Joint EIX and SCE Proxy Statement
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT No. ___)
Filed by the Registrant X
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec.240.14a-12
Edison International
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed purtuant to Exchange Act Rule 0-11 (set
forth the amount on which the filing fee is calculated and state how it was determined)
------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
-----------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.
-----------------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
LOGO SUNBURST
-------------------------------------------------------------------------------------------------------------------
EDISON INTERNATIONAL
AND
SOUTHERN CALIFORNIA EDISON COMPANY
JOINT NOTICE OF ANNUAL MEETINGS OF SHAREHOLDERS
AND
JOINT PROXY STATEMENT
ANNUAL MEETINGS
May 15, 2003
-------------------------------------------------------------------------------------------------------------------
EDISON INTERNATIONAL LOGO SOUTHERN CALIFORNIA EDISON COMPANY LOGO
April 7, 2003
Dear Shareholder:
You are invited to attend the Edison International and Southern California Edison Company ("SCE") Annual
Meetings of Shareholders. The meetings will be held jointly on Thursday, May 15, 2003, at the Hyatt Regency Long
Beach, 200 South Pine Avenue, Long Beach, California, at 10:00 a.m., Pacific Time.
Your voting instructions are enclosed, and the applicable 2002 Annual Report and Joint Proxy Statement
are enclosed or are being delivered to you electronically. The Joint Proxy Statement discusses the matters to be
considered at the annual meetings. At the meetings, we will report on company activities, and shareholders of
Edison International and SCE will elect Directors who will oversee company affairs until the next annual
meetings. Also at the meetings, Edison International shareholders will have the opportunity to vote on a
shareholder proposal regarding the shareholder rights agreement.
Your Boards of Directors and Management recommend that you vote "FOR" the nominees for Directors listed
in the Joint Proxy Statement. For reasons stated in the Joint Proxy Statement, the Edison International Board of
Directors and Management recommend that you vote "AGAINST" the shareholder proposal.
Whether or not you expect to attend the annual meetings, and regardless of the number of shares you own,
your vote is important. If you hold shares in both Edison International and SCE, you will receive a proxy or
voting instruction card for each company. Certain shareholders also have the option to vote shares by telephone
or the Internet as well as by mail. Voting by any of these methods, if available, will ensure that you are
represented at the annual meetings even if you are not present. Please review the instructions on the proxy card
regarding these options. If you hold your shares in an account with a broker or other nominee, you will receive
separate instructions from that nominee which may also allow telephone and Internet voting.
Please take the first opportunity to ensure that your shares are represented at the annual meetings.
Voting promptly will save your Companies the cost of additional solicitations.
Your continued interest in the business of Edison International and SCE is appreciated.
Sincerely,
/s/ John E. Bryson
John E. Bryson
Chairman of the Board, President
and Chief Executive Officer
Edison International
Chairman of the Board
Southern California Edison Company
EDISON INTERNATIONAL LOGO SOUTHERN CALIFORNIA EDISON COMPANY LOGO
===============================================================
JOINT NOTICE OF ANNUAL MEETINGS
OF SHAREHOLDERS
===============================================================
Date: Thursday, May 15, 2003
Time: 10:00 a.m., Pacific Time
Place: Hyatt Regency Long Beach
200 South Pine Avenue
Long Beach, California 90802
Matters to be voted upon by Edison International and Southern California Edison Company ("SCE") shareholders:
o Election of 11 Directors to the Edison International Board and 12 Directors to the SCE Board. The
names of the Director nominees are:
John E. Bryson Ronald L. Olson
Alan J. Fohrer* James M. Rosser
Bradford M. Freeman Richard T. Schlosberg, III
Joan C. Hanley Robert H. Smith
Bruce Karatz Thomas C. Sutton
Luis G. Nogales Daniel M. Tellep
* Alan J. Fohrer is a Director nominee for the SCE Board only.
o Any other business that may properly come before the meetings.
Matter to be voted upon by Edison International shareholders only:
o Shareholder proposal regarding the shareholder rights agreement.
Your Boards of Directors and Management recommend that you vote "FOR" the nominees for Directors listed in
the Joint Proxy Statement. The Edison International Board of Directors and Management recommend that you vote
"AGAINST" the shareholder proposal.
Record Date: Shareholders of record at the close of business on March 17, 2003, and valid
proxyholders for those shareholders, are entitled to vote at the annual meetings.
Voting Instructions: To vote by mail, you may complete, sign, date and return the enclosed proxy card in
the envelope provided. If you hold shares in your own name, or through the Edison
International Dividend Reinvestment and Stock Purchase Plan or the Stock Savings
Plus Plan for employees, you may vote by telephone or via the Internet by following
the instructions on your proxy card. There is a special number assigned to you on
the proxy card to safeguard your vote. Voting by telephone and via the Internet is
available 24 hours a day, seven days a week, through 9:00 p.m. Pacific Time, May 14,
2003, except for Stock Savings Plus Plan shareholders who must vote by 2:00 p.m.,
Pacific Time, on May 12, 2003. If you hold your shares in an account with a broker
or other nominee, you will receive separate instructions from that nominee which may
also allow telephone and Internet voting.
Electronic Access: Edison International and SCE are electronically delivering their Proxy Statements
and Annual Reports for annual and special shareholders' meetings to certain
shareholders. If you hold Edison International shares through the Stock Savings
Plus Plan, and you use company E-mail in the ordinary course of performing your job
and are expected to log-on to E-mail routinely to receive mail and communications,
we are delivering these documents to you electronically. If you are a registered
shareholder and/or Stock Savings Plus Plan shareholder who does not have a
company-assigned E-mail address, and you previously have elected to receive these
documents electronically, we also are delivering these documents to you
electronically. The Edison International and SCE Joint Proxy Statement for the
annual meetings, and the respective 2002 Annual Reports are available on Edison
International's Internet site at http://www.edisoninvestor.com. If these documents
are being delivered to you electronically, you may also request paper copies through
the date of the annual meetings by contacting the SCE Law Department, Corporate
Governance, 2244 Walnut Grove Avenue, P. O. Box 800, Rosemead, California 91770 or
at 626-302-2662; and after the annual meetings by contacting Edison International,
Investor Relations, 2244 Walnut Grove Avenue, P. O. Box 999, Rosemead, California
91770 or at 626-302-1937.
Page 2
Meeting Admission: The following individuals will be admitted to the meetings:
o Shareholders of record on the record date, and their spouses or domestic partners;
o Individuals holding written proxies executed by shareholders of record on the record date;
o Shareholders who provide a letter or account statement from their broker or other nominee showing that
they owned stock held in the name of the broker or other nominee on the record date, and their spouses
or domestic partners; and
o Other individuals with the approval of the Edison International or SCE Secretary.
Shareholders which are companies or other entities are limited to three authorized representatives at the
meetings. Cameras, recording devices and other electronic devices will not be permitted at the meetings.
Dated: April 7, 2003
For the Boards of Directors,
/S/ BEVERLY P. RYDER
BEVERLY P. RYDER
Vice President and Secretary
Edison International
Secretary
Southern California Edison Company
----------------------------------------------------------------------------------------------------------------
IMPORTANT
----------------------------------------------------------------------------------------------------------------
In order to assure a quorum of shareholders at the annual meetings, please complete, sign, date and
mail the enclosed card promptly; or (if available to you) give your instructions by telephone or the Internet
as described on the enclosed card. If you mail the enclosed card, please sign (do not print) your name
exactly as it appears on the card. When signing as attorney, executor, administrator, trustee or guardian,
include your full title. Please have an authorized officer whose title is indicated sign for corporations,
charitable institutions and governmental units. For partnerships, have a partner sign and indicate
partnership status.
----------------------------------------------------------------------------------------------------------------
Page 3
TABLE OF CONTENTS
-----------------
Introduction - Solicitation of Proxies.........................................................................1
Questions and Answers on Voting, Proxies, and Attendance.......................................................2
Householding of Proxy Statements and Annual Reports............................................................6
Electronic Access to Proxy Statements and Annual Reports.......................................................7
Election of Directors, Nominees for Election...................................................................8
Board Committees and Subcommittees............................................................................10
Board Meetings and Attendance.................................................................................14
Director Compensation.........................................................................................14
Stock Ownership of Directors and Executive Officers...........................................................18
Section 16(a) Beneficial Ownership Reporting Compliance.......................................................19
Stock Ownership of Certain Shareholders.......................................................................20
Executive Compensation........................................................................................22
Summary Compensation Table...............................................................................22
Option/SAR Grants in 2002................................................................................24
Aggregated Option/SAR Exercises in 2002 and FY-End Option/SAR Values.....................................26
Long-Term Incentive Plan Awards in Last Fiscal Year......................................................27
Pension Plan Table.......................................................................................29
Other Retirement Benefits................................................................................30
Employment Contracts and Termination of Employment Arrangements..........................................31
Compensation and Executive Personnel Committees' Report on Executive Compensation.............................32
Compensation and Executive Personnel Committees' Interlocks and Insider Participation.........................36
Certain Relationships and Transactions........................................................................36
Other Management Transactions.................................................................................37
Five-Year Stock Performance Graph.............................................................................38
Change in Certifying Accountant...............................................................................39
Audit Committees' Report......................................................................................40
Independent Accountant Fees...................................................................................41
Independent Accountants for 2003..............................................................................42
To be Voted on by Edison International Shareholders Only: Shareholder Proposal
On Shareholder Rights Agreement..........................................................................43
Recommendation of Your Board of Directors Against Item 2......................................................44
Shareholder Proposals and Nominations for 2004 Annual Meetings................................................46
Corporate Governance Practices................................................................................46
Availability of Form 10-K and Other Information...............................................................46
Other Proposed Matters........................................................................................47
EDISON INTERNATIONAL
SOUTHERN CALIFORNIA EDISON COMPANY
2244 WALNUT GROVE AVENUE
P. O. BOX 800
ROSEMEAD, CALIFORNIA 91770
======================================================================
JOINT PROXY STATEMENT
======================================================================
INTRODUCTION - SOLICITATION OF PROXIES
This Joint Proxy Statement, proxy forms, voting instructions and the 2002 Annual Reports are being
distributed together beginning April 7, 2003, to the Edison International and Southern California Edison Company
shareholders for their annual meetings. The annual meetings will be held jointly on Thursday, May 15, 2003, at
the Hyatt Regency Long Beach, 200 South Pine Avenue, Long Beach, California, at 10:00 a.m., Pacific Time. The
Edison International and Southern California Edison Company Boards of Directors are soliciting proxies from you
for use at their annual meetings, or at any adjournment or postponement of the meetings. Proxies allow properly
designated individuals to vote on your behalf at an annual meeting. This Proxy Statement discusses the matters
to be voted on at the annual meetings.
In this Proxy Statement:
o "Annual Meeting" means the Edison International annual meeting of shareholders and the Southern
California Edison Company annual meeting of shareholders, which are being held jointly.
o "Companies" means Edison International and SCE.
o "DRP" means the Edison International shareholder plan known as the Dividend Reinvestment and Stock
Purchase Plan.
o "Executive Officers" of Edison International and SCE means their respective Chairman of the Board, Chief
Executive Officer, President, any Vice President in charge of a principal business unit, division or
function, and any other person who performs a similar significant policy-making function, including
Executive Officers of any Edison International or SCE subsidiaries, for the reporting period or as of the
date covered by this Proxy Statement.
o "SCE" means Southern California Edison Company.
o "SSPP" means the employee benefit plan known as the Stock Savings Plus Plan through which participants
may hold Edison International shares.
o Holding shares in "street name" means your shares are held in an account through your broker, bank,
fiduciary, custodian or other nominee, and you are considered the beneficial owner of those shares.
Your name does not appear on the Companies' records as a shareholder.
o Holding shares as a "registered" shareholder or "of record" means your shares are registered in your own
name directly with the Companies rather than in street name, and that stock certificates are issued in
your own name. Shares held in your DRP plan account are also included.
QUESTIONS AND ANSWERS ON VOTING, PROXIES AND ATTENDANCE
Q: What am I voting on?
A: Edison International and SCE shareholders are voting on the election of 11 Directors for Edison
International and 12 Directors for SCE, respectively, and any other matters properly brought before the
meeting. Additionally, Edison International shareholders will vote on a shareholder proposal regarding the
shareholder rights agreement. The election of Directors is Item 1 on your proxy card. The shareholder
proposal is Item 2 on the Edison International proxy card.
Q. Who can vote?
A. All shareholders of record at the close of business on March 17, 2003, are entitled to vote at the meeting.
Holders of Edison International's Common Stock are entitled to one vote per share on each item of Edison
International business. On each item of SCE business, holders of SCE Cumulative Preferred Stock are
entitled to six votes per share; holders of SCE $100 Cumulative Preferred Stock are entitled to two votes
per share; and holders of SCE Common Stock are entitled to one vote per share. Shareholders who hold shares
that are not registered in their own name (shares held in street name) may vote their shares by giving
voting instructions to the registered shareholders. Shares held by participants in the SSPP are registered
in the name of the plan trustee and will be voted by the plan trustee in its capacity as the Edison
International stock fund investment manager, subject to each participant's instructions. Fractional shares,
such as those held in the SSPP and in the DRP, may not be voted. All shares of SCE Common and Preferred
Stocks vote together as one class.
Q: Who can attend the meeting?
A: All shareholders on the record date, or their duly appointed proxies, may attend the meeting. Shareholders'
spouses or domestic partners are also welcome. Seating, however, is limited. All shareholders will be
required to pass through a security inspection area, and they must check in at the registration desk at the
meeting. The registration desk will open at 8:00 a.m., Pacific Time. If you are a registered or SSPP
shareholder, an admission pass is included with these materials. Please bring your pass with you to present
at the registration desk for admission. If you do not have an admission pass and you are a registered
shareholder, we will be able to verify your share ownership from the share register upon presentation of
proper identification. If your shares are not registered in your name, you will need to bring a letter or
an account statement from your broker, plan trustee or other nominee reflecting your stock ownership as of
the record date to provide proper identification. A shareholder which is a corporation, partnership,
association or other entity is limited to three authorized representatives at the Annual Meeting. Cameras,
recording devices and other electronic devices will not be permitted at the meeting.
Page 2
Q: How do I vote?
A: Your vote is important. You can save us the expense of a second mailing by voting promptly. Please follow
the appropriate instructions described below.
If you are a registered or SSPP shareholder, you may choose one of the following ways to cast your vote:
o Vote by mail: Complete, date, sign and mail the proxy/voting instruction card in
the enclosed postage prepaid envelope.
o Vote by telephone: Call 1-877-779-8683 toll free from the U.S. and Canada.
Call 201-536-8073 from outside the U.S. and Canada.
o Vote via the Internet: Access the Edison International Internet voting site
http://www.eproxyvote.com/eix
Access the SCE Internet voting site
http://www.eproxyvote.com/sce
Registered shareholders have a fourth option to cast their vote:
o Vote by ballot Attend the Annual Meeting and complete a written ballot
at the meeting: distributed at the meeting.
If you vote by telephone or via the Internet, follow the instructions on the enclosed card. You will be
asked to enter the specially assigned control number on your proxy card. Additionally, if you vote by
telephone, you will receive recorded instructions, or if you vote via the Internet, you will receive
additional instructions at the Internet site. Voting by telephone and via the Internet is available
24 hours a day, seven days a week, through 9:00 p.m., Pacific Time, May 14, 2003, except for SSPP
shareholders who must vote by 2:00 p.m., Pacific Time, on May 12, 2003.
By voting by mail, telephone or the Internet, you will authorize the individuals named on the proxy card,
referred to as the proxies, or the SSPP trustee in its capacity as Edison International stock fund
investment manager, to vote your shares according to your instructions. You are also authorizing those
persons to vote your shares on any other matter properly presented at the meeting.
If you hold shares in street name, please refer to the proxy card or other information forwarded by your
bank, broker or other holder of record to see which options are available. Typically, you may provide
voting instructions as follows:
o Vote by mail: On cards received from your broker or other nominee.
o Vote by telephone or If offered by your broker or other nominee.
via the Internet:
o Vote by ballot If you request a legal proxy from your broker or other nominee
at the meeting: and deliver the proxy to the inspector of election before or at the
meeting.
Page 3
Under California law, you or your authorized attorney-in-fact may transmit a proxy by telephone or via the
Internet. SHAREHOLDERS WHO VOTE BY TELEPHONE OR OVER THE INTERNET SHOULD NOT MAIL THE PROXY CARD.
Q: What happens if I return my proxy or vote by mail, telephone or the Internet, but I do not indicate my
voting preference?
A: If you return your proxy or vote by mail and do not indicate how you wish to vote for the nominees for
Director, the proxies and SSPP trustee will vote "FOR" election of all the nominees for Director (Item 1).
If you return your proxy or vote by mail and do not indicate how you wish to vote on the shareholder
proposal, the proxies and SSPP trustee will vote "AGAINST" the shareholder proposal (Item 2). If you enter
your control number by telephone or on the Internet and do not indicate how you wish to vote for the
nominees for Director, your shares will not be voted on the election. If you enter your control number by
telephone or on the Internet and do not indicate how you wish to vote on the shareholder proposal, your
shares will not be voted on the proposal.
Q: What happens if I do not return my proxy or provide voting instructions?
A: If you are a registered shareholder and you do not deliver voting instructions to a designated proxy or cast
a ballot at the Annual Meeting, your shares will not be voted. If you are an SSPP shareholder and you do
not deliver voting instructions to the trustee, the trustee as Edison International stock fund investment
manager may vote your shares as it chooses. If you hold your shares in street name and you do not instruct
your broker or other nominee how to vote your shares, the broker or other nominee may be authorized to vote
your shares as it chooses on the matters to be considered at the meeting. If your broker lacks this
discretionary authority to vote on an item, your shares will not be voted on that item and will be treated
as a "broker nonvote" on that item.
Q: What if I vote and then change my mind?
A: If you are a registered shareholder, you can revoke your proxy by:
o Writing to the Edison International or SCE Secretary;
o Voting again via mail, telephone or the Internet; or
o Voting in person at the Annual Meeting.
Your last vote will be the vote that is counted.
If you are an SSPP shareholder, you can revoke your voting instructions by voting again via mail, telephone
or the Internet by 2:00 p.m., Pacific Time, on May 12, 2003.
If you hold shares in street name, you should contact your broker or other nominee before the Annual Meeting
to determine whether and how you can change your voting instructions.
Q: How many votes do you need to hold the meeting?
A: As of the record date, March 17, 2003, Edison International had 325,793,886 shares of Edison International
Common Stock outstanding and entitled to vote. SCE had 5,150,198 shares of
Page 4
Cumulative Preferred Stock, 1,557,000 shares of $100 Cumulative Preferred Stock, and 434,888,104 shares of SCE
Common Stock outstanding and entitled to vote.
The holders of the Edison International Common Stock have the right to cast a total of 325,793,886 votes.
The holders of the SCE Cumulative Preferred Stock have the right to cast a total of 30,901,188 votes, the
holders of the SCE $100 Cumulative Preferred Stock have the right to cast a total of 3,114,000 votes, and
the holder of the SCE Common Stock, Edison International, has the right to cast a total of 434,888,104
votes. Voting together as a class, the SCE shareholders have the right to cast a total of 468,903,292 votes.
A quorum is required to transact business at the Annual Meeting. The presence at the Annual Meeting, in
person or by proxy, of shareholders entitled to cast at least a majority of the votes which all shareholders
are entitled to cast constitutes a quorum. If you properly return your proxy by mail, by telephone or via
the Internet, you will be considered part of the quorum, even if you abstain from voting or withhold votes,
and the proxies will vote (or not vote) your shares as you have indicated. If a broker or other nominee
holding your shares in street name votes your shares or returns a properly executed proxy representing your
shares, your shares will be considered as present and part of the quorum, even if your broker or other
nominee does not indicate a voting preference, or otherwise abstains or withholds votes, on any or all
matters.
Q: What vote is required to adopt the proposals at the meeting?
A: On Item 1, the Election of Directors, the 11 nominees receiving the highest number of affirmative or "for"
votes will be elected as Directors of Edison International and the 12 nominees receiving the highest number
of affirmative or "for" votes will be elected as Directors of SCE. Votes withheld for any of the nominees,
abstentions and broker nonvotes will have the effect of reducing the number of affirmative votes a candidate
might otherwise have received. On Item 2, the Shareholder Proposal On Shareholder Rights Agreement, the
following two votes must be obtained to adopt the proposal: (i) the affirmative vote of a majority of the
Edison International votes cast at the meeting, and (ii) the affirmative vote of at least a majority of the
votes required to constitute a quorum. In determining whether the first vote under (i) has been obtained,
abstentions and broker nonvotes are not treated as votes cast and therefore will not affect the vote. That
is, the percentage of votes cast can only be increased or decreased by casting votes for or against the
proposal, respectively. In determining whether the second vote under (ii) has been obtained, abstentions
and broker nonvotes will have the effect of votes cast against the proposal. That is, abstentions and
broker nonvotes will reduce the number of affirmative votes, and therefore reduce the total percentage of
votes, the proposal might otherwise have received.
Q: Who will count the votes?
A: EquiServe Trust Company, N.A., will tabulate the votes and act as the inspector of election. To protect the
confidentiality of votes cast under the SSPP, Edison International will not have access to any of the SSPP
shareholders' voting instructions, and SSPP voting results will only be reported in the aggregate.
Q: What shares are included on the proxy card?
A: If you hold shares in both Edison International and SCE, you will receive a proxy card for each of the
Companies. The shares listed on your card(s) represent all the shares of common stock and preferred stock
registered in your name (as distinguished from those held in street name), all whole shares held
Page 5
in the DRP, and all whole shares held in the SSPP. You will receive separate cards from your broker or other
nominee if you hold shares in street name.
Q: What does it mean if I get more than one proxy card?
A: It indicates that your shares are held in more than one account, such as two brokerage accounts, and
registered in different names. You should vote each of the proxy cards to ensure that all of your shares
are voted.
Q: How much will this proxy solicitation cost?
A: Edison International and SCE have retained D.F. King & Co., Inc. to assist them with the solicitation of
proxies for a maximum fee of $35,000, plus expenses. (This fee does not include the costs of printing and
mailing the proxy materials.) Edison International and SCE will pay these proxy solicitation costs. Some
of the directors, officers and other employees of Edison International and/or SCE also may solicit proxies
personally, by mail, by telephone or by other electronic means for no additional compensation, except for
customary overtime pay applicable to certain employees. Edison International and SCE will also reimburse
brokers and other nominees for their reasonable out-of-pocket expenses for forwarding proxy materials to the
beneficial owners of their stocks and for obtaining voting instructions.
Q: Whom may I call with any questions?
A: You may call Wells Fargo Shareholder Services at 800-347-8625 or visit their World Wide Web site at
http://www.wellsfargo.com/com/shareowner_services
Q: How do the Boards recommend I vote?
A: The Edison International and SCE Boards recommend the election of their nominees for Directors listed in
this Proxy Statement. The Edison International Board recommends that Edison International shareholders vote
against the shareholder proposal.
HOUSEHOLDING OF PROXY STATEMENTS AND ANNUAL REPORTS
If you are a registered shareholder and share an address with other registered shareholders, you may be
receiving multiple copies of the applicable Annual Report to Shareholders and Proxy Statement. You can save the
Companies money if you direct us to discontinue mailing all future multiple annual reports, proxy statements,
proxy statements combined with a prospectus, and information statements by marking the appropriate box on the
enclosed proxy card, or by following the instructions provided when you vote by telephone or over the Internet.
The Companies intend to deliver only one respective annual report, one proxy statement, one proxy statement
combined with a prospectus, and one information statement to multiple registered shareholders sharing an address
if such multiple shareholders have given their consent, and the Companies have not received contrary instructions
from one or more of such shareholders. This practice is commonly referred to as "householding." The Companies
do not plan to electronically household documents. Your consent to householding is perpetual, meaning it will
remain in effect until revoked. Eliminating duplicate mailings will not affect your receipt of future proxy
cards.
If through the date of the Annual Meeting, you decide you want a separate copy of this Joint Proxy Statement
or the applicable 2002 Annual Report, Edison International or SCE will promptly deliver your
Page 6
separate copy if you contact the SCE Law Department, Corporate Governance, 2244 Walnut Grove Avenue, P. O. Box
800, Rosemead, California 91770 or at 626-302-2662. At any time after the Annual Meeting, to resume the mailing
of individual copies of future annual reports, proxy statements, proxy statements combined with a prospectus, and
information statements to a particular account, you may contact Wells Fargo Bank, Minnesota, N.A., Attn:
Householding, P. O. Box 64854, St. Paul, Minnesota 55164-0854, or at 800-347-8625, and your request will be
effective within thirty days after receipt. After the Annual Meeting, you may request householding of these
documents, by providing Wells Fargo Bank at the address provided directly above with a written request to
eliminate multiple mailings. The written request must include names and account numbers of all shareholders
consenting to householding for a given address and must be signed by those shareholders.
Additionally, the Companies have been notified that certain brokers and other nominees will household the
Companies' annual reports and proxy statements for shareholders who hold in street name and have consented to
householding. In this case, you may request an individual copy of this Joint Proxy Statement and/or the
applicable 2002 Annual Report by contacting your broker or other nominee.
ELECTRONIC ACCESS TO PROXY STATEMENTS AND ANNUAL REPORTS
This Joint Proxy Statement and the Edison International and SCE 2002 Annual Reports are available on Edison
International's Internet site at http://www.edisoninvestor.com. Most shareholders can view future shareholder
communications including proxy statements and annual reports over the Internet instead of receiving paper copies
in the mail and save the Companies the cost of producing and mailing these documents.
If you are an SSPP shareholder, and you use company E-mail in the ordinary course of performing your job and
are expected to log-on to E-mail routinely to receive mail and communications, Edison International intends to
deliver proxy statements and annual reports to you electronically for every shareholders' meeting. You may also
request paper copies through the date of the Annual Meeting by contacting the SCE Law Department, Corporate
Governance, 2244 Walnut Grove Avenue, P. O. Box 800, Rosemead, California 91770 or at 626-302-2662; and after the
Annual Meeting by contacting Edison International, Investor Relations, 2244 Walnut Grove Avenue, P. O. Box 999,
Rosemead, California 91770 or at 626-302-1937.
If you are a registered shareholder and/or SSPP shareholder who does not have a company-assigned E-mail
address, you can choose this option by checking the appropriate box on your proxy card or by following the
instructions provided if you vote by telephone or over the Internet. In order to receive shareholder
communications electronically, you must have an E-mail account, access to the Internet through an Internet
service provider, and a Web browser that supports secure connections. Acceptance of electronic delivery of these
documents will remain in effect until withdrawn. Your consent to electronic delivery can be withdrawn at any
time by contacting Wells Fargo Bank, Minnesota, N.A., P. O. Box 64856, St. Paul, Minnesota 55164-0856 or at
800-347-8625. You may also request paper copies of the proxy materials from the date you receive this Proxy
Statement through the date of the applicable Annual Meeting by contacting the SCE Law Department, Corporate
Governance, 2244 Walnut Grove Avenue, P. O. Box 800, Rosemead, California 91770 or at 626-302-2662; and after the
Annual Meeting by contacting Edison International, Investor Relations, 2244 Walnut Grove Avenue, P. O. Box 999,
Rosemead, California 91770 or at 626-302-1937.
Page 7
If you are a registered shareholder and/or SSPP shareholder who does not have a company-assigned E-mail
address and choose to view future proxy statements and annual reports over the Internet, you will receive notice
each year containing the Internet address of those materials.
If you hold shares in street name, check the information provided by the nominee holding your shares for
instructions on how to elect to view future proxy statements and annual reports over the Internet. Your broker
or other nominee will receive notice containing the Internet address to use to access Edison International's and
SCE's Proxy Statement and Annual Reports.
For all shareholders, although there are no fees or charges for this service, there may be costs associated
with electronic access, such as usage charges from Internet access providers and telephone companies, for which
you will be responsible.
ELECTION OF DIRECTORS
Item 1 on Proxy Card
NOMINEES FOR ELECTION
Eleven Directors will be elected to the Edison International Board and twelve Directors will be elected to
the SCE Board to hold office until the next annual meeting. Should any of the nominees become unavailable to
stand for election as a Director, the proxies will have the authority to vote for substitute nominees as they
choose.
The nominees for Directors of Edison International and SCE are the same, except for Mr. Fohrer who is a
nominee for the SCE Board only. A brief biography of each nominee is presented below.
JOHN E. BRYSON
Chairman of the Board, President and Chief Executive Officer of Edison International and Chairman of the Board of SCE
(since January 1, 2003); Chairman of the Board, President and Chief Executive Officer of Edison International and
Chairman of the Board of Edison Mission Energy (an electric power generation nonutility subsidiary of Edison
International (2000-2002); Chairman of the Board and Chief Executive Officer of Edison International and SCE
(1990-1999)
Mr. Bryson has been a Director of Edison International since 1990. He was a Director of SCE from 1990 through
1999, and from January 1, 2003 to date. He is a Director of The Boeing Company, Pacific American Income Shares,
Inc. & Western Asset Funds, Inc., and The Walt Disney Company. Mr. Bryson is a graduate of Stanford University
and Yale Law School. Age 59.
ALAN J. FOHRER*
Chief Executive Officer of SCE (since January 1, 2003); Chairman of the Board and Chief Executive Officer of SCE
(2002); President and Chief Executive Officer of Edison Mission Energy (2000-2001); Chairman of the Board of
Edison Mission Energy (1999); Executive Vice President and Chief Financial Officer of Edison International
(1996-2000)
Mr. Fohrer has been a Director of SCE since 2002. Mr. Fohrer holds two degrees in civil engineering from the
University of Southern California, and received his MBA degree from California State University, Los Angeles.
Age 52.
------------------------
* Alan J. Fohrer is a nominee for Director of SCE only.
Page 8
BRADFORD M. FREEMAN
Founding Partner, Freeman Spogli & Co. (private investment company) (since 1983)
Mr. Freeman has been a Director of Edison International and SCE since 2002. He is a Director of RDO Equipment
Co. Mr. Freeman is a graduate of Stanford University, and holds an MBA degree from Harvard Business School.
Age 61.
JOAN C. HANLEY
The Former General Partner and Manager of Miramonte Vineyards (1973-1998)
Mrs. Hanley has been a Director of SCE since 1980 and a Director of Edison International since 1988. She is
Chairman of the Research and Education Institute at Harbor-UCLA Medical Center, a Director of the Harbor-UCLA
Collegium, and a Trustee of Pomona College. Mrs. Hanley is a graduate of the University of Washington. Age 70.
BRUCE KARATZ
Chairman and Chief Executive Officer of KB Home (homebuilding) (since 1993)
Mr. Karatz has been a Director of Edison International and SCE since 2002. He is a Director of Avery Dennison
Corporation, Honeywell International, Inc., The Kroger Company, and National Golf Properties, Inc. Mr. Karatz is
a graduate of The Blake School and Boston University, and holds a Law degree from the University of Southern
California. Age 57.
LUIS G. NOGALES
Managing Partner of Nogales Investors and Managing Director of Nogales Investors, LLC (private equity investment
companies) (since 2001 and 2002, respectively); President of Nogales Partners (a private equity investment
company) (1990-2001)
Mr. Nogales has been a Director of Edison International and SCE since 1993. He is a Director of The American
Balanced Fund, Arbitron Inc., The Income Fund of America, Kaufman and Broad, SA, France, and KB Home.
Mr. Nogales is a graduate of San Diego State University and Stanford Law School. Age 59.
RONALD L. OLSON
Partner of the law firm of Munger, Tolles and Olson (since 1970)
Mr. Olson has been a Director of Edison International and SCE since 1995. He is a Director of Berkshire
Hathaway, Inc., City National Corporation, and Pacific American Income Shares, Inc. & Western Asset Funds, Inc.
Mr. Olson is a graduate of Drake University and University of Michigan Law School and holds a Diploma in Law from
Oxford University. Age 61.
JAMES M. ROSSER
President of California State University, Los Angeles (since 1979)
Dr. Rosser has been a Director of SCE since 1985 and a Director of Edison International since 1988. Dr. Rosser
holds three degrees from Southern Illinois University. Age 64.
RICHARD T. SCHLOSBERG, III
President and Chief Executive Officer of The David and Lucile Packard Foundation (private family foundation)
(since 1999)
Mr. Schlosberg has been a Director of Edison International and SCE since 2002. Mr. Schlosberg is a graduate of
the United States Air Force Academy, and holds an MBA degree from Harvard Business School. Age 59.
Page 9
ROBERT H. SMITH
Managing Director of Smith & Crowley, Inc. (merchant banking) (since 1992)
Mr. Smith has been a Director of SCE since 1987 and a Director of Edison International since 1988. He is a
Director of Tarpanwear International, Inc., and a Trustee of the University of Southern California and Santa
Clara University. Mr. Smith is a graduate of the University of Southern California and holds a Law degree from
Van Norman University. Age 67.
THOMAS C. SUTTON
Chairman of the Board and Chief Executive Officer of Pacific Life Insurance Company (since 1990)
Mr. Sutton has been a Director of Edison International and SCE since 1995. He is Chairman of Pacific Select Fund
and Pacific Mutual Fund, and is a Director of Newhall Land & Farming Company and The Irvine Company. Mr. Sutton
is a graduate of the University of Toronto. Age 60.
DANIEL M. TELLEP
Retired Chairman of the Board of Lockheed Martin Corporation (aerospace industry) (1996)
Mr. Tellep has been a Director of Edison International and SCE since 1992. Mr. Tellep holds two degrees from the
University of California at Berkeley and has completed studies at Harvard University. Age 71.
BOARD COMMITTEES AND SUBCOMMITTEES
The Edison International and SCE Board Committees are the Audit Committee, Compensation and Executive
Personnel Committee, Executive Committee, Finance Committee and Nominating/Corporate Governance Committee.
Additionally, both Companies have subcommittees of the Compensation and Executive Personnel Committee and had
subcommittees of the Nominating/Corporate Governance Committee from October 2002 through February 20, 2003. The
composition of each committee and subcommittee is or was the same for Edison International and SCE, except for
the Executive Committees and the Compensation and Executive Personnel Subcommittees. The respective Edison
International and SCE Board Committees and Subcommittees held the same number of meetings in 2002, unless
otherwise indicated in the table below. The following table describes the Boards' committees and subcommittees.
Page 10
------------------------------------- --------------------------------------------------------------- ------------------
COMMITTEE NUMBER
AND SUBCOMMITTEE OF
NAME AND COMMITTEE AND MEETINGS
CURRENT MEMBERS SUBCOMMITTEE FUNCTIONS IN 2002
------------------------------------- --------------------------------------------------------------- ------------------
Audit Committees o Meets regularly with management, the independent 8
Daniel M. Tellep, Chair accountants, and the internal auditors to make inquiries
Bradford M. Freeman regarding the manner in which the responsibilities of
Richard T. Schlosberg, III each are being discharged.
Robert H. Smith
Thomas C. Sutton o Recommends to the Boards the annual appointment of the
independent accountants, Audit Committee charter
revisions, and the inclusion of the year-end audited
financial statements in the Annual Report on Form 10-K.
o Reviews with the independent accountants the scope of
audit and other engagements and the related fees, their
independence, the adequacy of internal accounting
controls, and the year-end audited financial statements.
o Reviews with management the audit plans and year-end
audited financial statements.
o Reviews information provided on legal proceedings,
environmental compliance, health and safety compliance,
information technology security, legal compliance,
business ethics monitoring and internal auditing
programs.
o Performs additional duties in accordance with rules
adopted under the Sarbanes-Oxley Act.
------------------------------------- --------------------------------------------------------------- ------------------
Compensation and o Reviews the performance and sets the compensation of Edison
Executive Personnel Committees designated elected officers, including the Executive International:
Robert H.Smith, Chair Officers. 5
Bruce Karatz
Luis G. Nogales o Approves the design of executive compensation programs. SCE
James M. Rosser 4
Thomas C. Sutton o May elect designated officers and determine their
compensation.
o Participates in executive succession planning and
management development.
Page 11
------------------------------------- --------------------------------------------------------------- ------------------
COMMITTEE NUMBER
AND SUBCOMMITTEE OF
NAME AND COMMITTEE AND MEETINGS
CURRENT MEMBERS SUBCOMMITTEE FUNCTIONS IN 2002
------------------------------------- --------------------------------------------------------------- ------------------
o Has additional duties described in the "Compensation
and Executive Personnel Committees' Report on
Executive Compensation" below.
------------------------------------- --------------------------------------------------------------- ------------------
Executive Committees o Has all the authority of the Boards between meetings Edison
Edison International except to the extent limited by the California General International:
John E. Bryson, Chair Corporation Law. None
Joan C. Hanley
Ronald L. Olson
James M. Rosser
Thomas C. Sutton
SCE
John E. Bryson, Chair(1) SCE:
Alan J. Fohrer 1
Joan C. Hanley
Ronald L. Olson
James M. Rosser
Thomas C. Sutton
------------------------------------- --------------------------------------------------------------- ------------------
Finance Committees o Regularly reviews the financial structure of their 3
Luis G. Nogales, Chair respective companies.
Bradford M. Freeman
Joan C. Hanley o The Edison International Finance Committee reviews the
Ronald L. Olson financial planning process and investment outlook for
Daniel M. Tellep Edison International and its nonutility subsidiaries,
and approves certain investments.
o The SCE Finance Committee reviews the five-year capital
expenditure outlook, financing plans, total revenue
requirements, and earnings trends of SCE, and approves
certain capital projects.
------------------------------------- --------------------------------------------------------------- ------------------
Page 12
------------------------------------- --------------------------------------------------------------- ------------------
COMMITTEE NUMBER
AND SUBCOMMITTEE OF
NAME AND COMMITTEE AND MEETINGS
CURRENT MEMBERS SUBCOMMITTEE FUNCTIONS IN 2002
------------------------------------- --------------------------------------------------------------- ------------------
Nominating/Corporate Governance o Periodically consults with management, reviews 3
Committees(2) shareholder suggestions of Director candidates, and
Joan C. Hanley, Chair identifies and makes recommendations regarding Board
Bruce Karatz composition and selection of candidates for election.
James M. Rosser
Richard T. Schlosberg, III o Periodically reviews and recommends updates to the
Corporate Governance Guidelines applicable to their
respective companies.
o Advises their respective Boards with respect to
corporate governance matters.
o Oversees the evaluation of their respective company
Boards.
------------------------------------- --------------------------------------------------------------- ------------------
Compensation and o May elect designated officers and determine their None;
Executive Personnel compensation. Took action only
Subcommittees by unanimous
Robert H. Smith, Chair o May handle certain substantive and administrative tasks written consent
At least one Compensation and related to executive compensation.
Executive Personnel Committee
member appointed by Committee
Chair
------------------------------------- --------------------------------------------------------------- ------------------
Page 13
------------------------------------- --------------------------------------------------------------- ------------------
COMMITTEE NUMBER
AND SUBCOMMITTEE OF
NAME AND COMMITTEE AND MEETINGS
CURRENT MEMBERS SUBCOMMITTEE FUNCTIONS IN 2002
------------------------------------- --------------------------------------------------------------- ------------------
Nominating/ o Temporarily formed to recommend action to the 1(3)
Corporate Governance Boards with respect to corporate governance
Subcommittees(3) matters
Joan C. Hanley, Chair
Bruce Karatz
James M. Rosser
Richard T. Schlosberg, III
------------------------------------- --------------------------------------------------------------- ------------------
(1) Mr. Bryson was appointed to this Committee and as Chair, effective January 1, 2003; Mr. Fohrer served as Chair
immediately prior to Mr. Bryson's appointment.
(2) In October 2002, the Edison International and SCE Boards formed Nominating/Corporate Governance Subcommittees
composed of independent directors to recommend actions to the Boards with respect to corporate governance
matters. Based on the Subcommittees' recommendations, the functions of the respective Nominating/Corporate
Governance Committees were increased in 2003 to include corporate governance responsibilities. Mr. Olson
served on the Committees until February 20, 2003, but did not serve on the Subcommittees.
(3) These Subcommittees ceased to exist on February 20, 2003. In addition to the meeting held in 2002, the
Subcommittees met 2 times in 2003.
For consideration by the Nominating/Corporate Governance Committees, shareholder suggestions for Director
candidates should be submitted in writing to the Secretary of Edison International and/or SCE. The deadlines and
additional procedures for shareholder nominations are in "Shareholder Proposals and Nominations for 2004 Annual
Meetings" below.
BOARD MEETINGS AND ATTENDANCE
During 2002, the Edison International Board and the SCE Board each met eight times.
During 2002, each current Director attended 75% or more of all Edison International and SCE Board and
applicable Committees' and Subcommittees' meetings he or she was eligible to attend, except for Mr. Nogales who,
as to SCE meetings only, attended 73%.
DIRECTOR COMPENSATION
Directors who are employees of Edison International or SCE are not paid additional compensation for serving
as Directors. Non-employee Directors are compensated as described below.
Page 14
Fees
During 2002, each non-employee Director was paid as follows:
o an annual Board retainer of $35,000,
o an annual retainer of $3,000 to Board Committee chairpersons,
o an annual Executive Committee retainer of $2,000 to Executive Committee members,
o $1,500 for each Board meeting attended,
o $1,500 for each Board Committee and Subcommittee meeting attended, and
o $1,500 for any other business meetings attended as a Director.
Non-employee Directors serve on both the Edison International Board and the SCE Board and the same
Committees and Subcommittees of each Board. Non-employee Directors receive only one retainer and, if the meetings
of the Boards or the same Committees and Subcommittees of each of the Companies are held concurrently or
consecutively, they receive only one meeting fee. It is the usual practice of Edison International and SCE that
meetings of the Edison International and SCE Boards are held together or consecutively and a single meeting fee
is paid to each non-employee Director for each set of meetings. Edison International and SCE Committee and
Subcommittee meetings are similarly managed. Directors are reimbursed for out-of-pocket expenses they incur
serving as Directors.
Equity Compensation Plan
The non-employee Directors of Edison International and SCE were granted the following awards under the
Edison International Equity Compensation Plan upon election or reelection to the Boards in 2002:
Upon initial election to the Boards:
o 2,000 Edison International deferred stock units, and
o 1,000 Edison International nonqualified stock options.
Upon reelection to the Boards:
o 500 shares of Edison International Common Stock,
o 500 Edison International deferred stock units, and
o 1,000 Edison International nonqualified stock options.
Directors serving on both Boards receive only one award per year. For years after 2002, Directors may
choose in advance to receive the reelection award entirely in Edison International Common Stock, entirely in
deferred stock units or in any combination of the two. Additionally, the initial and reelection award amounts
indicated are maximums and awards in future years are subject to reduction dependent upon the relationship of the
annual Board retainer to the closing price of a share of Edison International
Page 15
Common Stock on the date of election or reelection. The deferred stock units are credited to the Director's
deferred compensation plan account. Each stock unit represents the value of one share of Edison International
Common Stock. The deferred stock units accrue dividend equivalents, if and when dividends are paid on Edison
International Common Stock, that are converted to additional stock units under the plan. The deferred stock
units cannot be voted or sold. The deferred stock units will be distributed in Edison International Common Stock
in a lump sum upon the Director's retirement from the Boards unless a request to receive distribution in the form
of installments over 5, 10, or 15 years was previously submitted and approved. Resignation prior to retirement
will result in a lump sum payment in Edison International 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 Edison International
Common Stock.
Each Edison International nonqualified stock option awarded to Directors in 2002 may be exercised to
purchase one share of Edison International Common Stock at an exercise price equal to $19.45, the fair market
value of the underlying Common Stock on May 14, 2002, the date the stock option was granted. The stock options
were fully vested upon grant and have a ten-year term. The Director stock options are transferable to a spouse,
child or grandchild. Upon termination of service as a Director after attaining age 65 or because of death or
permanent and total disability, the Director stock options may continue to be exercised pursuant to their
original terms by the recipient or beneficiary. If service as a Director is terminated for any other reason, the
Director stock options are forfeited unless exercised within 180 days of the date of termination.
Appropriate and proportionate adjustments may be made to outstanding Director stock options to reflect any
impact resulting from various corporate events such as reorganizations and stock splits. If Edison International
is not the surviving corporation in such a reorganization, all Director stock options then outstanding will be
cashed out unless provisions are made as part of the transaction to continue the Equity Compensation Plan or to
assume or substitute stock options of the successor corporation with appropriate adjustments as to the number and
price of the stock options.
The Edison International Board administers the Equity Compensation Plan as to Director awards and has sole
discretion to determine all terms and conditions of any award, subject to plan limits. Edison International may
substitute cash that is equivalent in value to the Director deferred stock units and/or stock options and, with
the consent of the Director, may amend the terms of any award.
Deferred Compensation Plans
Director Deferred Compensation Plan
Non-employee Directors of Edison International and SCE are eligible to defer up to 100% of their Board
compensation, including any retainers and any meeting fees, under the Edison International Director Deferred
Compensation Plan. A grantor trust has been adopted to fund the deferred compensation liability. Amounts may be
deferred until a specified year, retirement, death or discontinuance of service as a Director. Compensation
deferred until a specified year is paid as a single lump sum. Compensation deferred until retirement or death
may be paid as a single lump sum, in monthly installments of 60, 120, or 180 months, or in a combination of a
partial lump sum and installments. Deferred compensation is paid as a single lump sum or in three annual
installments upon any other discontinuance of service as a Director. In addition to the cash compensation a
Director may defer, the deferred stock units discussed above under the section entitled "Equity Compensation
Plan" are credited to the Director's account under this plan. The deferred stock units accrue dividend
equivalents, if and when dividends are paid on Edison International Common Stock, which are converted into
additional stock units under the plan. The deferred stock units will be paid in a lump sum of Edison
Page 16
International Common Stock upon the Director's retirement from the Boards unless a request to receive
distribution in the form of installments over 5, 10, or 15 years was previously submitted and approved.
Resignation prior to retirement will result in a lump sum payment in 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 Edison
International Common Stock. All amounts payable under this plan are treated as obligations of Edison
International.
1985 Deferred Compensation Plan
SCE non-employee Directors were previously permitted to defer compensation earned from October 1, 1985,
through December 31, 1989, under the terms of the SCE 1985 Deferred Compensation Plan for Directors. No current
compensation may be deferred under this plan. The amounts are deferred until the participant ceases to be a
Director, dies or attains a predetermined age of at least 65, but not greater than 72. The account may be paid
in 10 or 15 equal annual installments or 120 or 180 equal monthly installments. If a participant dies before
payments have begun, his or her beneficiary will receive the account payments over the term elected by the
participant. In addition, the beneficiary will receive annual payments equal to 75% of the participant's total
deferral commitment for ten years. If a participant dies after payments have begun, the remainder of his or her
account will continue to be paid to the beneficiary. Following the completion of these payments, if the
beneficiary is the surviving spouse, the person will be entitled to a five-year-certain life annuity equal to 50%
of the payments the participant had been receiving. If the beneficiary is someone other than a spouse, the
payments will be made for five years only. All amounts payable under this plan are treated as obligations of
SCE.
Preferential Interest
Preferential interest (interest considered under SEC rules to be at above-market rates) was credited during
2002 to the deferred compensation plan accounts of the following Directors:
--------------------------------- --------------------------
Preferential
Director Interest
--------------------------------- --------------------------
Warren Christopher $ 177
--------------------------------- --------------------------
Bradford M. Freeman $ 142
--------------------------------- --------------------------
Joan C. Hanley $ 53,988
--------------------------------- --------------------------
Carl F. Huntsinger $ 59,944
--------------------------------- --------------------------
Bruce Karatz $ 140
--------------------------------- --------------------------
Ronald L. Olson $ 3,561
--------------------------------- --------------------------
James M. Rosser $ 61,967
--------------------------------- --------------------------
Richard T. Schlosberg, III $ 135
--------------------------------- --------------------------
Robert H. Smith $ 4,226
--------------------------------- --------------------------
Thomas C. Sutton $ 2,851
--------------------------------- --------------------------
Director Retirements
Warren Christopher, Carl F. Huntsinger and Charles D. Miller served as Directors of Edison International and
SCE during 2002 until they retired from service on May 14, 2002. Mr. Christopher was re-elected as a Director in
1997 following distinguished service as U. S. Secretary of State. Retirement and deferred compensation benefit
payments attributable to his prior service as a Director continued to be paid. Additional benefits that accrued
during his subsequent term as a Director will be paid to Mr. Christopher in accordance with the terms of the
plans in effect at the time of his retirement.
Page 17
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the number of shares of Edison International Common Stock beneficially owned as of
February 28, 2003, by the respective Directors of Edison International and SCE, the current Executive Officers of
Edison International and SCE named in the Executive Compensation Summary Compensation Table below, and all
Directors and Executive Officers of each of Edison International and SCE as a group. None of the persons
included in the table beneficially owns any other equity securities of Edison International or SCE, or any
subsidiary of either of them. The table includes shares that can be acquired through April 29, 2003, through the
payment of deferred stock units and the exercise of stock options.
------------------------------------ -------------------- ------------------ ------------------- -------------------
Shares Total Shares
Name of Deferred Stock of Common Stock(3) Beneficially
Beneficial Owner Stock Units(1) Options(2) Owned(4)(5)
------------------------------------ -------------------- ------------------ ------------------- -------------------
Directors and Executive Officers:
John E. Bryson(6) 61,890 1,089,375 157,303 1,308,568
Alan J. Fohrer(6) 26,541 344,284 33,096 403,921
Bradford M. Freeman 2,000 1,000 50,000 53,000
Joan C. Hanley 1,768 1,000 10,093 12,861
Bruce Karatz 2,000 1,000 3,300 6,300
Luis G. Nogales 1,768 1,000 4,524 7,292
Ronald L. Olson 1,768 1,000 29,993 32,761
James M. Rosser 1,768 1,000 9,100 11,868
Richard T. Schlosberg, III 2,000 1,000 5,000 8,000
Robert H. Smith 1,768 1,000 20,122 22,890
Thomas C. Sutton 1,768 1,000 31,216 33,984
Daniel M. Tellep 1,768 1,000 23,134 25,902
------------------------------------ -------------------- ------------------ ------------------- -------------------
Additional Executive Officers:
Bryant C. Danner(6) 23,010 334,189 28,897 386,096
Theodore F. Craver, Jr.(6) 23,088 190,733 20,920 234,741
Harold B. Ray(6) 18,170 205,038 12,414 235,622
Robert G. Foster(6) 14,782 164,521 5,331 184,634
Mahvash Yazdi(6) 11,421 116,594 12,365 140,380
John R. Fielder(6) 10,743 157,685 18,523 186,951
------------------------------------ -------------------- ------------------ ------------------- -------------------
All Directors and Executive
Officers of Edison International
as a group 241,292 2,780,372 494,018 3,515,682
(20 individuals)
------------------------------------ -------------------- ------------------ ------------------- -------------------
All Directors and Executive fficers
of SCE as a group (24 individuals) 214,243 2,673,872 503,137 3,391,252
------------------------------------ -------------------- ------------------ ------------------- -------------------
---------------
(1) Includes retention incentive deferred stock units granted to the Executive Officers worth one share each
which paid out on March 12, 2003, and deferred stock units granted to the Directors worth one share each
payable upon the holder's death, retirement or resignation.
(2) Includes options that became exercisable on January 2, 2003, and shares which can be acquired or paid on an
accelerated basis due to retirement, death, disability and/or involuntary termination of employment without
cause.
(3) Includes (i) shares held directly by the individual and/or in the name of a spouse, minor child, or certain
other relatives, (ii) SSPP shares for which instructions not received from any plan participant
Page 18
may be voted by the Edison International stock fund investment manager as it chooses and (iii) shares held in
family trusts, 401(k) plans and foundations. Except as follows, each individual has sole voting and
investment power:
Shared voting and sole investment power:
John E. Bryson - 26,403; Alan J. Fohrer - 28,510; Ronald L. Olson - 10,000; James M. Rosser - 9,100; Robert H. Smith - 14,900; Bryant C. Danner - 5,051; Theodore F.
Craver, Jr. - 6,000; Harold B. Ray - 1,614; Robert G. Foster - 5,331; Mahvash Yazdi - 6,038; John R. Fielder
- 14,533; all Edison International Directors and Executive Officers as a group - 133,568; and all SCE
Directors and Executive Officers as a group - 175,369.
Shared voting and shared investment power:
John E. Bryson - 130,900; Joan C. Hanley - 10,093; Ronald L. Olson - 19,993 (includes 15,000 shares held in
a foundation not deemed beneficially owned under Section 16 of the Securities Exchange Act of 1934); Robert
H. Smith - 5,222 (includes 2,222 shares held in daughter's name with respect to which beneficial ownership
is disclaimed); Thomas C. Sutton - 31,216; Daniel M. Tellep - 23,134; Bryant C. Danner - 7,000; Harold B.
Ray - 10,800; John R. Fielder - 3,152; all Edison International Directors and Executive Officers as a
group - 249,242; and all SCE Directors and Executive Officers as a group - 237,194 (includes 15,000 shares
held in a foundation not deemed beneficially owned under Section 16 of the Securities Exchange Act and
2,222 shares held by daughter with respect to which beneficial ownership is disclaimed).
(4) Includes shares listed in first three columns.
(5) The number of shares shown for each individual, and for the Directors and Executive Officers of each of
Edison International and SCE as a group, constitute, in each case, less than 1% of the outstanding shares
of Edison International Common Stock, as computed under SEC rules.
(6) Mr. Bryson is a Director and Executive Officer of both Edison International and SCE. Mr. Fohrer is a Director
of SCE only, but an Executive Officer of both Edison International and SCE. Messrs. Danner and Craver are
Executive Officers of Edison International only. Mr. Ray and Ms. Yazdi are Executive Officers of both Edison
International and SCE. Messrs. Foster and Fielder are Executive Officers of SCE only.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Edison International and SCE Directors and certain officers, and persons who own more than 10% of a
registered class of Edison International's or SCE's equity securities, are required to file ownership reports and
changes in ownership of such securities with the SEC and one designated national securities exchange under
Section 16(a) of the Securities Exchange Act. Based on a review of the reports and written representations from
the Directors and those officers, Edison International and SCE believe that all Section 16(a) filing requirements
were met during 2002.
Page 19
STOCK OWNERSHIP OF CERTAIN SHAREHOLDERS
The following are the only shareholders known by Edison International or SCE to beneficially own more than
5% of any class of either Company's voting securities as of February 28, 2003, except as otherwise indicated:
---------------------------------- ----------------------------------------------- ------------------- -----------
Amount and
Nature of
Name and Address of Beneficial Percent
Title of Class of Stock Beneficial Owner Ownership of Class
---------------------------------- ----------------------------------------------- ------------------- -----------
Edison International State Street Bank and Trust Company 41,374,228(1) 12.7%
Common Stock 225 Franklin Street
Boston, Massachusetts 02011
---------------------------------- ----------------------------------------------- ------------------- -----------
Edison International Putnam Investments, LLC 30,562,810(2) 9.4%
Common Stock One Post Office Square
Boston, Massachusetts 02109
---------------------------------- ----------------------------------------------- ------------------- -----------
Edison International Brandes Investment Partners, LLC 20,138,311(3) 6.2%
Common Stock 11988 El Camino Real, Suite 500
San Diego, California 92130
---------------------------------- ----------------------------------------------- ------------------- -----------
SCE Common Stock Edison International 434,888,104(4) 100%
2244 Walnut Grove Avenue
Rosemead, California 91770
---------------------------------- ----------------------------------------------- ------------------- -----------
SCE Cumulative O. Francis Biondi, Jr. 278,670(5) 5.4%
Preferred Stock Brian J. Higgins
575 Lexington Avenue, 7th Floor
New York, New York 10022
---------------------------------- ----------------------------------------------- ------------------- -----------
---------------
(1) This information is based on a Schedule 13G, dated February 10, 2003, filed with the SEC. Acting in various
fiduciary capacities, State Street reports that it has sole voting power over 8,243,614 shares, sole
investment power over 41,357,028 shares, shared voting power over 32,368,168 shares, and shared investment
power over 17,200 shares. As of February 28, 2003, 31,007,328 of these shares, or 9.5% of the class, are
held as the SSPP Trustee. SSPP shares are voted in accordance with instructions given by participants,
whether vested or not. SSPP shares for which instructions are not received may be voted by the Edison
International stock fund investment manager as it chooses. SSPP participants may not vote or give
instructions how to vote fractional shares.
(2) This information is based on a Schedule 13G, dated February 5, 2003, filed with the SEC. As the owner of
two investment advisers, Putnam, LLC d/b/a Putnam Investments reports that it may be deemed to have shared
voting power over 2,643,430 shares and shared investment power over all 30,562,810 shares, but disclaims
beneficial ownership.
(3) This information is based on a Schedule 13G dated February 14, 2003, filed with the SEC. Brandes Investment
Partners, LLC and its control persons report that they are deemed to have shared voting power over
14,779,507 shares and shared investment power over 20,138,311 shares, but beneficial ownership by the
control persons is disclaimed except as to an amount of shares that is substantially less than one percent
of the number of shares reported in the Schedule 13G.
Page 20
(4) Edison International became the holder of all issued and outstanding shares of SCE Common Stock on
July 1, 1988, when it became the holding company of SCE. Edison International has sole voting and investment
power over these shares.
(5) This information is based on a Schedule 13D, dated January 18, 2002, as amended by Amendment Nos. 1, 2 and 3
dated January 22, 2002, January 31, 2002, and February 12, 2002, respectively, filed with the SEC by
Mr. Biondi, Mr. Higgins, King Street Capital, L.P. ("KSC"), King Street Advisors, L.L.C. ("KSA"), King Street
Capital Management, L.L.C. ("KSCM"), and King Street Capital, Ltd. ("KSC Ltd.") reporting interests in
shares of SCE's Cumulative Preferred Stock, 4.08% Series ($25 par value). Messrs. Biondi and Higgins have
shared voting and investment power over these shares. Because shareholders of the 4.08% Series generally
vote together as a class with the holders of other series of SCE's Cumulative Preferred Stock, SCE does not
consider the 4.08% Series as a separate class of its voting securities for purposes of this table.
Therefore, the "percent of class" shown in the table (5.4%) is the percentage of the entire class of
Cumulative Preferred Stock ($25 par value). However, the reporting persons state that KSC and KSA have
shared voting and investment power over 95,890 shares or 9.6% of the Series; KSCM and KSC Ltd. have shared
voting and investment power over 182,780 shares or 18.3% of the Series; and Messrs. Biondi and Higgins have
shared voting and investment power over 278,670 shares or 27.9% of the Series. KSC's, KSA's, and KSCM's
address is 575 Lexington Avenue, 7th Floor, New York, New York 10022, and KSC Ltd.'s address is c/o HWR
Services, Craigmuir Chambers, P. O. Box 71, Road Town, Tortola, British Virgin Islands.
Page 21
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE(1)
The following table presents information regarding compensation of the Chief Executive Officers ("CEO") of
Edison International and SCE, and the other four most highly compensated Executive Officers of Edison
International and SCE, for services rendered during 2000, 2001 and 2002. These individuals are referred to as
"Named Officers" in this Joint Proxy Statement.
------------------------------------ ----------------------------------- --------------------------------------- -----------
Long-Term Compensation
---------------------------------------
Annual Compensation Awards Payouts
----------------------------------- ---------------------------------- ------------------------- ----------- -----------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
---------------------------- ------ ----------- ----------- ---------- ----------- ------------- ----------- -----------
Other Securities All
Annual Restricted Underlying Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Position(2) Year Salary Bonus sation(3) Award(s) SARs Payouts(4) sation(5)
($) ($) ($) ($) (#) ($) ($)
---------------------------- ------ ----------- ----------- ---------- ----------- ------------- ----------- -----------
John E. Bryson, Chairman 2002 1,020,000 1,000,000 10,562 -- 265,291 1,338,731 564,619
of the Board, President and 2001 950,000 1,350,000 444 -- 0 0 421,177
CEO of Edison International 2000 950,000 0 718 -- 1,273,600 0 401,841
---------------------------- ------ ----------- ----------- ---------- ----------- ------------- ----------- -----------
Alan J. Fohrer, Chairman 2002 552,000 550,000 8,220 -- 90,038 518,418 123,653
of the Board and CEO 2001 512,000 254,800 3,056 -- 0 0 83,717
of SCE 2000 477,000 0 2,603 -- 497,800 0 86,095
---------------------------- ------ ----------- ----------- ---------- ----------- ------------- ----------- -----------
Bryant C. Danner, Executive 2002 505,000 400,000 7,137 -- 82,803 306,672 122,494
Vice President and General 2001 470,600 424,200 0 -- 0 0 128,328
Counsel of Edison 2000 470,600 0 0 -- 483,100 0 138,982
International
---------------------------- ------ ----------- ----------- ---------- ----------- ------------- ----------- -----------
Theodore F. Craver, Jr., 2002 475,000 400,000 0 -- 76,372 260,917 52,353
Executive Vice President, 2001 375,000 523,600 0 -- 0 0 27,467
Chief Financial Officer and 2000 375,000 100,000 0 -- 244,800 0 39,000
Treasurer of Edison
International
---------------------------- ------ ----------- ----------- ---------- ----------- ------------- ----------- -----------
Harold B. Ray, 2002 420,000 410,000 7,137 -- 55,612 187,907 63,554
Executive Vice President 2001 390,000 373,100 0 -- 0 0 42,009
of SCE 2000 390,000 50,000 0 -- 171,200 0 49,682
---------------------------- ------ ----------- ----------- ---------- ----------- ------------- ----------- -----------
Robert G. Foster, 2002 375,000 370,000 13,676 -- 42,560 140,093 54,212
President of SCE 2001 330,000 300,000 0 -- 0 0 44,977
2000 322,500 0 0 -- 128,900 0 62,242
---------------------------- ------ ----------- ----------- ---------- ----------- ------------- ----------- -----------
Mahvash Yazdi, 2002 283,000 245,000 11,246 -- 32,119 110,247 27,469
Senior Vice President of 2001 255,000 163,350 0 -- 0 0 17,403
Edison International 2000 255,000 0 0 -- 101,300 0 24,336
and SCE
---------------------------- ------ ----------- ----------- ---------- ----------- ------------- ----------- -----------
John R. Fielder, 2002 293,000 230,000 8,679 -- 27,712 113,220 17,412
Senior Vice President 2001 272,500 235,950 0 -- 0 0 20,450
of SCE 2000 272,500 0 0 -- 103,400 0 38,893
---------------------------- ------ ----------- ----------- ---------- ----------- ------------- ----------- -----------
---------------
(1) For Edison International, the Named Officers for 2002 are John E. Bryson, Alan J. Fohrer, Bryant C. Danner,
Theodore F. Craver, Jr., and Harold B. Ray. For SCE, the Named Officers for 2002 are Alan J. Fohrer, Harold
B. Ray, Robert G. Foster, Mahvash Yazdi and John R. Fielder.
Page 22
(2) The principal positions shown are at December 31, 2002. Effective January 1, 2003, Mr. Bryson was elected
Chairman of the Board of SCE in addition to the Edison International positions shown and Mr. Fohrer was
elected Chief Executive Officer only of SCE.
(3) The amounts shown in column (e) include (i) perquisites if in total they exceed the lesser of $50,000 or 10%
of annual salary plus annual incentive, and (ii) reimbursed taxes.
(4) The amounts shown in column (h) include (i) payment of half of the 2000 Edison International Performance
Shares, and (ii) the value of the shares of Edison International Common Stock issued in payment of 25% of
the deferred stock units awarded in 2001 pursuant to the Edison International Stock Option Retention
Exchange Offer.
(5) The amounts shown in column (i) for 2002 include plan contributions (contributions to the SSPP and a
supplemental plan for eligible participants who are affected by SSPP participation limits imposed on higher
paid individuals by federal tax law), preferential interest (that portion of interest that is considered
under SEC rules to be at above-market rates) accrued on deferred compensation, vacation sale proceeds,
survivor benefits, disability benefits, benefit forfeiture allocations, and forgiven loans in the following
amounts:
------------------------ -------------- ------------- ----------- ---------- ----------- ------------ ----------
Vacation Benefit
Plan Preferential Sale Survivor Disability Forfeiture Loan
Contributions Interest Proceeds Benefits* Benefits Allocations Forgiven
($) ($) ($) ($) ($) ($) ($)
------------------------ -------------- ------------- ----------- ---------- ----------- ------------ ----------
John E. Bryson 74,011 393,025 0 97,424 0 158 0
------------------------ -------------- ------------- ----------- ---------- ----------- ------------ ----------
Alan J. Fohrer 34,544 38,227 0 36,760 14,112 10 0
------------------------ -------------- ------------- ----------- ---------- ----------- ------------ ----------
Bryant C. Danner 9,000 18,459 0 83,446 11,589 0 0
------------------------ -------------- ------------- ----------- ---------- ----------- ------------ ----------
Theodore F. Craver, Jr. 16,871 20,488 0 14,953 0 41 0
------------------------ -------------- ------------- ----------- ---------- ----------- ------------ ----------
Harold B. Ray 15,565 17,442 8,075 22,468 0 3 0
------------------------ -------------- ------------- ----------- ---------- ----------- ------------ ----------
Robert G. Foster 14,028 364 7,210 9,741 0 12 22,857
------------------------ -------------- ------------- ----------- ---------- ----------- ------------ ----------
Mahvash Yazdi 11,454 8,821 0 7,174 0 20 0
------------------------ -------------- ------------- ----------- ---------- ----------- ------------ ----------
John R. Fielder 9,000 0 0 8,392 0 20 0
------------------------ -------------- ------------- ----------- ---------- ----------- ------------ ----------
-------------------
* Includes the 2002 cost of survivor benefits under the Survivor Benefit Plan, Executive Deferred
Compensation Plan, 1985 Deferred Compensation Plan, Survivor Income Continuation Plan, and Supplemental
Survivor Income/Retirement Income Plan.
Page 23
OPTION / SAR GRANTS IN 2002
The following table presents information regarding Edison International nonqualified stock options granted
during 2002 to the Named Officers pursuant to the Edison International Equity Compensation Plan or 2000 Equity
Plan. No SARs were granted to any participant during 2002.
------------------------------------------------------------------------------------------------- -----------------
Grant Date
Individual Grants Value
------------------------------ ----------------- ---------------- --------------- --------------- -----------------
(a) (b) (c) (d) (e) (f)
Number of % of Total
Securities Options/SARs Grant
Underlying Granted to Exercise Date
Options/SARs Employees or Base Present
Granted(1)(2) in Fiscal Year Price Expiration Value(3)
Name (#) (%) ($/Sh) Date ($)
------------------------------ ----------------- ---------------- --------------- --------------- -----------------
John E. Bryson 265,291 8% 18.725 05/30/2012 2,103,758
------------------------------ ----------------- ---------------- --------------- --------------- -----------------
Alan J. Fohrer 90,038 3% 18.725 05/30/2012 714,001
------------------------------ ----------------- ---------------- --------------- --------------- -----------------
Bryant C. Danner 82,803 2% 18.725 05/30/2012 656,628
------------------------------ ----------------- ---------------- --------------- --------------- -----------------
Theodore F. Craver, Jr. 76,372 2% 18.725 05/30/2012 605,630
------------------------------ ----------------- ---------------- --------------- --------------- -----------------
Harold B. Ray 55,612 2% 18.725 05/30/2012 441,003
------------------------------ ----------------- ---------------- --------------- --------------- -----------------
Robert G. Foster 42,560 1% 18.725 05/30/2012 337,501
------------------------------ ----------------- ---------------- --------------- --------------- -----------------
Mahvash Yazdi 32,119 1% 18.725 05/30/2012 254,704
------------------------------ ----------------- ---------------- --------------- --------------- -----------------
John R. Fielder 27,712 1% 18.725 05/30/2012 219,756
------------------------------ ----------------- ---------------- --------------- --------------- -----------------
---------------
(1) Seventy-five percent of each Named Officer's annual long-term incentive compensation for 2002 was awarded in
the form of Edison International nonqualified stock options ("Stock Options"). The remaining portion of the
Named Officer's long-term incentive compensation for 2002 was awarded in the form of Edison International
performance shares as set forth below in the table entitled "Long-Term Incentive Plan Awards in Last Fiscal
Year." Each Stock Option granted in 2002 may be exercised to purchase one share of Edison International
Common Stock at an exercise price equal to the fair market value of the underlying Common Stock on the date
the Stock Option was granted.
(2) The Stock Options are subject to a four-year vesting period with one-fourth of the total award vesting and
becoming exercisable on May 30, 2003, May 30, 2004, May 30, 2005, and May 30, 2006. The Stock Options of
Messrs. Bryson, Fohrer and Danner are transferable to a spouse, child or grandchild. If a Stock Option
holder terminates employment after attaining age 65 or after attaining age 55 with five years of service, or
because of death or permanent and total disability (a "qualifying event") during the vesting period, the
unvested Stock Options vest on a pro rata basis. Unvested Stock Options of Messrs. Bryson, Fohrer, Danner,
and Ray will fully vest upon a qualifying event. If a qualifying event occurs, the vested Stock Options may
continue to be exercised pursuant to their original terms by the recipient or beneficiary. If a Stock
Option holder is terminated other than by a qualifying event, unvested Stock Options are forfeited. Stock
Options which had vested as of the prior anniversary date of the grant are also forfeited unless exercised
within 180 days of the date of termination except that if the termination is covered by the Edison
International Executive Severance Plan, the terminated executive will receive one additional year of vesting
credit and will have one year to exercise the vested Stock Options before they are forfeited.
Page 24
Appropriate and proportionate adjustments may be made by the Edison International Compensation and Executive
Personnel Committee to outstanding Stock Options to reflect any impact resulting from various corporate
events such as reorganizations and stock splits. If Edison International is not the surviving corporation
in such a reorganization, all Stock Options then outstanding will become vested and be exercisable unless
provisions are made as part of the transaction to continue the Equity Compensation Plan or 2000 Equity Plan
or to assume or substitute options of the successor corporation with appropriate adjustments as to the
number and price of the options. Notwithstanding the foregoing, upon a change of control of Edison
International after the occurrence of a "Distribution Date" under the Rights Agreement approved by the
Edison International Board of Directors on November 21, 1996, and amended on September 16, 1999, the Stock
Options will vest and will remain exercisable for at least two years following the Distribution Date. A
Distribution Date is generally the date a person acquires, or publicly announces its intent to acquire, 20%
or more of the Common Stock of Edison International.
The Edison International Compensation and Executive Personnel Committee administers the Equity Compensation
Plan and 2000 Equity Plan as to the Named Officers and has sole discretion to determine all terms and
conditions of any award, subject to plan limits. It may substitute cash that is equivalent in value to the
Stock Options and, with the consent of the executive, may amend the terms of any award agreement, including
the post-termination term, and the vesting schedule.
(3) The grant date value of each Stock Option awarded in 2002 to the Named Officers was calculated to be $7.93
per option share using the Black-Scholes stock option pricing model. In making this calculation, it was
assumed that the average exercise period was ten years, the volatility rate was 51.48%, the risk-free rate
of return was 4.94%, the historic average dividend yield was 2.87% and the stock price and exercise price
were $18.725.
Page 25
AGGREGATED OPTION / SAR EXERCISES IN 2002
AND FY-END OPTION / SAR VALUES
The following table presents information regarding the exercise of Stock Options during 2002 by any of the
Named Officers, and regarding unexercised Stock Options held at year-end 2002 by any of the Named Officers. No
SARs were exercised during 2002 or held at year-end 2002 by any of the Named Officers.
--------------------------- -------------- ------------------ ------------------------- ----------------------
(a) (b) (c) (d) (e)
--------------------------- -------------- ------------------ ------------------------- ----------------------
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options / SARs Options / SARs at
Shares at FY-End(1) FY-End(1) (2)
Acquired Value (#) ($)
------------------------- ----------------------
on Exercise Realized Exercisable / Exercisable /
Name (#) ($) Unexercisable Unexercisable
--------------------------- -------------- ------------------ ------------------------- ----------------------
John E. Bryson -- 490,080(3) 830,051 / 332,240 0/0
--------------------------- -------------- ------------------ ------------------------- ----------------------
Alan J. Fohrer -- 85,764(3) 261,526 / 110,812 0/0
--------------------------- -------------- ------------------ ------------------------- ----------------------
Bryant C. Danner -- 0 260,626 / 303,577 0/0
--------------------------- -------------- ------------------ ------------------------- ----------------------
Theodore F. Craver, Jr. -- 0 107,051 / 89,621 0/0
--------------------------- -------------- ------------------ ------------------------- ----------------------
Harold B. Ray -- 0 139,051 / 74,061 0/0
--------------------------- -------------- ------------------ ------------------------- ----------------------
Robert G. Foster -- 0 113,875 / 54,885 0/0
--------------------------- -------------- ------------------ ------------------------- ----------------------
Mahvash Yazdi -- 0 81,850 / 40,869 0/0
--------------------------- -------------- ------------------ ------------------------- ----------------------
John R. Fielder -- 0 129,101 / 39,011 0/0
--------------------------- -------------- ------------------ ------------------------- ----------------------
---------------
(1) Each Stock Option may be exercised for one share of Edison International Common Stock at an exercise price
equal to the fair market value of the underlying Common Stock on the date the option was granted. Dividend
equivalents on outstanding Stock Options issued prior to 2000 accrue to the extent dividends are declared on
Edison International Common Stock, and are subject to reduction unless certain performance criteria are met.
The option terms for current year awards are discussed in footnote (2) in the table above entitled
"Option/SAR Grants in 2002."
(2) Stock Options are treated as "in-the-money" if the fair market value of the underlying stock at year-end
2002 exceeded the exercise price of the Stock Options. No Stock Options held by the Named Officers were
in-the-money at year-end 2002.
Page 26
The aggregate value at year-end 2002 of all accrued dividend equivalents for the Named Officers was:
--------------------------------- -----------------------------
$ / $
Exercisable / Unexercisable
--------------------------------- -----------------------------
John E. Bryson 2,711,174 / 0
--------------------------------- -----------------------------
Alan J. Fohrer 0 / 0
--------------------------------- -----------------------------
Bryant C. Danner 348,582 / 0
--------------------------------- -----------------------------
Theodore F. Craver, Jr. 183,658 / 0
--------------------------------- -----------------------------
Harold B. Ray 0 / 0
--------------------------------- -----------------------------
Robert G. Foster 0 / 0
--------------------------------- -----------------------------
Mahvash Yazdi 0 / 0
--------------------------------- -----------------------------
John R. Fielder 0 / 0
--------------------------------- -----------------------------
(3) The amount shown represents the proceeds from dividend equivalents related to Stock Options granted in
1992. The options expired at the end of their ten-year term.
LONG-TERM INCENTIVE PLAN
AWARDS IN LAST FISCAL YEAR
The following table presents information regarding Edison International performance shares granted during
2002 to the Named Officers.
---------------------------- ------------------- ------------------- ------------------------------------------
Estimated Future Payouts Under
Non-Stock Price-Based Plans(2)
---------------------------- ------------------- ------------------- ------------- ------------- --------------
(a) (b) (c) (d) (e) (f)
Performance
Number of or Other Period
Shares, Until
Units or Other Maturation
Rights(1) Or Payout Threshold Target Maximum
Name (#) (#) (#) (#)
---------------------------- ------------------- ------------------- ------------- ------------- --------------
John E. Bryson 46,135 3 years 11,534 46,135 138,405
---------------------------- ------------------- ------------------- ------------- ------------- --------------
Alan J. Fohrer 15,658 3 years 3,915 15,658 46,974
---------------------------- ------------------- ------------------- ------------- ------------- --------------
Bryant C. Danner 14,400 3 years 3,600 14,400 43,200
---------------------------- ------------------- ------------------- ------------- ------------- --------------
Theodore F. Craver, Jr. 13,282 3 years 3,321 13,282 39,846
---------------------------- ------------------- ------------------- ------------- ------------- --------------
Harold B. Ray 9,672 3 years 2,418 9,672 29,016
---------------------------- ------------------- ------------------- ------------- ------------- --------------
Robert G. Foster 7,402 3 years 1,851 7,402 22,206
---------------------------- ------------------- ------------------- ------------- ------------- --------------
Mahvash Yazdi 5,586 3 years 1,397 5,586 16,758
---------------------------- ------------------- ------------------- ------------- ------------- --------------
John R. Fielder 4,820 3 years 1,205 4,820 14,460
---------------------------- ------------------- ------------------- ------------- ------------- --------------
---------------
(1) Twenty-five percent of each Named Officer's annual long-term incentive compensation for 2002 was awarded in
the form of Edison International performance shares ("Performance Shares"). The remaining portion of the
Named Officer's long-term incentive compensation for 2002 was awarded in the form of Stock Options as set
forth above in the table above entitled "Option/SAR Grants in 2002."
Page 27
Performance Shares are stock-based units with each unit worth one share of Edison International Common
Stock, payment of which is subject to a three-year performance measure based on the percentile ranking of
Edison International total shareholder return ("TSR") compared to the TSR for each stock comprising the
Philadelphia Utility Index, adjusted to delete AES Corporation and to add Sempra Energy. A target number of
contingent Performance Shares was awarded. No dividend equivalents were included with these grants. The
Performance Shares cannot be voted or sold. One-half of any earned Performance Shares will be paid in
Edison International Common Stock under the Equity Compensation Plan, and one-half will be paid in cash
equal to the value of such stock outside of the plan. The payment will be based on the average of the New
York Stock Exchange high and low prices of Edison International Common Stock on December 31, 2004, if the
Named Officer remains employed by the Companies on that date. In the event of employment separation due to
retirement, death, disability, or involuntary severance without cause, pro rata payments will be made on or
after December 31, 2004. No payment will be made in the event of any other separation of employment.
Performance Share payments will also be made in cash in the event of a change in control of Edison
International. The Performance Shares are not transferable, but a beneficiary may be designated in the event
of death. Edison International will substitute cash awards to the extent necessary to pay required tax
withholding or any government levies, and has reserved the right to substitute cash awards substantially
equivalent in value to the Performance Shares.
(2) The amounts shown in columns (d), (e), and (f) represent the number of shares of Edison International Common
Stock payable half in stock and half in cash for the specified levels of Edison International TSR
performance. The Edison International TSR ranking must be at the 40th percentile to achieve the threshold
payment indicated in Column (d), which is 25 percent of the target number of shares. The target number
shown in Column (e) will be paid if the Edison International TSR rank is at the 50th percentile. If the
Edison International TSR percentile ranking is at the 90th percentile or higher, the maximum payment will be
earned, which is three times the target amount. Amounts in between these TSR performance percentiles are
interpolated on a straight-line basis.
Page 28
PENSION PLAN TABLE(1)
The following table presents estimated gross annual benefits(2) payable upon retirement at age 65 to the
Named Officers in the remuneration and years of service classifications indicated.
----------------- -----------------------------------------------------------------------------------------------
Years of Service
-----------------------------------------------------------------------------------------------
Annual
Remuneration 10 15 20 25 30 35 40
----------------- ----------- ------------ ------------ -------------- ------------- ------------- --------------
200,000 50,000 67,500 85,000 102,500 120,000 130,000 140,000
----------------- ----------- ------------ ------------ -------------- ------------- ------------- --------------
400,000 100,000 135,000 170,000 205,000 240,000 260,000 280,000
----------------- ----------- ------------ ------------ -------------- ------------- ------------- --------------
600,000 150,000 202,500 255,000 307,500 360,000 390,000 420,000
----------------- ----------- ------------ ------------ -------------- ------------- ------------- --------------
800,000 200,000 270,000 340,000 410,000 480,000 520,000 560,000
----------------- ----------- ------------ ------------ -------------- ------------- ------------- --------------
1,000,000 250,000 337,500 425,000 512,500 600,000 650,000 700,000
----------------- ----------- ------------ ------------ -------------- ------------- ------------- --------------
1,200,000 300,000 405,000 510,000 615,000 720,000 780,000 840,000
----------------- ----------- ------------ ------------ -------------- ------------- ------------- --------------
1,400,000 350,000 472,500 595,000 717,500 840,000 910,000 980,000
----------------- ----------- ------------ ------------ -------------- ------------- ------------- --------------
1,600,000 400,000 540,000 680,000 820,000 960,000 1,040,000 1,120,000
----------------- ----------- ------------ ------------ -------------- ------------- ------------- --------------
1,800,000 450,000 607,500 765,000 922,500 1,080,000 1,170,000 1,260,000
----------------- ----------- ------------ ------------ -------------- ------------- ------------- --------------
2,000,000 500,000 675,000 850,000 1,025,000 1,200,000 1,300,000 1,400,000
----------------- ----------- ------------ ------------ -------------- ------------- ------------- --------------
2,200,000 550,000 742,500 935,000 1,127,500 1,320,000 1,430,000 1,540,000
----------------- ----------- ------------ ------------ -------------- ------------- ------------- --------------
2,400,000 600,000 810,000 1,020,000 1,230,000 1,440,000 1,560,000 1,680,000
----------------- ----------- ------------ ------------ -------------- ------------- ------------- --------------
2,600,000 650,000 877,500 1,105,000 1,332,500 1,560,000 1,690,000 1,820,000
----------------- ----------- ------------ ------------ -------------- ------------- ------------- --------------
2,800,000 700,000 945,000 1,190,000 1,435,000 1,680,000 1,820,000 1,960,000
----------------- ----------- ------------ ------------ -------------- ------------- ------------- --------------
3,000,000 750,000 1,012,500 1,275,000 1,537,500 1,800,000 1,950,000 2,100,000
----------------- ----------- ------------ ------------ -------------- ------------- ------------- --------------
---------------
(1) The annual pension benefit estimates are based on the terms of the SCE Retirement Plan, a qualified defined
benefit employee retirement plan, and the SCE Executive Retirement Plan, a nonqualified supplemental
executive retirement plan, with the following assumptions: (i) SCE's qualified retirement plan will be
maintained, (ii) optional forms of payment which reduce benefit amounts have not been selected, and (iii)
any benefits in excess of limits contained in the Internal Revenue Code of 1986 and any incremental benefits
not included in the qualified retirement plan will be paid out of the Executive Retirement Plan or an excess
benefit plan as unsecured obligations of Edison International or the participating affiliate. For purposes
of the Executive Retirement Plan, as of December 31, 2002, Mr. Bryson had completed 18 years of service,
Mr. Fohrer - 29 years, Mr. Danner - 20 years, Mr. Craver - 6 years, Mr. Ray - 32 years, Mr. Foster - 18
years, Ms. Yazdi - 5 years, and Mr. Fielder -32 years.
(2) The retirement benefit of the Named Officers at normal retirement age (65 years) is determined by a
percentage of the executive's highest 36 consecutive months of salary and annual incentive prior to
attaining age 65. Compensation used to calculate combined benefits under the plans is based on salary and
bonus (excluding special recognition awards) as reported in the table above entitled "Summary Compensation
Table," except the Compensation and Executive Personnel Committee elected to adjust the amounts reported in
that table to include foregone 2000 target annual incentives and foregone 2001 salary merit increases for
purposes of the pension benefit determination under the Executive Retirement Plan. The adjustment amounts
for 2000 and 2001 for this purpose were:
Page 29
-------------------------- ------------------- ------------------
$ $
2000 2001
-------------------------- ------------------- ------------------
John E. Bryson 760,000 0
-------------------------- ------------------- ------------------
Alan J. Fohrer 339,500 0
-------------------------- ------------------- ------------------
Bryant C. Danner 336,420 24,400
-------------------------- ------------------- ------------------
Theodore F. Craver, Jr. 262,500 65,000
-------------------------- ------------------- ------------------
Harold B. Ray 253,500 20,000
-------------------------- ------------------- ------------------
Robert G. Foster 181,500 25,000
-------------------------- ------------------- -------------------
Mahvash Yazdi 140,250 15,000
-------------------------- ------------------- -------------------
John R. Fielder 149,875 13,500
-------------------------- ------------------- ------------------
The service percentage is based on 1 3/4% per year for the first 30 years of service (52 1/2% upon completion of
30 years of service) and 1% for each year in excess of 30. Named Officers receive an additional service
percentage of3/4% per year for the first ten years of service (7.5% upon completion of ten years of
service). The actual benefit is offset by up to 40% of the executive's primary Social Security benefits.
The normal form of benefit is a life annuity with a 50% survivor benefit following the death of the
participant. Retirement benefits are reduced for retirement prior to age 61. The amounts shown in the
Pension Plan Table above do not reflect reductions in retirement benefits due to the Social Security offset
or early retirement.
Messrs. Fohrer and Danner have elected to retain coverage under a prior benefit program. This program
provided, among other benefits, the post-retirement benefits discussed in the following section. The
retirement benefits provided under the prior program are less than the benefits shown in the Pension Plan
Table in that they do not include the additional 7.5% service percentage. To determine these reduced
benefits, multiply the dollar amounts shown in each column by the following factors: 10 years of service -
70%, 15 years - 78%, 20 years - 82%, 25 years - 85%, 30 years - 88%, 35 years - 88%, and 40 years - 89%.
OTHER RETIREMENT BENEFITS
Additional post-retirement benefits are provided pursuant to the Survivor Income Continuation Plan and the
Survivor Income/Retirement Income Plan under the Executive Supplemental Benefit Program. For purposes of
determining the estimated annual benefits payable under these plans upon retirement at normal retirement age for
each of the Named Officers, which is dependent upon final compensation, the highest compensation level in the
Pension Plan Table above ($3,000,000) has been used in the examples which follow.
The Survivor Income Continuation Plan provides a post-retirement survivor benefit payable to the beneficiary
of the participant following his or her death. The benefit is approximately 22% of final compensation (salary at
retirement and the average of the three highest annual incentives paid in the five years prior to retirement)
payable for ten years certain. If a Named Officer's final annual compensation were $3,000,000, the beneficiary's
estimated annual survivor benefit would be $652,500. Messrs. Fohrer and Danner have elected coverage under this
plan.
Page 30
The Supplemental Survivor Income/Retirement Income Plan provides a post-retirement survivor benefit payable
to the beneficiary of the Named Officer following his or her death. The benefit is 25% of final compensation
(salary at retirement and the average of the three highest annual incentives paid in the five years prior to
retirement) payable for ten years certain. At retirement, a Named Officer has the right to elect the retirement
income benefit in lieu of the survivor income benefit. The retirement income benefit is 10% of final
compensation (salary at retirement and the average of the three highest annual incentives paid in the five years
prior to retirement) payable to the participant for ten years certain immediately following retirement. If a
Named Officer's final annual compensation were $3,000,000, the beneficiary's estimated annual survivor benefit
would be $750,000. If a Named Officer were to elect the retirement income benefit in lieu of the survivor income
benefit and had final annual compensation of $3,000,000, the Named Officer's estimated annual benefit would be
$300,000. Messrs. Fohrer and Danner have elected coverage under this plan.
The 1985 Deferred Compensation Plan provides a post-retirement survivor benefit. This plan allowed eligible
participants in September 1985 to voluntarily elect to defer until retirement a portion of annual salary and
annual incentives otherwise earned and payable for the period October 1985 through January 1990. Messrs. Bryson
and Ray participate in this plan. The post-retirement survivor benefit is 50% of the annual amount the
participant had been receiving from the plan. Survivor benefit payments begin following completion of the
deferred compensation payments. If the named beneficiary is the executive's spouse, then survivor benefits are
paid as a life annuity, five years certain. The benefit amount will be reduced actuarially if the spouse is more
than five years younger than the executive at the time of the executive's death. If the beneficiary is not the
spouse, then benefits are paid for five years only. The annual amounts that would be payable to the surviving
beneficiaries of Messrs. Bryson and Ray if each retired at age 65 are $1,260,020 and $46,324, respectively.
Mr. Bryson is entitled to benefits accrued under the Retirement Plan for Directors before it was terminated
in 1997. He will be entitled to an annual retirement benefit in the amount of the annual retainer for the number
of years he served on the Boards prior to 1998 (and meeting fees for years prior to 1996). Mr. Bryson will
receive $10,438 per quarter for eight years following his retirement from the Edison International Board.
EMPLOYMENT CONTRACTS AND
TERMINATION OF EMPLOYMENT ARRANGEMENTS
Bryant C. Danner. Mr. Danner executed an employment agreement when he joined Edison International and SCE
as Senior Vice President and General Counsel in 1992. After completing three years of service, he was credited
with ten additional years of service with Edison International and SCE for purposes of determining benefits under
the Executive Retirement Plan. Edison International and SCE agreed to use their best efforts to make available
health care coverage until Mr. Danner and his spouse reach age 65, with the Companies bearing the cost over the
amount an SCE retiree would pay for coverage in the SCE group plan with the highest deductible. Mr. and Mrs.
Danner attained age 65 during 2002. Mr. Danner resigned his SCE positions effective January 1, 2001.
Mahvash Yazdi. Ms. Yazdi executed an employment agreement when she joined Edison International and SCE as
Vice President and Chief Information Officer in 1997. The agreement specified her annual and long-term incentive
awards for 1997, a hiring bonus, a vacation allowance, an automobile allowance, and a severance provision if her
employment was terminated within two years of her hire date. In addition, Ms. Yazdi's account under the
Executive Deferred Compensation Plan was credited with $200,000 vesting
Page 31
over five years to offset benefits she forfeited at a prior employer. The final 20% of that award vested during
2002.
COMPENSATION AND EXECUTIVE PERSONNEL COMMITTEES'
REPORT ON EXECUTIVE COMPENSATION(1)
The Edison International and SCE Compensation and Executive Personnel Committees are each composed of the
same non-employee directors named at the end of this report. The Committees have responsibility for all
executive compensation programs of the Companies and met jointly to consider executive compensation matters for
2002.
The Edison International Committee determines salaries and annual incentives for Edison International
officers. The SCE Committee determines salaries and annual incentives for SCE officers. The salaries and annual
incentives of the officers of the other Edison International subsidiaries are determined by their respective
boards of directors subject to review and approval by the Edison International Committee to ensure consistency
with overall Edison International compensation policies. In addition, the Edison International Committee
administers the Equity Compensation Plan and the 2000 Equity Plan pursuant to which long-term incentives were
awarded in 2002.
Compensation Policies
The executive compensation programs of Edison International, SCE and the other subsidiaries are intended to
achieve three fundamental objectives: (1) attract and retain qualified executives; (2) motivate performance to
achieve specific strategic objectives of the Companies; and (3) align the interests of senior management with the
long-term interests of the Companies' shareholders and for SCE, its ratepayers. At present, the basic components
of the Companies' executive compensation program are base salaries, annual incentives, and long-term incentives.
The Companies also provide broad-based employee benefit plans and certain other executive benefit plans.
Section 162(m) of the Internal Revenue Code of 1986 generally disallows a tax deduction to public companies
for compensation over $1,000,000 paid to their chief executive officers and the four other most highly
compensated executive officers unless certain tests are met. The Committees' general intent is to design and
administer the Edison International and SCE compensation programs in a manner that will preserve the
deductibility of compensation payments to Executive Officers. However, this goal is secondary in importance to
achievement of the Companies' compensation objectives discussed above. The Committees believe that the potential
increased tax liability is of insufficient magnitude to warrant alteration of the present compensation system
which is achieving the desired compensation objectives while retaining the flexibility of the Committees to
exercise judgment in assessing an executive's performance.
----------------------
(1) SEC filings sometimes "incorporate information by reference." This means the filing company is referring
you to information that has previously been filed with the SEC, and that the information should be
considered as part of the filing you are reading. Unless Edison International or SCE specifically states
otherwise, this report shall not be deemed to be incorporated by reference and shall not constitute
soliciting material or otherwise be considered filed under the Securities Act of 1933 or the Securities
Exchange Act.
Page 32
2002 Compensation Objectives
The Committees base their compensation actions for the Companies in part on data gathered through
independent surveys of peer group companies. Independent compensation consultants are retained to annually
review and identify the appropriate comparison companies and to obtain and evaluate current executive
compensation data for Edison International, SCE and the other subsidiaries of Edison International. The
Committees identified 11 diversified electric utilities for Edison International compensation comparisons for
2002. The comparison utility companies were selected on the basis of total assets and net sales. Two companies
were deleted from the peer group used for the prior year. MidAmerican Energy was acquired by another entity and
AES Corporation was dropped because its mix of business revenues differs significantly from that of Edison
International and the other companies in the group. Although the peer group differs from the Dow Jones U.S.
Electric Utilities Index depicted in the Stock Performance Graph below, all of the companies comprising the peer
group are included in the index, and the Committees believe the constitution of the peer group provides relevant
compensation data for Edison International and SCE. A compensation consultant reviews the data, along with
position-specific survey information collated from a variety of more general sources, to develop a recommended
structure of salary ranges, short-term incentive targets, and long-term incentive targets. Selecting peer groups
for the other subsidiaries was accomplished by a similar process geared to identify appropriate comparison
companies in their respective industries.
The Committees' strategy for 2002 compensation planning was established in December 2001 to generally target
fixed compensation (salary and benefits) for Edison International, SCE and the other subsidiaries at the median
level of their respective peer groups. Target annual incentive and long-term incentive opportunities were also
set at the median level of the peer groups, with maximum annual award opportunities of 200% of target levels for
significant performance exceeding target levels. The Committees may approve compensation above and below
established targets in individual cases as deemed appropriate in their discretion.
Base Salaries
The Committees reviewed the base salaries for Mr. Bryson, Mr. Fohrer and the other Executive Officers at the
end of 2001 to set salaries for 2002. Although no merit salary increases were adopted for 2001, the Committees
concluded that the effort to guide SCE through the California energy crisis and achieve a settlement with the
California Public Utilities Commission ("CPUC") laid a solid foundation for a stronger utility business in 2002
and future years. The Committees also determined that Edison International, Edison Mission Energy and Edison
Capital managed necessary cost cutting, restructuring and cash preservation measures well. The factors
considered by the Committees in setting the 2002 salaries of Mr. Bryson and Mr. Fohrer were the relationship of
their compensation to the average compensation of the other chief executive officers of the peer group of
companies, and the Committees' judgment of Mr. Bryson's performance as CEO of Edison International and Mr.
Fohrer's performance as CEO of Edison Mission Energy during 2001 and his new responsibilities as CEO of SCE. Mr.
Bryson was recognized for his focused and effective leadership in guiding the Companies through the California
Power Crisis. Mr. Fohrer's leadership was recognized for accomplishing important restructurings and asset sales
at Edison Mission Energy. Mr. Bryson's 2002 salary was $1,020,000, which was 3% above the median for CEOs in the
peer group. Mr. Fohrer's 2002 salary was $552,000, which was 1% below his peers.
In December 2001, the Edison International Committee also reviewed the base salaries of the Executive
Officers at the other subsidiaries. Salary actions taken by their respective boards of directors were examined
in light of the performance of the companies and survey data of competitive firms to
Page 33
assure conformance with overall Edison International compensation policies. The 2002 base salaries in the
aggregate of the Executive Officers at Edison International, SCE and the other subsidiaries were 2% below the
median levels of their respective peer groups.
Annual Incentive Compensation for 2002 Performance
Annual incentive compensation is determined on the basis of overall corporate performance and the
Committees' assessment of the individual Executive Officer's performance. Target annual incentives for Executive
Officers for 2002 ranged from 40% of base salary for certain vice presidents to 70% of base salary for Mr. Fohrer
and others and 80% of base salary for Mr. Bryson. Maximum opportunity levels were set at 200% of target award
levels. Awards are made in the judgment of the Committees taking into account overall company results as guided
by the relevant performance objectives for the year.
Performance objectives for the Edison International companies were adopted by the Boards in early 2002. Two
unweighted general areas of achievement were identified as Edison International goals for 2002: (1) Rebuild
Financial Strength, including objectives related to earnings, cash flow, credit rating, SCE's Procurement-Related
Obligations Account ("PROACT"), and financial statement completeness and clarity, and (2) Strengthen Business
Platform, including objectives related to public policy, regulatory and legal framework, risk management, skill
base, diversity, leadership capability, renewable energy, and coal-fired generation environmental issues. Five
unweighted general areas of achievement were identified as SCE goals for 2002: (1) Ensure Earliest Possible
PROACT Recovery, (2) Achieve Sound Regulatory Outcomes, including objectives related to future procurement cost,
various CPUC and Federal Energy Regulatory Commission rate cases, allocation of California Department of Water
Resources revenue, direct access customers, and utility retained generation, (3) Ensure Financial Performance,
including objectives related to earnings, investment grade status, and payment of arrears, (4) Invest Effectively
in Future Utility Business, including objectives related to reliability and cost efficiency, SCE's talent pool,
capital investments and productivity, and (5) Demonstrate Operational Excellence, including objectives related to
safety, customer satisfaction, reliability, San Onofre Nuclear Generating Station performance, facility security
and achievement of key performance factors.
Goals for 2002 were also identified for Edison Mission Energy relating to financial performance, risk
management, operational excellence and growth strategy. The 2002 goals for Edison Capital related to financial
performance, liquidity, and growth opportunities.
When the Committees met in February 2003 to evaluate performance by each of the companies and to determine
2002 annual incentive awards, the Committees reviewed the year's overall performance in light of the objectives
identified at the beginning of the year. The Committees concluded that Edison International made significant
progress in 2002 on its principal objective of rebuilding financial strength and recovering from the adverse
effects of the California Power Crisis, although it was recognized this progress has not yet been fully reflected
in the Edison International Common Stock price. The most important 2002 accomplishments were sharply building
cash flow, reducing debt across the companies, and working diligently to obtain CPUC decisions which restored a
significant part of the necessary regulatory framework for healthy future utility operations.
The strong earnings performance of Edison International was largely driven by SCE's results. SCE
accomplished most of its performance objectives. The $2 billion of PROACT cost recovery at SCE enabled progress
in restoring utility credit including paying off all outstanding unpaid obligations from the power crisis.
However, a U.S. Court of Appeals decision that raised questions (now being reviewed by the California Supreme
Court) regarding the validity of the PROACT settlement with the CPUC was a negative for the year.
Page 34
During 2002, Edison Mission Energy put into place a strong risk management system and made itself ready to
deal effectively with substantially increased merchant plant exposure in 2003. Overall, power plant
availabilities exceeded targets and financial results were strong in Illinois and improved from the early year
outlook in the United Kingdom. In general, however, poor wholesale power prices, the effects of the TXU Europe
bankruptcy, and the operational outages at the Homer City plant in Pennsylvania, had negative impacts on
results. A strong point for the year was the leadership at Edison Mission Energy in responding to these newly
adverse financial and credit markets with effective action to reduce future obligations and contingencies.
Edison Capital managed its portfolio of assets during 2002 to reduce debt and conserve cash, ending the year
in a strong cash position despite an investment write-off resulting from the United Airlines bankruptcy.
The Edison International Committee approved a 2002 annual incentive award of $1,000,000 for Mr. Bryson that
was 61% of his maximum potential award. The SCE Committee approved a 2002 annual incentive award of $550,000 for
Mr. Fohrer that was 70% of his maximum potential award. In addition to evaluating the overall performance of
Mr. Bryson as measured by the Companies' results discussed above, the Edison International Committee's subjective
assessment of his performance was considered. Factors found to be particularly significant in 2002 for
Mr. Bryson were his continuing leadership of the Companies' financial rebuilding and recovery effort, his focus on
managing the adverse effects of the volatile independent power market, and his effectiveness in communicating the
Companies' objectives to policy makers, shareholders, employees and customers. Mr. Fohrer's award reflected his
leadership in attaining the strong financial results at SCE and in mobilizing teams to effectively address the
need for sound regulation for the utility.
The 2002 annual incentives for the other Executive Officers averaged 58% of maximum at Edison International,
73% of maximum at SCE and 42% of maximum at the other subsidiaries. The target values established and the actual
awards granted to Mr. Bryson, Mr. Fohrer and the other Executive Officers were consistent with the Committees'
strategy described above.
Long-Term Incentives
In recent years, the long-term incentives awarded to Executive Officers have had two components. Edison
International nonqualified common stock options comprise 75% of the award value and Edison International
performance shares comprise 25% of the value. As reported last year, the companies resumed issuance of
nonqualified stock options in 2002. The Edison International Committee awarded 265,291 stock options and 46,135
performance shares to Mr. Bryson and 90,038 stock options and 15,658 performance shares to Mr. Fohrer. The
target values established and the actual awards granted to Mr. Bryson, Mr. Fohrer and the other Executive
Officers were consistent with the Committees' strategy described above and reflect the Committees' commitment to
link a significant portion of the compensation of Mr. Bryson and Mr. Fohrer directly to the value provided to
shareholders by Edison International stock. The awards were granted to Executive Officers in the judgment of the
Edison International Committee guided by the peer group survey results as to the target award percentages
described above and were not formula-driven. The number and value of options granted in prior years was not a
factor in the current year award determination.
Page 35
Summary
The Committees' compensation actions for 2002 reflect their judgment based on a review of peer group
compensation, and in the case of the annual incentives, evaluation of performance of Edison International and
each subsidiary company relative to goals set in December 2001, and in light of the challenges and opportunities
which arose during 2002. The members of the Committees believe that the compensation programs of the Companies
are effective in attracting and retaining qualified executives to lead the Companies. A significant portion of
Executive Officer compensation is directly linked to shareholder value. The Committees will continue to monitor
closely the effectiveness and appropriateness of each of the components of compensation to reflect changes in the
business environment of the Companies.
--------------------------------------------------------------------------------
Compensation and Executive Personnel Committees of the
Edison International and SCE
Boards of Directors*
--------------------------------------- ----------------------------------------
Robert H. Smith (Chair) Bruce Karatz
--------------------------------------- ----------------------------------------
Luis G. Nogales James M. Rosser
--------------------------------------- ----------------------------------------
Thomas C. Sutton
--------------------------------------- ----------------------------------------
------------------
* Charles D. Miller served as a member of the Committees for part of 2002, but ceased to be a
Committee member and a Board member on May 14, 2002, when he retired from service. He did not
participate in decisions of the Committees after that date, including deliberations regarding the
annual incentives for 2002 performance.
COMPENSATION AND EXECUTIVE PERSONNEL COMMITTEES'
INTERLOCKS AND INSIDER PARTICIPATION
Mr. Karatz became a member of the Compensation and Executive Personnel Committees on May 14, 2002, and
Mr. Miller ceased to be a member of the Committees on that date. The other members of the Committees whose names
appear on the Committees' Report above were members of the Committees during all of 2002. During 2002,
Messrs. Bryson, Danner, Craver and McDaniel served as directors of Edison Mission Energy and Edison Capital, both
nonutility subsidiaries of Edison International. Until August 1, 2002, Mr. William J. Heller, a former Edison
International Executive Officer, served as a director of Edison Mission Energy. Mr. Bryson was Chairman of the
Board of both Edison Mission Energy and Edison Capital during 2002, but his compensation is determined by the
Edison International Compensation and Executive Personnel Committee, not the subsidiaries' boards. Under
applicable SEC rules, there were no other interlocks or insider participation on the Compensation and Executive
Personnel Committees.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Mr. Olson is a Senior Partner of the law firm of Munger, Tolles and Olson which provided legal services to
Edison International, SCE, and/or their subsidiaries in 2002. Such services are expected to continue to be
provided in the future. Edison International and its subsidiaries paid Munger, Tolles and Olson an aggregate
amount of $6,333,000 in 2002 for legal services.
Page 36
Effective August 1, 2002, Edison International entered into a Consulting Agreement with Mr. Heller.
Pursuant to the agreement, Mr. Heller agreed to provide consulting services in connection with Edison
International's business affairs with which he became familiar while employed by Edison International or any of
its affiliates. For such services, Edison International paid a retainer of $100,000 in 2002, and agreed to pay
$200 per hour for up to 40 hours monthly for the first six months of the contract, and for up to 20 hours monthly
for the second six months. No additional amounts were paid for hourly services in 2002.
In 2002, Deloitte Consulting Services, LLC provided various consulting services to Edison International and
SCE, and such services are expected to continue to be provided in the future. Mr. John Danner, brother of Bryant
C. Danner, provided consulting services on two such projects pursuant to a retainer consulting agreement with
Deloitte. In 2002, the aggregate amount paid by Edison International for those projects was $233,659, and the
aggregate amount paid by SCE was $228,188. Mr. Danner received an aggregate amount of $71,575 in connection with
the consulting services provided for the projects.
Edison International, SCE, and Edison Mission Midwest Holdings Co., an indirect nonutility subsidiary of
Edison International, have maintained credit facilities under which certain affiliated companies of J. P. Morgan
Chase & Company (collectively, "JPMorgan"), the former beneficial owner of more than 5% of Edison International's
Common Stock, acted as administrative agents and participated as lenders. Under syndicated and bilateral credit
agreements, JPMorgan provided loans of approximately $117.5 million to SCE. In February 2003, SCE paid off a
portion of the loans, leaving an outstanding balance of $82 million. Under a syndicated credit agreement with
Edison Mission Midwest Holdings, JPMorgan provided loans of approximately $1.8 billion, of which $1.7 billion is
currently outstanding. In connection with the various credit facilities, Edison International and SCE paid
JPMorgan an aggregate of $4,167,425 in facility fees, agency fees, transaction fees and breakage fees during
2002. Edison Mission Midwest Holdings also paid JPMorgan an aggregate of $8,496,546 in facility fees during
2002. In addition, Edison Mission Midwest Holdings pays $50,000 annually in agency fees. A portion of those fees
may have been distributed by JPMorgan to other agents and syndicate lenders under the credit facilities. As
stated in JP Morgan's Schedule 13G Amendment dated February 10, 2003, JP Morgan ceased to be the beneficial owner
of more than 5% of Edison International Common Stock as of December 31, 2002.
Edison International and SCE believe that any transactions described above are comparable to those which
would have been undertaken under similar circumstances with nonaffiliated entities or persons.
OTHER MANAGEMENT TRANSACTIONS
During 1997, Edison International loaned Mr. Foster $160,000 interest-free in connection with his purchase
of a principal residence following his relocation from SCE's Sacramento Region Office to the Southern California
Metropolitan area. Under the terms of the loan, one-seventh of the original principal amount was forgiven in
1997, and one-seventh would be forgiven each year thereafter that Mr. Foster remained employed with an Edison
International affiliate. The remaining principal balance of $22,857 was forgiven on March 1, 2003.
Page 37
FIVE-YEAR STOCK PERFORMANCE GRAPH(1) (2)
The graph below compares the annual change in the cumulative total shareholder return on Edison
International Common Stock with the cumulative total return of companies in the Standard and Poor's 500 Stock
Index and the Dow Jones U.S. Electric Utilities Index (also known as the Dow Jones U.S. Total Market Electric
Utilities Index).(3) The S&P 500 Index is published daily in The Wall Street Journal. The Dow Jones U.S.
Electric Utilities Index contains 60(4) United States investor-owned power companies and is published daily by
Dow Jones & Company. Edison International is included in both the S&P 500 Index and the Dow Jones U.S. Electric
Utilities Index.
--------------------------------------------- ---------------------------------------------------------------------
Cumulative Total Return
---------------------------------------------------------------------
12/97 12/98 12/99 12/00 12/01 12/02
--------------------------------------------- ------------ ---------- ------------ ---------- ---------- ----------
Edison International $100.00 $106.39 $103.30 $65.10 $62.91 $49.37
--------------------------------------------- ------------ ---------- ------------ ---------- ---------- ----------
Standard & Poor's 500 Index $100.00 $128.58 $155.64 $141.46 $124.65 $97.10
--------------------------------------------- ------------ ---------- ------------ ---------- ---------- ----------
Dow Jones U.S. Electric Utilities Index $100.00 $114.91 $98.02 $155.10 $123.11 $95.21
--------------------------------------------- ------------ ---------- ------------ ---------- ---------- ----------
---------------
(1) SEC filings sometimes "incorporate information by reference." This means the Companies are referring you to
information that has previously been filed with the SEC, and that this information should be considered as
part of the filing you are reading. Unless Edison International or SCE specifically states otherwise, this
graph shall not be deemed to be incorporated by reference and shall not constitute soliciting material or
otherwise be considered filed under the Securities Act or the Securities Exchange Act.
Page 38
(2) The historical stock performance depicted on the graph is not necessarily indicative of future performance.
The Companies do not make or endorse any predictions as to future stock performance or dividends. The
quarterly dividends customarily paid on January 31, April 30, July 31, and October 31 were not declared for
2001 and 2002 and the quarterly dividends customarily paid on January 31 were not declared for 2003 by the
Edison International Board. This proxy statement is not to be considered material for soliciting the
purchase or sale of stock of either of the Companies.
(3) In February 2000, Dow Jones launched a new U.S. Equity Index series which replaced all of its prior index
series including the Dow Jones Electric Utilities Index previously used for this graph. The new series
covers 95% of the U.S. equity market and replaces the previous series that covered 80% of the equity
market. Additionally, the industry classification system was restructured. The net result of these changes
is that all U.S. indices will show differences when compared to the indices used prior to 2000.
(4) As of December 31, 2002.
(5) Ex-dividend dates have been used to determine the number of dividends included in Edison International's
cumulative total return calculation. The ex-dividend date occurs a few days prior to the record date for
each dividend payment, and is the date on which the stock begins trading at a price that does not include
the dividend. Edison International had three ex-dividend dates in 1999 even though shareholders received
four dividend payments in that year. In 2000, there were four ex-dividend dates and four dividend
payments. For purposes of calculating the adjusted cumulative total return presented in the following
table, four ex-dividend dates were used for each year starting in 1997 through 1999, and three ex-dividend
dates were used in 2000. The adjusted calculation for 2000 includes only three ex-dividend dates since the
Board did not declare the dividend customarily paid on January 31, 2001. As noted in footnote (2) above,
there were no dividends declared by the Edison International Board for each of the four quarters of 2001 and
2002.
---------------------------------------------------------------------------------
Adjusted Cumulative Total Return
---------------------------------------------------------------------------------
12/97 12/98 12/99 12/00 12/01 12/02
--------------- ------------ ------------ ------------ ------------ -------------
$100.00 $106.39 $104.37 $65.07 $62.88 $49.35
--------------- ------------ ------------ ------------ ------------ -------------
CHANGE IN CERTIFYING ACCOUNTANT
On May 8, 2002, following a recommendation from the Audit Committees, the Boards of Directors of Edison
International and SCE decided to no longer engage Arthur Andersen LLP as Edison International's and SCE's
independent accountants, and appointed PricewaterhouseCoopers LLP to serve as Edison International's and SCE's
independent accountants for the balance of 2002.
Arthur Andersen LLP's reports on Edison International's and SCE's consolidated financial statements for the
year ended 2001 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified
as to uncertainty, audit scope, or accounting principles; except that the 2001 report on Edison International's
financial statements included an explanatory paragraph with respect to the adoption of Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," and the adoption of
Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets."
During Edison International's and SCE's fiscal year 2001 and through May 8, 2002, there were no
disagreements with Arthur Andersen LLP on any matter of accounting principles or practices, financial
Page 39
statement disclosure, or auditing scope or procedure, which, if not resolved to Arthur Andersen LLP's
satisfaction, would have caused them to make reference to the subject matter in connection with their reports on
Edison International's and SCE's consolidated financial statements for those periods; and there were no
reportable events, as listed in Item 304(a)(1)(v) of SEC Regulation S-K.
During Edison International's and SCE's fiscal year 2001 and through May 8, 2002, Edison International and
SCE did not consult PricewaterhouseCoopers LLP with respect to the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on
Edison International's or SCE's consolidated financial statements, or any other matters or reportable events
listed in Item 304(a)(2)(i) and (ii) of SEC Regulation S-K.
In connection with preparing Current Reports on Form 8-K dated May 8, 2002, to report the change in
certifying accountant, Edison International and SCE provided Arthur Andersen LLP with substantially the same
disclosures as appear above. By a letter dated May 10, 2002, Arthur Andersen LLP stated its agreement with those
disclosures. Because Arthur Andersen LLP is no longer conducting business, the Companies have not furnished them
with a copy of the specific disclosures appearing above. Edison International and SCE furnished
PricewaterhouseCoopers LLP with a copy of the foregoing disclosures and gave them the opportunity to provide a
statement to be included in this Proxy Statement if they believe the foregoing disclosures to be incorrect or
incomplete. PricewaterhouseCoopers did not present any response indicating its disagreement with the foregoing
disclosures.
AUDIT COMMITTEES' REPORT(1)
The Edison International and SCE Audit Committees have certain duties and powers as described in their
charters. The Edison International Audit Committee Charter approved by the Edison International Board on
December 14, 2000, and the SCE Audit Committee Charter approved by the SCE Board on December 13, 2001, remained
unchanged. The Audit Committees are currently composed of the same five non-employee directors named at the end
of this report and are independent as defined by the rules of the stock exchanges on which the Companies are
listed.
Management is responsible for the Companies' internal controls and the financial reporting process,
including the integrity and objectivity of the financial statements. The independent accountants are responsible
for performing an independent audit of the Companies' financial statements in accordance with generally accepted
auditing standards and to issue a report thereon. The Committees monitor and oversee these processes. The
Committees' members are not accountants or auditors by profession and, therefore, have relied on certain
representations from management and the independent accountants about the carrying out of their respective
responsibilities.
---------------------
(1) SEC filings sometimes "incorporate information by reference." This means the Companies are referring you to
information that has previously been filed with the SEC, and that this information should be considered as
part of the filing you are reading. Unless Edison International or SCE specifically states otherwise, this
report shall not be deemed to be incorporated by reference and shall not constitute soliciting material or
otherwise be considered filed under the Securities Act or the Securities Exchange Act.
Page 40
In connection with the December 31, 2002, financial statements, the Audit Committees:
o reviewed and discussed the audited financial statements with the Companies' management;
o discussed with PricewaterhouseCoopers LLP, the Companies' independent accountants from May 8, 2002,
through year-end 2002, the matters required by Statement on Auditing Standards No. 61 (Communication
with Audit Committees); and
o received the written disclosures required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and discussed with PricewaterhouseCoopers LLP its independence from
the Companies.
Based upon these reviews and discussions, the Edison International and SCE Audit Committees recommended to
their respective Boards of Directors that the audited financial statements be included in the Edison
International and SCE 2002 Annual Reports on Form 10-K to be filed with the SEC.
---------------------------------------------------------------------
Audit Committees of the
Edison International and SCE
Boards of Directors
---------------------------------- ----------------------------------
Daniel M. Tellep (Chair) Robert H. Smith
Bradford M. Freeman Thomas C. Sutton
Richard T. Schlosberg, III
---------------------------------- ----------------------------------
INDEPENDENT ACCOUNTANT FEES
The following table sets forth the aggregate fees billed to Edison International (consolidated total
including Edison International and its subsidiaries) and SCE, respectively, for the fiscal year ended
December 31, 2002, by Arthur Andersen LLP and PricewaterhouseCoopers LLP, respectively:
Page 41
--------------------------------------------------- ---------------------- ---------------------
Edison International
and
Subsidiaries SCE
($000) ($000)
--------------------------------------------------- ---------------------- ---------------------
Audit Fees
Arthur Andersen 256 97
PricewaterhouseCoopers 6,392 1,195
--------------------------------------------------- ---------------------- ---------------------
Financial Information Systems Design
and Implementation Fees
Arthur Andersen 76 --
PricewaterhouseCoopers -- --
--------------------------------------------------- ---------------------- ---------------------
All Other Fees:
Tax
Arthur Andersen 1,659 183
PricewaterhouseCoopers 2,056 1,250
Audit-Related
Arthur Andersen -- --
PricewaterhouseCoopers 20 20
Advisory
Arthur Andersen 615 615
PricewaterhouseCoopers -- --
Total All Other Fees
Arthur Andersen 2,274 798
PricewaterhouseCoopers 2,076 1,270
--------------------------------------------------- ---------------------- ---------------------
INDEPENDENT ACCOUNTANTS FOR 2003
The Audit Committees of the Edison International and SCE Boards of Directors have considered whether the
provision of the non-audit services described above is compatible with maintaining PricewaterhouseCoopers'
independence. The Edison International and SCE Boards have selected PricewaterhouseCoopers LLP as the Companies'
independent accountants for calendar year 2003. PricewaterhouseCoopers is an international accounting firm which
provides leadership in public utility accounting matters and has served as the Companies' independent accountants
since May 8, 2002. Prior to that date, Arthur Andersen LLP served in that role.
Representatives of PricewaterhouseCoopers are expected to attend the Annual Meeting to respond to
appropriate questions and to make a statement if they wish; representatives of Arthur Andersen are not expected
to attend.
Page 42
TO BE VOTED ON BY
EDISON INTERNATIONAL SHAREHOLDERS ONLY
SHAREHOLDER PROPOSAL ON
SHAREHOLDER RIGHTS AGREEMENT
Item 2 on Edison International Proxy Card
A shareholder of Edison International has given notice of his intention to present the following proposal
for action at the Annual Meeting. Pursuant to Rule 14a-8(l)(1) of the Securities Exchange Act, Edison
International will provide the number of Edison International securities held by the proponent of this
shareholder proposal promptly upon receipt of an oral or written request; his name and address are below. The
following text and information was provided by the proponent of the shareholder proposal and has not been
endorsed or verified by Edison International. The Edison International Board of Directors response to the
shareholder proposal appears below under "Recommendation of Your Board of Directors Against Item 2."
2 - Shareholder Vote regarding Poison Pills
This topic won an average 60%-yes vote at 50 companies in 2002
This is to recommend that our Board of Directors redeem any poison pill previously issued (if
applicable) and not adopt or extend any poison pill unless such adoption or extension has been
submitted to a shareholder vote.
This proposal is submitted by Ronald D. Rattner, 1998 Broadway, #1204, San Francisco, CA 94109.
Harvard Report
A 2001 Harvard Business School study found that good corporate governance (which took into account
whether a company had a poison pill) was positively and significantly related to company value.
This study, conducted with the University of Pennsylvania's Wharton School, reviewed the
relationship between the corporate governance index for 1,500 companies and company performance
from 1990 to 1999.
Certain governance experts believe that a company with good governance will perform better over
time, leading to a higher stock price. Others see good governance as a means of reducing risk, as
they believe it decreases the likelihood of bad things happening to a company.
Since the 1980s Fidelity, a mutual fund giant with $800 billion invested, has withheld votes for
directors at companies that have approved poison pills, Wall Street Journal, June 12, 2002.
Challenges Faced by our Company
Shareholders believe that the challenges faced by our company in the past year demonstrate a need
for:
1) Shareholders to have an input on any poison pill considered by our company.
2) And that our management not be sheltered in their jobs by a poison pill which could prevent the
emergence of a more capable management team.
Page 43
Challenges facing our company include:
1) Our Southern California Edison (SCE) subsidiary credit rating was cut to "junk."
2) Tight credit, weak electricity demand and low prices will hit Edison in 2003 according to an
industry analyst.
3) SCE faces a legal challenge to its debt-repayment deal with the Public Utilities Commission.
4) SCE is embroiled in a contentious rate case to determine how much customers must pay and the
level of return for SCE.
Additionally:
5) Our directors, who have a primary duty to us as shareholders to monitor our management,
consisted of 2 employees and Mr. Ronald Olson who has a link to $11 million in legal billings to
our company.
6) A securities fraud class action lawsuit was filed against certain officers of our company in
March 2001. The charges included misrepresenting and/or failing to disclose material facts on the
financial condition of our company.
Council of Institution Investors Recommendation
The Council of Institutional Investors www.cii.org, an organization of 120 pension funds investing
$1.5 trillion, called for shareholder approval of poison pills. In recent years, various companies
have redeemed existing poison pills or sought shareholder approval for their poison pill. This
includes Columbia/HCA, McDermott International and Airborne, Inc. Shareholders believe that our
company should follow suit and allow shareholders a vote on this key issue.
Allow Shareholder Vote regarding Poison Pills
Yes on 2
RECOMMENDATION OF YOUR BOARD
OF DIRECTORS AGAINST ITEM 2
In 1996, the Edison International Board adopted a Rights Agreement (which we refer to as our "shareholder
rights plan" and the proponent of the shareholder proposal refers to as a "poison pill") to enhance the ability
of Edison International's shareholders to receive fair value for their investment in the event of an attempted
takeover of your company. The Board, comprised of a substantial majority of non-management Directors, has
reviewed our shareholder rights plan on a regular basis and continues to believe that the rights plan is in the
best interests of Edison International's shareholders. THEREFORE, THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE "AGAINST" ITEM 2.
Our shareholder rights plan is designed to prevent the coercive, abusive tactics that often characterize
unsolicited takeover attempts. Hostile takeover attempts made at a price less than fair, partial tender offers
that deprive some shareholders of the ability to obtain a full and fair price for all of their shares, and other
abusive takeover practices are all shortsighted techniques used to realize a quick gain at the expense of
fairness to the Company, its shareholders and its employees. Our shareholder rights plan is a "poison pill" only
with respect to those abusive practices.
Our shareholder rights plan is not intended to, and will not, prevent a takeover on terms that your Board,
as the shareholders' elected representatives, determines to be fair and equitable to all
Page 44
shareholders. Rather, it encourages a potential acquirer to negotiate in good faith directly with the Board. It
affords the Board valuable time to consider thoughtfully an offer and any alternative proposals. Thus, our
shareholder rights plan strengthens the Board's ability, in the exercise of its fiduciary duties, to protect and
maximize value for all shareholders.
The Board believes that the adoption of a shareholder rights plan is appropriately within the scope of the
responsibilities of the Board, acting on behalf of all the shareholders. Redeeming (eliminating) the rights
issued under our shareholder rights plan at this time would remove an important tool that the Board believes it
should have for the protection of shareholders. In the Board's view, any decision to cancel the shareholder
rights plan should be made in the context of a specific takeover proposal.
The proponent's arguments in support of his proposal are vague and, in our view, misleading. Moreover, those
arguments do not actually support adoption of the proposal. The proponent implies that having a shareholder
rights plan in place is not good corporate governance. However, according to a study performed by the Investor
Responsibility Research Center (IRRC), 59.6% of S&P 500 companies had shareholder rights plans at the end of
2001. And a study conducted by Georgeson & Company, a nationally recognized proxy solicitation and investor
relations firm, analyzing takeover data from 1992 to 1996, concluded that companies with rights plans received an
additional $13 billion in takeover premiums when compared with companies without shareholder rights plans.
Our shareholder rights plan also has features preferred by Institutional Shareholder Services that many
other companies' plans lack. First, only takeover offers for 20% or more of Edison International's common stock
will trigger the plan. (Of the 1,877 companies with shareholder rights plans for which IRRC had trigger
information in 2001, 70.8% had a trigger of 15% or less.) Second, our shareholder rights plan does not have a
"dead hand" provision, which would allow only certain directors in place at the time the plan was adopted, or
their designated successors, to redeem the rights issued under the plan.
Over the past two years, Edison International has been buffeted by the California energy crisis and adverse
changes in national and global energy markets. We have worked hard to weather these difficult times and restore
value for our shareholders. We have made progress in recovering SCE's past power procurement costs and have
begun to improve Edison International's and SCE's credit ratings. In this environment, it is particularly
important that we have the tools to deal with any coercive and unfair takeover attempts. Now is not the time to
remove our shareholder rights plan.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST"
ITEM 2.
Page 45
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR
2004 ANNUAL MEETINGS
To be considered for inclusion in the 2004 proxy statement, shareholder proposals for the Edison
International and SCE 2004 annual meetings must be received by December 9, 2003.
Shareholders intending to bring any other business before an annual meeting, including Director nominations,
must give written notice to the Edison International or SCE Secretary, as the case may be, of the business to be
presented. The notice must be received at our offices within the periods, and with the information and
documents, specified in the Bylaws. A copy of the Bylaws may be obtained by writing to the Edison International
or SCE Secretary.
Assuming that the 2004 annual meetings of shareholders are held on May 20, 2004, as currently specified by
the Bylaws, the period for the receipt by the Edison International or SCE Secretary of written notice of other
business to be brought by shareholders before the 2004 annual meetings of shareholders, including Director
nominations, will begin on October 10, 2003, and end on December 9, 2003.
CORPORATE GOVERNANCE PRACTICES
A description of the Companies' corporate governance practices is available on our Internet site at
www.edisoninvestor.com. The Nominating/Corporate Governance Committees periodically review the Companies'
corporate governance practices and make recommendations to the Companies' Boards that the practices be updated
from time to time.
AVAILABILITY OF FORM 10-K AND OTHER INFORMATION
The Edison International and SCE 2002 Annual Reports on Form 10-K, including the financial statements and
the financial statement schedules but excluding other exhibits, will be furnished without charge to shareholders
upon written request. These reports are expected to be available for distribution after March 31, 2003.
A copy may be requested by writing to:
Ms. Betty Hutchinson
Law Department, Corporate Governance
Edison International (or SCE, as the case may be)
2244 Walnut Grove Avenue, P. O. Box 800
Rosemead, California 91770
Page 46
OTHER PROPOSED MATTERS
The Edison International and SCE Boards were not aware by December 5, 2002 (the latest date for shareholders
to provide advance notice of business intended to be presented at the Annual Meeting) of any other matters which
can properly be presented for action at the Annual Meeting.
If any other matters should properly come before the Annual Meeting, including matters incident to the
conduct of the Annual Meeting, the proxies will vote the shares in accordance with their judgment. Discretionary
authority to do so is included in the proxies.
Dated: April 7, 2003
For the Boards of Directors,
/s/ BEVERLY P. RYDER
BEVERLY P. RYDER
Vice President and Secretary
Edison International
Secretary
Southern California Edison Company
Page 47
LOGO EQUISERVE
VOTE
-----------------------------
BY NET
VOTE BY NET
Step 1
Welcome to the EquiServe online voting wizard!
Just follow a few simple steps to complete the secure online voting process:
Authentication: Login using your voter control number
Delivery preference: Setup future delivery of your annual meeting materials
Voting: Cast your vote and receive your confirmation online
Finish: Update your address and review other options
If you have more than one proxy card, instruction card or ballot, please vote them one card at a time. To get
started now, login below and click "Continue".
-------------------------------------------------------------------------------------------------------------------
Step 1: Authentication
Enter your vote control number as it appears on your proxy
Card, instruction card or ballot _________________________
Enter the last 4 digits of the U.S. social security number (SSN)
Or the U.S. taxpayer identification number (TIN) for this
Account.* ____________
*If you do not have a SSN or TIN for this account, please
leave this box blank.
CONTINUE
Home/About Security/Privacy Policy/Back to Top
(C)2002 EquiServe. All rights reserved(R)
LOGO EQUISERVE
VOTE
-----------------------------
BY NET
VOTE BY NET
LOGO EDISON INTERNATIONAL
Step 2
Welcome
Name line
Address line
City, State, Zip line
CONTINUE
Home/About Security/Privacy Policy/Back to Top
(C)2002 EquiServe. All rights reserved(R)
LOGO EQUISERVEVOTE
VOTE
-----------------------------
BY NET
VOTE BY NET
LOGO EDISON INTERNATIONAL
Step 3
Proxy/Voting Instruction Card
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
JOHN E. BRYSON and THEODORE F. CRAVER, JR., are hereby appointed proxies of the undersigned with full power of
substitution to vote all shares of stock the undersigned is entitled to vote at the annual meeting of
shareholders of Edison International to be held at the Hyatt Regency Long Beach, 200 South Pine Avenue, Long
Beach, California, on May 15, 2003, at 10:00 a.m., Pacific Time, or at any adjournment or postponement of the
meeting, with all the powers and discretionary authority the undersigned would possess if personally present at
the meeting on the matters listed below.
The shares will be voted as indicated on this card. In addition, the appointed proxies may vote in their
discretion on such other matters as may properly come before the meeting.
VOTING INSTRUCTIONS TO THE EDISON INTERNATIONAL STOCK FUND INVESTMENT MANAGER,
STATE STREET BANK AND TRUST COMPANY
If I hold shares through the Southern California Edison Company Stock Savings Plus Plan, this card also provides
the following voting instructions to the Edison International stock fund investment manager: You are instructed
to vote confidentially as described above the shares of stock credited and conditionally credited to my account
through March 17, 2003. I understand that the stock will be voted as directed provided the Edison International
stock fund investment manager receives this card by 2:00 p.m., Pacific Time, on May 12, 2003, and all stock for
which the Edison International stock fund investment manager has not received instructions by this card at the
designated time may be voted in its discretion.
Edison International Directors recommend a vote:
`FOR" all nominees
"AGAINST" Proposal 2
-------------------------------------------------------------------------------------------------------------------
Check this box to cast your vote in accordance with the recommendation of Edison International
Directors on all matters to be voted on at the meeting: ____
-------------------------------------------------------------------------------------------------------------------
Edison International Directors recommend a vote "FOR" all Nominees.
1. Election of Directors ___ For all Nominees, except as noted below___ Withhold as to all Nominees
___ J.E. Bryson ___ B. M. Freeman ___ J.C. Hanley
___ B. Karatz ___ L. G. Nogales ___ R. L. Olson
___ J. M. Rosser ___ R. T. Schlosberg, III ___ R. H. Smith
___ T. C. Sutton ___ D. M. Tellep
_________________________________________________________________________________________________________________
Edison International
Directors recommend a vote "AGAINST" Proposal 2.
2. Shareholder Proposal on Shareholder
Rights Agreement ___ FOR ___ AGAINST ___ ABSTAIN
_________________________________________________________________________________________________________________
If applicable, click
the option box ___ Mark here if you plan to attend the annual meeting.
___ If you receive more than one set of Proxy Materials
at the address shown on this proxy card and have no
need for the extra copies, please mark here. Proxy
cards will continue to be mailed to this account.
Please make sure that at least one account continues
to receive these materials.
___ If you wish to receive shareholder communications
including Proxy Statements and Annual Reports via
Internet as described in the Proxy Statement, please
Mark here.
To cast your vote please click "Submit"
(Note: Your vote will not be counted until you click "Submit".)
SUBMIT
Home/About Security/Privacy Policy/Tabk to Tope
(C)2002 EquiServe. All rights reserved(R).
LOGO EQUISERVEVOTE
VOTE
-----------------------------
BY NET
VOTE BY NET
LOGO EDISON INTERNATIONAL
Step 3
Name line
Address line
City, State, Zip line
Thank you for using Equiserve's Vote-By-Net facility.
-------------------------------------------------------------------------------------------------------------------
Step 3: Summary of your vote
Your vote was recorded by EquiServe as follows:
-------------------------------------------------------------------------------------------------------------------
1. Election of Directors
2. Shareholder Proposal on Shareholder Rights Agreement
-------------------------------------------------------------------------------------------------------------------
Plese keep a copy for your records. To change your vote click "Back".
You can now vote another ballot or click "Finish" to exit to EquiServe Homepage.
BACK FINISH
Home/About Security/Privacy Policy/Back to Top
(C)2002 EquiServe. All rights reserved(R).
2003 Telephone Voting Script
Toll Free from the U.S. and Canada: 1-877-PRX-VOTE or 1-877-779-8683
Call Collect from outside the U.S. and Canada: 201-536-8073
1. Welcome to the electronic voting system. Please have your proxy card or voting instruction sheet or ballot
available before voting.
2. Enter the Voter Control Number as it appears on the card followed by the pound sign.
3. One moment please while we verify your information.
4. Enter the last four digits of the U.S. social security number or the U.S. taxpayer identification number
for this account followed by the pound sign.
5. The company that you are voting is Edison International.
6. Your vote is subject to the same terms and authorizations as indicated on the proxy card. It also
authorizes the named proxies to vote according to the instructions at the meeting of the stockholders.
7. To vote all proposals in accordance with the recommendations of the Board of Directors, press 1. If you
wish to vote on one proposal at a time, press 2.
If 1, go to 9.
If 2, go to 7.
8. Item # 1. To vote for all nominees press 1. To withhold from all nominees press 2. To withhold from
individual nominees press 3.
If 1, go to 8.
If 2, go to 8.
If 3, go to Director Exception.
Director Exception
Enter the 2-digit number next to the nominee from whom you would like to withhold your vote,
followed by the pound key. Or, if you have completed voting on Directors, press the pound key
again.
If pound key entered twice, go to 8.
If valid nominee number, go to Next Nominee.
Next Nominee
To withhold your vote from another nominee enter the 2-digit number next to the nominee
followed by the pound key. Or if you have completed voting on Directors press the pound key
again.
If pound key entered twice, go to 8.
If valid nominee number, go to Next Nominee.
Invalid Nominee Number
You have entered an invalid nominee number.
{Go to Next Nominee.}
9. Item #2. To vote FOR, press 1; AGAINST, press 2; to ABSTAIN, press 3.
If 1, got o 10.
If 2, go to 10.
If 3, go to 10.
10. If you would like to attend the annual meeting, press 1. If not, press 2.
If 1, go to 11.
If 2, go to 11.
11. If you receive more than one set of proxy materials at the address shown on your proxy card and have no
need for the extra copies, please press 1. If not, press 2.
If 1, go to 12.
If 2, go to 12.
12. If you are interested in receiving shareholder communications including annual meeting materials
electronically, press 1. If not, press 2.
If 1, go to 13.
If 2, go to 13.
13. You have cast your vote as follows:
Play back Playback back the appropriate vote for this proxy card.}
Default Playback
You have voted in the manner recommended by the Board of Directors.
Director Proposal Playback
Item #1. You have voted for all nominees
Item #1. You have voted to withhold your vote from all nominees.
Item #1. You have voted for all nominees except for the
following nominee numbers.
Shareholder Proposal Playback
Voted FOR Item 2
Vote AGAINST Item 2
ABSTAIN
14. To confirm your vote, press 1. To cancel your vote, press 2.
If 1, go to 16.
If 2, go to 15.
15. Your vote has been cancelled. If you wish to vote this card or another card, press 1. Otherwise, please
hang up and mark, sign, and return your card in the envelope provided. Thank you for calling.
16. Your vote has been successfully recorded. It is not necessary for you to mail in your card. If you wish
to vote another card or change your vote, press 1. Otherwise, please hang up. Thank you for voting.
No Key Pressed
Go to the same item (repeat three times); otherwise, go to Error.
Invalid Option
You have entered an invalid option. Go to the same item (repeat three times); otherwise, go to
Error.
Error
We are unable to process your request at this time. Thank you for calling.
{Call ends.}