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. )
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Filed by the Registrant
Filed by a Party other than the Registrant
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Check the appropriate box: |
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Preliminary Proxy Statement |
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Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to ss.240.14a-12 |
EDISON INTERNATIONAL
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box): |
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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(1) Title of each class of securities to which transaction applies: |
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(2) Aggregate number of securities to which transaction applies: |
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(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 |
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(set forth the amount on which the filing fee is calculated and state how it was determined): |
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(4) Proposed maximum aggregate value of transaction: |
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(5) Total fee paid: |
Notice of 2013 Annual Meeting
and
Joint Proxy Statement
Thursday, April 25, 2013
9:00 a.m., Pacific Time
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INVITATION TO PARTICIPATE IN THE ANNUAL MEETING OF SHAREHOLDERS
March 15, 2013
Dear Fellow Shareholder:
We are pleased to invite you to attend the Edison International and Southern California Edison Company Annual Meeting of Shareholders. The Annual Meeting will be held on Thursday, April 25, 2013, at 9:00 a.m., Pacific Time, at the Hilton Los Angeles/San Gabriel Hotel, 225 West Valley Blvd., San Gabriel, California 91776. The attached Notice of Annual Meeting and Joint Proxy Statement will serve as your guide to the business to be conducted at the meeting.
Among other items, the Joint Proxy Statement includes information about the qualifications of our Director nominees and the compensation of our executive officers that is relevant to matters that will be presented at the Annual Meeting. During the meeting, we will also report to you on the Company and provide an opportunity for shareholders to engage in a dialogue with management.
We hope that you will participate in the Annual Meeting, either by attending and voting in person or voting by other available methods as promptly as possible. Voting by any of the available methods will ensure that you are represented at the Annual Meeting, even if you are not present. You may vote your proxy via the Internet, by telephone, or by mail. Please follow the instructions on the Notice of Internet Availability of proxy materials that you received in the mail and/or your proxy card.
If you receive more than one copy of the Notice or more than one proxy card, it means your shares are held in more than one account. You should vote the shares in all of your accounts. Please note that to vote your shares by Internet or telephone, you will need the control number on your Notice or proxy card.
Your vote is very important to us and to our business. Please take the first opportunity to ensure that your shares are represented at the Annual Meeting. Voting promptly will save us the cost of additional solicitations.
Thank you very much for your continued interest in our business.
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Sincerely, |
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Theodore F. Craver, Jr. |
Ronald L. Litzinger |
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Chairman of the Board, |
President Southern California Edison Company |
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Edison International |
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Notice of 2013 Annual Meeting of Shareholders |
Thursday, April 25, 2013
9:00 a.m., Pacific Time
Hilton Los Angeles/San Gabriel Hotel
225 West Valley Blvd.
San Gabriel, California 91776
The Edison International (“EIX”) and Southern California Edison Company (“SCE”) Annual Meeting of Shareholders will be held on Thursday, April 25, 2013, at 9:00 a.m., Pacific Time, at the Hilton Los Angeles/San Gabriel Hotel, 225 West Valley Blvd., San Gabriel, California 91776, for the purpose of considering the following matters:
For both EIX and SCE shareholders:
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Election of 11 Directors to the EIX Board and 12 Directors to the SCE Board. The names of the Director nominees are as follows:
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Jagjeet S. Bindra |
Bradford M. Freeman |
Richard T. Schlosberg, III |
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Vanessa C.L. Chang |
Ronald L. Litzinger* |
Thomas C. Sutton |
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France A. Córdova |
Luis G. Nogales |
Peter J. Taylor |
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Theodore F. Craver, Jr. |
Ronald L. Olson |
Brett White |
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* Ronald L. Litzinger is a Director nominee for the SCE Board only. |
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Ratification of the Appointment of the Independent Registered Public Accounting Firm.
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Advisory Vote to Approve the Company’s Executive Compensation.
For EIX shareholders only:
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Shareholder Proposal Regarding an Independent Board Chairman.
The EIX and SCE Boards of Directors recommend that you vote “FOR” Items 1 through 3, and the EIX Board of Directors recommends that you vote “AGAINST” Item 4.
EIX and SCE shareholders may also vote on any other matters properly brought before the meeting. Only shareholders of record at the close of business on March 1, 2013 are entitled to receive notice of and to vote at the Annual Meeting. Directions to the Annual Meeting are on the last page of the Joint Proxy Statement, which can be viewed at www.edison.com/annualmeeting.
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For the Boards of Directors, |
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Barbara E. Mathews |
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Vice President, Associate General Counsel, |
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Chief Governance Officer and Corporate Secretary |
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Edison International |
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Southern California Edison Company |
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Dated: March 15, 2013 |
JOINT PROXY STATEMENT
Table of Contents
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RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
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ADVISORY VOTE TO APPROVE THE COMPANY’S EXECUTIVE COMPENSATION |
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SHAREHOLDER PROPOSAL REGARDING AN INDEPENDENT BOARD CHAIRMAN |
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Joint Proxy Statement |
INTRODUCTION
The EIX and SCE Boards of Directors are soliciting proxies from you for use at the Annual Meeting, or at any adjournment or postponement of the meeting. Proxies allow designated individuals to vote on your behalf at the Annual Meeting. The proxy materials are being mailed or made available to you via the Internet beginning on March 15, 2013.
The mailing address of the Company’s principal executive offices is 2244 Walnut Grove Avenue, Rosemead, California 91770.
In this Joint Proxy Statement:
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Holding shares as a “registered” shareholder or “of record” means your shares are registered in your own name on the Company’s records. Shares held in the Dividend Reinvestment and Direct Stock Purchase Plan account are included.
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Holding shares in “street name” means your shares are held in a brokerage account or through a trustee, custodian or other third party (referred to as a nominee), and you are considered the beneficial owner of those shares. Your name does not appear on the Company’s records as a shareholder.
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“401(k) Plan” means the employee benefit plan known as the Edison 401(k) Savings Plan through which participants may hold interests in EIX shares through the EIX Stock Fund.
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“401(k) Plan shareholders” means participants in the 401(k) Plan who hold interests in EIX shares through the EIX Stock Fund.
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“Annual Meeting” means both the EIX and SCE annual meetings of shareholders, which are held jointly.
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“Board” means both the EIX and SCE Boards of Directors, unless otherwise indicated.
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“Committee” means the applicable Board committee of both EIX and SCE, unless otherwise indicated.
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“Company” means both EIX and SCE, unless otherwise indicated.
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“EIX” means Edison International.
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“EMG” means Edison Mission Group Inc., a wholly-owned subsidiary of EIX, and holding company of Edison Mission Energy (“EME”). EME is an independent power producer that has filed for bankruptcy and is deconsolidated from EIX’s financial results.
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“ERISA” means the Employee Retirement Income Security Act of 1974.
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“Notice of Internet Availability” or “Notice” means the notice regarding the availability on the Internet of the Company’s proxy materials, which was mailed to most shareholders in lieu of printed copies of the proxy materials, as permitted under Securities and Exchange Commission rules.
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“Proxy card” means either a proxy card, which you may receive if you are a registered shareholder, or a voting instruction form, which you may receive if you hold shares in street name or are a 401(k) Plan shareholder.
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“SCE” means Southern California Edison Company.
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to Be Held on April 25, 2013: The Joint Proxy Statement and the Company’s 2012 Annual Report are available at www.edison.com/annualmeeting. |
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 1
QUESTIONS AND ANSWERS ABOUT VOTING
What is included in the proxy materials?
The proxy materials include:
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The Notice of Annual Meeting and Joint Proxy Statement;
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The Company’s 2012 Annual Report;
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The proxy card; and
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The Notice of Internet Availability.
Why did the Company mail a Notice of Internet Availability of proxy materials instead of a printed copy of the materials?
Making the proxy materials available to shareholders via the Internet saves us the cost of printing and mailing documents and will reduce the impact of the Annual Meeting on the environment.
If you received only a Notice of Internet Availability, you will not receive a printed copy of the proxy materials unless you request it. The Notice includes instructions on how to:
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Access and review the proxy materials;
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Submit your proxy via the Internet; and
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Request a printed copy of proxy materials by mail.
Why did some shareholders receive printed or email copies of the proxy materials?
We are distributing printed copies of the proxy materials to shareholders who have previously requested printed copies. We are providing shareholders who have previously requested electronic delivery of proxy materials with an email containing a link to the website where the materials are available via the Internet.
Who can vote?
All owners of voting stock at the close of business on March 1, 2013 (the record date) are entitled to vote.
On each Item of EIX business, holders of EIX Common Stock are entitled to one vote per share. On each Item of SCE business, holders of SCE Cumulative Preferred Stock are entitled to six votes per share and EIX, as the holder of SCE Common Stock, is entitled to one vote per share. All shares of SCE Common and Cumulative Preferred Stock vote together as one class.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 2
Who can attend the Annual Meeting?
All shareholders on the record date, or their duly appointed proxies, may attend the meeting. All shareholders will be required to pass through a security inspection area and check in at the registration desk at the meeting. The registration desk will open at 8:00 a.m. and meeting room doors will open at 8:30 a.m., Pacific Time. For the privacy of other attendees and to avoid distraction, shareholders will not be permitted to use cameras or recording devices at the meeting.
If you are a registered shareholder or a 401(k) Plan shareholder, we will be able to verify your share ownership from the share register with proper identification. No admission pass is required. To be admitted as a proxy for a registered shareholder, you must provide a written authorization from the registered shareholder.
If your shares are held in street name, you will need to bring proper identification and a letter or an account statement from your broker or other nominee reflecting your stock ownership as of the record date. To be admitted as a proxy for a broker, you must provide a written authorization from the broker together with a letter or account statement reflecting the broker’s ownership as of the record date. If a nominee holds the shares, you must provide a written authorization from the nominee to the broker that is assignable, a written authorization from the broker, and a letter or account statement reflecting the nominee’s ownership as of the record date.
Individual shareholders may bring one guest to the Annual Meeting. A shareholder that is a corporation, partnership, association or other entity is limited to three authorized representatives at the Annual Meeting.
How do I vote?
Your vote is important. You can save us the expense of additional solicitations by voting promptly. Please follow the instructions described below:
By Internet
– Shareholders who received a Notice of Internet Availability may vote via the Internet by following the instructions on the Notice. Shareholders who received a proxy card by mail may vote via the Internet by following the instructions on the proxy card. When voting via the Internet, all shareholders must have available the control number included on their Notice of Internet Availability or proxy card. Under California law, you may transmit a proxy via the Internet.
By Telephone
– Registered or 401(k) Plan shareholders may vote by telephone by calling 1-800-560-1965 and following the recorded instructions. Most shareholders who hold their shares in street name may vote by phone by calling the number provided by their broker. When voting by telephone, all shareholders must have available the control number included on their Notice of Internet Availability or proxy card.
By Mail
– Shareholders who received a printed copy of these proxy materials may vote by mail by completing, signing, dating and returning their proxy card as indicated.
In Person
– Registered shareholders may vote in person by attending the Annual Meeting and completing a ballot distributed at the meeting. Shareholders who hold their shares in street name may vote in person by attending the Annual Meeting only if they have requested and received a legal proxy from their broker or other nominee, and deliver the proxy to the inspector of election before or at the meeting. 401(k) Plan shareholders may not cast votes in person at the Annual Meeting.
What is the deadline to vote and how do I change my vote?
If you are a registered shareholder, the inspector of election will accept your proxy by telephone or via the Internet until 9:00 p.m., Pacific Time, on April 24, 2013, and by mail if it is received by the inspector of election before the polls close at the Annual Meeting. Registered shareholders may change their vote prior to the deadline by writing to the Corporate Secretary at the address above (so that it is received prior to the deadline), voting again by mail, telephone or the Internet, or voting in person at the Annual Meeting.
If you hold shares in street name, most brokers will accept your proxy by telephone or the Internet until 9:00 p.m., Pacific Time, on April 24, 2013, and by mail if it is received by your broker’s designated agent by 9:00 a.m., Pacific Time, on April 25, 2013. Contact your broker or other nominee before the Annual Meeting to determine the actual deadline and whether and how you can change your vote.
If you are a 401(k) Plan shareholder, your proxy must be received by 9:00 p.m., Pacific Time, on April 23, 2013 for the 401(k) Plan trustee to vote your shares. 401(k) Plan shareholders may change their vote at any time prior to this deadline by voting again. The last vote received within this timeframe will be the vote that is counted.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 3
What does it mean if I get more than one Notice of Internet Availability or proxy card?
It indicates that your shares are held in more than one account, such as two brokerage accounts, you hold both registered and street name shares, or you hold shares in both EIX and SCE. You should use the specific control numbers provided on each Notice of Internet Availability or proxy card and vote each Notice or proxy card to ensure that all of your shares are voted.
What shares are covered by the proxy card?
This depends on how you hold your shares, and whether you hold shares in EIX, SCE, or both EIX and SCE.
Registered and 401(k) Plan Shareholders – For EIX registered and 401(k) Plan shareholders, you will receive or have Internet access to a single proxy card that covers all shares of EIX Common Stock in your registered and 401(k) Plan accounts, including fractional shares held in the 401(k) Plan but excluding fractional shares held in the Dividend Reinvestment and Direct Stock Purchase Plan.
For SCE registered shareholders, you will receive or have Internet access to separate proxy cards for each series of preferred stock registered in your name.
If you hold registered shares in both EIX and SCE, you will receive or have Internet access to separate proxy cards for each Company.
Street Name Shareholders – If you hold shares of EIX and/or SCE in street name, you will receive or have Internet access to separate proxy cards from each broker or other nominee.
What happens if I submit my proxy card but do not indicate my voting preference?
The proxies and 401(k) Plan trustee will vote “FOR” election of all nominees for director (Item 1), “FOR” ratification of the appointment of the independent registered public accounting firm (Item 2), “FOR” approval of executive compensation (Item 3) and “AGAINST” the shareholder proposal regarding an independent Board Chairman (Item 4, EIX only).
What happens if I submit my proxy card but do not sign or date my card?
Those shares will be treated as unvoted shares on all matters and will not be considered as present and part of the quorum.
What happens if I do not vote?
If you are a registered shareholder, your shares will not be voted.
If you hold your shares in street name, most brokers or other nominees will only have authority to vote your shares on ratification of the appointment of the independent registered public accounting firm (Item 2). With respect to each of the other Items, most brokers or other nominees will not have authority to vote your shares, and the shares will instead be treated as “broker non-votes.”
If you are a 401(k) Plan shareholder, the 401(k) Plan trustee will vote your shares in the same proportion to the 401(k) Plan shares voted by other 401(k) Plan shareholders, unless contrary to ERISA.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 4
How many votes do you need to hold the meeting?
A quorum is required for the Company to conduct business at the Annual Meeting. The presence at the Annual Meeting, in person or by proxy, of shareholders entitled to cast a majority of the votes that all shareholders are entitled to cast constitutes a quorum. All shares represented by a properly signed proxy will be considered as present and part of the quorum, even if you or your broker or other nominee doesn’t vote or abstains on any or all matters.
As of the record date, EIX had 325,811,206 shares of EIX Common Stock outstanding, 325,798,716 of which are entitled to cast a total of 325,798,716 votes. Therefore, a quorum for EIX is 162,899,359 shares. SCE had 4,800,198 shares of Cumulative Preferred Stock outstanding and entitled to cast a total of 28,801,188 votes, and 434,888,104 shares of SCE Common Stock outstanding and entitled 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 463,689,292 votes. Therefore, a quorum for SCE is 231,844,647 shares.
What vote is required to adopt each Item at the meeting?
A director nominee will be elected, and a proposal will be approved, if the following two votes are obtained:
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The affirmative vote of at least a majority of the votes cast on the director or proposal. Abstentions and broker non-votes are not treated as votes cast, and therefore will not affect this vote; and
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The affirmative vote of at least a majority of the votes required to constitute a quorum. Abstentions and broker non-votes are not treated as votes cast and therefore will have the effect of votes cast against the director or proposal for this vote.
Who will count the votes?
Wells Fargo Bank, N.A., will tabulate the votes and is expected to act as the inspector of election. To protect the confidentiality of votes cast under the 401(k) Plan, 401(k) Plan shareholders’ voting instructions are given directly to Wells Fargo. Wells Fargo will tabulate those votes and provide aggregate voting results directly to the 401(k) Plan trustee. EIX will not have access to any of the 401(k) Plan shareholders’ voting instructions, and 401(k) Plan voting results are only reported to EIX in the aggregate.
How much will this proxy solicitation cost?
We have retained AST Phoenix Advisors to assist us with the solicitation of proxies and will pay an aggregate fee of $20,000 (EIX $18,000 and SCE $2,000) plus expenses. This fee does not include the costs of printing and mailing the proxy materials. Some of the directors, officers and other employees of the Company also may solicit proxies personally, by mail, by telephone or by other electronic means for no additional compensation. We will also reimburse brokers and other nominees for their reasonable out-of-pocket expenses for forwarding proxy materials to beneficial owners and obtaining voting instructions.
Whom may I call with any questions?
You may call Wells Fargo at 1-800-347-8625 or visit their Internet website at www.shareowneronline.com.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 5
ITEM 1 ELECTION OF DIRECTORS
Eleven directors are nominated for election to the EIX Board and 12 directors are nominated for election to the SCE Board, each to hold office until the next Annual Meeting. A current director, Charles B. Curtis, was not nominated for re-election under our Corporate Governance Guidelines because he reached the mandatory retirement age of 72. The director nominees of EIX and SCE are the same, except that Mr. Litzinger is a nominee for the SCE Board only.
A biography of each nominee describing his or her age, current Board committee service, business experience during the past five years, and other relevant business experience is presented below. The biography includes the specific experience, qualifications, attributes, and skills that led the Board to conclude that the nominee should serve as a director. While each nominee’s entire range of experience and skills is considered important, particular experience that contributes to the diversity and effectiveness of the Board is identified below. An overview of certain information considered by our Nominating/Corporate Governance Committee when nominating our non-management directors for re-election is presented in the table following the director biographies.
Director Nominees
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Jagjeet S. Bindra Age 65 Director of EIX and SCE since 2010 Committees: Audit and Finance, Operations & Safety Oversight |
Mr. Bindra served as president of Chevron Global Manufacturing, responsible for Chevron Corporation’s worldwide refining operations, from 2004 until his retirement in 2009. During his 32-year career at Chevron, Mr. Bindra also served as managing director and chief executive officer of Caltex Australia Limited, president of Chevron Pipeline Co., and senior vice president, pipelines, of Chevron Overseas Petroleum, Inc. He is a director of LyondellBasell Industries N.V. and Transocean Ltd. Mr. Bindra is a graduate of the Indian Institute of Technology in Kanpur, India, and holds a Master of Science degree in Chemical Engineering from the University of Washington and an MBA degree from Saint Mary’s College of California.
Mr. Bindra brings to the Board global experience in a capital intensive industry in the energy sector, which is particularly relevant to the Company’s capital investment program and infrastructure growth strategy. He has expertise in energy value chain and asset management. Mr. Bindra’s experience as a director of other public companies also brings value to the Board. He also brings strategic management and operations experience, and the perspective of a relatively new director, to Board deliberations.
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Vanessa C.L. Chang Age 60 Director of EIX and SCE since 2007 Committees: Audit (Chair) and Compensation & Executive Personnel |
Ms. Chang has been a director of EL & EL Investments, a private real estate investment business, since 1999. She previously served as chief executive officer and president of ResolveItNow.com, an online dispute resolution service, senior vice president of Secured Capital Corporation, a real estate investment bank, and a partner of the accounting firm KPMG Peat Marwick LLP. Ms. Chang is a director of Transocean Ltd. and a director or trustee of six funds in the American Funds family, advised by Capital Research and Management Company. She is a graduate of the University of British Columbia and a Certified Public Accountant (inactive).
Ms. Chang brings to the Board experience in accounting and financial reporting and oversight matters. This experience is valuable in her role as the Company’s Audit Committee Chair and financial expert. Ms. Chang has spent most of her career in the Southern California area and brings knowledge of the community served by SCE. She also brings experience as a director of public, private, and nonprofit organizations, securities regulation and corporate governance knowledge, and independent guidance as an important contributor to Board deliberations.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 6
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France A. Córdova Age 65 Director of EIX and SCE since 2004 Committees: Audit and Nominating/Corporate Governance |
Dr. Córdova served as president of Purdue University from 2007 to July 2012 and continues to be on the faculty of Purdue in Physics and Astrophysics. Prior to that, she served as chancellor of the University of California, Riverside, vice chancellor for research and a professor of physics for the University of California, Santa Barbara, and NASA Chief Scientist. Dr. Córdova is a director of SAIC, Inc. and chair of the Board of Regents of the Smithsonian Institution. She is a director or trustee of the National Science Board, the Center for Advancement of Science in Space, and the Mayo Clinic. Dr. Córdova is a graduate of Stanford University and holds a Ph.D in Physics from the California Institute of Technology.
Dr. Córdova brings to the Board experience as a leader of large organizations and expertise in science and technology matters. Her expertise in technology is particularly valuable in connection with technology developments affecting the utility industry and renewable energy. She also brings the perspective and insight of a director of other public and private companies and governmental and civic organizations.
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Theodore F. Craver, Jr. Age 61 Director of EIX since 2007 and SCE since 2008 |
Mr. Craver has been the Chairman of the Board, President, and Chief Executive Officer of EIX since 2008. He served as Chairman of the Board, President and Chief Executive Officer of EMG from 2005 to 2008, and, prior to that, Executive Vice President, Chief Financial Officer and Treasurer of EIX. Before joining the Company as Vice President and Treasurer in 1996, Mr. Craver served as executive vice president and corporate treasurer of First Interstate Bancorp and executive vice president and chief financial officer of First Interstate’s wholesale banking subsidiary. He is a director of Health Net, Inc. Mr. Craver is a graduate of the University of Southern California, where he also received his MBA degree.
Mr. Craver brings to the Board in-depth knowledge of the Company’s business, industry and strategy, experienced leadership and a finance background. He has had experience dealing with difficult challenges faced by the Company, including the California energy crisis. He is a leader in the electric utility industry, serving as a director of the Edison Electric Institute, an association of U.S. shareholder-owned electric companies, the Institute of Nuclear Power Operations, a non-profit organization dedicated to promoting the highest levels of safety and reliability in nuclear power plant operations, and the Electric Power Reserch Institute, which provides independent, public-benefit research and development relating to the generation, delivery and use of electicity.
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Bradford M. Freeman Age 71 Director of EIX and SCE since 2002 Committees: Finance, Operations & Safety Oversight (Chair) and Compensation & Executive Personnel |
Mr. Freeman has been a founding partner of Freeman Spogli & Co., a private investment company, since 1983. Prior to that he served as managing director of the investment banking firm Dean Witter Reynolds, Inc. Mr. Freeman is a director of CBRE Group, Inc. He is a graduate of Stanford University and holds an MBA degree from Harvard Business School.
Mr. Freeman brings to the Board knowledge and experience in the capital markets and securities business, which is particularly valuable in the Company’s capital intensive business and in the context of its capital investment and growth strategy. He also brings the perspective of managing an investment portfolio and an understanding of shareholder concerns. This experience is valuable in Mr. Freeman’s role as the Company’s Finance, Operations and Safety Oversight Committee Chair. As a result of his career in the Southern California area, he brings knowledge of the community served by SCE.
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Ronald L. Litzinger Age 53 Director of SCE since 2011 |
Mr. Litzinger has been the President of SCE since 2011. He has held a wide range of executive positions at the EIX companies since joining SCE as an engineer in 1986. From 2008 to 2010, Mr. Litzinger served as President and Chief Executive Officer of EMG and EME, a subsidiary of EMG that filed for bankruptcy on December 17, 2012 and is deconsolidated from EIX’s financial results. He served as Senior Vice President of SCE responsible for transmission and distribution operations from 2005 to 2008, and, prior to that, Vice President of EIX responsible for strategic planning, Senior Vice President and Chief Technical Officer of EME, and Senior Vice President of EME’s worldwide operations. Mr. Litzinger is a graduate of the University of Washington with a chemical engineering degree and received a Master of Arts degree from the University of Redlands.
Mr. Litzinger brings to the SCE Board in-depth knowledge of the Company’s business, experienced leadership and an engineering background. He also brings senior executive, operations and strategic planning experience developed during his 26 years of service with the Company.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 7
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Luis G. Nogales Age 69 Director of EIX and SCE since 1993 Committees: Audit and Compensation & Executive Personnel |
Mr. Nogales has been managing partner of Nogales Investors, LLC, a private equity investment company, since 2001. Prior to that he served as president of Nogales Partners, a private equity investment company, president of Univision, a Spanish language television network, and chairman of the board and chief executive officer of United Press International, a communications company. Mr. Nogales is a director of Arbitron Inc. and KB Home. He is a graduate of San Diego State University and Stanford Law School.
Mr. Nogales brings to the Board business, management and chief executive leadership experience in media and marketing enterprises and the Spanish language market, which is particularly relevant in the communities served by SCE. He also brings the perspective and insight of a director of other public companies and a private equity investor who understands shareholder concerns. He brings broad knowledge of the Company’s business and corporate history developed through 20 years of service on the Board.
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Ronald L. Olson Age 71 Director of EIX and SCE since 1995 Committee: Finance, Operations & Safety Oversight |
Mr. Olson has been a partner of the law firm of Munger, Tolles & Olson LLP since 1970. He is a director of Berkshire Hathaway, Inc., City National Corporation and The Washington Post Company, and a director or trustee for three funds in the Western Asset Funds complex. Mr. Olson is a trustee of the RAND Corporation and the California Institute of Technology. He is a graduate of Drake University and University of Michigan Law School, and holds a Diploma in Law from Oxford University.
Mr. Olson brings to the Board legal experience in complex litigation, regulatory and transactional matters and corporate counseling for large corporations. He also has experience in a wide range of governance and public policy matters as a director of various public and private companies and non-profit organizations, and leadership in the community developed through his business and civic affiliations. His experience as a director of four other public companies brings value to the Board, and has not affected the time or attention he has devoted to our Board. He attended all Board and Finance, Operations and Safety Oversight Committee meetings in 2012. Mr. Olson brings considerable knowledge of the Company’s business and corporate history developed through 18 years of service on the Board.
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Richard T. Schlosberg, III Age 68 Director of EIX and SCE since 2002 Committees: Compensation & Executive Personnel (Chair) and Finance, Operations & Safety Oversight |
Mr. Schlosberg served as president and chief executive officer of The David and Lucile Packard Foundation, a private family foundation, from 1999 until his retirement in 2004. Prior to joining the foundation, he was publisher and chief executive officer of The Los Angeles Times, and executive vice president and director of The Times Mirror Company, a media communications company. He is a director of eBay Inc. and chairman of the board of the Kaiser Family Foundation. Mr. Schlosberg is a graduate of the United States Air Force Academy, and holds an MBA degree from Harvard Business School.
Mr. Schlosberg brings to the Board business, management and chief executive leadership experience in the communications industry, including in the local markets served by SCE. He also brings executive compensation expertise from his business experience and his experience as the Company’s Compensation and Executive Personnel Committee Chair. He has exercised additional independent leadership as the Company’s Lead Director, devoting significant time and attention to the Company. He brings the perspective and insight of a director of other public and private companies.
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Thomas C. Sutton Age 70 Director of EIX and SCE since 1995 Committees: Nominating/Corporate Governance and Finance, Operations & Safety Oversight |
Mr. Sutton served as chairman of the board and chief executive officer of Pacific Life Insurance Company from 1990 until his retirement in 2007. He is a director of Pacific Mutual Holding Company, Pacific LifeCorp and the Public Policy Institute of California. Mr. Sutton is a graduate of the University of Toronto.
Mr. Sutton brings to the Board business and chief executive leadership experience in an industry which, like the electric utility industry, is highly regulated. He also brings extensive knowledge of finance, accounting and compensation matters. He brings significant knowledge of the Company’s business and corporate history developed through 18 years of service on the Board.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 8
|
|
Peter J. Taylor Age 54 Director of EIX and SCE since 2011 Committees: Audit and Nominating/Corporate Governance |
Mr. Taylor has been the executive vice president and chief financial officer of the University of California since 2009. Prior to that he served as managing director of public finance of Lehman Brothers and Barclays Capital from 2002 to 2009. Mr. Taylor is a director of the Kaiser Family Foundation and a member of the Board of Trustees of the J. Paul Getty Trust, serving as chair of the audit committee. Previously, he was chair of the UCLA African American Admissions Task Force and commissioner on the California Performance Review Commission. Mr. Taylor is a graduate of the University of California Los Angeles and holds a Master’s degree in public policy analysis from Claremont Graduate University.
Mr. Taylor brings to the Board finance and public policy experience, which is particularly relevant to the Company’s infrastructure development strategy. He also brings experience in risk management, accounting and financial reporting, and a fresh perspective to Board deliberations as our newest director.
|
|
Brett White Age 53 Director of EIX and SCE since 2007 Committees: Compensation & Executive Personnel and Nominating/Corporate Governance |
Mr. White has been a managing partner at Blum Capital, a private equity firm, since January 2013. He served as chief executive officer of CBRE Group, Inc., a commercial real estate services firm, from 2005 to December 2012, president of CBRE Group from 2001 to 2010 and, prior to that, as chairman of the Americas of CB Richard Ellis Services, Inc. He is a director of Realogy Holdings Corporation and a trustee of the University of San Francisco. Mr. White is a graduate of the University of California, Santa Barbara.
Mr. White brings to the Board the experience, strategic perspective, critical judgment and analytical skills of a recent chief executive officer of a public company engaged in an industry particularly relevant to the Company’s infrastructure growth strategy. He also brings the perspective of a business customer headquartered and doing business in the local markets served by SCE developed from his years of service at CBRE Group.
Overview of Non-Management Director Nominees
|
Director |
Industry Experience |
Ethnicity/Gender |
Independence |
Other Public Company Boards |
Projected Retirement Date |
|
Jagjeet S. Bindra |
Energy |
Asian/Male |
Yes |
2 |
2020 |
|
Vanessa C.L. Chang |
Accounting/Real Estate |
Asian/Female |
Yes |
2 |
2025 |
|
France A. Córdova |
Education/Science/Technology |
Hispanic/Female |
Yes |
1 |
2020 |
|
Bradford M. Freeman |
Securities/Investments |
White/Male |
Yes |
1 |
2015 |
|
Luis G. Nogales |
Media/Investments |
Hispanic/Male |
Yes |
2 |
2016 |
|
Ronald L. Olson |
Law |
White/Male |
No |
4 |
2014 |
|
Richard T. Schlosberg, III |
Communications/Publishing |
White/Male |
Yes |
1 |
2017 |
|
Thomas C. Sutton |
Insurance |
White/Male |
Yes |
0 |
2015 |
|
Peter J. Taylor |
Finance |
African American/Male |
Yes |
0 |
2031 |
|
Brett White |
Commercial Real Estate |
White/Male |
Yes |
1 |
2032 |
The Board recommends that you vote “FOR” the EIX and SCE director nominees, as applicable.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 9
QUESTIONS AND ANSWERS ABOUT OUR CORPORATE GOVERNANCE
How are potential director nominees identified and selected by the Board to become nominees?
The Nominating/Corporate Governance Committee, comprised solely of independent directors under New York Stock Exchange LLC (“NYSE”) rules and our Corporate Governance Guidelines, is responsible for recommending director candidates to the Board.
The Committee will consider candidates recommended by shareholders if they are submitted in writing to the Corporate Secretary and include all of the information required by Article II, Section 4 of our Bylaws plus a written description, together with any supporting materials, of the following:
•
Any direct or indirect business relationships or transactions within the last three years between EIX and its subsidiaries and senior management, on the one hand, and the candidate and his or her affiliates and immediate family members, on the other hand; and
•
The qualifications, qualities, and skills of the candidate that the shareholder deems appropriate to submit to the Committee to assist in its consideration of the candidate.
The Committee also considers candidates recommended by our directors, senior management, and any director search firm retained by the Committee. In 2012, the Committee retained a search firm to support the process of identifying director candidates, coordinating the interview process and conducting reference checks. There are no differences in the manner in which the Committee evaluates a candidate based on the source of the recommendation.
If, based on an evaluation of the candidate’s qualifications, qualities and skills, the Committee determines to continue its consideration of a candidate, one or more Committee members and other directors as determined by the Committee, interview the candidate. The Committee conducts any further research on the candidate that it deems appropriate. The Committee then determines whether to recommend that the candidate be nominated as a director. The Board considers the recommendation and determines whether to nominate the candidate for election.
What information does the Nominating/Corporate Governance Committee consider when recommending a director nominee?
For the Committee to recommend a director nominee, the candidate must at a minimum possess the qualifications, qualities and skills in our Corporate Governance Guidelines, including:
•
A reputation for integrity, honesty and adherence to high ethical standards;
•
Experience in a generally recognized position of leadership; and
•
The demonstrated business acumen, experience and ability to exercise sound judgment in matters that relate to the current and long-term objectives of the Company.
The Committee also considers other factors and information, including the Board’s current need for additional members, the candidate’s potential for increasing the Board’s range of experience, skills and diversity, the candidate’s independence, and specific skills and experience that are relevant to our business strategy.
In nominating candidates for re-election to the Board, the Committee also considers the nature and time invested in a director’s service on other boards, the director’s Board, Board committee and annual meeting attendance, and the vote received at the prior annual meeting.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 10
How does the Nominating/Corporate Governance Committee consider diversity in identifying director candidates?
Our Corporate Governance Guidelines state the Board’s policy that the value of diversity on the Board should be considered. The Committee considers ethnic and gender diversity, as well as diversity of skills, backgrounds and qualifications represented on the Board, in recommending nominees for election. In 2008 and 2011, the Committee retained a director search firm and instructed it to identify and coordinate interviews with candidates reflecting ethnic and gender diversity, resulting in the elections of Messrs. Bindra and Taylor to the Board.
The Committee evaluates its effectiveness in achieving diversity on the Board through its annual review of Board composition, which identifies ethnicity, gender and industry experience, prior to recommending nominees for election.
How does the Board determine which directors are considered independent?
Our Corporate Governance Guidelines require that the Board consist of at least a majority of independent directors. The Company uses the NYSE listing standards to determine independence.
Additionally, the Audit, Compensation and Executive Personnel, and Nominating/Corporate Governance Committees are required to be comprised solely of independent directors. The Audit and Compensation Committee charters contain additional independence requirements for committee membership.
No director will be considered independent if he or she would not qualify as independent under NYSE rules. Directors who qualify as independent are determined to be independent unless the director has a material relationship with the Company or its subsidiaries.
The Board has determined that the types of relationships described in Section B of Exhibit A-1 to our Corporate Governance Guidelines are not material for purposes of determining directors’ independence. As a result, the Board does not consider these relationships in making director independence determinations.
For relationships not prohibited by NYSE rules and not covered under the categories of immaterial relationships in our Guidelines, the determination of whether a relationship is material or not, and therefore whether a director is independent or not, is made in good faith by the directors. The director whose relationship is under consideration abstains from the vote regarding his or her independence.
Which directors has the Board determined are independent?
The Board has determined that directors Bindra, Chang, Córdova, Curtis, Freeman, Nogales, Schlosberg, Sutton, Taylor and White are each independent. The Board previously determined that Dr. Rosser, who retired from the Board on April 26, 2012, was independent.
The Board reviews the independence of our directors at least annually, and periodically as needed. In February 2013, prior to recommending director nominees for election, the Board confirmed that the independent directors had no relationships or transactions that disqualified them as independent.
Who is the Lead Director and what are the Lead Director’s duties and responsibilities?
The Lead Director is designated annually by the independent directors, must be independent, and is expected to devote a greater amount of time to Board service than the other directors. The current Lead Director is Richard T. Schlosberg, III, who has served in that role since April 2010.
The Lead Director’s duties and responsibilities are described in our Corporate Governance Guidelines and include all of the following:
•
In consultation with the non-employee directors, approve agendas and schedules for Board meetings, and approve the flow of information to the Board;
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 11
•
Preside at all meetings at which the Chairman is not present, including executive sessions of the non-employee and the independent directors, and apprise the Chairman of the issues considered;
•
Be available to serve as a liaison between the Chairman and the independent directors;
•
Be available for consultation and direct communication with the Company’s shareholders and other interested parties;
•
Call meetings of the non-employee and the independent directors when necessary and appropriate; and
•
Perform other duties delegated by the non-employee directors.
The Lead Director’s term is one year, consistent with annual elections of directors; in practice, however, our Lead Directors have served for at least two years since 2008.
Why does the Board believe that its Board leadership structure is appropriate?
The EIX Board has determined that the combined role of Chairman and CEO, together with an independent Lead Director having the duties described above, is currently in the best interest of our shareholders because it provides the appropriate balance between effective leadership of the Company and independent oversight of management. We have the following corporate governance practices that provide for strong independent leadership on the Board and effective oversight of management and CEO performance:
•
A strong Lead Director role;
•
A Board with ten independent directors and no former employees of the Company;
•
Key Board committees comprised entirely of independent directors;
•
Regular meetings in executive session without the CEO present (six meetings in 2012);
•
Meetings in executive session with only the independent directors at least once per year (two meetings in 2012); Annual performance reviews of the CEO conducted by the Compensation Committee;
•
Input on CEO performance obtained by the Compensation Committee Chair and shared with the Compensation Committee and the Board in executive session; and
•
Performance feedback annually provided to the CEO by the Compensation Committee Chair.
The EIX Board also believes that having Mr. Craver serve in the combined role of EIX Chairman and CEO is in the best interests of our shareholders because:
•
He is most familiar with our business and industry, and most capable of identifying strategic priorities and leading the Board’s review of strategy;
•
His day-to-day presence at the Company and interaction with management make him most capable of identifying and prioritizing issues and risks for the Board’s attention;
•
The combined role conveys the Board’s confidence in his leadership to shareholders and other stakeholders; and
•
The combined role provides clear accountability for effective leadership and results.
The EIX Board continues to monitor trends in this area and could, under different circumstances, reach a different conclusion.
The SCE Bylaws provide that the President of SCE has the duties of the Chairman. The Lead Director of EIX also serves as Lead Director of SCE. Ten of 13 directors of SCE are independent and the key Board committees are composed entirely of independent directors. The SCE Board has determined that the current leadership structure is appropriate for SCE as a subsidiary of EIX.
What is the Board’s role in CEO succession planning?
The Board believes that CEO succession planning is one of its most important responsibilities. Our Corporate Governance Guidelines provide that the Board will annually review and evaluate succession planning and management development for the Company’s senior officers, including the CEO.
At least annually, the Board meets in executive session with the EIX CEO to discuss succession planning. The discussion includes CEO succession in the ordinary course, CEO succession in the event of an emergency, and succession for other key senior management positions. The frequency of the Board’s succession planning discussions depends in part on the period until the CEO’s expected retirement. For example, the Board discussed succession planning more frequently in the year prior to the announcement that Mr. Craver would succeed the prior EIX CEO upon his retirement.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 12
In the succession planning process, internal CEO succession candidates are identified and evaluated based on criteria considered predictive of success at the CEO level, taking into account the Company’s business strategy. The Board uses a common talent assessment format for each individual. The assessment includes a development plan for each individual.
Our Corporate Governance Guidelines provide that the Board will have opportunities to become acquainted with the senior officers of the Company and others who may have the potential to handle significant management positions. This is carried out through opportunities for officers to make presentations to the Board and Board committees, director education sessions, other business interactions, and social events intended for this purpose.
In addition to the succession planning process, the Compensation and Executive Personnel Committee annually reviews the performance of the CEO and other senior officers. The performance review process is discussed under “Role of Compensation Committee and Executive Officers” in Part III of the Compensation Discussion and Analysis below. The Committee reports on the results to the Board.
What is the Board’s role in risk oversight?
Our Corporate Governance Guidelines provide that one of the Board’s primary functions is to review the Company’s enterprise risk management process and monitor strategic and emerging risks. The Board annually reviews key enterprise risks identified by management, such as financial, reputational, safety and security, and compliance risks, and periodically monitors key risks through reports and discussions regarding key risk areas at Board meetings. The Board also focuses on specific strategic and emerging risks in periodic strategy reviews. The Board annually reviews corporate goals and approves capital budgets.
Board committees have responsibility for risk oversight in specific areas as follows:
The Audit Committee is responsible for oversight of (i) risk assessment and risk management policies, (ii) major financial risk exposures, and (iii) the steps management has taken to monitor and control these exposures. In carrying out these responsibilities, the Committee semi-annually reviews the Company’s risk management processes and key enterprise risks, reviews the EIX risk management committee charter, and receives regular reports on litigation, internal audits and compliance. The Committee also annually reviews and approves the internal audit plan.
The Compensation Committee assesses and monitors risks in the Company’s compensation program. The Committee’s risk assessment process and factors considered in assessing risk are discussed under “Risk Considerations” in Part III of the Compensation Discussion and Analysis below.
The Finance, Operations and Safety Oversight Committee monitors risk in the Company’s capital investment activities. The Committee regularly monitors the level of capital investment relative to approved capital budgets and must approve significant capital spending variances and projects that are not included in approved capital budgets.
The Nominating/Corporate Governance Committee advises the Board with respect to Board size and composition, Board committee composition and responsibilities, Lead Director selection and corporate governance practices that help position the Board to effectively carry out its risk oversight responsibility.
The Board believes that its leadership structure supports the Board’s risk oversight function. Independent directors chair the Board committees responsible for risk oversight, the Company has an independent Lead Director who facilitates communication between management and directors, and all directors are involved in the review of key enterprise risks.
How many times did the Board meet in 2012?
The Board met ten times in 2012. Each director attended 75% or more of all Board and Board committee meetings he or she was eligible to attend. The Board held six executive sessions of the non-employee directors and two executive sessions of the independent directors.
Does the Company have a policy on attendance of Director nominees at Annual Meetings?
Director nominees are expected to attend Annual Meetings. All of the EIX and SCE directors attended the 2012 Annual Meeting.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 13
Are directors required to hold EIX Common Stock?
Yes. Within five years from the date of their initial election to the Board, directors are required to beneficially own an aggregate number of shares of EIX Common Stock or derivative securities convertible into EIX Common Stock, excluding stock options, having a value equivalent to five times the amount of the annual Board retainer.
All directors comply with these stock ownership guidelines.
Does EIX have a policy on shareholder rights plans?
The EIX Board has a policy to seek prior shareholder approval of the adoption of any shareholder rights plan unless, due to time constraints or other reasons consistent with the EIX Board’s fiduciary duties, a committee consisting solely of independent directors determines that it would be in the best interests of EIX shareholders to adopt the plan prior to shareholder approval. Any rights plan adopted by the EIX Board without prior shareholder approval will automatically terminate one year after adoption of the plan unless the plan is approved by EIX shareholders prior to such termination.
Is SCE subject to the same corporate governance stock exchange rules as EIX?
No. SCE is subject to the NYSE MKT LLC rules, which exempts SCE from designated corporate governance rules for Board and Board committee composition, including director independence, the director nominations process, and the process to determine executive compensation. SCE is exempt from these rules because (i) it is a “controlled company” with over 50% of the voting power held by its parent company, EIX, and (ii) it has listed only preferred stock on the exchange.
How may I communicate with the Board?
Shareholders and other interested parties may communicate with the Board or individual directors by following the procedures described on our website at www.edison.com/corpgov.
Where can I find the Company’s corporate governance documents?
The EIX Bylaws, Corporate Governance Guidelines, and Board committee charters, the Director Ethics and Compliance Code applicable to all directors of EIX and SCE, and the Employee Ethics and Compliance Code applicable to all EIX and SCE officers and employees, are posted on our website at www.edison.com/corpgov.
The SCE Bylaws, Corporate Governance Guidelines and Board committee charters are posted on our website at www.sce.com/corpgov.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
It is the Company’s policy that the Nominating/Corporate Governance Committee review at least annually, and periodically as needed, any transaction in the prior calendar year or any proposed transaction between the EIX companies and a related person in which the amount involved exceeds $120,000 and the related person has a material interest. A related person is generally a director, a director nominee, an executive officer, or a greater than 5% beneficial owner of any class of voting securities of EIX or SCE, and their immediate family members. This policy is stated in writing in the Nominating/Corporate Governance Committee charter.
The Committee’s regular procedure is to obtain from management annually, and periodically as needed, a list of the transactions with related persons described above, and to review these transactions at a meeting held in advance of recommending director nominations to the Board. The list is based on information from questionnaires completed by our directors, director nominees, and executive officers, together with information obtained from our accounts payable and receivable records. The Committee’s procedure is evidenced in the minutes and records for the Committee meeting at which the review occurred.
Director Olson is a partner of the law firm of Munger, Tolles & Olson LLP, which provided legal services to the EIX companies in 2012. Such services are expected to continue in the future. The amount paid to Munger, Tolles & Olson LLP for legal services during 2012 was $4,335,045. Mr. Olson did not personally provide any legal services to the EIX companies in 2012.
The terms and conditions of the Company’s relationship with Munger, Tolles & Olson LLP are comparable to the terms and conditions of the Company’s relationships with other law firms.
BOARD COMMITTEES
The current membership and primary functions of our Audit, Compensation and Executive Personnel, Nominating/Corporate Governance, and Finance, Operations and Safety Oversight Committees are described below.
|
Director |
Audit Committee |
Compensation & Executive Personnel Committee |
Nominating/ Corporate Governance Committee |
Finance, Operations & Safety Oversight Committee |
|
Jagjeet S. Bindra |
X |
X |
||
|
Vanessa C.L. Chang |
Chair Financial Expert |
X | ||
|
France A. Córdova |
X |
X | ||
|
Charles B. Curtis |
Chair |
X |
||
|
Bradford M. Freeman |
X |
Chair |
||
|
Luis G. Nogales |
X |
X | ||
|
Ronald L. Olson |
X |
|||
|
Richard T. Schlosberg, III |
Chair |
X |
||
|
Thomas C. Sutton |
X |
X |
||
|
Peter J. Taylor |
X |
X |
|
|
|
Brett White |
X |
X | ||
|
Number of Meetings Held in 2012 (EIX/SCE) |
5/5 |
4/4 |
4/4 |
4/4 |
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 15
Audit Committee
The Audit Committee’s duties and powers, which are described in its charter, include the following:
•
Appoint the independent registered public accounting firm.
•
Assist the Board in its oversight of:
–
the integrity of financial statements;
–
finance, accounting, ethics and compliance and internal control systems;
–
compliance with legal and regulatory requirements;
–
the qualifications, independence and performance of the Company’s independent registered public accounting firm; and
–
the performance of the internal audit function.
•
Meet regularly with management, the independent registered public accounting firm, and the internal auditors to make inquiries regarding the manner in which the responsibilities of each are being discharged.
•
Recommend to the Board the inclusion of the year-end audited financial statements in the Company’s Annual Report on Form 10-K.
•
Review with the independent registered public accounting firm 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.
•
Oversee the Company’s (i) risk assessment and risk management policies, (ii) major financial risk exposures and (iii) the steps management has taken to monitor and control these exposures.
The EIX Audit Committee also reviews at least semi-annually (i) any changes to the Company’s political contribution policies and (ii) a written report of political contributions and related political expenditures of the Company and its consolidated subsidiaries, political action committee and civic action committee. The EIX Committee approves all political contributions in excess of $1 million.
Compensation and Executive Personnel Committee
The Compensation and Executive Personnel Committee’s duties and powers, which are described in its charter, include the following:
•
Review the performance and set the compensation of designated elected officers, including the executive officers.
•
Review director compensation for consideration and action by the Board.
•
Approve the design of executive and director compensation programs, plans and arrangements.
•
Review and assess whether any risks arising from compensation policies and practices are reasonably likely to have a material adverse effect on the Company.
Nominating/Corporate Governance Committee
The Nominating/Corporate Governance Committee’s duties and powers, which are described in its charter, include the following:
•
Periodically review Board size and composition and identify and recommend director candidates.
•
Make recommendations to the Board regarding Board committee, committee chair and Lead Director assignments.
•
Review related party transactions.
•
Periodically review and recommend updates to the Corporate Governance Guidelines and Board committee charters.
•
Advise the Board with respect to corporate governance matters.
•
Oversee the evaluation of the Board and Board committees.
•
Review the orientation program for new directors and continuing education activities for all directors.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 16
Finance, Operations and Safety Oversight Committee
The Finance, Operations and Safety Oversight Committee’s duties and powers, which are described in its charter, include the following:
•
Review and monitor capital spending compared to budget.
•
Approve significant capital spending variances and significant capital projects not included in the budget.
•
Monitor operational and service excellence performance metrics and significant developments relating to safety, reliability and affordability.
DIRECTOR COMPENSATION
The following table presents information regarding the compensation paid during 2012 to our non-employee directors. The compensation paid to any director who is also an employee is presented in the EIX and SCE Summary Compensation Tables and the related explanatory tables.
|
Name |
Fees Earned or Paid in Cash ($) |
Stock Awards(1)(2) ($) |
Option Awards(3) ($) |
Non-Equity Incentive Plan Compensation ($) |
Change in Pension Value and Non- Qualified Deferred Compensation Earnings(4) ($) |
All Other Compensation(5)(6) ($) |
Total ($) |
|
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
|
Jagjeet S. Bindra |
101,500 |
105,022 |
— |
— |
— |
10,000 |
216,522 |
|
Vanessa C.L. Chang |
118,500 |
105,022 |
— |
— |
17,948 |
10,000 |
251,470 |
|
France A. Córdova |
99,500 |
105,022 |
— |
— |
28,752 |
— |
233,274 |
|
Charles B. Curtis |
103,500 |
105,022 |
— |
— |
21,620 |
— |
230,142 |
|
Bradford M. Freeman |
107,500 |
105,022 |
— |
— |
42,020 |
10,000 |
264,542 |
|
Luis G. Nogales |
101,500 |
105,022 |
— |
— |
37,515 |
8,000 |
252,037 |
|
Ronald L. Olson |
91,500 |
105,022 |
— |
— |
71,822 |
— |
268,344 |
|
James M. Rosser(7) |
45,500 |
— |
— |
— |
90,006 |
15,582 |
151,088 |
|
Richard T. Schlosberg, III |
139,500 |
105,022 |
— |
— |
45,212 |
10,000 |
299,734 |
|
Thomas C. Sutton |
101,500 |
105,022 |
— |
— |
37,915 |
10,000 |
254,437 |
|
Peter J. Taylor |
89,500 |
105,022 |
— |
— |
— |
1,000 |
195,522 |
|
Brett White |
95,500 |
105,022 |
— |
— |
15,902 |
10,000 |
226,424 |
|
(1) The amounts reported for stock awards reflect the aggregate grant date fair value of those awards computed in accordance with FASB ASC Topic 718. For a discussion of the assumptions and methodologies used to calculate the amounts reported, see Note 8 (Compensation and Benefit Plans) to EIX’s Consolidated Financial Statements, included as part of EIX’s 2012 Annual Report to Shareholders. (2) Each non-employee director, other than Dr. Rosser, was granted 2,406 shares or deferred stock units on April 26, 2012, and each share or unit had a value of $43.65 on the grant date. (3) We did not grant stock options to our non-employee directors in 2012. The number of outstanding stock options from grants in prior years held by each non-employee director as of December 31, 2012 was as follows: Messrs. Freeman, Olson, Schlosberg and Sutton 15,500 each, Dr. Córdova 13,500, Messrs. Curtis and Nogales 10,000 each, Ms. Chang and Mr. White 7,500 each, and Mr. Taylor 0. Dr. Rosser held 2,500 outstanding stock options as of April 26, 2012, the date he retired from the Board. (4) Amounts reported consist of interest on deferred compensation account balances considered under SEC rules to be at above-market rates and, for Messrs. Nogales and Olson, increases from January 1, 2012 to December 31, 2012 in the present value of benefits under the Retirement Plan for Directors of $22,939 and $14,266, respectively. (5) EIX has a matching gift program that provides assistance to qualified public and private schools by matching dollar-for-dollar gifts of at least $25 up to a prescribed maximum amount per calendar year for the Company’s employees and directors. EIX matches aggregate director contributions of up to $10,000 per calendar year to qualified schools. Under the Director Matching Gift Program, matching amounts for non-cash gifts are determined based on the value of the gift on the date given by the director. For purposes of determining the date on which an eligible (publicly-traded) stock gift is given, such date will be based on the date stock ownership transfers to the qualified school. (6) Includes $5,582 for Dr. Rosser as the cost of post-retirement survivor benefits under the 1985 Director Deferred Compensation Plan described below. (7) Dr. Rosser retired from the Board on April 26, 2012. |
|||||||
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 17
Annual Retainer and Meeting Fees
Compensation for non-employee directors during 2012 included an annual retainer, fees for attending meetings, and an annual equity award. Directors were offered the opportunity to receive all of their compensation on a deferred basis under the EIX Director Deferred Compensation Plan. The following table sets forth the current retainers and meeting fees:
|
Type of Fee |
Dollar Amount |
|
Annual Board Retainer: |
$60,000 |
|
Additional Annual Board Retainer to: | |
|
Audit Committee Chair |
$20,000 |
|
Compensation Committee Chair |
$15,000 |
|
Other Committee Chairs |
$10,000 |
|
Lead Director |
$25,000 |
|
Each Board, Board committee, subcommittee, or other business meeting, including adjourned meetings: |
$2,000 |
The annual Board retainer was increased from $55,000 to $60,000 effective July 1, 2012.
Directors receive only one meeting fee for each Board or Board committee meeting held jointly or consecutively, and for joint meetings of more than one committee. It is the usual practice that meetings of the EIX and SCE Board and Board committees are held jointly and a single meeting fee is paid for each joint meeting.
All directors are also reimbursed for out-of-pocket expenses incurred for serving as directors and are eligible to participate in the Director Matching Gift Program described above in footnote (5) to the “Director Compensation” table.
Annual Equity Awards
Upon re-election to the Board in April 2012, non-employee directors were granted an annual equity award of EIX Common Stock (or deferred stock units, as explained below) with an aggregate grant date value of $105,000. Non-employee directors who are re-elected to the Board in April 2013 will be granted an equity award (or deferred stock units) with an aggregate grant date value of $110,000. If a director is initially elected at or after the 2013 Annual Meeting, he or she will be granted an award of EIX deferred stock units with an aggregate grant date value of $110,000 on the date of election.
The number of shares or units granted is determined by dividing the value of the equity award ($105,000 or $110,000, as described above) by the closing price of EIX Common Stock on the date of election or re-election and rounding up to the next whole share.
Directors have the opportunity to elect in advance to receive their re-election award entirely in EIX Common Stock, entirely in deferred stock units, or in any combination of the two. A deferred stock unit is a contractual right to receive one share of EIX Common Stock. Deferred stock units are credited to the director’s account under the EIX Director Deferred Compensation Plan described below. Deferred stock units cannot be voted or sold and accrue dividend equivalents on the ex-dividend date, if and when dividends are declared on EIX Common Stock, that are converted to additional deferred stock units.
Each director’s equity award in 2012 was granted under the EIX 2007 Performance Incentive Plan. Directors serving on both Company Boards receive only one award per year.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 18
EIX Director Deferred Compensation Plan
As part of the 2008 Internal Revenue Code Section 409A amendments, the EIX Director Deferred Compensation Plan was separated into two different plan documents. The grandfathered plan document applies to deferrals that were earned prior to January 1, 2005, while the 2008 plan document applies to deferrals that were earned on or after January 1, 2005.
Eligibility and Deferrals
Non-employee directors are eligible to defer up to 100% of their annual retainers and meeting fees. Any portion of a director’s annual equity award that he or she elects to receive as deferred stock units is automatically deferred. Amounts deferred (other than deferred stock units) accrue interest until paid to the director at a rate equal to the average monthly Moody’s Corporate Bond Yield for Baa Public Utility Bonds over a 60-month period ending November 1 of the prior year.
Payment of Grandfathered Plan Benefits
Amounts deferred under the grandfathered plan document (other than deferred stock units) may be deferred until a specified date, retirement, death or discontinuance of service as a director. At the director’s election, any such compensation that is deferred until retirement or death may be paid as a lump sum, in monthly installments over 60, 120, or 180 months, or in a combination of a partial lump sum and installments. Any such deferred compensation is paid as a single lump sum or in three annual installments upon any other discontinuance of service as a director. Directors may elect at the time of deferral to receive payment on a fixed date in accordance with procedures established. Deferred amounts may also be paid in connection with a change in control of EIX or SCE in certain circumstances.
Deferred stock units may be deferred until retirement, death or discontinuance of service as a director. The deferred stock units will be distributed in EIX Common Stock in a lump sum upon the director’s retirement, unless a request to receive distribution in the form of annual installments over 5, 10, or 15 years was previously approved. Discontinuance of service as a director prior to retirement will result in a lump sum payout of deferred stock units in EIX Common Stock. Upon the director’s death, any remaining deferred stock unit balance will be paid to the director’s beneficiary in a lump sum in EIX Common Stock. Deferred stock units may also be paid in connection with a change in control of EIX or SCE in certain circumstances.
Payment of 2008 Plan Benefits
Any amounts deferred under the 2008 plan document (including deferred stock units) may be deferred until a specified date no later than the date the director turns age 75, retirement, death, disability or other separation from service. Directors have sub-accounts for each annual deferral for which the following forms of payment may be elected:
•
Single lump-sum;
•
Two to fifteen annual installments;
•
Monthly installments for 60 to 180 months; or
•
Any combination of the above.
Payments triggered by retirement, death, disability or other separation from service may begin upon the applicable triggering event or a specified number of months and/or years following the applicable triggering event. However, payments may not begin later than the director’s 75th birthday unless the director is still on the Board. Payments are subject to certain administrative earliest payment date rules, and may be delayed or accelerated in accordance with the 2008 plan document if permitted or required under Section 409A of the Internal Revenue Code.
If a director who was eligible to participate in the plan on or before December 31, 2008 dies within ten years of his or her initial eligibility to participate in the plan, the amount of the director’s remaining deferred compensation account balance that will be paid to his or her beneficiary will be doubled. However, deferred stock units and any amounts attributable to dividend equivalents previously associated with stock options will not be doubled. All amounts payable are treated as obligations of EIX.
1985 Director Deferred Compensation Plan
Dr. Rosser participated in the 1985 Director Deferred Compensation Plan, under which he deferred retainers and fees during the period 1985 to 1990. The payment of his deferrals and accrued interest commenced after his retirement. The plan also provides for survivor benefits to a surviving spouse or other beneficiary consisting of an annuity or five years of installment payments generally equal to half the regular account payment amount.
Retirement Plan for Directors
Directors Nogales and Olson participate in the Retirement Plan for Directors. No new director after 1997 may participate in the plan. Each participating director is generally entitled to quarterly payments, commencing following the director’s retirement, resignation or death, based on the amount of the annual retainer and regular Board meeting fees in effect at the time of such termination of service unless another payment schedule was elected under Section 409A of the Internal Revenue Code. The annual benefit for directors Nogales and Olson will be payable in quarterly installments for a number of years equal to the years of their service as a director prior to 1998. Years of service for benefit determination purposes were frozen at the end of 1997. However, the present value of these frozen benefits can change over time. Dr. Rosser was also a participant in this plan and has commenced receiving his benefit payments.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 19
INFORMATION ON STOCK OWNERSHIP
Directors and Executive Officers
The following table shows the number of shares of EIX Common Stock beneficially owned as of March 5, 2013, except as otherwise indicated, by each of our directors, each individual named in the EIX and SCE Summary Compensation Tables, and our directors and executive officers as a group. None of the persons included in the table beneficially owns any other equity securities of the Company or its subsidiaries. The table includes shares that the individual has a right to acquire through May 4, 2013.
|
Name of Beneficial Owner |
Deferred Stock Units |
Restricted Stock Units |
Stock Options |
Common Stock Shares(1) |
Total Shares Beneficially Owned(2) |
Percent of Class(3) |
|
Jagjeet S. Bindra |
3,209 |
— |
— |
4,941 |
8,150 |
* |
|
Vanessa C.L. Chang |
16,517 |
— |
7,500 |
113 |
24,130 |
* |
|
France A. Córdova |
24,104 |
— |
13,500 |
— |
37,604 |
* |
|
Theodore F. Craver, Jr. |
— |
— |
1,977,109 |
185,814 |
2,162,923 |
* |
|
Charles B. Curtis |
18,980 |
— |
10,000 |
920 |
29,900 |
* |
|
Bradford M. Freeman |
28,073 |
— |
15,500 |
52,000 |
95,573 |
* |
|
Ronald L. Litzinger |
— |
— |
402,700 |
45,119 |
447,819 |
* |
|
Luis G. Nogales |
27,767 |
— |
10,000 |
— |
37,767 |
* |
|
Ronald L. Olson |
27,767 |
— |
15,500 |
31,358 |
74,625 |
* |
|
Richard T. Schlosberg, III |
28,073 |
— |
15,500 |
5,000 |
48,573 |
* |
|
Thomas C. Sutton |
6,265 |
— |
15,500 |
60,060 |
81,825 |
* |
|
Peter J. Taylor |
5,155 |
— |
— |
— |
5,155 |
* |
|
Brett White |
16,504 |
— |
7,500 |
— |
24,004 |
* |
|
W. James Scilacci |
— |
— |
409,686 |
47,518 |
457,204 |
* |
|
Robert L. Adler |
— |
— |
372,501 |
27,252 |
399,753 |
* |
|
Bertrand A. Valdman |
— |
— |
49,169 |
— |
49,169 |
* |
|
Pedro J. Pizarro(4) |
— |
— |
199,802 |
20,320 |
220,122 |
* |
|
Linda G. Sullivan |
— |
— |
88,954 |
8,157 |
97,111 |
* |
|
Stephen E. Pickett |
— |
— |
27,614 |
36,293 |
63,907 |
* |
|
Peter T. Dietrich |
— |
— |
55,629 |
1,597 |
57,226 |
* |
|
Russell C. Swartz |
— |
— |
116,857 |
16,565 |
133,422 |
* |
|
Lynda Ziegler(4) |
— |
— |
134,538 |
16,019 |
150,557 |
* |
|
EIX Directors and Executive Officers as a Group (19 individuals) |
202,414 |
— |
3,507,760 |
508,089 |
4,218,263 |
1.29% |
|
SCE Directors and Executive Officers as a Group (19 individuals) |
202,414 |
— |
2,905,373 |
477,342 |
3,585,129 |
1.10% |
|
(1) Except as follows, each individual has sole voting and investment power: Shared voting and sole investment power: Mr. Olson 10,000; Mr. Scilacci 33,707; Mr. Adler 3,829; Mr. Pizarro 9,990; Ms. Sullivan 2,062; Mr. Pickett 36,293; Ms. Ziegler 8,857; all EIX directors and executive officers as a group 58,816; and all SCE directors and executive officers as a group 65,979. Shared voting and shared investment power: Ms. Chang 113; Mr. Craver 185,814; Mr. Curtis 920; Mr. Litzinger 45,119; Mr. Olson 21,358 (includes 15,000 shares held in a foundation not deemed beneficially owned under Section 16 of the Exchange Act); Mr. Sutton 41,175; Mr. Scilacci 634; Ms. Sullivan 2,090; Ms. Ziegler 7,128; all EIX directors and executive officers as a group 296,219; and all SCE directors and executive officers as a group 297,675. (2) Includes shares listed in the four columns to the left. (3) Each individual owns less than 1% of the outstanding shares of EIX Common Stock. (4) Beneficial ownership for Mr. Pizarro and Ms. Ziegler is listed as of December 31, 2012. |
||||||
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 20
Certain Shareholders
The following are the only shareholders known to beneficially own more than 5% of any class of EIX or SCE voting securities as of December 31, 2012, except as otherwise indicated:
|
Title of Class of Stock |
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership |
Percent of Class |
|
EIX Common Stock |
State Street Corporation One Lincoln Street Boston, Massachusetts 02111 |
31,523,081(1) |
9.70% |
|
EIX Common Stock |
FMR LLC 82 Devonshire Street Boston, MA 02109 |
22,525,128 (2) |
6.91% |
|
EIX Common Stock |
Black Rock Inc. 40 East 52nd Street New York, NY 10022 |
21,062,346(3) |
6.47% |
|
SCE Common Stock |
Edison International 2244 Walnut Grove Avenue Rosemead, California 91770 |
434,888,104(4) |
100% |
|
(1) This information is based on a Schedule 13G filed with the SEC on February 12, 2013. Acting in various fiduciary capacities, State Street reports that it has shared voting and investment power over all shares. This includes 15,138,670 shares, or 4.6% of the class, held by State Street as the 401(k) Plan Trustee. 401(k) Plan shares are voted in accordance with instructions given by participants, whether vested or not. 401(k) Plan shares for which instructions are not received will be voted by the 401(k) Plan trustee in the same proportion to the 401(k) Plan shares voted by other 401(k) Plan shareholders, unless contrary to ERISA. (2) This information is based on a Schedule 13G filed with the SEC on February 14, 2012. FMR LLC reports that it has sole voting power over 2,174,433 shares, or 0.67% of the class, and sole investment power over all shares. (3) This information is based on a Schedule 13G filed with the SEC on February 6, 2013. BlackRock Inc. reports that it has sole voting and investment power over all shares. (4) EIX 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. EIX continues to have sole voting and investment power over these shares. |
|||
ITEM 2 RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. The Audit Committee has selected PricewaterhouseCoopers LLP (“PwC”) as the Company’s independent registered public accounting firm for calendar year 2013. The Company is asking shareholders to ratify this appointment.
PwC is an international accounting firm which provides leadership in public utility accounting matters. Representatives of PwC are expected to attend the Annual Meeting to respond to appropriate questions and to make a statement if they wish.
PwC has been retained as the Company’s independent registered public accounting firm continuously since 2002. The Audit Committee discusses and approves annual audit fees in executive session without PwC present, and periodically considers whether there should be a rotation of the independent external audit firm. Further, in conjunction with the mandated rotation of the audit firm’s lead engagement partner, the Audit Committee is involved in the selection of PwC’s new lead engagement partner. The members of the Audit Committee and the Board believe that the continued retention of PwC to serve as the Company’s independent external auditor is in the best interests of the Company and its investors.
The Company is not required to submit this appointment to a shareholder vote. Ratification would be advisory only. However, if the shareholders of either EIX or SCE do not ratify the appointment, the appropriate Audit Committee will investigate the reasons for rejection by the shareholders and will reconsider the appointment.
The Board recommends that you vote “FOR” Item 2.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 21
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES
The following table sets forth the aggregate fees billed to EIX (consolidated total including EIX and its subsidiaries) and SCE, respectively, for the fiscal years ended December 31, 2012 and December 31, 2011, by PwC:
|
Type of Fee |
|
EIX and Subsidiaries(1) ($000) |
|
|
SCE ($000) |
||||
|
|
2012 |
2011 |
|
2012 |
2011 |
||||
|
Audit Fees |
$ |
9,940 |
$ |
11,841 |
|
$ |
6,188 |
$ |
6,652 |
|
Audit-Related Fees(2) |
|
159 |
560 |
|
|
140 |
150 |
||
|
Tax Fees(3) |
|
1,802 |
3,680 |
|
|
1,696 |
2,965 |
||
|
All Other Fees(4) |
|
65 |
341 |
|
|
65 |
338 |
||
|
TOTAL |
$ |
11,966 |
$ |
16,422 |
|
$ |
8,089 |
$ |
10,105 |
|
(1) Includes $2,791,000 billed to EME, which was deconsolidated from EIX’s financial results as of December 17, 2012. (2) The nature of the services comprising these fees were assurance and related services related to the performance of the audit or review of the financial statements and not reported under “Audit Fees” above. (3) These aggregate fee amounts are composed of tax compliance fees and other tax fees. Those fees were to support compliance with federal and state tax reporting and payment requirements, including tax return review and review of tax laws, regulations or cases. (4) These fees are related to an annual subscription to an Internet accounting research service and other miscellaneous services. |
|||||||||
The Audit Committee is required to review with management and pre-approve all audit services to be performed by the independent registered public accounting firm and all non-audit services that require pre-approval under the Exchange Act. The Committee’s pre-approval responsibilities may be delegated to one or more Committee members, provided that such delegates present any pre-approval decisions to the Committee at its next meeting. The Committee has delegated such pre-approval responsibilities to the Committee Chair. The independent registered public accounting firm must assure that all audit and non-audit services provided to the Company have been approved by the Audit Committee.
During the fiscal year ended December 31, 2012, all services performed by PwC were pre-approved by the Audit Committee, irrespective of whether the services required pre-approval under the Exchange Act.
AUDIT COMMITTEE REPORT
Management is responsible for the Company’s internal controls and the financial reporting process, including the integrity and objectivity of the financial statements. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and to issue a report thereon. The Audit Committee monitors and oversees these processes. The Committee members are not accountants or auditors by profession and, therefore, have relied on certain representations from management and the independent registered public accounting firm about carrying out its responsibilities.
In connection with the December 31, 2012 financial statements, the Audit Committee:
•
Reviewed and discussed the audited financial statements with the Company’s management;
•
Discussed with PwC, the Company’s independent registered public accounting firm, the matters required by the Statement on Auditing Standards No.61 (AU Section 380), Communication with Audit Committees, as adopted by the Public Company Accounting Oversight Board; and
•
Received the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding PwC’s communications with the Audit Committee concerning independence, and discussed with PwC its independence from the Company.
Based upon these reviews and discussions, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s 2012 Annual Report on Form 10-K to be filed with the SEC.
Vanessa C.L. Chang, Chair
Jagjeet S. Bindra
France A. Córdova
Luis G. Nogales
Peter J. Taylor
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 22
ITEM 3 ADVISORY VOTE TO APPROVE THE COMPANY’S EXECUTIVE COMPENSATION
The advisory vote to approve the Company’s executive compensation, commonly known as “Say-on-Pay,” gives shareholders the opportunity to endorse or not endorse our executive compensation. This advisory vote is required by SEC rules to be provided at least once every three years. However, in 2011, our shareholders voted to hold the advisory vote every year, and the Board determined that it would be held annually. In 2012, the advisory vote to approve EIX’s executive compensation received support from approximately 94% of the votes cast.
Our executive compensation is described under “Compensation Discussion and Analysis” below. We encourage you to read it carefully. Our executive compensation program is reviewed and approved by the Compensation and Executive Personnel Committee. The Board believes our competitive compensation structure aligns executive compensation with shareholder value and serves shareholders well.
EIX and SCE request shareholder approval of the compensation paid to the Company’s named executive officers, as disclosed in this Joint Proxy Statement pursuant to the SEC’s compensation disclosure rules, including the Compensation Discussion and Analysis, the compensation tables and the narrative discussion that accompanies the compensation tables.
The Company values constructive dialogue with shareholders on compensation and other important governance matters. Because your vote is advisory, it will not be binding on the Board or the Company. However, the Compensation and Executive Personnel Committee will consider the outcome of the vote and any constructive feedback from shareholders when making future executive compensation decisions as it deems appropriate. See “Shareholder Communication and Compensation Program for 2013” in Part I of the Compensation Discussion and Analysis below.
It is expected that the next such vote will occur at the 2014 Annual Meeting.
The Board recommends that you vote “FOR” Item 3.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 23
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
This Compensation Discussion and Analysis (“CD&A”) describes the principles of our executive compensation program, how we applied those principles in compensating our named executive officers (“NEOs”) for 2012, and how we use our compensation program to drive performance. We also discuss the role and responsibilities of our Compensation and Executive Personnel Committee (the “Committee”) in determining executive compensation. The CD&A is organized to address the following:
I.
Executive summary of our compensation program
II.
What we pay and why: elements of our direct compensation
III.
How we make compensation decisions
IV.
Other benefits in our compensation program
V.
Other compensation policies and guidelines
The CD&A contains information that is relevant to your decision regarding the advisory vote to approve our executive compensation (Item 3 on your proxy card). When voting on Item 3, EIX shareholders will vote on EIX executive compensation, while SCE shareholders will vote on SCE executive compensation.
EIX and SCE NEOs for 2012
|
EIX NEOs |
Title |
|
Theodore F. Craver, Jr. |
Chairman of the Board, President and CEO |
|
W. James Scilacci |
Executive Vice President, CFO and Treasurer |
|
Robert L. Adler |
Executive Vice President and General Counsel |
|
Bertrand A. Valdman |
Senior Vice President |
|
Ronald L. Litzinger |
SCE President |
|
Pedro J. Pizarro(1) |
EME President (EIX executive officer through 12/13/2012) |
|
(1) As explained under “Our Business and Strategy” in Part I below, EME has filed for bankruptcy and is deconsolidated from EIX’s financial results. Mr. Pizarro is President of EME. He ceased to be an executive officer of EIX on December 13, 2012, but is included as an EIX NEO for 2012 in accordance with applicable SEC rules. His compensation is discussed and analyzed separately in “Compensation Arrangements with Mr. Pizarro” in Part II below. |
|
|
SCE NEOs |
Title |
|
Ronald L. Litzinger |
President |
|
Linda G. Sullivan |
Senior Vice President and CFO |
|
Stephen E. Pickett |
Executive Vice President |
|
Peter T. Dietrich |
Senior Vice President and Chief Nuclear Officer |
|
Russell C. Swartz |
Senior Vice President and General Counsel |
|
Lynda L. Ziegler |
Former Executive Vice President (SCE executive officer through 9/30/2012) |
In this CD&A, the term “CEO” means the Chief Executive Officer of EIX.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 24
I. Executive Summary
To facilitate review and understanding of our executive compensation program, certain key information is highlighted in this Executive Summary.
Our Business and Strategy
EIX conducts operations through its subsidiaries. Its core business is its subsidiary SCE, a rate-regulated electric utility that supplies electric energy to an approximately 50,000 square-mile area of southern California. Our strategy is to provide customers safe, reliable and affordable electricity as a foundation for long-term sustainable growth and shareholder value. SCE’s investment focus is on transmission and distribution infrastructure. EIX continues to see merit in the ownership and operation of competitive businesses in the electric sector, and is exploring business ventures in a number of areas related to the provision of electric power and infrastructure. Prior to December 17, 2012, EIX had a competitive power generation segment, the majority of which consisted of its indirectly, wholly-owned subsidiary, EME. On December 17, 2012, EME and certain of its wholly-owned subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. As of December 17, 2012, EME is deconsolidated from EIX’s financial results and accounted for as discontinued operations.
2012 Financial Highlights
Significant results for EIX in 2012 include:
•
Our stock price increased 9.2%, outperforming the Philadelphia Utility Index, which decreased 4.7%, and underperforming the S&P 500 Index, which increased 13.4%;
•
Our total shareholder return (“TSR”)(1) was 12.4%, which was at the 80th percentile of the Philadelphia Utility Index; and
•
Our consolidated core earnings(2) of $1.28 billion exceeded our goal of $1.17 billion.
EIX’s consolidated core earnings exceeding our goal was a key factor in above-target 2012 annual incentive awards for EIX. The determination of annual incentive awards is described under “Annual Incentives” in Part II below.
2012 NEO Pay
The following table shows the total direct compensation for 2012 compared to 2011 for the executives who were EIX NEOs both years. Total direct compensation consists of base salary, annual incentive awards and long-term incentive awards (columns (c), (e), (f) and (g) of the EIX Summary Compensation Table), but excludes other elements of pay reported in the Summary Compensation Table below.
|
EIX NEO |
2012 TDC ($) |
2011 TDC ($) |
|
Theodore F. Craver, Jr. |
8,581,493 |
7,662,639 |
|
W. James Scilacci |
2,284,230 |
2,139,001 |
|
Robert L. Adler |
2,358,538 |
2,130,760 |
|
Ronald L. Litzinger |
2,279,406 |
2,095,568 |
Higher annual incentive awards were the biggest factor in the increases in total direct compensation shown above. The increase for Mr. Craver was also attributable to increases in his base salary, target annual incentive as a percentage of base salary, and long-term incentive awards as a percentage of base salary. For Messrs. Scilacci, Adler, and Litzinger, the increases were also attributable to increases in their base salaries.
For a discussion of the reasons for changes in compensation from 2011 to 2012, see “What We Pay and Why: Elements of Direct Compensation” in Part II below.
The total direct compensation for all EIX and SCE NEOs is shown in the Summary Compensation Tables and discussed under “What We Pay and Why: Elements of Direct Compensation” in Part II below.
(1)
TSR is calculated using the difference between (i) the closing stock price for the relevant stock on the last NYSE trading day preceding the first day of the relevant period and (ii) the closing stock price for the relevant stock on the last trading day of the relevant period, and assumes all dividends during the period are reinvested on the ex-dividend date. A different methodology is used to calculate TSR for performance shares (see “Long-Term Incentives” below)
(2)
Core earnings is defined on a consolidated basis for EIX as earnings attributable to EIX shareholders less income or loss from discontinued operations and income or loss from significant discrete items that management does not consider representative of ongoing earnings, such as: exit activities, including lease terminations, sale of certain assets, early debt extinguishment costs and other activities that are no longer continuing; asset impairments and certain tax, regulatory or legal settlements or proceedings. In 2012, core earnings excluded an after-tax earnings charge during the fourth quarter of 2012 related to the bankruptcy and deconsolidation of EME, and certain other non-core items. For a reconciliation of core earnings to net income determined under GAAP, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Management Overview – Highlights of Operating Results” included as part of the Company’s 2012 Annual Report to Shareholders.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 25
Executive Compensation Practices
The table below highlights our current compensation practices for NEOs, including practices that we believe drive performance and those we have not implemented because we do not believe they would serve our shareholders’ long-term interests.
|
What We Do |
|
What We Don’t Do |
||
|
|
We tie pay to performance by making the majority of compensation “at risk” and linking it to shareholders’ interests. |
|
|
We do not have any employment contracts. |
|
|
We target the market median (50th percentile) for all elements of direct compensation. |
|
|
We do not provide perquisites. |
|
|
We use a peer group based on a recognized market index. |
|
|
We do not provide excise tax gross-ups on change in control payments. |
|
|
We balance multiple metrics for short- and long-term incentives. |
|
|
We do not have individually negotiated change in control agreements. |
|
|
We have double-trigger change in control provisions for acceleration of equity award vesting. |
|
|
We do not provide personal use of any corporate aircraft. |
|
|
We have stock ownership guidelines. |
|
|
We do not re-price underwater stock options. |
|
|
We seek shareholder feedback on our executive compensation. |
|
|
We do not permit pledging of Company securities by EIX executive officers. |
|
|
Our Compensation Committee’s compensation consultant is independent and does not provide any other services to the Company. |
|
|
We do not permit hedging of Company securities. |
How Our CEO Pay Aligns With Performance
The link between pay and performance is highlighted by trends in our CEO’s compensation. The following chart shows the alignment of our CEO’s total direct compensation over the past four years with our indexed TSR, which represents the value of an initial investment of $100 in EIX common stock at the beginning of the four-year period, and assumes that dividends are reinvested.
The data used in the chart reflects grant date fair value of stock and option awards. It does not reflect the realized value of equity awards. For example, it does not reflect the actual payout of performance shares, which was $0 for the performance periods ending in 2009, 2010, and 2012, and 63% of target for the performance period ending in 2011, as discussed below under “How Our Long Term Incentives are Tied to Shareholder Value.”
How Our CEO Pay Compares to Peer Group Median
We used the companies in the Philadelphia Utility Index as our peer group for benchmarking performance and comparing CEO compensation for 2012. The following chart shows Mr. Craver’s total direct compensation for the last four years as reported in the EIX Summary Compensation Table, relative to the peer group median. (The chart uses the 2011 peer group median as the peer group median for 2012 since proxy data showing 2012 compensation was generally unavailable for our peer group in time for inclusion in this Joint Proxy Statement.) Mr. Craver’s total direct compensation was below the peer group median for 2009 and 2010. In 2011 and 2012, Mr. Craver’s total direct compensation was above the peer group median, largely because the peer group median decreased by approximately 13.5% from 2010 to 2011. The decrease in the peer group median was largely driven by chief executive officer turnover. Six of the 19 peers elected a new chief executive officer in late 2010 or 2011, and the new chief executive officer’s 2011 total direct compensation was in most cases lower than his or her predecessor’s 2010 total direct compensation. Another significant factor was that Mr. Craver’s annual incentive awards for 2011 and 2012 were above target, largely due to strong financial performance, as discussed in the Company’s 2012 Joint Proxy Statement and under “Annual Incentives” below in this CD&A.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 26
How Our Short-Term Incentive Plan is Tied to Shareholder Value
Our annual incentive program is designed to enhance long-term shareholder value by encouraging our NEOs to focus on the financial, strategic and operational objectives that support our business strategy discussed above under “Our Business and Strategy.” Approximately half of the value of annual incentive payouts for 2012 was dependent on financial performance. The strategic and operational goals are focused on factors identified as key to the success of our overall business strategy. By focusing on performance and achievement of our overall business strategy, our short-term incentive plan is designed to enhance shareholder value.
How Our Long-Term Incentive Plan is Tied to Shareholder Value
We tie our NEOs’ long-term interests to those of shareholders by making equity a substantial portion of our executive compensation. A decline in stock price results in a decrease in value of the equity compensation. This link is demonstrated in part by the recent payout history of our performance shares. Performance share grants are designed to provide for 17% of CEO total target direct compensation and a smaller, but significant percentage of other NEO total target direct compensation. However, relative TSR as compared to our peer group for the 2010-2012, 2008-2010, 2007-2009, and 2006-2008 performance periods was below the threshold required for payout of the performance shares, resulting in no payouts.
The following chart shows the target value of performance share awards granted between 2006 and 2010 compared to the value realized upon vesting of those awards following the related three-year performance period based on our relative TSR percentile ranking in our peer group, as calculated in the manner described below for performance shares. The value realized upon vesting of the 2009 performance share awards reflects the TSR ranking and the change in the stock price between the grant date and the vesting date.
Likewise, NEOs realize value in the stock option portion of their long-term award only if the EIX stock price appreciates after the grant date. NEOs realize an increase or decrease in value compared to the target value of the restricted stock unit portion of their long-term award commensurate with the increase or decrease in value realized by shareholders from changes in the stock price and dividends over the three-year vesting period.
Shareholder Communication and Compensation Program for 2013
In 2012, the advisory vote to approve EIX’s executive compensation received support from approximately 94% of the votes cast. The Committee reviewed the results of our shareholder vote, including feedback from major shareholders. Taking the vote results and shareholder feedback into account, and considering trends in executive compensation and the best interests of shareholders, the Committee approved maintaining our executive compensation program without any significant changes for 2013.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 27
II. What We Pay and Why: Elements of Direct Compensation
Our executive compensation program seeks to achieve three fundamental objectives:
•
Attract and retain qualified executives;
•
Focus executives’ attention on specific financial, strategic and operating objectives of the Company that will increase shareholder value; and
•
Align executive pay directly with shareholder return through long-term incentives.
This section of the CD&A discusses the elements of direct compensation offered under our program, which include base salaries, annual cash incentives, and long-term equity-based incentives, and how each of these elements contributes to the objectives of our program.
We target the market median for all elements of direct compensation. The Committee’s determination of market compensation is discussed in “Use of Competitive Data” in Part III below.
The reasons for the Committee’s decision to target the median level include:
•
The policy of the applicable regulatory authorities that SCE should provide market level compensation, and the desire for internal compensation equity between EIX and SCE;
•
Above-median compensation generally has not been necessary, except occasionally for recruitment and retention purposes; and
•
Below-median compensation would create retention and recruitment difficulties.
A significant portion of our total direct compensation is tied to company performance. The following charts show that incentive compensation comprised approximately 85% of our CEO’s 2012 target total direct compensation and approximately 65% on average of our other NEOs’ 2012 target total direct compensation. Most of the target incentive compensation was in the form of long-term incentives.
This pay mix provides an opportunity for NEO compensation to reflect the upside and downside potential of company performance and helps to focus their attention on our financial, strategic and operating objectives.
Base Salary
We pay our NEOs a fixed base salary to attract talented executives. For 2012, each NEO’s base salary was evaluated according to his or her position and performance. For each position, a base salary range was determined, consisting of a minimum, median and maximum. The Committee targets the market median level of base salaries for comparable positions. None of our NEOs has a contractual right to receive a fixed base salary.
The salary increases between 2011 and 2012 shown in the Summary Compensation Tables for Messrs. Craver, Scilacci, Litzinger, and Dietrich were made to bring their salaries closer to the market median. The Committee increased Mr. Adler’s salary above the market median after making a subjective determination that the increase was appropriate in light of his overall responsibilities and contributions.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 28
Annual Incentives
Executive Incentive Compensation Plan
NEOs are eligible for annual incentive awards under the EIX Executive Incentive Compensation Plan for achieving specific financial, strategic and operational goals pre-established at the beginning of each year. The target value is stated as a percentage of base salary and is based on the market median of target annual incentive awards for comparable positions. The minimum award is $0. The maximum award is 200% of target, which the Committee’s independent compensation consultant, Frederic W. Cook & Co., Inc. (“F.W. Cook”), has advised is the most prevalent practice among the peer group companies.
The Committee determines annual incentive awards based on corporate and individual performance. The corporate performance factor is based on performance relative to the pre-established goals. For each goal category, the Committee assigned a target score equal to the relative weight given that goal category and a potential score range. In February 2013, the Committee determined the score achieved for each goal category, depending on the extent to which the goals were unmet, met or exceeded.
Separate goals were established for EIX and SCE. Annual incentive awards for the EIX NEOs (other than Mr. Litzinger) were based on EIX performance. Annual incentive awards for the SCE NEOs, including Mr. Litzinger, were based on SCE performance.
EIX Performance
Performance on the 2012 financial goal for EIX, measured primarily by consolidated core earnings and weighted 60% at target, is shown below. In February 2012, the Committee set the threshold level of consolidated core earnings, below which no incentive would be paid, at $528 million, and set target and maximum scores at $757 million and $923 million in consolidated core earnings, respectively.
These original threshold, target, and maximum levels were set under the assumption that losses at EME would be included in consolidated core earnings. However, EME has been deconsolidated from EIX’s financial results and is accounted for as discontinued operations. As a result, EME is classified as non-core for purposes of EIX’s 2012 consolidated core earnings. In February 2013, the Committee adjusted the 2012 threshold, target, and maximum levels of consolidated core earnings to exclude EME’s results. The adjusted threshold, target, and maximum levels are $939 million, $1,168 million, and $1,334 million, respectively.
EME’s 2012 losses through the date of deconsolidation were lower (i.e., better) than the budgeted target, so the adjustment of the threshold, target, and maximum levels to exclude EME’s losses resulted in a lower financial performance score than if EME’s losses had been included and the original threshold, target, and maximum levels had been applied. For purposes of scoring financial performance, the Committee also reduced the actual consolidated core earnings from $1,278 million to $1,245 million by excluding certain deferred tax adjustments.
|
Financial Performance |
Target (million) |
Actual (million) |
Target Score |
Potential Score |
Actual Score |
||
|
Consolidated Core Earnings |
$ |
1,168 |
$ |
1,245 |
60 |
0-120 |
89 |
Performance on the 2012 strategic and operational goals for EIX, weighted a total of 40% at target, is shown below.
|
Goal Category |
Target Score |
Potential Score |
Actual Score |
|
Strategic Initiatives |
30 |
0-60 |
40 |
|
People and Culture |
10 |
0-20 |
15 |
Key factors contributing to above-target scores were:
•
Strategic Initiatives: Achieved an outcome from SCE’s 2012 General Rate Case that was in line with strategic goals. Achieved significant cost savings for SCE customers through initiatives to further the strategy of providing electricity at affordable rates. Entered into an agreement with EME and a majority of its senior unsecured noteholders (subject to bankruptcy court approval) in furtherance of strategy to resolve uncertainties and reduce business risks.
•
People and Culture: Exceeded goals for addressing results of work environment reviews.
SCE Performance
Performance on the 2012 financial goal for SCE, measured primarily by core earnings and weighted 40%, is shown below. The threshold level was $1,087 million. The maximum score was the same as target. For SCE, above-target financial performance does not increase the score. The score is capped in order to mitigate a potential perception that SCE executives may be motivated to achieve short-term earnings over the interests of other regulated utility stakeholders. For purposes of scoring financial performance, the Committee reduced the actual core earnings from $1,338 million to $1,305 million by excluding certain deferred tax adjustments.
|
Financial Performance |
Target (million) |
Actual (million) |
Target Score |
Potential Score |
Actual Score |
||
|
Core Earnings |
$ |
1,202 |
$ |
1,305 |
40 |
0-40 |
40 |
Performance on the 2012 strategic and operational goals for SCE, weighted a total of 60% at target, is shown below.
|
Goal Category |
Target Score |
Potential Score |
Actual Score |
|
Operational and Service Excellence |
25 |
0-65 |
20 |
|
Strategic Initiatives |
25 |
0-65 |
60 |
|
People and Culture |
10 |
0-30 |
15 |
Key factors contributing to above and below target scores were:
•
Operational and Service Excellence: Workplace safety goals were not met.
•
Strategic Initiatives: Achieved an outcome from the 2012 General Rate Case that was in line with strategic goals. Achieved significant cost savings for customers through initiatives to further our strategy of providing electricity at affordable rates.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 29
•
People and Culture: Exceeded goals for addressing results of work environment reviews.
2012 Annual Incentive Results
Based on 2012 performance, the corporate performance factors for EIX and SCE were 144% and 135% of target, respectively.These factors were determined by adding the “Actual Scores” noted above. The Committee has discretion to increase or decrease the corporate performance factor from the amount determined by application of the scoring matrix. The Committee exercised discretion to reduce EIX’s corporate performance factor from 144%, as determined by application of the matrix, to 135%, to match SCE’s corporate performance factor.
The Committee determined the annual incentive award for each NEO by multiplying the target percentage by the corporate performance factor and an individual performance factor. Individual performance factors were determined by the Committee in its discretion, based on its assessment of each NEO’s performance and achievements for the year and relative impact and contribution compared to executives in similar roles. The maximum award is two times the target percentage. The resulting annual incentive awards to our EIX NEOs were as follows:
|
EIX NEOs |
Annual Incentive Target (% of salary) |
Individual Performance Factor
|
Annual Incentive Award (% of salary) |
|||
|
Theodore F. Craver, Jr. |
115 |
% |
110 |
% |
171 |
% |
|
W. James Scilacci |
70 |
% |
105 |
% |
99 |
% |
|
Robert L. Adler |
70 |
% |
130 |
% |
123 |
% |
|
Bertrand A. Valdman |
55 |
% |
105 |
% |
78 |
% |
|
Ronald L. Litzinger |
70 |
% |
105 |
% |
99 |
% |
Target and actual annual incentive award results for all NEOs are shown in the Grants of Plan-Based Awards tables and the Summary Compensation Tables, respectively.
Impact of Other Plans
Mr. Dietrich also participated in a retention and performance incentive plan (“SONGS Plan”) for executives employed at the San Onofre Nuclear Generating Station (“SONGS”). The SONGS Plan provided that half of Mr. Dietrich’s targeted annual incentive for each of 2010, 2011 and 2012 would be determined under the SONGS Plan, and the actual incentive awards under the SONGS Plan could range from zero to 200% of target. The other half of Mr. Dietrich’s 2012 annual incentive was determined under the EIX Executive Incentive Compensation Plan as described above for SCE NEOs. The portion of Mr. Dietrich’s annual incentive determined under the SONGS Plan for 2010 through 2012 was aggregated, and that aggregate amount was then apportioned across the three years covered by the plan. Thirty percent of any award otherwise earned under the SONGS Plan was deferred to June 30, 2013 and subject to the executive’s continued employment through that date. The SONGS Plan also provided for a three-year supplemental bonus opportunity following 2012. However, since both nuclear reactors at SONGS have been shut down since January 2012, the SCE Committee determined that it would instead be appropriate to determine all of Mr. Dietrich’s annual incentive for 2012 using the methodology described above for the EIX Executive Incentive Compensation Plan. With respect to the three-year supplemental bonus opportunity under the SONGS Plan, the SCE Committee determined that a supplemental award of $196,056 was appropriate after reviewing SONGS performance since 2010, with 30% of the award subject to Mr. Dietrich’s continued employment through June 30, 2013. The 2012 target and maximum annual incentive award amounts for Mr. Dietrich under the SONGS Plan are in the SCE Grants of Plan-Based Awards table below. The 2012 SONGS Plan annual incentive award for Mr. Dietrich, as well as his supplemental bonus, are reflected in the SCE Summary Compensation Table below.
To qualify annual incentive awards as deductible performance-based compensation under Section 162(m) of the Internal Revenue Code, the EIX Committee adopted the EIX 2012 Executive Annual Incentive Program (“162(m) Program”). Under this Program, an overall maximum annual incentive award for 2012 was established for each participating EIX NEO as a specified percentage of an annual incentive award pool. The aggregate award pool had a maximum value equal to 1.5% of EIX’s 2012 consolidated core earnings. The actual annual incentive awarded to each participating EIX NEO under the Executive Incentive Compensation Plan for 2012 was less than the applicable maximum under the 162(m) Program. Thus, all such compensation was tax-deductible.
Long-Term Incentives
We provide our NEOs with long-term incentives that are directly linked to the value provided to EIX shareholders. All of our long-term incentives are awarded as equity instruments reflecting, or valued by reference to, EIX Common Stock. Long-term incentive awards are made under the EIX 2007 Performance Incentive Plan.
Long-Term Equity Mix
In 2012, each NEO’s long-term incentive award value was in the form of 50% non-qualified stock options, 25% performance shares, and 25% restricted stock units as shown in the chart below.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 30
The Committee believes the long-term incentive award allocations strike an appropriate balance among equity awards that reward:
•
Absolute shareholder return (non-qualified stock options);
•
Relative shareholder return and earnings (performance shares); and
•
Shareholder value through retention over a multi-year vesting period (restricted stock units).
More than 50% of our long-term equity mix is performance-based. In addition to the performance shares, we believe stock options are performance-based because NEOs will realize value only if the market value of the EIX Common Stock appreciates over time.
Value of Long-Term Equity
In December 2011, the Committee approved the target long-term incentive award value for each officer for the upcoming year. The target value is stated as a percentage of base salary and is based on the market median level of target long-term incentive award values for comparable positions.
For 2012, the Committee kept the same target long-term incentive award value for each NEO, except Mr. Craver. His target was increased by ten percentage points to move it closer to market median.
The Committee approved grants of stock options, performance shares, and restricted stock units to the NEOs on February 22, 2012, with a grant date of March 5, 2012. The grant date value of each award is listed in the Grants of Plan-Based Awards tables below.
The Committee approved the award values and methodology for converting those values into the number of options, performance shares, and restricted stock units at the time of each long-term incentive grant. The number of options for an NEO was determined by dividing the option award by the grant date value of an option using a Black-Scholes Merton valuation model. As to TSR performance shares, the conversion formula involved dividing the award by the grant date value of the TSR performance shares using a Standard Monte Carlo simulation model. As to EPS performance shares and restricted stock units, the respective grant date value was converted into a specific number of EPS performance shares or units, respectively, by dividing the grant date value by the closing price of a share of EIX Common Stock on the grant date. The aggregate grant date values of NEOs’ 2012 long-term incentive awards are reflected in columns (e) and (f) of the Summary Compensation Tables.
Stock Options
Each stock option granted may be exercised to purchase one share of EIX Common Stock at an exercise price equal to the closing price of a share of EIX Common Stock on the applicable grant date. Options vest over a four-year period, subject to continued employment, with one-fourth of each award generally vesting and becoming exercisable at the beginning of each year.
Performance Shares
Performance shares reward performance over three years against pre-established metrics. Each performance share awarded is a contractual right to receive one share of EIX Common Stock or its cash equivalent if performance and continued service vesting requirements are satisfied. The amount realized in the performance share portion of an NEO’s long-term award can range from zero to 200% of target, and depends on the performance against pre-established metrics. The performance share awards provide for reinvested dividend equivalents. For each dividend declared for which the ex-dividend date falls within the performance period and after the date of grant, the NEO will be credited with an additional number of target performance shares subject to the same terms and conditions as the original performance shares.
For performance shares granted in 2012, two metrics will be used for measuring payouts, with each metric weighted 50%. One of the two performance metrics is based on the percentile ranking of EIX’s TSR for the three-year performance period compared to the TSR of each stock in EIX’s peer group for the same period. The following chart provides the percentile ranking and corresponding payout levels:
|
Payout Levels |
TSR Ranking |
Payout |
|
Below Threshold |
<25th Percentile |
0 |
|
Threshold |
25th Percentile |
25% of Target |
|
Target |
50th Percentile |
Target |
|
Maximum |
≥75th Percentile |
200% of Target |
If EIX achieves a TSR ranking between the 25th percentile and the 50th percentile or between the 50th percentile and the 75th percentile, the number of shares paid will be interpolated on a straight-line basis with discrete intervals at every 5th percentile. For purposes of determining performance share payouts, TSR is calculated using the difference between (i) the average closing stock price for the relevant stock for the 20 trading days ending with the last NYSE trading day preceding the first day of the performance period and (ii) the average closing stock price for the relevant stock for the 20 trading days ending with the measurement date, and assumes all dividends are reinvested on the ex-dividend date.
The second performance metric for performance shares granted in 2012 is based on EIX’s three-year average annual core earnings per share (“EPS”), measured against target levels. Core EPS is defined as GAAP basic EPS, excluding income or loss from discontinued operations and income or loss from significant discrete items that are not representative of ongoing earnings. The Committee establishes the EPS target for each calendar year in February of that year. After the three-year performance period, the Committee will certify the EPS performance multiple for each calendar year in the performance period, based on EIX’s actual EPS performance as a percentage of the EPS target for that year, in accordance with the following chart:
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 31
|
Performance Level |
Actual EPS as % of Target EPS |
EPS Performance Multiple |
|
|
Below Threshold |
<80 |
% |
0 |
|
Threshold |
80 |
% |
0.25x |
|
Target |
100 |
% |
1.0x |
|
Maximum |
≥120 |
% |
2.0x |
If EIX’s EPS for a year as a percentage of target EPS is between 80% and 100% or between 100% and 120%, the EPS performance multiple will be interpolated on a straight-line basis, with discrete intervals at every 4th percentile. The EPS performance multiples achieved for each calendar year in the three-year performance period will be averaged, and the resulting average will determine the performance share payout as a multiple of target.
The performance shares generally are paid half in EIX Common Stock and half in cash having a value equal to the EIX Common Stock that otherwise would have been delivered. EIX converts a portion of the awards otherwise payable in stock to cash to the extent necessary to satisfy minimum tax withholding or any governmental levies. NEOs may elect to defer payment of the portion of performance shares payable in cash under the Executive Deferred Compensation Plan.
The performance shares granted in 2010 utilized only one metric—the TSR metric described above—except that the threshold for a payout was set as a 40th percentile TSR ranking. EIX stock performance from 2010-2012 relative to the peer group did not meet this threshold. As a result, there was no payout from the 2010 performance share grants. There was also no payout from 2006, 2007, or 2008 performance share grants. For 2012 performance share grants, the Committee set the threshold for payout at a 25th percentile TSR ranking, which is in alignment with our peers according to F.W. Cook. For payout values of performance share awards granted over the last five years, see the “Value of CEO Performance Shares” chart under “How Our Long-Term Incentives are Tied to Shareholder Value” in the Executive Summary above.
Restricted Stock Units
Each restricted stock unit awarded is a contractual right to receive one share of EIX Common Stock if continued service vesting requirements are satisfied. The restricted stock units for NEOs provide for reinvested dividend equivalents. For each dividend declared for which the ex-dividend date falls within the vesting period, the NEO will be credited with an additional number of restricted stock units subject to the same terms and conditions as the original restricted stock units.
The restricted stock units are paid in EIX Common Stock, except EIX converts awards to cash having a value equal to the stock that otherwise would have been delivered to satisfy minimum tax withholding and governmental levies. The EIX Committee may elect to pay any restricted stock units in cash rather than shares of EIX Common Stock if and to the extent that payment in shares would exceed the applicable share limits of the EIX 2007 Performance Incentive Plan.
Acceleration of Long-Term Equity
If an NEO terminates employment after reaching age 65, or age 61 with five years of service, (i) stock options will vest and continue to become exercisable as scheduled, (ii) performance shares will be retained with vesting based on the applicable performance metrics, and (iii) restricted stock units will vest and become payable as scheduled; in each instance, subject to a pro-rated reduction if the NEO retires within the year of grant. Messrs. Craver, Adler, Pickett, and Swartz are eligible for these accelerated vesting provisions. If an NEO dies or becomes disabled while employed, stock options and restricted stock units will immediately vest and become exercisable and payable, respectively, and performance shares will be retained.
Compensation Arrangements with Mr. Pizarro
Based on market data reviewed by F.W. Cook, the Committee determined that Mr. Pizarro’s 2011 salary, target annual incentive award, and target long-term incentive award grant value were below the market median for comparable positions. Accordingly, the Committee approved the following changes in Mr. Pizarro’s compensation for 2012 to bring his compensation level closer to the market median: an increase in base salary as reflected in the EIX Summary Compensation Table, an increase in his target annual incentive award from 65% to 70% of base salary, and an increase in his target long-term incentive award grant value from 140% to 160% of base salary. Mr. Pizarro was initially a participant in the EIX Executive Incentive Compensation Plan for 2012. In December 2012, the independent Compensation Committee of the EME Board of Directors (“Independent EME Committee”) withdrew EME from participation in the EIX Executive Incentive Compensation Plan and established a short-term incentive award program for EME executives for 2012 (“2012 EME Program”), based on the 2012 goals and target awards previously established for EME executives under the EIX Executive Incentive Compensation Plan. EME paid a $332,500 award to Mr. Pizarro under the 2012 EME Program, which was 100% of his target bonus opportunity. The payout target was based on EME’s financial performance, measured by core adjusted EBITDA, exceeding 2012 goals, and the exercise of discretion by the Independent EME Committee to limit payouts to target in light of EME’s restructuring issues. Mr. Pizarro’s long-term incentive awards for 2012 were a mix of stock options, performance shares and restricted stock units as described above under Long-Term Incentives.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 32
III. How We Make Compensation Decisions
Role of Compensation Committee and Executive Officers
The Committee is responsible for reviewing and determining the compensation paid to executive-level Company officers, including the NEOs. The Committee annually reviews all components of compensation for our CEO and other NEOs. This review encompasses all forms of compensation, including base salary, annual and long-term incentives, and other benefits, as well as amounts pursuant to retirement and non-qualified deferred compensation plans.
Toward the start of each year, the Committee approves the base salary range, and the target and maximum potential annual and long-term incentive award values for each officer. The annual and long-term incentive target awards are stated as percentages of base salary and are based on the market median of target annual and long-term incentive award values for comparable positions. Each February, after performance results for the prior year are finalized, the Committee determines annual incentive awards for the prior year and performance share payouts for the prior performance period. At that time, the Committee also approves base salary changes and long-term incentive grants for the current year. Base salary changes are effective in March of each year.
The CEO provides the Committee with recommendations regarding the compensation of the NEOs (other than his own). Other NEOs participate in developing and reviewing executive compensation recommendations, but do not participate in recommendations regarding their own compensation.
In determining the compensation of the CEO, the Committee Chair solicits input on his performance from the non-employee directors. The Chair reports to the Committee on the input received. The Committee discusses the report and determines the compensation of the CEO in executive session without the CEO present. The Chair also reports to the Board in a non-management executive session on the input received and the Committee’s compensation determination.
For Company officers who are not EIX executive officers, the Committee has authorized the CEO and the EIX executive responsible for executive compensation matters to jointly approve special relocation, recruitment and retention awards within specific limits pre-approved by the Committee. Mid-year compensation determinations for newly hired and promoted officers who are not EIX executive officers that are within guidelines previously approved by the Committee do not require Committee approval.
Tally Sheets
The Committee reviewed tally sheets for the EIX NEOs. Tally sheets provide the Committee with information about the following components of compensation paid over the three-year period ending December 31, 2012:
•
Cash compensation (base pay and annual incentives);
•
Equity award values (stock options, performance shares and restricted stock units); and
•
Changes in pension values and non-qualified plan earnings.
The tally sheets also provide the amounts payable in the event of voluntary or involuntary separation from service, death or disability, or a change in control resulting in termination.
The Committee also reviews additional information regarding long-term incentives, including stock program statistics on share usage, analysis of current exercise values of prior option grants, and a summary of current and past performance share results.
Role of the Committee’s Independent Compensation Consultant
The Committee has retained F.W. Cook to assist in the evaluation of officer compensation, including the NEOs; however, the Committee makes all decisions regarding our executives’ compensation. Generally, this assistance includes helping the Committee identify industry trends and norms for executive compensation; reviewing and identifying the appropriate peer group companies and pay surveys; and evaluating relevant executive compensation data for these companies.
During 2012, F.W. Cook performed the following specific services:
•
Provided a presentation on executive compensation trends and competitive evaluation of total direct compensation for executives;
•
Reviewed Committee agendas and supporting materials before each meeting, and raised questions/issues with management and the Committee Chair, as appropriate;
•
Reviewed drafts and commented on the CD&A for the proxy statement and related compensation tables; and
•
Provided recommendations on CEO total compensation to the Committee at its February meeting, without prior review by our CEO.
In addition, an F.W. Cook representative attended Committee meetings and communicated directly with the Committee as needed. F.W. Cook did not perform any services for the Company unrelated to the Committee’s responsibilities for our compensation programs, and all interactions with management were incidental to its work for the Committee.
The Committee retains sole authority to hire F.W. Cook, approve its compensation, determine the nature and scope of its services, evaluate its performance, and terminate its engagement. Pursuant to SEC rules, the Committee assessed and determined that no conflict of interest exists with respect to the engagement of F.W. Cook as the Committee’s compensation consultant.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 33
Use of Competitive Data
The Committee uses peer group data and data from pay surveys by Towers Watson and AonHewitt to determine market compensation for our NEOs. The Committee targets the market median for all elements of direct compensation.
The Committee decided to use the companies in the Philadelphia Utility Index as the peer group for benchmarking performance and comparing NEO compensation for 2012. The Philadelphia Utility Index has been used by the Committee as the basis for the peer group since 2005. Use of an established market index for peer group purposes is consistent with the way in which investors evaluate performance across companies within an industry.
|
2012 Peer Group Companies Philadelphia Utility Index |
|
|
AES Corporation |
Entergy |
|
Ameren |
Exelon |
|
American Electric Power |
First Energy |
|
CenterPoint Energy |
NextEra Energy |
|
Consolidated Edison |
Northeast Utilities |
|
Constellation Energy* |
PG&E Corporation |
|
Covanta |
Public Service Enterprise Group |
|
Dominion Resources |
Southern Company |
|
DTE Energy |
Xcel Energy |
|
Duke Energy | |
|
* Constellation Energy was replaced by El Paso Electric in the Philadelphia Utility Index after Entergy acquired Constellation Energy. |
|
EIX is near the peer group median in revenues and market capitalization. For the four quarters ending September 30, 2012, EIX’s revenues of $13.0 billion were approximately 3% above the peer group median of $12.6 billion (ranking 10th out of the 20 companies in the peer group), based on reported revenues. As of December 31, 2012, EIX’s market capitalization of $14.7 billion was approximately 3% below the peer group median of $15.1 billion (ranking 11th out of 20).
F.W. Cook provided the Committee with benchmarking data from peer group proxy statements. In addition, the Committee received base salary, target annual incentive, and target long-term incentive grant value data from the Towers Watson 2011 Energy Services, the Towers Watson 2011 General Industry, and the AonHewitt 2011 Total Compensation Measurement pay surveys. The pay survey data included compensation information from utilities, other energy companies, and companies in other industries with comparable revenues, in order to reflect the range of the Company’s competitors for executive talent and provide a robust set of information to make compensation decisions. The pay survey data was presented to the Committee in aggregated form. The Committee does not consider the identities of the individual companies in the survey data to be material for its decision-making process, and the individual companies were not provided to the Committee.
The specific components of the market data and the relative weighting used to calculate a market median varied for each NEO position, based on the availability of sufficient comparative data for the position, and were reviewed by F.W. Cook. Market median levels for 2012 were projected from available data with input from F.W. Cook.
Although the Committee targets the market median, it may vary from market median after taking into account individual performance, internal equity, or other factors it considers important.
Risk Considerations
Our executive compensation policy directs that our total compensation structure should not encourage inappropriate or excessive risk-taking. The Committee takes risk into consideration when reviewing and approving executive compensation.
As specified in its charter, and with the assistance of F.W. Cook and Company management, the Committee reviewed the Company’s compensation programs for executives and for employees generally and has concluded that these programs do not create risks that are reasonably likely to have a material adverse effect on the Company.
In particular, in concluding that the current executive compensation program does not encourage inappropriate or excessive risk-taking, the Committee noted the following characteristics which limit risk:
•
Annual incentives are balanced with long-term incentives to lessen the risk that short-term objectives might be pursued to the detriment of long-term value;
•
Goals for annual incentive programs are varied (not focused on just one metric) and include risk management, safety and compliance goals, and are subject to Committee review and discretion as to the ultimate award payment for executives;
•
Long-term incentive awards are subject to a multi-year vesting schedule;
•
The ultimate value of equity grants is not solely dependent on stock price due to the use of relative TSR and EPS for performance shares;
•
Stock ownership guidelines require top officers to hold company stock worth two to six times their salary; and
•
Executive retirement and deferred compensation benefits are unfunded and thus depend in part on the continued solvency of the Company.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 34
IV. Other Benefits
Post-Employment Benefits
The NEOs receive retirement benefits under qualified and non-qualified defined-benefit and defined-contribution retirement plans. The SCE Retirement Plan and the 401(k) Plan are both qualified retirement plans in which the NEOs participate on substantially the same terms as other participating employees.
Due to limitations imposed by ERISA and the Internal Revenue Code, the benefits payable to the NEOs under the SCE Retirement Plan and the 401(k) Plan are limited. Because we do not believe that it is appropriate for retirement benefits to be reduced because of limits under ERISA and the Internal Revenue Code, we have established the Executive Retirement Plan and the Executive Deferred Compensation Plan that permit our NEOs to receive the full amount of benefits that would be paid under the qualified plans but for such limitations, and certain additional benefits.
For descriptions of the tax-qualified and non-qualified defined benefit pension plans and the Executive Deferred Compensation Plan, see the narrative below to the “Pension Benefits” and “Non-Qualified Deferred Compensation” tables, respectively.
The Company also sponsors survivor and disability benefit plans in which the NEOs are eligible to participate.
Severance and Change in Control Benefits
Our policy regarding severance protection for NEOs stems from its importance in recruiting and retaining executives. Executives are recruited from well-compensated positions in other companies or have attractive opportunities with other companies. We believe offering one year’s worth of compensation and benefits if any officer is involuntarily severed without cause offers financial security to offset the risk of leaving another company or foregoing an opportunity with another company. Severance benefits are not offered for resignation for “good reason,” except in the event of a change in control. The Company also provides severance protection for non-executive employees whose positions are eliminated.
The current executive compensation plans offer additional benefits in the event of a change in control of EIX. We believe that the occurrence, or expected occurrence, of a change-in-control transaction would create uncertainty regarding continued employment for NEOs. This uncertainty would result from the fact that many change-in-control transactions result in significant organizational changes, particularly at the senior executive level.
To encourage the NEOs to remain employed with the Company during a time when their prospects for continued employment following the transaction would be uncertain, and to permit them to remain focused on the Company’s interests during the change in control, the NEOs would be provided with enhanced severance benefits if their employment were actually or constructively terminated without cause within a defined period of a change in control. Constructive termination would include occurrences such as a material diminution in duties or salary, or a substantial relocation.
Given that none of the NEOs has an employment agreement that provides for fixed positions or duties, or for a fixed base salary or annual incentive award, we believe that a constructive termination severance trigger is needed to prevent potential acquirors from having an incentive to constructively terminate an NEO’s employment to avoid paying any severance benefits at all. We do not provide excise tax gross-ups on change-in-control severance benefits for any of our executives. We do not believe that NEOs should be entitled to receive their cash severance benefits merely because a change-in-control transaction occurs. Therefore, the payment of cash severance benefits is subject to a double-trigger where an actual or constructive termination of employment would also have to occur before payment.
However, if a change in control occurs where EIX is not the surviving corporation, and following the transaction, outstanding equity awards would not be continued or assumed, then NEOs would receive immediate vesting of their outstanding equity awards as described under “Potential Payments Upon Termination or Change in Control” below.
We believe it is appropriate to fully vest equity awards in change-in-control situations where EIX is not the surviving corporation and the equity awards are not assumed, whether or not employment is terminated, because such a transaction effectively ends the NEOs’ ability to realize any further value with respect to the equity awards. However, restricted stock units will continue, in connection with a change in control, to vest and be paid on the original schedule unless the award is terminated in connection with the change in control in accordance with special rules under Code Section 409A, or the officer’s employment is terminated involuntarily not for cause or constructively terminated within a specified period around the change in control.
For detailed information on the estimated potential payments and benefits payable to NEOs in the event of their termination of employment, including following a change in control of the Company, see “Potential Payments Upon Termination or Change in Control” below.
Perquisites
All perquisites were eliminated for our NEOs effective January 2012.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 35
V. Other Compensation Policies and Guidelines
Tax-Deductibility
Section 162(m) generally disallows a tax deduction by public companies for compensation over $1,000,000 paid to chief executive officers and certain other most highly compensated executive officers unless certain tests are met. While EIX’s first priority is to achieve its executive compensation objectives, it will generally attempt to design and administer its executive compensation program to preserve the deductibility of compensation payments.
Under the EIX 2007 Performance Incentive Plan, non-qualified stock options, performance shares and annual incentive awards awarded to the EIX NEOs are structured to constitute performance-based compensation within the meaning of Section 162(m). However, restricted stock units are not deductible performance-based compensation within the meaning of Section 162(m). This is consistent with EIX’s philosophy that its goal of preserving the deductibility of compensation is secondary in importance to achievement of its compensation objectives.
Stock Ownership Guidelines
To underscore the importance of linking executive and shareholder interests, the Company has adopted stock ownership guidelines that require the NEOs to own EIX Common Stock or equivalents in an amount ranging from two to six times their annual base salary. The stock ownership guidelines for the NEOs are as follows:
•
Mr. Craver – six times salary
•
Messrs. Scilacci, Adler, and Litzinger – three times salary
•
Ms. Sullivan and Messrs. Valdman, Pickett, Dietrich and Swartz – two times salary
The NEOs are expected to achieve their ownership targets within five years from the date they became subject to the guidelines. EIX Common Stock owned outright, shares held in the 401(k) Plan, and vested and unvested restricted stock units which do not depend on performance measures are included in determining compliance with the guidelines. Shares that NEOs have the right to acquire through the exercise or payout of stock options and performance shares are not included in determining compliance until such time as the options or performance shares are actually exercised, or paid, as the case may be, and the shares are acquired. All of the NEOs currently meet their stock ownership requirements under these guidelines.
Hedging and Pledging Policy
Under the Company’s Insider Trading Policy, hedging related to Company securities, including EIX shares, is prohibited for all directors and employees, including NEOs. In addition, EIX executive officers may not pledge Company securities as collateral for loans. Directors are required to get pre-approval for any transactions involving Company securities. No directors have pledged any EIX or SCE securities.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 36
COMPENSATION COMMITTEE REPORT
The Committee has reviewed and discussed with management the Compensation Discussion and Analysis section of this Joint Proxy Statement. Based upon this review and the discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis section be included in the Company’s 2012 Annual Report on Form 10-K and this Joint Proxy Statement.
Richard T. Schlosberg, III, Chair
Vanessa C.L. Chang
Bradford M. Freeman
Luis G. Nogales
Brett White
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Ms. Chang became a Committee member when the Committees were reappointed on April 26, 2012, and Dr. Rosser ceased to be a Committee member on that date. The other Committee members whose names appear on the Compensation Committee Report above were Committee members during all of 2012. Under applicable SEC rules, there were no interlocks or insider participation on the Committee.
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 37
EXECUTIVE COMPENSATION
I. Summary Compensation Tables
The following tables present information regarding compensation of the EIX and SCE NEOs for service during 2012, and for service during 2011 and/or 2010 for individuals who were also an EIX or SCE NEO in those years.
The tables below were prepared in accordance with SEC requirements. The total compensation presented below does not necessarily reflect the actual total compensation received by our NEOs. Specifically, the amounts under “Stock Awards” do not represent the actual amounts paid to or realized by our NEOs for these awards during 2010-2012, but represent the aggregate grant date fair value of awards granted in those years for financial reporting purposes. Likewise, the amounts under “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” do not reflect amounts paid to or realized by our NEOs during 2010-2012, but represent the change in the actuarial present values of such NEOs’ accumulated pension benefits based on the assumptions we use for financial reporting purposes.
EIX Summary Compensation Table
|
Name and Principal Position/ |
Year |
Salary ($) |
Bonus ($) |
Stock Awards(1) ($) |
Option Awards(2) ($) |
Non-Equity Incentive Plan Compensation ($) |
Change in Pension Value and Non- Non- Qualified Deferred Compensation Earnings(3) ($) |
All Other Compen- sation(4) ($) |
Total ($) |
|
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
(j) |
|
Theodore F. Craver, Jr. EIX Chairman of the Board, President and CEO |
2012 |
1,192,115 |
— |
2,670,074 |
2,670,004 |
2,049,300 |
2,782,262 |
126,830 |
11,490,586 |
|
2011 |
1,142,115 |
— |
2,501,274 |
2,501,250 |
1,518,000 |
2,968,854 |
212,029 |
10,843,523 |
|
|
2010 |
1,096,115 |
— |
2,268,778 |
2,268,755 |
1,633,500 |
2,100,132 |
174,260 |
9,541,540 |
|
|
W. James Scilacci EIX Executive Vice President, CFO and Treasurer |
2012 |
577,635 |
— |
565,587 |
565,503 |
575,505 |
1,364,237 |
48,787 |
3,697,254 |
|
2011 |
562,635 |
— |
550,886 |
550,880 |
474,600 |
1,254,988 |
91,423 |
3,485,412 |
|
|
2010 |
544,231 |
— |
529,414 |
529,377 |
519,800 |
894,459 |
76,455 |
3,093,736 |
|
|
Robert L. Adler EIX Executive Vice President and General Counsel |
2012 |
562,635 |
— |
550,923 |
550,877 |
694,103 |
358,716 |
48,922 |
2,766,175 |
|
2011 |
550,000 |
— |
536,306 |
536,254 |
508,200 |
301,967 |
85,020 |
2,517,747 |
|
|
2010 |
548,173 |
— |
481,256 |
481,255 |
571,700 |
203,246 |
73,298 |
2,358,927 |
|
|
Bertrand A. Valdman EIX Senior Vice President |
2012 |
450,000 |
|
222,890 |
222,753 |
350,831 |
151,805 |
20,682 |
1,418,961 |
|
Ronald L. Litzinger SCE President |
2012 |
561,846 |
— |
578,516 |
578,423 |
560,621 |
763,529 |
44,988 |
3,087,923 |
|
2011 |
545,000 |
— |
584,551 |
584,517 |
381,500 |
734,379 |
89,940 |
2,919,887 |
|
|
2010 |
516,981 |
— |
495,697 |
495,690 |
464,000 |
546,776 |
91,616 |
2,610,760 |
|
|
Pedro J. Pizarro(5) EME President |
2012 |
471,058 |
— |
456,115 |
456,004 |
332,500 |
386,002 |
66,962 |
2,168,639 |
|
2011 |
450,000 |
— |
362,283 |
362,253 |
345,200 |
289,971 |
79,941 |
1,889,648 |
|
|
2010 |
398,125 |
— |
277,668 |
277,621 |
368,600 |
241,232 |
58,554 |
1,621,800 |
|
|
(1) Stock awards consist of performance shares and restricted stock units granted under the 2007 Performance Incentive Plan in the year indicated. The performance share and restricted stock unit amounts shown in the EIX Summary Compensation Table reflect the aggregate grant date fair value of these awards computed in accordance with FASB ASC Topic 718. For performance shares, the value is reported as of the grant date based on the probable outcome of performance conditions, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. For a discussion of the assumptions and methodologies used to calculate these amounts, see the discussion contained in (i) Note 8 (Compensation and Benefit Plans) to EIX’s Consolidated Financial Statements, included as part of the Company’s 2012 Annual Report to Shareholders and (ii) similar footnotes to EIX’s Consolidated Financial Statements for prior years when the awards were granted. |
|||||||||
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 38
|
The table below shows the maximum value of performance share awards included in the EIX Summary Compensation Table at the grant date assuming that the highest level of performance conditions will be achieved. The performance period for the 2010 performance shares ended on December 31, 2012, and EIX’s TSR relative to the peer group was below the threshold required for a payout; therefore, the actual value realized with respect to the 2010 performance shares was zero. The performance periods for the 2011 and 2012 performance shares have not ended. |
|
|
Name |
Maximum Performance Share Potential as of Grant Date for 2012 Awards ($) |
Maximum Performance Share Potential as of Grant Date for 2011 Awards ($) |
Maximum Performance Share Potential as of Grant Date for 2010 Awards ($) |
|
|
Theodore F. Craver, Jr. |
2,670,124 |
2,501,287 |
2,268,760 |
|
|
W. James Scilacci |
565,604 |
550,896 |
529,425 |
|
|
Robert L. Adler |
550,948 |
536,313 |
481,260 |
|
|
Bertrand A. Valdman |
222,938 |
— |
— |
|
|
Ronald L. Litzinger |
578,572 |
584,519 |
495,690 |
|
|
Pedro J. Pizarro |
456,132 |
362,276 |
277,680 |
|
(2) Option awards consist of non-qualified stock options granted under the 2007 Performance Incentive Plan in the year indicated. The option amounts shown in the EIX Summary Compensation Table reflect the aggregate grant date fair value of these awards computed in accordance with FASB ASC Topic 718. For a discussion of the assumptions and methodologies used to calculate these amounts, see the discussion of options contained in (i) Note 8 (Compensation and Benefit Plans) to EIX’s Consolidated Financial Statements, included as part of the Company’s 2012 Annual Report to Shareholders and (ii) similar footnotes to EIX’s Consolidated Financial Statements for prior years when the awards were granted. (3) The reported amounts include : (i) 2012 interest on deferred compensation account balances considered under SEC rules to be at above-market rates for Mr. Craver $496,087; Mr. Scilacci $139,479; Mr. Adler $11,806; Mr. Valdman $24,640; Mr. Litzinger $57,989; and Mr. Pizarro $103,791; and (ii) the 2012 aggregate change in the actuarial present value of the accumulated benefit under the SCE Retirement Plan and the EIX Executive Retirement Plan for Mr. Craver $2,286,175; Mr. Scilacci $1,224,758; Mr. Adler $346,910; Mr. Valdman $127,165; Mr. Litzinger $705,540; and Mr. Pizarro $282,211. (4) Amounts reported for 2012 represent Company contributions to the 401(k) Plan and the Executive Deferred Compensation Plan for each NEO other than Mr. Craver. For Mr. Craver, the amount reported for 2012 includes $116,830 for Company contributions to the 401(k) Plan and the Executive Deferred Compensation Plan, and a $10,000 charitable matching gift. As a director, Mr. Craver was permitted to participate in the charitable matching gift program for directors described in footnote (5) to the “Director Compensation” table above. (5) Mr. Pizarro was an EIX executive officer through December 13, 2012. |
||||
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 39
SCE Summary Compensation Table
|
Name and Principal Position/ |
Year |
Salary ($) |
Bonus ($) |
Stock Awards(1) ($) |
Option Awards(2) ($) |
Non-Equity Incentive Plan Compensation ($) |
Change in Pension Value and Non- Non- Qualified Deferred Compensation Earnings(3) ($) |
All Other Compen- sation(4) ($) |
Total ($) |
|
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
(j) |
|
Ronald L. Litzinger SCE President |
2012 |
561,846 |
— |
578,516 |
578,423 |
560,621 |
763,529 |
44,988 |
3,087,923 |
|
2011 |
545,000 |
— |
584,551 |
584,517 |
381,500 |
734,379 |
89,940 |
2,919,887 |
|
|
2010 |
516,981 |
— |
495,697 |
495,690 |
464,000 |
546,776 |
91,616 |
2,610,760 |
|
|
Linda G. Sullivan SCE Senior Vice President and CFO |
2012 |
341,300 |
— |
161,336 |
161,267 |
316,769 |
339,275 |
27,221 |
1,347,168 |
|
2011 |
341,300 |
— |
153,591 |
153,587 |
225,300 |
354,316 |
63,326 |
1,291,420 |
|
|
2010 |
340,042 |
— |
153,621 |
153,588 |
256,200 |
228,564 |
49,085 |
1,181,100 |
|
|
Stephen E. Pickett SCE Executive Vice President |
2012 |
400,000 |
— |
180,117 |
180,001 |
297,000 |
233,797 |
30,508 |
1,321,424 |
|
2011 |
400,000 |
— |
198,060 |
198,005 |
220,000 |
585,844 |
68,783 |
1,670,692 |
|
|
2010 |
379,454 |
— |
170,134 |
170,104 |
297,300 |
515,645 |
56,565 |
1,589,202 |
|
|
Peter T. Dietrich(5) SCE Senior Vice President and Chief Nuclear Officer |
2012 |
460,690 |
— |
251,449 |
251,374 |
522,520 |
155,704 |
411,166 |
2,052,903 |
|
2011 |
435,000 |
— |
195,775 |
195,756 |
284,910 |
94,434 |
815,893 |
2,021,768 |
|
|
2010 |
58,558 |
— |
195,768 |
195,752 |
71,912 |
9,208 |
1,317,764 |
1,848,962 |
|
|
Russell C. Swartz SCE Senior Vice President and General Counsel |
2012 |
350,700 |
— |
165,774 |
165,709 |
299,454 |
483,855 |
21,945 |
1,487,437 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lynda L. Ziegler(6) Former SCE Executive Vice President |
2012 |
386,100 |
— |
243,258 |
243,247 |
— |
671,836 |
848,313 |
2,392,754 |
|
2011 |
386,100 |
— |
216,239 |
216,221 |
175,700 |
595,719 |
64,603 |
1,654,581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Stock awards consist of performance shares and restricted stock units granted under the 2007 Performance Incentive Plan in the year indicated. The performance share and restricted stock unit amounts shown in the SCE Summary Compensation Table reflect the aggregate grant date fair value of these awards computed in accordance with FASB ASC Topic 718. For performance shares, the value is reported as of the grant date based on the probable outcome of performance conditions, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. For a discussion of the assumptions and methodologies used to calculate these amounts, see the discussion contained in (i) Note 8 (Compensation and Benefit Plans) to EIX’s Consolidated Financial Statements, included as part of the Company’s 2012 Annual Report to Shareholders and (ii) similar footnotes to EIX’s Consolidated Financial Statements for prior years when the awards were granted. |
|||||||||
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 40
The table below shows the maximum value of performance share awards included in the SCE Summary Compensation Table at the grant date assuming that the highest level of performance conditions will be achieved. The performance period for the 2010 performance shares ended on December 31, 2012, and EIX’s TSR relative to the peer group was below the threshold required for a payout; therefore, the actual value realized with respect to the 2010 performance shares was zero. The performance periods for the 2011 and 2012 performance shares have not ended.
|
|
Name |
Maximum Performance Share Potential as of Grant Date for 2012 Awards ($) |
Maximum Performance Share Potential as of Grant Date for 2011 Awards ($) |
Maximum Performance Share Potential as of Grant Date for 2010 Awards ($) |
|
|
Ronald L. Litzinger |
578,572 |
584,519 |
495,690 |
|
|
Linda G. Sullivan |
161,427 |
153,596 |
153,595 |
|
|
Stephen E. Pickett |
180,163 |
198,045 |
170,105 |
|
|
Peter T. Dietrich |
251,552 |
195,752 |
195,757 |
|
|
Russell C. Swartz |
165,797 |
— |
— |
|
|
Lynda L. Ziegler |
243,277 |
216,257 |
148,525 |
|
(2) Option awards consist of non-qualified stock options granted under the 2007 Performance Incentive Plan in the year indicated. The option amounts shown in the SCE Summary Compensation Table reflect the aggregate grant date fair value of these awards computed in accordance with FASB ASC Topic 718. For a discussion of the assumptions and methodologies used to calculate these amounts, see the discussion of options contained in (i) Note 8 (Compensation and Benefit Plans) to EIX’s Consolidated Financial Statements, included as part of the Company’s 2012 Annual Report to Shareholders and (ii) similar footnotes to EIX’s Consolidated Financial Statements for prior years when the awards were granted. (3) The reported amounts include (i) 2012 interest on deferred compensation account balances considered under SEC rules to be at above-market rates for Mr. Litzinger $57,989; Ms. Sullivan $30,644; Mr. Pickett $233,797; Mr. Dietrich $35,909; Mr. Swartz $74,123; and Ms. Ziegler $79,942; and (ii) the 2012 aggregate change in the actuarial present value of the accumulated benefit under the SCE Retirement Plan and the EIX Executive Retirement Plan for Mr. Litzinger $705,540; Ms. Sullivan $308,631; Mr. Pickett $0; Mr. Dietrich $119,795; Mr. Swartz $409,732; and Ms. Ziegler $591,894. (4) Amounts reported for 2012 represent Company contributions to the 401(k) Plan and the Executive Deferred Compensation Plan for each NEO other than Mr. Dietrich and Ms. Ziegler. For Mr. Dietrich, the amount reported for 2012 includes $36,166 of Company contributions to the 401(k) Plan and the Executive Deferred Compensation Plan, and payments totaling $375,000 that were paid pursuant to the terms of his employment offer in 2010. For Ms. Ziegler, the amount reported for 2012 includes $23,746 of Company contributions to the 401(k) Plan and the Executive Deferred Compensation Plan, and $824,568 of cash severance benefits paid to Ms. Ziegler or accrued in connection with her separation from the Company on September 30, 2012. See “Potential Payments Upon Termination or Change in Control” below for a discussion of Ms. Ziegler’s severance benefits. (5) The Non-Equity Incentive Plan Compensation reported for Mr. Dietrich for 2012 consists of an Executive Incentive Compensation Plan award of $224,662 and vested SONGS Plan awards of $297,858. (6) Ms. Ziegler was an SCE executive officer through September 30, 2012. |
||||
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 41
II. Grants of Plan-Based Awards
The following tables present information regarding the incentive plan awards granted to the EIX and SCE NEOs during 2012 under the EIX 2007 Performance Incentive Plan and the potential 2012 target and maximum amount of performance-based annual incentive awards payable under the 162(m) Program, the EIX Executive Incentive Compensation Plan (EICP), or the SONGS Plan. See the CD&A above for further information regarding award terms reported in the tables below and for discussions regarding NEO stock ownership guidelines, dividends paid on equity awards, and allocations between short-term and long-term compensation.
EIX Grants of Plan-Based Awards Table
|
Name |
Grant Date |
Date of Committee Action |
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) |
|
Estimated Future Payouts Under Equity Incentive Plan Awards(2) |
All Other Stock Awards: Number of Shares of Stock or Units (#) |
All Other Option Awards: Number of Securities Underlying Options (#) |
Exercise or Base Price of Option Awards ($/Sh) |
Grant Date Fair Value of Stock and Option Awards(3) ($) |
||||
|
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold Number of Shares of Stock or Units (#) |
Target Number of Shares of Stock or Units (#) |
Maximum Number of Shares of Stock or Units (#) |
||||||||
|
(a) |
(b) |
|
(c) |
(d) |
(e) |
|
(f) |
(g) |
(h) |
(i) |
(j) |
(k) |
(l) |
|
Theodore F. Craver, Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
|
511,495 |
43.10 |
2,670,004 |
|
TSR Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
2,634 |
10,537 |
21,074 |
|
|
|
667,519 |
|
EPS Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
1,290 |
15,488 |
30,976 |
|
|
|
667,533 |
|
Restricted Stock Units |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
30,975 |
|
|
1,335,023 |
|
Annual Incentive |
N/A |
1,380,000 |
2,760,000 |
| |||||||||
|
W. James Scilacci |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
|
108,334 |
43.10 |
565,503 |
|
TSR Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
558 |
2,232 |
4,464 |
|
|
|
141,397 |
|
EPS Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
273 |
3,281 |
6,562 |
|
|
|
141,411 |
|
Restricted Stock Units |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
6,561 |
|
|
282,779 |
|
Annual Incentive |
N/A |
406,000 |
812,000 |
| |||||||||
|
Robert L. Adler |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
|
105,532 |
43.10 |
550,877 |
|
TSR Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
543 |
2,174 |
4,348 |
|
|
|
137,723 |
|
EPS Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
266 |
3,196 |
6,392 |
|
|
|
137,748 |
|
Restricted Stock Units |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
6,391 |
|
|
275,452 |
|
Annual Incentive |
N/A |
395,500 |
791,000 |
| |||||||||
|
Bertrand A. Valdman |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
|
42,673 |
43.10 |
222,753 |
|
TSR Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
220 |
880 |
1,760 |
|
|
|
55,748 |
|
EPS Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
107 |
1,293 |
2,586 |
|
|
|
55,728 |
|
Restricted Stock Units |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
2,585 |
|
|
111,414 |
|
Annual Incentive |
|
|
N/A |
247,500 |
495,000 |
|
|
|
|
|
|
|
|
|
Ronald L. Litzinger |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
|
110,809 |
43.10 |
578,423 |
|
TSR Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
570 |
2,283 |
4,566 |
|
|
|
144,628 |
|
EPS Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
279 |
3,356 |
6,712 |
|
|
|
144,644 |
|
Restricted Stock Units |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
6,711 |
|
|
289,244 |
|
Annual Incentive |
N/A |
395,500 |
791,000 |
| |||||||||
|
Pedro J. Pizarro |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
|
87,357 |
43.10 |
456,004 |
|
TSR Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
450 |
1,800 |
3,600 |
|
|
|
114,030 |
|
EPS Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
220 |
2,646 |
5,292 |
|
|
|
114,043 |
|
Restricted Stock Units |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
5,291 |
|
|
228,042 |
|
Annual Incentive |
N/A |
332,500 |
665,000 |
| |||||||||
|
(1) Maximum amounts reported are lower than the maximum annual incentive award payable under the 162(m) Program to participating NEOs for purposes of Section 162(m). For information regarding the description of performance-based conditions under the 162(m) Program and the EICP, see “Annual Incentives” in Part II of the CD&A above. (2) Half of each NEO’s 2012 performance share award value was granted in performance shares subject to a TSR vesting metric and the other half of the award value was granted in performance shares subject to an EPS vesting metric. The TSR and EPS components of each NEO’s award are subject to different threshold and other vesting requirements. In order to reflect these differences, the table above reports the TSR and EPS components of each NEO’s 2012 performance share award as separate awards. See “Long-Term Incentives” in Part II of the CD&A above for information regarding the terms of the awards, the description of performance based vesting conditions, and the criteria for determining the amounts payable. (3) The amounts shown for performance shares represent the grant date fair value of the performance share awards in 2012 determined in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeiture. There is no guarantee that, if and when the 2012 performance awards vest, they will have this value. Assumptions used in the calculation of these amounts are referenced in footnotes (1) and (2) to the EIX Summary Compensation Table. |
|||||||||||||
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 42
SCE Grants of Plan-Based Awards Table
|
Name |
Grant Date |
Date of Committee Action |
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) |
|
Estimated Future Payouts Under Equity Incentive Plan Awards(2) |
All Other Stock Awards: Number of Shares of Stock or Units (#) |
All Other Option Awards: Number of Securities Underlying Options (#) |
Exercise or Base Price of Option Awards ($/Sh) |
Grant Date Fair Value of Stock and Option Awards(3) ($) |
||||
|
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold Number of Shares of Stock or Units (#) |
Target Number of Shares of Stock or Units (#) |
Maximum Number of Shares of Stock or Units (#) |
||||||||
|
(a) |
(b) |
|
(c) |
(d) |
(e) |
|
(f) |
(g) |
(h) |
(i) |
(j) |
(k) |
(l) |
|
Ronald L. Litzinger |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
|
110,809 |
43.10 |
578,423 |
|
TSR Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
570 |
2,283 |
4,566 |
|
|
|
144,628 |
|
EPS Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
279 |
3,356 |
6,712 |
|
|
|
144,644 |
|
Restricted Stock Units |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
6,711 |
|
|
289,244 |
|
Annual Incentive |
N/A |
395,500 |
791,000 |
| |||||||||
|
Linda G. Sullivan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
|
30,894 |
43.10 |
161,267 |
|
TSR Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
159 |
637 |
1,274 |
|
|
|
40,354 |
|
EPS Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
78 |
936 |
1,872 |
|
|
|
40,342 |
|
Restricted Stock Units |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
1,871 |
|
|
80,640 |
|
Annual Incentive |
N/A |
187,715 |
375,430 |
| |||||||||
|
Stephen E. Pickett |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
|
34,483 |
43.10 |
180,001 |
|
TSR Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
177 |
711 |
1,422 |
|
|
|
45,042 |
|
EPS Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
87 |
1,045 |
2,090 |
|
|
|
45,040 |
|
Restricted Stock Units |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
2,089 |
|
|
90,036 |
|
Annual Incentive |
N/A |
220,000 |
440,000 |
| |||||||||
|
Peter T. Dietrich |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
|
48,156 |
43.10 |
251,374 |
|
TSR Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
248 |
992 |
1,984 |
|
|
|
62,843 |
|
EPS Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
121 |
1,459 |
2,918 |
|
|
|
62,883 |
|
Restricted Stock Units |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
2,917 |
|
|
125,723 |
|
Annual Incentive |
|
|
|
|
|
| |||||||
|
(EICP) |
|
|
N/A |
128,013 |
256,025 |
|
|
|
|
|
|
|
|
|
(SONGS Plan) |
N/A |
128,013 |
384,038 |
| |||||||||
|
Russell C. Swartz |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
|
31,745 |
43.10 |
165,709 |
|
TSR Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
163 |
654 |
1,308 |
|
|
|
41,431 |
|
EPS Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
80 |
962 |
1,924 |
|
|
|
41,462 |
|
Restricted Stock Units |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
1,923 |
|
|
82,881 |
|
Annual Incentive |
N/A |
192,885 |
385,770 |
|
|
|
|
|
|
|
|
||
|
Lynda L. Ziegler |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
|
46,599 |
43.10 |
243,247 |
|
TSR Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
240 |
960 |
1,920 |
|
|
|
60,816 |
|
EPS Performance Shares |
3/5/2012 |
2/22/2012 |
|
|
|
|
117 |
1,411 |
2,822 |
|
|
|
60,814 |
|
Restricted Stock Units |
3/5/2012 |
2/22/2012 |
|
|
|
|
|
|
|
2,822 |
|
|
121,628 |
|
Annual Incentive |
N/A |
250,965 |
501,930 |
| |||||||||
|
(1) Maximum amounts reported are lower than the maximum annual incentive award payable under the 162(m) Program to participating NEOs for purposes of Section 162(m). For information regarding the description of performance-based conditions under the 162(m) Program and the EICP, see “Annual Incentives” in Part II of the CD&A above. (2) Half of each NEO’s 2012 performance share award value was granted in performance shares subject to a TSR vesting metric and the other half of the award value was granted in performance shares subject to an EPS vesting metric. The TSR and EPS components of each NEO’s award are subject to different threshold and other vesting requirements. In order to reflect these differences, the table above reports the TSR and EPS components of each NEO’s 2012 performance share award as separate awards. See “Long-Term Incentives” in Part II of the CD&A above for information regarding the terms of the awards, the description of performance based vesting conditions, and the criteria for determining the amounts payable. (3) The amounts shown for performance shares represent the grant date fair value of the performance share awards in 2012 determined in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeiture. There is no guarantee that, if and when the 2012 performance awards vest, they will have this value. Assumptions used in the calculation of these amounts are referenced in footnotes (1) and (2) to the SCE Summary Compensation Table. |
|||||||||||||
EDISON INTERNATIONAL / SCE – 2013 Joint Proxy Statement 43
III. Outstanding Equity Awards at Fiscal Year-End
The following tables present information regarding the outstanding equity awards held by the EIX and SCE NEOs at the end of 2012. Outstanding equity awards consist of non-qualified stock options, performance shares, and restricted stock units. Column (d) “Equity Incentive Plan Awards” has been omitted in accordance with SEC rules because no such awards were outstanding at the end of 2012.
EIX Outstanding Equity Awards Table
|
Name |
Grant Date |
Option Awards |
|
Stock Awards |
||||||
|
Number of Securities Underlying Unexercised Options Exercisable(1) (#) |
Number of Securities Underlying Unexercised Options Unexercisable(1) (#) |
Option Exercise Price ($) |
Option Expiration Date(1) |
Number of Shares or Units of Stock That Have Not Vested(2) (#) |
Market Value of Shares or Units of Stock That Have Not Vested(2)(3) ($) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(4) (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(3)(4) ($) |
|||
|
(a) |
|
(b) |
(c) |
(e) |
(f) |
|
(g) |
(h) |
(i) |
(j) |
|
Theodore F. Craver, Jr. |
1/2/2004 |
116,165 |
— |
21.8750 |
1/2/2014 |
|
— |
— |
— |
— |
|
1/3/2005 |
100,644 |
— |
31.9350 |
1/2/2015 |
|
— |
— |
— |
— |
|
|
2/16/2005 |
72,000 |
— |
32.7100 |
1/2/2015 |
|
— |
— |
— |
— |
|
|
3/1/2006 |
60,020 |
— |
44.2950 |
1/4/2016 |
|
— |
— |
— |
— |
|
|
3/5/2007 |
84,699 |
— |
47.4100 |
1/3/2017 |
|
— |
— |
— |
— |
|
|
3/3/2008 |
87,793 |
— |
49.9500 |
1/2/2018 |
|
— |
— |
— |
— |
|
|
6/30/2008 |
23,149 |
— |
51.3800 |
1/2/2018 |
|
— |
— |
— |
— |
|
|
9/30/2008 |
240,385 |
— |
39.9000 |
1/2/2018 |
|
— |
— |
— |
— |
|
|
3/3/2009 |
373,761 |
124,588 |
24.8400 |
1/2/2019 |
|
— |
— |
— |
— |
|
|
3/3/2010 |
230,566 |
230,563 |
33.3000 |
1/2/2020 |
|
— |
— |
— |
— |
|
|
3/3/2011 |
110,091 |
330,270 |
37.9600 | |||||||