Two-for-one stock split frequently asked questions

At its meeting on Jan. 20, 2011, the Wisconsin Energy Corporation board of directors approved a two-for-one stock split. As a result of the stock split, each stockholder received one additional share of Wisconsin Energy common stock for each share held at the close of business on February 14, 2011, the split record date. To assist our stockholders in their understanding of the split, we are providing answers to the most frequently asked questions.

Why did the WEC board of directors approve a stock split?
Wisconsin Energy Chairman, President and Chief Executive, Gale Klappa said, "The actions by our board were made possible by the company's long-term performance in delivering value to our customers and stockholders. In addition, the stock split reflects our goal to maintain a market price for our shares that is attractive to a broad range of institutional and individual investors."
Press release

What is the effective date of the split?
There are several key dates:

The record date, Feb. 14, 2011, determines which stockholders are entitled to receive additional shares due to the split.
The payment date (or distribution date), March 1, 2011, is the date stockholders of record are mailed notification of the shares received as a result of the split.
The ex-split date, March 2, 2011, is the date when WEC common shares will trade on the NYSE at the new split-adjusted price.

What does a two-for-one stock split mean to Wisconsin Energy stockholders?
Stockholders were issued one additional share of common stock for every share of common stock held by that stockholder at the close of business on the record date, and have twice as many shares after the split as before the split. The split doubled the number of shares outstanding but the corresponding market value per share decreased by half. The overall market value of the stockholder's individual investment remains the same.

Example: Assume that as of the Feb. 14, 2011 record date, an investor owned 200 shares of WEC common stock and the market price is $60 per share. The investor's total investment value would be $12,000. On March 1, 2011, the distribution date, stockholders of record were mailed notification of the shares received as a result of the split. After the split, the investor owned 400 shares at a market price of $30 per share (assuming a $60 stock price on March 1, 2011). The investor's total investment value in WEC would remain the same at $12,000 until the stock price moves up or down.

How does the split affect WEC’s first quarter dividend?
Your Board declared a first quarter cash dividend of 52 cents per share payable on March 1, 2011. The cash dividend was paid on pre-split shares held by stockholders at the close of business on the record date of Feb. 14, 2011. The cash dividend was not paid on the shares issued as a result of the stock split as those shares were issued after the record date of the cash dividend.

How does the split affect WEC’s future quarterly dividend rate?
To maintain the same dividend rate, the recently announced 52 cents per share dividend rate was adjusted by half (to 26 cents per share) to reflect the increased number of shares outstanding because of the split. As an example, at this dividend rate, a stockholder whose stock ownership increased from 200 to 400 shares because of the split would receive a dividend of 26 cents multiplied by 400 shares ($104). The pre-split dividend would have been calculated by multiplying 200 shares by 52 cents per share (also $104). As you can see, although the dividend rate changed, the dividend amount credited to stockholder accounts is the same pre and post split. Declaration of dividends and the appropriate amount of any dividends in the future will continue to be determined by the Board of Directors.

Is the stock split a taxable transaction?
No. We have been advised by counsel that under present federal income tax laws, your receipt of shares issued under this split is not taxable as income to you. However, your basis in all of the shares subject to the split will be impacted and you must consider this impact when determining the amount of gain or loss that results from the sale of any shares (gain or loss must be reported for federal income tax purposes).

Although this tax information is provided for your assistance, we are not providing personal tax advice. You should consult your personal tax advisor regarding the tax consequences of any transaction you undertake with these shares. You should also consult your tax advisor regarding the tax consequences in foreign jurisdictions.

Under existing U.S. laws and regulations, the new shares issued will have a basis equal to one-half the adjusted cost or other basis of the shares on which they were distributed. For example, if prior to the stock split you own 100 shares with a basis of $50 per share, half of the basis in each of those shares would be allocated to the corresponding new share, resulting in a basis of $25 per share for each of the 200 shares owned after the split. For tax purposes, the holding period of the new shares is the same as for the old shares on which they were issued.

Does the two-for-one stock split dilute the value of my WEC stock holdings by increasing the number of shares outstanding?
No. This move does not change the proportionate interest that a stockholder maintains in the company. That is, a stockholder who owned 1 percent of WEC common stock before the split will continue to own 1 percent of WEC common stock after the split.

Why didn't I receive a new stock certificate for my additional shares?
As a convenience to stockholders, all additional shares were issued in book-entry form, either through the Direct Registration System (DRS) or as a credit to an existing stock account.

How were additional shares from the split distributed to registered stockholders?

For Stock Plus Investment Plan participants, all additional shares were credited to their existing account.
For stockholders who hold stock certificates or DRS shares, additional shares were issued in book-entry form through the direct registration form of ownership. These shares were described on WEC account statements as book entry shares.

What is Direct Registration?
The direct registration form of ownership allows registered stockholder to maintain their shares in book-entry form without the need of a physical certificate. The stockholder retains full ownership of the shares without the responsibility of holding the actual certificate. See the DRS brochure for more information.

Why did WEC use DRS?
There are advantages to having your shares in DRS. The benefits are that it

saves you the burden of storing your certificate(s) in a safe place, i.e. safe deposit box or vault;
eliminates the risk of potential loss thus avoiding the significant costs involved in replacing any lost, stolen, or destroyed certificates;
eliminates the risk of fraudulent transfer of certificates;
saves the costs associated with the issuance and delivery of physical stock certificates;
makes your stock transactions faster and easier;
saves you the inconvenience of delivering stock certificate(s) to your broker for sale or safekeeping; and
allows for shares to be moved electronically to your brokerage account.

Are there any fees associated with DRS?
There are no fees to the stockholder for holdings shares in DRS. This is a free service which eliminates the worry and responsibility of keeping track of stock certificates, as well as the time and expense of replacement if certificates are lost or misplaced. Fees will be charged for selling your shares through the DRS program.

What do I do with my existing WEC stock certificate(s)?
Your existing common stock certificates are still valid. The stock certificates you personally hold continue to represent the same number of shares as shown on their face and should be kept in a safe place such as a safety deposit box, as they are valuable documents. However, today most shares are kept in paperless fashion and stockholders have the option to conveniently convert all valid certificates to Direct Registration.

How do I convert my WEC stock certificates to DRS?
If you would like to take advantage of the convenience of having all shares held in DRS/book-entry form, you must mail your certificates to:

Wisconsin Energy Corporation
BNY Mellon Shareowner Services
P.O. Box 358035
Pittsburgh, PA 15252-8035

It is recommended that you mail your stock certificates, certified or registered mail and insured for 2 percent of the current market value. This is the cost to replace the certificates if they are lost. Do not sign your stock certificates. Include written instructions indicating you would like to deposit your stock certificate(s) into DRS/book entry form. All shareholders shown on the account must sign the written request. The certificate shares will then be added to your account.

How do I contact the transfer agent?
Visit our Contact us page.

Please be advised that all of the answers above are intended only to provide a general overview of the stock split process. None of the answers should be considered tax or investment advice. You should consult your tax or investment professionals for detailed advice that takes into account your specific circumstances.