<PAGE>
LOGO
CALIFORNIA ENERGY COMPANY, INC.
10831 OLD MILL ROAD
OMAHA, NE 68154
March 27, 1995
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
California Energy Company, Inc. to be held at the Red Lion Hotel, 1616 Dodge
Street, Omaha, Nebraska on May 11, 1995 at 9:00 A.M. local time.
The following matters will be considered and acted upon at the Annual
Meeting: (i) election to the Board of Directors of the Company of three Class
III Directors; (ii) ratification of the appointment by the Board of Directors
of Deloitte & Touche as auditors of the Company for the 1995 fiscal year; and
(iii) transaction of such other business as may properly come before the
meeting.
Information concerning the matters to be considered and voted upon at the
Annual Meeting is set forth in the attached Notice of Annual Meeting and
Proxy Statement. We encourage you to review the attached material carefully
and to sign, date and return the enclosed proxy card in the enclosed postage
paid envelope. Each proxy is revocable and will not affect your right to vote
in person if you attend the meeting.
Sincerely,
/s/ David L. Sokol
David L. Sokol
Chairman of the Board
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LOGO
CALIFORNIA ENERGY COMPANY, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 11, 1995
To The Stockholders of California Energy Company, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of
California Energy Company, Inc. will be held at the Red Lion Hotel, 1616
Dodge Street, Omaha, Nebraska on May 11, 1995 at 9:00 A.M. local time for the
following purposes:
1. To elect to the Board of Directors of the Company three Class III
Directors (with terms expiring at the 1998 annual meeting);
2. To ratify the appointment by the Board of Directors of Deloitte &
Touche as auditors of the Company for fiscal year 1995; and
3. To act upon such other matters as may properly come before the
meeting.
All Stockholders of record at the close of business on March 13, 1995 are
entitled to vote at the Annual Meeting.
To ensure that your shares are represented, you are urged to please fill
in, sign, date and return the enclosed proxy card promptly in the enclosed
postage paid envelope. You may revoke your proxy at any time before it is
voted at the Annual Meeting. If you attend the meeting, you may vote your
shares in person.
Please date your proxy card and sign it exactly as your name appears on
the proxy card.
By Order of the Board of Directors
/s/ David L. Sokol
David L. Sokol
Chairman of the Board
March 27, 1995
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CALIFORNIA ENERGY COMPANY, INC.
10831 OLD MILL ROAD
OMAHA, NE 68154
PROXY STATEMENT
MARCH 27, 1995
ANNUAL MEETING OF STOCKHOLDERS
May 11, 1995
SOLICITATION AND VOTING
This Proxy Statement ("Statement") is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors (the "Board") of
California Energy Company, Inc. (the "Company") to be voted at the Annual
Meeting of Stockholders to be held on May 11, 1995, or any adjournment
thereof (the "Annual Meeting"). This Proxy Statement, the Notice of Annual
Meeting and the accompanying Proxy are being mailed to Stockholders on or
about March 31, 1995.
The voting stock of the Company (the "Voting Stock") consists of the
Common Stock of the Company, $0.0675 par value (the "Common Stock"), and the
Series C Redeemable Convertible Exchangeable Preferred Stock of the Company
(the "Series C Preferred Stock") which was outstanding on the record date.
Holders of the Common Stock and the holder of the Series C Preferred Stock
will vote together as a single class at the Annual Meeting. Each share of
Common Stock will be entitled to one vote on all matters presented at the
Annual Meeting. Each share of Series C Preferred Stock will be entitled to
vote on an "as converted" basis on all matters presented at the Annual
Meeting.
The close of business on March 13, 1995 is the record date (the "Record
Date") for determining holders of the outstanding Voting Stock (the
"Stockholders") entitled to vote at the Annual Meeting. On the Record Date,
50,036,621 shares of Common Stock and 1272 shares of Series C Preferred
Stock, entitled to 3,461,224 votes, were outstanding.
The approval of a plurality of the Voting Stock present in person or by
proxy at the Annual Meeting is required for the election of nominees as
Directors of the Company. The approval of a majority of the Voting Stock
present in person or by proxy at the Annual Meeting is required for approval
of Proposal 2 (ratification of selection of Independent Auditors). A quorum
equal to a majority of the outstanding Voting Stock must be present in person
or by proxy at the Annual Meeting in order to elect Directors and consider
Proposal 2.
All shares of Voting Stock represented by properly executed proxies which
are returned and not revoked will be voted in accordance with the
instructions, if any, given therein. If no instructions are provided in a
proxy, it will be voted FOR the Board's nominees for Director, FOR the
approval of Proposal 2 and in accordance with the proxy-holders best judgment
as to any other matters raised at the Annual Meeting. Abstentions and broker
non-votes will not be counted as shares present with respect to the proposals
with respect to which they are not voted. The proxy is revocable and any
Stockholder who executes a proxy may revoke it at any time before it is voted
by delivering to the Secretary of the Company a written statement revoking
the proxy, by executing and delivering to the Secretary of the Company a
later dated proxy or by voting in person at the Annual Meeting.
Expenses in connection with this solicitation of proxies will be paid by
the Company. Upon request, the Company will reimburse brokers, dealers, banks
or similar entities acting as nominees for reasonable expenses incurred in
forwarding copies of these proxy materials to the beneficial owners of shares
which such persons hold of record. The Company has engaged MacKenzie
Partners, Inc. to solicit proxies for the
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Annual Meeting for a fee of approximately $10,000, plus reimbursement of
reasonable expenses. In addition, solicitation of proxies may be made through
the mail, in person and by facsimile and telephone by certain directors,
officers and regular employees of the Company.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board currently consists of twelve members divided into three classes
serving staggered three-year terms. The Board has unanimously nominated James
Q. Crowe, Walter Scott, Jr. and John R. Shiner for election at the Annual
Meeting as Class III directors, with terms expiring at the 1998 annual
meeting of Stockholders. The terms of the current Class III Directors, Mr.
Crowe, Mr. Scott, Everett B. Laybourne and Barton W. Shackelford expire at
the Annual Meeting. Mr. Laybourne and Mr. Shackelford will be retiring as
directors of the Company at the end of their term and accordingly will not be
seeking re-election at the Annual Meeting. Mr. Herbert L. Oakes, Jr. will
also resign effective as of the Annual Meeting and will not be seeking
re-election at the Annual Meeting. Following the Annual Meeting, the Board
has voted to reduce the size of the Board to ten members to reflect the
retirement of Mr. Laybourne and Mr. Shackelford.
Messrs. Crow, Scott, and Shiner have consented to serve if elected. If a
nominee becomes unable to serve if elected, proxies will be voted for such
other person, if any, as the Board may nominate, or the Board may be reduced
in size accordingly. The Board knows of no reason why any nominee will be
unable to serve if elected.
The approval of a plurality of the Voting Stock present in person or by
proxy at the Annual Meeting is required for election of the nominees as
directors. A quorum equal to the majority of the outstanding Voting Stock
must be present in person or by proxy at the Annual Meeting in order to elect
directors. If no instructions are provided in a proxy, it will be voted FOR
the Board's nominees for directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ABOVE-NAMED
NOMINEES.
BOARD OF DIRECTORS
In addition to the above-named current and nominated Directors, the Board
includes the following seven persons, each for a term expiring at the annual
meeting in the year indicated:
<TABLE>
<CAPTION>
YEAR OF EXPIRATION
NAME CLASS OF TERM
------------------- ---------- -----------------
<S> <C> <C>
Judith E. Ayres Class I 1996
Richard K. Davidson Class I 1996
David L. Sokol Class I 1996
David E. Wit Class I 1996
Edgar D. Aronson Class II 1997
Ben Holt Class II 1997
Richard R. Jaros Class II 1997
</TABLE>
During 1994, the Board met five times and took action by unanimous written
consent once.
The Board has an Audit Committee, a Compensation Committee, an
Environmental Committee, an Executive Committee, a Nominating Committee, and
a Stock Option Committee.
AUDIT COMMITTEE
The Audit Committee (Messrs. Aronson, Shackelford and Wit) is empowered to
recommend to the Board independent public accounting firms for selection as
auditors of the Company; to make recommendations to the Board on auditing
matters; to examine and make recommendations concerning the scope of audits;
and to review the terms of transactions between the Company and related
entities. The Audit Committee met four times during 1994.
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COMPENSATION COMMITTEE
The Compensation Committee (Messrs. Jaros, Laybourne, Shackelford and Wit)
is authorized to make recommendations to the Board with respect to executive
salaries and bonuses and directors' compensation. The Compensation Committee
acted by written consent once and met once during 1994.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Jaros served as President of the Company from January 8, 1992 until
April 19, 1993 and served as Chairman of the Company from April 19, 1993
until May 5, 1994. Mr. Jaros serves on the Board of the Company as a nominee
of Kiewit Energy Company ("Kiewit Energy") under an agreement entered into in
connection with Kiewit Energy's investment in the Company in early 1991. Mr.
Jaros also owns Peter Kiewit Sons' Inc. ("Kiewit") stock. Kiewit Energy is a
wholly owned subsidiary of Kiewit. See "Certain Transactions and
Relationships." Messrs. Laybourne, Shackelford and Wit have not been
employees of the Company or otherwise participated in activities constituting
compensation committee interlocks or insider participation requiring
disclosure under this caption.
ENVIRONMENTAL COMMITTEE
The Environmental Committee (Mr. Aronson, Ms. Ayres and Mr. Jaros)
addresses issues and provides advice concerning environmental regulations and
compliance. The Environmental Committee met four times during 1994.
EXECUTIVE COMMITTEE
The Executive Committee (Messrs. Davidson, Jaros, Scott, Shackelford and
Sokol) was established to act for the Board in between regularly scheduled
Board meetings. The Executive Committee met three times during 1994.
NOMINATING COMMITTEE
The Nominating Committee (Ms. Ayres and Messrs. Jaros, Oakes and Sokol)
was established to provide the Board with advice regarding potential nominees
to the Board. The Nominating Committee did not meet during 1994. The
Nominating Committee will consider qualified nominees recommended by holders
in the aggregate of 5% or more of the Voting Stock. The Nominating Committee
is under no obligation, however, to nominate any person so recommended. The
Nominating Committee is not presently considering any nominations to the
Board.
STOCK OPTION COMMITTEE
The Stock Option Committee (Messrs. Crowe, Scott and Jaros) was
established to provide disinterested administration of the Company's Amended
and Restated 1986 Stock Option Plan ("Employee Option Plan") pursuant to the
requirements of the SEC's Rule 16b-3. The Stock Option Committee acted by
written consent three times during 1994.
INFORMATION REGARDING NOMINEES FOR ELECTION AS DIRECTORS,
DIRECTORS CONTINUING IN OFFICE AND DIRECTORS RETIRING
AT THE ANNUAL MEETING:
EDGAR D. ARONSON, 60. Mr. Aronson has been a director of the Company since
April 1983. Mr. Aronson is Chairman of Oakes, Fitzwilliams & Co., Inc., the
corporate general partner of Oakes, Fitzwilliams, L.P., a position he has
held since December 1994, and he has served as a director of U.S. Electricar,
Inc. since February 1995. Mr. Aronson founded EDACO Inc., a private venture
capital company, in 1981, and has been President of EDACO since that time.
Prior to that, Mr. Aronson was Chairman, Dillon, Read International from 1979
to 1981 and a General Partner in charge of the International Department at
Salomon Brothers Inc from 1973 to 1979.
JUDITH E. AYRES, 50. Ms. Ayres has been a director of the Company since July
1990. Since 1990, Ms. Ayres has been Principal of The Environmental Group, an
environmental consulting firm in San Francisco, California. From 1988 to
1989, Ms. Ayres was Vice President/Principal of William D.
3
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Ruckelshaus Associates, an environmental consulting firm. From 1983 to 1988
Ms. Ayres was the Regional Administrator of Region 9 (Arizona, California,
Hawaii, Nevada, and the Western Pacific Islands) of the United States
Environmental Protection Agency.
JAMES Q. CROWE, 45. Mr. Crowe has been a director of the Company since March
1991. Mr. Crowe is Chairman and Chief Executive Officer of MFS Communications
Company, Inc. ("MFS"), a publicly traded company in which Kiewit holds a
majority ownership interest. Prior to assuming his current position in 1991,
Mr. Crowe was President of Kiewit Industrial Company, a major subsidiary of
Kiewit. Before joining Kiewit Industrial Company in 1986, Mr. Crowe was Group
Vice President, Power Group at Morrison-Knudsen Corporation. Mr. Crowe is a
director of Kiewit and C-TEC Corporation, a publicly traded company in which
Kiewit holds a majority ownership interest.
RICHARD K. DAVIDSON, 53. Mr. Davidson was appointed a director of the Company
in March 1993. Mr. Davidson has been Chairman and Chief Executive Officer of
Union Pacific Railroad since September 1991. In May 1994 he was elected
President of Union Pacific Corporation. From 1989 to 1991 he was Executive
Vice President --Operations of Union Pacific Railroad, and from 1986 to 1989
he was Vice President --Operations of Union Pacific Railroad. Mr. Davidson is
also a director of FirsTier Financial, Inc., Chicago & North Western Holdings
Corporation as well as Union Pacific Corporation.
BEN HOLT, 81. Mr. Holt was elected to the Board in September 1993. Mr.
Holt is the founder, and was Chairman and Chief Executive Officer of The Ben
Holt Co., an engineering firm located in Pasadena, California, which the
Company acquired in September 1993. Mr. Holt retired as Chairman and CEO of
The Ben Holt Co. in December 1993 and is currently a consultant to the
Company.
RICHARD R. JAROS, 43. Mr. Jaros has been a director of the Company since
March 1991. Mr. Jaros has served as Chairman of the Board from April 19, 1993
to May 5, 1994 and served as President and Chief Operating Officer of the
Company from January 8, 1992 to April 19, 1993. From 1990 until January 8,
1992, Mr. Jaros served as a Vice President of Kiewit and is currently an
Executive Vice President and director of Kiewit. Mr. Jaros serves as a
director of MFS and C-TEC Corporation, both of which are publicly traded
companies in which Kiewit holds a majority ownership interest. From 1986 to
1990, Mr. Jaros served as a Vice President for Mergers and Acquisitions for
Kiewit Holdings, a subsidiary of Kiewit.
EVERETT B. LAYBOURNE, 83. Mr. Laybourne has been a director of the Company
since May 1988. For many years he served as counsel for a number of major
publicly-held corporations. He also presently serves as Vice President and
Trustee of The Ralph M. Parsons Foundation and as National Board Chairman of
WAIF, Inc. From 1969 to 1988, Mr. Laybourne was senior partner in the law
firm of MacDonald, Halsted & Laybourne in Los Angeles, California, whose
successor firm was Baker & McKenzie to which he acted for five years in an of
counsel capacity. He continues in the practice of law in Los Angeles.
HERBERT L. OAKES, Jr., 47. Mr. Oakes has been a director of the Company since
October 1987. In 1982, Mr. Oakes founded and became President of H.L. Oakes &
Co., Inc., a corporate advisor and dealer in securities. From 1988 to the
present, Mr. Oakes has served as Managing Director of Oakes, Fitzwilliams,
Co., Limited, a member of the Securities and Futures Authority Limited and
The London Stock Exchange. Mr. Oakes is a director of Shared Technologies,
Inc., Harcor Energy Inc. and New World Power Corporation.
WALTER SCOTT, JR., 63. Mr. Scott has been a director of the Company since
June 1991. Mr. Scott was the Chairman and Chief Executive Officer of the
Company from January 8, 1992 until April 19, 1993. Mr. Scott is Chairman and
President of Kiewit, a position he has held since 1979. Mr. Scott is a
director of Berkshire Hathaway, Inc., Burlington Resources, Inc., ConAgra,
Inc., FirsTier Financial, Inc., and Valmont Industries, Inc. Mr. Scott also
serves as a director of MFS and C-TEC Corporation, both publicly traded
companies in which Kiewit holds a majority ownership interest.
BARTON W. SHACKELFORD, 74. Mr. Shackelford has been a director of the Company
since June 1986. Mr. Shackelford served as President and a director of
Pacific Gas & Electric Company from 1979 until his retirement in 1985. He is
a director of Harding Associates, Inc.
4
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JOHN R. SHINER, 51. Mr. Shiner was nominated as a director of the Company
on February 24, 1995. Mr. Shiner is currently a partner in the law firm of
Morrison & Foerster in Los Angeles and was counsel to the firm since 1993.
Prior to that time, he was a partner in the law firm of Baker & McKenzie.
DAVID L. SOKOL, 38. Mr. Sokol has been a director of the Company since March
1991 and is currently the Chairman and Chief Executive Officer of the
Company. Mr. Sokol also held the title of President of the Company from April
19, 1993 until January 21, 1995. Mr. Sokol was Chairman, President and Chief
Executive Officer of the Company from February 1991 until January 1992. Mr.
Sokol was the President and Chief Operating Officer of, and a director of,
JWP, Inc., from January 27, 1992 to October 1, 1992. From November 1990 until
February 1991, Mr. Sokol was the President and Chief Executive Officer of
Kiewit Energy. From 1983 to November 1990, Mr. Sokol was the President and
Chief Executive Officer of Ogden Projects, Inc.
DAVID E. WIT, 33. Mr. Wit has been a director of the Company since April
1987. He is Co-Chief Executive Officer of Logicat, Inc., a software
development/publishing firm. Prior to working at Logicat, Inc. Mr. Wit worked
at E.M. Warburg, Pincus & Company, where he analyzed seed-stage financing and
technology investments.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Proposal 2 is to ratify the appointment of Deloitte & Touche as the
Company's independent auditors.
The Board, upon the recommendation of the Audit Committee, has unanimously
appointed Deloitte & Touche as the independent accounting firm engaged to
audit the financial statements of the Company for the 1995 fiscal year.
Deloitte & Touche acted in that capacity for the 1994 fiscal year. A
representative of Deloitte & Touche is expected to be present at the Annual
Meeting and will be available to respond to questions and may make a
statement if he or she so desires.
The approval of a majority of the Voting Stock present in person or by
proxy at the Annual Meeting is required for approval of Proposal 2. A quorum
equal to the majority of the outstanding Voting Stock must be present in
person or by proxy at the Annual Meeting in order to vote on Proposal 2. If
no instructions are provided in a proxy, it will be voted FOR the approval of
Proposal 2.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
OTHER MATTERS
The Board knows of no other matters which are likely to be brought before
the Annual Meeting. However, if any other matters are brought before the
Annual Meeting, the proxy-holders will vote proxies granted by Stockholders
in accordance with their best judgment.
5
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SECURITY OWNERSHIP OF SIGNIFICANT STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information with respect to all
Stockholders known by the Company to beneficially own more than 5% of either
class of the Voting Stock, and certain information with respect to the
beneficial ownership of each director and the five most highly compensated
executive officers of the Company (and all directors and executive officers
of the Company, as a group) of Common Stock. All information is as of March
13, 1995, unless otherwise indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME (AND ADDRESS IF REQUIRED) OF BENEFICIALLY PERCENTAGE OF
BENEFICIAL OWNER OWNED (1) CLASS (1)
------------------------------------------ ---------------- ---------------
<S> <C> <C>
SERIES C PREFERRED STOCK:
Kiewit Energy Company 1000 Kiewit Plaza
Omaha, Nebraska 68131(2) ................. 1,297 100%
COMMON STOCK:
Kiewit Energy Company(2) .................. 19,940,727 33.6%
The Capital Group Companies Inc.(3) ...... 2,908,570 5.74%
Edgar D. Aronson .......................... 44,000 .09%
Judith E. Ayres ........................... 60,000 .12%
James Q. Crowe ............................ 10,000 .02%
Richard K. Davidson ....................... 40,000 .08%
Ben Holt .................................. 135,250 .27%
Richard R. Jaros .......................... 340,428 .68%
Everett B. Laybourne ...................... 27,789 .06%
Herbert L. Oakes, Jr.(4) .................. 66,353 .13%
Walter Scott, Jr. ......................... 10,000 .02%
Barton W. Shackelford ..................... 12,860 .03%
John R. Shiner ............................ 0 .00%
David L. Sokol ............................ 543,824 1.08%
David E. Wit(5) ........................... 47,874 .10%
Thomas R. Mason ........................... 114,137 .23%
Steven A. McArthur ........................ 125,300 .25%
Donald M. O'Shei, Sr. ..................... 74,565 .15%
John G. Sylvia ............................ 109,805 .22%
All directors and executive officers as a
group (17 persons) ....................... 1,762,185 3.42%
<FN>
---------------
(1) Includes shares which the listed beneficial owner is deemed to have
the right to acquire beneficial ownership under Rule 13d-3(d) under the
Securities Exchange Act, including, among other things, shares which
the listed beneficial owner has the right to acquire within 60 days.
(2) Includes the 10,622,312 shares of Common Stock Kiewit Energy Company
held on March 9, 1995 the date of Amendment No. 10 to their Schedule
13D, options to purchase an additional 5,789,163 shares of Common Stock
and 3,529,352 shares of Common Stock into which the 1,297 shares of
Series C Preferred Stock held by Kiewit Energy are convertible.
Effective March 15, 1995, the Company elected to exchange the Series C
Preferred Stock for 9.5% Convertible Subordinated Debentures Due 2003.
The 9.5% Convertible Subordinated Debentures Due 2003 will also be
convertible into 3,529,352 shares of Common Stock.
(3) According to a Schedule 13G filed by such parties February 6, 1995.
Certain operating subsidiaries of The Capital Group Companies, Inc.,
exercised investment discretion over various institutional accounts
which held 2,908,570 shares of the Company. Capital Guardian Trust
Company, a bank, and one of such operating companies, exercised
investment discretion over 1,789,660 of said shares. Capital Research
and Management Company, and Capital International, Inc., registered
investment advisers, and Capital International Limited, and Capital
International S.A., other operating subsidiaries, had investment
discretion with respect to approximately 1,069,440, 11,460, 20,000 and
17,990 shares, respectively.
(4) Includes 5,720 shares registered in the name of H.L. Oakes & Co., Inc.
and 3,373 shares registsered in the name of HLO Co. Inc., both
companies of which Mr. Oakes is a director and of which his wife is a
principal stockholder, 4,746 shares owned by Mr. Oakes' wife and 4,996
shares registered to H.L. Oakes, trustee for Harrison Oakes, Mr. Oakes'
minor son. Mr. Oakes disclaims beneficial ownership of all of those
shares.
(5) Includes 3,748 shares held jointly with his spouse.
6
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EXECUTIVE OFFICER AND DIRECTOR COMPENSATION
COMPENSATION COMMITTEE REPORT
The Company's executive compensation is determined by the Compensation
Committee of the Board. The Compensation Committee usually meets once a year
in December, at which time salaries with respect to the next fiscal year, and
bonuses with respect to the nearly completed year are determined, as well as
making recommendations to the Stock Option Committee for stock option grants
as long-term incentive compensation.
The Compensation Committee believes that compensation of the Company's key
executives should be sufficient to attract and retain highly qualified and
productive personnel and also to provide meaningful incentives for enhanced
productivity and superior performance. It is the policy of the Company that
the three components of the Company's total compensation package (salary,
bonus and stock options) will be considered in the aggregate in determining
the amount of any one component. The Company seeks to reward achievement of
long and short-term individual performance goals, viewed in the context of
both individual power project and company performance. However, given the
unique nature of each independent development project (particularly
considering the context of the different legal, regulatory, financial,
accounting, tax, political and cultural systems, issues and structures found
in various countries in which the Company develops projects internationally)
and the resulting flexible adaptation required in the duties and tasks
performed by the Company's key executives, the Compensation Committee's
criteria for assessing executive performance in any year is inherently
subjective and not subject to specific enumeration of factors, relative
weighting or formulae calculations. The Company did not specifically use any
companies in the same industry as a basis for comparison when establishing
executive compensation.
During 1994, the Company's executive compensation included a base salary,
a cash bonus and long-term incentive compensation in the form of stock
options awarded under the Company's Employee Option Plan, all dependent on
subjective evaluations of performance as noted above. The cash bonus
compensation of executives is designed to compensate executives for the
Compensation Committee's assessment of superior performance and meritorious
and diligent individual efforts, and such assessments usually relate to
individual and unique projects and, in part, also recognize the individual
executive's level of commitment (demonstrated by subjective factors) to the
Company's long-term success. The long term incentive option grants
recommended by the Compensation Committee and implemented by the Stock Option
Committee are intended to align the interests of employees and Stockholders
and thereby to motivate executives as equity owners to contribute at superior
levels in the future and to allow them to share in increased value developed
for Stockholders generally.
The Company's Chairman and Chief Executive Officer, David Sokol, has an
existing employment agreement with the Company which provides for a base
salary of $350,000 per annum and a minimum annual bonus of $75,000. The
employment contract also provides for the payment of two years base salary
and minimum bonus in the event of termination without cause.
At its December 1994 meeting, the Compensation Committee determined to
increase Mr. Sokol's base salary to $400,000 per annum and to award Mr. Sokol
a cash bonus of $550,000 in order to reflect Mr. Sokol's superior performance
and significant accomplishments during the year. In addition, at the December
1994 meeting other executives received salary increases, cash bonuses and
recommendations for stock option grants commensurate with the Compensation
Committee's subjective assessment of their relative individual performance.
In reviewing Mr. Sokol's compensation, the Compensation Committee
subjectively considered Mr. Sokol's significant contribution to the
management of the Company during the year, including the favorable settlement
of significant litigation involving the Company's Yuma Project, the issuance
of the Company's 10 1/4 % Senior Notes Due 2004 (providing $400 million in
proceeds to fund international projects and acquisitions), the Company's
successfully closing financing and commencing construction on two Philippine
geothermal projects aggregating 300 MW, the Company's successfully signing
definitive power sales contracts for one new Philippine power project (the
140 MW Casecnan combined
7
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hydroelectric and irrigation project) and two Indonesian geothermal projects
aggregating 800 MW (the Dieng Project and Patuha Project), the Company's
other promising project development activities and record electrical
production levels at the Coso Project. Mr. Sokol contributed significantly to
the Company's current success and the Compensation Committee believes his
overall compensation was wholly justified and moreover, expressly approved of
by Kiewit Energy, the Company's largest Stockholder (holding approximately
34% of the Company's Voting Stock on the Record Date, on a fully-diluted
basis).
COMPENSATION COMMITTEE
Richard R. Jaros
Everett Laybourne
Barton Shackelford
David Wit
PERFORMANCE GRAPH
The following performance graph shall not be deemed to be incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates such information by reference, and shall not otherwise be deemed
filed under such Acts.
The following graph compares the yearly percentage change in the
cumulative total return on the Company's Common Stock with the cumulative
total return assuming reinvestment of dividends of (1) the S&P 400 Index, (2)
the S&P Utilities Index and (3) an index of comparable peer issuers
constructed by the Company. The index of comparable peer issuers (New Index)
is composed of AES Corp., Destec Energy Inc., Magma Power Company, Enron
Global Power and Pipelines, L.L.C. ("Enron") and Sithe Energies, Inc.
("Sithe") during the periods that each company has been publicly traded.
Enron and Sithe have been added to the index of comparable peer issuers
because of their participation in the independent power industry. Enron and
Sithe were previously excluded from the index because they did not publicly
report the required information, only becoming publicly traded during 1994
and 1993, respectively. The performance graph also includes the index (Old
Index) used in last years proxy statement (excluding Ogden Projects, Inc. for
which data became no longer available in 1994).
</TABLE>
<TABLE>
<CAPTION>
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Cal Energy Comparables - Old Index Comparables - New Index S & P 400 S & P Utilities
<S> <C> <C> <C> <C> <C>
1989 $100 $100 $100 $100 $100
1990 $ 70 $ 90 $ 90 $ 98 $ 97
1991 $126 $119 $119 $126 $109
1992 $139 $115 $115 $138 $122
1993 $154 $134 $134 $149 $138
1994 $130 $124 $118 $155 $127
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation of the Company's five most
highly compensated executive officers who were employed as of the last day in
1994. Information is provided regarding these individuals for the last three
fiscal years during which they were executive officers of the Company, if
applicable.
<TABLE>
<CAPTION>
ALL OTHER
OTHER ANNUAL SECURITIES COMPENSATION
YEAR ENDED SALARY COMPENSATION UNDERLYING (401(K) PLAN
NAME AND PRINCIPAL POSITIONS DECEMBER 31, ($) BONUS ($) ($) OPTIONS (#) CONTRIBUTIONS)
----------------------------- -------------- --------- --------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
David L. Sokol (1) 1994 350,000 612,482 N/A 0 3,472
Chairman and 1993 246,794 350,000 1,000,000 2,800
Chief Executive Officer 1992 27,083 4,167 0
Thomas R. Mason 1994 169,359 100,949 N/A 75,000 3,472
President and 1993 164,359 30,000 5,000 3,398
Chief Operating Officer 1992 155,447 50,000 25,000 3,318
Steven A. McArthur 1994 156,538 119,915 N/A 110,000 3,472
Senior Vice President, 1993 156,538 70,000 10,000 3,398
General Counsel and Secretary 1992 150,000 40,000 20,000 3,215
Donald M. O'Shei, Sr.(2) 1994 160,000 111,852 N/A 75,000 3,472
Senior Vice President 1993 160,000 50,000 5,000 3,398
1992 105,102 40,000 20,000 1,500
John G. Sylvia 1994 138,782 112,670 N/A 100,000 3,472
Senior Vice President, 1993 130,449 45,000 10,000 2,216
Chief Financial Officer 1992 125,000 40,000 15,000 1,451
and Treasurer
<FN>
---------------
(1) Mr. Sokol's compensation for 1992 is through January 8, 1992, the date
of his termination of employment. Mr. Sokol rejoined the Company on
April 19, 1993.
(2) Mr. O'Shei left the employment of the Company in September of 1991 and
rejoined the Company in August of 1992. From September 1991 to August
1992 Mr. O'Shei performed consulting services to the Company.
Accordingly, the 1992 salary entries include payments for such
consulting as well as salary.
9
<PAGE>
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth options granted to each of the named
executive officers of the Company during 1994:
</TABLE>
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES OF
INDIVIDUAL GRANTS % OF STOCK PRICE APPRECIATION
TOTAL OPTIONS FOR OPTION TERM (1)
OPTIONS GRANTED GRANTED TO EXERCISE ------------------------
AND DATE EMPLOYEES PRICE EXPIRATION 5% 10%
NAME OF GRANT IN FISCAL YEAR ($/SHARE) DATE ($) ($)
--------------------- ---------------------- -------------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
David L. Sokol -- -- -- -- -- --
Thomas R. Mason 05/12/94 - 75,000 (2) 7.86% $16.625 05/11/2004 785,531 1,982,531
Steven A. McArthur 05/12/94 - 110,000 (3) 11.53% $16.625 05/11/2004 1,152,113 2,907,713
Donald M. O'Shei, Sr. 05/12/94 - 75,000 (4) 7.86% $16.625 05/11/2004 785,531 1,902,531
John G. Sylvia 05/12/94 - 100,000 (5) 10.48% $16.625 05/11/2004 1,047,375 2,643,375
</TABLE>
---------------
(1) As required by the Securities and Exchange Commission ("SEC"),
potential values stated are based on the prescribed assumption that the
Company's Common Stock will appreciate in value from the date of grant
to the end of the option term (ten years from the date of grant) at
annualized rates of 5% and 10% (total appreciation of 63% and 159%),
respectively, and therefore are not intended to forecast possible
future appreciation, if any, in the price of the Company's Common
Stock. The total of all stock options granted to employees, including
executive officers, during fiscal 1994 was approximately 3% of total
shares outstanding during the year. Accordingly, the potential value of
such options for all optionees under the prescribed assumptions is
approximately 3% of the potential realizable value of all shareholders
for the same period under the same assumptions. As an alternative to
the assumed potential realizable values stated above, SEC rules would
permit stating the present value of such options at the date of grant.
Methods of computing present value suggested by different authorities
can produce significantly different results. Moreover, since stock
options granted by the Company are not transferable, there are no
objective criteria by which any computation of present value can be
verified. Consequently, the Company's management does not believe there
is a reliable method of computing the present value of such stock
options and that all assumptions as to annualized appreciation rates
are inherently speculative.
(2) 18,780 shares exercisable immediately and 937 shares exercisable on
the last day of each month commencing on May 1, 1994.
(3) 27,500 shares exercisable immediately and 1,375 shares exercisable on
the last day of each month commencing on May 1, 1994.
(4) 18,780 shares exercisable immediately and 937 shares exercisable on
the last day of each month commencing on May 1, 1994.
(5) 25,000 shares exercisable immediately and 1,250 shares exercisable on
the last day of each month commencing on May 1, 1994.
10
<PAGE>
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table sets forth the option exercises and the value of
in-the-money unexercised options held by each of the named executive officers
of the Company at December 31, 1994, calculated as being equal to the
difference between the exercise price of the options and the closing price of
the Company's Common Stock on the New York Stock Exchange of $15.625 per
share on December 31, 1994.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTION HELD AT FY END IN-THE-MONEY OPTIONS AT FY END
ACQUIRED VALUE ---------------------------- -----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- ---------- ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
David L. Sokol ....... -- -- 464,983 535,017 -- --
Thomas R. Mason ...... -- -- 85,169 79,831 90,284 35,966
Steven A. McArthur .. -- -- 109,364 90,636 124,534 1,716
Donald M. O'Shei, Sr. -- -- 68,461 61,100 242,589 11,856
John G. Sylvia ....... -- -- 94,712 84,032 412,648 3,432
</TABLE>
COMPENSATION OF DIRECTORS
For 1995, directors who are not employees of the Company will be paid an
annual retainer fee of $15,000 and a fee of $500 per day for attendance at
Board and Committee meetings. Directors who are employees of the Company will
not receive such fees. All directors are reimbursed for their expenses
incurred in attending Board meetings.
TERMINATION OF EMPLOYMENT ARRANGEMENTS
Under the terms of his employment contract, Mr. Sokol is entitled to
receive two times his base salary and minimum bonus in the event of the
termination of his employment by the Company other than for cause. Under the
terms of separate employment agreements between the Company and Mr. Mason,
and the Company and Mr. O'Shei, Mr. Mason and Mr. O'Shei are entitled to
receive two times their base salary and average incentive bonuses for the
prior two years in the event of the termination of employment by the Company
other than for cause. In addition, Mr. O'Shei is entitled to a lump sum
payment of $70,000 for relocation expense if he resides overseas at the time
of his termination. If such persons were terminated without cause, Mr. Sokol,
Mr. Mason and Mr. O'Shei would currently be paid approximately $950,000,
$530,000 and $552,000, respectively.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
The Company and Kiewit Energy are parties to a stock purchase agreement
and related agreements, dated as of February 18, 1991, pursuant to which
Kiewit Energy purchased 4,000,000 shares of Common Stock at $7.25 per share
and received options to buy 3,000,000 shares of Common Stock at a price of
$9.00 per share exercisable over three years, and an additional 3,000,000
shares of Common Stock at a price of $12.00 per share exercisable over five
years (subject to customary adjustments).
In connection with such stock purchase, the Company and Kiewit Energy also
entered into certain other agreements pursuant to which, among other things,
(i) Kiewit Energy and its affiliates agreed, subject to certain conditions,
not to acquire more than 34% of the outstanding Common Stock (the "Standstill
Percentage") for a five-year period, (ii) Kiewit Energy became entitled to
nominate at least three of the Company's directors, (iii) Kiewit Energy
agreed that Kiewit and its affiliates would present to the Company any
opportunity to acquire, develop, operate or own a geothermal resource or
geothermal power plant, and (iv) the Company and Kiewit Energy agreed to use
their best efforts to negotiate and execute a definitive joint venture
agreement relating to the development of certain geothermal properties in
Nevada and Utah. Messrs. Crowe, Jaros and Scott are the current Board
nominees of Kiewit Energy.
11
<PAGE>
<PAGE>
On June 19, 1991, the Board approved a number of amendments to the stock
purchase agreement and the related agreements. Pursuant to such amendments,
the Company reacquired from Kiewit Energy the rights to develop the Nevada
and Utah properties, and Kiewit Energy agreed to exercise options to acquire
1,500,000 shares of Common Stock at $9.00 per share, providing the Company
with $13.5 million in cash. The Company also extended the term of the $9.00
and $12.00 options to seven years, modified certain of the other terms of
these options, granted to Kiewit Energy an option to acquire an additional
1,000,000 shares of the outstanding Common Stock at a price of $11.625 per
share exercisable over ten years (the closing price for the shares on the
American Stock Exchange on June 18, 1991), and increased the Standstill
Percentage from 34% to 49%.
On May 12, 1994, the Company and Kiewit Energy agreed to a final
antidilution adjustment pursuant to the February 18, 1991 Stock Option
Agreement resulting in an additional 289,163 shares of Common Stock being
subject to purchase under the Second Option thereunder.
The Company entered into a Joint Venture Agreement with two subsidiaries
of Kiewit, Kiewit Diversified Group, Inc. and Kiewit Construction Group,
Inc., on December 14, 1993. The agreement provides a framework for the joint
development of power projects located outside the United States. Pursuant to
this Joint Venture Agreement, Kiewit, through its affiliate Kiewit Energy
International (Bermuda) Ltd., is participating in the ownership of the
Company's Mahanagdong project company, CE Luzon Geothermal Power Company,
Inc., in the Philippines on an equal equity basis with the Company.
Affiliates of the Company and Kiewit have entered into joint venture
agreements with respect to the construction of the Mahanagdong Project. CE
Luzon Geothermal Power Company, Inc. executed a First Amended and Restated
Construction Contract dated as of June 30, 1994 with Kiewit/Holt Philippines,
L.P. Kiewit/Holt Philippines, L.P. is a Nebraska limited partnership between
Kiewit Industrial Co. ("KIC") (a wholly owned affiliate of Kiewit) and The
Ben Holt Co. ("BHC") (a wholly owned subsidiary of the Company). KIC has an
80% interest in Kiewit/Holt Philippines, L.P. and BHC owns the remaining 20%
interest. CE Luzon Geothermal Power Company, Inc. also executed a First
Amended and Restated Design, Engineering and Equipment Supply Contract with
Gilbert/CBE, L.P. Gilbert/CBE, L.P. is a Nebraska limited partnership owned
80% by Gilbert Industrial Co. (a wholly owned affiliate of Kiewit) and 20%
owned by CBE Engineering Co. (a wholly owned subsidiary of the Company). The
Company contemplates similar arrangements will be negotiated with respect to
certain of its projects in Indonesia.
Mr. Scott, a director of the Company, is also the Chairman and President
of Kiewit and owns Kiewit stock. Mr. Crowe, a director of the Company, is the
Chairman and President of MFS, a subsidiary of Kiewit and owns Kiewit's
common stock. Mr. Jaros, a director of the Company, is an officer and
director of Kiewit and also owns Kiewit's common stock. Mr. Holt, a director
of the Company, provides consulting and other services to the Company for an
annual fee of $75,000 pursuant to the terms of a consulting agreement which
expires in 1998. The Company believes the terms of this agreement are
comparable to those in similar transactions with unaffiliated third parties.
The Company previously sublet to Midwest Aviation, a division of a
subsidiary of Kiewit, an aircraft leased by the Company from an unaffiliated
third-party lessor (the "Lessor"). The Company paid monthly lease payments of
$38,669 to Lessor, and Midwest Aviation, in turn, paid monthly sublease
payments of $25,000. During 1994, Midwest Aviation exercised certain rights
to purchase the aircraft and the Company's obligations with respect to the
aircraft were terminated. For 1994 the Company's total expenditures for the
aircraft (net of sublease payments but including charter services) was
$203,270.
The Company retained the law firm of Morrison & Foerster in 1994. John R.
Shiner, a nominee for director, is a partner in the Los Angeles office of
Morrison & Foerster. The Company paid Morrison & Foerster a total of
approximately $863,237 in legal fees in 1994. The Company believes that the
fees payable to Morrison & Foerster are comparable to fees that would be
payable in similar transactions with unaffiliated third parties.
12
<PAGE>
<PAGE>
STOCKHOLDER PROPOSALS
Any proposal which a stockholder intends to present at the 1996 annual
meeting of Stockholders must be received by the Company no later than
November 27, 1995 in order to be considered for inclusion in the proxy
statement relating to such meeting. Any such proposals should be directed to
the Secretary, California Energy Company, Inc., 10831 Old Mill Road, Omaha,
Nebraska 68154.
By Order of the Board of Directors
/s/ David L. Sokol
David L. Sokol
Chairman of the Board
March 27, 1995
Omaha, Nebraska
13
<PAGE>
<PAGE>
PROXY SOLICITATION
CALIFORNIA ENERGY COMPANY, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY FOR ANNUAL MEETING MAY 11, 1995
P The undersigned hereby appoints David L. Sokol, Thomas R. Mason, John G.
R Sylvia and Steven A. McArthur, or any one of them, with full power of
O substitution, attorneys and proxies of the undersigned, to represent the
X undersigned and vote all shares of Common Stock, par value $.0675, of
Y California Energy Company, Inc., which the undersigned would be entitled to
vote if personally present at the annual meeting of Stockholders to be held
at the Red Lion Hotel, 1616 Dodge Street, Omaha, Nebraska on May 11, 1995 at
9:00 A.M., local time, and any adjournments thereof, on all matters coming
before said meeting and in the following manner:
-------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
-------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<PAGE>
[X]
Please mark
your votes
like this in blue
or black ink
-------
COMMON
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN ITEM 1 AND
"FOR" ITEMS 2, 3 AND 4
WITHHOLD
1.ELECTION OF FOR all authority to vote
DIRECTORS: JAMES Q. Nominees for all nominees
CROWE, WALTER SCOTT, [ ] [ ]
JR. AND JOHN R.
SHINER
WITHHELD for the following only: [Write the name of
the nominee(s) in the space below.]
----------------------------------------------------
2. PROPOSAL TO APPROVE THE FOR AGAINST ABSTAIN
APPOINTMENT OF DELOITTE & [ ] [ ] [ ]
TOUCHE, CERTIFIED PUBLIC
ACCOUNTANTS, AS THE COMPANY'S
AUDITORS FOR FISCAL YEAR 1994.
I PLAN TO ATTEND MEETING [ ]
COMMENTS/ADDRESS CHANGE
Please mark this box if [ ]
you have written comments/
address change on the
reverse side.
WHEN THIS PROXY IS PROPERLY EXECUTED AND RETURNED,
THE SHARES IT REPRESENTS WILL BE VOTED AT THE
MEETING IN ACCORDANCE WITH THE CHOICES SPECIFIED
ABOVE. IF A CHOICE IS NOT SPECIFIED, THIS PROXY
WILL BE VOTED TO APPROVE THAT PROPOSAL FOR WHICH
NO CHOICE IS INDICATED.
Please mark, date, sign and return your proxy
promptly in the enclosed envelope, which requires
no postage if mailed in the United States.
Signature(s) Date
----------------------------------- -----------
Please sign above exactly as your name or names appear hereon. Joint owners
should each sign personally. Corporate proxies should be signed in full
corporate name by an authorized officer. Fiduciaries should give full titles
as such. PLEASE MARK, DATE, SIGN, AND MAIL PROMPTLY IN THE POSTAGE-PAID
ENVELOPE ENCLOSED.
-------------------------------------------------------------------------------
FOLD AND DETACH HERE
