UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No. )
Filed by the Registrant [X] [ ]Confidential, For Use of the
Filed by a Party Other Commission Only (as permitted
that Registrant __ Rule 14a-6(e)(2))
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
EDISON INTERNATIONAL
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(Name of Registrant as Specified in its Charter)
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JOINT NOTICE OF ANNUAL MEETINGS OF SHAREHOLDERS
AND
JOINT PROXY STATEMENT
ANNUAL MEETINGS
May 14, 2001
April 19, 2001
Dear Shareholder:
You are invited to attend the Edison International and Southern
California Edison Company ("SCE") annual meetings of shareholders. The meetings
will be held jointly on Monday, May 14, 2001, at the DoubleTree Hotel Ontario,
222 N. Vineyard Avenue, Ontario, California, at 1:30 p.m., Pacific Time. Please
note the change in location and time.
Your voting instructions and the applicable 2000 Annual Report are
enclosed with this Joint Proxy Statement. The Joint Proxy Statement discusses
the matters to be considered at the annual meetings. At the meetings,
shareholders of Edison International and SCE will elect Directors who will be
responsible for the direction of Company affairs until the next annual meetings.
Your Board of Directors and Management recommend that you vote "FOR"
the nominees for Directors listed in the Joint Proxy Statement.
Whether or not you expect to attend the annual meetings, it is
important that your shares be represented. If you hold shares in both Edison
International and SCE, you will receive a proxy card for each Company.
We are pleased to offer you options to vote your shares by mail,
telephone or the Internet. To vote by mail, you may complete, sign, date and
return the enclosed proxy card in the envelope provided. If you hold shares in
your own name, or through the Edison International Dividend Reinvestment and
Stock Purchase Plan or the SCE Stock Savings Plus Plan, you may vote by
telephone or via the Internet by following the instructions on your proxy card.
There is a special number assigned to you on the proxy card to safeguard your
vote. Voting by telephone and via the Internet is available 24 hours a day,
seven days a week, through midnight, May 13, 2001, except for Stock Savings Plus
Plan shareholders who must vote by 5:00 p.m., Eastern Time, on May 9, 2001. If
you hold your shares in an account with a broker or other nominee, you will
receive separate instructions from that nominee which may also allow telephone
and Internet voting.
Your continued interest in the business of Edison International and SCE
is appreciated.
John E. Bryson Stephen E. Frank
John E. Bryson Stephen E. Frank
Chairman of the Board, President Chairman of the Board, President
and Chief Executive Officer and Chief Executive Officer
Edison International Southern California Edison Company
IMPORTANT
In order to assure a quorum of shareholders at the annual meetings,
please complete, sign, date and mail the enclosed card promptly; or (if
available to you) give your instructions by telephone or the Internet as
described on the enclosed card. If you mail the enclosed card, please sign (do
not print) your name exactly as it appears on the card. When signing as
attorney, executor, administrator, trustee or guardian, include your full title.
Please have an authorized officer whose title is indicated sign for
corporations, charitable institutions and governmental units. For partnerships,
have a partner sign and indicate partnership status.
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JOINT NOTICE OF ANNUAL MEETINGS
OF SHAREHOLDERS
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Date: Monday, May 14, 2001
Time: 1:30 p.m., Pacific Time
Place: DoubleTree Hotel Ontario
222 N. Vineyard Avenue
Ontario, California 91764
Matters to be voted upon by Edison International and Southern California Edison
Company ("SCE") shareholders:
o Election of 13 and 12 Directors, respectively - The names of the Director
nominees are:
John E. Bryson* Ronald L. Olson
Warren Christopher James M. Rosser
Stephen E. Frank Robert H. Smith
Joan C. Hanley Thomas C. Sutton
Carl F. Huntsinger Daniel M. Tellep
Charles D. Miller Edward Zapanta
Luis G. Nogales
* John E. Bryson is a Director nominee for the
Edison International Board only.
o Any other business that may properly come before the meetings.
Record Date: Shareholders of record at the close of business on March 23, 2001,
and valid proxyholders for those shareholders, are entitled to
vote at the annual meetings.
Meeting Admission: The following individuals will be admitted to the meetings:
o Shareholders of record on the record date, and their spouses;
o Individuals holding written proxies executed by shareholders of
record on the record date;
o Shareholders who provide a letter or account statement from their
broker or other nominee showing that they owned stock held in the
name of the broker or other nominee on the record date, and their
spouses; and
o Other individuals with the approval of the Edison International or
SCE Secretary.
Shareholders which are companies or other entities are limited to three
authorized representatives at the meetings. Cameras, recording devices and other
electronic devices will not be permitted at the meetings.
Dated: April 19, 2001
For the Boards of Directors,
BEVERLY P. RYDER
BEVERLY P. RYDER, Secretary
Edison International and
Southern California Edison Company
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TABLE OF CONTENTS
Introduction - Solicitation of Proxies.........................................1
Questions and Answers on Voting, Proxies, and Attendance.......................2
Election of Directors, Nominees for Election...................................6
Board Committees...............................................................9
Board Meetings and Attendance.................................................11
Board Compensation............................................................11
Stock Ownership of Directors and Executive Officers...........................14
Section 16(a) Beneficial Ownership Reporting Compliance.......................16
Stock Ownership of Certain Shareholders.......................................16
Executive Compensation........................................................17
Summary Compensation Table...............................................17
Option/SAR Grants in 2000................................................19
Aggregated Option/SAR Exercises in 2000 and FY-End Option/SAR Values.....22
Long-Term Incentive Plan Awards in Last Fiscal Year......................24
Pension Plan Table.......................................................25
Other Retirement Benefits................................................26
Employment Contracts and Termination of Employment Arrangements..........27
Compensation and Executive Personnel Committees' Report on Executive
Compensation...............................................................27
Compensation and Executive Personnel Committees' Interlocks and
Insider Participation.......................................................31
Certain Relationships and Transactions of Nominees and Executive Officers.....32
Other Management Transactions.................................................32
Certain Legal Proceedings.....................................................32
Five-Year Stock Performance Graph.............................................33
Audit Committees' Report......................................................34
Independent Public Accountant Fees............................................35
Independent Public Accountants for 2001.......................................36
Shareholder Proposals and Nominations for 2002 Annual Meetings................36
Availability of Form 10-K and Other Information...............................36
Other Proposed Matters........................................................37
Appendix A: Edison International Charter for the Audit Committee of the
Board of Directors...........................................A-1
Appendix B: Southern California Edison Company Charter for the Audit
Committee of the Board of Directors..........................B-1
EDISON INTERNATIONAL
SOUTHERN CALIFORNIA EDISON COMPANY
2244 WALNUT GROVE AVENUE
P. O. BOX 800
ROSEMEAD, CALIFORNIA 91770
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JOINT PROXY STATEMENT
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INTRODUCTION - SOLICITATION OF PROXIES
This Joint Proxy Statement, proxy forms, voting instructions and the 2000
Annual Reports are being distributed together beginning April 19, 2001, to the
Edison International and Southern California Edison Company shareholders for
their annual meetings. The annual meetings will be held jointly on Monday, May
14, 2001, at the DoubleTree Hotel Ontario, 222 N. Vineyard Avenue, Ontario,
California, at 1:30 p.m., Pacific Time. The Edison International and Southern
California Edison Company Boards of Directors are soliciting proxies from you
for use at their annual meetings, or at any adjournment or postponement of the
meetings. Proxies allow properly designated individuals to vote on your behalf
at an annual meeting. This Proxy Statement discusses the matters to be voted on
at the annual meetings.
In this Proxy Statement:
o "Annual meeting" means the Edison International annual meeting of
shareholders and the Southern California Edison Company annual meeting
of shareholders, which are being held jointly.
o "SCE" means Southern California Edison Company.
o "SSPP" means the SCE employee benefit plan known as the Stock Savings
Plus Plan through which participants may hold Edison International
shares.
o "DRP" means the Edison International shareholder plan known as the
Dividend Reinvestment and Stock Purchase Plan.
o Holding shares in "street name" means your shares are held in an
account through your broker, bank, fiduciary, custodian or other
nominee, and you are considered the beneficial owner of those shares.
Your name does not appear on the Companies' records as a shareholder.
o Holding shares as a "registered" shareholder or "of record" means your
shares are registered in your own name directly with the Companies
rather than in street name, and that stock certificates are issued in
your own name. Shares held in your DRP plan account are also included.
QUESTIONS AND ANSWERS ON VOTING, PROXIES, AND ATTENDANCE
Q: What am I voting on?
A: You are voting on the election of 13 Directors for Edison International and
12 Directors for SCE and any other matters properly brought before the
meetings. The election of Directors is Item 1 on the proxy card.
Q. Who can vote?
A. All registered shareholders at the close of business on March 23, 2001, are
entitled to vote at the meeting. Holders of Edison International's Common
Stock are entitled to one vote per share on each item of Edison
International business. On each item of SCE business, holders of SCE
Cumulative Preferred Stock are entitled to six votes per share; holders of
SCE $100 Cumulative Preferred Stock are entitled to two votes per share;
and holders of SCE Common Stock are entitled to one vote per share.
Shareholders who hold shares that are not registered in their own name will
give voting instructions to the registered shareholders. Shares held by
participants in the SSPP are registered in the name of the plan trustee and
will be voted in its capacity as the stock fund investment manager.
Fractional shares, such as those held in the SSPP and in the DRP, may not
be voted. All shares of SCE Common and Preferred Stocks vote together as
one class.
Q: Who can attend the meeting?
A: All shareholders on the record date, or their duly appointed proxies, may
attend the meeting. Shareholders' spouses are also welcome. Seating,
however, is limited. All shareholders must check in at the registration
desk at the meeting. The registration desk will open at 10:30 a.m., Pacific
Time. If you are a registered or SSPP shareholder, an admission pass is
included with these materials, and you will present your pass at the
registration desk for admission. If you do not have an admission pass and
you are a registered shareholder, we will be able to verify your share
ownership from the share register upon presentation of proper
identification. If your shares are not registered in your name, you will
need to bring a letter or an account statement from your broker, plan
trustee or other nominee reflecting your stock ownership as of the record
date and to provide proper identification. A shareholder which is a
corporation, partnership, association or other entity is limited to three
authorized representatives at the annual meeting. Cameras, recording
devices and other electronic devices will not be permitted at the meeting.
Additional security measures are being implemented for the meeting; please
excuse any inconvenience.
Q: How do I vote?
A: If you are a registered or SSPP shareholder, you may choose one of the
following ways to cast your vote:
o By mail: Complete, date, sign and mail the proxy/voting
instruction card in the enclosed postage prepaid envelope.
o By telephone: Call 1-877-779-8683 toll free from the U.S. and Canada.
Call 1-201-536-8073 from outside the U.S. and Canada.
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o Via the Internet: Access the Edison International World Wide Web site
http://www.eproxyvote.com/eix
Access the SCE World Wide Web site
http://www.eproxyvote.com/sce
Registered shareholders have a fourth option to cast their vote:
o By ballot at the meeting: Attend the annual meeting and complete a
written ballot distributed at the meeting.
If you vote by telephone or via the Internet, follow the instructions on
the enclosed card. You will be asked to enter a specially assigned control
number on the proxy card. Additionally, if you vote by telephone, you will
receive recorded instructions, and if you vote via the Internet, an
electronic proxy card. Voting by telephone and via the Internet is
available 24 hours a day, seven days a week, through midnight, May 13,
2001, except for SSPP shareholders who must vote by 5:00 p.m., Eastern
Time, on May 9, 2001.
By voting by mail, telephone or the Internet, you will authorize the
individuals named on the proxy card, referred to as the proxies, or the
SSPP trustee in its capacity as stock fund investment manager to vote your
shares according to your instructions. You are also authorizing those
persons to vote your shares on any other matter properly presented at the
meeting.
If you hold shares in street name, you will provide voting instructions as
follows:
o By mail: On cards received from your broker or other nominee.
o By telephone or via the Internet: If offered by your broker or other
nominee.
o By ballot at the meeting: If you request a legal proxy from your broker
or other nominee and deliver the proxy to the inspector of election
before or at the meeting.
Under California law, you may transmit a proxy by telephone or via the
Internet if authorized by you or your attorney in fact. SHAREHOLDERS WHO
VOTE BY TELEPHONE OR OVER THE INTERNET SHOULD NOT MAIL THE PROXY CARD.
Q: What happens if I return my proxy or vote by mail, telephone or the
Internet, but I do not indicate my voting preference?
A: If you return your proxy or vote by mail and do not indicate how you wish
to vote for the nominees for Director, the proxies and SSPP trustee will
vote FOR election of all the nominees for Director (Item 1). If you enter
your control number by telephone or on the Internet and do not indicate how
you wish to vote for the nominees for Director, your shares will not be
voted on the election.
Q: What happens if I do not return my proxy or provide voting instructions?
A: If you are a registered shareholder and you do not deliver voting
instructions to a designated proxy or cast a ballot at the annual meeting,
your shares will not be voted. If you are an SSPP shareholder and you do
not deliver voting instructions to the trustee, the trustee as stock fund
investment manager may vote your shares as it chooses. If you hold your
shares in street name and you do not instruct
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your broker or other nominee how to vote your shares, the registered owner
may be authorized to vote your shares as it chooses on the matters to be
considered at the meeting. If your broker lacks this discretionary
authority to vote on an item and properly indicates this to us, we call
this a "broker nonvote" on that item.
Q: What if I vote and then change my mind?
A: If you are a registered shareholder, you can revoke your proxy by:
o Writing to the Edison International or SCE Secretary;
o Voting again via mail, telephone or the Internet; or
o Voting in person at the annual meeting.
Your last vote will be the vote that is counted.
If you are an SSPP shareholder, you can revoke your voting instructions by
voting again via mail, telephone or the Internet by 5:00 p.m., Eastern
Time, on May 9, 2001.
If you hold shares in street name, you should contact the registered
shareholder before the annual meeting to determine whether you can change
your voting instructions.
Q: How many votes do you need to hold the meeting?
A: As of the record date, March 23, 2001, Edison International had 325,791,958
shares of Edison International Common Stock outstanding and entitled to
vote. SCE had 5,150,198 shares of Cumulative Preferred Stock, 2,557,000
shares of $100 Cumulative Preferred Stock, and 434,888,104 shares of SCE
Common Stock outstanding and entitled to vote.
The holders of the Edison International Common Stock have the right to cast
a total of 325,791,958 votes. The holders of the SCE Cumulative Preferred
Stock have the right to cast a total of 30,901,188 votes, the holders of
the SCE $100 Cumulative Preferred Stock have the right to cast a total of
5,114,000 votes, and the holder of the SCE Common Stock, Edison
International, has the right to cast a total of 434,888,104 votes. Voting
together as a class, the SCE shareholders have the right to cast a total of
470,903,292 votes.
A quorum is required to transact business at the annual meeting. The
presence at the annual meeting, in person or by proxy, of shareholders
entitled to cast at least a majority of the votes which all shareholders
are entitled to cast constitutes a quorum. If you properly return your
proxy by mail, by telephone or via the Internet, you will be considered
part of the quorum, even if you abstain from voting or withhold votes, and
the proxies will vote your shares as you have indicated. If a broker or
other nominee holding your shares in street name votes your shares or
returns a properly executed proxy representing your shares, your shares
will be considered as present and part of the quorum, even if your broker
or other nominee does not indicate a voting preference, or otherwise
abstains or withholds votes, on any or all matters.
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Q: What vote is required to adopt the proposal at the meeting?
A: On Item 1, the Election of Directors, the 13 and 12 nominees receiving the
highest number of affirmative or "for" votes will be elected as Directors
of Edison International and SCE, respectively. Votes withheld for any of
the nominees, abstentions or broker nonvotes will have the effect of
reducing the number of affirmative votes a candidate might otherwise have
received.
Q: Who will count the votes?
A: EquiServe Trust Company, N.A., will tabulate the votes and act as the
inspector of election. To protect the confidentiality of votes cast under
the SSPP, Edison International will not have access to any of the SSPP
shareholders' voting instructions, and SSPP voting results will only be
reported in the aggregate.
Q: What shares are included on the proxy card?
A: If you hold shares in both Edison International and SCE, you will receive a
card for each Company. The shares listed on your card(s) represent all the
shares of common stock and preferred stock registered in your name (as
distinguished from those held in street name), all whole shares held in the
DRP, and all whole shares held in the SSPP. You will receive separate cards
from your broker or other nominee if you hold shares in street name.
Q: What does it mean if I get more than one proxy card?
A: It indicates that your shares are held in more than one account, such as
two brokerage accounts, and registered in different names. You should vote
each of the proxy cards to ensure that all of your shares are voted.
Q: How much did this proxy solicitation cost?
A: Edison International and SCE have retained Corporate Investment
Communications, Inc., to solicit proxies from shareholders at an estimated
fee of $10,000 plus expenses. (This fee does not include the costs of
printing and mailing the proxy materials.) Edison International and SCE
will pay all proxy solicitation costs. Some of the directors, officers and
other employees of Edison International and/or SCE also may solicit proxies
personally, by mail, by telephone or by other electronic means for no
additional compensation, except for customary overtime pay. Edison
International and SCE will also reimburse brokers and other nominees for
their reasonable out-of-pocket expenses for forwarding proxy materials to
the beneficial owners of their stocks and obtaining voting instructions.
Q: Whom can I call with any questions?
A: You may call Wells Fargo Bank at 1-800-347-8625 or visit their World Wide
Web site at http://www.stocktransfer@wellsfargo.com
Q: How does the Board recommend I vote?
A: The Edison International and SCE Boards recommend the election of their
nominees for Directors listed in this Proxy Statement.
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ELECTION OF DIRECTORS
Item 1 on Proxy Card
NOMINEES FOR ELECTION
Thirteen and twelve Directors will be elected to the Edison International
and SCE Boards, respectively, to hold office until the next annual meeting.
Should any of the nominees become unavailable to stand for election as a
Director, the proxies will have the authority to vote for substitute nominees as
they choose.
The nominees for Directors of Edison International and SCE are the same,
except for Mr. Bryson who is a nominee for the Edison International Board only.
A brief biography of each nominee is presented below.
JOHN E. BRYSON*
Chairman of the Board, President and Chief Executive Officer of Edison
International and Chairman of the Board of Edison Mission Energy (electric power
generation; a nonutility subsidiary of Edison International) (since 2000);
Chairman of the Board and Chief Executive Officer of Edison International and
SCE (1990-1999) Mr. Bryson has been a Director of Edison International since
1990. He is a Director of The Walt Disney Company, The Boeing Company, and
Pacific American Income Shares, Inc. and LM Institutional Fund Advisors I, Inc.
Mr. Bryson is a graduate of Stanford University and Yale Law School. Age 57.
WARREN CHRISTOPHER
Senior Partner of the law firm of O'Melveny & Myers (1958-1967, 1969-1977,
1981-1993, and since 1997); U. S. Secretary of State (1993-1997)
Mr. Christopher has been a Director of SCE from August 1971 through January
1977, from June 1981 through January 1993, and from May 1997 to date. He has
been a Director of Edison International from April 1988 through January 1993 and
from May 1997 to date. Mr. Christopher is a graduate of the University of
Southern California and Stanford Law School. Age 75.
STEPHEN E. FRANK
Chairman, President and Chief Executive Officer of SCE (since 2000); President
and Chief Operating Officer of SCE (1995-1999)
Mr. Frank has been a Director of Edison International and SCE since 1995. He is
a Director of Washington Mutual, Inc., Associated Electric & Gas Insurance
Services Limited, UNOVA, Inc., and LNR Property Corporation. Mr. Frank is a
graduate of Dartmouth College and received his MBA degree from the University of
Michigan. Age 59.
JOAN C. HANLEY
The Former General Partner and Manager of Miramonte Vineyards (1973-1998)
Mrs. Hanley has been a Director of SCE since 1980 and a Director of Edison
International since 1988. She is a Director of the Harbor-UCLA Research and
Education Institute. Mrs. Hanley is a graduate of the University of Washington.
Age 68.
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* John E. Bryson is a nominee for Director of Edison International only.
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CARL F. HUNTSINGER
General Partner of DAE Limited Partnership, Ltd. (agricultural management)
(since 1986)
Mr. Huntsinger has been a Director of SCE since 1983 and a Director of Edison
International since 1988. Mr. Huntsinger is a graduate of the Massachusetts
Institute of Technology. Age 71.
CHARLES D. MILLER
Retired Chairman of the Board of Avery Dennison Corporation (manufacturer of
self-adhesive products) (1998-April 2000); Chairman of the Board and Chief
Executive Officer of Avery Dennison Corporation (1983-1998) Mr. Miller has been
a Director of SCE since 1987 and a Director of Edison International since 1988.
He is a Director of Avery Dennison Corporation, Nationwide Health Properties
(Chairman), The Air Group, Mellon Financial Group-West Coast, and Korn/Ferry
International. He is a graduate of Johns Hopkins University. Age 72.
LUIS G. NOGALES
President of Nogales Partners (a private equity investment company) (since 1990)
Mr. Nogales has been a Director of Edison International and SCE since 1993. He
is a Director of Adolph Coors Company, Arbitron Inc., KB Home, and Kaufman and
Broad, France. Mr. Nogales is a graduate of San Diego State University and
Stanford Law School. Age 57.
RONALD L. OLSON
Partner of the law firm of Munger, Tolles and Olson (since 1970)
Mr. Olson has been a Director of Edison International and SCE since 1995. He is
a Director of Berkshire Hathaway, Inc., and Pacific American Income Shares, Inc.
and LM Institutional Fund Advisors I, Inc. Mr. Olson is a graduate of Drake
University and University of Michigan Law School and holds a Diploma in Law from
Oxford University. Age 59.
JAMES M. ROSSER
President of California State University, Los Angeles (since 1979)
Dr. Rosser has been a Director of SCE since 1985 and a Director of Edison
International since 1988. He is a Director of Sanwa Bank. Dr. Rosser holds three
degrees from Southern Illinois University. Age 61.
ROBERT H. SMITH
Managing Director of Smith & Crowley, Inc. (merchant banking) (since 1992)
Mr. Smith has been a Director of SCE since 1987 and a Director of Edison
International since 1988. He is a Director of Tarpanware International, Inc. Mr.
Smith is a graduate of the University of Southern California and holds a Law
Degree from Van Norman University. Age 65.
THOMAS C. SUTTON
Chairman of the Board and Chief Executive Officer of Pacific Life Insurance
Company (since 1990)
Mr. Sutton has been a Director of Edison International and SCE since 1995. He is
a Director of Newhall Land & Farming Company and The Irvine Company. Mr. Sutton
is a graduate of the University of Toronto. Age 58.
7
DANIEL M. TELLEP
Retired Chairman of the Board of Lockheed Martin Corporation (aerospace
industry) (1996)
Mr. Tellep has been a Director of Edison International and SCE since 1992. Mr.
Tellep holds two degrees from the University of California at Berkeley and has
completed studies at Harvard University. Age 69.
EDWARD ZAPANTA
Private Practice Physician (neurosurgical care) (since 1970)
Dr. Zapanta has been a Director of SCE since 1984 and a Director of Edison
International since 1988. He is a Director of EastWest Bancorp, Inc., and is a
trustee of the University of Southern California. Dr. Zapanta attended the
University of California at Los Angeles and is a graduate of the University of
Southern California School of Medicine. Age 61.
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BOARD COMMITTEES
The Edison International and SCE Board Committees are the Audit Committee,
Compensation and Executive Personnel Committee, Executive Committee, Finance
Committee and Nominating Committee. The composition of each Committee is the
same for Edison International and SCE, except for the Executive Committee. Each
Committee held the same number of meetings in 2000, unless otherwise indicated
in the table below. This table describes the Boards' Committees.
NUMBER OF
COMMITTEE NAME MEETINGS
AND MEMBERS COMMITTEE FUNCTIONS IN 2000
Audit o Meets regularly with management, the independent public 4
Daniel M. Tellep, Chair accountants, and the internal auditors to make inquiries
Carl F. Huntsinger regarding the manner in which the responsibilities of
Charles D. Miller each are being discharged.
Robert H. Smith
Thomas C. Sutton o Recommends to the Boards the annual appointment of the
Edward Zapanta independent public accountants, Committee charter
revisions, and the inclusion of the
year-end audited financial
statements in the Annual Report on
Form 10-K.
o Reviews with the independent public
accountants the scope of audit and
other engagements and the related
fees, their independence, the
adequacy of internal accounting
controls, and the year-end audited
financial statements.
o Reviews with management the audit
plans and year-end audited
financial statements.
o Reviews information provided on
legal proceedings, environmental
compliance, health and safety
compliance, information technology
security, legal compliance,
business ethics monitoring and
internal auditing programs.
Compensation and o Reviews the performance and sets the compensation of the Edison
Executive Personnel Executive Officers. International: 11
Robert H. Smith, Chair
Charles D. Miller o Approves the design of executive compensation programs.
Luis G. Nogales
James M. Rosser o May elect designated officers and determine their
Thomas C. Sutton compensation. SCE: 3
Edward Zapanta
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o Participates in executive
succession planning and management
development.
o Has additional duties described in
the "Compensation and Executive
Personnel Committees' Report on
Executive Compensation" below.
Executive o Has all the authority of the Boards between meetings 1
Edison International except to the extent limited by the California General
-------------------- Corporation Law.
Warren Christopher, Chair
John E. Bryson
Carl F. Huntsinger
Ronald L. Olson
James M. Rosser
Edward Zapanta
SCE
Warren Christopher, Chair
Stephen E. Frank
Carl F. Huntsinger
Ronald L. Olson
James M. Rosser
Edward Zapanta
Finance o Regularly reviews the financial structure of their 3
Luis G. Nogales, Chair respective company.
Joan C. Hanley
Ronald L. Olson o The Edison International Finance Committee reviews the
James M. Rosser financial planning process and investment outlook for
Thomas C. Sutton Edison International and its nonutility subsidiaries,
Daniel M. Tellep and approves certain committed investments.
o The SCE Finance Committee reviews
the five-year capital expenditure
outlook, financing plans, total
revenue requirements, and earnings
trends of SCE as well as approving
certain capital projects.
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Nominating o Periodically consults with management, reviews 2
Joan C. Hanley, Chair shareholder suggestions of Director candidates, and
Warren Christopher makes recommendations regarding Board composition and
Carl F. Huntsinger selection of candidates for election.
Charles D. Miller
Ronald L. Olson
For consideration by the Nominating Committees, shareholder suggestions for
Director candidates should be submitted in writing to the Secretary of Edison
International and/or SCE. The deadlines and additional procedures for
shareholder nominations are in "Shareholder Proposals and Nominations for 2002
Annual Meetings" below.
BOARD MEETINGS AND ATTENDANCE
During 2000, the Edison International Board met 15 times, and the SCE Board
met 11 times.
During 2000, all current Directors attended 75% or more of all Edison
International and SCE Board and applicable Committees' meetings.
BOARD COMPENSATION
Directors who are employees of Edison International or SCE are not paid
additional compensation for serving as Directors. Non-employee Directors are
compensated as described below.
Fees
During 2000, each non-employee Director was paid as follows:
o an annual Board retainer of $25,000,
o an annual retainer of $3,000 to Board Committee chairpersons,
o an annual Executive Committee retainer of $2,000 to Executive Committee
members,
o $1,500 for each Board meeting attended,
o $1,000 for each Board Committee meeting attended, and
o $1,500 for any other business meetings attended as a Director.
Non-employee Directors serve on both the Edison International Board and the
SCE Board and the same Committees of each Board. Non-employee Directors receive
only one retainer and, if the meetings
11
of the Boards or the same Committees of each Company are held concurrently or
consecutively, they receive only one meeting fee. It is the usual practice of
Edison International and SCE that meetings of the Edison International and SCE
Boards are held together or consecutively and a single meeting fee is paid to
each non-employee Director for each set of meetings. Edison International and
SCE Committee meetings are similarly managed. Directors are reimbursed for
out-of-pocket expenses they incur serving as Directors.
Equity Compensation Plan
Under terms of the Edison International Equity Compensation Plan, each
non-employee Director of Edison International and SCE is automatically granted
upon election or reelection to the Boards:
o 500 shares of Edison International Common Stock, and
o 300 deferred stock units.
Directors serving on both Boards receive only one award of stock and
deferred stock units per year. The deferred stock units are credited to the
Director's deferred compensation plan account. Each stock unit represents the
value of one share of Edison International Common Stock. Stock units accrue
dividend equivalents that are converted to additional stock units under the
plan. The stock units cannot be voted or sold. The deferred stock units will be
distributed in cash in a lump sum upon the Director's retirement from the Boards
unless the Director's request to receive distribution in the form of
installments over 5, 10, or 15 years was previously approved. Resignation prior
to retirement will result in a lump sum payment.
Deferred Compensation Plans
1985 Deferred Compensation Plan
SCE non-employee Directors were permitted to defer compensation earned from
October 1, 1985, through December 31, 1989, under the terms of the SCE 1985
Deferred Compensation Plan for Directors. These amounts are deferred until the
participant ceases to be a Director, dies or attains a predetermined age of at
least 65, but not greater than 72. The account may be paid in installments of 10
or 15 equal annual installments or 120 or 180 equal monthly installments. If a
participant dies before payments have begun, his or her beneficiary will receive
the account payments over the term elected by the participant. In addition, the
beneficiary will receive annual payments equal to 75% of the participant's total
deferred commitment for ten years. If a participant dies after payments have
begun, the remainder of his or her account will continue to be paid to the
beneficiary. Following the completion of these payments, if the beneficiary is
the surviving spouse, the person will be entitled to a five-year certain life
annuity equal to 50% of the payments the participant had been receiving. If the
beneficiary is someone other than a spouse, the payments will be made for five
years only. All amounts payable under this plan are treated as obligations of
SCE.
Director Deferred Compensation Plan
Non-employee Directors of Edison International and SCE are eligible to
defer up to 100% of their Board compensation, including any retainers, and any
meeting fees under the Edison International Director Deferred Compensation Plan.
A grantor trust has been adopted to fund the deferred compensation liability.
Amounts may be deferred until a specified year, retirement, death or
12
discontinuance of service as a Director. Compensation deferred until a specified
year is paid as a single lump sum. Compensation deferred until retirement or
death may be paid as a single lump sum, in monthly installments of 60, 120, or
180 months, or in a combination of a partial lump sum and installments. Deferred
compensation is paid as a single lump sum or in three annual installments upon
any other discontinuance of service as a Director. All amounts payable under
this plan are treated as obligations of Edison International.
Preferential interest (interest considered under the Securities and
Exchange Commission rules to be at above-market rates) was credited during 2000
to the plan accounts of the following Directors under the 1985 Deferred
Compensation Plan and the Director Deferred Compensation Plan:
Preferential Interest
-----------------------------------
1985 Plan Director DCP
($) ($)
-----------------------------------
Warren Christopher 7,411 0
Joan C. Hanley 76,208 0
Carl F. Huntsinger 76,208 5,272
Ronald L. Olson 0 1,937
James M. Rosser 76,208 5,312
Robert H. Smith 0 2,336
Thomas C. Sutton 0 1,308
Edward Zapanta 76,208 260
Mr. Christopher was re-elected as a Director of Edison International and
SCE in 1997 following distinguished service as U. S. Secretary of State.
Retirement and deferred compensation benefit payments attributable to his prior
service as a Director will continue to be paid. Any additional benefits accruing
during his current term as a Director will be payable to Mr. Christopher in
accordance with the terms of the plans in effect at the time of his subsequent
retirement.
13
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the number of equity securities of Edison
International, SCE and any of their subsidiaries beneficially owned as of
February 28, 2001, by the respective Directors and Executive Officers of Edison
International and SCE. The table includes shares that can be acquired through
April 29, 2001, through the exercise of stock options. Unless otherwise noted,
each individual has sole voting and investment power.
Amount and Nature of Beneficial Ownership (1)
-----------------------------------------------------
Company and Total Shares
Name Class of Stock Options SSPP Shares (2) Beneficially Owned (3)
- ---- -------------- ------- --------------- ----------------------
John E. Bryson (4) Edison International Common Stock 839,501 17,447 917,557 (5)
Warren Christopher Edison International Common Stock 3,185 (6)
Theodore F. Craver, Jr.(4) Edison International Common Stock 103,751 109,751 (7)
Bryant C. Danner (4) Edison International Common Stock 269,451 3,600 280,051
John R. Fielder (4) Edison International Common Stock 127,750 15,045 145,947
Alan J. Fohrer (4) Edison International Common Stock 267,426 28,965 299,313
Robert G. Foster Edison International Common Stock 106,350 4,319 110,669
Stephen E. Frank Edison International Common Stock 354,500 6,774 366,274
Joan C. Hanley Edison International Common Stock 9,094 (6)
Carl F. Huntsinger Edison International Common Stock 14,037 (8)
Charles D. Miller Edison International Common Stock 19,087 (9)
Luis G. Nogales Edison International Common Stock 3,525
Ronald L. Olson Edison International Common Stock 28,994 (10)
Harold B. Ray (4) Edison International Common Stock 123,725 1,517 125,242
Richard M. Rosenblum (4) Edison International Common Stock 64,825 1,706 66,532
James M. Rosser Edison International Common Stock 8,100 (11)
Robert H. Smith Edison International Common Stock 19,123 (12)
Thomas C. Sutton Edison International Common Stock 30,217 (6)
Daniel M. Tellep Edison International Common Stock 17,134 (6)
Edward Zapanta Edison International Common Stock 14,277 (13)
All Directors and Executive Officers
of Edison International as a group (21 individuals)
Edison International Common Stock 2,224,231 83,916 2,559,494 (14)
All Directors and Executive Officers
of SCE as a group (22 individuals)
Edison International Common Stock 1,109,144 92,936 1,377,058 (15)
(1) No Director owns, no named Executive Officer owns, nor do the Directors
and Executive Officers of Edison International or SCE as a group own in
excess of 1% of the outstanding shares of any class of Edison
International's, SCE's or any of their subsidiaries' outstanding equity
securities.
(2) SSPP shares for which instructions are not received from any plan
participant may be voted by the Edison International stock fund investment
manager as it chooses.
(3) Includes amounts listed in the first two columns.
(4) Mr. Bryson is a Director and Executive Officer of Edison International
only. Messrs. Danner, Craver and Fohrer are Executive Officers of Edison
International only. Messrs. Fielder, Ray, and Rosenblum are Executive
Officers of SCE only.
14
(5) Includes 14,000 shares held as co-trustee of trust with shared voting and
investment power, 6,000 shares held as trustee of trust with shared voting
and sole investment power, 40,409 shares held as co-trustee and
co-beneficiary of trust with shared voting and investment power, and 200
shares held by spouse with shared voting and investment power.
(6) Held as co-trustee and co-beneficiary of trust with shared voting and
investment power.
(7) Includes 6,000 shares held as co-trustee and co-beneficiary of trust with
shared voting and investment power.
(8) Includes 9,037 shares held as trustee and co-beneficiary with shared voting
and sole investment power, and 5,000 shares held by spouse with shared
voting and investment power.
(9) Includes 16,087 held as co-trustee and co-beneficiary of trust with shared
voting and investment power, and 3,000 shares held in a foundation with
shared voting and investment power which are not deemed beneficially owned
under Section 16 of the Securities Exchange Act of 1934.
(10) Includes 3,994 shares held as co-trustee and co-beneficiary of trust with
shared voting and investment power, 10,000 shares held in a 401(k) plan
with shared voting and sole investment power, and 15,000 shares held in a
foundation with shared voting and investment power which are not deemed
beneficially owned under Section 16 of the Securities Exchange Act.
(11) Held as co-trustee and co-beneficiary with shared voting and sole
investment power.
(12) Includes 5,900 shares held as co-trustee and co-beneficiary of trust with
shared voting and sole investment power, 2,223 shares held by daughter with
shared voting and investment power, 3,000 shares held by spouse with shared
voting and investment power, and 5,000 held in a Pension Purchase Program
with shared voting and sole investment power.
(13) Includes 4,278 shares held as co-trustee and co-beneficiary with shared
voting and investment power.
(14) Includes 130,398 shares held as co-trustee and co-beneficiary of trust with
shared voting and investment power, 14,000 shares held as co-trustee of
trust with shared voting and investment power, 14,000 shares held as
co-trustee and co-beneficiary of trust with shared voting and sole
investment power, 9,037 shares held as trustee and co-beneficiary with
shared voting and sole investment power, 6,000 shares held as trustee of
trust with shared voting and sole investment power, 10,000 shares held in a
401(k) plan with shared voting and sole investment power, 5,000 shares held
in a Pension Purchase Program with shared voting and sole investment power,
8,200 shares held by spouse with shared voting and investment power, 2,223
shares held by daughter with shared voting and investment power, and 18,000
shares held in a foundation with shared voting and investment power.
(15) Includes 83,989 shares held as co-trustee and co-beneficiary of trust with
shared voting and investment power, 14,000 shares held as co-trustee and
co-beneficiary of trust with shared voting and sole investment power, 9,037
shares held as trustee and co-beneficiary with shared voting and sole
investment power, 10,000 shares held in a 401(k) plan with shared voting
and sole investment power, 5,000 shares held in a Pension Purchase Program
with shared voting and sole investment
15
power, 8,000 shares held by spouse with shared voting and investment
power, 2,223 shares held by daughter with shared voting and investment
power, and 18,000 shares held in a foundation with shared voting and
investment power.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Edison International and SCE Directors and certain officers, and persons
who own more than 10% of a registered class of Edison International's or SCE's
equity securities, are required to file ownership reports and changes in
ownership of such securities with the SEC and one designated national securities
exchange under Section 16(a) of the Securities Exchange Act. Based on a review
of the reports and written representations from the Directors and those
officers, Edison International and SCE believe that all Section 16(a) filing
requirements were met during 2000, except that Mrs. Hanley filed one late report
for one 1999 Edison International Common Stock transaction, and Mr. Miller filed
two late reports for two separate 2000 Edison International Common Stock
transactions.
STOCK OWNERSHIP OF CERTAIN SHAREHOLDERS
The following are the only shareholders known by Edison International or
SCE to beneficially own more than 5% of any class of either Companies' voting
securities as of February 28, 2001, except as otherwise indicated:
Amount and
Nature of
Beneficial Percent
Class of Stock Name and Address of Shareholder Ownership of Class
-------------- ------------------------------- -------------- ---------
SCE Common Stock Edison International 434,888,104 (1) 100%
2244 Walnut Grove Avenue
Rosemead, California 91770
Edison International Common Stock State Street Bank and Trust Company 30,243,423 (2) 9.3%
105 Rosemont Avenue
Westwood, Massachusetts 02090
(1) Edison International became the holder of all issued and outstanding
shares of SCE Common Stock on July 1, 1988, when it became the holding
company of SCE. Edison International has sole voting and investment power
over these shares.
(2) This information is based on a Schedule 13G, dated February 9, 2001, filed
with the SEC. Acting in various fiduciary capacities, State Street reports
that at December 31, 2000, it had sole voting power over 5,912,676 shares,
sole investment power over 30,214,787 shares, shared voting power over
23,649,150 shares, and shared investment power over 28,636 shares. As of
February 28, 2001, 25,486,898 shares of the class, or 7.8%, are held as
the SSPP Trustee. SSPP shares are voted in accordance with instructions
given by participants, whether vested or not. SSPP shares for which
instructions are not received may be voted by the Edison International
stock fund investment manager as it chooses. SSPP participants may not
vote or give instructions how to vote fractional shares.
16
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE (1)
The following table presents information regarding compensation of the
Chief Executive Officers of Edison International and SCE ("CEO"), and the other
four most highly compensated Executive Officers of Edison International and SCE,
for services rendered during 1998, 1999 and 2000. These individuals are referred
to as "Named Officers" in this Joint Proxy Statement.
Long-Term Compensation
----------------------------------
Annual Compensation Awards Pay-
outs
- -------------------------------------- ------------------------------------ -------------------------- ------- -----------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- ------------------------------ ------- ---------- ------------- ----------- ----------- -------------- ------- -----------
Other Re- Securities All
Annual stricted Underlying LTIP Other
Name and Compen- Stock Options/ Pay- Compen-
Principal Position(2) Year Salary Bonus sation(3) Award(s) SARs(4) outs sation(5)
($) ($) ($) ($) (#) ($) ($)
- --------------------- ------- ---------- ------------- ----------- ----------- -------------- ------- -----------
John E. Bryson, Chairman 2000 950,000 0 91,938(6) -- 1,273,600 -- 579,115
of the Board, President and 1999 900,000 1,260,000 78,422 -- 267,800 -- 461,909
CEO of Edison International 1998 860,000 1,000,000 70,550 -- 160,000 -- 481,899
Stephen E. Frank, Chairman 2000 617,000 0 76,538(7) -- 321,600 -- 65,831
of the Board, President and 1999 593,000 711,600 1,114 -- 117,700 -- 49,793
CEO of SCE 1998 565,000 559,400 1,109 -- 69,600 -- 61,255
Alan J. Fohrer, President and 2000 477,000 0 49,797 -- 497,800 -- 57,342
CEO of Edison Mission 1999 397,000 486,000 -- -- 83,100 -- 39,310
Energy 1998 367,000 393,800 -- -- 44,700 -- 60,810
Theodore F. Craver, Jr., 2000 375,000 100,000(8) -- -- 244,800 -- 36,824
Senior Vice President, CFO 1999 305,000 347,100 -- -- 53,000 -- 24,189
and Treasurer of Edison 1998 290,000 228,400 -- -- 25,000 -- 24,084
International
Bryant C. Danner, Executive 2000 470,600 0 109,718(9) -- 483,100 -- 61,361
Vice President and General 1999 435,000 534,000 84,187 -- 83,100 -- 44,328
Counsel of Edison 1998 415,000 433,500 77,935 -- 44,700 -- 70,530
International
Harold B. Ray, 2000 390,000 50,000(8) -- -- 171,200 -- 43,280
Executive Vice President 1999 372,000 446,400 -- -- 73,800 -- 43,176
of SCE 1998 355,000 372,800 -- -- 43,700 -- 54,294
Robert G. Foster, 2000 322,500 0 -- -- 128,900 -- 55,595
Senior Vice President 1999 284,000 242,800 -- -- 49,300 -- 48,363
of Edison International and 1998 270,000 194,400 -- -- 29,300 -- 57,231
SCE
John R. Fielder, 2000 272,500 0 -- -- 103,400 -- 32,390
Senior Vice President 1999 260,000 231,400 -- -- 45,200 -- 23,810
of SCE 1998 245,000 192,900 -- -- 20,000 -- 26,079
Richard M. Rosenblum, 2000 265,000 0 -- -- 102,500 -- 21,721
Senior Vice President 1999 250,000 197,500 -- -- 43,400 -- 15,997
of SCE 1998 230,000 175,950 -- -- 20,000 -- 269,581
17
(1) For Edison International, the Named Officers for 2000 are John E. Bryson,
Stephen E. Frank, Alan J. Fohrer, Theodore F. Craver, Jr., and Bryant C.
Danner. For SCE, the Named Officers for 2000 are Stephen E. Frank, Harold
B. Ray, Robert G. Foster, John R. Fielder and Richard M. Rosenblum.
(2) The principal positions shown are at December 31, 2000. On January 17,
2000, Mr. Fohrer resigned as Executive Vice President and Chief Financial
Officer of Edison International and was elected President and CEO of Edison
Mission Energy.
(3) Includes perquisites if in total they exceed the lesser of $50,000 or 10%
of annual salary and bonus, plus reimbursed taxes. Each perquisite
exceeding 25% of the total is separately described in footnotes below.
(4) The awards shown in Column (g) are Edison International nonqualified stock
options for each Named Officer. The terms and conditions for the 2000
Option Awards are described in footnotes to the table below entitled
"Options/SAR Grants in 2000."
(5) The amounts shown in column (i) for 2000 include contributions to the SSPP
and a supplemental plan for eligible participants who are affected by SSPP
participation limits imposed on higher paid individuals by federal tax law,
preferential interest (that portion of interest that is considered under
SEC rules to be at above-market rates) accrued on deferred compensation,
vacation sale proceeds, Employee Stock Ownership Plan ("ESOP") dividend
incentives (the ESOP is a component of the SSPP), electric vehicle
incentives, benefit forfeiture allocations and forgiven loans in the
following amounts:
ESOP Electric Benefit
Plan Preferential Vacation Dividend Vehicle Forfeiture Loan
Contributions Interest Sold Incentives Incentives Allocations Forgiven
($) ($) ($) ($) ($) ($) ($)
------------------------ -------------- ------------- ---------- ------------ ----------- ------------ ---------
John E. Bryson 68,792 508,220 0 1,730 0 373 0
Stephen E. Frank 42,380 23,151 0 0 300 0 0
Alan J. Fohrer 33,540 23,743 0 0 0 59 0
Theodore F. Craver, Jr. 23,440 13,137 0 0 0 247 0
Bryant C. Danner 32,659 28,702 0 0 0 0 0
Harold B. Ray 13,779 28,388 0 1,064 0 49 0
Robert G. Foster 17,151 9,743 5,770 0 0 74 22,857
John R. Fielder 17,547 7,900 5,240 1,584 0 119 0
Richard M. Rosenblum 16,420 5,202 0 0 0 99 0
(6) Includes the following costs of providing Mr. Bryson's benefits: $33,149
under the Executive Survivor Benefit Plan and $22,076 for survivor benefits
under the Executive Deferred Compensation Plan.
(7) Includes the following costs of providing Mr. Frank's benefits: $23,100
under the Executive Survivor Benefit Plan, $22,500 under the Estate and
Financial Planning Program, and $17,074 for survivor benefits under the
Executive Deferred Compensation Plan.
(8) Although no bonuses were paid under the Executive Incentive Compensation
Plan to Executive Officers for 2000 performance, Mr. Craver and Mr. Ray
received special recognition awards in acknowledgment
18
of their significant contributions in 2000 to preserving the viability of
the Companies during the financial crisis, and for retention purposes.
(9) Includes $30,633 which is the cost of providing Mr. Danner's survivor
benefits under the Executive Deferred Compensation Plan.
OPTION / SAR GRANTS IN 2000
The following table presents information regarding Edison International
stock options granted during 2000 to the Named Officers pursuant to the Edison
International Equity Compensation Plan and/or the Edison International 2000
Equity Plan adopted by the Edison International Board on May 18, 2000. No SARs
were granted under the Equity Compensation Plan to any participant during 2000.
SARs cannot be granted under the 2000 Equity Plan.
Grant Date
Individual Grants Value
----------------- --------
(a) (b) (c) (d) (e) (f)
Number of % of Total
Securities Options/SARs Grant
Underlying Granted to Exercise Date
Options/SARs Employees or Base Expiration Present
Name Granted (1) in 2000 Price Date (2) Value (3)
(#) (%) ($/Sh) ($)
---- ----------- ---------- ------- ---------- ---------
John E. Bryson 273,600(4) 2% $25.1875 01/04/2010 1,444,308
1,000,000(5) 7% $20.0625 05/18/2010 5,820,000
Stephen E. Frank 106,600(4) 1% $25.1875 01/04/2010 562,848
215,000(5) 2% $20.0625 05/18/2010 1,251,300
Alan J. Fohrer 83,100(4) 1% $25.1875 01/04/2010 438,768
14,700(6) <1% $27.1250 01/04/2010 84,231
400,000(5) 3% $20.0625 05/18/2010 2,328,000
Theodore F. Craver, Jr. 43,900(4) <1% $25.1875 01/04/2010 231,792
20,900(6) <1% $27.1250 01/04/2010 119,757
180,000(5) 1% $20.0625 05/18/2010 1,047,600
Bryant C. Danner 83,100(4) 1% $25.1875 01/04/2010 438,768
400,000(5) 3% $20.0625 05/18/2010 2,328,000
Harold B. Ray 56,200(4) <1% $25.1875 01/04/2010 296,736
115,000(5) 1% $20.0625 05/18/2010 669,300
Robert G. Foster 38,900(4) <1% $25.1875 01/04/2010 205,392
90,000(5) 1% $20.0625 05/18/2010 523,800
John R. Fielder 33,400(4) <1% $25.1875 01/04/2010 176,352
70,000(5) 1% $20.0625 05/18/2010 407,400
Richard M. Rosenblum 32,500(4) <1% $25.1875 01/04/2010 171,600
70,000(5) 1% $20.0625 05/18/2010 407,400
(1) Edison International nonqualified stock options granted in 2000 may be
exercised when vested to purchase one share of Edison International Common
Stock. In January 2000, the annual Option Awards were made, and in May
2000, special Option Awards were made in lieu of the 2001 and 2002 annual
Option Awards. No dividend equivalents were included with these option
grants.
The Edison International Compensation and Executive Personnel Committee
administers the Equity Compensation Plan and the 2000 Equity Plan and has
sole discretion to determine all terms and
19
conditions of any grant, subject to plan limits. It may substitute cash
that is equivalent in value to the Option Awards and, with the consent of
the executive, may amend the terms of any award, including the
post-termination term, and the vesting schedule.
(2) All Option Awards are subject to earlier expiration upon termination of
employment as described in footnotes (4) and (5) below.
(3) The estimated grant date values are based on the Black-Scholes Model, a
mathematical formula used to value options. The Black-Scholes Model relies
on several key assumptions to estimate the present value of options,
including the volatility of the underlying security, the risk-free rate of
return on the date of grant, the dividend yield, the risk of forfeiture and
the estimated time period until exercise of the option. These estimated
values are not a prediction of future stock price. The actual amount that
an option holder may realize will depend on the value of Edison
International Common Stock on the date the option is exercised, so there is
no assurance that the value realized will be at or near the grant date
value estimated by the Black-Scholes Model. The value that would have been
realized by each of the Named Officers if they were able to exercise all of
their "in-the-money" Edison International stock options on December 31,
2000, is shown in Column (e) of the table below entitled "Aggregated Option
/ SAR Exercises in 2000 and FY-End Option / SAR Values."
The grant date value of each Edison International stock option for the
January 3, 2000, Option Award was calculated to be $5.28 per option share
using the Black-Scholes Model with the following assumptions: a volatility
rate of 23.48%, a risk-free rate of return of 5.58%, a dividend yield of
4.02%, a risk of forfeiture factor of 0.9039 and an exercise date of ten
years after the date of grant.
The grant date value of each Edison International stock option for the
January 18, 2000, Option Award was calculated to be $5.73 per option share
using the Black-Scholes Model with the following assumptions: a volatility
rate of 23.48%, a risk-free rate of return of 5.65%, a dividend yield of
4.02%, a risk of forfeiture factor of 0.9039 and an exercise date of ten
years after the date of grant.
The grant date value of each Edison International stock option for the May
18, 2000, Option Award was calculated to be $5.82 per option share using
the Black-Scholes Model with the following assumptions: a volatility rate
of 36.67%, a risk-free rate of return of 6.01%, a dividend yield of 4.21%,
a risk of forfeiture factor of 0.9039 and an exercise date of ten years
after the date of grant.
(4) The January 3, 2000, Option Awards are subject to a four-year vesting
period with one-fourth of the total award vesting and becoming exercisable
annually beginning on January 2, 2001. If an executive retires, dies, or
terminates employment following a permanent and total disability (a
"Separation Event") during the four-year vesting period, the unvested
Option Awards will vest and be exercisable to the extent of 1/48 of the
grant for each full month of service during the vesting period. Unvested
Option Awards of Messrs. Bryson, Fohrer, Danner and Ray will vest and be
exercisable upon a Separation Event. The vested Option Awards may continue
to be exercised within their original term by the recipient or beneficiary
following a Separation Event. If employment is terminated for reasons other
than a Separation Event, Option Awards that were vested as of the prior
anniversary date of the grant are forfeited unless exercised within 180
days of the date of termination. All unvested Option Awards are forfeited
on the date of termination. The Option Awards of Messrs. Bryson, Frank,
Fohrer, Craver, Danner and Foster are transferable to a spouse, child or
grandchild.
Appropriate and proportionate adjustments may be made by the Edison
International Compensation and Executive Personnel Committee to the Option
Award to reflect any impact resulting from various
20
events such as corporate reorganizations and stock splits. If Edison
International is not the surviving corporation in such a reorganization,
all Option Awards then outstanding will become vested and be exercisable
unless provisions are made as part of the transaction for the assumption or
substitution of the Option Awards with options of the successor corporation
with appropriate adjustments as to the number and price of the options.
Notwithstanding the foregoing, the January 3, 2000, Option Awards provide
that upon a change of control of Edison International after the occurrence
of a "Distribution Date" under the Rights Agreement approved by the Edison
International Board of Directors on November 21, 1996, and amended on
September 16, 1999, the options will vest and will remain exercisable for
at least two years following the Distribution Date. A Distribution Date is
generally the date a person acquires 20% or more of the Common Stock of
Edison International, or a date specified by the Edison International Board
of Directors after commencement of a tender offer for 20% or more of such
stock. In no event, however, may an Option Award be exercised beyond its
original term.
(5) The May 18, 2000, Option Awards are subject to a five-year vesting period
with one-fourth of the total award vesting annually beginning on May 18,
2002. The Option Awards may not be exercised prior to May 18, 2005, unless
the closing price of Edison International Common Stock has averaged at
least $25 per share over 20 consecutive trading days. If a Separation Event
occurs during the five-year vesting period, the unvested Option Awards will
vest and be exercisable (subject to the stock price appreciation
requirement) to the extent of 1/60 of the grant for each full month of
service during the vesting period, taking into consideration prior vesting
and exercises (the "regular vesting rule"). Portions of the Option Awards
of Messrs. Bryson, Fohrer and Danner covering 452,800 shares, 204,400
shares and 233,800 shares, respectively, will fully vest upon a Separation
Event, but will not be exercisable before May 18, 2005 unless the stock
price appreciation requirement described above is met. The remaining
portions of the Option Awards of Messrs. Bryson, Fohrer, and Danner and all
of the Option Award of Mr. Ray will vest and be exercisable upon a
Separation Event in two equal blocks, referred to below as the 2001 block
and the 2002 block. Both blocks will vest and be exercisable to the extent
provided under the regular vesting rule if the Separation Event occurs
prior to January 1, 2001. If the Separation Event occurs during 2001, the
2001 block will be fully vested and exercisable (subject to the stock price
appreciation requirement), and the 2002 block will vest and be exercisable
to the extent determined under the regular vesting rule. If the Separation
Event occurs after 2002, both blocks will be fully vested and exercisable
(subject to the stock price appreciation requirement). Following a
Separation Event, vested Option Awards may be exercised within their
original term by the recipient or beneficiary. If an executive terminates
employment other than by a Separation Event, Option Awards that were vested
as of the prior anniversary date of the grant are forfeited unless
exercised within 180 days of the date employment is terminated. All
unvested Option Awards are forfeited on the date employment is terminated.
The Option Awards of Messrs. Bryson, Frank, Fohrer, Craver, Danner and
Foster are transferable to a spouse, child or grandchild.
Appropriate and proportionate adjustments may be made by the Edison
International Compensation and Executive Personnel Committee to the Option
Award to reflect any impact resulting from various events such as corporate
reorganizations and stock splits. In the event of a change in control of
Edison International, the May 18, 2000, Option Awards then outstanding will
vest and be exercisable unless provisions are made as part of the
transaction for the assumption or substitution of the Option Awards with
options of the successor corporation with appropriate adjustments as to the
number and price of the options. If an involuntary severance occurs during
a protected period, but prior to a change in control, unvested Option
Awards and vested Option Awards reaching the end of their 180-day exercise
period will be suspended and unexercisable. If a change in control occurs
within 24 months after the
21
involuntary severance, the Option Awards will vest and be exercisable for
60 days after the change in control, or until the end of the 180-day period
following employment termination, whichever date is later. In no event,
however, may an Option Award be exercised beyond its original term.
(6) The January 18, 2000, Option Awards granted an additional increment of
Edison International stock options to Mr. Fohrer and Mr. Craver upon their
elections as President and Chief Executive Officer of Edison Mission Energy
and Chief Executive Officer of Edison Enterprises, respectively. These
Option Awards are subject to the same terms described in footnote (4)
above.
AGGREGATED OPTION / SAR EXERCISES IN 2000
AND FY-END OPTION / SAR VALUES
The following table presents information regarding the exercise of Edison
International stock options during 2000 by any of the Named Officers, and
regarding unexercised options held at year-end 2000 by any of the Named
Officers. No SARs were exercised during 2000 or held at year-end 2000 by any of
the Named Officers.
(a) (b) (c) (d) (e)
------------------------- --------------- -------------- ---------------------- --------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options / SARs Options / SARs at
Shares at FY-End (1) FY-End (1)(2)
Acquired Value (#) ($)
---------------------- --------------------
Name on Exercise Realized Exercisable / Exercisable /
(#) ($) Unexercisable Unexercisable
------------------------- --------------- -------------- ---------------------- --------------------
John E. Bryson -- -- 664,151 / 1,554,449 101,100 / 0
Stephen E. Frank -- -- 281,026 / 444,674 0 / 0
Alan J. Fohrer -- -- 211,026 / 582,474 37,912 / 0
Theodore F. Craver, Jr. -- -- 68,051 / 297,049 0 / 0
Bryant C. Danner -- -- 216,726 / 567,774 33,700 / 0
Harold B. Ray 0(3) 168,400(3) 80,301 / 248,399 0 / 0
Robert G. Foster 0(4) 257,360(4) 76,975 / 180,525 0 / 0
John R. Fielder 8,400(5) 643,179(5) 103,101 / 147,299 16,850 / 0
Richard M. Rosenblum -- -- 40,850 / 145,050 0 / 0
(1) Each Edison International stock option may be exercised for one share of
Edison International Common Stock at an exercise price equal to the fair
market value of the underlying Common Stock on the date the option was
granted. Dividend equivalents that may accrue on some of the Edison
International stock options accumulate without interest and are paid in
cash. The option terms for current year awards are discussed in footnotes
(4) and (5) in the table above entitled "Option/SAR Grants in 2000."
(2) Edison International stock options have been treated as "in-the-money" if
the fair market value of the underlying stock at year-end 2000 exceeded the
exercise price of the options. The dollar amounts shown for Edison
International stock options are the differences between (i) the fair market
value of the Edison International Common Stock underlying all unexercised
"in-the-money" options at year-end 2000 and (ii) the exercise prices of
those options.
22
The aggregate value at year-end 2000 of all accrued dividend equivalents,
exercisable and unexercisable, for the Named Officers was:
$ / $
--------------
John E. Bryson 3,196,046 / 0
Stephen E. Frank 1,081,528 / 0
Alan J. Fohrer 1,051,040 / 0
Theodore F. Craver, Jr. 183,658 / 0
Bryant C. Danner 1,103,294 / 0
Harold B. Ray 0 / 0
Robert G. Foster 0 / 0
John R. Fielder 0 / 0
Richard M. Rosenblum 84,200 / 0
(3) The amount shown represents the proceeds from the exercise of dividend
equivalents related to 40,000 options granted in 1997, although the options
themselves have not been exercised. These options will accrue no further
dividend equivalents.
(4) The amount shown represents the proceeds from the exercise of dividend
equivalents related to 2,400 options granted in 1992, 3,000 options granted
in 1993, 18,600 options granted in 1996, and 26,000 options granted in
1997, although the options themselves have not been exercised. These
options will accrue no further dividend equivalents.
(5) The amount shown includes $97,020 of value from dividend equivalents on the
8,400 options exercised. It also includes $505,734 in proceeds from the
exercise of dividend equivalents related to 6,600 options granted in 1992,
7,000 options granted in 1993, 9,600 options granted in 1994, 2,000 options
granted in 1995, 18,600 options granted in 1996, and 20,000 options granted
in 1997, although the options themselves have not been exercised. These
options will accrue no further dividend equivalents.
23
LONG-TERM INCENTIVE PLAN
AWARDS IN LAST FISCAL YEAR
The following table presents information regarding Edison International
performance shares granted during 2000 to the Named Officers.
Estimated Future Payouts Under
Non-Stock Price-Based Plans
--------------------------------
(a) (b) (c) (d) (e) (f)
Performance
Number of or Other Period
Shares, Until
Units or Maturation
Name Other Rights (1) Or Payout (1) Threshold Target Maximum
(#) ($) ($) ($)
---- --------------- ---------------- --------- ------ -------
John E. Bryson 9,421 Units 2 years N/A N/A N/A
9,420 Units 3 years
Stephen E. Frank 3,673 Units 2 years N/A N/A N/A
3,673 Units 3 years
Alan J. Fohrer 3,328 Units 2 years N/A N/A N/A
3,328 Units 3 years
Theodore F. Craver, Jr. 2,180 Units 2 years N/A N/A N/A
2,179 Units 3 years
Bryant C. Danner 2,854 Units 2 years N/A N/A N/A
2,854 Units 3 years
Harold B. Ray 1,930 Units 2 years N/A N/A N/A
1,929 Units 3 years
Robert G. Foster 1,337 Units 2 years N/A N/A N/A
1,337 Units 3 years
John R. Fielder 1,144 Units 2 years N/A N/A N/A
1,144 Units 3 years
Richard M. Rosenblum 1,111 Units 2 years N/A N/A N/A
1,110 Units 3 years
(1) Twenty-five percent of each Named Officer's long-term incentive
compensation for 2000 was awarded in the form of Edison International
performance shares, with the balance being granted in the form of Edison
International Stock Options. The stock options are discussed in the
footnotes to the table above entitled "Option/SAR Grants in 2000."
Performance shares are stock-based units with each unit worth one share of
Edison International Common Stock. No dividend equivalents were included
with these grants. The performance shares cannot be voted or sold. Two
payment dates were established for this initial grant of performance
shares, each covering one-half of the performance shares awarded. The first
payment date is December 31, 2001; the second payment date is December 31,
2002. One-half of the performance shares will be paid in Edison
International Common Stock under the Equity Compensation Plan, and one-half
will be paid in cash equal to the value of such stock outside of the plan.
The initial grant and payment of performance shares was conditioned on
certain performance targets being met including total shareholder return.
However, as discussed in its report below, effective January 2, 2001, the
Edison International Compensation and Executive Personnel Committee
restructured the performance shares into retention incentives as an
inducement to continue
24
employment through resolution of the California power crisis. The downside
and upside potential was eliminated, and the performance shares will pay at
target levels on the first and second payment dates if the Named Officer
remains employed by the Companies on those dates. Pro rata payments will be
made in the event of death, disability, or involuntary severance without
cause, but no payment will be made in the event of a voluntary separation
or a separation for cause.
PENSION PLAN TABLE (1)
The following table presents estimated gross annual benefits payable upon
retirement at age 65 to the Named Officers in the remuneration and years of
service classifications indicated.
Years of Service
-------------------------------------------------------------------------------------
Annual
Remuneration 10 15 20 25 30 35 40
------------ -- -- -- -- -- -- --
200,000 50,000 67,500 85,000 102,500 120,000 130,000 140,000
400,000 100,000 135,000 170,000 205,000 240,000 260,000 280,000
600,000 150,000 202,500 255,000 307,500 360,000 390,000 420,000
800,000 200,000 270,000 340,000 410,000 480,000 520,000 560,000
1,000,000 250,000 337,500 425,000 512,500 600,000 650,000 700,000
1,200,000 300,000 405,000 510,000 615,000 720,000 780,000 840,000
1,400,000 350,000 472,500 595,000 717,500 840,000 910,000 980,000
1,600,000 400,000 540,000 680,000 820,000 960,000 1,040,000 1,120,000
1,800,000 450,000 607,500 765,000 922,500 1,080,000 1,170,000 1,260,000
2,000,000 500,000 675,000 850,000 1,025,000 1,200,000 1,300,000 1,400,000
2,200,000 550,000 742,500 935,000 1,127,500 1,320,000 1,430,000 1,540,000
2,400,000 600,000 810,000 1,020,000 1,230,000 1,440,000 1,560,000 1,680,000
2,600,000 650,000 877,500 1,105,000 1,332,500 1,560,000 1,690,000 1,820,000
2,800,000 700,000 945,000 1,190,000 1,435,000 1,680,000 1,820,000 1,960,000
3,000,000 750,000 1,012,500 1,275,000 1,537,500 1,800,000 1,950,000 2,100,000
The retirement plans provide monthly benefits at normal retirement age (65
years) determined by a percentage of the average of the executive's highest 36
consecutive months of regular salary and, in the case of the executive plan with
respect to the Named Officers, the executive's highest 36 consecutive months of
salary and bonus prior to attaining age 65. Compensation used to calculate
combined benefits under the
- ------------------
(1) Estimates are based on the terms of the SCE Retirement Plan, a qualified
defined benefit employee retirement plan, and the SCE Executive Retirement
Plan, a nonqualified supplemental executive retirement plan, with the
following assumptions: (i) SCE's qualified retirement plan will be
maintained, (ii) optional forms of payment which reduce benefit amounts
have not been selected, and (iii) any benefits in excess of limits
contained in the Internal Revenue Code of 1986 and any incremental
retirement benefits attributable to consideration of the annual bonus will
be paid out of the executive retirement plan as unsecured obligations of
Edison International or the participating affiliate. For purposes of the
Executive Retirement Plan, as of December 31, 2000, Mr. Bryson had
completed 16 years of service, Mr. Frank - 11 years, Mr. Fohrer - 27 years,
Mr. Craver - 4 years, Mr. Danner - 18 years, Mr. Ray - 30 years, Mr. Foster
- 16 years, Mr. Fielder - 30 years, and Mr. Rosenblum - 24 years.
25
plans is based on base salary and bonus as reported in the "Summary Compensation
Table" above. The service percentage is based on 1 3/4% per year for the first
30 years of service (52 1/2% upon completion of 30 years of service) and 1% for
each year in excess of 30. Named Officers receive an additional service
percentage of 3/4 percent per year for the first ten years of service (7.5% upon
completion of ten years of service). The actual benefit is offset by up to 40%
of the executive's primary Social Security benefits.
The normal form of benefit is a life annuity with a 50% survivor benefit
following the death of the participant. Retirement benefits are reduced for
retirement prior to age 61. The amounts shown in the Pension Plan Table above do
not reflect reductions in retirement benefits due to the Social Security offset
or early retirement.
Messrs. Fohrer and Danner have elected to retain coverage under a prior
benefit program. This program provided, among other benefits, the
post-retirement benefits discussed in the following section. The retirement
benefits provided under the prior program are less than the benefits shown in
the Pension Plan Table in that they do not include the additional 7.5% service
percentage. To determine these reduced benefits, multiply the dollar amounts
shown in each column by the following factors: 10 years of service - 70%, 15
years - 78%, 20 years - 82%, 25 years - 85%, 30 years - 88%, 35 years - 88%, and
40 years - 89%.
OTHER RETIREMENT BENEFITS
Additional post-retirement benefits are provided pursuant to the Survivor
Income Continuation Plan and the Survivor Income/Retirement Income Plan under
the Executive Supplemental Benefit Program. For purposes of determining the
estimated annual benefits payable under these plans upon retirement at normal
retirement age for each of the Named Officers, which is dependent upon final
compensation, the highest compensation level in the Pension Plan Table above
($3,000,000) has been used in the examples which follow.
The Survivor Income Continuation Plan provides a post-retirement survivor
benefit payable to the beneficiary of the participant following his or her
death. The benefit is approximately 23% of final compensation (salary at
retirement and the average of the three highest bonuses paid in the five years
prior to retirement) payable for ten years certain. If a Named Officer's final
annual compensation were $3,000,000, the beneficiary's estimated annual survivor
benefit would be $720,000. Messrs. Fohrer and Danner have elected coverage under
this plan.
The Supplemental Survivor Income/Retirement Income Plan provides a
post-retirement survivor benefit payable to the beneficiary of the Named Officer
following his or her death. The benefit is 25% of final compensation (salary at
retirement and the average of the three highest bonuses paid in the five years
prior to retirement) payable for ten years certain. At retirement, a Named
Officer has the right to elect the retirement income benefit in lieu of the
survivor income benefit. The retirement income benefit is 10% of final
compensation (salary at retirement and the average of the three highest bonuses
paid in the five years prior to retirement) payable to the participant for ten
years certain immediately following retirement. If a Named Officer's final
annual compensation were $3,000,000, the beneficiary's estimated annual survivor
benefit would be $750,000. If a Named Officer were to elect the retirement
income benefit in lieu of the survivor income benefit and had final annual
compensation of $3,000,000, the Named Officer's estimated annual benefit would
be $300,000. Messrs. Fohrer and Danner have elected coverage under this plan.
The 1985 Deferred Compensation Plan provides a post-retirement survivor
benefit. This plan allowed eligible participants in September 1985 to
voluntarily elect to defer until retirement a portion of annual
26
salary and annual bonuses otherwise earned and payable for the period October
1985 through January 1990. Messrs. Bryson and Ray participate in this plan. The
post-retirement survivor benefit is 50% of the annual amount the participant had
been receiving from the plan. Survivor benefit payments begin following
completion of the deferred compensation payments. If the named beneficiary is
the executive's spouse, then survivor benefits are paid as a life annuity, five
years certain. The benefit amount will be reduced actuarially if the spouse is
more than five years younger than the executive at the time of the executive's
death. If the beneficiary is not the spouse, then benefits are paid for five
years only. The annual amounts which would be payable to the surviving
beneficiaries of Messrs. Bryson and Ray if each retired at age 65 are $1,260,020
and $46,324, respectively.
EMPLOYMENT CONTRACTS AND
TERMINATION OF EMPLOYMENT ARRANGEMENTS
Stephen E. Frank. Mr. Frank executed an employment agreement when he joined
SCE as President and Chief Operating Officer and as a member of the Boards of
Directors of Edison International and SCE in 1995. For purposes of the Executive
Retirement Plan, he will be credited with 1.25 years of additional service for
each year of actual service up to ten years. A deferred compensation plan
account was established and credited with $250,000 which vested when Mr. Frank
completed five years of service. He is also provided two club memberships along
with regular executive and employee benefits. If Mr. Frank's employment is
terminated involuntarily (other than for cause), he will receive a severance
payment equal to one year's salary plus bonus.
Bryant C. Danner. Mr. Danner executed an employment agreement when he
joined Edison International and SCE as Senior Vice President and General Counsel
in 1992. After completing three years of service, he was credited with ten
additional years of service with SCE and Edison International for purposes of
determining benefits under the Executive Retirement Plan. Edison International
and SCE agreed to use their best efforts to make available health care coverage
until Mr. Danner and his spouse reach age 65, with the Companies bearing the
cost over the amount an SCE retiree would pay for coverage in the SCE group plan
with the highest deductible. Mr. Danner resigned his SCE positions effective
January 1, 2001.
COMPENSATION AND EXECUTIVE PERSONNEL COMMITTEES'
REPORT ON EXECUTIVE COMPENSATION (1)
The Edison International and SCE Compensation and Executive Personnel
Committees are each composed of the same non-employee directors named at the end
of this report. The Committees have responsibility for all executive
compensation programs of the Companies and met jointly to consider executive
compensation matters for 2000. As discussed in more detail below, the salary
adjustments described in this report were approved in 1999, well before the
onset of the California energy crisis. No bonuses were awarded to Executive
Officers for 2000 performance, and no salary merit increases were approved for
the Executive Officers for 2001.
- --------------------
(1) SEC filings sometimes "incorporate information by reference." This means
the Companies are referring you to information that has previously been
filed with the SEC, and that this information should be considered as part
of the filing you are reading. Unless Edison International or SCE
specifically states otherwise, this report shall not be deemed to be
incorporated by reference and shall not constitute soliciting material or
otherwise be considered filed under the Securities Act of 1933 or the
Securities Exchange Act.
27
The Edison International Committee determines salaries and bonuses for
Edison International officers. The SCE Committee determines salaries and bonuses
for SCE officers. The salaries and bonuses of the officers of the other Edison
International subsidiaries are determined by their respective boards of
directors subject to review and approval of the Edison International Committee
to ensure consistency with overall Edison International compensation policies.
In addition, the Edison International Committee administers the Equity
Compensation Plan and the 2000 Equity Plan pursuant to which stock options
and/or performance awards were awarded in 2000.
Compensation Policies
The executive compensation programs of Edison International, SCE and the
other subsidiaries are intended to achieve three fundamental objectives: (1)
attract and retain qualified executives; (2) motivate performance to achieve
specific strategic objectives of the Companies; and (3) align the interests of
senior management with the long-term interests of the Companies' shareholders
and ratepayers. At present, the basic components of the Companies' executive
compensation program are base salaries, bonuses, and long-term incentives. The
Companies also provide broad-based employee benefit plans and certain other
executive benefit plans.
Section 162(m) of the Internal Revenue Code of 1986 generally disallows a
tax deduction to public companies for compensation over $1,000,000 paid to their
chief executive officers and the four other most highly compensated executive
officers unless certain tests are met. The Committees' general intent is to
design and administer the Edison International and SCE compensation programs in
a manner that will preserve the deductibility of compensation payments to
Executive Officers. However, this goal is secondary in importance to achievement
of the Companies' compensation objectives discussed above. The Committees
believe that the potential increased tax liability is of insufficient magnitude
to warrant alteration of the present compensation system which is achieving the
desired compensation objectives while retaining the flexibility of the
Committees to exercise judgment in assessing an executive's performance.
2000 Compensation Objectives
The Committees base their compensation actions for the Companies on data
gathered through independent surveys of peer group companies. Independent
compensation consultants are retained to annually review and identify the
appropriate comparison companies and to obtain and evaluate current executive
compensation data for Edison International, SCE and the other subsidiaries of
Edison International. The Committees identified 13 deregulating, diversified
electric utilities for Edison International and SCE compensation comparisons for
2000. This peer group of companies includes nine of the companies used for
compensation planning in the prior year, plus four new companies. The Committees
determined that it was no longer necessary to include the deregulated
telecommunications and gas pipeline companies that were part of the peer group
in the past because the electric service industry as a whole is now facing the
competitive challenges that began in California. The comparison utility
companies were selected on the basis of total assets and net sales. Although the
peer group differs from the Dow Jones U.S. Electric Utilities Index depicted in
the Stock Performance Graph, all of the companies comprising the peer group are
included in the index, and the Committees believe the constitution of the peer
group provides relevant compensation data for Edison International and SCE in
view of their changing business environment. Selecting peer groups for the other
subsidiaries was accomplished by a similar process geared to identify
appropriate comparison companies in their respective industries.
28
The Compensation Committees' strategy for 2000 compensation planning was
established in December 1999 to generally target fixed compensation (salary and
benefits) for Edison International, SCE and the other subsidiaries at the median
level of their respective peer groups. Target annual bonus and long-term
incentive opportunities were also set at the median level of the peer groups,
with maximum annual award opportunities of 200% of target levels for significant
performance exceeding target levels. The Compensation Committees may deviate
above and below established targets in individual cases as deemed appropriate in
their discretion.
Affiliate Options
Beginning in 1994 for Edison Mission Energy and 1995 for Edison Capital
(both of which are subsidiaries of Edison International), affiliate option
performance awards were used as part of the long-term incentive compensation
program for key employees. Each affiliate option granted could be exercised to
realize certain appreciation in the deemed value of one hypothetical share of
Edison Mission Energy or Edison Capital stock in excess of their respective
annually escalated exercise prices.
This program was terminated in December 1999 and no affiliate options were
granted for the year 2000. On July 3, 2000, the Edison International
Compensation and Executive Personnel Committee with the approval of the Edison
International Board of Directors offered to exchange cash and Edison
International stock equivalent units for all of the outstanding affiliate
options. As 100% of the holders accepted the exchange offer, there are no longer
any affiliate options outstanding.
Base Salaries
As mentioned at the beginning of this report, the salary actions reported
in this section were approved in 1999, before the onset of the California energy
crisis. No salary merit increases have been approved for 2001.
The Committees reviewed the base salaries for Mr. Bryson and the other
Executive Officers at the end of 1999 to set salaries for 2000. The factors
considered by the Committees in determining Mr. Bryson's 2000 salary were the
relationship of his compensation to the average compensation of the other chief
executive officers of the peer group of companies, and the Committees' judgment
of Mr. Bryson's performance as CEO. The Committees determined that the Companies
had outstanding years in 1999, each contributing above target levels and
achieving nearly every performance objective. Only Edison Enterprises had
disappointing results. Factors found to be particularly significant with respect
to setting Mr. Bryson's 2000 salary were the Companies' 1999 performance in
attaining the established goals and objectives and Edison Mission Energy's
acquisition of major generation assets in strategic regional markets. The base
salary component of Mr. Bryson's 2000 compensation was raised to $950,000 which
was within 8% of the average for CEOs in the peer group. The 2000 base salaries
approved by the Compensation Committees for the other Executive Officers at
Edison International and SCE increased 8% over 1999 levels.
In December 1999, the Edison International Committee also reviewed the base
salaries of the Executive Officers at the other subsidiaries. Salary actions for
2000 taken by their respective boards of directors were examined in light of the
1999 performance of the Companies and survey data of competitive firms to assure
conformance with overall Edison International compensation policies. The 2000
base salaries approved by the Compensation Committees for Executive Officers at
the other subsidiaries increased 10% over 1999 levels. After 2000 salary
adjustments are taken into account, the
29
base salaries in the aggregate of the Executive Officers at Edison
International, SCE and the other subsidiaries are 1% below the median levels of
their respective peer groups.
Bonus Compensation for 2000 Performance
The financial effects of the California energy crisis have overshadowed all
other aspects of Company and individual performance. Notwithstanding the
Companies' strong operating performance in many areas, the Committees determined
that no bonuses will be paid to Executive Officers for 2000 under the annual
incentive plan.
Ordinarily, bonus compensation is determined on the basis of overall
corporate performance and the Committees' assessment of the individual Executive
Officer's performance. Target bonuses for Executive Officers for 2000 ranged
from 30% of base salary for certain subsidiary vice presidents to 80% of base
salary for Mr. Bryson. Maximum opportunity levels were set at 200% of target
award levels. Awards are made in the judgment of the Committees taking into
account overall Company results as guided by the specific performance objectives
for the year.
From time-to-time, the Committees approve awards for special recognition of
accomplishment and for retention purposes. The Committees approved such awards
for two Executive Officers in recognition of their significant contributions in
2000 to preserving the viability of the Companies during the financial crisis,
and for retention purposes.
Long-Term Compensation Awards
The January 2000 long-term compensation awards were comprised of ten-year
nonqualified Edison International Common Stock options and performance shares.
As the value that would otherwise have been allocated to dividend equivalents
was allocated to additional Edison International options in 2000, the number of
options granted to the Executive Officers increased over 1999. In May 2000,
accelerated levels of long-term compensation in the form of Edison International
options were granted to Executive Officers. These option grants were made to
include the anticipated level of options that would have been scheduled for
issuance in 2001 and 2002 under the long-term compensation program. They were
made in an effort to more clearly align the interests of the Executive Officers
with the long-term interests of the shareholders. The awards were granted to
Executive Officers in the judgment of the Edison International Committee guided
by the survey results described above and were not formula-driven. The number
and value of options granted in prior years was not a factor in the current year
award determinations. The Edison International Committee approved January 2000
and May 2000 awards for Mr. Bryson of 273,600 and 1,000,000 Edison International
options, respectively. Mr. Bryson was also awarded 18,841 performance shares in
January 2000. These awards reflect the Committees' commitment to link a
significant portion of Mr. Bryson's compensation directly to the value provided
to shareholders by Edison International stock. The target values established and
the actual awards granted to Mr. Bryson and the other Executive Officers were
consistent with the Committees' strategy described above.
Retention Measures
The extraordinary challenges facing the Companies as a result of the
California energy crisis caused the Edison International Committee to focus on
retention of the management team at SCE and throughout Edison International. As
a result, Edison International has guaranteed the payment of SCE's deferred
compensation plan benefits for active executives with certain exceptions related
to voluntary employment termination and in-service withdrawals. In addition,
because of the retention concerns mentioned above,
30
the Edison International Committee restructured the long-term compensation 2000
performance shares into retention incentives. The retention incentives will pay
out if an executive remains actively employed through the performance period.
Summary
The Committees' compensation actions for 2000 reflect the volatility of the
energy industry and the Companies' performance in 1999 and 2000. Although salary
merit increases for 2000 were approved for the Executive Officers because of
1999 operating performance and for competitive reasons, no annual incentive
awards were paid for 2000 and no salary merit increases will be granted in 2001.
The members of the Committees believe that the compensation programs of the
Companies are effective in attracting and retaining qualified executives to lead
the Companies. A significant portion of Executive Officer compensation is
directly linked to shareholder value. The Committees will continue to monitor
closely the effectiveness and appropriateness of each of the components of
compensation to reflect changes in the business environment of the Companies.
Compensation and Executive Personnel Committees of the
Edison International and SCE
Boards of Directors
--------------------------------------------------------------
Robert H. Smith (Chair) Thomas C. Sutton
Charles D. Miller Daniel M. Tellep*
Luis G. Nogales Edward Zapanta**
James M. Rosser**
March 12, 2001
* Mr. Tellep ceased to be a member of the Committees on April 20, 2000. He
did not participate in deliberations and decisions of the Committees from
that date, including the determination that there would be no bonuses for
2000 performance.
** Dr. Rosser and Dr. Zapanta became members of the Committees on April 20,
2000. They did not participate in deliberations and decisions of the
Committees prior to that date, including the determination of base salaries
for 2000.
COMPENSATION AND EXECUTIVE PERSONNEL COMMITTEES'
INTERLOCKS AND INSIDER PARTICIPATION
Mr. Tellep was a member of the Compensation Committees until the Committees
were changed by the Boards on April 20, 2000. Dr. Rosser and Dr. Zapanta became
members of the Committees on April 20, 2000. The other Compensation Committees
members whose names appear on the Committees' Report above were members of the
Compensation Committees during all of 2000. During 2000, Mr. Danner served as a
director of Edison Mission Energy and Edison Capital, both nonutility
subsidiaries of Edison International. Mr. Bryson is Chairman of the Board of
both subsidiaries, but his compensation is determined by the Edison
International Compensation Committee, not the subsidiaries' boards. Under
applicable SEC rules, there were no other interlocks or insider participation on
the Compensation Committees.
31
CERTAIN RELATIONSHIPS AND TRANSACTIONS OF
NOMINEES AND EXECUTIVE OFFICERS
Mr. Christopher is a Senior Partner of the law firm of O'Melveny & Myers,
and Mr. Olson is a Senior Partner of the law firm of Munger, Tolles and Olson.
Both firms provided legal services to Edison International, SCE, and/or their
subsidiaries in 2000, and such services are expected to continue to be provided
in the future. Edison International and its subsidiaries paid Munger, Tolles and
Olson an aggregate amount of $5,036,326 in 2000 for legal services. The amount
paid to O'Melveny & Myers for legal services was below the threshold requiring
disclosure by the SEC.
In 2000, WRG, a management consulting firm of which Mr. John Danner is a
partner, was paid $191,969 by SCE for consulting services provided in late 1999
and 2000, and such services are expected to continue to be provided in the
future. Mr. Danner is the brother of Bryant C. Danner.
Edison International and SCE believe that any transactions described above
are comparable to those which would have been undertaken under similar
circumstances with nonaffiliated entities or persons.
OTHER MANAGEMENT TRANSACTIONS
During 1997, Edison International loaned Robert G. Foster $160,000
interest-free in connection with his purchase of a principal residence following
his relocation from SCE's Sacramento Region Office to the Southern California
Metropolitan area. Under the terms of the loan, one-seventh of the original
principal amount was forgiven in 1997, and one-seventh will be forgiven each
year thereafter if Mr. Foster remains employed with an Edison International
affiliate. As of February 28, 2001, a principal balance of $68,571 remained
outstanding. If Mr. Foster's employment terminates before the end of the loan
term, the remaining principal balance owing will be due and payable. Interest
will accrue on any remaining principal balance at the Bank of America Prime
Interest Rate after 90 days.
CERTAIN LEGAL PROCEEDINGS
On March 15, 2001, a purported class action lawsuit was filed in federal
district court in Los Angeles, California against Edison International and SCE
and certain of their officers, including Messrs. Bryson and Craver, and Thomas
M. Noonan, Vice President and Controller of Edison International and SCE. The
complaint alleges that the defendants engaged in securities fraud by
misrepresenting and/or failing to disclose material facts concerning the
financial condition of Edison International and SCE, including that the
defendants allegedly overreported income and improperly accounted for the
transition revenue account or TRA undercollections. The TRA is a California
Public Utilities Commission-authorized regulatory asset account in which SCE
records the difference between the revenues received from customers through
currently frozen rates and the costs of providing service to customers,
including power procurement costs. The complaint purports to be filed on behalf
of a class of persons who purchased all publicly-traded securities of Edison
International between May 12, 2000, and December 22, 2000. Plaintiffs seek
damages, in an unstated amount, in connection with their purchase of securities
during the class period. This action may be consolidated with another purported
class action lawsuit filed on October 30, 2000, in federal district court in Los
Angeles against Edison International and SCE, also involving securities fraud
claims arising from alleged improper accounting by Edison International and SCE
of undercollections in SCE's TRA. This action purports to be filed on behalf of
a class of persons who purchased Edison International Common Stock beginning
June 1, 2000, and continuing until TRA-related undercollections are recorded as
a loss on SCE's income statements. Plaintiffs seek compensatory damages caused
by the alleged fraud and punitive damages.
32
As previously reported, due to the current energy and liquidity crisis, it
is possible that SCE could be forced into bankruptcy proceedings. SCE is
continuing to seek to avoid bankruptcy.
FIVE-YEAR STOCK PERFORMANCE GRAPH(1)(2)
The graph below compares the yearly percentage change in the cumulative
total shareholder return on the Edison International Common Stock with the
cumulative total return of companies in the Standard and Poor's 500 Stock Index
and the Dow Jones U.S. Electric Utilities Index (also known as the Dow Jones
U.S. Total Market Electric Utilities Index).(3) The Dow Jones U.S. Electric
Utilities Index contains 62 United States utility companies that are electric or
combination (electric and gas) companies. Both indices are published daily in
The Wall Street Journal. Edison International is included in both the S&P 500
Index and the Dow Jones U.S. Electric Utilities Index.
Cumulative Total Return
-----------------------
12/95 12/96 12/97 12/98 12/99 12/00
----- ----- ----- ----- ----- -----
Edison International 100.00 120.88 172.17 183.17 177.86 112.08
Standard & Poor's 500 Index 100.00 122.96 163.98 210.84 255.22 231.98
Dow Jones U.S. Electric Utilities Index 100.00 102.01 131.58 151.20 128.97 204.08
- ---------------
(1) SEC filings sometimes "incorporate information by reference." This means
the Companies are referring you to information that has previously been
filed with the SEC, and that this information should be considered as part
of the filing you are reading. Unless Edison International or SCE
specifically states otherwise, this graph shall not be deemed to be
incorporated by reference and shall not constitute soliciting material or
otherwise be considered filed under the Securities Act or the Securities
Exchange Act.
33
(2) The historical stock performance depicted on the graph is not necessarily
indicative of future performance. The Companies do not make or endorse any
predictions as to future stock performance or dividends. The dividends
customarily paid on January 31 and April 30 were not declared for 2001 by
the Edison International Board. This proxy statement is not to be
considered material for soliciting the purchase or sale of either
Companies' stock.
(3) In February 2000, Dow Jones launched a new U.S. Equity Index series which
replaced all of its prior index series including the Dow Jones Electric
Utilities Index previously used for this graph. The new series covers 95%
of the U.S. equity market and replaces the previous series that covered 80%
of the equity market. Additionally, the industry classification system was
restructured. The net result of these changes is that all U.S. indices will
show differences when compared to the prior indices.
(4) Ex-dividend dates have been used to determine the number of dividends
included in Edison International's cumulative total return calculation. The
ex-dividend date occurs a few days prior to the record date for each
dividend payment, and is the date on which the stock begins trading at a
price that does not include the dividend. Edison International had three
ex-dividend dates in 1995, five ex-dividend dates in 1996, and three
ex-dividend dates in 1999 even though shareholders received four dividend
payments in each year. In 2000, there were four ex-dividend dates and four
dividend payments. For purposes of calculating the adjusted cumulative
total return presented in the following table, four ex-dividend dates were
used for each year starting in 1996 through 1999, and three ex-dividend
dates were used in 2000. The adjusted calculation for 2000 includes only
three ex-dividend dates since the Board did not declare the dividend
customarily paid on January 31, 2001.
Adjusted Cumulative Total Return
-------------------------------------------------------------------------
12/95 12/96 12/97 12/98 12/99 12/00
----- ----- ----- ----- ----- -----
$100.00 $119.21 $169.79 $180.64 $175.40 $109.35
AUDIT COMMITTEES' REPORT (1)
The Edison International and SCE Audit Committees have certain duties and
powers as described in their charters. In 2000, the Committees developed updated
charters which were approved by the Boards on December 14, 2000, and are
attached to this Proxy Statement as Appendices A and B, respectively. The Audit
Committees are composed of the same six non-employee directors named at the end
of this report and are independent as defined by the rules of the stock
exchanges on which the Companies are listed.
- ---------------------
(1) SEC filings sometimes "incorporate information by reference." This means
the Companies are referring you to information that has previously been
filed with the SEC, and that this information should be considered as part
of the filing you are reading. Unless Edison International or SCE
specifically states otherwise, this report shall not be deemed to be
incorporated by reference and shall not constitute soliciting material or
otherwise be considered filed under the Securities Act or the Securities
Exchange Act.
34
Management is responsible for the Companies' internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Companies' financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon. The Committees monitor and oversee these processes.
In connection with the December 31, 2000, financial statements, the Audit
Committees:
o reviewed and discussed the audited financial statements with Company
management;
o discussed with Arthur Andersen LLP, the Companies' independent public
accountants for calendar year 2000, the matters required by Statement
on Auditing Standards No. 61 (Communication with Audit Committees); and
o received the written disclosures required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees)
and discussed with Arthur Andersen its independence from the Companies.
Based upon these reviews and discussions, the Edison International and SCE
Audit Committees recommended to their respective Boards of Directors that the
audited financial statements be included in the Edison International and SCE
2000 Annual Reports on Form 10-K to be filed with the SEC.
Audit Committees of the
Edison International and SCE
Boards of Directors
--------------------------------------------------------
Daniel M. Tellep (Chair) Robert H. Smith
Carl F. Huntsinger Thomas C. Sutton
Charles D. Miller Edward Zapanta
INDEPENDENT PUBLIC ACCOUNTANT FEES
The following table sets forth the aggregate fees billed to Edison
International and SCE, respectively, for the fiscal year ended December 31,
2000, by Arthur Andersen:
Edison
International SCE
($) ($)
------------- ---------
Audit Fees 5,893,000 2,653,000
Financial Information Systems Design and
Implementation Fees 3,442,000 0
All Other Fees 8,003,000 4,183,000
35
INDEPENDENT PUBLIC ACCOUNTANTS FOR 2001
The Edison International and SCE Boards have selected Arthur Andersen LLP
as the Companies' independent public accountants for calendar year 2001. Arthur
Andersen is an international public accounting firm which provides leadership in
public utility accounting matters. The Audit Committees of the Boards of
Directors have considered whether the provision of the non-audit services
described above is compatible with maintaining Arthur Andersen's independence.
Representatives of Arthur Andersen are expected to attend the annual
meeting to respond to appropriate questions and to make a statement if they
wish.
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR
2002 ANNUAL MEETINGS
To be considered for inclusion in the 2002 proxy statement, shareholder
proposals for the Edison International and SCE 2002 annual meetings must be
received by December 20, 2001.
Shareholders intending to bring any other business before an annual
meeting, including Director nominations, must give written notice to the Edison
International or SCE Secretary, as the case may be, of the business to be
presented. The notice must be received at Company offices within the periods,
and with the information and documents, specified in the Bylaws. A copy of the
Bylaws may be obtained by writing to the Edison International or SCE Secretary.
Assuming that the 2002 annual meetings of shareholders are held on April
18, 2002, as currently specified by the Bylaws, the period for the receipt by
the Edison International or SCE Secretary of written notice of other business to
be brought by shareholders before the 2002 annual meetings of shareholders,
including Director nominations, will begin on October 22, 2001, and end on
December 20, 2001.
AVAILABILITY OF FORM 10-K AND OTHER INFORMATION
The Edison International and SCE 2000 Annual Reports on Form 10-K,
including the financial statements and the financial statement schedules but
excluding other exhibits, will be furnished without charge to shareholders upon
written request. This report is expected to be available for distribution after
April 17, 2001.
A copy may be requested by writing to:
Ms. Betty Hutchinson
Law Department, Corporate Governance
Edison International (or SCE, as the case may be)
2244 Walnut Grove Avenue, P. O. Box 800
Rosemead, California 91770
36
OTHER PROPOSED MATTERS
The Edison International and SCE Boards were not aware by November 14, 2000
(the latest date for shareholders to provide advance notice of business intended
to be presented at the annual meeting) of any other matters which can properly
be presented for action at the annual meeting.
If any other matters should properly come before the annual meeting,
including matters incident to the conduct of the annual meeting, the proxies
will vote the shares in accordance with their judgment. Discretionary authority
to do so is included in the proxies.
Dated: April 19, 2001
For the Boards of Directors,
BEVERLY P. RYDER
BEVERLY P. RYDER, Secretary
Edison International and
Southern California Edison Company
37
APPENDIX A
EDISON INTERNATIONAL
CHARTER FOR THE AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS
Adopted by the Board of Directors
December 14, 2000
Membership
The Audit Committee ("Committee") of the Board of Directors ("Board") shall
consist of not less than four nor more than seven members of the Board. Each
Committee member shall be appointed by the Board and shall serve until a
successor shall be appointed by the Board. The Board shall designate one of the
Committee members as Chair ("Chair") who shall preside over meetings of the
Committee and report Committee actions to the Board.
Each member of the Committee shall be (i) independent as determined
pursuant to the listing standards of any stock exchange on which the Company is
listed, subject to any exceptions provided in such standards; and (ii)
financially literate as determined by the Board, or become financially literate
within a reasonable time after appointment. At least one member shall have
accounting or related financial management expertise as determined by the Board.
Meetings and Other Actions
At least four regular meetings per year shall be held with the Company's
independent public accountants, one of which shall be held at the completion of
the annual audit and before the Company's annual financial statements are
published, and three of which shall be scheduled at the direction of the Chair.
Additional meetings may be requested by any Committee member. Regular meetings
normally shall be attended by the Company's chief executive officer, chief
financial officer, chief accounting officer, chief legal officer, and chief
internal auditor and representatives of the independent public accountants
retained by the Company. The Committee may meet in executive session at its
discretion. Representatives of management, the independent public accountants,
and the chief internal auditor each shall be given the opportunity to meet
privately with the Committee.
A majority of the members of the Committee shall constitute a quorum for
the transaction of business. Meetings shall be held at the principal offices of
the Company or as directed by the Chair.
The Company's Secretary shall keep, or appoint an appropriate employee of
the Company to keep, regular minutes of all Committee proceedings. The minutes
of each meeting shall be reviewed and approved by legal counsel and the Chair.
The approved minutes shall become a permanent corporate record maintained by the
Company's Secretary. A report on the Committee's activities shall be provided to
the Board after each meeting.
Unless otherwise provided in this Charter, the meetings and any other
actions of the Committee shall be governed by the provisions of Article III of
the Bylaws of the Company applicable to meetings and actions of the Board.
A-1
Duties and Responsibilities
The Committee shall exercise the following powers and duties at least
annually:
1. Recommend to the Board the appointment of the Company's
independent public accountants. The Board and the Committee shall
have the ultimate authority and responsibility to select, evaluate
and, where appropriate, replace the independent public
accountants, who shall be ultimately accountable to the Board and
the Committee.
2. Ensure that the independent public accountants submit to the
Committee a formal written statement delineating all relationships
between such accountants and the Company, including information
required by Independence Standards Board Standard No. 1. Review
any disclosed relationships and the scope of the professional
services performed or to be performed by the independent public
accountants as well as the related fees and consider the possible
effect that these services could have on the independence of such
accountants. Actively engage in a dialogue with the independent
public accountants with respect to any disclosed relationships or
services that may impact the objectivity and independence of such
accountants and recommend to the Board, if necessary, that
appropriate action be taken in response to such accountants'
report to satisfy itself of the accountants' independence.
3. Review the independent public accountants' and internal auditors'
evaluations of the adequacy of the Company's internal controls,
and the extent to which major recommendations made by the
independent public accountants and the Company's chief internal
auditor have been implemented by management.
4. Review with management the audit plans of the independent public
accountants and the Company's internal auditors in light of
current and contemplated business activities.
5. Review with the independent public accountants, upon completion of
their audit, the Company's year-end audited financial statements
and related notes, including the matters required to be discussed
by Statement on Auditing Standards No. 61, the results of their
examination, any report or opinion proposed to be rendered in
connection therewith and any unresolved disagreements with
management concerning accounting or disclosure matters.
6. Review information provided by management on issues such as
litigation and regulatory proceedings, environmental compliance,
health and safety compliance, information technology security, and
legal compliance.
7. Review information provided by the chief internal auditor and
management regarding business ethics monitoring and internal
auditing programs.
8. Review and discuss with management the Company's year-end audited
financial statements.
9. Recommend to the Board that the year-end audited financial
statements be included in the Company's Annual Report on Form
10-K.
10. Review and reassess the adequacy of the Committee charter.
A-2
11. Provide a report in the Company's proxy statement when required by
the Securities and Exchange Commission.
In addition, the Committee shall exercise the following duties and
responsibilities at its discretion:
1. Request the independent public accountants, the Company's chief
internal auditor or management to conduct any reviews or studies
considered necessary. As deemed appropriate by the Committee, it
shall direct and supervise an investigation into any matter within
the scope of its duties and responsibilities. In connection with
any such investigation, the Committee shall have the authority to
utilize the Company's internal audit staff and to employ outside
counsel or consultants at Company expense.
2. Perform such additional functions as are necessary or prudent to
fulfill the Committee's duties and responsibilities.
While the Committee has the duties and powers set forth in this Committee
charter, it is not the duty of the Committee to conduct audits or carry out its
own independent analyses for purposes of determining that the Company's
financial statements are complete and accurate and are in accordance with
generally accepted accounting principles. This is the responsibility of
management and the independent public accountants. Nor is it the duty of the
Committee to conduct investigations, to resolve disagreements, if any, between
management and the independent public accountants or to assure compliance with
laws and regulations and the Company's Standards of Conduct.
A-3
APPENDIX B
SOUTHERN CALIFORNIA EDISON COMPANY
CHARTER FOR THE AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS
Adopted by the Board of Directors
December 14, 2000
Membership
The Audit Committee ("Committee") of the Board of Directors ("Board") shall
consist of not less than four nor more than seven members of the Board. Each
Committee member shall be appointed by the Board and shall serve until a
successor shall be appointed by the Board. The Board shall designate one of the
Committee members as Chair ("Chair") who shall preside over meetings of the
Committee and report Committee actions to the Board.
Each member of the Committee shall be (i) independent as determined
pursuant to the listing standards of any stock exchange on which the Company is
listed, subject to any exceptions provided in such standards; and (ii) able to
read and understand fundamental financial statements including a balance sheet,
income statement, and cash flow statement, or become able to do so within a
reasonable time after appointment. At least one member shall have past
employment experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience or background
resulting in the individual's financial sophistication, including being or
having been a chief executive officer, chief financial officer or other senior
officer with financial oversight responsibilities.
Meetings and Other Actions
At least four regular meetings per year shall be held with the Company's
independent public accountants, one of which shall be held at the completion of
the annual audit and before the Company's annual financial statements are
published, and three of which shall be scheduled at the direction of the Chair.
Additional meetings may be requested by any Committee member. Regular meetings
normally shall be attended by the Company's chief executive officer, chief
financial officer, chief accounting officer, chief legal officer, and chief
internal auditor and representatives of the independent public accountants
retained by the Company. The Committee may meet in executive session at its
discretion. Representatives of management, the independent public accountants,
and the chief internal auditor each shall be given the opportunity to meet
privately with the Committee.
A majority of the members of the Committee shall constitute a quorum for
the transaction of business. Meetings shall be held at the principal offices of
the Company or as directed by the Chair.
The Company's Secretary shall keep, or appoint an appropriate employee of
the Company to keep, regular minutes of all Committee proceedings. The minutes
of each meeting shall be reviewed and approved by legal counsel and the Chair.
The approved minutes shall become a permanent corporate record maintained by the
Company's Secretary. A report on the Committee's activities shall be provided to
the Board after each meeting.
B-1
Unless otherwise provided in this Charter, the meetings and any other
actions of the Committee shall be governed by the provisions of Article III of
the Bylaws of the Company applicable to meetings and actions of the Board.
Duties and Responsibilities
The Committee shall exercise the following powers and duties at least
annually:
1. Recommend to the Board the appointment of the Company's
independent public accountants. The Board and the Committee shall
have the ultimate authority and responsibility to select, evaluate
and, where appropriate, replace the independent public
accountants, who shall be ultimately accountable to the Board and
the Committee.
2. Ensure that the independent public accountants submit to the
Committee a formal written statement delineating all relationships
between such accountants and the Company, including information
required by Independence Standards Board Standard No. 1. Review
any disclosed relationships and the scope of the professional
services performed or to be performed by the independent public
accountants as well as the related fees and consider the possible
effect that these services could have on the independence of such
accountants. Actively engage in a dialogue with the independent
public accountants with respect to any disclosed relationships or
services that may impact the objectivity and independence of such
accountants and take, or recommend that the Board take,
appropriate action to oversee the accountants' independence.
3. Review the independent public accountants' and internal auditors'
evaluations of the adequacy of the Company's internal controls,
and the extent to which major recommendations made by the
independent public accountants and the Company's chief internal
auditor have been implemented by management.
4. Review with management the audit plans of the independent public
accountants and the Company's internal auditors in light of
current and contemplated business activities.
5. Review with the independent public accountants, upon completion of
their audit, the Company's year-end audited financial statements
and related notes, including the matters required to be discussed
by Statement on Auditing Standards No. 61, the results of their
examination, any report or opinion proposed to be rendered in
connection therewith and any unresolved disagreements with
management concerning accounting or disclosure matters.
6. Review information provided by management on issues such as
litigation and regulatory proceedings, environmental compliance,
health and safety compliance, information technology security, and
legal compliance.
7. Review information provided by the chief internal auditor and
management regarding business ethics monitoring and internal
auditing programs.
8. Review and discuss with management the Company's year-end audited
financial statements.
9. Recommend to the Board that the year-end audited financial
statements be included in the Company's Annual Report on Form
10-K.
B-2
10. Review and reassess the adequacy of the Committee charter.
11. Provide a report in the Company's proxy statement when required by
the Securities and Exchange Commission.
In addition, the Committee shall exercise the following duties and
responsibilities at its discretion:
1. Request the independent public accountants, the Company's chief
internal auditor or management to conduct any reviews or studies
considered necessary. As deemed appropriate by the Committee, it
shall direct and supervise an investigation into any matter within
the scope of its duties and responsibilities. In connection with
any such investigation, the Committee shall have the authority to
utilize the Company's internal audit staff and to employ outside
counsel or consultants at Company expense.
2. Perform such additional functions as are necessary or prudent to
fulfill the Committee's duties and responsibilities.
While the Committee has the duties and powers set forth in this Committee
charter, it is not the duty of the Committee to conduct audits or carry out its
own independent analyses for purposes of determining that the Company's
financial statements are complete and accurate and are in accordance with
generally accepted accounting principles. This is the responsibility of
management and the independent public accountants. Nor is it the duty of the
Committee to conduct investigations, to resolve disagreements, if any, between
management and the independent public accountants or to assure compliance with
laws and regulations and the Company's Standards of Conduct.
B-3
X Please mark your CONTROL NO.
- --- votes as in this
example
The Directors recommend a vote of "FOR" Item 1.
- ----------------------------------------------
ANNUAL MEETING
Withhold For All Nominees: 01-J.E.Bryson, 02-W.Christopher, Mark here if you plan
1. Election For All For All Except 03-S.E.Frank, 04-J.C.Hanley, 05-C.F.Huntsinger, to attend the annual
of Directors 06-C.D.Miller, 07-L.G.Nogales, 08-R.L.Olson, meeting. ----
---- ---- ---- 09-J.M.Rosser, 10-R.H.Smith, 11-T.C.Sutton,
12-D.M.Tellep, 13-E.Zapanta
(INSTRUCTION: to withhold authority for any individual nominee,
write such name(s) in the space provided below.)
- ----------------------------------------------------------------------
SIGNATURE(S) ------------------------------- DATE ------------------------------
IMPORTANT: Please sign exactly as name appears on this proxy. When signing
as attorney, executor, trustee, guardian, corporate officer, etc., please
indicate full title.
- --------------------------------------------------------------------------------
Fold and Detach Here
LOGO EDISON INTERNATIONAL
EDISON INTERNATIONAL ANNUAL MEETING - May 14, 2001
Edison International offers Phone or Internet
voting 24 hours a day, 7 days a week
through midnight, May 13, 2001
On a touch-tone phone, call toll-free 1-877-779-8683 (outside the US and
Canada, call 201-536-8073).
o Have your proxy card and social security number ready.
o Enter the control number from the box above, just below the perforation.
o Follow the voting instructions.
o Your vote will be repeated to you, and you will be asked to confirm it.
Log onto the Internet and type: http://www.eproxyvote.com/eix
o Have your proxy card and social security number ready.
o Enter the control number from the box above, just below the perforation.
o Follow the voting instructions.
o Your vote will be repeated to you, and you will be asked to confirm it.
Your vote by phone or Internet authorizes the proxies and/or the Southern
California Edison Company Stock Savings Plus Plan Edison International stock
fund investment manager, both named on the reverse of this card, to vote your
shares to the same extent as if you marked, signed, dated and returned the proxy
card. Voting instructions to the Edison International stock fund investment
manager are confidential. All stock for which the Edison International stock
fund investment manager has not received instructions by telephone or Internet
by 5:00 p.m., Eastern Time, on May 9, 2001, may be voted in its discretion.
If you voted by phone or Internet, please do not return the proxy card.
THANK YOU FOR VOTING!
LOGO
EDISON INTERNATIONAL Proxy/Voting Instruction Card
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P JOHN E. BRYSON and THEODORE F. CRAVER, JR. are hereby appointed proxies of
the undersigned with full power of substitution to vote all shares of stock
R the undersigned is entitled to vote at the annual meeting of shareholders
of Edison International to be held at DoubleTree Hotel Ontario, 222 N.
O Vineyard Avenue, Ontario California, on May 14, 2001, at 1:30 p.m., Pacific
Time, or at any adjournment or postponement of the meeting, with all the
X powers and discretionary authority the undersigned would possess if
personally present at the meeting on the matter listed on the other side.
Y
The shares will be voted as indicated on this card. WHERE NO INDICATION IS
SHOWN, THE SHARES REPRESENTED BY THIS CARD WILL BE VOTED FOR ITEM 1. In
addition, the appointed proxies may vote in their discretion on such other
matters as may properly come before the meeting.
VOTING INSTRUCTIONS TO THE EDISON INTERNATIONAL STOCK FUND INVESTMENT
MANAGER, STATE STREET BANK AND TRUST COMPANY
If I hold shares through the Southern California Edison Company Stock
Savings Plus Plan, this card also provides the following voting
instructions to the Edison International stock fund investment manager: You
are instructed to vote confidentially as described above the shares of
stock credited and conditionally credited to my account through March 23,
2001. I understand that the stock will be voted as directed provided the
Edison International stock fund investment manager receives this card by
5:00 p.m. Eastern Time, on May 9, 2001, and all stock for which the Edison
International stock fund investment manager has not received instructions
by this card at the designated time may be voted in its discretion.
YOU MAY RECEIVE MORE THAN ONE SET OF PROXY MATERIALS. PLEASE MARK, SIGN, DATE
AND RETURN ALL CARDS YOU RECEIVE PROMPTLY USING THE ENCLOSED ENVELOPES.
TO VOTE BY PHONE OR THE INTERNET, PLEASE SEE THE REVERSE SIDE OF THIS CARD.
See Reverse
Side
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE.
ADMISSION TICKET
Edison International and
Southern California Edison Company
Annual Meeting of Shareholders
May 14, 2001 at 1:30 p.m., Pacific Time
DoubleTree Hotel Ontario MAP
222 N. Vineyard Avenue
Ontario, California
Space is limited;
Doors open at 12:30 p.m., Pacific Time.
Registration desk opens at 10:30 a.m., Pacific Time.
Please present this ticket
to attend the meeting.
Internet Voting Screen No. 1
VOTE BY NET
[Graphic Omitted]
If you have more than one proxy card, please vote only one card at a time.
[1] Enter the Voter Control Number that appears in the box on your proxy card.
[--------------------------------------]
[2] Enter the last 4 digits of your U.S. Taxpayer Identification
(Social Security) Number for this account.
[----------]
If you do not have a U.S. Taxpayer Identification Number for this
account, please leave this box blank.
Important: For your vote to be cast, the Voter Control
Number and the last four digits of the U.S. Taxpayer
Identification (Social Security) Number for this
account must match the numbers on our records.
Proceed
Internet Voting Screen No. 2
[Edison International Logo]
VOTE BY NET
[Graphic Omitted]
Welcome!
Name Line
Address Line
City, State, Zip Line
Proceed
Copyright(C)2000 EquiServe. All rights reserved.
Internet Voting Screen No. 3
[Edison International Logo]
Proxy/Voting Instruction Card
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
JOHN E. BRYSON and THEODORE F. CRAVER, JR. are hereby appointed proxies of the
undersigned with full power of substitution to vote all shares of stock the
undersigned is entitled to vote at the annual meeting of shareholders of Edison
International to be held at the DoubleTree Hotel Ontario, 222 N. Vineyard
Avenue, Ontario, California, on May 14, 2001, at 1;30 p.m., Pacific Time, or at
any adjournment or postponement of the meeting, with all the powers and
discretionary authority the undersigned would possess if personally present at
the meeting on the matter listed below.
The shares will be voted as indicated on this card. In addition, the appointed
proxies may vote in their discretion on such other matters as may properly come
before the meeting.
VOTING INSTRUCTIONS TO THE EDISON INTERNATIONAL STOCK FUND
INVESTMENT MANAGER, STATE STREET BANK AND TRUST COMPANY
If I hold shares through the Southern California Edison Company Stock Savings
Plus Plan, this card also provides the following voting instructions to the
Edison International stock fund investment manager: You are instructed to vote
confidentially as described above the shares of stock credited and conditionally
credited to my account through March 23, 2001. I understand that the stock will
be voted as directed provided the Edison International stock fund investment
manager receives this card by 5:00 p.m., Eastern Time, on May 9, 2001, and all
stock for which the Edison International stock fund investment manager has not
received instructions by this card at the designated time may be voted in its
discretion.
The Directors recommend a Vote of "FOR" Item 1.
Check this box to cast your vote in accordance with the recommendations of the
Board of Directors [__]
For All Nominees Withhold
Except As Noted As To All
Below Nominees
1. Election of Directors [__] [__]
Or, check the box for the Director(s) from whom you wish to withhold your vote:
[__] J.E. Bryson [__] W. Christopher [__] S.E. Frank
[__] J.C. Hanley [__] C.F. Huntsinger [__] C.D. Miller
[__] L.G. Nogales [__] R.L. Olson [__] J.M. Rosser
[__] R.H. Smith [__] T.C. Sutton [__] D.M. Tellep
[__] E. Zapanta
Check the box below, if the option applies to you.
[__] Mark here if you plan to attend the Annual Meeting.
To submit your vote please click the button below.
(Your vote will not be counted until the Submit Your Vote button is clicked.)
Submit Your Vote
Copyright(C)2000 EquiServe. All rights reserved.
Internet Voting Screen No. 4
[Edison International Logo]
VOTE BY NET
[Graphic Omitted]
Your proxy vote has been recorded as follows:
1. Election of Directors
[Stockholder's vote inserted here.]
Please review your vote. If this is incorrect, please use the Back button on
your browser, change your vote and resubmit. If this is correct, please click
the button below.
Proceed
Copyright(C)2000 EquiServe. All rights reserved.
Internet Voting Screen No. 5
[Edison International Logo]
VOTE BY NET
[Graphic Omitted]
Success! Your vote has been cast and will be tabulated by EquiServe within 24
hours. Please take a moment to review the options below.
You can now vote another proxy card or exit to EquiServe's homepage.
Vote Another Proxy
Copyright(C)2000 EquiServe. All rights reserved.
[TELEPHONE VOTING SCRIPT]
2001 Telephone Voting Script
Toll Free from the U.S. and Canada: 1-877-779-8683
Call Collect from outside the U.S. and Canada: 1-201-536-8073
1. Welcome to the electronic voting system. Please have your proxy card or
voting instruction sheet or ballot available before voting.
2. Enter the Voter Control Number as it appears on the card followed by
the pound sign.
3. One moment please while we verify your information.
4. Enter the last four digits of the U.S. Social Security number or the
U.S. taxpayer identification number for this account followed by the
pound sign.
5. The company that you are voting is Edison International.
6. Your vote is subject to the same terms and authorizations as indicated
on the proxy card. It also authorizes the named proxies to vote
according to the instructions at the meeting of the stockholders.
7. To vote the proposal in accordance with the recommendations of the
Board of Directors, press 1. If you wish to vote on the proposal,
press 2.
If 1, go to 9.
If 2, go to 8.
8. Item # 1. To vote for all nominees press 1. To withhold from all
nominees press 2. To withhold from individual nominees press 3.
If 1, go to 9.
If 2, go to 9.
If 3, go to Director Exception.
Director Exception
Enter the 2-digit number next to the nominee from whom you
would like to withhold your vote followed by the pound key. Or
if you have completed voting on directors, press the pound key
again.
If pound key entered twice, go to 9. If valid nominee
number, go to Next Nominee.
Next Nominee
To withhold your vote from another nominee, enter the 2-digit
number next to the nominee followed by the pound key, or if
you have completed voting on directors press the pound key
again.
If pound key entered twice, go to 9. If valid nominee
number, go to Next Nominee.
Invalid Nominee Number
You have entered an invalid nominee number.
{Go to Next Nominee.}
------------
9. If you would like to attend the annual meeting, press 1. If not,
press 2.
If 1, go to 10.
If 2, go to 10.
10. You have cast your vote as follows:
Playback {Playback the appropriate vote for this proxy card.}
Default Playback
You have voted in the manner recommended by the Board of
Directors.
Director Proposal Playback
Voted for all nominees: Item #1. You have voted for all
nominees.
Withhold from all nominees: Item #1. You have voted to
withhold your vote from all nominees.
Withhold from individual nominees: Item #1. You have voted for
all nominees except for the following nominee numbers.
11. To confirm your vote, press 1. To cancel your vote, press 2.
If 1, go to 13.
If 2, go to 12.
12. Your vote has been canceled. If you wish to vote this card or another
card, press 1. Otherwise, please hang up and mark, sign, and return
your card in the envelope provided. Thank you for calling.
13. Your vote has been successfully recorded. It is not necessary for you
to mail in your card. If you wish to vote another card or change your
vote, press 1. Otherwise, please hang up. Thank you for voting.
Invalid Control Numbers
We were unable to authenticate the information that you
entered.
No Key Pressed
Go to the same item (repeat three times); otherwise, go to
Error.
Invalid Number
You have entered an invalid option. Go to the same item
(repeat three times); otherwise, go to Error.
Error
We are unable to process your request at this time. Thank you
for calling.
{Call ends.}