<PAGE> 1
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:
[X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11 (c) or
Section 240.14a-12
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
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(Name of registrant as specified in its Charter)
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(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 the table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
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registration statement number, or the Form or Schedule and the date
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<PAGE> 2
[CENTRAL LOUISIANA ELECTRIC COMPANY, INC. LOGO]
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
AND PROXY STATEMENT
MARCH 11, 1998
<PAGE> 3
[CENTRAL LOUISIANA ELECTRIC COMPANY, INC. LOGO]
March 11, 1998
To the Shareholders of
Central Louisiana Electric Company, Inc.:
The annual meeting of shareholders for 1998 will be held at the Pineville
High School Auditorium at 1511 Line Street, Pineville, Louisiana, on Friday,
April 24, 1998, at 9 a.m., Central time. A notice of annual meeting of
shareholders and proxy statement is enclosed herewith, together with a proxy
that may be used by shareholders who are unable to attend the meeting in person.
The principal items of business to be transacted at the annual meeting are:
(1) the election of directors; (2) the appointment of independent auditors of
the Company for the year ending December 31, 1998; (3) the approval of an
amendment to the Company's 1990 Long-Term Incentive Compensation Plan for the
benefit of the outside directors of the Company and a related amendment to the
Company's Deferred Compensation Plan for Directors; (4) the approval of an
amendment to the Company's Restated Articles of Incorporation to delete section
3 of article 7 thereof; and (5) the approval of an amendment to the Company's
Restated Articles of Incorporation to change the name of the Company from
Central Louisiana Electric Company, Inc. to Cleco Corporation.
The board of directors of the Company recommends election of the nominees
for director, appointment of the independent auditors, approval of the
amendments to the benefit plans mentioned above, approval of the proposal to
amend the Company's Restated Articles of Incorporation to delete section 3 of
article 7 thereof and approval of a proposal to amend the Company's Restated
Articles of Incorporation to change the name of the Company to Cleco
Corporation, in each case as named or described in the accompanying proxy
statement.
You are cordially invited to attend the meeting. Even if you now expect to
attend the meeting, you are requested to sign, date and return the accompanying
proxy in the enclosed addressed envelope that requires no postage if mailed in
the United States. If you attend the meeting, you may vote in person even though
you have mailed in your proxy. Your continued interest and cooperation are
greatly appreciated.
Sincerely,
/s/ GREGORY L. NESBITT
Gregory L. Nesbitt
President and Chief Executive Officer
<PAGE> 4
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1998
To the Shareholders of
Central Louisiana Electric Company, Inc.:
Notice is hereby given that the annual meeting of shareholders of Central
Louisiana Electric Company, Inc. ("Cleco" or the "Company") will be held at the
Pineville High School Auditorium at 1511 Line Street, Pineville, Louisiana, on
Friday, April 24, 1998, at 9 a.m., Central time, for the following purposes:
(1) To elect directors;
(2) To consider and act upon a proposal to appoint the firm of Coopers &
Lybrand L.L.P., independent certified public accountants, as auditors
of the Company for the year ending December 31, 1998;
(3) To consider and act upon a proposal to amend the Company's 1990
Long-Term Incentive Compensation Plan for the benefit of the outside
directors of the Company and to make a related amendment to the
Company's Deferred Compensation Plan for Directors;
(4) To consider and act upon a proposal to amend the Company's Restated
Articles of Incorporation to delete section 3 of article 7 thereof,
which section states that no director shall be required to own any
stock in the Company;
(5) To consider and act upon a proposal to amend the Company's Restated
Articles of Incorporation to change the name of the Company from
Central Louisiana Electric Company, Inc. to Cleco Corporation; and
(6) To transact such other business as may properly come before the meeting
or any adjournments thereof.
Holders of record of common stock and preferred stock of the Company at the
close of business on February 24, 1998 are entitled to notice of and to vote at
the annual meeting.
The bylaws of the Company require that the holders of shares of capital
stock representing a majority of the votes entitled to be cast be represented in
person or by proxy at the meeting in order to constitute a quorum for the
transaction of business. Therefore, it is important that your stock be
represented at the meeting.
Please date, sign and return the enclosed proxy in the accompanying
envelope.
By order of the board of directors.
/s/ MICHAEL P. PRUDHOMME
Michael P. Prudhomme
Secretary/Treasurer
March 11, 1998
<PAGE> 5
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
P. O. Box 5000
Pineville, Louisiana 71361-5000
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
The accompanying proxy is solicited on behalf of the board of directors of
Central Louisiana Electric Company, Inc. ("Cleco" or the "Company") to be voted
at the annual meeting of shareholders of the Company to be held at the time and
place and for the purposes set forth in the foregoing notice. In addition to the
original solicitation by mail, certain regular employees of the Company may
solicit proxies by telephone, facsimile or in person, and Morrow & Company, Inc.
("Morrow") has been retained on customary terms to assist in the solicitation of
proxies. The Company has engaged Morrow to assist in the solicitation of proxies
at a fee of approximately $11,500, plus expenses. Other than Morrow, no
specially engaged employees or solicitors will be retained to solicit proxies.
All expenses of such solicitation, including the cost of preparing and mailing
this proxy statement and the reimbursement of brokerage firms and other nominees
for their reasonable expenses in forwarding proxy material to beneficial owners
of the Company's capital stock, will be borne by the Company. This proxy
statement and the accompanying proxy are being mailed to shareholders beginning
on or about March 11, 1998.
All duly executed proxies will be voted in accordance with the instructions
thereon. If no instructions have been given in a proxy, the shares represented
thereby will be voted at the annual meeting of shareholders or any adjournments
thereof FOR Item 1 (election of the nominees for director), FOR Item 2
(appointment of Coopers & Lybrand L.L.P. as independent auditors of the Company
for 1998), FOR Item 3 (approval of a proposal to amend the Company's 1990
Long-Term Incentive Compensation Plan for the benefit of the outside directors
of the Company and to make a related amendment to the Company's Deferred
Compensation Plan for Directors), FOR Item 4 (approval of a proposal to amend
the Company's Restated Articles of Incorporation to delete section 3 of article
7 thereof), FOR Item 5 (approval of a proposal to amend the Company's Restated
Articles of Incorporation to change the name of the Company from Central
Louisiana Electric Company, Inc. to Cleco Corporation) and, in the discretion of
the persons named in the proxy, on any other business that may properly come
before the meeting.
Shareholders who execute proxies retain the right to revoke them at any
time before they are voted. A shareholder who attends the meeting may vote in
person even though such shareholder has mailed in a proxy. A proxy may be
revoked by a proxy bearing a later date. The revocation of a proxy will not be
effective until written notice thereof has been given to the secretary of the
Company, unless the person granting such proxy votes in person.
VOTING OF SECURITIES
As of February 24, 1998, the record date for the determination of
shareholders entitled to vote at the meeting, the Company had outstanding
shares of common stock, par value $2.00 per share ("Common Stock"), and
shares of preferred stock, par value $100 per share ("$100 Preferred Stock"),
which are the only classes of stock of the Company outstanding and entitled to
vote at the meeting. Each holder of shares of Common Stock or $100 Preferred
Stock is entitled to one vote for each share held, except that at an election of
directors, each holder of shares of Common Stock is entitled to cast as many
votes as equal the number of such holder's shares multiplied by the number of
directors to be elected, and may cumulate all or any part of such votes for one
or more of the nominees.
Under Louisiana law and the Company's Restated Articles of Incorporation
and Bylaws, an abstention from voting on a matter by a shareholder present in
person or represented by proxy at the
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meeting is not a vote "cast" and is counted neither "for" nor "against" the
matter subject to the abstention. Broker non-votes on matters are treated as
shares as to which voting power has been withheld by the beneficial holders of
those shares and, therefore, as shares not entitled to vote. Under Louisiana law
and the Company's Restated Articles of Incorporation and Bylaws, a quorum is
determined based upon the number of outstanding shares of capital stock of the
Company entitled to vote on a matter, including shares relating to abstentions.
ELECTION OF DIRECTORS
The Company's Bylaws provide for the division of the board of directors
into three classes, Class I, Class II and Class III, with each class consisting,
as nearly as possible, of one-third of the number of directors constituting the
whole board. The term of each directorship is three years, and the terms of the
three classes are staggered in a manner so that only one class is elected by the
shareholders annually. Those persons who served as directors of the Company
during the past year are named in the Company's 1997 Annual Report to
Shareholders. Four Class I directors are proposed for election this year to
serve as members of the board of directors until the annual meeting of
shareholders in 2001, or until their successors are elected and qualified. The
persons named in the accompanying proxy may act with discretionary authority (i)
with respect to cumulative voting of shares of Common Stock and (ii) upon the
unavailability of a nominee for election, although management is unaware of any
circumstances likely to render any of the nominees unavailable for election.
Unless a shareholder specifies otherwise, the persons named in the accompanying
proxy intend to vote in favor of the nominees listed below. The affirmative vote
of a plurality of the total votes cast is required for the election of
directors. All of the nominees, except Mr. David M. Eppler, currently serve as
directors of the Company. Directors who are members of Classes II and III, who
are continuing as directors at this time and whose terms of office expire in
1999 and 2000, respectively, are named on page 3.
Mr. Hugh J. Kelly, who has served as a director since 1992, will retire
from the board of directors effective at the annual meeting of shareholders
since he has reached the retirement age for outside directors specified in the
Company's Bylaws.
DIRECTORS
The following sets forth information concerning the four nominees for
election as directors at the annual meeting of shareholders and the continuing
directors, including the business experience of each during the past five years.
NOMINEES FOR ELECTION UNTIL 2001 ANNUAL MEETING
CLASS I DIRECTORS
SHERIAN G. CADORIA has served as president of Cadoria Speaker and
Consultancy Service since January 1992. She retired in 1990 as Brigadier General
of the United States Army after a 29-year military career. Ms. Cadoria (age 58)
has been a director of the Company since 1993 and is a member of the
compensation committee of the board of directors.
RICHARD B. CROWELL has been engaged in the practice of law for more than
five years as a member of the law firm of Crowell & Owens.(1) Mr. Crowell (age
59) has been a director of the Company since April 1997. He is also a director
of Whitney Holding Corporation and Whitney National Bank.
DAVID M. EPPLER has served as executive vice president and chief operating
officer of the Company since July 1997, executive vice president from January
1997 until July 1997, vice president of power supply and energy transmission
from 1995 to 1997 and vice president of finance and chief financial
- ---------------
1 Crowell & Owens performed legal services for the Company in 1997 and will be
retained to perform such services in 1998.
2
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officer from 1993 to 1995. Prior to that time, he had served as vice president
of finance and rates, treasurer and chief financial officer. Mr. Eppler (age 47)
joined the Company in 1981 and served as manager, investor relations and finance
until 1985, when he became vice president of financial services.
GREGORY L. NESBITT has served as chief executive officer of the Company
since 1993 and has served as president since 1992; he had served as chief
operating officer from 1991 to 1993 and as executive vice president from 1988 to
1991. Mr. Nesbitt (age 60) has been a director of the Company since 1988 and is
a member of the executive committee of the board of directors. He joined the
Company in 1980 and served as senior vice president of the Company's electric
power supply group until January 1988.
CLASS II DIRECTORS
(TERMS OF OFFICE EXPIRE IN 1999)
ROBERT T. RATCLIFF has been chairman, president and chief executive officer
of Ratcliff Construction Company, Inc., a company primarily engaged in the
design and construction of industrial, commercial and governmental facilities,
since 1975. Mr. Ratcliff (age 55) has been a director of the Company since 1993
and is a member of the audit committee of the board of directors. He is also a
director of Hibernia Corporation and Hibernia National Bank.
EDWARD M. SIMMONS is chairman of the board and chief executive officer of
McIlhenny Company (makers of Tabasco brand products). Prior to being named
chairman of the board in June 1996, Mr. Simmons had served as president and
chief executive officer of McIlhenny Company for more than five years. Mr.
Simmons (age 69) has been a director of the Company since 1992 and he previously
served on the Company's board of directors during the period 1971-1981. He is
chairman of the compensation committee and a member of the executive committee
of the board of directors and also serves as a director of First Commerce
Corporation, First National Bank of Commerce, Pan American Life Insurance
Company and Piccadilly Cafeterias, Inc.
WILLIAM H. WALKER, JR. is president and a director of Howard, Weil,
Labouisse, Friedrichs Inc., an investment banking firm, and has served in such
positions for more than five years. Mr. Walker (age 52) has been a director of
the Company since September 1996 and is a member of the audit committee of the
board of directors. He is also a director of Howard Weil Financial Corporation.
CLASS III DIRECTORS
(TERMS OF OFFICE EXPIRE IN 2000)
J. PATRICK GARRETT has been president and chief executive officer of
Windsor Food Company Ltd., a privately held company engaged in the food
processing business, since July 1995. Prior to that time, he had been engaged in
the practice of law for more than five years as a member of the law firm of
Baker & Botts, L.L.P. Mr. Garrett (age 54) has served as a director of the
Company since 1981 and is a member of the compensation committee of the board of
directors.
F. BEN JAMES, JR. has been president of James Investments, Inc., a company
primarily engaged in real estate development and international marketing, for
more than five years. Mr. James (age 62) has been a director of the Company
since 1986 and is chairman of the audit committee and a member of the executive
committee of the board of directors. He is also a director of First Commerce
Corporation.
A. DELOACH MARTIN, JR. has been chairman of Central Engineering & Supply
Company, a company engaged in the wholesale distribution of refrigeration and
mill supplies, for more than five years. Mr. Martin (age 68) became a director
of the Company in 1978 and is chairman of the executive committee and a member
of the audit committee of the board of directors.
3
<PAGE> 8
ORGANIZATION AND COMPENSATION OF THE BOARD OF DIRECTORS
The board of directors has an executive committee, an audit committee (the
"Audit Committee") and a compensation committee (the "Compensation Committee").
The members of such committees are identified under "-- Directors" above. The
board of directors has no standing nominating committee.
The Audit Committee recommends to the board of directors the appointment of
the independent auditors of the Company, reviews the scope of audits, reviews
and recommends to the board of directors financial reporting and accounting
practices, reviews the scope and results of the Company's procedures for
internal auditing and the adequacy of the system of internal accounting controls
of the Company, and has responsibility with respect to audit matters generally.
During 1997, the Audit Committee held two meetings.
The Compensation Committee approves, or in some cases recommends to the
board of directors, remuneration arrangements and compensation plans involving
the Company's directors, officers and employees, and administers the granting of
restricted stock and other awards to eligible employees under the Company's
long-term incentive compensation plan and annual incentive compensation program
described below. The Compensation Committee held three meetings in 1997.
The board of directors held four regular meetings and one special meeting
during 1997. At intervals between formal meetings, members of the board are
provided with information regarding the operations of the Company and are
consulted informally from time to time with respect to pending business. During
1997, all directors attended at least 75% of the total number of meetings of the
board of directors and of the committees of the board of directors on which such
directors served.
The director who is a regularly employed officer of the Company receives no
fees for serving as a director of the Company. Currently, each other director
who is not the chairman of a board committee receives an annual fee of $12,000
for serving as a director. The board of directors intends to approve, at its
meeting immediately following the annual meeting of shareholders, an increase in
the annual fee paid to outside directors to $18,000. Each director who is the
chairman of a board committee receives an additional annual fee of $3,000. Each
director receives $800 for each day he or she attends one or more meetings of
the board of directors or its committees. The Company also reimburses directors
for travel and related expenses incurred in attending meetings of the board of
directors or such committees. The Company has in effect a deferred compensation
plan for directors under which a director may elect to defer all or part of his
or her compensation as a director. The Company has a retirement plan for its
non-employee directors under which directors with five years of service receive,
at age 65 or upon later retirement, an annual payment equal to the annual board
fee in effect at the time of retirement. In connection with the proposed
increase in the amount of the annual retainer paid to outside directors, the
board of directors intends to fix the annual retirement benefit for outside
directors at $12,000. Benefits are payable for life or a period equal to the
number of years of service as a director, whichever is shorter. The Company also
provides its non-employee directors with $200,000 of life insurance and
permanent total disability coverage under the Company's group accidental death
and dismemberment plan, which covers all active, full-time employees.
The board of directors has recently analyzed its directors' compensation
policy and in connection with such analysis intends to increase, effective after
the annual meeting of shareholders, the annual retainer paid to the Company's
outside directors from the current $12,000 annually to $18,000 annually, with
payment to be made, at the option of the director, in either cash, Common Stock
or a combination of both. In connection with this increase, the board intends to
fix the annual retirement benefit for outside directors at $12,000.
Additionally, the board of directors intends to adopt a policy that all outside
directors should own at least 1,000 shares of Common Stock (the "Stock Ownership
Policy"). The board of directors also intends to approve, subject to the
approval of shareholders, the following changes to its directors' compensation
policy.
1. In connection with the Stock Ownership Policy, the Company's 1990
Long-Term Incentive Compensation Plan (the "Long-Term Plan") would be
amended so that each outside director
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who did not own at least 1,000 shares of Common Stock would receive the
annual equivalent of $6,000 in the form of a vested interest in
restricted Common Stock as a portion of his or her annual retainer, and
the other $12,000 of retainer in cash. Once the outside director has
accumulated at least 1,000 shares of Common Stock, the director may
elect to receive all of his or her compensation in the form of cash or
Common Stock or any combination thereof, and may elect to defer any or
all of such compensation pursuant to the Company's Deferred Compensation
Plan for Directors (the "Directors' Deferred Compensation Plan").
2. The Directors' Deferred Compensation Plan would be amended to include an
election to defer compensation in Common Stock. If Common Stock is
chosen, that portion of the deferred compensation which is treated as
invested in Common Stock would not be credited with interest, and any
dividends on the Common Stock would be reinvested in deferred Common
Stock.
3. The Long-Term Plan would also be amended so that each outside director
would be granted an option to purchase 2,500 shares of Common Stock with
an exercise price at the then current market price upon his or her
election or re-election to the board of directors and current outside
directors would be granted an option to purchase a portion of 2,500
shares of Common Stock prorated according to the number of years such
director had remaining in his or her term on the board of directors.
For additional information regarding the proposed amendment to the Long-Term
Plan and to the Directors' Deferred Compensation Plan relating to these changes
to the directors' compensation policy, see "Proposal to Approve the Amendment to
the 1990 Long-Term Incentive Compensation Plan and the Related Amendment to the
Deferred Compensation Plan for Directors."
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SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth the number of shares of Common Stock and
$100 Preferred Stock beneficially owned as of February 1, 1998 by each director
and nominee, each of the executive officers named in the Summary Compensation
Table below and all directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP OF AMOUNT AND NATURE OF
COMMON STOCK(1) BENEFICIAL OWNERSHIP
---------------------------------------------- OF $100 PREFERRED
OPTIONS STOCK(2)
EXERCISABLE ---------------------
WITHIN PERCENT PERCENT
DIRECT 60 DAYS OTHER OF CLASS INDIRECT OF CLASS
-------- ------------ ------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
DIRECTORS AND NOMINEES
Sherian G. Cadoria............. 150 *
Richard B. Crowell............. 20,516 49,540(3) *
David M. Eppler (4)............ 18,061 2,800 400 *
J. Patrick Garrett............. 2,000 *
F. Ben James, Jr............... 2,400 *
Hugh J. Kelly.................. 2,000 *
A. DeLoach Martin, Jr.......... 19,200 *
Gregory L. Nesbitt (5)......... 49,631 2,000 * 274 *
Robert T. Ratcliff............. 1,000 *
Edward M. Simmons.............. 1,359 *
William H. Walker, Jr.......... 1,000 *
NAMED OFFICERS
John L. Baltes, Jr............. 6,994 5,000 * 285 *
Darrell J. Dubroc.............. 2,472 * 174 *
Catherine C. Powell............ 4,455 * 228 *
All directors and executive
officers as a group (19
persons, including those
listed above)............... 143,909 15,800 49,540 % 2,142 *
</TABLE>
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(1) In accordance with Securities and Exchange Commission regulations, shares
are deemed to be "beneficially owned" by a person if such person directly or
indirectly has or shares the power to vote or to dispose of the shares,
regardless of whether such person has any economic interest in the shares.
In addition, a person is deemed to own beneficially any shares of which such
person has the right to acquire beneficial ownership within 60 days, as in
the case of the stock options which are set forth under the "Options
Exercisable Within 60 Days" column. Shares of Common Stock listed under the
"Direct" column are those as to which each named individual has sole voting
or dispositive power, including shares held under the Company's 401(k)
Savings and Investment Plan (548 shares for Mr. Dubroc and 1,282 shares for
other executive officers included in the amount shown for all directors and
executive officers as a group) and shares granted as restricted stock awards
under the Company's long-term incentive compensation plan described below
(13,444 shares for Mr. Nesbitt, 4,969 shares for Mr. Eppler, 3,135 shares
for Ms. Powell, 1,924 shares for Mr. Dubroc, 2,083 shares for Mr. Baltes and
6,521 shares for other executive officers included in the amount shown for
all directors and executive officers as a group). Shares listed under the
"Other" column are those as to which the named individual shares voting and
dispositive power with another person.
(2) The shares of $100 Preferred Stock beneficially owned by the individuals
indicated in the table are shares held for the respective accounts of
executive officers under the ESOP Component of the Company's 401(k) Savings
and Investment Plan.
(3) Includes 5,000 shares which are owned by Mr. Crowell's wife, 26,844 shares
which are owned by Mr. Crowell's children and with respect to which Mr.
Robert D. Crowell, III acts as custodian, and 17,696 shares which are owned
by trusts established for the benefit of Mr. Crowell's children and
(Footnotes continued on following page)
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with respect to which Mr. Robert D. Crowell, III acts as trustee. Mr.
Crowell disclaims beneficial ownership of such shares.
(4) Mr. Eppler is also an executive vice president and the chief operating
officer of the Company.
(5) Mr. Nesbitt is also the president and chief executive officer of the
Company.
* Less than 1% of class.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Section
16(a)"), requires the Company's executive officers and directors, and persons
who beneficially own more than 10% of a registered class of the Company's equity
securities, to file with the Securities and Exchange Commission and the New York
Stock Exchange initial reports of ownership and reports of changes in ownership
of the Company's equity securities. To the Company's knowledge, based solely on
review of the copies of such reports furnished to the Company and written
representations that no year-end reports on Form 5 were required, during the
fiscal year ended December 31, 1997, all Section 16(a) filing requirements
applicable to its executive officers, directors and greater-than-10%
shareholders were satisfied.
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EXECUTIVE COMPENSATION
GENERAL
The Summary Compensation Table sets forth individual compensation
information with respect to the chief executive officer and the four other most
highly paid executive officers of the Company for services rendered in all
capacities to the Company during the fiscal years ended December 31, 1997,
December 31, 1996 and December 31, 1995. The table discloses the annual salary,
bonuses and other compensation awards and payouts to the named executive
officers.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------------
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION PAYOUTS
-------------------------------------- ------------
(a) (b) (c) (d) (e) (f) (g)
- ---------------------------------------------------------------------------------------------------------
OTHER ALL
ANNUAL OTHER
COMPEN- LTIP COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) SATION(2) PAYOUTS(3) SATION(4)
- --------------------------- ---- -------- -------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Gregory L. Nesbitt.......... 1997 $296,770 $126,000 $16,840 $206,738 $6,334
President and Chief 1996 271,081 130,600 11,954 144,187 6,000
Executive Officer 1995 258,796 94,800 10,546 146,135 17,000
David M. Eppler............. 1997 $166,478 $ 54,000 $ 5,837 $ 68,238 $6,836
Executive Vice President 1996 140,808 62,800 4,302 58,526 6,483
and Chief Operating 1995 140,807 49,956 4,446 72,970 6,442
Officer
Catherine C. Powell......... 1997 $111,023 $ 33,660 $ 4,044 $ 41,782 $6,188
Senior Vice President -- 1996 102,000 44,400 2,872 33,523 5,683
Employee and 1995 96,024 32,528 1,666 0 4,715
Corporate Services
Darrell J. Dubroc........... 1997 $118,656 $ 36,910 $ 1,287 $ 0 $9,964
Vice President -- 1996 97,565 5,737 0 0 2,592
Generation Services 1995 90,184 0 0 0 7,877
John L. Baltes, Jr.......... 1997 $110,591 $ 20,016 $ 2,881 $ 28,434 $6,335
Controller 1996 105,586 25,800 2,165 25,488 5,938
1995 101,308 17,400 2,444 45,171 9,551
</TABLE>
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(1) The "Bonus" column includes cash awards that are payable or have been paid
to executive officers pursuant to (i) an annual incentive compensation
program under which participants may receive incentive compensation in
addition to base compensation determined by the performance of the Company
and the individual participants, (ii) merit lump-sum payments received by
certain named executive officers, (iii) payments received by a certain named
executive officer under the Employee Incentive Plan (prior to election as an
executive officer) and (iv) payments received under the Company's spot award
incentive plan which rewards individual performance.
(2) For 1995, 1996 and 1997, the "Other Annual Compensation" column includes
long-term incentive plan compensation which represents dividends paid on
restricted stock awards. Dividends on restricted stock are paid quarterly
and at the same rate as dividends on the Common Stock. As permitted by the
rules on executive officer compensation disclosure, restricted stock awards
granted under the Company's long-term incentive compensation plan, which are
subject to performance-based vesting requirements, are reported under the
"Long-Term Incentive Plan -- Awards in 1997" table below. The number and
value of the aggregate restricted stock holdings at December 31, 1997, a
portion of which is included in the "LTIP Payouts" column, for each of the
(Footnotes continued on following page)
8
<PAGE> 13
named executive officers were as follows: Gregory L. Nesbitt, 10,516 shares
with a value of $340,456; David M. Eppler, 3,650 shares with a value of
$118,169; Catherine C. Powell, 2,531 shares with a value of $81,941; Darrell
J. Dubroc, 820 shares with a value of $26,548; and John L. Baltes, Jr.,
1,802 shares with a value of $58,340.
(3) For 1995, 1996 and 1997, the "LTIP Payouts" column includes the value of
restricted stock and opportunity shares under the Company's long-term
incentive compensation plan vested in 1996 relating to the performance
period January 1, 1993 to December 31, 1995, in 1997 relating to the
performance period January 1, 1994 to December 31, 1996, and in 1998
relating to the performance period January 1, 1995 to December 31, 1997,
respectively, and related tax gross-up amounts.
(4) For 1995, 1996 and 1997, respectively, the "All Other Compensation" column
includes: (i) amounts contributed or accrued by the Company under the
Company's 401(k) Savings and Investment Plan on behalf of the named
executive officers as follows: Gregory L. Nesbitt, $6,000, $6,000 and
$6,334; David M. Eppler, $6,000, $6,000 and $6,333; Catherine C. Powell,
$4,594, $5,488 and $5,973; Darrell J. Dubroc, $2,477, $2,547 and $4,881; and
John L. Baltes, Jr., $4,489, $4,999 and $5,376; (ii) term life insurance
premiums paid for the benefit of the named executive officers as follows:
Gregory L. Nesbitt, $0, $0 and $0; David M. Eppler, $442, $483 and $503;
Catherine C. Powell, $121, $195 and $215; Darrell J. Dubroc, $0, $45 and
$71; and John L. Baltes, Jr., $412, $939 and $959; and (iii) unused vacation
purchased from the following named executives: Gregory L. Nesbitt, $11,000,
$0 and $0; David M. Eppler, $0, $0 and $0; Catherine C. Powell, $0, $0 and
$0; Darrell J. Dubroc, $5,400, $0 and $5,012; and John L. Baltes, Jr.,
$4,650, $0 and $0.
STOCK OPTION PLANS
The Company currently maintains two plans pursuant to which options to
purchase shares of Common Stock are outstanding or available for future grants.
The Company's 1981 Incentive Stock Option Plan (the "Stock Option Plan"),
covering an aggregate of 800,000 shares of Common Stock, expired in 1991 and no
future grants can be made under this plan. As of February 1, 1998, options
covering 15,800 shares remained to be exercised pursuant to grants made under
the Stock Option Plan. The Company has in effect a long-term incentive
compensation plan pursuant to which certain officers and key employees may
receive stock options or stock appreciation rights. This plan is discussed in
greater detail under the section "Long-Term Incentive Plan" below. No stock
options were granted under the Long-Term Plan in 1997. Although the Long-Term
Plan permits grants of stock appreciation rights, no such rights had been
granted as of December 31, 1997.
The following table sets forth, for each of the persons listed in the
Summary Compensation Table, certain information concerning stock options
exercised during 1997. The table also discloses information concerning
unexercised stock options held at December 31, 1997.
AGGREGATE OPTION EXERCISES IN 1997 AND 1997 YEAR-END OPTION VALUES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
- ----------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, 1996(#) DECEMBER 31, 1996
ACQUIRED ON VALUE --------------------------- ------------------------------
NAME EXERCISE(#) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE(1) UNEXERCISABLE
---- ----------- ----------- ----------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gregory L. Nesbitt..... 0 $ 0 2,000 0 $31,190 $0
David M. Eppler........ 0 0 2,800 0 43,666 0
Catherine C. Powell
..................... 0 0 0 0 0 0
Darrell J. Dubroc...... 0 0 0 0 0 0
John L. Baltes, Jr..... 0 0 5,000 0 77,975 0
</TABLE>
- ---------------
(1) Based on the closing price of the Common Stock on the New York Stock
Exchange Composite Tape at December 31, 1997, minus the exercise price.
9
<PAGE> 14
LONG-TERM INCENTIVE PLAN
The Company has in effect a long-term incentive compensation plan (the
"Long-Term Plan"), pursuant to which certain officers and key employees may
receive stock incentives and/or cash incentives based on the value of the Common
Stock. Five types of awards may be granted under the Long-Term Plan: (i) stock
awards consisting of restricted stock and "opportunity shares" which may be
awarded in connection with restricted stock awards; (ii) restricted unit awards
consisting of Common Stock equivalent units and "opportunity units" which may be
awarded in connection with restricted unit awards; (iii) nonstatutory stock
options or incentive stock options; (iv) stock appreciation rights attached to
stock options; and (v) stock appreciation rights not attached to stock options.
An aggregate of 800,000 shares of Common Stock, or cash equivalents of Common
Stock, may be issued pursuant to the Long-Term Plan (such number being subject
to antidilution adjustments under certain circumstances). Plan participants,
awards to participants, performance measurement periods and performance goals
are determined by the Compensation Committee. Upon a change of control of the
Company or merger or similar transaction involving the Company, all restrictions
imposed on awards under the Long-Term Plan will lapse, all unvested rights will
vest and all stock options and similar rights granted under the plan will become
fully exercisable, subject to certain limitations imposed by the Long-Term Plan.
The following table sets forth, for each of the persons listed in the
Summary Compensation Table, information as to long-term incentive plan awards
granted under the Long-Term Plan during 1997.
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLAN -- AWARDS IN 1997
- -------------------------------------------------------------------------------------------------------
(A) (B) (C) (D) (E) (F)
- -------------------------------------------------------------------------------------------------------
ESTIMATED FUTURE PAYOUTS
PERFORMANCE OR ------------------------------------------
OTHER PERIOD UNTIL NUMBER OF NUMBER OF NUMBER OF
NUMBER OF MATURATION OR THRESHOLD TARGET MAXIMUM
NAME SHARES(#)(1) PAYOUT SHARES(#)(2) SHARES(#)(2) SHARES(#)(3)
---- ------------ ------------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Gregory L. Nesbitt...... 4,887 1/1/97-12/31/99 1,222 4,887 7,330
David M. Eppler......... 1,759 1/1/97-12/31/99 440 1,759 2,639
Catherine C. Powell..... 1,218 1/1/97-12/31/99 305 1,218 1,827
Darrell J. Dubroc....... 820 1/1/97-12/31/99 205 820 1,230
John L. Baltes, Jr...... 805 1/1/97-12/31/99 201 805 1,208
</TABLE>
- ---------------
(1) The amounts under column (b) "Number of Shares" represent the target level
of performance-based restricted stock awards granted to the named executive
officers in 1997, as reflected in column (e) "Number of Target Shares." For
further information concerning these awards and the award of "opportunity
shares" granted in connection with the restricted stock, see the discussion
under footnotes 2 and 3 below.
(2) The amounts under columns (d) "Number of Threshold Shares" and (e) "Number
of Target Shares" represent performance-based restricted stock awards
granted to the named executive officers in 1997 that will vest under the
threshold and target levels established by the Compensation Committee. The
restricted stock awards vest based on total return to shareholders (Common
Stock price appreciation plus dividends paid during performance cycle) in
relation (by percentile) to a peer group of other utilities ("Total Return
to Shareholders"). The vesting (payout) schedule for the restricted stock
awards set forth under these two columns, based on the Company's Total
Return to Shareholders ranking, is as follows:
(a) No awards vest if the Company's ranking is below the 25th
percentile.
(b) Threshold performance provides 25% award payout at the 25th
percentile.
(c) Target performance provides 100% award payout from the 45th
percentile to the 55th percentile.
Performance awards above the threshold level and below the target level
will be prorated.
(Footnotes continued on following page)
10
<PAGE> 15
The recipient of a restricted stock award is the record owner of the number
of target shares awarded, which are issued in the name of the recipient but
held in escrow by the Company until delivery to or forfeiture by the
recipient. The recipient may vote the shares covered by the award and
receive dividends with respect thereto, but generally may not sell, pledge
or otherwise transfer such shares until the restriction period imposed by
the Compensation Committee comes to an end and the performance goals
established by the committee have been met. The recipient may, at the end
of the restriction period, forfeit all or a portion of the restricted
shares awarded depending on the performance level achieved. The restriction
period for restricted stock awarded during 1997 is three years from the
date of grant (January 2000). The restricted stock awards require an
additional three-year holding period following vesting before any shares
may be sold.
(3) The amounts under column (f) "Number of Maximum Shares" represent the number
of performance-based restricted stock awards that vest at the target level
set forth under column (e) "Number of Target Shares" plus the number of
performance-based "opportunity shares" granted to the named executive
officers in 1997 that will vest between the target and maximum levels
established by the Compensation Committee. The "opportunity shares" vest
based on Total Return to Shareholders and will be issued when the
restriction period on the associated restricted stock awards lapses. The
vesting (payout) schedule for the "opportunity shares" included in this
column, based on the Company's Total Return to Shareholders ranking, is as
follows:
(a) No awards of "opportunity shares" vest if the Company's ranking is
at or below the 55th percentile.
(b) Maximum performance provides 100% "opportunity share" award payout
(equal to 50% of number of target shares of restricted stock) at the
75th percentile.
Performance awards of "opportunity shares" above the target level and below
the maximum level will be prorated.
"Opportunity shares" awarded in connection with a restricted stock award
will not be issued until the lapse of restrictions on the related
restricted stock and do not entitle the recipient to the rights of a
shareholder with respect to the "opportunity shares" until the time of
issuance of the Common Stock representing the "opportunity shares."
Provisions of the "opportunity share" awards require an additional
three-year holding period following vesting before any of the shares may be
sold.
PENSION PLAN
The Company has in effect a pension plan and related trust (the "Pension
Plan"), covering substantially all employees of the Company, under which the
Company makes such contributions as are actuarially necessary to provide for the
retirement benefits established under the plan. Benefits are based on employees'
earnings, length of service, age at retirement, payment form elected,
application of statutory benefit limits, and certain other factors, and are
payable upon normal retirement at age 65, upon early retirement beginning at age
55 or after termination of employment under certain circumstances. Annual
benefits under the Pension Plan are limited to the maximum amount prescribed by
sections 415 and 401(a)(17) of the Internal Revenue Code of 1986, as amended
(the "Code"). For 1998, the annual compensation of each employee which is to be
taken into account under the Pension Plan cannot exceed $160,000, and the
maximum allowable pension benefit for the plan is limited to $130,000. Payments
to retired employees under the Pension Plan are not reduced for Social Security
benefits or other offsetting amounts.
In addition, effective July 1, 1992, the Company established a Supplemental
Executive Retirement Plan (the "SERP") for the benefit of certain participants
designated by the Compensation Committee. The SERP provides participants who
have completed ten years of service and terminated employment after reaching age
65 with a right to monthly payments for the life of the participant and
surviving spouse equal to 65% of final average compensation, reduced by the
Pension Plan benefit and benefits under other previous employer pension plans.
The SERP also provides adjusted benefits for early retirement on
11
<PAGE> 16
or after age 55 with ten years of service, for termination of service due to
disability and for beneficiaries in the event of the death of the participant.
The SERP, as amended and restated effective January 1, 1996, provides that the
Chief Executive Officer or the Compensation Committee may prescribe a shorter
period of service as a condition for normal or early retirement or entitlement
to receive a benefit upon termination of employment prior to early retirement
age, which shall be set forth in a written agreement between the participant and
the Compensation Committee. The Company has in effect written agreements
prescribing shorter periods of service for Ms. Powell and one other executive
officer of the Company. Benefits under the SERP are payable out of the Company's
general funds. The SERP participants in 1997 were the five individuals named in
the Summary Compensation Table and four other executive officers of the Company.
Under the Pension Plan, eligible remuneration for purposes of determining
the annual pension benefit payable to a participant upon retirement is based
upon the average of the five consecutive years (of the participant's last ten
years of employment) during which the participant received his or her highest
amount of remuneration from the Company. Under the SERP, eligible remuneration
is based on the sum of the highest annual salary paid during the five years
prior to termination of employment and the average of the three highest annual
incentive compensation program awards paid to the participant during the
preceding five years. The remuneration covered by the Pension Plan and the SERP
consists of salaries and bonuses paid to Pension Plan and SERP participants,
including the salaries and bonuses set forth in columns (c) and (d) of the
Summary Compensation Table. The estimated annual benefits payable upon
retirement at normal retirement age under the Pension Plan and the SERP for Mr.
Nesbitt, Mr. Eppler, Ms. Powell, Mr. Dubroc and Mr. Baltes would be
approximately $269,037, $144,341, $96,126, $86,887 and $86,556, respectively.
These amounts are based on the assumption that these executive officers will
continue to work for the Company until age 65 and that their earnings in the
five years prior to such retirement will be the same, respectively, as their
earnings during the past five years.
LONG-TERM DISABILITY PLAN
The Company maintains a long-term disability plan that provides disability
benefits up to 60% of salary or a maximum of $7,500 per month for all active
full-time employees with two or more years of service. These benefits are
provided for the first 24 months out of the Company's general funds, and
thereafter pursuant to an insurance contract under which premiums are paid by
the Company.
SEVERANCE AGREEMENTS
The Company has severance agreements with Mr. Nesbitt, Mr. Eppler, Ms.
Powell, Mr. Dubroc and Mr. Baltes and four other executive officers of the
Company. The agreement for each such officer provides generally for payment of a
minimum annual salary equal to such executive officer's current annual base
salary, participation in all Company benefit plans and programs applicable to
the Company's executive officers and reimbursement of employment-related
expenses incurred while performing such officer's duties. Under the severance
agreements, the base salaries for 1998 for Mr. Nesbitt, Mr. Eppler, Ms. Powell,
Mr. Dubroc and Mr. Baltes are $325,000, $200,000, $125,000, $143,000 and
$111,200, respectively. The severance agreements had an initial term of three
years ending on July 1, 1995, with continuously renewing one-year extensions
thereafter, unless either the Company or the executive officer gives notice
prior to such extension that such officer's term of employment will not be
extended.
The severance agreements include provisions governing reductions in salary
or duties, termination of employment and change in control. Generally, if the
executive's employment is terminated (i) by the Company for any reason other
than a material breach by the executive (as defined in the agreements) or (ii)
by the executive following a reduction in base salary (other than a reduction in
pay uniformly applicable to all officers) or a significant reduction in the
executive's authority, duties or responsibilities, the executive is entitled to
receive, as severance pay, an amount equal to his or her annual base salary at
the time of termination. The executive is also entitled to continued health plan
coverage for up to 18 months after such termination. The executive is also
entitled to require the Company to (i) purchase his or her principal residence
(if it is located within 60 miles of the Company's Pineville office) for an
amount equal to the greater of (x) the purchase price of the residence plus the
cost of capital
12
<PAGE> 17
improvements or (y) the fair market value of the residence, and (ii) pay or
reimburse the executive for relocation costs.
Generally, in the event a change in control occurs and within three years
after such change in control the executive's employment is terminated by the
Company for reasons other than a material breach by the executive (as defined in
the agreements) or the executive terminates his or her employment for good
reason (as defined in the agreements), the Company will pay the executive, in
lieu of any severance obligation otherwise payable under the severance
agreement, an amount equal to three times the executive's average compensation
paid during the five calendar years preceding the change in control. In the
event of a change in control, payments under the agreements for the individuals
named in the Summary Compensation Table, using compensation for the years 1993
through 1997, would be approximately as follows: Mr. Nesbitt, $1,055,765; Mr.
Eppler, $568,298; Ms. Powell, $333,815; Mr. Dubroc, $280,604; and Mr. Baltes,
$363,857. However, the severance agreements limit the amount payable upon a
change in control to an amount that would not result in the disallowance of a
deduction to the Company under the "golden parachute" provisions of the Code or
the imposition of an excise tax on the employee under Section 4999 of the Code.
The severance agreements also generally require the executives not to
disclose confidential information relating to the Company and, for a period of
one year after termination, not to hire Company officers, employees or agents,
or solicit or divert any customer or supplier of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (in this report, the "Committee") has prepared
its report of 1997 executive compensation. The Committee, composed entirely of
directors who are not current or former officers or employees of the Company, is
responsible for implementing or making recommendations to the board of
directors, with respect to the Company's officer compensation programs. The
Committee has retained the services of executive compensation consultants to
provide professional assistance, data and advice regarding pay practices at the
Company. This report describes the basis on which such 1997 compensation
determinations or recommendations were made by the Committee with respect to the
Company's executive officers. This report, required by rules of the Securities
and Exchange Commission, provides specific information regarding compensation of
the Company's president and chief executive officer (the "Chief Executive
Officer") and general information regarding compensation of the Company's
executive officers as a group. The Chief Executive Officer and four other most
highly compensated executive officers are sometimes referred to as the "Named
Executives."
Section 162(m) of the Code limits to $1,000,000 in a taxable year, the
deduction publicly held companies may claim for compensation paid to an
executive officer, unless certain requirements are met. The Company has reviewed
this provision and has determined that the Company is not affected by Section
162(m) because no compensation paid to any officer currently approaches or is
expected to approach $1,000,000 in the near term. Accordingly, no change to any
of the compensation plans is contemplated at this time.
Compensation Philosophy and Overall Objective of Executive Compensation
Programs
The Company seeks to ensure that executive compensation is directly linked
to corporate performance and shareholder value, as well as comparable pay
practices in the industry. Each year, the Committee, in making compensation
decisions and recommendations, and the board of directors, in approving base
salaries, review the performance of the Company and compare such performance to
specified internal and external performance standards. The Committee has
developed the following compensation guidelines as the principles upon which
compensation decisions and recommendations are made:
- Provide variable compensation opportunities that are linked to the
financial performance of the Company and that align executive
compensation with the interests of shareholders.
13
<PAGE> 18
- Provide incentives to increase corporate performance and shareholder
value relative to those of other electric utilities.
- Establish executive officer base pay levels somewhat below the
competitive market, while providing incentive awards (from the annual and
long-term plans) above the market, provided that performance objectives
are achieved.
- Provide a competitive total compensation package that is "at-risk" driven
and enables the Company to attract and retain key executives.
Compensation Program Components
The compensation program for executive officers is currently comprised of
base salary, annual performance-related incentives and performance-based awards
of restricted stock and related "opportunity shares" granted under the Long-Term
Plan, as discussed above under "Long-Term Incentive Plan." In addition, certain
of the executive officers have stock options outstanding that were granted under
the Stock Option Plan, which expired in 1991 and under which no future grants
can be made. See "Stock Option Plans." The compensation programs for the
Company's executive officers are further explained below.
- Base Salary -- Base pay levels recommended by the Committee are largely
determined through comparisons with those of other electric utilities of
similar size and complexity to the Company. These companies, as well as
other electric utilities, are included in the Edison Electric Institute
Index of approximately 100 investor-owned electric utilities (the "Edison
Electric Institute Index") graphed in the performance graph shown
elsewhere. Actual salaries are based on individual performance
contributions within a salary structure that is established through job
evaluation and market comparisons. While the actual relationship may vary
from year to year, it is the Company's policy to have base pay levels for
the Company's executive officers, including the Named Executives, to be
somewhat below the average of the competitive market. Including 1997 base
salary increases, actual base pay levels for the Company's executive
officers, including the Named Executives, are consistent with this
policy. Increases in base salary for 1997 to continuing executive
officers were recommended by the Committee and approved by the board of
directors in January 1997. In January 1997, the Named Executives, other
than the Chief Executive Officer (see "1997 Compensation for the
President and Chief Executive Officer -- Base Salary"), received pay
increases (including a promotional adjustment that reflected an increase
in job responsibilities) that averaged 10%. During 1997, three
individuals were promoted to officers, and their compensation was
adjusted in accordance with their new responsibilities. One of the Named
Executives was promoted to Chief Operating Officer and his base pay was
accordingly increased.
- Annual Incentive Compensation -- The Company's executive officers are
eligible to participate in an annual incentive compensation program with
awards generally based on earnings per share goals and the Company's
actual return on equity in relation to that of the Edison Electric
Institute Index, a peer group of approximately 100 electric utilities.
Earnings per share and return on equity goals are generally of equal
weight. Based on actual results, awards from 0% to 150% of target
incentive levels may be made. For awards based on 1997 performance, the
earnings per share target was $2.20. The Company's return on equity
target was the 50th to 59th percentile of the Edison Electric Institute
Index. The Company's actual 1997 return on equity performance was in the
50th to 59th percentile of the Edison Electric Institute Index, and its
primary earnings per share in 1997 was $2.24. Based on the earnings per
share and return on equity financial performance, the Committee approved
actual awards for 1997 at 100% of target annual bonus levels. The
objective of the annual incentive compensation program is to deliver
competitive levels of compensation (i.e., average award levels compared
to the Company's competitive peer group) for the attainment of short-term
financial objectives that the Committee believes are primary determinants
of shareholder value over time, and to reinforce behaviors that
contribute to consistent growth of the enterprise. The Committee bases
target annual bonus levels on average
14
<PAGE> 19
competitive bonus levels among other electric utility companies of
similar size and complexity. These companies are included in the Edison
Electric Institute Index. Targeted awards for executive officers of the
Company under this program range from 18% to 42% of base salary. Awards
are paid in the first quarter of the year following the year for which
the award is earned. The amounts of actual awards are further subject to
the discretion of the Committee, within established program guidelines
(i.e., the ability of the Committee to make adjustments to reflect
extraordinary items of income or expense).
- Long-Term Incentive Compensation Plan -- The Committee supports increased
stock ownership by key executives of the Company and favors awards to key
executives of stock and/or cash, based on the Company's stock price
appreciation and other measures of performance. The basis for such
position is the Committee's belief that the Company benefits by providing
those persons who have substantial responsibility for the management and
growth of the Company with additional incentives by increasing their
proprietary interest in the success of the Company and by rewarding those
persons for increases in the Company's stock price or the achievement of
other long-term performance goals of the Company. Thus, under the
Long-Term Plan, executive officers may be eligible to receive
performance-based grants of restricted stock, related "opportunity
shares," restricted unit grant awards, related "opportunity units," stock
options and stock appreciation rights, giving them the right to receive
or purchase shares of Common Stock under specified circumstances or to
receive cash awards based on the Company's Common Stock price
appreciation or the achievement of pre-established long-term performance
goals. The Committee believes that such programs are also important as a
means of retaining senior management over the long term. The number of
shares of Common Stock and other awards granted to executive officers
under the Long-Term Plan is based on competitive practices (i.e.,
compensation practices of other utilities that constitute the Edison
Electric Institute Index).
Grants and awards of restricted stock as well as awards of related
"opportunity shares" under the Long-Term Plan were made to all executive
officers in 1997. Awards to executive officers are based on a competitive
compensation analysis (i.e., compensation practices of other utilities
that constitute the Edison Electric Institute Index). Awards actually
earned are based on the Company's performance during a three-year
performance cycle compared to the other electric utilities in the Edison
Electric Institute Index over the same period. For the fifth three-year
performance cycle which ended December 31, 1997, the Company's total
return to shareholders placed it at the 43rd percentile compared to the
Edison Electric Institute Index. As a result, the actual awards were
reduced below target in order to reflect the Company's relative
performance. Provisions of the restricted stock grants require an
additional three-year holding period following vesting before any shares
may be sold. No other types of awards under the Long-Term Plan were made
to executive officers in 1997, and no awards of performance-based
restricted stock vested during 1997.
Other Executive Compensation Plans
The Company also provides executive officers with certain executive
benefits, such as a supplemental retirement plan and severance agreements. The
Committee considers each of these programs to be reasonably competitive and
appropriate for executive officers of the Company.
1997 Compensation for the President and Chief Executive Officer
The Committee believes that the role of the Chief Executive Officer is
particularly important in reaching corporate goals and accomplishing
organizational objectives. As such, for 1997 the Committee made the following
recommendations or determinations regarding the compensation for Mr. Nesbitt:
- Base Salary. Mr. Nesbitt is president and chief executive officer of the
Company. His base salary was increased in January 1997 from $272,000 to
$300,000, an increase of approximately 10%. The amount of this increase
was based on the continued performance of Mr. Nesbitt as evaluated
15
<PAGE> 20
by the Committee. Even with this adjustment, his base pay is
significantly below peers in the industry.
- Annual Incentive. Mr. Nesbitt was eligible to participate in 1997 in the
Company's annual incentive compensation program discussed in this report
above (see " -- Annual Incentive Compensation"). The Chief Executive
Officer's 1997 target award was 42% of his base salary. His actual award
for 1997 was 100% of target.
- Long-Term Incentive. Awards were made to Mr. Nesbitt under the Long-Term
Plan during 1997. The number of shares of stock and other awards granted
to the Chief Executive Officer under the Long-Term Plan is based on
competitive practices within the industry. Administration is consistent
with the provisions of the plan as described above in "Long-Term
Incentive Plan." For the three-year performance cycle ended December 31,
1997, the Chief Executive Officer's award was 92.5% of target or 2,593
shares.
Summary
The Committee believes that base pay levels and increases and
performance-based awards are reasonable and competitive with the compensation
programs provided to officers and other executives by electric utilities of
similar size and complexity to the Company. The Committee believes further that
the degree of performance sensitivity in the annual incentive program continues
to be reasonable, yielding awards that are directly linked to the annual
financial and operational results of the Company. The Long-Term Plan continues
to provide, in the view of the Committee, financial opportunities to
participants and retention features for the Company that are consistent with the
relative returns that are generated on behalf of the Company's shareholders.
The Compensation Committee
Edward M. Simmons, Chairman
Sherian G. Cadoria, Brig. General (retired)
J. Patrick Garrett
Hugh J. Kelly
16
<PAGE> 21
PERFORMANCE GRAPH
The following performance graph compares the performance of the Common
Stock to the S&P 500 Index and to the Edison Electric Institute Index (which
includes the Company) for the Company's last five fiscal years. The graph
assumes that the value of the investment in the Common Stock and each index was
$100 at December 31, 1992 and that all dividends were reinvested.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) CLECO S&P 500 Index EEI Index
<S> <C> <C> <C>
1992 100 100 100
1993 108 110 111
1994 108 112 098
1995 133 153 129
1996 145 189 130
1997 180 252 166
</TABLE>
(1) The Edison Electric Institute Index is comprised of: Allegheny Power System,
Inc.; American Electric Power Company, Inc.; Atlantic Energy, Inc.;
Baltimore Gas & Electric Company; Bangor Hydro-Electric Company; Black Hills
Corporation; Boston Edison Company; Carolina Power & Light Company; Central
Hudson Gas & Electric Corporation; Central Louisiana Electric Company, Inc.;
Central Maine Power Company; Central Vermont Public Service Corporation;
Central & South West Corporation; Cilcorp Inc.; CINergy Corp.; Cipsco Inc.;
CMS Energy Corp.; Commonwealth Energy System; Consolidated Edison Company of
New York, Inc.; Delmarva Power & Light Co.; Dominion Resources, Inc.; DPL
Inc.; DQE Inc.; DTE Energy Co.; Duke Energy Corporation (formerly known as
Duke Power Company); Eastern Utilities Associates; Edison International; El
Paso Electric Company; Empire District Electric Company; Enova Corp.;
Entergy Corporation; ESELCO Inc.; FirstEnergy Corp. (a holding company
formed by the business combination of Centerior Energy Corporation and Ohio
Edison Company); Florida Progress Corporation; FPL Group, Inc.; General
Public Utilities Corporation; Green Mountain Power Corporation; Hawaiian
Electric Industries, Inc.; Houston Industries Incorporated; Idaho Power
Company; IES Industries, Inc.; Illinova Corp.; Interstate Power Co.; IPALCO
Enterprises Inc.; Kansas City Power & Light Company; KU Energy Corp.; LG&E
Energy Corp.; Long Island Lighting Company; Madison Gas & Electric Co.;
Maine Public Service Company; MDU Resources Group, Inc.; MidAmerican Energy
Holding Company; Minnesota Power & Light Co.; Montana Power Co.; Nevada
Power Company; New Century Energies, Inc. (a holding company formed by the
business combination of Public Service Co. of Colorado and Southwestern
Public Service Co.); New England Electric System; New York State Electric &
Gas Corporation; Niagara Mohawk Power Corp.; NIPSCO Industries, Inc.;
Northeast Utilities; Northern States Power Co. (MN); Northwestern Public
Service Co.; Oklahoma Gas & Electric Company; Orange & Rockland Utilities,
Inc.; Otter Tail Power Company; Pacific Gas & Electric Co.; Pacificorp; Peco
Energy Co.; Pinnacle West Capital Corp.; Potomac Electric Power Corporation;
PP&L Resources Inc.; Public Service Company of New Mexico; Public Service
Enterprise Group Incorporated; Puget Sound Energy, Inc.; Rochester Gas &
Electric Corporation; SCANA Corp.; Sierra Pacific Resources; SIGCORP;
Southern Company; St. Joseph Light & Power Co.; TECO Energy, Inc.; Texas
Utilities Company; TNP Enterprises, Inc.; Tucson Electric Power Company;
Unicom Corp.; Union Electric Co.; United Illuminating Company; Unitil Corp.;
Upper Peninsula Energy Corp.; Utilicorp United Inc.; Washington Water Power
Co.; Western Resources, Inc.; Wisconsin Energy Corporation; WPL Holdings
Inc.; and WPS Resources Corp. Portland General Corporation, which was merged
into Enron Corp. during 1997, was deleted from, and MDU Resources Group,
Inc. and El Paso Electric Co. were added to, the Edison Electric Institute
Index used in the Company's proxy statement relating to its 1997 annual
meeting of shareholders.
17
<PAGE> 22
APPOINTMENT OF AUDITORS
The firm of Coopers & Lybrand L.L.P., independent certified public
accountants, has served as auditors for the Company continuously since 1952. The
board of directors, upon recommendation of the Audit Committee, proposes to
continue such firm's services as auditors for the Company for the year ending
December 31, 1998. Neither such firm nor any of its associates has any
relationship with the Company except in their capacity as auditors. The persons
named in the accompanying proxy will vote in accordance with the choice
specified thereon, or, if no choice is properly indicated, in favor of the
appointment of Coopers & Lybrand L.L.P. as auditors of the Company.
A representative of Coopers & Lybrand L.L.P. is expected to attend the
annual meeting. If present, the representative will have an opportunity to make
a statement during the meeting if he or she so desires and will respond to
appropriate questions raised during the meeting.
PROPOSAL TO APPROVE THE AMENDMENT TO THE
1990 LONG-TERM INCENTIVE COMPENSATION PLAN AND THE RELATED
AMENDMENT TO THE DEFERRED COMPENSATION PLAN FOR DIRECTORS
The board of directors (the "Board") intends to adopt, subject to approval
by the shareholders of the Company, an amendment to the Long-Term Plan and an
amendment to the Directors' Deferred Compensation Plan, each effective as of
April 24, 1998 (collectively such plans as so amended, the "Amended Plan").
The purpose of the Amended Plan is to strengthen the Company's ability to
attract and retain non-employee directors with appropriate experience and
ability and to enhance the identification of these directors with the interests
of shareholders. The members of the board of directors of the Company who are
not employees of the Company or any subsidiary of the Company are eligible to
participate in the Amended Plan ("Eligible Directors").
Pursuant to the terms of the Amended Plan, each of the Eligible Directors
who currently or upon his or her election to the Board owns less than 1,000
shares of the Common Stock will be immediately granted, subject to shareholder
approval of the Amended Plan, that number of shares of restricted Common Stock
necessary to increase the individual's ownership of Common Stock to 1,000
shares. The Eligible Director will be required to apply $6,000 of the Eligible
Director's $18,000 annual retainer toward acquiring a vested interest in all of
the shares of restricted Common Stock granted. The shares of restricted Common
Stock will vest based on the Fair Market Value (as defined below) of the shares
on the date the shares are granted (the "Grant Date") to the Eligible Director.
Thus, the Eligible Director will vest annually the number of shares of Common
Stock that results when $6,000 is divided by the Fair Market Value of the stock
on the Grant Date. On the Grant Date, an Eligible Director may elect to receive
the Common Stock outright or defer receipt of the Common Stock under the terms
of the Directors' Deferred Compensation Plan. The restricted stock may not be
sold, transferred, pledged or otherwise disposed of until the termination of the
Eligible Director's membership on the Board. If the Eligible Director terminates
membership on the Board prior to full vesting of the shares of Common Stock
granted, the Eligible Director will forfeit any unvested shares.
If an Eligible Director elects to defer receipt of the restricted Common
Stock under the terms of the Directors' Deferred Compensation Plan, the Eligible
Director may not vote the shares until the Common Stock is transferred by the
Company at the end of the deferral period and dividends deemed to be paid on the
deferred Common Stock would be reinvested in Common Stock until the end of such
period. Upon the expiration of the deferral period, the Eligible Director will
have ordinary income equal to the fair market value of the shares of Common
Stock on the date of transfer of the shares to the Eligible Director, and the
Company will be entitled to a tax deduction equal to the amount of ordinary
income recognized by the Eligible Director.
If the Eligible Director elects to receive the shares of restricted Common
Stock on the Grant Date, the Eligible Director will have ownership rights with
respect to the shares of restricted Common Stock,
18
<PAGE> 23
including the right to vote the shares and receive dividends thereon, subject to
the restrictions described above. Upon vesting of the shares, the Eligible
Director will have ordinary income equal to the fair market value of the Common
Stock on the date the shares vest, and the Company will be entitled to a tax
deduction equal to the amount of ordinary income recognized by the Eligible
Director. The Eligible Director would be entitled to make an election, however,
to be taxed on the fair market value of the shares at the Grant Date, and in
that event the Company would be entitled to a deduction at that time.
Also, pursuant to the terms of the Amended Plan, each Eligible Director,
upon his or her election or reelection to the Board, will be granted, subject to
shareholder approval of the Amended Plan, an award of an immediately exercisable
option to purchase 2,500 shares of Common Stock at an exercise price equal to
the Fair Market Value of the Common Stock on the date of the option grant. Each
option expires ten years after the date of the option grant. Each Eligible
Director who is currently serving and whose term of office expires in 1999 or
2000 will receive an option to acquire a number of shares of Common Stock equal
to the product of 2,500 multiplied by a fraction, with a numerator equal to the
years remaining in the Eligible Director's term of office and a denominator
equal to three. The stock option grants to those Eligible Directors with
unexpired terms will be made on the first business day following the 1998 annual
meeting of shareholders.
The options granted to Eligible Directors will be nonqualified options.
Upon the Eligible Director's exercise of the options, the Eligible Director is
taxed at ordinary income rates equal to the difference between the fair market
value of the Common Stock received upon exercise and the exercise price. The
Company will be entitled to a tax deduction equal to the amount of ordinary
income recognized by the Eligible Director.
For purposes of this proxy statement, Fair Market Value means the average,
rounded to the nearest 1/8th, of the high and low sales prices of a share of
Common Stock on the New York Stock Exchange Composite Transactions reporting
system, as reported in The Wall Street Journal, on the date as of which such
value is being determined or, if no sales occurred on such day, then on the next
preceding day on which there were such sales.
APPROVAL BY SHAREHOLDERS
Approval of this proposal requires the affirmative vote of a majority of
the votes cast, in person or by written proxy, at the 1998 annual meeting of
shareholders (at which a quorum must be present).
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS BELIEVES ADOPTION OF THE AMENDED PLAN STRENGTHENS
THE COMPANY'S ABILITY TO ATTRACT AND RETAIN QUALIFIED PERSONS AS DIRECTORS OF
THE COMPANY. THE BOARD OF DIRECTORS URGES THE SHAREHOLDERS TO VOTE FOR THE
ADOPTION OF THE AMENDED PLAN. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE
SO VOTED UNLESS SHAREHOLDERS SPECIFY OTHERWISE ON THEIR PROXY CARD.
PROPOSAL TO AMEND
THE RESTATED ARTICLES OF INCORPORATION
TO DELETE SECTION 3 OF ARTICLE 7 THEREOF
PROPOSED AMENDMENT
The Company's board of directors has adopted, and is recommending to the
shareholders for their approval at the 1998 annual meeting of shareholders, a
resolution to amend the Company's Restated Articles of Incorporation to delete
section 3 of article 7 thereof (the "Article 7 Amendment"). Currently section 3
of article 7 of the Company's Restated Articles of Incorporation states that
"[n]o director shall be required to own any stock in the Corporation." The board
of directors' resolution authorizes that
19
<PAGE> 24
section 3 of article 7 of the Company's Restated Articles of Incorporation be
deleted in its entirety. If the shareholders approve the Article 7 Amendment,
section 3 of article 7 of the Company's Restated Articles of Incorporation will
be replaced by:
"Article 7.
Section 3. This section is intentionally omitted."
REASONS FOR AMENDMENT
The board of directors authorized the deletion of section 3 of article 7 of
the Company's Restated Articles of Incorporation so that the proposed Stock
Ownership Policy and the Restated Articles of Incorporation would be consistent.
Under the Stock Ownership Policy, all outside directors should own at least
1,000 shares of Common Stock. The board of directors did not want to have a
provision of the Company's Restated Articles of Incorporation appear to be
inconsistent with the Stock Ownership Policy and therefore the board is
recommending that shareholders approve the amendment to the Company's Restated
Articles of Incorporation to delete section 3 of article 7 thereof.
APPROVAL BY SHAREHOLDERS
Approval of this proposal requires the affirmative vote of a majority of
the outstanding capital stock of the Company. If approved by the shareholders of
the Company, the Article 7 Amendment will be filed with the Secretary of State
of the State of Louisiana in the form of Articles of Amendment to the Company's
Restated Articles of Incorporation. If this proposal is not approved by the
shareholders, the Articles of Amendment will not be filed.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSAL TO AMEND THE COMPANY'S
RESTATED ARTICLES OF INCORPORATION TO DELETE SECTION 3 OF ARTICLE 7 THEREOF IS
IN THE BEST INTEREST OF THE COMPANY AND RECOMMENDS A VOTE FOR APPROVAL OF THE
PROPOSAL. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY OTHERWISE ON THEIR PROXY CARD.
PROPOSAL TO AMEND THE RESTATED ARTICLES OF INCORPORATION
TO CHANGE THE COMPANY'S NAME TO CLECO CORPORATION
PROPOSED AMENDMENT
The Company's board of directors has adopted, and is recommending to the
shareholders for their approval at the 1998 annual meeting of shareholders, a
resolution to amend article 1 of the Company's Restated Articles of
Incorporation to change the Company's name (the "Article 1 Amendment"). The
applicable text of the board of directors' resolution is as follows:
"RESOLVED, That in connection with the proposal to change the Company's
name to Cleco Corporation, the Board of Directors authorizes Article 1. of
the Company's Restated Articles of Incorporation to be amended to read in
its entirety as follows:
'Article 1.
The name of the Corporation is hereby declared to be CLECO CORPORATION'."
REASONS FOR A NAME CHANGE
The markets in which the Company operates are changing and so are its
customers. Cleco is currently positioning itself to take advantage of the
opportunities that will present themselves as customer choice is introduced into
the Company's service territory and surrounding areas and the related
transformation of the Company from the traditional electric service provider it
has been for over 60 years begins. The perception of such a transformation must
also occur in the minds of Cleco's customers,
20
<PAGE> 25
shareholders and the public. A name change, new logo and new approach to Cleco's
overall identity will help solidify the Company's identity with existing
customers and provide a better platform from which to launch new market
initiatives.
APPROVAL BY SHAREHOLDERS
Approval of this proposal requires the affirmative vote of a majority of
the outstanding capital stock of the Company. If approved by the shareholders of
the Company, the Article 1 Amendment will be filed with the Secretary of State
of the State of Louisiana in the form of Articles of Amendment to the Company's
Restated Articles of Incorporation. If this proposal is not approved by the
shareholders, the Articles of Amendment will not be filed.
If the Article 1 Amendment is adopted, shareholders will not be required to
exchange outstanding stock certificates for new certificates.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSAL TO AMEND THE COMPANY'S
RESTATED ARTICLES OF INCORPORATION TO CHANGE THE COMPANY'S NAME TO CLECO
CORPORATION IS IN THE BEST INTEREST OF THE COMPANY AND RECOMMENDS A VOTE FOR
APPROVAL OF THE PROPOSAL. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO
VOTED UNLESS SHAREHOLDERS SPECIFY OTHERWISE ON THEIR PROXY CARD.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, to the knowledge of the Company based on a
review of the information and as of the dates indicated, certain information
with respect to each person who is the beneficial owner of more than 5% of the
outstanding shares of any class of the Company's voting securities.
<TABLE>
<CAPTION>
SHARES OF $100 PREFERRED
STOCK BENEFICIALLY OWNED
---------------------------------
AMOUNT AND NATURE OF PERCENTAGE
NAME AND ADDRESS BENEFICIAL OWNERSHIP OF CLASS
---------------- -------------------- ----------
<S> <C> <C>
UMB Bank, N.A.,
Trustee of the Company's 401(k) Savings and Investment
Plan,
1010 Grand, Kansas City, MO 64106......................... 290,731(1) %
</TABLE>
- ---------------
(1) As of December 31, 1997, based upon a Schedule 13G filed with the Securities
and Exchange Commission. The reporting entity states that it has shared
dispositive power with respect to 290,731 shares and shared voting power
with respect to 290,731 shares. Such 290,731 shares are held by UMB Bank,
N.A., as trustee (the "ESOP Trustee") of the ESOP component (the "ESOP") of
the Company's 401(k) Savings and Investment Plan ("Savings Plan"). Such
290,731 shares are convertible under certain circumstances pursuant to the
Company's Restated Articles of Incorporation and the governing instruments
of the ESOP and the Savings Plan into 1,395,509 shares of Common Stock,
subject to antidilution adjustment, or approximately 6.2% of the Common
Stock outstanding as of December 31, 1997. Participants in the Savings Plan
have voting rights with respect to shares of $100 Preferred Stock (or Common
Stock into which such stock has been converted) allocated to their accounts.
The ESOP Trustee is required to vote unallocated shares in the same
proportion as allocated shares as to which it has received voting
instructions from participants. Participants in the Savings Plan have, in
the event of a tender or exchange offer, investment discretion with respect
to shares of $100 Preferred Stock (or Common Stock into which such stock has
been converted) allocated to their accounts. In such an event, the ESOP
Trustee is required to tender unallocated shares in the same proportion that
it tenders allocated shares as to which it has received investment
instructions, but has no power to tender allocated shares as to which it has
received no investment instructions. The reporting entity also states that
it, as trustee of various collective investor funds for employee benefit
plans and other index accounts and various
21
<PAGE> 26
personal trust accounts, has sole voting power with respect to shares
of Common Stock, shared voting power with respect to shares of Common
Stock, sole dispositive power with respect to shares of Common Stock
and shared dispositive power with respect to shares of Common Stock.
ANNUAL REPORT
A shareholder survey card, the Company's 1997 Year in Review and the
enclosed 1997 Annual Report to Shareholders, which contains the Company's
consolidated financial statements for the year ended December 31, 1997,
accompany the proxy material being mailed to all shareholders. The shareholder
survey card, the 1997 Year in Review and the Annual Report to Shareholders are
not a part of the proxy solicitation material.
PROPOSALS BY SHAREHOLDERS
Proposals of shareholders intended to be presented at the Company's annual
meeting of shareholders to be held in 1999, and otherwise eligible, must be
received by the Company (at the address indicated on the first page of this
proxy statement) no later than November 11, 1998 (subject to certain provisions
of the Company's Bylaws which require that certain proposals be submitted 180
days before such meeting) to be included in the Company's proxy material and
form of proxy relating to such meeting.
OTHER MATTERS
Management does not intend to bring any other matters before the meeting
and has not been informed that any other matters are to be presented to the
meeting by others. If other matters properly come before the meeting or any
adjournments thereof, the persons named in the accompanying proxy and acting
thereunder intend to vote in accordance with their best judgment.
ALL SHARES THAT A SHAREHOLDER OWNS, NO MATTER HOW FEW, SHOULD BE
REPRESENTED AT THE ANNUAL MEETING OF SHAREHOLDERS. THE ACCOMPANYING PROXY SHOULD
THEREFORE BE COMPLETED, SIGNED, DATED AND RETURNED AS SOON AS POSSIBLE.
By order of the board of directors.
/s/ GREGORY L. NESBITT
Gregory L. Nesbitt
President and Chief Executive
Officer
March 11, 1998
22
<PAGE> 27
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING ON APRIL 24, 1998
The undersigned hereby constitutes and appoints Gregory L. Nesbitt, Thomas J.
Howlin and Michael P. Prudhomme, and each of them (the "Proxy Committee"), his
or her true and lawful agents and proxies, with full power of substitution in
each, to represent the undersigned at the annual meeting of shareholders of
Central Louisiana Electric Company, Inc. (the "Company"), to be held at the
Pineville High School Auditorium, 1511 Line Street, Pineville, Louisiana, on
Friday, April 24, 1998, and at any adjournments thereof, on all matters coming
before said meeting. Receipt of the notice of the meeting and the proxy
statement, both dated March 11, 1998, is acknowledged. The following items of
business will be considered at the aforesaid annual meeting:
1. Election of four Class I Directors. Nominees:
Sherian G. Cadoria, Richard B. Crowell, David M. Eppler and Gregory L.
P Nesbitt, whose terms of office expire in 2001.
R 2. Proposal to approve appointment of Coopers & Lybrand L.L.P. as
auditors.
O
3. Proposal to amend the Company's 1990 Long-Term Incentive Compensation
X Plan for the benefit of the outside directors of the Company and to
make related amendments to the Company's Deferred Compensation Plan
Y for Directors.
4. Proposal to amend the Company's Restated Articles of Incorporation to
delete section 3 of article 7 thereof.
5. Proposal to amend the Company's Restated Articles of Incorporation to
change the name of the Company from Central Louisiana Electric Company,
Inc. to Cleco Corporation.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXY COMMITTEE
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD. ACTION TAKEN
PURSUANT TO THIS PROXY CARD WILL BE EFFECTIVE AS TO ALL THE SHARES (WHETHER
COMMON OR PREFERRED, AND, IF PREFERRED, OF ANY CLASS OR SERIES) THAT YOU OWN.
<PAGE> 28
[ ] Please mark your votes
as in this example.
This proxy when executed will be voted in the manner directed herein. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" ITEMS 1,2,3,4 AND 5.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
<TABLE>
<S> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. ELECTION OF [ ] [ ] 2. PROPOSAL TO APPROVE [ ] [ ] [ ]
DIRECTORS. APPOINTMENT OF COOPERS &
(SEE REVERSE) LYBRAND L.L.P. AS
AUDITORS.
</TABLE>
For, except vote withheld from the following nominee(s):
- -------------------------------------------
<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
3. PROPOSAL TO AMEND THE COMPANY'S 1990 LONG-TERM INCENTIVE COMPENSATION PLAN FOR THE BENEFIT [ ] [ ] [ ]
OF THE OUTSIDE DIRECTORS OF THE COMPANY AND TO MAKE RELATED AMENDMENTS TO THE COMPANY'S
DEFERRED COMPENSATION PLAN FOR DIRECTORS.
FOR AGAINST ABSTAIN
4. PROPOSAL TO AMEND THE COMPANY'S RESTATED ARTICLES OF INCORPORATION TO DELETE SECTION 3 OF [ ] [ ] [ ]
ARTICLE 7 THEREOF.
FOR AGAINST ABSTAIN
5. PROPOSAL TO AMEND THE COMPANY'S RESTATED ARTICLES OF INCORPORATION TO CHANGE THE NAME OF [ ] [ ] [ ]
THE COMPANY FROM CENTRAL LOUISIANA ELECTRIC COMPANY, INC. TO CLECO CORPORATION.
</TABLE>
NOTE: Please sign exactly as name
appears hereon. Joint owners
should each sign. When
signing as attorney,
executor, trustee or
guardian, please give full
title as such.
-------------------------------------
-------------------------------------
SIGNATURE(S) DATE
