[Kansas City Southern Letterhead]
January 11, 2008
VIA EDGAR AND FEDERAL EXPRESS
Daniel Morris, Esq.
Attorney-Advisor
Securities and Exchange Commission
Division of Corporation Finance
Mail Stop 3561
100 F Street, N.E.
Washington, D.C. 20549
Re: Kansas City Southern
Definitive 14A
Filed March 30, 2007
File No. 001-04717
Dear Mr. Morris:
Kansas City Southern ("KCS," "we," "us," "our" or the "Company") is pleased
to provide the following response to your comment letter dated December 10, 2007
to Mr. Michael R. Haverty, Chief Executive Officer of KCS, with respect to the
above-referenced proxy statement.
In connection with this response, KCS acknowledges that:
o The Company is responsible for the adequacy and accuracy of the
disclosure in its filing;
o Staff comments or changes in disclosure in response to staff comments
do not foreclose the Commission from taking any action with respect to
a filing; and
o The Company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
For your convenience, each response to your comments is preceded by the
comment to which it relates.
1. While we note your response to prior comment 6, please confirm that you
will disclose in future filings where actual payments fall within targeted
parameters.
The Company will in future proxy statements disclose where actual payments
to the named executive officers ("NEOs") fall within the targeted parameters for
each element of compensation that was the subject of a benchmark analysis. To
the extent any compensation element materially exceeds or falls below the
targeted parameters, the Company will disclose the reasons why the Compensation
Committee felt that such level of compensation was appropriate.
2. While we note your response to prior comment 9, we re-issue the prior
comment. Specifically, please address whether there were specific targets for
business unit and individual performance. If not, please so state. If so, please
disclose the targets for 2006 and post-2006, to the extent known. If you believe
that disclosure of the goals is not required because it would result in
competitive harm such that you may omit the disclosure under Instruction 4 to
Item 402(b) of Regulation S-K, please provide a detailed supplemental analysis
supporting your conclusion. Please refer to prior comment 9 for additional
guidance, as appropriate.
With the exception of Mr. Zuza's 2006 AIP award (which was based 25% on his
individual performance), individual and business unit performance goals were not
considered in determining AIP awards for 2006.
In addition to the Company financial performance goals for 2007 AIP
compensation disclosed in the proxy statement, the following business unit goals
will be taken into consideration in awarding 2007 AIP bonuses:
o Our U.S. operations must meet a specified operating ratio;
o Our Mexico operations must meet a specified operating ratio;
o Our marketing department must meet its business unit and corporate
financial goals; and
o Each department must meet its budget and corporate financial goals.
Each of the foregoing departmental goals will only account for 5% of an
NEO's AIP bonus for 2007.
Our CEO has tasked the NEOs with achieving four major strategic goals, and
will recommend to the Compensation Committee that the officers' progress in
meeting these strategic goals be evaluated in awarding the 30% component of 2007
AIP bonuses to be determined by individual performance.
3. While we note your response to our prior comment 10, we re-issue the
prior comment. In future filings, please disclose the rationale for setting your
payment and benefits at the current levels. In so doing, disclose why you
believe that the current levels are appropriate and consistent with your
compensation objectives.
The post-termination compensation and benefits described in the proxy
statement are required under the terms of employment agreements with the NEOs
identified in the proxy statement. A number of these agreements were adopted
some years ago. The post-termination compensation and benefits payable under
these agreements may be amended only with the consent of the executive and
cannot be unilaterally changed by the Company. Most if not all of these
agreements pre-date the service of the current members of the Compensation
Committee.
The Committee's compensation consultant performed a competitive analysis of
these provisions in 2006 and determined that such compensation and benefits were
within competitive ranges for the Company's peer group.
4. While we note your response to our prior comment 12, please confirm that
your future disclosure will provide a more detailed analysis of how and why the
compensation of Mr. Haverty and Mr. Shoener differs so widely from that of the
other named executives. Please also confirm that you will provide analysis on an
individualized basis to the extent that the policies or decisions relating to
Mr. Haverty and/or Mr. Shoener are materially different than the other named
executive officers.
As stated in our letter dated September 21, 2007, three of the NEOs listed
in the Summary Compensation Table were not employed during the entirety of 2006,
making the compensation paid to Messrs. Haverty and Shoener seem comparatively
higher than it actually was. We also stated in that letter that Messrs. Haverty
and Shoener do not participate in any compensation programs that are not made
available to other executives.
As stated in our 2007 proxy statement, the Committee generally targets
executive officer base salaries at approximately the market median among the
peer group companies. We believe the total compensation paid to Messrs. Haverty
and Shoener for 2006 was within the midrange of the peer group companies for
executives of comparable position and tenure. We compete with other companies
for executive talent, and seek to pay
executives at approximately the market median for their positions in order to
remain competitive for executive talent. The Compensation Committee has not
established maximum ratios between the compensation paid to our CEO and COO and
the compensation paid to other NEOs.
Mr. Haverty has been with KCS approximately 12 years, and both he and Mr.
Shoener have deep executive experience in our industry. We believe the unique
roles, responsibilities, experience, accountability, leadership and achievements
of Messrs. Haverty and Shoener as our Company's chief officers are worthy of
consideration in setting their compensation. In future proxy statements, we will
provide a more detailed discussion and analysis of these incumbent-specific
factors and their relationship to the compensation of our CEO and COO.
We appreciate the opportunity to provide this response. If you have any
questions or would like to discuss these responses, please call me at
816.983.1382.
Very truly yours,
/s/ Brian P.Banks
Brian P. Banks
Associate General Counsel and
Corporate Secretary
cc: Rodney E. Slater, Esq., Chairman-Compensation Committee
Michael R. Haverty, Chairman & Chief Executive Officer
Patrick J. Ottensmeyer, Executive Vice President & Chief Financial Officer
William J. Wochner, Esq., Senior Vice President & Chief Legal Officer