EDISON INTERNATIONAL
STOCK OPTION RETENTION
EXCHANGE OFFER
Text of Slides for Question and Answer Meetings
STOCK OPTION RETENTION EXCHANGE OFFER (header on each slide)
Slide 1
ALTHOUGH THE EIX COMPENSATION AND EXECUTIVE PERSONNEL COMMITTEE HAS APPROVED THE EXCHANGE OFFER, NO RECOMMENDATION IS MADE BY
THE EIX BOARD OF DIRECTORS, BY THE EIX COMPENSATION AND EXECUTIVE PERSONNEL COMMITTEE, BY EIX, OR BY ANY OTHER AFFILIATE AS TO
WHETHER YOU SHOULD ACCEPT OR REJECT THE EXCHANGE OFFER. YOU MUST MAKE YOUR OWN DECISION TO ACCEPT OR REJECT THE EXCHANGE OFFER.
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON THE COMPANY'S BEHALF AS TO WHETHER YOU SHOULD ACCEPT
THE EXCHANGE OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS CIRCULAR AND THE INFORMATION CONTAINED IN THE
DOCUMENTS EXPRESSLY REFERRED TO IN THIS CIRCULAR. THE COMPANY HAS NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE INFORMATION AND THE REPRESENTATIONS CONTAINED IN THIS
CIRCULAR AND IN THE DOCUMENTS EXPRESSLY REFERRED TO IN THIS CIRCULAR. IF ANYONE MAKES ANY RECOMMENDATION OR REPRESENTATION TO
YOU OR GIVES YOU ANY OTHER INFORMATION, YOU MUST NOT RELY UPON THAT RECOMMENDATION, REPRESENTATION OR OTHER INFORMATION AS
HAVING BEEN AUTHORIZED BY THE COMPANY.
Slide 2
Offer to active employees to exchange stock options granted in 2000 for Deferred Stock Units
For any grant, may exchange 0%, 50% or 100% of the option
Deferred Stock Units will vest and pay out as shares of common stock 25% on the Exchange Date (currently scheduled to be
November 29) in 2002, 2003, 2004 and 2005
Terms for retirement, disability, death, termination, and change in control similar to those for stock options
Slide 3
How were the exchange ratios determined?
1. Calculated the Black-Scholes values of each option using standard methodology
and the assumptions current as of October 11, 2001
Effect
+ Stock price=FMV=$15.485
- - - Strike price=strike price of grant
- - - Risk free rate=52-week average=5.1046%
+ Volatility=36-month average=51.69%
- - - Dividend yield=12-quarter average=3.58%
- - - Forfeiture risk=10% based on historic data
+ Remaining term=8.2356 years for EIX grants, 8.6027 years for EIXS
2. Divided $15.485 by the Black-Scholes value
Slide 4
What factors affect the potential value to an offeree of the DSUs vs. the options?
Expectations regarding direction, extent and timing of changes in the EIX stock price
Timing of vesting and payout of DSUs
Expectations regarding timing of stock option exercises
Vesting schedule for DSUs vs. options and expectations re continued employment
Basic 2000 options are 25% vested, and another 25% vest January 2, 2002,
2003, 2004
Special 2000 options vest 25% May 18, 2002, 2003, 2004, 2005
DSUs vest and pay out on Exchange Date, 2002, 2003, 2004, 2005
(continued on next slide)
Slide 5
Factors affecting potential value to an offeree of the DSUs vs. the options, continued
Expectations regarding timing and amount of cash needs--e.g., tuition, real estate
purchases
Tax situation now and expected in the future
Potential earnings on alternative investments
Personal risk tolerance
Expectations regarding continued solvency of EIX
Other factors
