<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
PROTECTION ONE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
PROTECTION ONE, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
To the Stockholders of Protection One, Inc.:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders (the
"Meeting") of Protection One, Inc., a Delaware corporation (the "Company"), will
be held at 10:00 a.m., Pacific Daylight Time, on Wednesday, May 12, 1999 at our
corporate headquarters at 600 Corporate Pointe, 12th Floor, Culver City,
California 90230, for the following purposes, all as set forth in the attached
Proxy Statement:
(1) To elect twelve directors; and
(2) To transact such other business as may properly come before the Meeting.
The Board of Directors has fixed the close of business on March 26, 1999 as
the record date for the determination of stockholders entitled to receive notice
of, and to vote at, the Meeting and any and all adjournments thereof.
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. HOWEVER,
WHETHER OR NOT YOU EXPECT TO ATTEND, YOU ARE URGED TO READ THE ATTACHED PROXY
STATEMENT AND TO ASSURE YOUR REPRESENTATION AT THE MEETING BY COMPLETING,
SIGNING, DATING AND RETURNING THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE.
AN ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES OR CANADA,
IS INCLUDED FOR YOUR CONVENIENCE. IF YOU RECEIVE MORE THAN ONE PROXY CARD
BECAUSE YOU OWN SHARES REGISTERED IN DIFFERENT NAMES OR AT DIFFERENT ADDRESSES,
EACH PROXY CARD SHOULD BE COMPLETED, SIGNED AND RETURNED.
By Order of the Board of Directors
/s/ John E. Mack III
--------------------
John E. Mack III
CHIEF EXECUTIVE OFFICER
April 26, 1999
<PAGE>
PROTECTION ONE, INC.
600 CORPORATE POINTE
CULVER CITY, CALIFORNIA 90230
------------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 12, 1999
------------------------
This Proxy Statement is furnished to holders of shares of the Common Stock,
par value $.01 per share ("Common Stock"), of Protection One, Inc., a Delaware
corporation (the "Company" or "Protection One"), in connection with the
solicitation of proxies by the Board of Directors of the Company from holders of
the Common Stock for use at the 1999 Annual Meeting of Stockholders of the
Company (the "Meeting"), for the purposes set forth in the foregoing notice of
the Meeting, and at any and all adjournments of the Meeting. The Meeting will be
held at 10:00 a.m., Pacific Daylight Time, on Wednesday, May 12, 1999, at our
corporate headquarters at 600 Corporate Pointe, 12th Floor, Culver City,
California 90230.
This Proxy Statement and the enclosed proxy are first being mailed or
otherwise released to stockholders entitled to vote at the Meeting on or about
April 26, 1999. The Company's audited financial statements, together with the
report thereon of Arthur Andersen LLP and certain other information concerning
the Company, are included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1998, a copy of which is being mailed with this Proxy
Statement.
The Board of Directors requests that you complete, sign, date and return the
enclosed proxy promptly, regardless of whether you plan to attend the Meeting.
Any stockholder attending the Meeting may vote in person, even though he or she
previously has returned a proxy.
The date of this Proxy Statement is April 26, 1999.
<PAGE>
INTRODUCTION
MATTERS TO BE CONSIDERED
At the Meeting, the stockholders of the Company will vote upon (i) the
election of twelve directors to serve for one year and until their successors
have been elected and shall have qualified; and (ii) such other business as may
properly come before the Meeting. The Board of Directors does not know of any
matter to be presented at the Meeting other than the election of directors
described in this Proxy Statement.
VOTING RIGHTS AND VOTES REQUIRED
The Board of Directors has fixed the close of business on March 26, 1999 as
the date (the "Record Date") for the determination of stockholders entitled to
notice of, and to vote at, the Meeting. At the close of business on the Record
Date, 126,838,741 shares of Common Stock were outstanding.
A majority of the outstanding shares of Common Stock must be represented in
person or by proxy at the Meeting in order to constitute a quorum for the
transaction of business. Abstentions and shares held by a broker or other
nominee holding shares for a beneficial owner that are not voted on a particular
proposal because the nominee does not have discretionary voting power with
respect to that proposal and has not received instructions from the beneficial
owner (a "broker non-vote") will be counted as present for purposes of
determining the presence of a quorum for the Meeting.
Each holder of record of Common Stock on the Record Date is entitled to one
vote for each share of Common Stock so held on each matter to be voted upon at
the Meeting.
The twelve directors to be elected at the Meeting will be elected by the
affirmative vote of the holders of a plurality of the shares of Common Stock
represented at the Meeting in person or by proxy. Because the twelve directors
will be elected by a plurality vote (i.e., the twelve persons receiving the
highest number of favorable votes will be elected) and assuming such election is
uncontested, votes withheld from any one or more nominees and broker non-votes
will not have any effect on the outcome of the election of directors.
Action with respect to any other matter that may properly come before the
Meeting will require the affirmative vote of the holders of a majority of the
shares of Common Stock represented at the Meeting in person or by proxy and
entitled to vote on the matter. Abstentions will be counted in determining the
total number of shares present and entitled to vote on any such proposal.
Accordingly, although not counted as a vote "for" or "against" a proposal, an
abstention on any such proposal will have the same effect as a vote "against"
that proposal. Broker non-votes will not be counted in determining the number of
shares present and entitled to vote on any such proposal, and will have no
effect on the outcome.
SOLICITATION, VOTING AND REVOCATION OF PROXIES
In connection with the solicitation by the Board of Directors of proxies for
use at the Meeting, the Board of Directors has designated John E. Mack III and
Thomas K. Rankin as proxies. Shares of Common Stock represented by proxies in
the accompanying form, properly executed, received prior to the Meeting and not
revoked, will be voted at the Meeting in accordance with the instructions
specified thereon. IF NO INSTRUCTIONS ARE SPECIFIED, SHARES OF COMMON STOCK
REPRESENTED BY ANY SUCH PROXY WILL BE VOTED FOR THE ELECTION OF EACH OF THE
NOMINEES IDENTIFIED BELOW AND IN ACCORDANCE WITH THE BEST JUDGMENT OF THE
PERSONS DESIGNATED AS PROXIES WITH REGARD TO ALL OTHER MATTERS, IF ANY, THAT MAY
BE PRESENTED AT THE MEETING AND MATTERS INCIDENT TO THE CONDUCT OF THE MEETING.
The Board of Directors is not aware of any matter that will come before the
Meeting other than as described above.
A stockholder may revoke his or her proxy at any time prior to its exercise
by filing with the Secretary of the Company at its principal executive offices
at 600 Corporate Pointe, 12th Floor, Culver City, California 90230 a notice of
revocation or a duly executed proxy bearing a later date, or by attending the
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<PAGE>
Meeting and voting in person. Attendance at the Meeting will not, in itself,
constitute revocation of a previously granted proxy.
In the event that the votes necessary to approve a proposal have not been
obtained by the date of the Meeting, the chairman of the Meeting may, in his
discretion, adjourn the Meeting from time to time to permit the solicitation of
additional proxies by the Board of Directors.
The costs of this solicitation, including expenses in connection with
preparing and mailing this Proxy Statement and the enclosed proxy, will be paid
by the Company. The Company will reimburse persons holding shares of Common
Stock in their names or the names of their nominees but not owning such shares
beneficially (such as brokerage firms, banks and other fiduciaries) for their
expenses in forwarding soliciting materials to such beneficial owners.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to the
beneficial ownership of Western Resources, Inc. ("Western Resources") of the
Common Stock as of March 26, 1999. No other person is known to the Company to
beneficially own more than 5% of the outstanding Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------------------------------------------------------------------------------------------------- -------------------- --------
<S> <C> <C>
Western Resources, Inc. .......................................................................... 114,505,372(1)(2)(3) 85.44%
818 S. Kansas Avenue
Topeka, KS 66612
</TABLE>
- ------------------------------
(1) Includes 2,750,238 shares issuable upon exercise of the option granted by
the Company to Western Resources to purchase up to 2,750,238 additional
shares of Common Stock at a price of $15.50 per share (the "Western Option")
and 4,426,232 shares issuable upon conversion of $49,550,000 aggregate
principal amount of Convertible Notes held by Western Resources. Western
Resources' right to exercise the Western Option will terminate on the
earlier of (a) October 31, 1999 or (b) the 45th day after the last day on
which any of the 6 3/4% Convertible Senior Subordinated Notes due 2003
("Convertible Notes") issued by Protection One Alarm Monitoring, Inc., a
wholly owned subsidiary of the Company, remain outstanding.
(2) Western Resources has shared voting power and shared investment power with
respect to these shares.
(3) The record owner of the outstanding shares is Westar Capital, Inc., a wholly
owned subsidiary of Western Resources.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
Twelve directors will be elected at the Meeting, each to serve until the
next annual meeting of the Company's stockholders and until his or her successor
has been duly elected and qualified.
The Contribution Agreement between the Company and Western Resources, dated
July 30, 1997, as amended (the "Contribution Agreement"), provides that (i)
until the second anniversary of November 24, 1997 (the "Acquisition Date"),
Western Resources will vote all shares of Common Stock beneficially owned by
Western Resources to elect as directors of Protection One certain persons who
were serving as directors of Protection One at the Acquisition Date, and eight
individuals nominated by Western Resources (some or all of whom may be, at
Western Resources' sole discretion, "independent persons" as defined in the
Contribution Agreement); and (ii) thereafter, for so long as Western Resources
directly or indirectly owns more than 50% of the outstanding shares of Common
Stock, Western Resources will vote all such shares to elect as directors of
Protection One an individual selected by Western Resources from the executive
officers of Protection One, at least three "Independent Directors" (as defined
in the Contribution Agreement) and eight additional individuals nominated by
Western Resources. As indicated under "Security Ownership of Certain Beneficial
Owners" above, Western Resources beneficially owns in excess of 80% of the
outstanding shares of Common Stock entitled to vote at the Meeting. Accordingly,
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<PAGE>
the vote by Western Resources of such shares in the election of directors of the
Company will result in the election of all the nominees listed below, regardless
of how any other stockholders may vote.
The persons recommended by the Board of Directors for election as directors
at the Meeting are Robert M. Chefitz, Ben M. Enis, and James Q. Wilson, each of
whom was serving as a director of Protection One at the Acquisition Date, and
Howard A. Christensen, Carl M. Koupal, Jr. and John C. Nettels, Jr., each of
whom was nominated by Western Resources and became a director of Protection One
on the Acquisition Date. In addition, Charles Q. Chandler IV, Maria de Lourdes
Duke, Douglas T. Lake, John E. Mack III, Thomas K. Rankin and Anthony D. Somma
have been nominated for election as directors at the Meeting.
Each of the nominees for director has consented to being named as a nominee
in this Proxy Statement and to serve if elected. Although the Board of Directors
does not know of any reason why any of the Board's nominees will be unavailable
for election, in the event any such nominee should be so unavailable at the time
of the Meeting, proxies in the accompanying form will be voted for the election
of the balance of those nominees named and such other person as the Board of
Directors shall select in accordance with the provisions of the Contribution
Agreement described above.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH OF THE
NOMINEES LISTED BELOW AS A DIRECTOR OF THE COMPANY.
Certain information concerning each of the persons proposed by the Board of
Directors for election at the Meeting as a director is set forth below.
CHARLES Q. CHANDLER IV, age 45, has been a director of Intrust Financial
Corporation since 1985 and President since April of 1990. From January 1988
through March 1990, he was Executive Vice President of Intrust Financial
Corporation. He was Executive Vice President of Intrust Bank, N.A. from January
1988 until July 1993 when he was elected Vice Chairman. In 1996, he was elected
Chairman and President of Intrust Bank, N.A.
ROBERT M. CHEFITZ, age 39, has been a director of Protection One since
September 1991. Mr. Chefitz joined Patricof & Co. Ventures, Inc. ("Patricof"),
an investment management firm, in 1987, where he currently serves as a Managing
Director. Mr. Chefitz also serves as a general partner to various venture
capital partnerships managed by Patricof. Mr. Chefitz currently serves on the
Board of Directors of Xpedite Systems, Inc. and is also a director of several
private companies.
HOWARD A. CHRISTENSEN, age 65, is President and Chief Executive Officer of
Christensen & Associates, an investor relations and strategic planning firm.
MARIA DE LOURDES DUKE, age 52, has been President of Fundacion Amistad since
1997 and Senior Vice President of The Harbor for Boys and Girls since 1973. Ms.
Duke has also been a member of the Women's Commission of the International
Rescue Committee since 1998, a member of the Duke University's Provost Advisory
Committee on International Affairs since 1996 and a member of the NYU Medical
Center Child Study Center.
BEN M. ENIS, age 57, has been a director of Protection One since October
1994. He has been a Professor of Marketing at the University of Southern
California since 1982. Mr. Enis currently serves on the Board of Directors of
Countrywide Credit Industries, Inc.
CARL M. KOUPAL, JR., age 45, has been an Executive Vice President and the
Chief Administrative Officer for Western Resources since July 1995. From January
1995 to July 1995, Mr. Koupal was Executive Vice President of Corporate
Communications, Marketing and Economic Development for Western Resources. Prior
to that time, he served as Western Resources' Vice President, Corporate
Marketing, and Economic Development. Mr. Koupal also currently serves as a
director of Hanover Compressor Co.
DOUGLAS T. LAKE, age 48, is Chairman of the Board of Directors of the
Company and was appointed to the Board on March 19, 1999 to fill a vacancy. Mr.
Lake has been Executive Vice President and Chief
5
<PAGE>
Strategic Officer of Western Resources since 1998. Mr. Lake is currently a
director of Guardian International, Inc. and ONEOK, Inc. From 1995 to 1998, Mr.
Lake was a Senior Managing Director at Bear Stearns & Co., Inc.
JOHN E. MACK III, age 40, is the Chief Executive Officer of the Company.
From August 1996 to March 1999, Mr. Mack was Executive Vice President, Chief
Strategic Officer, Acting Chief Financial Officer and Secretary of the Company.
Mr. Mack had been Protection One's Executive Vice President--Business
Development since August 1996 and Assistant Secretary of Protection One since
October 1994. Previously, Mr. Mack was Vice President--Business Development of
Protection One from September 1991 until August 1996.
JOHN C. NETTELS, JR., age 42, is a partner in the law firm of Morrison &
Hecker L.L.P.
THOMAS K. RANKIN, age 42, is President and Chief Operating Officer of the
Company. From August 1996 to March 1999, Mr. Rankin was President--North
American Security Alarm Operations of the Company. Mr. Rankin was Vice
President--Branch Management of Protection One from September 1991 to August
1996, and had been Protection One's Executive Vice President--Branch Management
since August 1996 and Assistant Secretary of Protection One since October 1994.
ANTHONY D. SOMMA, age 35, is Acting Chief Financial Officer, Treasurer and
Secretary of the Company. In July 1996, he was promoted to Director of Corporate
Strategy, and in October 1998 was promoted to Executive Director of Finance of
Western Resources. In July 1995, he moved to Western Resources' corporate office
in the Corporate Strategy Department. From December 1994 to July 1995, Mr. Somma
was Manager of Corporate Development at Astra Resources, a subsidiary of Western
Resources.
JAMES Q. WILSON, age 67, has been a director of Protection One since June
1996. Mr. Wilson has recently retired from his position as a Professor of
Management at the University of California at Los Angeles. Mr. Wilson is
currently a director of New England Electric System and State Farm Mutual Life
Insurance Company.
COMMITTEES OF THE BOARD OF DIRECTORS; BOARD AND COMMITTEE MEETINGS
The Board of Directors has a Compensation Committee, an Audit Committee, a
Community and Charity Committee, a Finance Committee and a Nominating Committee.
The members of the Compensation Committee are Mr. Gardner, Mr. Christensen, Mr.
Koupal and Mr. Nettels. The Compensation Committee establishes, subject to
approval by the Board of Directors, the salaries and bonuses for executive
officers of the Company, and together with the Board of Directors administers
the Company's long-term incentive, stock purchase and 401(k) plans. The members
of the Audit Committee are Mr. Brown, Mr. Gremp, Mr. Kitchen and Mr. Wilson. The
Audit Committee selects, subject to approval by the Board of Directors,
independent public accountants to audit the consolidated financial statements of
the Company and its subsidiaries and reviews the results and scope of the audits
and other services provided by the Company's independent auditors. The members
of the Community and Charity Committee are Mr. Brown, Mr. Chefitz, Mr. Enis and
Mr. Nettels. The Community and Charity Committee reviews and recommends action
relating to community and charitable activities of the Company. The members of
the Finance Committee are Mr. Chefitz and Mr. Enis. The Finance Committee
reviews the financial structure and activities of the Company. The members of
the Nominating Committee are Mr. Kitchen, Mr. Koupal and Mr. Wilson. The
Nominating Committee reviews nominations for and recommends nominees to the
Board of Directors of the Company. The Nomination Committee will not consider
nominees recommended by security holders.
During the year ended December 31, 1998, the Board of Directors held ten
meetings. The Compensation Committee held two meetings. The Audit Committee held
one meeting. The Community and Charity Committee held three meetings. The
Finance Committee held five meetings. The Nominating Committee did not hold any
meetings last year. Mr. Brown and Mr. Enis did not attend 75% of the aggregate
of the meetings of the Board of Directors and of the committees of the Board of
which each was a member.
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<PAGE>
DIRECTOR COMPENSATION. All directors of Protection One who are not
employees of Protection One or Western Resources will receive for their services
as directors an annual fee of $15,000 and an additional fee of $750 per
in-person meeting (or $500 per telephonic meeting) of the Board or committees
thereof attended. Mr. Chefitz's fees are paid to Patricof.
On January 26, 1998, pursuant to the Company's long-term incentive plan,
each non-employee director received an option to acquire 2,500 shares of Common
Stock. Each such option has a term of 10 years, will vest in full on the third
anniversary of the grant date and has an exercise price equal to the closing
price of the Common Stock as reported on the New York Stock Exchange on the date
granted. The option that otherwise would have been granted to Mr. Chefitz was
granted to Patricof.
All directors are reimbursed for travel and other out-of-pocket expenses
incurred in attending meetings of the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, the members of the Compensation Committee were Mr. Gardner, Mr.
Christensen, Mr. Nettles and Mr. Koupal. None of such persons is an employee of
the Company, or serves or has formerly served as an officer of the Company. Mr.
Koupal is an executive officer of Western Resources.
7
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND DIRECTORS
The following table sets forth certain information with respect to
beneficial ownership of the Common Stock as of March 26, 1999 by each of the
Company's directors, each named executive officer and all directors and
executive officers of the Company as a group. Unless otherwise indicated below,
each individual named in the table has sole voting power and sole investment
power with respect to all shares beneficially owned, subject to community
property laws where applicable.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP(2) CLASS (3)
- -------------------------------------------------------------- ---------------------- -------------
<S> <C> <C>
James M. Mackenzie, Jr.(1).................................... 431,381 *
John W. Hesse................................................. 354,326 *
John E. Mack III.............................................. 272,115 *
Steven A. Millstein........................................... 100 *
Thomas K. Rankin.............................................. 278,951 *
Peter C. Brown(1)............................................. 0 *
Charles Q. Chandler IV........................................ 0 *
Robert M. Chefitz............................................. 16,542 *
Howard A. Christensen......................................... 0 *
Maria de Lourdes Duke......................................... 0 *
Ben M. Enis................................................... 30,000 *
Joseph J. Gardner(1).......................................... 0 *
William J. Gremp(1)........................................... 0 *
Steven L. Kitchen(1).......................................... 300 *
Carl M. Koupal, Jr............................................ 0 *
Douglas T. Lake............................................... 0 *
John C. Nettels, Jr........................................... 2,000 *
Anthony D. Somma.............................................. 0 *
James Q. Wilson............................................... 20,100 *
All directors, director nominees and executive officers of
Protection One as a group (19 persons)...................... 1,405,815(4) 1.1%
</TABLE>
- ------------------------------
* Less than one percent.
(1) Messrs. Mackenzie, Brown, Gardner, Gremp and Kitchen are not standing for
re-election.
(2) Includes shares subject to options that are currently exercisable or that
become exercisable within 60 days after December 31, 1998 as follows: Mr.
Mackenzie, 143,000 shares; Mr. Hesse, 155,000 shares; Mr. Mack, 161,000
shares; Mr. Rankin, 161,000 shares; Mr. Enis, 30,000 shares; Mr. Wilson,
20,000 shares; and all directors and executive officers as a group, 670,000
shares.
(3) Based upon shares of Common Stock outstanding at December 31, 1998, as
adjusted for options that are currently exercisable or that become
exercisable within 60 days after such date.
(4) Gives effect to the above footnotes.
EXECUTIVE OFFICERS; EXECUTIVE
COMPENSATION AND RELATED INFORMATION
EXECUTIVE OFFICERS
The name, age and current position(s) with the Company of each executive
officer of the Company are as set forth below.
JOHN E. MACK III, age 40, is the Chief Executive Officer of the Company.
From August 1996 to March 1999, Mr. Mack was Executive Vice President, Chief
Strategic Officer, Acting Chief Financial Officer and Secretary of the Company.
Mr. Mack had been Protection One's Executive Vice President-- Business
Development since August 1996 and Assistant Secretary of Protection One since
October 1994.
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<PAGE>
Previously, Mr. Mack was Vice President--Business Development of Protection One
from September 1991 until August 1996.
THOMAS K. RANKIN, age 42, is President and Chief Operating Officer of the
Company. From August 1996 to March 1999, Mr. Rankin was President--North
American Security Alarm Operations of the Company. Mr. Rankin was Vice
President--Branch Management of Protection One from September 1991 to August
1996, and had been Protection One's Executive Vice President--Branch Management
since August 1996 and Assistant Secretary of Protection One since October 1994.
ANTHONY D. SOMMA, age 35, is the Acting Chief Financial Officer, Treasurer
and Secretary of the Company. In July 1996, he was promoted to Director of
Corporate Strategy, and in October 1998 was promoted to Executive Director of
Finance at Western Resources. In July 1995, he moved to Western Resources'
corporate office in the Corporate Strategy Department. From December 1994 to
July 1995, Mr. Somma was Manager of Corporate Development at Astra Resources, a
subsidiary of Western Resources.
STEVEN A. MILLSTEIN, age 46, is President of the Mobile Division of the
Company. Mr. Millstein was Executive Vice President--New Market Development of
Protection One since the Acquisition Date and had been President of WestSec,
Inc. since its formation in December 1996 and President of Westar Security, Inc.
since May 1995. Prior to that time he was Vice President, Marketing and Sales
for Acoustics Development Corporation, a manufacturer of telephone booths and
interactive media enclosures.
All officers of Protection One are appointed by Protection One's Board of
Directors and hold such officers' respective offices until their respective
successors have been appointed, or their earlier death, resignation or removal
by the Board of Directors.
EXECUTIVE COMPENSATION
EMPLOYMENT AGREEMENTS
Protection One has employment agreements with Messrs. Mackenzie, Mack,
Rankin and Millstein which were entered into on the Acquisition Date pursuant to
the Contribution Agreement. Such agreements provide for minimum annual base
salaries in the amounts of $379,000 (Mr. Mackenzie), and $270,800 (Messrs. Mack,
Rankin and Millstein). The term of each agreement is continually extended so as
to cause each such agreement to have a remaining term of three years. Each of
these employment agreements provides for participation by the executive officer
in Protection One's long-term incentive plan, bonus plan for senior executives
and other employee benefit plans. Each executive officer may terminate his
employment by Protection One for any reason at any time upon not less than 60
days' prior notice to Protection One. If an employment agreement is terminated
(i) by Protection One other than for Cause (as defined) or as a result of the
executive officer's death or disability or (ii) by the executive officer for
Good Reason (as defined), the executive officer will be entitled to receive
severance payments (the "Termination Amount") equal in the aggregate to three
times the executive officer's then annual base salary plus the last annual bonus
paid or payable to such officer, and all options and other awards previously
granted to such officer will become exercisable and will remain exercisable for
three years. "Cause" is defined in the employment agreements to mean: (i) an act
of fraud, embezzlement or similar conduct by the executive officer involving
Protection One, (ii) conviction of a felony involving moral turpitude, (iii) a
continuing, repeated willful failure or refusal by the executive officer to
perform his duties, (iv) willful or serious misconduct on the part of the
executive officer that continues and is demonstrably injurious to Protection
One, or (v) an activity by the executive officer that is in conflict with or
adverse to the business interests of Protection One. "Good Reason" is defined by
the employment agreements to mean an uncured breach of Protection One's
obligations under the employment agreement or a material diminution in the
executive officer's current position, responsibilities or authority. Each
executive officer has agreed in his employment agreement not to compete with
Protection One and not to solicit any Protection One employee, or hire any
Protection One employee whose annual base salary and fixed or guaranteed bonus
would be more than
9
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$50,000, prior to the later of the first anniversary of the date on which the
officer's employment by Protection One terminates and the date on which the
Termination Amount is paid in full.
SUMMARY OF EXECUTIVE COMPENSATION
The following table summarizes the compensation for the fiscal years ended
December 31, 1998, 1997 and September 30, 1997 and 1996 of Protection One's
Chief Executive Officer and the four other most highly paid executive officers
of Protection One.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------------
SECURITIES
ANNUAL COMPENSATION RESTRICTED UNDERLYING ALL OTHER
----------------------------------- STOCK AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION(S) YEAR(1) SALARY ($) BONUS ($) ($)(2) GRANTED (#) ($)(3)
- -------------------------------------- ----------- ----------- --------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James M. Mackenzie, Jr. .............. 1998 385,000 41,690 -- 190,000 3,114
Former President and Chief 1997* 315,976 1,616,232 -- -- --
Executive Officer(4) 1997 300,155 -- -- 25,000 1,727
1996 298,104 60,000 40,000(5) 100,000 1,818
John W. Hesse(6) ..................... 1998 321,000 34,650 -- 125,000 1,503,010
Former Executive Vice President 1997* 277,368 1,646,233 -- -- --
1997 264,155 -- -- 25,500 1,524
1996 250,728 60,000 40,000(5) 100,000 1,706
John E. Mack III ..................... 1998 276,800 29,788 -- 125,000 2,630
Chief Executive Officer 1997* 214,452 1,590,758 -- -- --
1997 199,172 -- -- 25,000 1,159
1996 186,128 60,000 40,000(5) 100,000 263
Thomas K. Rankin ..................... 1998 276,800 29,788 -- 125,000 439
President and Chief Operating 1997* 214,453 1,590,758 -- -- --
Officer 1997 199,172 -- -- 25,000 --
1996 186,128 60,000 40,000(5) 100,000 2,288
Steven A. Millstein (7) .............. 1998 281,600 29,788 -- 125,000 2,719
President--Mobile Division
</TABLE>
- ------------------------------
(1) Information given for 1998 relates to the fiscal year ended December 31,
1998. Information given for "1997*" relates to the fiscal year ended
December 31, 1997. All other amounts relate to the fiscal years ended
September 30, 1997 and 1996. Information relating to January 1 through
September 30, 1997, is included in the information presented for the year
ended September 30, 1997 and for the year ended December 31, 1997.
Overlapping fiscal years are presented because the Company changed its
fiscal year end from September 30 to December 31 effective as of the
Acquisition Date.
(2) Restricted stock is fully vested when awarded. The executive officer owning
such shares will receive the same dividends on these shares as are received
by all other holders of the Common Stock. The aggregate number (and value)
for each of the executive officers at December 31, 1998 for outstanding
restricted stock was: 4,156 ($35,586) for each of Mr. Mackenzie, Mr. Hesse,
Mr. Mack, Mr. Rankin, and Mr. Millstein.
(3) Amounts stated reflect contributions made by Protection One to such
executive officer's account under Protection One's 401(k) plan and amounts
reflecting insurance premiums paid by the Company.
(4) James M. Mackenzie, Jr., ceased to be president and chief executive officer
on March 19, 1999.
(5) Awarded in fiscal 1996 and paid in fiscal 1997 in the form of 4,156 shares
of Common Stock. As no consideration was paid for these shares, the value
set forth in the chart is calculated by multiplying the closing price of the
Common Stock as reported on the Nasdaq National Market on the date of award
($9.625) by the number of shares awarded.
(6) John W. Hesse, the Company's former chief financial officer, announced his
resignation on December 9, 1998. Mr. Hesse continued to work with the
Company during a transition period through March 31, 1999. $1.5 million
represents severance amounts paid or payable to Mr. Hesse.
10
<PAGE>
(7) Steven A. Millstein became an Executive Vice President of the Company on
November 24, 1997. Prior to the Acquisition Date, Mr. Millstein served, and
he continued to serve, as the President of WestSec, Inc., and Westar
Security, Inc., which became subsidiaries of the Company on the Acquisition
Date. During the year ended December 31, 1997, Mr. Millstein's aggregate
compensation from the Company, WestSec, Inc. and Westar Security, Inc.
consisted of salary in the amount of $216,777 and other compensation in the
amount of $215,728 (consisting of $105,728 representing compensation for his
relocation to Dallas, Texas, and $110,000 representing a retention bonus
earned in fiscal 1997 and paid in fiscal 1998). In 1998, Mr. Millstein
became President of the Mobile Division of the Company.
Other compensation in the form of perquisites and other personal benefits
has been omitted from the above table as the aggregate amount of such
perquisites and other personal benefits constituted the lesser of $50,000 or 10%
of the total annual salary and bonus of the named executive officer for such
year.
STOCK OPTION GRANTS
The following table sets forth certain information concerning grants of
stock options made during the year ended December 31, 1998 to the executive
officers named in the Summary Compensation Table.
OPTION GRANTS IN LAST YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS(1) AT ASSUMED ANNUAL
------------------------------------------------------------ RATES OF STOCK
NUMBER OF PRICE APPRECIATION
SECURITIES PERCENT OF TOTAL FOR OPTION TERM(3)
UNDERLYING OPTIONS GRANTED EXERCISE OR ------------------
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE PRESENT
NAME GRANTED LAST YEAR ($/SH)(2) DATE VALUE ($)
- --------------------------------------- ----------- ------------------- ------------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
James M. Mackenzie, Jr................. 190,000 15.0% 11.00 1/26/08 1,301,500
John W. Hesse.......................... 125,000 10.0% 11.00 1/26/08 856,250
John E. Mack III....................... 125,000 10.0% 11.00 1/26/08 856,250
Thomas K. Rankin....................... 125,000 10.0% 11.00 1/26/08 856,250
Steven A. Millstein.................... 125,000 10.0% 11.00 1/26/08 856,250
</TABLE>
- ------------------------------
(1) All options were granted on January 26, 1998. All such options have 10-year
terms and are currently nonexercisable.
(2) The exercise price was determined by reference to the closing price of the
Common Stock reported on the New York Stock Exchange on the date of grant
($10.98).
(3) The grant date valuation was calculated using the Black-Scholes option
pricing model and assumptions called for by paragraph 19 and Appendix B of
FAS123. This calculation does not necessarily follow the same method and
assumptions that the Company uses in valuing long term incentives for other
purposes. In calculating the grant date valuation the following assumptions
were made: actualized stock volatility of 61.78%; a 6-year time of exercise
option term; a risk-free interest rate 5.49%; a stock price at grant date of
$10.98; exercise price at grant date of $11.00; an average dividend yield of
0.00% and vesting restrictions of 3.00 years. These numbers are calculated
based upon the requirements promulgated by the Securities and Exchange
Commission, and do not represent an estimate by the Company of future stock
price growth.
AGGREGATED OPTION EXERCISES IN LAST YEAR AND YEAR-END OPTION VALUES
The following table sets forth, for each of the executive officers named in
the Summary Compensation Table above, certain information regarding the value of
stock options held at year end. No stock option was exercised by any such
executive officer during the year ended December 31, 1998.
11
<PAGE>
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
STOCK UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
12/31/98 AT 12/31/98 ($)(1)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ----------------------------------------------- ----------------------- -----------------------
<S> <C> <C>
James M. Mackenzie, Jr......................... 143,000/190,000 76,500/--
John W. Hesse.................................. 155,000/125,000 101,250/--
John E. Mack III............................... 161,000/125,000 113,625/--
Thomas K. Rankin............................... 161,000/125,000 113,625/--
Steven A. Millstein............................ --/125,000 --/--
</TABLE>
- ------------------------------
(1) Value is calculated by subtracting the exercise price from the assumed fair
market value of the securities underlying the options at fiscal year end and
multiplying the result by the number of shares for which the option is in
the money. Fair market value was calculated based upon the closing sales
prices of the Common Stock as reported on the New York Stock Exchange on
December 31, 1998 ($8.56250). There is no guarantee that if and when any
such option is exercised, the option will have this value.
COMPENSATION COMMITTEE REPORT ON
PROTECTION ONE EXECUTIVE COMPENSATION
THE FOLLOWING REPORT WAS ISSUED BY THE COMPENSATION COMMITTEE OF THE BOARD
OF DIRECTORS WITH RESPECT TO THE FISCAL YEAR ENDED DECEMBER 31, 1998.
The compensation of the Company's executive officers is determined by the
Compensation Committee of the Board of Directors based on the goals and policies
established by the Board of Directors.
The compensation of Protection One's Chief Executive Officer, like the other
executive officers, consists of a combination of salary and bonuses. In addition
to those factors applying generally to all executives as indicated below, Mr.
Mackenzie's compensation for 1998 reflects the Company's performance in the
areas of revenues and EBITDA and the Committee's assessment of Mr. Mackenzie's
management skills and individual performance.
Protection One has entered into employment agreements with each of the
executive officers. The base salary for each of the executive officers is set
forth in his employment agreement, subject to adjustments pursuant to the
policies established by the Compensation Committee. Salaries for executive
officers are supplemented by bonuses paid in cash and in common stock, as well
as options.
Since the inception of Protection One in September 1991, the Compensation
Committee has used common stock, warrants and options as a means of providing
performance-based compensation to all executive officers. The Compensation
Committee believes linking executive compensation to the performance of
Protection One's common stock aligns the interests of the executive officers
with those of shareholders.
In determining the compensation and bonuses of Protection One's executive
officers, the Compensation Committee considers a combination of objective and
subjective performance criteria, all of which the Compensation Committee
believes contribute to shareholder value. Objective criteria include:
<TABLE>
<S> <C>
Revenue and EBITDA growth..... Margin expansion
Subscriber growth............. Subscriber and MRR attrition
</TABLE>
The Compensation Committee reviews the business plans and projections
prepared by management and compares Protection One's actual performance to the
objective criteria set forth in such plans and projections.
12
<PAGE>
Subjective criteria considered by the Compensation Committee in determining
executive officer compensation include the consummation of acquisitions, growth
in Protection One's dealer program, strategic alliances, joint venture and
affinity program activities, management and Protection One's infrastructure
enhancements and success in capital formation. Bonuses paid for 1998 were based
on the same factors used in determining changes in base compensation. The
Compensation Committee considers compensation paid to other persons with
comparable skills and experience in the security industry and other service
industries, Protection One's performance in comparison to its competitors and
performance in each officer's specific area of responsibility.
Joseph J. Gardner, Chairman
Howard A. Christensen
Carl M. Koupal, Jr.
John C. Nettels, Jr.
PERFORMANCE GRAPH
The following chart compares the cumulative total stockholder returns on the
Common Stock since September 29, 1994 to the cumulative total returns over the
same period of the Russell 2000 index and a peer group index comprised of the
common stock of Alarmguard Holdings, Inc., Borg Warner Security Corporation, The
Pittston Brinks Group Common Stock of The Pittston Company and Response USA,
Inc. (the "Peer Group"). The Peer Group is based on the selection of companies
operating in the security alarm monitoring business. The annual returns for the
Peer Group index are weighted based on the capitalization of each company within
the Peer Group at the beginning of each period for which a return is indicated.
The chart assumes the value of the investment in the Common Stock and each index
was $100 at September 29, 1994 and that all dividends were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
PROTECTION ONE, INC. PEER GROUP RUSSELL 2000
<S> <C> <C> <C>
9/94 100 100 100
12/94 73 91 98
12/95 157 169 126
12/96 151 155 147
12/97 276 228 180
12/98 209 191 179
</TABLE>
13
<PAGE>
The materials contained in the foregoing Compensation Committee Report on
Executive Compensation and included under the caption "Performance Graph" are
not "soliciting material," are not deemed filed with the Securities and Exchange
Commission and are not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), whether made before or after the
date of this Proxy Statement and irrespective of any general incorporation
provision contained therein.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Exchange Act and the rules issued
thereunder, Protection One's executive officers and directors are required to
file with the Securities and Exchange Commission reports of ownership and
changes in ownership of shares of Common Stock. Copies of such reports are
required to be furnished to Protection One. Based solely on Protection One's
review of the copies of such reports furnished to Protection One or on written
representations to Protection One that no such reports were required, Protection
One believes that during the fiscal year ended December 31, 1998, all of
Protection One's executive officers and directors and all beneficial owners of
more than 10% of the Common Stock filed on a timely basis all reports, if any,
required by Section 16(a) of the Exchange Act, with the following exceptions: a
Form 3 for Montgomery W. Cornell was filed approximately three weeks late; a
Form 4 reflecting a transaction during 1998 was not filed by Mr. George A.
Weinstock; and Forms 5 reporting the acquisition of stock options during 1997
for Messrs. Enis, Hesse, Mack, Mackenzie, Rankin and Wilson were not filed. All
such previously unreported transactions were reported on Forms 5 filed in
February of 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH WESTERN RESOURCES
As described above, pursuant to the Contribution Agreement, on November 24,
1997, Western Resources acquired control of Protection One in consideration for
the transfer by Western Resources of cash and securities to Protection One (the
"Western Transaction"). In connection with the Western Transaction, Western
Resources was granted the Western Option to purchase additional shares of Common
Stock.
Pursuant to the Contribution Agreement, Western Resources has agreed to
certain arrangements relating to the election of directors of Protection One.
See "Election of Directors--Nominees for Election." In addition, during the
10-year period following the Acquisition Date, a merger or a sale of all or
substantially all of the assets of Protection One involving Western Resources or
any affiliate of Western Resources generally will require the prior approval of
a majority of the "Independent Directors" (as defined in the Contribution
Agreement), and Western Resources may not acquire more than 85% of the
outstanding shares of Common Stock or other voting securities of Protection One
except under specified circumstances and subject to specified limitations.
Effective as of January 1, 1998, Protection One Alarm Monitoring, Inc.
("Monitoring"), a wholly owned subsidiary of Protection One, acquired Network
Multi-Family Security Corporation, from Westar Capital, Inc. ("Westar"), a
wholly owned subsidiary of Western Resources, in exchange for a promissory note
of Monitoring in the principal amount of approximately $180 million.
On March 2, 1998, Monitoring executed a promissory note in favor of Westar
in the principal amount of $274 million. Both of these notes bore interest at
the rate of 6 11/16% per annum due and payable June 1, 1998 and were refinanced
with a revolving credit facility provided by Westar.
On June 8, 1998, Protection One sold 37,597,500 shares of its Common Stock
to Westar, at a price of $9.50 per share, for aggregate proceeds of
approximately $357 million.
14
<PAGE>
On August 17, 1998, Protection One issued $250 million of senior unsecured
notes bearing an interest rate of 7 3/8% and due in 2005. Protection One used
proceeds from this offering to repay a portion of the borrowings under
Protection One's revolving credit facility with Westar.
A tax sharing agreement between Western Resources and Protection One
provides for the payment to Protection One by Western Resources for tax benefits
utilized by Western Resources. Accordingly, in November 1998, Protection One
received payment from Western Resources for 1997 tax receivable in the amount of
$29.9 million. As of December 31, 1998, Protection One had a receivable of $5.9
million for current year losses anticipated to be utilized by Western Resources
in its 1998 federal income tax return.
On December 21, 1998, Protection One issued $350 million of senior
subordinated notes bearing an interest rate of 8 1/8% and due in 2009.
Protection One used proceeds from this offering to repay borrowings under the
credit facility provided by Westar.
In December 1998, Protection One replaced an existing $462 million senior
credit facility, provided by Westar, with a new $500 million credit facility
provided by a group of banks.
In addition, in connection with the acquisition of Lifeline Systems, Inc.,
Westar may, but is under no obligation to, acquire additional shares of Common
Stock from Protection One in an amount sufficient to maintain its ownership of
more than 80.1% of the outstanding common stock of Protection One.
TRANSACTIONS WITH EXECUTIVE OFFICERS
During 1998, the Company made a personal loan to Thomas Rankin, President of
the Company. The largest aggregate amount of indebtedness outstanding during the
year was $150,000. The balance of this loan, together with interest at the
variable interest rate equal to the rate Protection One pays on the revolving
credit facility, was $154,427.08 at December 31, 1998.
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has selected Arthur Andersen
LLP ("Andersen") as the independent public accountants to audit the consolidated
financial statements of the Company and its subsidiaries for fiscal 1998. A
representative of that firm is expected to be present at the Meeting, will have
an opportunity to make a statement if so desired, and will be available to
respond to appropriate questions. If such firm should decline to act or
otherwise become incapable of acting, or if such firm's employment is
discontinued, the Audit Committee will select other independent public
accountants for the Company.
The Company retained Andersen to serve as principal accountant for the
Company and its subsidiaries beginning with the calendar year ended December 31,
1997, and dismissed the firm of Coopers & Lybrand LLP ("C&L"). The dismissal of
C&L as principal accountant and the appointment of Andersen as principal
accountant was unanimously approved by all the members of the Company's Board of
Directors on January 16, 1998, as recommended by the Audit Committee.
The decision to dismiss C&L and engage Andersen followed the Western
Transaction and the Company's decision to change its fiscal year to a calendar
year as required by the Western Transaction. See "Change in Control of the
Company." Andersen is the principal accountant for Western Resources.
The audit reports of C&L on the Company's consolidated financial statements
as of and for the fiscal years ended September 30, 1998 and 1997 did not contain
an adverse opinion or a disclaimer of opinion nor were they qualified or
modified as to uncertainty, audit scope or accounting principles. During fiscal
years 1998 and 1997, there were no disagreements with C&L on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which, if not resolved to C&L's satisfaction, would have
caused it to make reference to the subject matter of the disagreement in
connection with its reports. In addition, there were no reportable events as
described under Item 304(a)(1)(v)(A) through (D) of Regulation S-K promulgated
by the Securities and Exchange
15
<PAGE>
Commission during fiscal years 1998 and 1997. Representatives of C&L are not
expected to be present at the Meeting.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2000 Annual Meeting of
the Company's stockholders must be received at the Company's principal executive
offices at 600 Corporate Pointe, Culver City, California 90230, addressed to the
attention of the Secretary of the Company, by December 6, 1999 in order to be
considered for inclusion in the proxy statement and form of proxy relating to
such meeting. In addition, if a stockholder intends to present a proposal at the
2000 Annual Meeting other than pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, and if the proposal is not received by the Company's
Secretary by February 16, 2000, then the proxies designated by the Board of
Directors of the Company for the 2000 Annual Meeting of Shareholders may vote in
their discretion on any such proposal any shares for which they have been
appointed proxies without mention of such matter in the Proxy Statement for such
meeting or on the proxy card for such meeting.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented at the
Meeting other than the matter described above. If any other matter properly
comes before the Meeting, the persons named in the enclosed form of proxy intend
to vote said proxy in accordance with their best judgment on such matter.
ANNUAL REPORT ON FORM 10-K
THE ANNUAL REPORT OF THE COMPANY ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 1998 WAS FILED ON APRIL 14, 1999. THE REPORT CONTAINS FINANCIAL STATEMENTS
AUDITED BY ARTHUR ANDERSEN LLP, INDEPENDENT PUBLIC ACCOUNTANTS.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE 1999 ANNUAL MEETING, YOU ARE
REQUESTED TO DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD. YOUR PROMPT RESPONSE
WILL BE MUCH APPRECIATED.
16
<PAGE>
PROTECTION ONE, INC.
600 CORPORATE POINTE, 12TH FLOOR
CULVER CITY, CALIFORNIA 90230
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 12, 1999
The undersigned, a stockholder of Protection One, Inc., a Delaware
corporation, hereby appoints JOHN E. MACK III and THOMAS K. RANKIN, and each
of them as the attorneys and proxies of the undersigned, with power of
substitution, to attend the Annual Meeting of Stockholders of Protection One,
Inc. to be held at 600 Corporate Pointe, 12th Floor, Culver City, California
90230 on Wednesday, May 12, 1999, at 10:00 a.m. Pacific Daylight Time, and at
any adjournments or postponements thereof, and to vote the number of shares
the undersigned would be entitled to vote if personally present.
THIS PROXY WILL BE VOTED AS DIRECTED, UNLESS OTHERWISE MARKED, THIS PROXY
WILL BE VOTED FOR ITEM 1.
In their discretion, the proxies are authorized to vote upon any other
matters as may properly come before the meeting. If any nominee is unable or
unwilling to serve or is otherwise unavailable, said proxies shall have
discretion and authority to vote in accordance with their judgment for other
nominees.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED ON THE OTHER SIDE)
- -------------------------------------------------------------------------------
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<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED PLEASE MARK
IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED YOUR VOTE AS / X /
STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS INDICATED IN
PROXY WILL BE VOTED FOR ITEM 1. THIS EXAMPLE.
(The Board of directors recommends a vote FOR.)
Item 1. ELECTION OF DIRECTORS
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed to the right
/ / / /
ELECTION OF DIRECTORS, NOMINEES, Charles Q. Chandler IV;
Robert M. Chefitz; Howard A. Christensen; Marie de Lourdes Duke;
Ben M. Enis; Carl M. Koupal, Jr.; Douglas T. Lake; John E. Mack III;
John C. Nettels, Jr.; Thomas K. Rankin; Anthony D. Somma;
and James Q. Wilson.
(INSTRUCTION: To withhold authority to vote for one or more individual
nominees, write such name of names in the space provided below.)
_______________________________________________________________________________
Date ____________________________________
Signature _______________________________
Signature _______________________________
NOTE: Please sign exactly as name appears
to the left. When signing as attorney,
executor, trustee, guarantor or officer
of a corporation, please give full title
as such. For joint accounts, all named
holders should sign.
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
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-ARROW- FOLD AND DETACH HERE -ARROW-
