1
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
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/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only
/X/ Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
Southern California Water Company
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(Name of Registrant as Specified in itsIn Its Charter)
James B. Gallagher
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(Name of Person(s) Filing Proxy Statement)Statement, if other than the Registrant)
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2
SOUTHERN CALIFORNIA WATER COMPANY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS -- APRIL 26, 199430, 1996
Dear Shareholder:
The Annual Meeting of the Shareholders of Southern California Water Company
(the "Company") will be held at the Industry Hills Sheraton, Suites Fairplex, 601 West McKinley Avenue,
Pomona,One Industry Hills
Parkway, City of Industry, California, on Tuesday, April 26, 1994,30, 1996, at 11:10:00
A.M., Pacific time, for the following purposes:
1. To elect a boardseven directors to the Board of six directorsDirectors to serve until the
next Annual Meeting of Shareholders and until their successors are
elected and qualified.
2. To approve an amendment to the Company's Bylaws to establish a
variable Board of Directors of between five and nine persons, with the
exact number of directors to be six until changed by the Board of
Directors or the shareholders by amendment of the Articles of
Incorporation or the Bylaws.
3. To transact any other business which may properly come before the
meeting or any adjournment thereof.
The Board of Directors has nominated the following individuals for election
as directors: Jean E. Auer, William V. Caveney, R. Bradbury Clark, N.P. Dodge,
Jr., Robert F. Kathol, Lloyd E. Ross and Floyd E. Wicks.
The Board of Directors has fixed the close of business on February 28,
1994,March 4, 1996, as
the record date for the determination of shareholders entitled to notice of and
to vote at this meeting or any adjournment thereof.
It is important that every shareholder, whether owning one or more shares
and whether or not expecting to attend the meeting in person, sign, date and
promptly return the enclosed proxy. A return envelope, requiring no postage if
mailed in the United States, is enclosed for convenience. By returning your
signed proxy, you can help assure a quorum to transact the business of the
meeting.
By order of the Board of Directors
JAMES B. GALLAGHER
----------------------------------(SIG)
James B. Gallagher
Secretary
San Dimas, California
March 18, 199415, 1996
3
PROXY STATEMENT
SOUTHERN CALIFORNIA WATER COMPANY
630 EAST FOOTHILL BOULEVARD
SAN DIMAS, CALIFORNIA 91773
------------------------
SOLICITATION OF PROXY AND RIGHT OF REVOCATION
The accompanying proxy is solicited by and on behalf of the Board of
Directors (the "Board" or the "Board of Directors") of Southern California Water
Company (the "Company") for use at the Annual Meeting of Shareholders to be held
on April 26, 1994,30, 1996 (the "Annual Meeting"), or any adjournment thereof. Any
shareholder giving a proxy has the power to revoke it at any time before it is
exercised by attending the meeting and voting in person or by a writing
delivered to the Company stating that the proxy is revoked or by a subsequent
proxy executed by the shareholder and presented to the meeting. All shares
represented by each properly executed, unrevoked proxy received in time for the
meeting will be voted as marked on the proxy. If the proxy is signed and
returned, but is not marked, it will be voted for all nominees listed and in
favoror, if
cumulative voting applies, at the discretion of the Bylaw amendmentproxies named on the
accompanying proxy card, as described herein. You are encouraged to mark your
proxy carefully in accordance with the instructions appearing thereon. Theits instructions. Proxy solicitation expense of soliciting proxies
will be paid by the Company. This proxy statement and the accompanying proxy
were mailed on or about March 18, 1994.15, 1996.
VOTING RIGHTS
The Company's voting securities of the Company outstanding as of February 28, 1994on March 4, 1996 were 89,60086,400
Preferred Shares and 7,845,092 Common Shares. Each Preferred Share is entitled
to one vote and each Common Share is entitled to one-tenth of one vote. Except
as otherwise provided in the Company's Articles of Incorporation, as amended,
and under applicable law, Common and Preferred shareholders vote as a single
class.
Votes cast by proxy or in person at the meeting will be counted by an
inspector of election appointed by the Board of Directors to act as an election
inspector for the meeting. The election inspector will treat sharesShares represented by proxies that reflect
abstentions will be treated as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. Abstentions, however, dowill not constitute
a vote "for" or "against" any matter and thus will be disregarded in the
calculation of a plurality or of votes cast on any matter submitted to the
shareholders for a vote.
1
4
The inspector of election inspector will treat shares referred to as "broker
non-votes" (i.e., shares held by brokers or nominees as to which instructions
have not been received from the beneficial owners or
1
4 persons entitled to vote
that the broker or nominee does not have discretionary power to vote on a
particular matter) as shares that are present and entitled to vote for purposes
of determining the presence of a quorum. However, for purposes of determining
the outcome of any matter as to which the broker has physically indicated on the
proxy that it does not have discretionary authority to vote, those shares will
be treated as not present and not entitled to vote with respect to that matter
(even though those shares are considered present for quorum purposes and may be
entitled to vote on other matters). Any unmarked proxies, including those
submitted by brokers or nominees, will be voted as indicated in the accompanying
proxy card.
In the election of directors, the candidates for election receiving the
highest number of affirmative votes of the shares entitled to be voted for them,
up to the number of directors to be elected, by those shares will be elected. Votes cast against
a candidate or votes withheld will have no legal effect. No shareholder shallwill be
entitled to cumulate votes (i.e., cast for any candidate a number of votes
greater than the number of such shareholder's shares in the case of Preferred
Shares or one-tenth that number in the case of Common Shares) unless such
candidate's name has been placed in nomination prior to the voting and the
shareholder has given notice at the meeting, prior to the voting, of the
shareholder's intention to cumulate the shareholder's votes. If any one
shareholder has given such notice, all shareholders may cumulate their votes for
candidates who have been nominated. If voting for directors is conducted by
cumulative voting, each share will be entitled to the number of votes equal to
the number of directors authorized times the number of votes to which itsuch share
is otherwise entitled, which votes may be cast for a single candidate or may be
distributed among two or more candidates in whatever proportion the shareholder
may determine.desire. The accompanying proxy card will grant the named proxies
discretionary authority to vote cumulatively, if cumulative voting applies. If
voting is not conducted by cumulative voting, each sharePreferred Share will be
entitled to one vote forand each PreferredCommon Share andwill be entitled to one-tenth of one
vote, for each
Common Share and shareholders having a majority of the voting power exercised at the
meeting will be able to elect all of the directors if they choose to do so. In
that event, the other shareholders will be unable to elect any director or
directors.
Approval of the proposed amendment requires the favorable vote of the
majority ofExcept as otherwise provided in the Company's outstanding Common and Preferred Shareholders entitled
to vote at the Annual Meeting, voting together as a single class. OnArticles of Incorporation, on
all matters other than the election of directors, the affirmative vote of the
majority of the voting power of shares represented and voting at the meeting (which(if
the shares voting affirmatively also constituterepresent at least a majority of the voting
power required for a quorum) is required for the shareholders to take action.
Assuming the presence of a quorum, the shareholders present at the meeting may
continue to do business until adjournment, notwithstanding the withdrawal of
enough shareholders holding sufficient voting power to leave less than a quorum, if any
action taken (other than adjournment) is approved by at least a majority of the
sharesvoting power required to constitute a quorum.
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5
ITEM 1.
ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting to elect sixseven directors to the
Board of Directors to serve until the next Annual Meeting of Shareholders and
until their successors are elected and qualified. It is intended that the
proxies solicited and received by and on behalf of the Board of Directors will
be voted for the election as
directorsre-election of the Nominees listed belowcurrent directors, who are standing for
re-election (the "Nominees"), unless authority is withheld. If voting for
directors is conducted by cumulative voting, the proxies named on the enclosed
form of proxy will have discretionary authority to cumulate votes among the
Nominees named herein.
The proxies may also be voted for a substitute Nominee or Nominees in the
event any one or more of the persons named below shall be unable to serve for
any reason or be withdrawn from nomination, a contingency not now anticipated.
The following table, together with its footnotes, presents information
regardingA brief biography of each Nominee is set forth below, including the
occupation,Nominee's business experience outside directorshipsduring the last five years.
JEAN E. AUER, Consultant to the CalFed Bay Delta Program and beneficial ownershipmember of sharesthe
town council of Hillsborough, California. Mrs. Auer served as Consultant to the
San Francisco Estuary Project (1990-1995). Mrs. Auer has previously served as a
member of the National Drinking Water Advisory Board to the United States
Environmental Protection Agency, a member of the California State Water
Resources Control Board and a member of both the Central Coast and the San
Francisco Regional Water Quality Control Boards. Mrs. Auer, age 59, is a member
of the Company's Compensation and Business Opportunities Committees and has
served as a director of the Company for each nominee. All nominees are
presently directorssince 1995.
WILLIAM V. CAVENEY, Chairman of the Company.
PRINCIPAL OCCUPATION AND
EXPERIENCE PERIOD DURING COMMON SHARES PERCENT
DURING THE PAST FIVE YEARS; WHICH SERVED BENEFICIALLY OF
NAME OTHER DIRECTORSHIPS AGE AS DIRECTOR OWNED CLASS
- ------------------ ------------------------------ --- ------------- ------------- -------
D.E. Brown Senior Vice PresidentBoard of Directors of 67 1971 to date 26,000(1) *
Kirkpatrick, Pettis, Smith,
Polian Inc.,
investment bankers,
Omaha, Nebraska
W.V. Caveney Chairman of the Board of the 67 1980 to date 6,905 *
Company(2)
R.B. Clark Retired Partner in the law 69 1970 to date 2,641 *
firm of O'Melveny & Myers,
Los Angeles, California
N.P. Dodge, Jr. President of N.P. Dodge 57 1990 to date 2,600 *
Company, full service real
estate concern,
Omaha, Nebraska(3)
W.M. Kizer Chairman of the Board of 69 1969 to date 7,600 *
Central States Health & Life
Co. of Omaha
F.E. Wicks President and Chief Executive 50 1990 to date 555 *
Officer of the Company(4)
- ---------------
* Less than one percent.
(1) Shares held in the name of D. E. Brown's wife.
(2) W.VCompany since
April, 1992. Mr. Caveney was Chairman of the Board and Chief Executive Officer
of the Company from 4/90April, 1990 to 3/92March, 1992 and President and Chief Executive
Officer of the Company from 4/82April, 1982 to 3/90.
(3) N.P. DodgeMarch, 1990. Mr. Caveney, age 69, is also
Chairman of the BoardCompany's Compensation Committee and a member of Hillcrest/Westlawn Cemetaries.the Business
Opportunities Committee and has served as a director of the Company since 1980.
R. BRADBURY CLARK, Of Counsel to the law firm of O'Melveny & Myers in Los
Angeles, California. Until February 1, 1993, Mr. Clark was a partner in that
firm. Mr. Clark, age 71, is a member of the Company's Compensation, Business
Opportunities and Audit Committees and has served as a director of the company
since 1970.
N.P. DODGE, JR., President of the N.P. Dodge Company, a full service real
estate concern in Omaha, Nebraska. Mr. Dodge, age 59, is a director of Firststar Bankthe Omaha
Public Power District. Mr. Dodge
3
6
is a member of Council Bluffsthe Company's Compensation Committee and Chairman of the Audit
Committee and has served as a director of Bridges Investment Fund, whichthe Company since 1990.
ROBERT F. KATHOL, Executive Vice President of Kirkpatrick, Pettis, Smith,
Polian, Inc., an investment banking firm in Omaha, Nebraska. Mr. Kathol, age 55,
is managed by Bridges Investment Counsel,
Inc., the investment management firm fora member of the Company's pension plan.
(4) F.E.Compensation and Audit Committees and has served as
a director of the Company since 1995.
LLOYD E. ROSS, Chairman, President and Chief Executive Officer of SMI
Construction Co., a commercial and industrial general contracting firm in
Irvine, California. Mr. Ross also is a director of PacifiCare Health Systems.
Mr. Ross, age 55, is a member of the Company's Compensation Committee and
Chairman of the Business Opportunities Committee and has served as a director of
the Company since 1995.
FLOYD E. WICKS, President and Chief Executive Officer of the Company since
April, 1992. Mr. Wicks wasserved as President of the Company from 4/90April, 1990 to
3/92March, 1992 and as Vice President of Operations from 1/88January, 1988 to 3/90.
3
6March,
1990. Mr. Wicks, age 52, is a member of the Company's Business Opportunities
Committee and has served as a director of the Company since 1990.
No Nominee is or has been employed in his or her principal occupation or
employment during the past five years by the Company or other organization that
is a parent, subsidiary or affiliate of the Company, other than Mr. Caveney and
Mr. Wicks whose relationships are as described above.
The following table sets forth, as of March 4, 1996, the beneficial
ownership of Common Shares of the Company by each Nominee. No Nominee owns any
of the Company's Preferred Shares.
AMOUNT AND NATURE OF PERCENT OF CLASS
NAME BENEFICIAL OWNERSHIP BENEFICIALLY HELD
---- -------------------- -----------------
Jean E. Auer................................ 400 *
William V. Caveney.......................... 7,441 *
R. Bradbury Clark........................... 2,898 *
N.P. Dodge, Jr. ............................ 3,100 *
Robert F. Kathol............................ 600 *
Lloyd E. Ross............................... 400 *
Floyd E. Wicks.............................. 1,603 *
- ---------------
* Less than one percent
During 1995, reports required by Section 16(a) of the Securities Exchange
Act of 1934 covering two transactions in the Common Shares of the Company for
Lloyd E. Ross were not timely filed.
O'Melveny &and Myers, for which R. Bradbury Clark is of counsel, and of
which R.B. Clarkhe is a retired partner, provides legal services to the Company.Company on a
variety of matters.
4
7
Kirkpatrick, Pettis, Smith, Polian Inc., of which D.E. BrownRobert F. Kathol is a Senioran
Executive Vice President, has served, at various times in the past five years,
as co-manager of the Company's offerings of Common Stock offering in
June of 1993Shares and as co-agent on the
Company's Medium Term Note program in 1993.debt issuances. A subsidiary, KPM Investment Management, Inc., had
also been, until December, 1995, the Company's 401(k) Plan investment manager.
Neither Kirkpatrick, Pettis, Smith, Polian Inc. nor its subsidiaries currently
provide any services to the Company.
The Board of Directors met as a board seven times in 1993. Anhas an Audit Committee, consisting of R.B. Clark, W.M. Kizer and N.P. Dodge, Jr. met four times during
1993. Aa Compensation Committee (referenced below) met once in 1993. The Board
has not appointedand
a NominatingBusiness Opportunities Committee. No director attended less than 75% of
the board and committee meetings as appropriate. The Audit Committee provides advice and
assistance to the CompanyBoard of Directors on accounting and financial reporting
practices of the Company. It reviews the scope of audit work and findings of the
firm of independent public accountants who serve as auditors of the Company, and
also monitors the work of the Company's internal auditors. It also reviews the
qualifications of and recommends to the Board of Directors a firm of independent
auditors and reviews and approves fees charged by the independent auditors. AThe
Compensation Committee was appointed during 1993reviews and consists of all
members ofmakes recommendations to the Board of
Directors except F.E. Wicks. The Compensation Committee
is responsibleas to appropriate compensation for the reviewPresident and other executive
officers of the Company and determines the awards to be made under the Company's
Key Executive Long-Term Incentive Plan (see table and accompanying footnotes on
pages 8 and 9). The Business Opportunities Committee reviews potential changes
to the regulated and non-regulated operations of the Company including
acquisitions, divestitures, joint ventures and partnerships and makes
recommendations to the Board of Directors as to annual salariesthe financial and operational
integrity of the executive officers, as well as an evaluation of management performance.
During 1993, directors Dodge, Brown and Clark earned directors' fees
(including amounts deferred -- see "Deferred Compensation Plan for Directors and
Executives") of $22,000 while director Kizer earned $21,000.such changes. There is no Executive Committee or Nominating
Committee.
Outside directors (presently all directors except Messrs. Caveney and
Wicks) are presentlycurrently paid an annual retainer, payable monthly, of $15,000. In
addition, each such director receives a $1,000 fee for each meeting attended,
(thealthough the regular and organizationorganizational meetings of the board held in April are
deemed one meeting for purposes of the perper-meeting fee. In addition, after
November, 1995, each outside director who is a member of the Compensation
Committee, Audit Committee or Business Opportunities Committee will receive a
$500 fee for each meeting fee).attended and the chairperson of each committee, if an
outside director, will receive an additional fee of $250 for each committee
meeting attended.
Chairman of the Board Caveney earned $93,375$94,500 as chairman during 1993. The1995, which
is the current annual rate for such service is $94,500.service. President Wicks was compensated as
an officer of the Company andCompany. Neither Mr. Caveney nor Mr. Wicks received no separate
compensation as a director.
4
7
ITEM 2.
AMENDMENT TO BYLAWSDuring 1995, directors met as a board six times. The BylawsAudit Committee met
four times in 1995, the Compensation Committee met five times in 1995 and the
Business Opportunities Committee met once in 1995. No director attended less
than 75% of the Company currently provide for a Board of Directors of
six persons unless changed by an amendment duly adopted by the shareholders
amending the Bylaws. The proposed amendment to the Bylaws will establish a
variable Board of Directors of between fiveboard meetings and nine persons. The amendment will
also provide that the exact number of directors within these limits will be
fixed by the Board of Directors or the shareholders, and that until changed, the
exact number will be six.
The Board of Directors has approved the proposed amendment to the Bylaws
in order to provide greater flexibility in the number of directors that may
serveother committee meetings on the Board. This flexibility will enable the Board to increase its size
to add directors under appropriate circumstances, for example, in connection
with acquisitions of other water companies or water properties, and to reduce
the size of the Board in the event of resignation or retirement of directors. In
addition, in part in response to recommendations of the Management Audit
referred to in the Company's Annual Report to Shareholders, the Board has
determined that it would be in the best interests of the Company to increase the
number of California directors on the Board and the added flexibility
contemplated by the amended Bylaws will permit the Board to do so when it
identifies qualified candidates.
The text of the proposed amendment is set forth in Annex A to this Proxy
Statement. Approval of the proposed amendment requires the favorable vote of the
holders of a majority of the Company's outstanding Common and Preferred Shares
entitled to vote at the Annual Meeting, voting as a single class. If approved,
the proposed amendment will be effective immediately upon the close of the 1994
Annual Meeting of Shareholders.
THE BOARD OF DIRECTORS HAS APPROVED THE PROPOSED AMENDMENT AND RECOMMENDS
THAT THE SHAREHOLDERS APPROVE THE AMENDMENT.which such
director serves.
5
8
EXECUTIVE OFFICERS
EXPERIENCE, SECURITY OWNERSHIP AND COMPENSATION
TheIn addition to Chairman Caveney (information about whose business
experience and beneficial share ownership is set forth on pages 3 and 4), the
Company had sixseven executive officers as of December 31, 1993.1995. Information
regarding the identification,identities, business experience and beneficial ownership of shares
of the Company's executive officersthose seven individuals is shown in the following table and footnotes
thereto:
HELD SUCH COMMON SHARES PERCENT
PRINCIPAL OCCUPATION AND EXPERIENCE POSITION BENEFICIALLY OF
NAME DURING THE PAST FIVE YEARS AGE SINCE OWNED CLASS
- ----------------- ----------------------------------------------- ----------------------------------- --- --------- ------------- -------
W.V. Caveney Chairman of the Board(1) 67 4/92 6,905 *
F.E.Floyd E. Wicks President and Chief Executive Officer(2) 5052 4/92 5551,603 *
J.A.Officer(1)
Thomas J. Bunosky Vice President -- Customer Service of 41 4/94 435 *
Region II(2)
Joel A. Dickson Vice President -- Regulatory Affairs and 41 6/90 1,144Customer Service of 43 4/94 2,063 *
Utility
Business Development(3)
T.J. BunoskyRegion III(3)
James B. Gallagher Vice President -- Operations(4) 39 3/93 87Finance, Chief 41 4/94 867 *
R.J.Financial Officer and Secretary(4)
Donald K. Saddoris Vice President -- Customer Service of 52 4/94 2,726 *
Region I(5)
Randell J. Vogel Vice President -- Administration(5) 57 2/93Customer and 60 4/94 610 *
Operations Support(6)
Joseph F. Young Vice President -- --
J.B. Gallagher Secretary, Treasurer and Chief Financial 39 10/90 129Regulatory Affairs(7) 51 4/94 8,645 *
Officer(6)
- ---------------
* Less than one percent
(1) Chairman of the Board and Chief Executive Officer of the Company from 4/90
to 3/92 and President and Chief Executive Officer from 4/82 to 3/90.
(2) President from 4/90 to 3/92 and92.
(2) Vice President of Operations from 1/883/93 to 3/90.
(3) Employed by Suburban Water Systems as Vice President of Finance and
Administration from 8/88 to 5/90 and as Vice President of Budgeting and
Regulations from 4/88 to 7/88.
(4)94, Manager of Operations from
5/91 to 2/93 and Director of Engineering, Production and Water Resources
from 12/90 to 4/91, Director of Water
Resources91.
(3) Vice President -- Regulatory Affairs and Utility Business Development 9/90
to 3/94.
(4) Secretary, Treasurer and Chief Financial Officer from 10/90 to 11/90; Assistant Manager3/94.
(5) Director of Operations for Ohio
Water Service Company-- Northern/Coastal Division from 4/835/90 to 9/90.
(5)3/94.
(6) Vice President of Administration from 2/93 to 3/94, Director of
Administration from 1/93 to 2/93, Director of Information Systems from 6/92
to 12/92; Executive Vice President and Chief Operating Officer of Suburban
Water Systems from 10/85 to 4/92.
(6) Secretary(7) Assistant Vice President for Conservation Management and TreasurerGovernmental
Affairs from 10/874/92 to 9/90.3/94, Assistant Vice President of Operations from 5/91
to 3/92 and Director of Operations from 4/89 to 4/91.
Directors and executive officers of the Company as a group beneficially own
47,66131,788 Common Shares of the Company, which is less than one percent of the total
shares outstanding. No director or executive officer of the Company owns any of
the Company's outstanding preferred shares.Preferred Shares.
6
9
The following table sets forth information on compensation of the Company's
Chief Executive Officer and its four most highly compensated executive officers
for the three most recent calendar years:
LONG TERM
COMPENSATION
------------
ANNUAL PAYOUTS
COMPENSATION ALL
--------------------------- OTHER------------
NAME AND PRINCIPAL ------------ LTIP ALL OTHER
POSITION YEAR SALARY(1) COMPENSATION(2)
- ------------------------------------------------------ ----- -------------------PAYOUTS(2) COMPENSATION(3)
------------------ ---- ------------ ------------ ---------------
F.E.
Floyd E. Wicks - 1995 $263,584 $ 4,767
President and Chief 1994 251,796 3,700
Executive Officer 1993 $ 237,918 $ 3,700
1992 216,895(3) 3,332
1991 180,563 2,423
J.A.Joel A. Dickson - Vice 1995 147,039 4,548
President - Regulatory Affairs andCustomer 1994 139,625 2,313
Service of Region III 1993 132,687 2,288
Utility Business Development 1992 126,606 2,110
1991 118,268 267
T.J.Thomas J. Bunosky - 1995 142,739 4,452
Vice President - Operations1994 138,307 2,282
Customer Service 1993 130,807(4) 2,231
1992 109,930 13,619(5)
1991 91,873 32,294(5)
R.J.of Region II
Randell J. Vogel - Vice 1995 143,699 4,322
President - AdministrationCustomer 1994 124,023 2,061
and Operations 1993 114,818(6)114,818(4) 267
1992 55,044 --
1991 -- --
J.B.Support
James B. Gallagher - Vice 1995 128,167 3,990
President - Finance, 1994 121,488 2,016
Chief Financial Officer Secretary 1993 111,678 1,944
and Treasurer 1992 105,903 1,046
1991 99,667 267Secretary
- ---------------
(1) The executive officers of the Company receive both cash compensation and
certain perquisites, including
the personal use of a Company vehicles.vehicle and personal computer. However, the
aggregate amount of such perquisites received by each named officer does
not, in the case of any such named officer, exceed 10% of the total annual
salary of eachany such named officer.
(2) The Company has a Key Executive Long-Term Incentive Plan, the provisions of
which became effective on January 1, 1995. Any payouts, which are made in
cash and/or Common Shares of the Company, would not occur prior to 1998,
except as otherwise provided in the Plan.
(3) Includes Company payment of premium on business travel and accident policy
of $39 per person per year and Company payment of the premium on group life
insurance of $228 per person per year. Except with regard to footnote (5) below, theThe balance represents the Company's
matching contribution to the 401(k) Plan for the benefit of the named
officer.
(3) Elected Chief Executive Officer in 1992.
(4) Elected executive officer in April, 1993.
(5) Includes $32,294 in 1991 and $13,619 in 1992 as remuneration for relocation
expenses.
(6) Elected executive officer in April, 1993. Employed by the Company beginning
in June, 1992.7
10
The Company currently has no other bonus, profit sharing, stock option,
stock appreciation right or other remunerative program (other than pension and
welfare benefits) currently in effect. The Company implemented a Key Executive Long-Term
Incentive Plan effective as of January 1, 1995 (see footnote 2 above). The
following table sets forth information about this Plan.
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK
OR OTHER PRICE-BASED PLANS(B)
PERIOD UNTIL -------------------------------------------
NAME AND PRINCIPAL MATURATION THRESHOLD TARGET MAXIMUM
POSITION OR PAYOUT(A) (# OR $)(C) (# OR $)(D) (# OR $)(C)
------------------ ------------ ----------- ----------- -----------
Floyd E. Wicks - 3 years $15,120 N/A $108,800
President and Chief
Executive Officer
Joel A. Dickson - Vice 3 years $ 6,345 N/A $ 42,300
President - Customer
Service of Region III
Thomas J. Bunosky - 3 years $ 6,255 N/A $ 41,700
Vice President -
Customer Service
of Region II
Randell J. Vogel - 3 years $ 5,490 N/A $ 36,600
Vice President -
Customer and
Operations Support
James B. Gallagher - 3 years $ 5,310 N/A $ 35,400
Vice President -
Finance, Chief
Financial Officer
and Secretary
- ---------------
(A) It is intended, but not required, under the Company's Key Executive
Long-Term Incentive Plan that a three-year performance cycle (as such cycle
is defined in the Plan, the "Performance Cycle") until payout of the awards
under the Plan will begin to run at the start of each calendar year. Payment
of awards is to be made as soon as practicable after the end of the
Performance Cycle to which they relate. If Termination of Service (as
defined in the Plan) of a participant occurs during a Performance Cycle for
any reason other than death, disability, normal retirement or early
retirement, the participant will forfeit the opportunity to receive an award
for that Performance Cycle. If a participant dies, becomes disabled or
retires during a Performance Cycle, the participant will be eligible to
receive a pro rata award (based on the number of days the participant was
employed substantially full-time during that Performance Cycle) for that
Performance Cycle. The Plan also contains provisions for the payment of
awards if there is a change of control of the Company (as defined in the
Plan) before the end of a Performance Cycle.
(B) Awards under the Plan are established as a percentage of each Plan
participant's annual base salary and are payable in cash and/or Company
Common Shares. Awards for the Performance Cycle that began in 1995 will be
based on the Company's ranking, expressed as a percentile, for
8
11
growth in earnings per share and total shareholder return relative to the
corresponding measures for the companies that comprise the Peer Group
referred to on page 14. A ranking below the 40th percentile among the
companies in the Peer Group with respect to either performance measure will
result in no award with respect to that measure, while the maximum award for
either performance measure will be paid for a ranking at or above the 75th
percentile with respect to that measure. Awards will be reduced if the
Company's return on equity falls more than 50 basis points below the
Company's Authorized Rate of Return (as defined in the Plan), and awards
will not be paid at all if the Company's share price at the end of a
Performance Cycle is less than 80% of its price at the beginning of that
cycle.
(C) Figures listed represent the amount of awards that would be payable to the
executives if the Company were to achieve a ranking among the Peer Group at
the 40th percentile (Threshold) and for any percentile at or above the 75th
percentile (Maximum) for each of the performance measures. The Plan also
specifies awards for performance at the 50th and 60th percentiles with
respect to each of the performance measures. Awards for performance at
percentiles between such stated percentiles will be calculated by linear
interpolation.
(D) Participants in the Plan are not assigned a "target" award. Rather, awards
are variable depending upon the Company's performance with respect to each
of the performance measures for the Performance Cycle (see footnote (C)
above).
9
12
PENSION PLAN
The Company hasmaintains a noncontributory, defined benefit pension plan that is noncontributory.plan.
Benefits are determined under a formula applied uniformly to all employees,
regardless of position, and amounts depend on length of service and the average
of the five highest consecutive years of compensation earned. For purposes of
pension calculations, compensation includes salary and all other compensation
but excludes the value of personal use of Company vehicles and other
perquisites. An employee who terminates employment after having at least five
years of service with the Company has a vested interest in the plan.
7
10
Annual benefits payable at retirement (at age 65 or beyond) are reduced by
a percentage of primary social security benefits based upon years of credited
service and are payable monthly. The following table illustrates the estimated
annual benefits payable upon retirement for persons in the earnings
classifications with years of service as shown, but excluding the Social
Security deduction.
AVERAGE ANNUAL BENEFITS BASED ON LENGTH OF SERVICE
AVERAGE ANNUAL --------------------------------------------------------------------------
SALARY FOR HIGHEST --------------------------------------------------------------------------
CONSECUTIVE FIVE YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
---------------------- -------- -------- -------- -------- -------- --------
$ 75,000 $22,500 $30,000 $ 37,500 $ 45,000$37,500 $45,000 $ 52,500 $ 60,000
100,000 30,000 40,000 50,000 60,000 70,000 80,000
125,000 37,500 50,000 62,500 75,000 87,500 100,000
150,000 45,000 60,000 75,000 90,000 105,000 175,000 52,500 70,000 87,500 105,000 122,500
200,000 60,000 80,000 100,000 120,000 140,000
The executive officers listed inof the summary compensation tableCompany not presently receiving pension
benefits have the following credited years of service under the pension plan:
F.E.Floyd E. Wicks -- 6;
J.A.8; Joel A. Dickson -- 3; T.J.5; Thomas J. Bunosky -- 3; R.J.5; Randell J.
Vogel -- 1 and J.B.3, James B. Gallagher -- 6.8, Joseph F. Young -- 18 and Donald K.
Saddoris -- 28.
The plan provides an early retirement option for those employees the sum of
whose age plusand number of years of service equalequals at least 90.
The Board of DirectorsCompany has a Retirement Plan for Non-Employee Directors (the
"Plan""Non-Employee Directors Plan") of the Company. TheThis Plan provides annual
benefits to an eligible directorsdirector in an amount equal to the annual retainer in
effect at suchthe director's date of retirement. Benefits are payable in monthly
installments for a period equal to the shortest of (a) the life of the director following retirement, (b)
the period such individualhe or she was
a director or (c)(b) ten years. In the case of a director's death,
of the director, benefits will
continue to be received by suchthat director's surviving spouse for the remaining
period for which the director would have been entitled to receive benefits
except for death. The minimumBenefits are payable to directors after the age forof 62 and
after retirement from the Board, except that a director who ceases to qualify for retirement benefits under the Plan is 62 unless retirementbe a
director before attaining age 62 is required forbecause of ill health reasons.or death may receive
benefits immediately after retirement from the Board, or at such later date as
he or she may request. Directors who are "removed for cause"
(including failure to be re-elected by shareholders) are not eligible
for benefits under the Non-Employee Directors Plan. As a condition of
participation in the Non-Employee Directors Plan, an eligible director must
agree to retire from the boardBoard at the annual
10
13
shareholders' meeting occurring on or next following such director's 72nd
birthday.birthday, and to accept nomination as a director if requested by the Board (and
to serve if so nominated) for at least ten years after his or her first election
to the Board.
DEFERRED COMPENSATION PLAN FOR DIRECTORS AND EXECUTIVES
Under the Company's Deferred Compensation Plan for Directors and
Executives, directors and eligible officers and employees are entitled to defer
all, in the case of directors, or a portion, in the case of officers and
employees, of their compensation until specified times after the deferral.
Interest accrues on amounts deferred under the Plan, but such accrued interest
is not included in the compensation table on page 5 because the interest rate
does not exceed prevailing rates of interest at the time the interest is
accrued.
8
11this Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee's report on executive compensation is set forth
below. Mr. William V. Caveney, a member of this Committee and Chairman of the
Board of Directors, is, in his capacity as Chairman, of the Board, an officer of the Company.
Mr. Caveney does not actively participate in the daily operation of the Company,
duties as to which are the responsibility of Mr. Wicks, President and Chief
Executive Officer of the Company. The Compensation Committee does not recommend
or determine Mr. Caveney's compensation. No other member of this Committee is a
current or former officer or employee of the Company or any of its subsidiaries
or affiliates.
R. B. Clark and D. E. BrownAll of the Company's directors except Mr. Wicks are also members of this Committee and are
directors of the
Company.Compensation Committee. Mr. Clark is of counsel to and is a retired partner of
O'Melveny & Myers, which provides legal services to the Company. Mr. BrownKathol is
SeniorExecutive Vice President of Kirkpatrick, Pettis, Smith, Polian Inc., which has
served as co-manager of the Company's Common Stock offering in June of 1993Share offerings and as co-agent on
the Company's Medium Term Note Programdebt sales in 1993.the past. The firm of Kirkpatrick, Pettis, Smith,
Polian Inc. and its subsidiaries do not currently provide any services to the
Company.
The following Report and the Performance Graph included in this proxy
statement shall not be deemed to be incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent the Company specifically incorporates this
Report or the Performance Graph by reference therein, and shall not be deemed
soliciting material or otherwise deemed filed under either of such Acts.
BOARD11
14
REPORT ON EXECUTIVE COMPENSATION
To: The Board of Directors
As membersThe principal responsibility of theyour Compensation Committee of the Board of Directors (the
"Committee"), it is our responsibility to review
and make recommendations as to the annual salariescompensation of the executive officers of the
Company.Company (other than the Chairman of the Board). In addition to our
reviewrecommending cash
and other kinds of cash compensation, our responsibility in this regard extends toincludes the consideration
of other related matters including evaluation ofsuch as evaluating management performance and planning for
management planning and succession. ThisThe Compensation Committee makesreviews these
matters in detail with you and reports to you the Committee's recommendations as
to andcompensation of these executive officers.
The Compensation Committee particularly reviews, in detail, allthe performance
and other aspects of these matters withcompensation for the BoardPresident and Chief Executive Officer,
Floyd E. Wicks.
In its deliberations concerning compensation for Mr. Wicks and the
Company's other executive officers in April, 1995, the Committee relied on both
objective and subjective criteria. We reviewed comparative salary and total
compensation data for Mr. Wicks and other executive officers, the results of
Directors concerningwhich were included as part of a report entitled "An Assessment of Executive
Compensation," dated January 25, 1995, prepared by Strategic Compensation
Associates ("SCA"). In addition, we relied on other compensation data developed
by the six executive officersCompany's Human Resources department, which included comparable cash
salary data of other water utilities, as well as reviewing
compensationcomments and evaluative
recommendations of certain senior executives reporting directly to
thoseMr. Wicks based on his formal appraisal of each executive's
performance. In conducting the formal appraisals, Mr. Wicks reviewed the
contribution of each executive officers.
The Company has retained the services of Sibson & Company Inc. ("Sibson"),
a nationally-recognized compensation consulting firm, to assist this Committee
in connection with the discharge of its responsibilities. Sibson has been
retained by the Company since 1991.
Sibson provided reports and advice to the Company and this Committee with
respect to the appropriate compensation and benefit levels of executive officers
and senior executives of the
9
12
Company. As part of its studies, Sibson compared compensation paid by water
utilities and industrial companies having gross revenues and numbers of
employees and customers relatively similar to that of the Company, taking into
account four areas of compensation: base salary, annual incentives, long-term
incentives and benefits and perquisites. The water utilities which are part of
the Dow Jones Water Utility Index reported in the performance graph were
included in the Sibson study, as well as seven other water utilities. This
Committee relies on the reports prepared by Sibson and a subjective evaluation
of management performance in the discharge of their assigned duties and
responsibilities, as well as the performance of the Company generally, in
determining the appropriate compensation levels for the Company's executive
officers and senior executives.
In April, 1993, the Company commissioned Sibson and Chase Consulting Group
to prepare a Water Utility Executive Compensation Survey Update Report (the
"Update Report") covering the four areas of compensation generally reviewed by
this Committee. The Update Report indicated that, while past increases to base
salaries have brought the Company's salaries closer to the average paid by the
water utilities referenced above, in the areas of incentiveregulatory matters,
implementation of the Company's organizational goals and general progress made
toward the achievement of individually determined, job-related goals.
As part of our review, we recognize that our responsibilities also extend
to offering compensation opportunities designed to retain and attract managerial
talent. We believe that the Key Executive Long-Term Incentive Plan, approved by
shareholders in April, 1995, will result in closer alignment of management's
goals with those of the shareholders by providing compensation to management
based upon the Company's achievement, over rolling three-year performance
cycles, of specified targets for total shareholder return and growth in earnings
per share. Awards earned under the Plan supplement base compensation and benefitsshould
enhance the Company's ability to attract and perquisites,retain qualified personnel.
As in the Company lags behind other water utilities. The
Update Report demonstrated that base salaries for 1993 would remain within the
median range of this peer group of water utilities, with a nominal 5% average
merit increase over 1992 amounts for the executive group.
This Committee haspast, we have not adopted a direct formula relationship between
the Company's financial performance and the level of compensation paid to itsMr.
Wicks and other executive officers in part because of the pervasive effects that
varying regulatory practices and weather conditions have on financial
performance, whichperformance. We believe that these effects are largely outside the immediate
control of the executive officers. The Update
Report comparedAccordingly, in determining executives'
compensation, the salary and all other compensation received by the Chief
Executive Officer and concluded Mr. Wicks' base salary and all other
compensation was 12% and 28%, respectively, below the other water utilities
included in the Update Report. In determining the compensation of Mr. Wicks and
other executives, the Committeecommittee also relied
12
15
upon aits subjective evaluation of the Company's earnings performance, in light
of those considerations, and of the performance of the executive staffexecutives in maintaining
and enhancing the Company's ability to meet its challenges. These challenges
includinginclude (i) water quality and water supply, issues,(ii) appropriately enhancing
earnings levels and the
successful resolution of(iii) successfully resolving issues before regulatory agencies and the California Public
Utilities Commission.Commission and other regulatory agencies (including the Company's
continuing response to the CPUC-ordered management audit). Upon review of all of
the objective and subjective factors described above, in April 1995, we
recommended and the Committee recommendedBoard authorized that Mr. Wicks' annual base compensation be
increased by 9.1% for 1993-94.
10
13
This Committee recognizesset at $262,000.
We recognize that changes to the Internal Revenue Code in 1993 affect,
subject to limited exceptions, the deductibility of compensation in excess of
$1,000,000 for certain executive officers unless such compensation qualifies as
"performance-based"."performance-based." However, since the Company's current compensation program
does not provide for annual compensation to any executive in excess of
$1,000,000, the deduction limitations are presently inapplicable to the Company.
We will address this limitation if and when it becomes meaningful.
Compensation Committee
D.E.D. E. Brown
W.M. Kizer
R.B.W. V. Caveney
R. B. Clark
W.V. Caveney
N.P.N. P. Dodge, Jr.
March, 1993
1113
1416
PERFORMANCE GRAPH
The graph below compares the performance of Southern California Waterthe Company to (1) the S&PStandard
& Poor's 500 Stock Index, (2) a peer group index developed by the NASDAQ Stock Market Index (U.S. companies only)Company for
the Key Executive Long-Term Incentive Plan and (3) the Dow Jones Water Utility
index, aIndex (a published industry index.index). The water and electric utilities selected by
the Compensation Committee for the peer group were intended to provide an
appropriate basis for comparison with the Company in determining awards payable
under the Key Executive Long Term Incentive Plan and, as such, that peer group
is included herein for comparative purposes. The peer group consists of 17
companies: American Water Works Inc., Aquarion Company, Consumers Water Company,
Connecticut Water Service Inc., California Water Service Company, Citizens
Utilities Company (Class A and Class B), Empire District Electric Company,
E'Town Corporation, Green Mountain Power Corporation, IWC Resources Corporation,
Middlesex Water Company, Northwestern Public Service Company, Philadelphia
Suburban Corporation, St. Joseph Light & Power Company, SJW Corp., Southwest
Water Company and United Water Resources, Inc. The graph shows the total return
to shareholders for the last five years of an investment of $100 made on
December 31, 19881990 and assuming reinvestment of all dividends. As with any
investment, the historical performance reflected in this performance graph is
not necessarily indicative of future performance.
On June 17, 1993, the Common Shares of the Company were listed on the New
York Stock Exchange. The Company, therefore, changed its broad market index to
the S&P 500 to more accurately reflect the market in which its Common Shares are
traded. Information on the NASDAQ Stock Market Index is presented here pursuant
to applicable SEC regulations.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG SOUTHERN CALIFORNIA WATER COMPANY, THE S & P 500 STOCK INDEX,
THE DOW JONES WATER UTILITIES INDEX AND THE NASDAQ STOCK MARKET-US INDEXA PEER GROUP
MEASUREMENT PERIOD SOUTHERN CALIFORNIA
(FISCAL YEAR COVERED) WATER COMPANY PEER GROUP S & P 500 D J WATER UTILITIES
- --------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1988 1989 1990 1991 1992 1993
- --------------------------------------------------------------------------------------
Southern California Water Co.12/90 100 119 121100 100 100
12/91 128 147 130 152
12/92 163 164 140 163
12/93 188 190 155 197 227
- --------------------------------------------------------------------------------------
DJ Water Utilities 100 105 93 142 153 172
- --------------------------------------------------------------------------------------
S&P 500 100 132 128 166 179 197
- --------------------------------------------------------------------------------------
NASDAQ Stock Market 100 121 103 165 192 219
- --------------------------------------------------------------------------------------184
12/94 161 158 157 173
12/95 199 185 215 223
- ---------------
* $100 INVESTED ONinvested on 12/31/88 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER90 in stock or index -- including reinvestment of
dividends. Fiscal year ending December 31.
1214
1517
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information with respect to the beneficial
owners of more than five percent of any class of the Company's voting securities
on February 28, 1994March 4, 1996 based upon public information known to the Company.
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNER TITLE OF CLASS OWNERSHIP OF CLASS
- ------------------------------------------- ------------------ ---------------------------------- -------------- ---------- --------
First Colony Life Insurance Company Preferred Shares 46,125--Direct 51.5*44,959--Direct 52.1*
700 Main Street
Lynchburg, Virginia
Massachusetts Mutual Life Insurance Co. Preferred Shares 12,000--Direct 13.4
1295 State Street
Springfield, Massachusetts13.9
Box 5101 GPO
New York, New York
Equitable LifeAmerican Insurance Company of Iowa Preferred Shares 2,645--Direct 3.0
699 Walnut2,315--Direct 2.7
604 Locust Street
Des Moines, Iowa
- ---------------
* Represents 5.3%5.2% of total eligible vote.voting power.
ANNUAL REPORT (FORM 10-K)
The Company undertakes, on written request, to provide, without charge,
each person from whom the accompanying proxy is solicited, with a copy of the
Company's Annual Report on Form 10-K for the year ended December 31, 19931995 as
filed with the Securities and Exchange Commission, including the financial
statements and schedules. Requests should be addressed to Southern California
Water Company, 630 East Foothill Boulevard, San Dimas, California 91773,
Attention: Office of the Secretary.Treasurer.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen & Co.LLP served as the Company's independent public accountants
for the year ended December 31, 1993.1995. No accounting firm has been selected for
the current year. The Board of Directors normally selects the public accountants
for each year in July of that year. Representatives of Arthur Andersen & Co.LLP will
be at the Annual Meeting of Shareholders and will have an opportunity to make a
statement, if they so desire, and will be available to respond to appropriate
questions.
1315
1618
OTHER MATTERS
Management of the Company knows of no business, other than that mentioned
above, to be transacted at the Annual Meeting, but if other matters do properly
come before the meeting, it is the intention of the persons named in the
enclosed proxy to vote in regard thereto in accordance with their judgment, and
discretionary authority to do so is included in the proxy. Whether or not you
intend to be present at the meeting, you are urged to complete, sign and return
your proxy promptly.
PROPOSALS FOR NEXT ANNUAL MEETING
Any proposal which a shareholder intends to present at the next Annual
Meeting of Shareholders to be held in April 19951997 must be received at the
principal executive office of the Company by November 18, 199415, 1996 if such proposal
is to be considered for inclusion in the Company's proxy statement and form of
proxy relating to that meeting. 14
17
ANNEX A
TEXT OF PROPOSED
AMENDMENT TO BYLAWS
Resolved, that, effective immediately afterIn addition, the adjournmentCompany's bylaws contain
separate notice requirements applicable to the bringing of business before the 1994
Annual Meeting of Shareholders Section 2 of Article IIIby a shareholder of the BylawsCompany. The Company
maintains at its principal executive offices in San Dimas, California, a copy of
this
Corporation shallits bylaws, as amended, which bylaws will be amended in its entiretyopen to read as follows:
The authorized number of directors shall be not less than five nor more
than nine until changedinspection by Amendment of the Articles or by a Bylaw duly
adopted by the shareholders
amending this Section 2. The exact number of
directors shall be fixed, within the limits specified, by amendment of the
next sentence duly adopted either by the Board or the shareholders. The
exact number of directors shall be six until changed as provided in this
Section 2.at all reasonable times during office hours.
16
1819
PROXY
SOUTHERN CALIFORNIA WATER COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF SOUTHERN CALIFORNIA WATER COMPANY
D. E. BrownThe undersigned hereby appoints R. Bradbury Clark and W. V.W.V. Caveney eachproxies,
with full power to act without the other are hereby appointed the attorneys and proxies, with full power of substitution, for and hereby
authorizes them to represent and vote, as designated on the other side, all the
shares of stock of Southern California Water Company standing in the name of the
undersigned to represent and vote in
their discretionwith all stockpowers which the undersigned could represent and votewould possess if present at
the annual meetingAnnual Meeting of Stockholders of the shareholdersCompany to be held April 30, 1996 or
any adjournment of thethat meeting.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
Dear Shareholder:
The Annual Meeting of Shareholders of Southern California Water Company towill
be held on April 30, 1996 at the Industry Hills Sheraton, Suites Fairplex, 601 West McKinley Avenue, Pomona,
California,One Industry Hills
Parkway, City of Industry, California. A map of the location is located on Tuesday, April 26, 1994 atthe
reverse side. The meeting is scheduled for 10:00 a.m. and refreshments will be
provided beforehand. The meeting should conclude by 11:00 o'clock A.M., Pacific time,a.m.
This mailing also includes the notice of the meeting and the proxy statement.
Whether or any adjournment thereof, fornot you plan to attend the electionmeeting, please assure representation of
Directors,your shares by marking, signing, dating and sending in the detachable proxy
card.
Sincerely,
/s/ Floyd E. Wicks
- ------------------
Floyd E. Wicks
President, Chief Executive Officer
20
Please mark
your votes as /X/
indicated in
this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
Item 1. ELECTION OF DIRECTORS WITHHELD
FOR FOR ALL
Nominees: Jean E. Auer Robert F. Kathol / / / /
William V. Caveney Lloyd E. Ross
R. Bradbury Clark Floyd E. Wicks
N.P. Dodge, Jr.
WITHHELD FOR: (write that Nominee's name in the space provided below.)
- ----------------------------------------------------------------------
Item 2. In their discretion, the Proxies are authorized to vote upon such other
mattersbusiness as may properly comingcome before the meeting.
1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) / / listed below / /
D. E. Brown, W. V. Caveney, R. B. Clark, N. P. Dodge, Jr.,
W. M. Kizer and F. E. Wicks
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE INDIVIDUAL
NOMINEE(S) WRITE THAT NOMINEE(S) NAME ON THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
Continued and to be signed on the other side
2. Approval of an amendment proposed by the Board of Directors to the Company's
Bylaws to establish a variable Board of Directors of between five and nine
persons, with the exact number of directors to be six until changed by the
Board of Directors or the shareholders by amendment of the Articles of
Incorporation or the Bylaws.
/ / FOR / / AGAINST / / ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL NOMINEES AND FOR APPROVAL OF THE AMENDMENT OF THE BYLAWS.
(NOTE: SignatureSignature(s) Date
----------------------------------------- ---------------------
NOTE: Please sign as name appears hereon. Joint owners should agree with name hereon.each sign. When
signing as attorney, executor, administrator, trustee guardian, or corporate officer,guardian, please give
full title as such.
All joint owners should
sign.)
-------------------------
Signature
-------------------------
Signature
-------------------------
Date
IMPORTANT: Please mark, date, sign and return this Proxy promptly in- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
INDUSTRY HILLS SHERATON
ONE INDUSTRY HILLS PARKWAY
CITY OF INDUSTRY, CA 91744-0290
(818) 810-4455
[MAP OF INDUSTRY, CALIFORNIA]
INDUSTRY HILLS
SHERATON RESORT HOTEL
Refreshments will be provided only before the enclosed envelope.meeting.