the Company will not be entitled to a tax deduction at
such time. Upon the settlement of performance shares, the participant will
recognize compensation taxable as ordinary income (and subject to income tax
withholding in the case of an employee) in an amount equal to the fair market
value of any shares delivered and any cash paid by the Company. This amount is
deductible by the Company as compensation expense, except to the extent the
deduction limits of Section 162(m) of the Code apply.
The following table sets forth the number of shares of Common Stock
underlying options and restricted stock awards which would be granted (i)
automatically to non-employee directors on the date of each annual meeting of
stockholders beginning with the 1998 Annual Meeting of Stockholders and (ii)
annually to non-employee directors based on the amount of the cash retainer and
meeting fees currently payable to non-employee directors (assuming all
non-employee directors elect to receive only options or restricted stock in lieu
of all of such retainer and meeting fees).
19
<PAGE>
1998 LONG-TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
DOLLAR VALUE
POSITION ($) NUMBER OF UNITS (4)
- -------------------------------------------------------- --------------- -------------------
<S> <C> <C>
All Non-Employee
Directors as a Group (8 persons)...................... -- (1) 16,000
$ 144,000(2) 8,000
-- (3) 16,000
172,800(3) 9,600
</TABLE>
- ------------------------
(1) Each non-employee director would be granted options to purchase 2,000
shares of Common Stock at an exercise price per share equal to 100% of the
closing sale price of the Common Stock on the New York Stock Exchange on
the date of grant. On March 18, 1998, the closing sale price of Common
Stock on the New York Stock Exchange was $18 per share.
(2) Each non-employee director would be granted 1,000 shares of restricted
stock every three years upon their election or reelection to the Board of
Directors. The dollar value of the restricted stock awards is based on the
closing sale price of Common Stock on the New York Stock Exchange on March
18, 1998.
(3) Based on a current annual cash retainer and meeting fees of $18,000 and a
fair market value of $18 per share, each non-employee director would be
granted an option to purchase up to 2,000 shares of Common Stock or up to
1,200 shares of restricted stock. The dollar value of the restricted stock
awards is based on the closing sale price of Common Stock on the New York
Stock Exchange on March 18, 1998.
(4) The general terms of each option and restricted stock award are described
above under "Non-Employee Director Options and Restricted Stock Awards."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
PROPOSAL 3
APPOINTMENT OF AUDITORS
The firm of Arthur Andersen LLP has audited the accounts of the Company
since 1945. The firm has been recommended by the Board of Directors to serve as
independent auditors for the year 1998 following the favorable recommendation of
the Audit Committee.
A representative of Arthur Andersen LLP is expected to be present at the
shareholders' meeting. Such representative may make a statement and is expected
to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 3.
SHAREHOLDER PROPOSALS
FOR THE 1999 ANNUAL MEETING
In order to be considered for inclusion in the Company's proxy materials for
the 1999 Annual Meeting of Shareholders, shareholder proposals must be received
by the Company, 520 Francis Street, P. O. Box 998, St. Joseph, Missouri
64502-0998, Attention: Office of the Corporate Secretary, no later
20
<PAGE>
than December 8, 1998. In addition, the Company's Bylaws establish an advance
notice procedure for shareholder proposals to be brought before the 1999 Annual
Meeting of Shareholders, including proposed nominations of persons for election
to the Board of Directors. The 1999 Annual Meeting of Shareholders is expected
to be held on May 19, 1999. A shareholder proposal or nomination intended to be
brought before the 1999 Annual Meeting of Shareholders must be received by the
Secretary on or after January 2, 1999 and on or prior to March 3, 1999.
OTHER MATTERS
ANYONE OWNING COMMON STOCK OF THE COMPANY AT THE RECORD DATE FOR THIS
MEETING OR WHO SHALL IN GOOD FAITH REPRESENT TO THE COMPANY THAT HE WAS A
BENEFICIAL OWNER OF COMMON STOCK ON SUCH DATE MAY, UPON WRITTEN OR ORAL REQUEST,
OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 1997, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, BY DIRECTING SUCH REQUEST TO THE OFFICE OF THE SECRETARY, 520
FRANCIS STREET, P. O. BOX 998, ST. JOSEPH, MISSOURI 64502-0998 [TELEPHONE (816)
387-6434].
The Company knows of no other matters to be brought before the meeting. The
enclosed form of proxy gives the proxies named therein discretionary authority
to vote on any other matters properly presented at the meeting or any
adjournments thereof.
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND PROMPTLY RETURN IN THE ENVELOPE
PROVIDED.
By Order of the Board of Directors:
GARY L. MYERS
Vice President, General
Counsel & Secretary
St. Joseph, Missouri
April 7, 1998
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<PAGE>
EXHIBIT A
ST. JOSEPH LIGHT & POWER COMPANY
1998 LONG-TERM INCENTIVE PLAN
I. INTRODUCTION
1.1 PURPOSES. The purposes of the 1998 Long-Term Incentive Plan (the
"PLAN") of St. Joseph Light & Power Company (the "COMPANY") are (i) to align the
interests of the Company's stockholders and the recipients of awards under this
Plan by increasing the proprietary interest of such recipients in the Company's
growth and success, (ii) to advance the interests of the Company by attracting
and retaining directors (including Non-Employee Directors), officers, and other
employees, and (iii) to motivate such persons to act in the long-term best
interests of the Company and its stockholders.
1.2 CERTAIN DEFINITIONS.
"AGREEMENT" shall mean the written agreement evidencing an award hereunder
between the Company and the recipient of such award.
"BOARD" shall mean the Board of Directors of the Company.
"BONUS STOCK" shall mean shares of Common Stock which are not subject to a
Restriction Period or Performance Measures.
"BONUS STOCK AWARD" shall mean an award of Bonus Stock under this Plan.
"CAUSE" shall mean the willful engaging in conduct which is demonstrably
injurious to the Company or any Subsidiary, monetarily or otherwise, including
conduct that, in the reasonable judgment of the Company, no longer conforms to
the standard of the Company's employees, any act of dishonesty, commission of a
felony, or a significant violation of any statutory or common law duty of
loyalty to the Company.
"CHANGE IN CONTROL" shall have the meaning set forth in Section 6.8(b).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMITTEE" shall mean the Compensation Committee of the Board, each member
of which may be (i) a "Non-Employee Director" within the meaning of Rule 16b-3
under the Exchange Act and (ii) an "outside director" within the meaning of
Section 162(m) of the Code.
"COMMON STOCK" shall mean the common stock, no par value, of the Company.
"COMPANY" has the meaning specified in Section 1.1.
"DIRECTORS OPTIONS" shall have the meaning set forth in Section 5.1.
"DIRECTORS RESTRICTED STOCK" shall have the meaning set forth in Section
5.1.
"DISABILITY" shall mean the inability of the holder of an award to perform
substantially such holder's duties and responsibilities for a continuous period
of at least six months, as determined solely by the Committee.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" shall mean the closing transaction price of a share of
Common Stock as reported in the New York Stock Exchange Composite Transactions
on the date as of which such value
<PAGE>
is being determined or, if there shall be no reported transaction for such date,
on the next preceding date for which a transaction was reported; provided,
however, that Fair Market Value may be determined by the Committee by whatever
means or method as the Committee, in the good faith exercise of its discretion,
shall at such time deem appropriate.
"FREE-STANDING SAR" shall mean an SAR which is not issued in tandem with, or
by reference to, an option, which entitles the holder thereof to receive, upon
exercise, shares of Common Stock (which may be Restricted Stock), cash or a
combination thereof with an aggregate value equal to the excess of the Fair
Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of such SARs which are exercised.
"INCENTIVE STOCK OPTION" shall mean an option to purchase shares of Common
Stock that meets the requirements of Section 422 of the Code, or any successor
provision, which is intended by the Committee to constitute an Incentive Stock
Option.
"INCUMBENT BOARD" shall have the meaning set forth in Section 6.8(b)(2)
hereof.
"MATURE SHARES" shall mean previously-acquired shares of Common Stock for
which the holder thereof has good title, free and clear of all liens and
encumbrances and which such holder either (i) has held for at least six months
or (ii) has purchased on the open market.
"NON-EMPLOYEE DIRECTOR" shall mean any director of the Company who is not an
officer or employee of the Company or any Subsidiary.
"NON-STATUTORY STOCK OPTION" shall mean an option to purchase shares of
Common Stock which is not an Incentive Stock Option.
"OUTSTANDING COMMON STOCK" shall have the meaning set forth in Section
6.8(b)(1).
"OUTSTANDING VOTING SECURITIES" shall have the meaning set forth in Section
6.8(b)(1).
"PERFORMANCE MEASURES" shall mean the criteria and objectives, established
by the Committee, which shall be satisfied or met (i) as a condition to the
exercisability of all or a portion of an option or SAR, (ii) as a condition to
the grant of a Stock Award or (iii) during the applicable Restriction Period or
Performance Period as a condition to the holder's receipt, in the case of a
Restricted Stock Award, of the shares of Common Stock subject to such award, or,
in the case of a Performance Share Award, of the shares of Common Stock subject
to such award and/or of payment with respect to such award. Such criteria and
objectives may include one or more of the following: return on equity, revenues,
total shareholder return, earnings per share, return on equity measures, O&M
measures, cost containment, cash flow measures, earnings from non-utility
operations, or any combination of the foregoing. If the Committee desires that
compensation payable pursuant to any award subject to Performance Measures be
"qualified performance-based compensation" within the meaning of Section 162(m)
of the Code, the Performance Measures (i) shall be established by the Committee
no later than the end of the first quarter of the Performance Period or
Restriction Period, as applicable (or such other time designated by the Internal
Revenue Service) and (ii) shall satisfy all other applicable requirements
imposed under Treasury Regulations promulgated under Section 162(m) of the Code,
including the requirement that such Performance Measures be stated in terms of
an objective formula or standard.
"PERFORMANCE PERIOD" shall mean any period designated by the Committee
during which the Performance Measures applicable to a Performance Share Award
shall be measured.
2
<PAGE>
"PERFORMANCE SHARE" shall mean a right, contingent upon the attainment of
specified Performance Measures within a specified Performance Period, to receive
one share of Common Stock, which may be Restricted Stock, or in lieu of all or a
portion thereof, the Fair Market Value of such Performance Share in cash.
"PERFORMANCE SHARE AWARD" shall mean an award of Performance Shares under
this Plan.
"PERMANENT AND TOTAL DISABILITY" shall have the meaning set forth in Section
22(e)(3) of the Code or any successor thereto.
"PERSON" shall have the meaning set forth in Section 6.8(b)(1).
"POST-TERMINATION EXERCISE PERIOD" shall mean the period specified in or
pursuant to Section 2.3(a), Section 2.3(b), Section 2.3(d) or Section 2.3(e)
following termination of employment with or service to the Company during which
an option or SAR may be exercised.
"RESTRICTED STOCK" shall mean shares of Common Stock which are subject to a
Restriction Period and shall include Directors Restricted Stock.
"RESTRICTED STOCK AWARD" shall mean an award of Restricted Stock under this
Plan.
"RESTRICTION PERIOD" shall mean any period designated by the Committee
during which the Common Stock subject to a Restricted Stock Award may not be
sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or
disposed of, except as provided in this Plan or the Agreement relating to such
award.
"RETIREMENT" shall mean termination of employment with or service to the
Company by reason of retirement on or after age 65 or on or after age 55 after a
minimum of 5 years of employment with or service to the Company.
"SAR" shall mean a stock appreciation right which may be a Free-Standing SAR
or a Tandem SAR.
"STOCK AWARD" shall mean a Restricted Stock Award or a Bonus Stock Award.
"SUBSIDIARY" and "SUBSIDIARIES" shall have the meanings set forth in Section
1.4.
"TANDEM SAR" shall mean an SAR which is granted in tandem with, or by
reference to, an option (including a Non-Statutory Stock Option granted prior to
the date of grant of the SAR), which entitles the holder thereof to receive,
upon exercise of such SAR and surrender for cancellation of all or a portion of
such option, shares of Common Stock (which may be Restricted Stock), cash or a
combination thereof with an aggregate value equal to the excess of the Fair
Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of shares of Common Stock subject to
such option, or portion thereof, which is surrendered.
"TAX DATE" shall have the meaning set forth in Section 6.5.
"TEN PERCENT HOLDER" shall have the meaning set forth in Section 2.1(a).
1.3 ADMINISTRATION. This Plan shall be administered by the Committee. Any
one or a combination of the following awards may be made under this Plan to
eligible persons: (i) options to purchase shares of Common Stock in the form of
Incentive Stock Options or Non-Statutory Stock Options, (ii) SARs in the form of
Tandem SARs or Free-Standing SARs, (iii) Stock Awards in the form
3
<PAGE>
of Restricted Stock or Bonus Stock and (iv) Performance Shares. The Committee
shall, subject to the terms of this Plan, select eligible persons for
participation in this Plan and determine the form, amount and timing of each
award to such persons and, if applicable, the number of shares of Common Stock,
the number of SARs and the number of Performance Shares subject to such an
award, the exercise price or base price associated with the award, the time and
conditions of exercise or settlement of the award and all other terms and
conditions of the award, including, without limitation, the form of the
Agreement evidencing the award. The Committee may, in its sole discretion and
for any reason at any time, subject to the requirements imposed under Section
162(m) of the Code and regulations promulgated thereunder in the case of an
award intended to be qualified performance-based compensation, take action such
that (i) any or all outstanding options and SARs shall become exercisable in
part or in full, (ii) all or a portion of the Restriction Period applicable to
any outstanding Restricted Stock Award shall lapse, (iii) all or a portion of
the Performance Period applicable to any outstanding Performance Share Award
shall lapse and (iv) the Performance Measures applicable to any outstanding
award shall be deemed to be satisfied at the maximum or any other level. The
Committee shall, subject to the terms of this Plan, interpret this Plan and the
application thereof, establish rules and regulations it deems necessary or
desirable for the administration of this Plan and may impose, incidental to the
grant of an award, conditions with respect to the award, such as limiting
competitive employment or other activities. All such interpretations, rules,
regulations and conditions shall be final, binding and conclusive.
A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (i) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (ii) acts approved in
writing by all of the members of the Committee without a meeting.
1.4 ELIGIBILITY. Participants in this Plan shall consist of such directors
(including Non-Employee Directors), officers, other employees, and persons
expected to become directors, officers or employees of the Company, its
subsidiaries from time to time and any other entity designated by the Board or
the Committee (individually a "SUBSIDIARY" and collectively the "SUBSIDIARIES")
as the Committee in its sole discretion may select from time to time. For
purposes of this Plan, references to employment by the Company shall also mean
employment by a Subsidiary. The Committee's selection of a person to participate
in this Plan at any time shall not require the Committee to select such person
to participate in this Plan at any other time. Non-Employee Directors of the
Company shall be eligible to participate in this Plan in accordance with Section
V.
1.5 SHARES AVAILABLE. Subject to adjustment as provided in Section 6.7,
600,000 shares of Common Stock shall be available under this Plan, reduced by
the sum of the aggregate number of shares of Common Stock which become subject
to outstanding options, including Directors Options, outstanding Free-Standing
SARs, outstanding Stock Awards and outstanding Performance Shares. To the extent
that shares of Common Stock subject to an outstanding option (except to the
extent shares of Common Stock are issued or delivered by the Company in
connection with the exercise of a Tandem SAR), Free-Standing SAR, Stock Award or
Performance Share are not issued or delivered by reason of the expiration,
termination, cancellation or forfeiture of such award or by reason of the
delivery or withholding of shares of Common Stock to pay all or a portion of the
exercise price of an award, if any, or to satisfy all or a portion of the tax
withholding obligations relating to an award, then such shares of Common Stock
shall again be available under this Plan.
4
<PAGE>
Shares of Common Stock shall be made available from authorized and unissued
shares of Common Stock, or authorized and issued shares of Common Stock
reacquired and held as treasury shares or otherwise or a combination thereof.
To the extent required by Section 162(m) of the Code and the rules and
regulations thereunder, the maximum number of shares of Common Stock with
respect to which options or SARs, or a combination thereof may be granted during
any calendar year to any person shall be 100,000, subject to adjustment as
provided in Section 6.7.
II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 STOCK OPTIONS. The Committee may, in its discretion, grant options to
purchase shares of Common Stock to such eligible persons as may be selected by
the Committee. Each option, or portion thereof, that is not an Incentive Stock
Option, shall be a Non-Statutory Stock Option. An Incentive Stock Option may not
be granted to any person who is not an employee of the Company or any parent or
subsidiary (as defined in Section 424 of the Code). Each Incentive Stock Option
shall be granted within ten years of the effective date of this Plan. To the
extent that the aggregate Fair Market Value (determined as of the date of grant)
of shares of Common Stock with respect to which options designated as Incentive
Stock Options are exercisable for the first time by a participant during any
calendar year (under this Plan or any other plan of the Company, or any parent
or subsidiary as defined in Section 424 of the Code) exceeds the amount
(currently $100,000) established by the Code, such options shall constitute
Non-Statutory Stock Options.
Options shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:
(a) NUMBER OF SHARES AND PURCHASE PRICE. The number of shares of Common
Stock subject to an option and the purchase price per share of Common Stock
purchasable upon exercise of the option shall be determined by the
Committee; provided, however, that the purchase price per share of Common
Stock purchasable upon exercise of an Incentive Stock Option shall not be
less than 100% of the Fair Market Value of a share of Common Stock on the
date of grant of such option; provided further, that if an Incentive Stock
Option shall be granted to any person who, at the time such option is
granted, owns capital stock possessing more than ten percent of the total
combined voting power of all classes of capital stock of the Company (or of
any parent or subsidiary as defined in Section 424 of the Code) (a "TEN
PERCENT HOLDER"), the purchase price per share of Common Stock shall be the
price (currently 110% of Fair Market Value) required by the Code in order to
constitute an Incentive Stock Option.
(b) OPTION PERIOD AND EXERCISABILITY. The period during which an option
may be exercised shall be determined by the Committee; provided, however,
that no Incentive Stock Option shall be exercised later than ten years after
its date of grant; provided further, that if an Incentive Stock Option shall
be granted to a Ten Percent Holder, such option shall not be exercised later
than five years after its date of grant. The Committee may, in its
discretion, establish Performance Measures which shall be satisfied or met
as a condition to the grant of an option or to the exercisability of all or
a portion of an option. The Committee shall determine whether an option
shall become exercisable in cumulative or non-cumulative installments and in
part or in full at any time. An
5
<PAGE>
exercisable option, or portion thereof, may be exercised only with respect
to whole shares of Common Stock.
(c) METHOD OF EXERCISE. An option may be exercised (i) by giving
written notice to the Company specifying the number of whole shares of
Common Stock to be purchased and accompanied by payment therefor in full (or
arrangement made for such payment to the Company's satisfaction) either (A)
in cash, (B) by delivery (either actual delivery or by attestation
procedures established by the Company) of Mature Shares having an aggregate
Fair Market Value, determined as of the date of exercise, equal to the
aggregate purchase price payable by reason of such exercise, (C) in cash by
a broker-dealer acceptable to the Company to whom the optionee has submitted
an irrevocable notice of exercise or (D) a combination of (A) and (B), in
each case to the extent set forth in the Agreement relating to the option,
(ii) if applicable, by surrendering to the Company any Tandem SARs which are
canceled by reason of the exercise of the option and (iii) by executing such
documents as the Company may reasonably request. The Company shall have sole
discretion to disapprove of an election pursuant to any of clauses (B)-(D).
Any fraction of a share of Common Stock which would be required to pay such
purchase price shall be disregarded and the remaining amount due shall be
paid in cash by the optionee. No certificate representing Common Stock shall
be delivered until the full purchase price therefor has been paid (or
arrangement made for such payment to the Company's satisfaction).
2.2 STOCK APPRECIATION RIGHTS. The Committee may, in its discretion, grant
SARs to such eligible persons as may be selected by the Committee. The Agreement
relating to an SAR shall specify whether the SAR is a Tandem SAR or a
Free-Standing SAR.
SARs shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:
(a) NUMBER OF SARS AND BASE PRICE. The number of SARs subject to an
award shall be determined by the Committee. Any Tandem SAR related to an
Incentive Stock Option shall be granted at the same time that such Incentive
Stock Option is granted. The base price of a Tandem SAR shall be the
purchase price per share of Common Stock of the related option. The base
price of a Free-Standing SAR shall be determined by the Committee; provided,
however, that such base price shall not be less than 100% of the Fair Market
Value of a share of Common Stock on the date of grant of such SAR.
(b) EXERCISE PERIOD AND EXERCISABILITY. The Agreement relating to an
award of SARs shall specify whether such award may be settled in shares of
Common Stock (including shares of Restricted Stock) or cash or a combination
thereof. The period for the exercise of an SAR shall be determined by the
Committee; provided, however, that no Tandem SAR shall be exercised later
than the expiration, cancellation, forfeiture or other termination of the
related option. The Committee may, in its discretion, establish Performance
Measures which shall be satisfied or met as a condition to the grant of an
SAR or to the exercisability of all or a portion of an SAR. The Committee
shall determine whether an SAR may be exercised in cumulative or
non-cumulative installments and in part or in full at any time. An
exercisable SAR, or portion thereof, may be exercised, in the case of a
Tandem SAR, only with respect to whole shares of Common Stock and, in the
case of a Free-Standing SAR, only with respect to a whole number of SARs. If
an SAR is exercised for shares of Restricted Stock, a certificate or
certificates representing such Restricted
6
<PAGE>
Stock shall be issued in accordance with Section 3.2(c) and the holder of
such Restricted Stock shall have such rights of a stockholder of the Company
as determined pursuant to Section 3.2(d). Prior to the exercise of an SAR
for shares of Common Stock, including Restricted Stock, the holder of such
SAR shall have no rights as a stockholder of the Company with respect to the
shares of Common Stock subject to such SAR and shall have rights as a
stockholder of the Company in accordance with Section 6.10.
(c) METHOD OF EXERCISE. A Tandem SAR may be exercised (i) by giving
written notice to the Company specifying the number of whole SARs which are
being exercised, (ii) by surrendering to the Company any options which are
canceled by reason of the exercise of the Tandem SAR and (iii) by executing
such documents as the Company may reasonably request. A Free-Standing SAR
may be exercised (i) by giving written notice to the Company specifying the
whole number of SARs which are being exercised and (ii) by executing such
documents as the Company may reasonably request.
2.3 TERMINATION OF EMPLOYMENT OR SERVICE. (a) DISABILITY. Subject to
paragraph (e) below and unless otherwise specified in the Agreement relating to
an option or SAR, as the case may be, if the employment with or service to the
Company of the holder of an option or SAR terminates by reason of Disability,
each option and SAR held by such holder shall be exercisable only to the extent
that such option or SAR, as the case may be, is exercisable on the effective
date of such holder's termination of employment or service and may thereafter be
exercised by such holder (or such holder's legal representative or similar
person) until and including the earliest to occur of (i) the date which is one
year (or such other period as set forth in the Agreement relating to such option
or SAR) after the effective date of such holder's termination of employment or
service and (ii) the expiration date of the term of such option or SAR.
(b) RETIREMENT. Subject to paragraph (e) below and unless otherwise
specified in the Agreement relating to an option or SAR, as the case may be, if
the employment with or service to the Company of the holder of an option or SAR
terminates by reason of Retirement, each option and SAR held by such holder
shall be fully exercisable and may thereafter be exercised by such holder (or
such holder's legal representative or similar person) until and including the
earliest to occur of (i) the date which is one year (or such other period as set
forth in the Agreement relating to such option or SAR) after the effective date
of such holder's termination of employment or service and (ii) the expiration
date of the term of such option or SAR.
(c) DEATH. Unless otherwise specified in the Agreement relating to an
option or SAR, as the case may be, if the employment with or service to the
Company of the holder of an option or SAR terminates by reason of death, each
option and SAR held by such holder shall be exercisable only to the extent that
such option or SAR, as the case may be, is exercisable on the effective date of
such holder's termination of employment or service and may thereafter be
exercised by such holder's executor, administrator, legal representative,
beneficiary or similar person until and including the earliest to occur of (i)
the date which is one year (or such other period as set forth in the Agreement
relating to such option or SAR) after the date of death and (ii) the expiration
date of the term of such option or SAR.
(d) OTHER TERMINATION. Subject to paragraph (e) below and unless otherwise
specified in the Agreement relating to an option or SAR, as the case may be, if
the employment with or service to the Company of the holder of an option or SAR
terminates for any reason other than Disability,
7
<PAGE>
Retirement or death or for Cause, each option and SAR held by such holder shall
be exercisable only to the extent that such option or SAR is exercisable on the
effective date of such holder's termination of employment or service and may
thereafter be exercised by such holder (or such holder's legal representative or
similar person) until and including the earliest to occur of (i) the date which
is three months (or such other period as set forth in the Agreement relating to
such option or SAR) after the effective date of such holder's termination of
employment or service and (ii) the expiration date of the term of such option or
SAR.
(e) TERMINATION OF EMPLOYMENT -- INCENTIVE STOCK OPTIONS. Unless otherwise
specified in the Agreement related to the option, if the employment with the
Company of a holder of an Incentive Stock Option terminates by reason of
Permanent and Total Disability, each Incentive Stock Option held by such
optionee shall be exercisable to the extent set forth in Section 2.3(a) and may
thereafter be exercised by such optionee (or such optionee's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is one year after the effective date of such optionee's
termination of employment and (ii) the expiration date of the term of such
option.
Unless otherwise specified in the Agreement relating to the option, if the
employment with the Company of a holder of an Incentive Stock Option terminates
for any reason other than Permanent and Total Disability or death or for Cause,
each Incentive Stock Option held by such optionee shall be exercisable to the
extent set forth in Section 2.3(a), Section 2.3(b) or 2.3(d), as applicable, and
may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is three months after the effective date of such optionee's
termination of employment and (ii) the expiration date of the term of such
option.
(f) DEATH FOLLOWING TERMINATION OF EMPLOYMENT OR SERVICE. Unless otherwise
specified in the Agreement relating to an option or SAR, as the case may be, if
the holder of an option or SAR dies during the applicable Post-Termination
Exercise Period, each option and SAR held by such holder shall be exercisable
only to the extent that such option or SAR, as the case may be, is exercisable
on the date of such holder's death and may thereafter be exercised by the
holder's executor, administrator, legal representative, beneficiary or similar
person until and including the earliest to occur of (i) the date which is one
year (or such other period as set forth in the Agreement relating to such option
or SAR) after the date of death and (ii) the expiration date of the term of such
option or SAR.
(g) CAUSE. Notwithstanding anything to the contrary in this Plan or in any
Agreement relating to an Option or SAR, as the case may be, if the employment
with or service to the Company of the holder of an option or SAR is terminated
by the Company for Cause, each option and SAR held by such holder shall
terminate automatically on the effective date of such holder's termination of
employment or service.
8
<PAGE>
III. STOCK AWARDS
3.1 STOCK AWARDS. The Committee may, in its discretion, grant Stock Awards
to such eligible persons as may be selected by the Committee. The Agreement
relating to a Stock Award shall specify whether the Stock Award is a Restricted
Stock Award or Bonus Stock Award.
3.2 TERMS OF STOCK AWARDS. Stock Awards shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable.
(a) NUMBER OF SHARES AND OTHER TERMS. The number of shares of Common
Stock subject to a Restricted Stock Award or Bonus Stock Award and the
Performance Measures (if any) and Restriction Period applicable to a
Restricted Stock Award shall be determined by the Committee.
(b) VESTING AND FORFEITURE. The Agreement relating to a Restricted
Stock Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of
the shares of Common Stock subject to such award (i) if specified
Performance Measures are satisfied or met during the specified Restriction
Period or (ii) if the holder of such award remains continuously in the
employment of or service to the Company during the specified Restriction
Period and for the forfeiture of the shares of Common Stock subject to such
award (x) if specified Performance Measures are not satisfied or met during
the specified Restriction Period or (y) if the holder of such award does not
remain continuously in the employment of or service to the Company during
the specified Restriction Period.
Bonus Stock Awards shall not be subject to any Performance Measures or
Restriction Periods.
(c) SHARE CERTIFICATES. During the Restriction Period, a certificate
or certificates representing a Restricted Stock Award may be registered in
the holder's name and may bear a legend, in addition to any legend which may
be required pursuant to Section 6.6, indicating that the ownership of the
shares of Common Stock represented by such certificate is subject to the
restrictions, terms and conditions of this Plan and the Agreement relating
to the Restricted Stock Award. All such certificates shall be deposited with
the Company, together with stock powers or other instruments of assignment
(including a power of attorney), each endorsed in blank with a guarantee of
signature if deemed necessary or appropriate by the Company, which would
permit transfer to the Company of all or a portion of the shares of Common
Stock subject to the Restricted Stock Award in the event such award is
forfeited in whole or in part. Upon termination of any applicable
Restriction Period (and the satisfaction or attainment of applicable
Performance Measures), or upon the grant of a Bonus Stock Award, in each
case subject to the Company's right to require payment of any taxes in
accordance with Section 6.5, a certificate or certificates evidencing
ownership of the requisite number of shares of Common Stock shall be
delivered to the holder of such award.
(d) RIGHTS WITH RESPECT TO RESTRICTED STOCK AWARDS. Unless otherwise
set forth in the Agreement relating to a Restricted Stock Award, and subject
to the terms and conditions of a Restricted Stock Award, the holder of such
award shall have all rights as a stockholder of the Company, including, but
not limited to, voting rights, the right to receive dividends and the right
to participate in any capital adjustment applicable to all holders of Common
Stock; provided, however, that a distribution with respect to shares of
Common Stock, other than a regular cash
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dividend shall be deposited with the Company and shall be subject to the
same restrictions as the shares of Common Stock with respect to which such
distribution was made.
(e) AWARDS TO CERTAIN EXECUTIVE OFFICERS. Notwithstanding any other
provision of this Article III, and only to the extent necessary to ensure
the deductibility of the award to the Company, the Fair Market Value of the
number of shares of Common Stock subject to a Stock Award granted to a
"covered employee" within the meaning of Section 162(m) of the Code shall
not exceed $500,000 (i) at the time of grant in the case of a Stock Award
granted upon the attainment of Performance Measures or (ii) in the case of a
Restricted Stock Award with Performance Measures which shall be satisfied or
met as a condition to the holder's receipt of the shares of Common Stock
subject to such award, on the earlier of (x) the date on which the
Performance Measures are satisfied or met and (y) the date the holder makes
an election under Section 83(b) of the Code.
3.3 TERMINATION OF EMPLOYMENT OR SERVICE. (a) DISABILITY, RETIREMENT AND
DEATH. Unless otherwise set forth in the Agreement relating to a Restricted
Stock Award, if the employment with or service to the Company of the holder of
such award terminates by reason of Disability, Retirement or death, the
Restriction Period shall terminate as of the effective date of such holder's
termination of employment or service and all Performance Measures, if any,
applicable to such award shall be deemed to have been satisfied at the target
level.
(b) OTHER TERMINATION. Unless otherwise set forth in the Agreement
relating to a Restricted Stock Award, if the employment with or service to
the Company of the holder of a Restricted Stock Award terminates for any
reason other than Disability, Retirement or death, the portion of such award
which is subject to a Restriction Period on the effective date of such
holder's termination of employment or service shall be forfeited by such
holder and such portion shall be canceled by the Company.
IV. PERFORMANCE SHARE AWARDS
4.1 PERFORMANCE SHARE AWARDS. The Committee may, in its discretion, grant
Performance Share Awards to such eligible persons as may be selected by the
Committee.
4.2 TERMS OF PERFORMANCE SHARE AWARDS. Performance Share Awards shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of this Plan, as the
Committee shall deem advisable.
(a) NUMBER OF PERFORMANCE SHARES AND PERFORMANCE MEASURES. The number
of Performance Shares subject to any award and the Performance Measures and
Performance Period applicable to such award shall be determined by the
Committee.
(b) VESTING AND FORFEITURE. The Agreement relating to a Performance
Share Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of
such award, if specified Performance Measures are satisfied or met during
the specified Performance Period, and for the forfeiture of such award, if
specified Performance Measures are not satisfied or met during the specified
Performance Period.
(c) SETTLEMENT OF VESTED PERFORMANCE SHARE AWARDS. The Agreement
relating to a Performance Share Award (i) shall specify whether such award
may be settled in shares of Common Stock (including shares of Restricted
Stock) or cash or a combination thereof and
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(ii) may specify whether the holder thereof shall be entitled to receive, on
a current or deferred basis, dividend equivalents, and, if determined by the
Committee, interest on or the deemed reinvestment of any deferred dividend
equivalents, with respect to the number of shares of Common Stock subject to
such award. If a Performance Share Award is settled in shares of Restricted
Stock, a certificate or certificates representing such Restricted Stock
shall be issued in accordance with Section 3.2(c) and the holder of such
Restricted Stock shall have such rights of a stockholder of the Company as
determined pursuant to Section 3.2(d). Prior to the settlement of a
Performance Share Award in shares of Common Stock, including Restricted
Stock, the holder of such award shall have no rights as a stockholder of the
Company with respect to the shares of Common Stock subject to such award and
shall have rights as a stockholder of the Company in accordance with Section
6.10.
4.3 TERMINATION OF EMPLOYMENT. (a) DISABILITY, RETIREMENT AND
DEATH. Unless otherwise set forth in the Agreement relating to a Performance
Share Award, if the employment with or service to the Company of the holder of
such award terminates by reason of Disability, Retirement or death, all
Performance Measures applicable to such award shall be deemed to have been
satisfied at the target level and the Performance Period applicable to such
award shall thereupon terminate.
(b) OTHER TERMINATION. Unless otherwise set forth in the Agreement
relating to a Performance Share Award, if the employment with or service to
the Company of the holder of a Performance Share Award terminates for any
reason other than Disability, Retirement or death, the portion of such award
which is subject to a Performance Period on the effective date of such
holder's termination of employment shall be forfeited and such portion shall
be canceled by the Company.
V. CERTAIN PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS
5.1 PARTICIPATION. Each Non-Employee Director may from time to time elect,
in accordance with procedures to be specified by the Committee, to receive in
lieu of all or part of the cash retainer and any meeting fees that would
otherwise be payable to such Non-Employee Director, on each date on which such
retainer and meeting fees would otherwise be payable during the period that such
election is in effect, either (i) Restricted Stock having the terms described in
Section 5.2 ("DIRECTORS RESTRICTED STOCK") with a Fair Market Value as of such
payment date equal to 120% of the amount of such retainer payment and meeting
fees or (ii) options having the terms described in Section 5.3 ("DIRECTORS
OPTIONS") to purchase shares of Common Stock having a Fair Market Value as of
such payment date equal to 200% of the amount of such retainer payment and
meeting fees.
5.2 DIRECTORS RESTRICTED STOCK. Shares of Directors Restricted Stock shall
be subject to a Restriction Period commencing on the date of grant of such award
and terminating on the date of the first anniversary of the date of grant of
such award, shall vest if the holder of such award remains continuously in the
service of the Company as a Non-Employee Director during the Restriction Period
and shall be forfeited if the holder of such award does not remain continuously
in the service of the Company as a Non-Employee Director during the Restriction
Period. A certificate or certificates representing Directors Restricted Stock
shall be issued in accordance with Section 3.2(c) and the holder of such award
shall have such rights of a stockholder of the Company as determined pursuant to
Section 3.2(d).
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Notwithstanding the foregoing paragraph, if the service to the Company as a
Non-Employee Director of the holder of Directors Restricted Stock terminates by
reason of Disability, Retirement or death, the Restriction Period shall
terminate as of the effective date of such holder's termination of service.
5.3 DIRECTORS OPTIONS. Each Directors Option shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee shall
deem advisable:
(a) EXERCISE PERIOD AND EXERCISABILITY. Each Directors Option shall
not be exercisable during the first year following its date of grant.
Thereafter, such option may be exercised: (i) on or after the first
anniversary of its date of grant, for up to one-third of the shares of
Common Stock subject to such option on its date of grant, (ii) on or after
the second anniversary of its date of grant, for up to an additional
one-third (two-thirds on a cumulative basis) of the shares of Common Stock
subject to such option on its date of grant and (iii) on or after the third
anniversary of its date of grant, for up to the remaining one-third (all
shares on a cumulative basis) of the shares of Common Stock subject to such
option on its date of grant. Each Directors Option shall expire ten years
after its date of grant.
(b) PURCHASE PRICE. The purchase price for the shares of Common Stock
subject to any Directors Option shall be equal to 100% of the Fair Market
Value of a share of Common Stock on the date of grant of such Directors
Option. An exercisable option, or portion thereof, may be exercised in whole
or in part only with respect to whole shares of Common Stock. Such Directors
Options shall be exercisable in accordance with Section 2.1(c).
(c) TERMINATION OF DIRECTORSHIP. If the holder of a Directors Option
ceases to be a director of the Company by reason of Disability, Retirement
or death, each such option held by such holder shall be fully exercisable
and may thereafter be exercised by such holder (or such holder's executor,
administrator, legal representative, beneficiary or similar person) until
and including the expiration date of the term of such option.
If the holder of a Directors Option ceases to be a director of the
Company for any reason other than Disability, Retirement or death, each such
option held by such holder shall be exercisable only to the extent such
option is exercisable on the effective date of such holder's ceasing to be a
director and may thereafter be exercised by such holder (or such holder's
legal representative or similar person) until and including the expiration
date of the term of such option.
If the holder of a Directors Option dies prior to the expiration date of
the term of a Directors Option, each such option held by such holder shall
be exercisable only to the extent that such option is exercisable on the
date of the holder's death and may thereafter be exercised by such holder's
executor, administrator, legal representative, beneficiary or similar person
until and including the expiration date of the term of such option.
VI. GENERAL
6.1 EFFECTIVE DATE AND TERM OF PLAN. This Plan shall be submitted to the
stockholders of the Company for approval and, if approved by the affirmative
vote of a majority of the shares of Common Stock present in person or
represented by proxy at the 1998 annual meeting of stockholders, shall become
effective on the date of such approval. This Plan shall terminate when shares of
Common
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Stock are no longer available for the grant of awards, unless terminated earlier
by the Board. Termination of this Plan shall not affect the terms or conditions
of any award granted prior to termination. In the event that this Plan is not
approved by the stockholders of the Company on or before December 31, 1998, this
Plan and any awards granted hereunder shall be null and void.
6.2 AMENDMENTS. The Board may amend this Plan as it shall deem advisable,
subject to any requirement of stockholder approval required by applicable law,
rule or regulation, including Section 162(m) and Section 422 of the Code;
provided, however, that no amendment shall be made without stockholder approval
if such amendment would (a) increase the maximum number of shares of Common
Stock available under this Plan (subject to Section 6.7) or (b) effect any
change inconsistent with Section 422 of the Code. No amendment may impair the
rights of a holder of an outstanding award without the consent of such holder.
6.3 AGREEMENT. Each award under this Plan shall be evidenced by an
Agreement setting forth the terms and conditions applicable to such award. No
award shall be valid until an Agreement is executed by the Company and the
recipient of such award and, upon execution by each party and delivery of the
Agreement to the Company, such award shall be effective as of the effective date
set forth in the Agreement.
6.4 NON-TRANSFERABILITY OF AWARDS. Unless otherwise specified in the
Agreement relating to an award, no award shall be transferable other than by
will, the laws of descent and distribution or pursuant to beneficiary
designation procedures approved by the Company. Except to the extent permitted
by the foregoing sentence or the Agreement relating to an award, each award may
be exercised or settled during the holder's lifetime only by the holder or the
holder's legal representative or similar person. Except to the extent permitted
by the second preceding sentence or the Agreement relating to an award, no award
may be sold, transferred, assigned, pledged, hypothecated, encumbered or
otherwise disposed of (whether by operation of law or otherwise) or be subject
to execution, attachment or similar process. Upon any attempt to so sell,
transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any such
award, such award and all rights thereunder shall immediately become null and
void.
6.5 TAX WITHHOLDING. The Company shall have the right to require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash pursuant to an award made hereunder, payment by the holder of such award of
any Federal, state, local or other taxes which may be required to be withheld or
paid in connection with such award. An Agreement may provide that (i) the
Company shall withhold whole shares of Common Stock which would otherwise be
delivered to a holder, having an aggregate Fair Market Value determined as of
the date the obligation to withhold or pay taxes arises in connection with an
award (the "TAX DATE"), or withhold an amount of cash which would otherwise be
payable to a holder, in the amount necessary to satisfy any such obligation or
(ii) the holder may satisfy any such obligation by any of the following means:
(A) a cash payment to the Company, (B) delivery (either actual delivery or by
attestation procedures established by the Company) to the Company of Mature
Shares having an aggregate Fair Market Value, determined as of the Tax Date,
equal to the amount necessary to satisfy any such obligation, (C) authorizing
the Company to withhold whole shares of Common Stock which would otherwise be
delivered having an aggregate Fair Market Value, determined as of the Tax Date,
or withhold an amount of cash which would otherwise be payable to a holder,
equal to the amount necessary to satisfy any such obligation, (D) in the case of
the exercise of an option, a cash payment by a broker-dealer acceptable to the
Company to whom the optionee has submitted an irrevocable notice of exercise or
(E) any combination
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of (A), (B) and (C), in each case to the extent set forth in the Agreement
relating to the award; provided, however, that the Company shall have sole
discretion to disapprove of an election pursuant to any of clauses (B)-(E). Any
fraction of a share of Common Stock which would be required to satisfy such an
obligation shall be disregarded and the remaining amount due shall be paid in
cash by the holder.
6.6 RESTRICTIONS ON SHARES. Each award made hereunder shall be subject to
the requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
award upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the exercise or settlement
of such award or the delivery of shares thereunder, such award shall not be
exercised or settled and such shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company may require that certificates evidencing shares of Common Stock
delivered pursuant to any award made hereunder bear a legend indicating that the
sale, transfer or other disposition thereof by the holder is prohibited except
in compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
6.7 ADJUSTMENT. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Common Stock other than a regular cash
dividend, the number and class of securities available under this Plan, the
number and class of securities subject to each outstanding option and the
purchase price per security, the terms of each outstanding SAR, the number and
class of securities subject to each outstanding Stock Award, and the terms of
each outstanding Performance Share shall be appropriately adjusted by the
Committee, such adjustments to be made in the case of outstanding options and
SARs without an increase in the aggregate purchase price or base price. The
decision of the Committee regarding any such adjustment shall be final, binding
and conclusive. If any such adjustment would result in a fractional security
being (a) available under this Plan, such fractional security shall be
disregarded, or (b) subject to an award under this Plan, the Company shall pay
the holder of such award, in connection with the first the vesting, exercise or
settlement of such award in whole or in part occurring after such adjustment, an
amount in cash determined by multiplying (i) the fraction of such security
(rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair
Market Value on the vesting, exercise or settlement date over (B) the exercise
or base price, if any, of such award.
6.8 CHANGE IN CONTROL. (a) (1) Notwithstanding any provision in this Plan
or any Agreement, in the event of a Change in Control pursuant to Section (b)(3)
or (4) below in connection with which the holders of Common Stock receive shares
of common stock that are registered under Section 12 of the Exchange Act, (i)
all outstanding options and SARS shall immediately become exercisable in full,
(ii) the Restriction Period applicable to any outstanding Restricted Stock Award
shall lapse, (iii) the Performance Period applicable to any outstanding
Performance Share shall lapse, (iv) the Performance Measures applicable to any
outstanding award shall be deemed to be satisfied at the maximum level and (v)
there shall be substituted for each share of Common Stock available under this
Plan, whether or not then subject to an outstanding award, the number and class
of shares into which each outstanding share of Common Stock shall be converted
pursuant to such Change in Control. In the event of any such substitution, the
purchase price per share in the case of an option and the base price in the case
of an SAR shall be appropriately adjusted by the Committee (whose determination
shall be
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final, binding and conclusive), such adjustments to be made in the case of
outstanding options and SARs without an increase in the aggregate purchase price
or base price.
(2) Notwithstanding any provision in this Plan or any Agreement, in the
event of a Change in Control pursuant to Section (b)(1) or (2) below, or in
the event of a Change in Control pursuant to Section (b)(3) or (4) below in
connection with which the holders of Common Stock receive consideration
other than shares of common stock that are registered under Section 12 of
the Exchange Act, each outstanding award shall be surrendered to the Company
by the holder thereof, and each such award shall immediately be canceled by
the Company, and the holder shall receive, within ten days of the occurrence
of a Change in Control, a cash payment from the Company in an amount equal
to (i) in the case of an option, the number of shares of Common Stock then
subject to such option, multiplied by the excess, if any, of the greater of
(A) the highest per share price offered to stockholders of the Company in
any transaction whereby the Change in Control takes place or (B) the Fair
Market Value of a share of Common Stock on the date of occurrence of the
Change in Control, over the purchase price per share of Common Stock subject
to the option, (ii) in the case of a Free-Standing SAR, the number of shares
of Common Stock then subject to such SAR, multiplied by the excess, if any,
of the greater of (A) the highest per share price offered to stockholders of
the Company in any transaction whereby the Change in Control takes place or
(B) the Fair Market Value of a share of Common Stock on the date of
occurrence of the Change in Control, over the base price of the SAR, (iii)
in the case of a Restricted Stock Award or Performance Share Award, the
number of shares of Common Stock or the number of Performance Shares, as the
case may be, then subject to such award, multiplied by the greater of (A)
the highest per share price offered to stockholders of the Company in any
transaction whereby the Change in Control takes place or (B) the Fair Market
Value of a share of Common Stock on the date of occurrence of the Change in
Control. In the event of a Change in Control, each Tandem SAR shall be
surrendered by the holder thereof and shall be canceled simultaneously with
the cancellation of the related option. The Company may, but is not required
to, cooperate with any person who is subject to Section 16 of the Exchange
Act to assure that any cash payment in accordance with the foregoing to such
person is made in compliance with Section 16 and the rules and regulations
thereunder.
(b) "Change in Control" shall mean:
(1) the acquisition by any individual, entity or group (a "PERSON"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act, of 20% or more of either (i) the then
outstanding shares of common stock of the Company (the "OUTSTANDING COMMON
STOCK") or (ii) the combined voting power of the then outstanding securities
of the Company entitled to vote generally in the election of directors (the
"OUTSTANDING VOTING SECURITIES"); excluding, however, the following: (A)
any acquisition directly from the Company (excluding any acquisition
resulting from the exercise of an exercise, conversion or exchange privilege
unless the security being so exercised, converted or exchanged was acquired
directly from the Company), (B) any acquisition by the Company, (C) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or
(D) any acquisition by any corporation pursuant to a transaction which
complies with clauses (i), (ii) and (iii) of subsection (3) of this Section
6.8(b); provided further, that for purposes of clause (B), if any Person
(other than the Company or any employee benefit plan (or related trust)
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sponsored or maintained by the Company or any corporation controlled by the
Company) shall become the beneficial owner of 20% or more of the Outstanding
Common Stock or 20% or more of the Outstanding Voting Securities by reason
of an acquisition by the Company, and such Person shall, after such
acquisition by the Company, become the beneficial owner of any additional
shares of the Outstanding Common Stock or any additional Outstanding Voting
Securities and such beneficial ownership is publicly announced, such
additional beneficial ownership shall constitute a Change in Control;
(2) individuals who, as of the effective date of this Plan constitute
the Board of Directors (the "INCUMBENT BOARD") cease for any reason to
constitute at least a majority of such Board; provided that any individual
who becomes a director of the Company subsequent to the effective date of
this Plan whose election, or nomination for election by the Company's
stockholders, was approved by the vote of at least a majority of the
directors then comprising the Incumbent Board shall be deemed a member of
the Incumbent Board; and provided further, that any individual who was
initially elected as a director of the Company as a result of an actual or
threatened election contest, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act, or any other actual or
threatened solicitation of proxies or consents by or on behalf of any Person
other than the Board shall not be deemed a member of the Incumbent Board;
(3) the consummation of a reorganization, merger or consolidation of the
Company or sale or other disposition of all or substantially all of the
assets of the Company (a "CORPORATE TRANSACTION"); excluding, however, a
Corporate Transaction pursuant to which (i) all or substantially all of the
individuals or entities who are the beneficial owners, respectively, of the
Outstanding Common Stock and the Outstanding Voting Securities immediately
prior to such Corporate Transaction will beneficially own, directly or
indirectly, more than 60% of, respectively, the outstanding shares of common
stock, and the combined voting power of the outstanding securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly
or indirectly) in substantially the same proportions relative to each other
as their ownership, immediately prior to such Corporate Transaction, of the
Outstanding Common Stock and the Outstanding Voting Securities, as the case
may be, (ii) no Person (other than: the Company; any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company; the corporation resulting from such Corporate
Transaction; and any Person which beneficially owned, immediately prior to
such Corporate Transaction, directly or indirectly, 20% or more of the
Outstanding Common Stock or the Outstanding Voting Securities, as the case
may be) will beneficially own, directly or indirectly, 20% or more of,
respectively, the outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined voting power of
the outstanding securities of such corporation entitled to vote generally in
the election of directors and (iii) individuals who were members of the
Incumbent Board will constitute at least a majority of the members of the
board of directors of the corporation resulting from such Corporate
Transaction; or
(4) the consummation of a plan of complete liquidation or dissolution of
the Company.
(c) (1) With respect to any optionee who is subject to Section 16 of the
Exchange Act, (i) notwithstanding the exercise periods set forth in subsections
(a) through (f) of Section 2.3, Section 5.3(c) or as set forth pursuant thereto
in any Agreement to which such optionee is a party and
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(ii) notwithstanding the expiration date of the term of such option, in the
event the Company is involved in a business combination which is intended to be
treated as a pooling of interests for financial accounting purposes (a "POOLING
TRANSACTION") or pursuant to which such optionee receives a substitute option to
purchase securities of any entity, including an entity directly or indirectly
acquiring the Company, then each option (or option in substitution thereof) held
by such optionee shall be exercisable to the extent set forth in the Agreement
evidencing such option until and including the latest of (x) the expiration date
of the term of the option or, in the event of such optionee's termination of
employment or service, the date determined pursuant to the then applicable
subsection of Section 2.3 or paragraph of 5.3(c), (y) the date which is seven
months after the consummation of such business combination and (z) the date
which is 30 days after the date of expiration of any period during which such
optionee may not dispose of a security issued in the Pooling Transaction in
order for the Pooling Transaction to be accounted for as a pooling of interests;
and
(2) With respect to any holder of an SAR (other than an SAR which may be
settled only for cash) who is subject to Section 16 of the Exchange Act, (i)
notwithstanding the exercise periods set forth in subsections (a) through
(f) of Section 2.3, or as set forth pursuant to such subsections in any
Agreement to which such holder is a party and (ii) notwithstanding the
expiration date of the term of such SAR (or related option in the case of a
Tandem SAR), in the event the Company is involved in a Pooling Transaction
or pursuant to which such holder receives a substitute SAR relating to any
entity, including an entity directly or indirectly acquiring the Company,
then each such SAR (or SAR in substitution thereof) held by such holder
shall be exercisable to the extent set forth in the Agreement evidencing
such SAR until and including the latest of (x) the expiration date of the
term of such SAR (or related option in the case of a Tandem SAR), or, in the
event of such holder's termination of employment or service, the date
determined pursuant to the then applicable subsection of Section 2.3, (y)
the date which is seven months after the consummation of such business
combination and (z) the date which is 30 days after the date of expiration
of any period during which such holder may not dispose of a security issued
in the Pooling Transaction in order for the Pooling Transaction to be
accounted for as a pooling of interests.
6.9 NO RIGHT OF PARTICIPATION OR EMPLOYMENT. No person shall have any
right to participate in this Plan. Neither this Plan nor any award made
hereunder shall confer upon any person any right to continued employment by the
Company, any Subsidiary or any affiliate of the Company or affect in any manner
the right of the Company, any Subsidiary or any affiliate of the Company to
terminate the employment of any person at any time without liability hereunder.
6.10 RIGHTS AS STOCKHOLDER. No person shall have any right as a
stockholder of the Company with respect to any shares of Common Stock or other
equity security of the Company which is subject to an award hereunder unless and
until such person becomes a stockholder of record with respect to such shares of
Common Stock or equity security.
6.11 GOVERNING LAW. This Plan, each award hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Missouri and construed in
accordance therewith without giving effect to principles of conflicts of laws.
6.12 FOREIGN EMPLOYEES. Without amending this Plan, the Committee may
grant awards to eligible persons who are foreign nationals on such terms and
conditions different from those specified in this Plan as may in the judgment of
the Committee be necessary or desirable to foster and promote
17
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achievement of the purposes of this Plan and, in furtherance of such purposes
the Committee may make such modifications, amendments, procedures, subplans and
the like as may be necessary or advisable to comply with provisions of laws in
other countries or jurisdictions in which the Company or its Subsidiaries
operates or has employees.
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ST. JOSEPH LIGHT & POWER COMPANY
FOR ANNUAL MEETING OF SHAREHOLDERS MAY 20, 1998
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints T. F. STEINBECKER, G. L. MYERS and L. J. STOLL,
and each of them, attorneys and proxies for the undersigned with full power of
substitution to vote at the Annual Meeting of Shareholders of St. Joseph Light &
Power Company on May 20, 1998 and any adjournments thereof all shares of Common
Stock which the undersigned would be entitled to vote if personally present.
(1) FOR [ ] The election of the three (3) nominees for directors of Class
II named below.
WITHHOLD [ ] authority to vote for all nominees listed below.
Class II (3-year tem expiring in 2001) - Messrs. John P. Barclay, Jr.,
William J. Gremp and David W. Shinneman. To withhold authority to
vote for any individual nominee write the nominee's name on the space
provided below:
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(2) FOR [ ] AGAINST [ ] ABSTAIN [ ] The approval of the 1998 Long-Term
Incentive Plan.
(3) FOR [ ] AGAINST [ ] ABSTAIN [ ] The appointment of Arthur Andersen
LLP as auditors for 1998.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ABOVE PROPOSALS.
<PAGE>
(4) In their discretion with respect to such other matters as may properly
come before such meeting or any adjournments thereof.
UNLESS A CONTRARY VOTE IS SPECIFIED THIS PROXY WILL BE VOTED FOR EACH OF THE
THREE NOMINEES FOR DIRECTOR AND FOR THE LISTED PROPOSALS. ANY SHARES HELD IN
THE AUTOMATIC DIVIDEND REINVESTMENT AND OPTIONAL CASH PAYMENT PLAN WILL BE VOTED
BY THE PLAN NOMINEE IN THE SAME MANNER AS SHARES REGISTERED IN THE PARTICIPANT'S
NAME.
Dated , 1998
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(Signature)
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(Signature, if held jointly)
Please sign exactly as your name appears
on this card. For joint accounts each
owner should sign. When signing as
corporate officer, attorney, executor,
administrator, trustee or guardian,
please give full title as such.
THIS IS A PROXY - SEE REVERSE
