<PAGE>
Securities and Exchange Commission
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
CALENERGY COMPANY, INC.
- - -------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- - -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
<PAGE>
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[CalEnergy Company Logo]
CALENERGY COMPANY, INC.
302 SOUTH 36TH ST., SUITE 400
OMAHA, NE 68131
April 4, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
CalEnergy Company, Inc. to be held at The Joslyn Art Museum, 2200 Dodge
Street, Omaha, Nebraska on May 15, 1997 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 four Class
II Directors and two Class III Directors; (ii) amendment of the Company's
Restated Certificate of Incorporation to increase the number of authorized
shares of common stock of the Company from 80,000,000 to 180,000,000 to
provide the Company with the future flexibility, subject to market conditions
and appropriate opportunities, to effect a stock split and/or issue shares in
connection with acquisitions; (iii) approval and ratification of an amendment
of the Company's Employee Stock Option Plan to increase the number of option
shares available for grant under the Plan by 2,000,000 as there are currently
only 290,136 option shares remaining available for issuance under the plan;
(iv) ratification of the appointment by the Board of Directors of Deloitte &
Touche LLP as auditors of the Company for the 1997 fiscal year; and (v)
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
<PAGE>
[CalEnergy Company Logo]
CALENERGY COMPANY, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 1997
To the Stockholders of CalEnergy Company, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of
CalEnergy Company, Inc. will be held at The Joslyn Art Museum, 2200 Dodge
Street, Omaha, Nebraska on May 15, 1997 at 9:00 A.M. local time for the
following purposes:
1. To elect to the Board of Directors of the Company four Class II
Directors (with terms expiring at the May 2000 annual meeting) and two
Class III Directors (with terms expiring at the May 1998 annual meeting);
2. To amend the Company's Restated Certificate of Incorporation to
increase the number of authorized shares of common stock of the Company
(the "Common Stock") from 80,000,000 to 180,000,000 shares to provide the
Company with the future flexibility, subject to market conditions and
favorable opportunities, to effect a stock split and/or issue shares in
connection with acquisitions;
3. To approve and ratify an amendment of the Company's Employee Stock
Option Plan to increase the aggregate number of option shares that are
available for grant under the plan by 2,000,000 as there are currently
only 290,136 option shares remaining available for issuance under the
plan;
4. To ratify the appointment by the Board of Directors of Deloitte &
Touche LLP as auditors of the Company for fiscal year 1997; and
5. To act upon such other matters as may properly come before the
meeting.
All Stockholders of record at the close of business on March 17, 1997 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
April 4, 1997
<PAGE>
CALENERGY COMPANY, INC.
302 SOUTH 36TH ST., SUITE 400
OMAHA, NE 68131
---------------
PROXY STATEMENT
APRIL 4, 1997
---------------
ANNUAL MEETING OF STOCKHOLDERS
May 15, 1997
---------------
SOLICITATION AND VOTING
This Proxy Statement (the "Proxy Statement") is furnished in connection
with the solicitation of proxies on behalf of the Board of Directors (the
"Board") of CalEnergy Company, Inc. (the "Company") to be voted at the Annual
Meeting of Stockholders to be held on May 15, 1997, 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 April 4, 1997.
The Voting Stock of the Company (the "Voting Stock") consists of the
Common Stock of the Company, $0.0675 par value (the "Common Stock"), which
was outstanding on the record date. Holders of the Common Stock will vote 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.
The close of business on March 17, 1997 is the Record Date (the "Record
Date") for determining the holders of the outstanding Voting Stock (the
"Stockholders") entitled to vote at the Annual Meeting. On the Record Date,
63,529,595 shares of Common Stock were outstanding.
The approval of a plurality of the Voting Stock present in person or by
proxy, and entitled to vote at the Annual Meeting is required for the
election of nominees as Directors of the Company. The approval of two-thirds
of the Voting Stock present in person or by proxy, and entitled to vote, at
the annual meeting is required for approval of Proposal 2 (Charter Amendment
to increase Authorized Common Shares). A quorum equal to sixty-six and
two-thirds percent (66 2/3%) of the Voting Stock must be present in person or
by proxy at the Annual Meeting in order to consider Proposal 2. The approval
of a majority of the Voting Stock present in person or by proxy, and entitled
to vote, at the Annual Meeting is required for approval of both Proposal 3
(Increase shares authorized for issuance under the Company's 1996 Stock
Option Plan (the "Employee Stock Option Plan")), and Proposal 4 (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 Proposals 3 and 4.
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 Proposals 2, 3 and 4 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 be counted as shares present for
purposes of establishing a quorum with respect to the proposals with respect
to which they apply. Abstention votes will be counted as voted AGAINST the
proposals with respect to which they apply. Broker non-votes will not be
considered as either FOR or AGAINST votes with respect to the proposals to
which they apply. 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.
<PAGE>
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 Annual Meeting for a fee of
approximately $15,000, 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 thirteen members divided into three
classes serving staggered three-year terms.
Class II Nominees. The Board has unanimously nominated David H. Dewhurst,
Richard R. Jaros, David R. Morris and Neville G. Trotter for election at the
Annual Meeting as Class II Directors, with terms expiring at the May 2000
annual meeting of Stockholders.
Class III Nominees: In addition, Edgar D. Aronson and Bernard W. Reznicek,
both of whom were Class II Directors with terms expiring at the Annual
Meeting, have been unanimously nominated by the Board for election at the
Annual Meeting as Class III Directors, with terms expiring at the May 1998
annual meeting of Stockholders.
Messrs. Aronson, Dewhurst, Jaros, Morris, Reznicek and Trotter 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, and entitled to vote, 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 having a term expiring at the
annual meeting in the year indicated:
<TABLE>
<CAPTION>
YEAR OF
NAME CLASS EXPIRATION OF TERM
- - ------------------- ----------- ------------------
<S> <C> <C>
James Q. Crowe ClassIII 1998
Walter Scott, Jr. ClassIII 1998
John R. Shiner ClassIII 1998
Judith E. Ayers ClassI 1999
Richard K. Davidson ClassI 1999
David L. Sokol ClassI 1999
David E. Wit ClassI 1999
</TABLE>
During 1996, the Board met seven times and took action by unanimous
written consent twice.
The Board has an Audit Committee, a Compensation Committee, an
Environmental Committee, an Executive Committee, a Nominating Committee, and
a Stock Option Committee.
2
<PAGE>
AUDIT COMMITTEE
The Audit Committee (Messrs. Jaros (Chair), Aronson, Reznicek and Shiner)
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 1996.
COMPENSATION COMMITTEE
The Compensation Committee (Messrs. Aronson (Chair), Jaros, Shiner and
Wit) is authorized to make recommendations to the Board with respect to
executive salaries and bonuses, directors' compensation and employee benefits
matters. The Compensation Committee met five times during 1996.
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
subsidiary of Kiewit. See "Certain Transactions and Relationships." Messrs.
Aronson, Shiner 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 (Ms. Ayres (Chair) and Messrs. Aronson, Holt,
Reznicek and Shiner) addresses issues and provides advice concerning
environmental regulations and compliance. The Environmental Committee met
four times during 1996.
EXECUTIVE COMMITTEE
The Executive Committee (Messrs. Sokol (Chair), Davidson, Jaros and Scott)
was established to act for the Board in between regularly scheduled Board
meetings. The Executive Committee met twice during 1996.
NOMINATING COMMITTEE
The Nominating Committee (Messrs. Sokol (Chair), Davidson, Jaros and Wit)
was established to provide the Board with advice regarding potential nominees
to the Board. The Nominating Committee did not meet during 1996. 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. Jaros (Chair), Crowe and Scott) was
established to provide disinterested administration of the Company's Employee
Stock Option Plan pursuant to the requirements of the SEC's Rule 16b-3. The
Stock Option Committee acted by written consent four times during 1996.
3
<PAGE>
INFORMATION REGARDING NOMINEES FOR ELECTION AS DIRECTORS
AND DIRECTORS CONTINUING IN OFFICE
DAVID L. SOKOL: 40. Chairman of the Board of Directors and Chief Executive
Officer. Mr. Sokol has been CEO since April 19, 1993 and served as President
of the Company from April 19, 1993 until January 21, 1995. He has been
Chairman of the Board of Directors since May 1994. Mr. Sokol has been a
director of the Company since March 1991. Formerly, 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, the largest stockholder of the Company
and a wholly owned subsidiary of Kiewit.
EDGAR D. ARONSON: 62. Mr. Aronson has been a director of the Company since
April 1983. 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: 52. 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 a Vice President of William D. 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: 47. Mr. Crowe has been a director of the Company since March
1991. Mr. Crowe is Chairman of the Board of WorldCom Inc. Prior to assuming
his current position, Mr. Crowe was Chairman and Chief Executive Officer of
MFS Communications Company, Inc. In 1991, Mr. Crowe was President of Kiewit
Industrial Company, a subsidiary of Kiewit. Before joining Kiewit Industrial
Company in 1986, Mr. Crowe was Group Vice President, Power Group at
Morrison-Knudsen Corporation. In 1994 Mr. Crowe became a director of Kiewit.
Mr. Crowe is also a director of C-TEC Corporation, a publicly traded company
in which Kiewit holds a majority ownership interest.
RICHARD K. DAVIDSON: 55. Mr. Davidson has been a director of the Company
since March 1993. As of January 1, 1997, Mr. Davidson became Chairman,
President and Chief Executive Officer of Union Pacific Corporation and member
of the Board of Directors. Prior to that, Mr. Davidson was President and Chief
Operating Officer of Union Pacific Corporation and a director of that
Corporation. He has been Chairman and Chief Executive Officer of Union
Pacific Railroad since September 1991. Mr. Davidson became part of Union
Pacific Railroad when it merged with the Missouri Pacific and the Western
Pacific Railroads in 1982. He was promoted to Vice President-Operations of
Union Pacific Railroad in 1986 and Executive Vice President-Operations in
1989, and served in that capacity until his appointment as President and
Chief Executive Officer of the Railroad on August 7, 1991; seven weeks later
Mr. Davidson was named Chairman and Chief Executive Officer.
DAVID H. DEWHURST: 53. Mr. Dewhurst has been a director since August 1996.
Mr. Dewhurst was the founder, Chairman and Chief Executive Officer of Falcon
Seaboard Resources, Inc. for many years and is presently Chairman and Chief
Executive Officer of Falcon Seaboard Holdings, L.P. Mr. Dewhurst served as an
officer in the U.S. Air Force from 1968-1970 and was a Foreign Service
Reserve Officer in the U.S. Department of State from 1971-1973. Mr. Dewhurst
currently serves on the National Board of Directors of Citizens for a Sound
Economy.
RICHARD R. JAROS: 45. Mr. Jaros has been a director of the Company since
March 1991. Mr. Jaros served as President and Chief Operating Officer of the
Company from January 8, 1992 to April 19, 1993 and as Chairman of the Board
from April 19, 1993 to May 1994. Mr. Jaros is currently Executive Vice
President, Chief Financial Officer and a director of Kiewit and President of
Kiewit Diversified Group, Inc. From 1990 until January 8, 1992, Mr. Jaros
served as a Vice President of Kiewit. Mr. Jaros serves as a director of
WorldCom Inc. and C-TEC Corporation, a publicly-traded company in which
Kiewit holds a majority ownership interest.
4
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DAVID R. MORRIS: 62. Mr. Morris was appointed a director of the Company in
February 1997. Mr. Morris was Chairman of Northern Electric plc from 1989 to
January 1997. In 1980 he joined Delta plc becoming Managing Director of the
Switchgear and Accessories Division in 1981 and a Board Director in 1984.
Prior to that, Mr. Morris was Managing Director of Wildt Mellor Bromley Ltd.,
a subsidiary of Sears Holdings, plc, from 1975 to 1980. From 1958 to 1975 Mr.
Morris was associated with English Electric Aircraft Ltd., which merged with
GEC, in production and development management. Mr. Morris is a director of
Delta Group plc.
BERNARD W. REZNICEK: 60. Mr. Reznicek has been a director since May 1995.
Mr. Reznicek became National Director -- Utility Marketing for Central States
Indemnity Co. of Omaha on January 2, 1997. Prior to that, he was Dean,
College of Business Administration at Creighton University. From 1987 to
1994, Mr. Reznicek was the Chairman, President and Chief Executive Officer of
Boston Edison Company and was the President and Chief Executive Officer of
the Omaha Public Power District from 1981 to 1987. Mr. Reznicek serves on the
Board of Directors of Stone & Webster, Incorporated since September 1995,
State Street Boston Corporation since 1991 and Guarantee Life Companies, Inc.
since 1986.
WALTER SCOTT, JR.: 65. 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., Valmont Industries, Inc., WorldCom Inc., First Bank Systems, Inc. and
C-TEC Corporation, a publicly-traded company in which Kiewit holds a majority
ownership interest
JOHN R. SHINER: 53. Mr. Shiner was elected as a director of the Company in
May 1995. He joined the law firm of Morrison & Foerster in 1993, where he is
a partner resident in the Los Angeles office. Prior to that time, he was a
partner in the law firm of Baker & McKenzie. Mr. Shiner has practiced law in
Los Angeles since 1968, specializing in litigation and consultation with the
senior management and Boards of closely held and public corporations.
NEVILLE G. TROTTER: 65. Since 1974, Mr. Trotter has been a Member of
Parliament in the U.K. House of Commons representing the Tynemouth area. In
Parliament, Mr. Trotter served as a member of the Select Committees of the
House relating to Defense, Trade & Industry and Transport. Prior to that, Mr.
Trotter, a Chartered Accountant, was a Senior Partner in the Grant Thornton
accounting firm in the U.K. and formerly served as a member of the Newcastle
City Council and was Chairman of the City Finance and Transport Committees.
DAVID E. WIT: 35. 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.
INFORMATION REGARDING DIRECTORS EMERITUS:
Directors Emeritus are former Board members who are appointed by the
Board. The position of Director Emeritus recognizes an individual's
long-standing advice and counsel to the Company after retirement from Board
membership. Directors Emeritus may attend but not vote at Board meetings and
receive no annual or daily director fees for such attendance.
BEN HOLT: 83. Mr. Holt was elected a director of the Company in September
1993 and is retiring as a Board member at the 1997 annual meeting to become a
Director Emeritus. Mr. Holt is the founder, and was Chairman and Chief
Executive Officer of The Ben Holt Co., now CE 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 thereafter served as a consultant to the Company.
EVERETT B. LAYBOURNE: 85. Mr. Laybourne retired as a Board member and was
appointed Director Emeritus by the Board in May 1995 after serving as 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
5
<PAGE>
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.
BARTON W. SHACKELFORD: 76. Mr. Shackelford retired as a Board member and was
appointed Director Emeritus by the Board in May 1995 after serving as 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.
PROPOSAL 2
AMENDMENT OF CERTIFICATE OF INCORPORATION -- INCREASE
IN AUTHORIZED COMMON STOCK
The Company's Board has unanimously approved and recommended to the
Stockholders an amendment to the Certificate of Incorporation to increase the
number of shares of Common Stock the Company is authorized to issue.
The Certificate of Incorporation currently authorizes the Company to issue
80,000,000 shares of Common Stock. By approving Proposal 2, the Certificate
of Incorporation would be amended to authorize the Company to issue up to
180,000,000 shares of Common Stock. As of the Record Date, (i) 63,529,595
shares of Common Stock were outstanding, (ii) 3,459,804 shares of Common
Stock have been reserved for issuance pursuant to options granted under the
Company's Employee Stock Option Plan, (iii) 1,206,000 shares of Common Stock
have been reserved for issuance under options other than those granted under
the Employee Stock Option Plan, (iv) 623,429 shares of Common Stock have been
reserved for issuance pursuant to the Company's Employee Stock Purchase Plan,
and (v) 7,672,882 shares of Common Stock have been reserved for issuance in
connection with outstanding convertible securities issued by subsidiary
trusts.
Accordingly, as of the Record Date, only approximately 3,508,290 shares of
Common Stock remain available for issuance by the Company. THE COMPANY IS
SEEKING APPROVAL FOR THE AUTHORIZATION OF ADDITIONAL SHARES OF COMMON STOCK,
IN ORDER THAT THE COMPANY WILL HAVE THE FUTURE FLEXIBILITY, SUBJECT TO MARKET
CONDITIONS AND FAVORABLE OPPORTUNITIES, TO EFFECT A STOCK SPLIT AND/OR ISSUE
SHARES IN CONNECTION WITH ACQUISITIONS. If Proposal 2 is approved by the
Company's stockholders, the additional common shares will remain authorized,
although the Company has no immediate plans relating to the issuance of such
shares.
If Proposal 2 is adopted, the Certificate of Incorporation will be amended
to increase the authorized shares of Common Stock to 180,000,000 shares.
The approval of sixty-six and two-thirds percent (66 2/3%) of the Voting
Stock (whether or not present at the Annual Meeting) is required for approval
of Proposal 2. A quorum equal to sixty-six and two-thirds percent (66 2/3%)
of the Voting Stock must be present in person or by proxy at the Annual
Meeting in order to consider Proposal 2. If no instructions are provided in
the proxy, such proxy will be voted FOR the approval of Proposal 2.
KIEWIT, THE BENEFICIAL OWNER OF APPROXIMATELY 31.5% OF THE VOTING POWER OF
THE OUTSTANDING VOTING STOCK, HAS AGREED TO VOTE IN FAVOR OF PROPOSAL 2.
THE COMPANY'S BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL 3
AMENDMENT OF EMPLOYEE STOCK OPTION PLAN
Proposal 3 is to approve an amendment to the Company's Employee Stock
Option Plan. A summary of the Plan is contained in Exhibit B hereto.
6
<PAGE>
The Board has unanimously approved and recommended to the Stockholders an
amendment to the Company's Employee Stock Option Plan. The Employee Stock
Option Plan provides for options to purchase Common Stock. As of the Record
Date, only 290,136 option shares remain available for grant under the
Employee Stock Option Plan. The proposed amendment provides that the
aggregate amount of option shares that are available for grant under the Plan
will be increased by 2,000,000. A copy of the proposed amendment is set forth
in Exhibit A.
The Company believes that the granting of options under the Employee Stock
Option Plan plays an important role in the Company's ability to attract and
retain employees of outstanding ability. The Board believes that the
amendment to the Employee Stock Option Plan to provide 2,000,000 additional
option shares to be available effective as of the date of the amendment for
grant under the plan is necessary to ensure that the Company can continue to
attract and retain such persons. AS OF THE RECORD DATE, ONLY 290,136 OPTION
SHARES REMAIN AVAILABLE FOR GRANT UNDER THE EMPLOYEE STOCK OPTION PLAN.
The approval of a majority of the Voting Stock present in person or by
proxy, and entitled to vote at the Annual Meeting is required for approval of
Proposal 3. 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 3. If no instructions are provided in a proxy, it will be voted
FOR the approval of Proposal 3.
KIEWIT, THE BENEFICIAL OWNER OF APPROXIMATELY 31.5% OF THE VOTING POWER OF
THE OUTSTANDING VOTING STOCK, HAS AGREED TO VOTE IN FAVOR OF PROPOSAL 3.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Proposal 4 is to ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the 1997 fiscal year.
The Board, upon the recommendation of the Audit Committee, has unanimously
appointed Deloitte & Touche LLP as the independent accounting firm engaged to
audit the financial statements of the Company for the 1997 fiscal year.
Deloitte & Touche LLP acted in that capacity for the 1996 fiscal year. A
representative of Deloitte & Touche LLP is expected to be present at the
Annual Meeting and will be available to respond to appropriate questions and
will have an opportunity to make a statement if desired.
The approval of a majority of the Voting Stock present in person or by
proxy, and entitled to vote, at the Annual Meeting is required for approval
of Proposal 4. 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 4. If no instructions are provided in a proxy, it will be voted
FOR the approval of Proposal 4.
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.
7
<PAGE>
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
17, 1997, unless otherwise indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME (AND ADDRESS IF REQUIRED) BENEFICIALLY PERCENTAGE OF
OF BENEFICIAL OWNER OWNED (1) CLASS (1)
- - ------------------------------------ ---------------- ---------------
<S> <C> <C>
COMMON STOCK:
Kiewit Energy Company (2)............ 20,231,065 31.35
Putnam Investments, Inc. (3) ....... 6,409,038 10.09
Edgar D. Aronson .................... 43,500 0.07
Judith E. Ayres ..................... 55,500 0.09
James Q. Crowe ...................... 12,425 0.02
Richard K. Davidson ................. 41,000 0.06
David Dewhurst....................... 1,000 0.00
Richard R. Jaros .................... 419,115 0.66
David Morris......................... 1,685 0.00
Bernard W. Reznicek ................. 13,888 0.02
Walter Scott, Jr. ................... 12,100 0.02
John R. Shiner ...................... 21,000 0.03
David L. Sokol ...................... 358,952 0.56
Neville Trotter...................... 0 0.00
David E. Wit (4) .................... 43,874 0.07
Gregory E. Abel...................... 109,033 0.17
Thomas R. Mason ..................... 153,709 0.24
Steven A. McArthur .................. 104,457 0.16
John G. Sylvia ...................... 134,988 0.21
All directors and executive officers
as a group (20 persons)............. 1,654,791 2.56
</TABLE>
- - ------------
(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 19,231,065 shares of Common Stock Kiewit Energy Company
held on October 15, 1996 the date of Amendment No. 13 to their Schedule
13D and options to purchase an additional 1,000,000 shares of Common
Stock. Kiewit Energy Company's mailing address is 1000 Kiewit Plaza,
Omaha, NE 68131.
(3) According to an amended Schedule 13G filed by such party on February 7,
1997 on behalf of itself and Marsh & McLennan Companies, Inc., Putnam
Investment Management, Inc. and Putnam Advisory Company, Inc. The
mailing address for Putnam Investments, Inc. is One Post Office Square,
Boston, MA 02109.
(4) Includes 3,748 shares held jointly with his spouse.
COMPENSATION COMMITTEE REPORT
The Company's executive compensation is determined by the Compensation
Committee of the Board. The Compensation Committee usually meets from time to
time during the year as may be required and at least 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 or, if
applicable, restricted stock grants as long-term incentive compensation and
making other determinations or recommendations with respect to employee
benefit plans and related matters.
8
<PAGE>
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 primary components of the Company's total compensation package
(salary, bonuses and grants of stock options or, if applicable, restricted
stock) 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
or other infrastructure 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 or acquires or joint
ventures on 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 1996, the Company's executive compensation generally included a
base salary, cash bonuses and long-term incentive compensation in the form of
stock options awarded under the Company's Employee Stock Option Plan (or, if
applicable, grants of restricted stock), 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 or, if
applicable, restricted stock 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 has a term of five years
(ending August 2000 unless extended). As amended in August 1996 by Committee
action, Mr. Sokol's employment agreement provides for a base salary of
$500,000 per annum and a minimum annual bonus of $400,000. The employment
contract also provides for the payment of three years base salary and bonus
in the event of termination without cause.
At its December 1996 meeting, the Compensation Committee determined to
award Mr. Sokol a cash bonus of $1,500,000 and recommended that the Company
make a grant of 200,000 stock options (to vest over four years) to Mr. Sokol
in order to reflect Mr. Sokol's superior performance and significant
accomplishments during the year. In addition, at the Compensation Committee's
December 1996 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: successfully
negotiating, structuring, financing and consummating the strategic Northern
Electric plc and Falcon Seaboard Resources, Inc. acquisitions which together
resulted in the Company entering into the electrical distribution and supply
and related businesses in the U.K. and significantly diversifying its
domestic fuel sources, power purchasers and geographic facility locations;
the successful issuance of $225,000,000 principal amount of the Company's 9
1/2% Senior Notes Due 2006; the successful completion and start-up of the 40
MW Salton Sea Expansion Project and related pH Modification project; the
successful financial closing of the $135,000,000 Salton Sea Funding
Corporation Offering; the successful acquisition of Edison Mission Energy's
50% interest in the Imperial Valley partnerships; the deemed completion of
the Upper Mahiao project and Unit 1 of the Malitbog project; commencing
construction and closing the financing on the Dieng Unit I project in
Indonesia; the successful issuance by a special
9
<PAGE>
purpose subsidiary trust of $100,000,000 6 1/4% Convertible Preferred
Securities (TIDES); the significant progress of the Company's drilling,
permitting and development efforts on the Dieng, Patuha and Bali Projects in
Indonesia; the Company's other promising project development activities and
achievement of record electrical production levels at the Coso and Imperial
Valley Projects. Mr. Sokol contributed very significantly to these
achievements and 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 31.5% of the Company's Voting Stock on the
Record Date, on a fully diluted basis). Section 162(m) of the Internal
Revenue Code, enacted in 1993, generally disallows a tax deduction to public
companies for compensation over $1 million paid to the chief executive or any
of the four other most highly compensated executive officers. However,
certain compensation meeting a tax law definition of "performance-based" is
generally exempt from this deduction limit. The Company does not currently
intend to qualify cash compensation paid to executive officers for
deductibility under Section 162(m). Further, in general, the Company does not
currently have a policy that requires or encourages the Committee to qualify
other types of compensation awarded to executive officers for deductibility
under Section 162(m). However, the Company has included provisions in the
Employee Stock Option Plan designed to enable option grants made to executive
officers affected by Section 162(m) to qualify as "performance-based"
compensation if the Committee determines that it is appropriate to make such
qualifying grants.
COMPENSATION COMMITTEE
Edgar D. Aronson
Richard R. Jaros
John R. Shiner
David E. Wit
10
<PAGE>
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 weighted average 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 is
composed of AES Corp., Calpine Corp., Destec Energy Inc. and Enron Global
Power and Pipelines, L.L.C. during the periods that each company has been
publicly traded. In compliance with Securities and Exchange Commission
regulations, the returns of each of the comparables have been weighted
according to capitalization as of the beginning of the five year period.
Sithe Energies, Inc. has been removed from last year's list of comparables
since it is no longer publicly traded and has been replaced by Calpine Corp.
CALENERGY COMPANY, INC.
1991 1992 1993 1994 1995 1996
- - --------------------------------------------------------------------------------
CalEnergy Company, Inc. $100 $110 $121 $102 $128 $220
- - --------------------------------------------------------------------------------
Weighted Comparables $100 $83 $94 $77 $95 $155
- - --------------------------------------------------------------------------------
S&P 400 $100 $106 $115 $120 $160 $198
- - --------------------------------------------------------------------------------
S&P Utilities $100 $108 $124 $114 $160 $167
- - --------------------------------------------------------------------------------
11
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation of the Company's five most
highly compensated executive officers who were employed as of the last day in
1996. Information is provided regarding these individuals for the last three
fiscal years during which they were executive officers of the Company, if
applicable.
<TABLE>
<CAPTION>
BONUS SECURITIES
--------------------- OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND YEAR ENDED SALARY CASH STOCK (1) COMPENSATION STOCK AWARDS OPTIONS COMPENSATION (2)
PRINCIPAL POSITIONS DECEMBER 31, ($) ($) ($) ($) $ (#) $
- - -------------------- ------------ ------- ---------- ---------- -------------- ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David L. Sokol (1) 1996 500,000 1,500,000 0 0 0 200,000 4,927
Chairman and 1995 436,388 854,025 1,280,000 0 $3,840,000(1)(3) 0 4,429
Chief Executive 1994 350,000 612,482 0 0 0 1,000,000 3,472
Officer
Gregory E. Abel 1996 129,202 218,947 0 0 0 130,000 3,820
Chief Accounting 1995 103,145 142,935 0 0 0 10,000 3,630
Officer, CalEnergy, 1994 86,567 44,472 0 0 0 85,000 3,393
President and COO
CalEnergy Europe
Thomas R. Mason 1996 210,000 129,994 0 0 0 20,000 5,681
President and 1995 198,675 326,116 0 0 0 30,000 5,344
Chief Operating 1994 169,359 100,949 0 0 0 75,000 3,472
Officer, CalEnergy
Americas
Steven A. McArthur 1996 164,000 392,369 0 0 0 40,000 3,917
Senior Vice 1995 162,800 315,789 0 0 0 0 3,809
President, 1994 156,538 119,915 0 0 0 110,000 3,472
General Counsel
and Secretary
John G. Sylvia 1996 160,000 291,381 0 0 0 40,000 3,906
Senior Vice 1995 156,467 301,242 0 0 0 0 3,793
President and Chief 1994 138,782 112,670 0 0 0 100,000 3,472
Financial Officer
</TABLE>
- - ------------
(1) On November 29, 1995, Mr. Sokol relinquished vested options for 500,000
shares of the Company's common stock having a per share exercise price
of $19.00 in exchange for 500,000 shares of restricted stock, 125,000
shares of which vested on the date of grant with the remaining 375,000
shares vesting at the rate of 6,250 shares per month over 56 months
beginning December 1995. The 125,000 immediately vested shares are
reflected in the bonus (stock) column with the remaining 375,000 shares
reflected in the restricted stock column. The dollar amount for the
125,000 share award shown as a bonus was calculated by multiplying the
closing market price of the Company's common stock on the date of the
exchange times the number of bonus shares ($2,375,000), less the option
relinquishment cost on that date ($1,095,000) of options to purchase
125,000 shares relinquished by Mr. Sokol. The option relinquishment
cost was calculated using the standard Black-Scholes option pricing
model. The dollar amount for the 375,000 share award shown as
restricted stock was calculated by multiplying the closing market price
of the Company's common stock on the date of the exchange times the
number of restricted shares ($7,125,000), less the option
relinquishment cost as calculated pursuant to the preceding sentence
($3,285,000) of options for 375,000 shares relinquished by Mr. Sokol.
The 500,000 options relinquished by Mr. Sokol had a potential
realizable value as of 12/31/94 (as reported in the Company's 1994
Proxy Statement) of $5,974,498 assuming a 5% annualized stock price
appreciation rate for the 10-year option term, and $15,140,553,
assuming a 10% annualized stock price appreciation rate for the 10-year
option term.
(2) 401(k) Plan contributions and group term life insurance premiums.
(3) As of December 31, 1995, Mr. Sokol held 368,750 shares of unvested
restricted stock with a dollar value, based on the closing price of the
Company's common stock on December 29, 1995 (the last preceding trading
date), of $7,190,625, without deducting the option relinquishment cost
($4,380,000) calculated pursuant to the standard Black-Scholes option
pricing model reflected in footnote 1 above. If dividends are paid on
the Company's common stock, dividends will be paid on the restricted
stock at the same rate.
12
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth options granted to each of the named
executive officers of the Company during 1996:
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
% OF ANNUAL RATES OF
TOTAL OPTIONS STOCK PRICE APPRECIATION
GRANTED TO EXERCISE ------------------------
SECURITIES UNDERLYING EMPLOYEES PRICE EXPIRATION 5% 10%
NAME OPTIONS GRANTED (1) IN FISCAL YEAR ($/SHARE) DATE ($) ($)
- - ---- --------------------- -------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
David L. Sokol 200,000 24.3 29.0625 12/5/2006 2,449,152 $6,206,631
Gregory E. Abel 90,000 10.9 30.3750 8/28/2006 1,151,891 2,919,119
Gregory E. Abel 40,000 4.9 29.0625 12/5/2006 489,830 1,241,326
Thomas R. Mason 20,000 2.4 29.0625 12/5/2006 244,915 620,663
Steven A. McArthur 40,000 4.9 29.0625 12/5/2006 489,830 1,241,326
John G. Sylvia 40,000 4.9 29.0625 12/5/2006 489,830 1,241,326
</TABLE>
- - ------------
(1) All options have a ten year term and become exerciseable in equal
monthly increments over a four year vesting period
(2) 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 1996 was approximately 2% of total
shares outstanding during the year. Accordingly, the potential value of
such options for all optionees under the prescribed assumptions is
approximately 2% 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.
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, 1996, 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 $33.625 per
share on December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING ENEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS 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 ..... 91,520 $2,596,880 44,823 205,177 418,235 693,546
Gregory E. Abel ... 0 0 84,984 160,016 853,762 736,860
Thomas R. Mason ... 11,264 322,432 120,568 59,432 1,454,269 509,040
Steven A. McArthur 3,188 90,460 150,061 79,939 1,812,123 580,614
John G. Sylvia ..... 6,375 180,891 122,307 76,439 1,671,947 540,749
</TABLE>
13
<PAGE>
COMPENSATION OF DIRECTORS
For 1997, directors who are not employees of the Company will be paid an
annual retainer fee of $25,000 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. Under the Company's Non-Employee Director Stock Option
Plan, in lieu of receiving the annual $25,000 fee, directors may elect to
receive stock options having a value approximately equal to such cash amount
(approximated by reference to a Black-Scholes calculation and subject to
rounding and appropriate discounts for illiquidity). 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 three times his base salary and bonus and three years of accelerated
option vesting in the event of the termination of his employment by the
Company other than for cause. Under the terms of separate employment
agreements between Mr. Abel, Mr. McArthur and Mr. Sylvia and the Company,
each of such Executives is entitled to receive two years base salary
continuation and payments in respect of average incentive bonuses for the
prior two years and two years continued option vesting in the event of the
termination of his employment by the Company other than for cause. If such
persons were terminated without cause, Mr. Sokol, Mr. Abel, Mr. McArthur and
Mr. Sylvia would currently be entitled to be paid approximately $2,700,000,
$505,070, $818,000 and $753,333, respectively, pursuant to their employment
agreements.
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, as amended, pursuant
to which in 1991 Kiewit Energy purchased 4,000,000 shares of Common Stock and
received options to buy 6,000,000 shares of Common Stock (subject to
customary adjustments).
In connection with such agreements, Kiewit Energy became entitled to
nominate at least three of the Company's directors; and 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. Messrs. Crowe, Jaros and Scott are the current Board nominees of
Kiewit Energy.
On June 19, 1991, the Board approved a number of amendments to the stock
purchase agreement and the related agreements and in connection therewith
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 (subject to customary adjustments).
The Company entered into a three year joint venture agreement with Kiewit
Diversified Group, Inc. on December 14, 1993. This agreement was amended and
extended for an additional five year term on December 4, 1996. The agreement
provides a framework for the joint development of independent power projects
located outside the United States and provides for Kiewit Diversified Group
to contribute 50% of the project development expenses and equity and to pay
the Company a development fee. In addition, the projects will pay the Company
management and operating fees. Pursuant to this Joint Venture Agreement,
Kiewit Diversified Group, through its affiliate Kiewit Energy International
(Bermuda) Ltd., is contributing 50% of the equity requirements for and
otherwise participating in the ownership of the Company's Mahanagdong Project
Company, CE Luzon Geothermal Power Company, Inc. and the Company's Casecnan
Project Company, CE Casecnan Water and Energy Company, Inc. in the
Philippines and in the ownership of the Dieng, Patuha and Bali projects in
Indonesia on an equal equity basis with the Company.
Pursuant to the Shareholders Agreement with Kiewit relating to the
Northern acquisition (which, as acquisition of an operating business was not
covered by the power project development joint venture agreement with
Kiewit), the Company contributed 70% and Kiewit contributed 30% of the equity
and expenses. As a result, the Company and Kiewit indirectly own 70% and 30%
of Northern, respectively. In addition, under the Northern shareholders
agreement with Kiewit, the Company received a development fee and annual
management fees.
14
<PAGE>
Affiliates of the Company and Kiewit have also 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., Inc. ("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 in the construction joint venture. 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 Corporation (a
wholly owned affiliate of Kiewit) and 20% owned by CBE Engineering Co. (a
wholly owned subsidiary of the Company). The Company contemplates that
similar equity and construction joint venture arrangements with Kiewit will
be negotiated with respect to certain of its projects in Indonesia and
elsewhere internationally.
Mr. Dewhurst, a director of the Company, was formerly the founder,
Chairman and principal shareholder of Falcon Seaboard Resources, Inc.
("Falcon") which the Company purchased (including Falcon's significant
ownership interest in three operating gas-fired cogeneration plants located
in Texas, Pennsylvania and New York and a related natural gas pipeline in New
York) in August 1996 for a cash purchase price of $226 million. In connection
with the transaction, Mr. Dewhurst received a grant of 300,000 options
(having an exercise price equal to the market price as of the date of grant)
in exchange for agreeing to enter into a seven year consulting services
contract with the Company. Subsequent to the Falcon acquisition, Mr. Dewhurst
was elected to the Company's Board of Directors. The Company's management
negotiated, and the Company's Board of Directors approved, the price paid by
the Company in such acquisition transaction. In connection with such
acquisition transaction, the Company received advice from Credit Suisse First
Boston Corporation that the consideration paid was fair to the Company from a
financial point of view.
Mr. Morris, a director of the Company, was formerly the Chairman of
Northern Electric plc., a U.K. regional electric company. In connection with
the acquisition by tender offer of Northern Electric plc by CE Electric UK
plc (a U.K. company indirectly owned 70% by the Company and 30% by Kiewit)
for an expected aggregate amount of approximately $1.3 billion, Mr. Morris
received certain payments from Northern pursuant to certain long-standing
severance arrangements with that company and received buyout compensation for
his outstanding Northern stock and stock options on the same terms as
Northern's public shareholders and which was consistent with the treatment of
all other Northern employee and executive option holders. Subsequent to the
acquisition transaction, Mr. Morris was elected to the Company's Board of
Directors and received a grant of 20,000 stock options (having an exercise
price equal to the market price as of the date of grant) for so agreeing to
serve. The Company's management negotiated, and the Company's Board of
Directors approved, the price paid by the Company in such acquisition
transaction. In connection with such acquisition transaction, the Company
received advice from Credit Suisse First Boston Corporation that the
consideration paid was fair to the Company from a financial point of view.
The Company retained the law firm of Morrison & Foerster in 1996. Mr.
Shiner, a director of the Company, is a partner in the Los Angeles office of
Morrison & Foerster. The Company paid Morrison & Foerster a total of
approximately $500,000 in legal fees in 1996. 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year, the Company is not aware of any director, officer or other
person subject to Section 16(a) of the Securities Exchange Act in respect of
the Company who failed to file on a timely basis, as disclosed in the above
Forms, reports required by Section 16(a) of the Exchange Act during the
Company's most recent fiscal year or prior fiscal years.
15
<PAGE>
STOCKHOLDER PROPOSALS
Any proposal which a stockholder intends to present at the 1998 annual
meeting of stockholder must be received by the Company not later than
December 6, 1997 in order to be considered for inclusion in the proxy
statement relating to such meeting. Any such proposals should be directed to
the Secretary, CalEnergy Company, Inc., 302 South 36 Street, Suite 400,
Omaha, Nebraska 68131.
By Order of the Board of Directors
/s/ David L. Sokol
-------------------------
David L. Sokol
Chairman of the Board
April 4, 1997
Omaha, Nebraska
16
<PAGE>
EXHIBIT A
AMENDMENT NO. 1
TO THE
1996 STOCK OPTION PLAN
This Amendment No. 1 to the 1996 Stock Option Plan of CalEnergy Company,
Inc. is made as of May 15, 1997 by deleting Section 4(a) thereof in its
entirety and amending and restating it to read as follows:
"(a) Basic Limitation. Shares offered under the Plan shall be authorized
but unissued Shares or Treasury Shares. The aggregate number of Shares
available for issuance after May 15, 1997 under the Plan in respect of grants
made under the Plan (whether granted before or after such date) shall not
exceed 2,290,136 Shares, subject to adjustment pursuant to Section 9. The
Company, during the term of the Plan, shall at all times reserve and keep
available sufficient Shares to satisfy the requirements of the Plan."
Except as modified by this Amendment No. 1, all of the terms and
conditions of the 1996 Stock Option Plan shall remain valid and in full force
and effect.
CalEnergy Company, Inc.
By:
------------------------------------
Steven A. McArthur
Senior Vice President and General Counsel
A-1
<PAGE>
EXHIBIT B
SUMMARY
DESCRIPTION OF EMPLOYEE
STOCK OPTION PLAN
Effective as of March 26, 1996, the Board of Directors of the Company
adopted the CalEnergy Company, Inc. 1996 Stock Option Plan (the "Plan") which
was ratified and approved by shareholders at the 1996 Annual Meeting. The
Plan provides for the issuance from time to time, as may be authorized by the
Committee (as defined below) of shares of common stock of the Company
pursuant to options to be granted to employees, officers, directors,
consultants and independent contractors of the Company. The Plan provides for
the grant of both non-qualified stock options ("NQSOs") and incentive stock
options ("ISOs") designed to meet the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). The purpose of the
Plan is to provide to directors, officers, other employees, consultants and
independent contractors an incentive to acquire or increase their proprietary
interests in the success of the Company and thereby more strongly align their
interests with those of stockholders generally.
The Plan is administered by a committee of the Board of Directors
consisting of two or more Board members, appointed by the Board, who are not
officers of the Company (the "Committee"). The Committee has the discretion
to designate one or more subcommittees, including for purposes of Section
162(m) of the Code (discussed below under "Federal Income Tax Consequences").
The Plan provides for automatic annual nonqualified option grants of 1,000
shares to each member of the Committee immediately following each annual
meeting of stockholders of the Company. The exercise price of options granted
to Committee members will be the fair market value of the Company's Common
Stock on the date of grant. Grants to members of the Committee vest
immediately and are exercisable for a period of ten years from the date of
grant. Committee members may not receive option grants under the Plan other
than these automatic nonqualified option grants.
The Committee has broad discretion, subject to the terms of the Plan to
determine the persons (other than Committee members) entitled to receive
options, the terms and conditions thereof, including vesting (and accelerated
vesting of outstanding options), and the number of shares for which such
options may be granted. The Committee also has discretion to determine the
nature of the consideration to be paid upon the exercise of any option or
right to purchase stock granted under the Plan; provided that such
consideration shall generally, in the case of options at the discretion of
the Committee, consist of cash or, in the discretion of the Company (pursuant
to procedures adopted from time to time by the Committee) consist of (i)
shares of the Company's Common Stock, including the withholding of Shares
otherwise deliverable to an optionee upon exercise of the option; (ii) an
irrevocable direction to a broker to sell shares of the Company's Common
Stock and deliver all or a portion of the proceeds to the Company in payment
of the exercise price; (iii) a promissory note; or (iv) any combination of
the foregoing items (i) through (iii); provided that the Company shall have
no obligation to accept any form of consideration other than cash.
The maximum term of an option granted under the Plan is ten years (five
years in the case of an ISO granted to an employee who, at the time of the
grant, holds 10% or more of the Company's outstanding Common Stock ("10%
Shareholder")). The aggregate fair market value, on the date of grant, of the
stock for which ISOs are exercisable for the first time by an employee during
any calendar year may not exceed $100,000. The exercise price of ISOs granted
under the Plan must be not less than the fair market value of the Common
Stock at the date of grant (not less than 110% of fair market value in the
case of an option granted to a 10% Shareholder); the exercise price of NQSOs
(other than an option automatically granted to a Committee member) is
determined by the Committee at the time of the option grant but cannot be
less than 85% of the fair market value at the time of grant.
Under the Plan, an optionee who terminates employment with the Company may
exercise ISOs for a period of three months after termination of employment
(but not beyond the option period) for the number of shares vested on the
date of termination. If an optionee becomes disabled, as determined by the
Company, or dies while an employee of the Company, any ISOs held by the
optionee will continue in
B-1
<PAGE>
effect and may be exercised in accordance with their terms for the number of
shares vested on the date of disability or death for a period of twelve
months from the date of the optionee's disability or death (but not beyond
the option period). In the case of NQSOs, if an optionee ceases to be an
employee or director of the Company, the NQSOs held by the optionee will
continue in effect and may be exercised in accordance with their terms (but
not beyond the option period) for the number of shares vested on the date of
such cessation. Notwithstanding the foregoing, if the termination of an
optionee's position as a director, officer or employee of the Company is for
gross misconduct, his or her options under the Plan will be canceled and the
optionee will have no right to exercise any part of those options after such
termination.
The vesting of an option will be accelerated immediately without any
further action upon any of the following events: (i) the acquisition of more
than 50% of the voting power of the Company by any person, (ii) a change in
the composition of the members of the Board over a three-year period or less
to include a majority of persons not serving on the Board at the beginning of
the period or nominated by such persons, or (iii) approval by the Company's
stockholders of (A) a merger or consolidation in which the Company is not the
surviving entity, (B) the sale of all or substantially all of the assets of
the Company, or (C) any reverse merger in which the Company is the surviving
entity in which holders of the Company's voting securities prior to the
merger do not own at least 50% of the voting power in the Company immediately
after the merger.
The number of shares subject to the Plan and to options granted under the
Plan and the exercise price of outstanding options are subject to adjustment
by the Committee in the event of increases or decreases in the number of
outstanding shares of Common Stock through stock splits, stock dividends,
reclassifications of the outstanding capital stock and similar events.
Options granted under the Plan will generally be nontransferable by the
optionee.
Except for the provisions relating to the grant of options to Committee
members, the Plan may be amended at any time by the Board, although certain
amendments require stockholder approval. The Board may not amend the Plan's
automatic grant provisions for Committee members more than once in any six
month period except as required to comply with the requirements of the
Internal Revenue Code. The Plan will terminate ten years after its adoption
by the Company unless earlier terminated by the Board.
The Plan, as it relates to grants of options to Committee members and
executive officers of the Company, is designed to comply with Rule 16b-3 of
the Securities Exchange Act of 1934. Certain provisions of the Plan,
including the requirement that Committee members receive options only under
the Plan's automatic grant feature, limitations on transferability of
options, and the automatic grant provisions applicable to Committee members,
have been included in the Plan solely because of Rule 16b-3's requirements.
In the event that Rule 16b-3 is amended to delete one or more of these
requirements, the Plan may be amended by the Board, without shareholder
approval, to delete those provisions of the Plan no longer required by Rule
16b-3.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. If an option under the Plan is treated as an ISO,
the optionee generally recognizes no regular taxable income as the result of
the grant or exercise of the option. However, an amount equal to the
difference between the fair market value of the stock on the date of exercise
and the exercise price is classified as an item of alternative minimum
taxable income in the year of exercise for purposes of the alternative
minimum tax.
The Company will not be allowed a deduction for federal income tax
purposes in connection with the grant or exercise of an ISO, regardless of
the applicability of the alternative minimum tax to the optionee. The Company
will be entitled to a deduction, however, to the extent that ordinary income
is recognized by the optionee upon a disqualifying disposition (see below).
Upon a sale or exchange of the shares at least two years after the grant
of an ISO and one year after exercise of the option, gain or loss will be
recognized by the optionee equal to the difference between the sale price and
the exercise price. Such gain or loss will be characterized for federal
income tax purposes as long-term capital gain or loss. The Company is not
entitled to any deduction under these circumstances.
B-2
<PAGE>
If an optionee disposes of shares acquired upon issuance of an ISO prior
to completion of either of the above holding periods, the optionee will have
made a "disqualifying disposition" of the shares. In such event, the optionee
will recognize ordinary income at the time of disposition equal to the
difference between the exercise price and the lower of the fair market value
of the stock at the date of the option exercise or the sale price of the
stock. The Company generally will be entitled to a deduction in the same
amount as the ordinary income recognized by the optionee on a disqualifying
disposition if the optionee's total compensation is deemed reasonable in
amount.
The optionee also will recognize capital gain or loss on such
disqualifying disposition in an amount equal to the difference between (i)
the amount realized by the optionee upon such disqualifying disposition of
the stock and (ii) the exercise price, increased by the total amount of
ordinary income, if any, recognized by the optionee upon such disqualifying
disposition (as described in the second sentence of the preceding paragraph).
Any such capital gain or loss resulting from a disqualifying disposition of
shares acquired upon exercise of an ISO will be long-term capital gain or
loss if the shares with respect to which such gain or loss is realized have
been held for more than twelve months.
NQSOs. An optionee generally recognizes no taxable income as the result of
the grant of an NQSO, assuming that the option does not have a readily
ascertainable fair market value at the time it is granted (which is usually
the case with plans of this type). Upon exercise of an NQSO, an optionee will
normally recognize ordinary compensation income for federal tax purposes
equal to the excess, if any, of the then fair market value of the shares over
the exercise price. Optionees who are employees will be subject to
withholding with respect to income recognized upon exercise of a NQSO.
The Company will be entitled to a tax deduction to the extent and in the
year that ordinary income is recognized by the exercising optionee, so long
as the optionee's total compensation is deemed reasonable in amount.
Upon the sale of shares acquired pursuant to the exercise of an NQSO, any
difference between the sale price and the fair market value of the shares on
the date of exercise will be treated as capital gain or loss and will qualify
for long-term capital gain or loss treatment if the shares have been held for
more than twelve months.
Section 162(m) of the Code. Under Section 162(m) of the Code, compensation
paid in any year to any of the Company's five most highly compensated
executive officers is potentially nondeductible by the Company to the extent
that it exceeds $1,000,000. However, certain "performance-based compensation"
is exempt from the $1,000,000 cap on deductibility.
The Plan contains provisions designed to enable grants of options to the
Company's five most highly compensated executive officers to qualify as
"performance-based compensation" provided that the option grants: (i) are
made by a committee of the Board of Directors consisting solely of two or
more "outside directors" (as that term is specially defined for purposes of
Section 162(m)) and (ii) have a per share option exercise price at least
equal to the per share fair market value (on the grant date) of the stock
subject to the option. The Committee will determine whether any such
qualifying grants are to be made. In addition, the maximum number of shares
with respect to which options may be granted to any individual per calendar
year under the Plan cannot exceed 1,000,000 shares.
B-3
<PAGE>
PROXY
[CalEnergy Company, Inc. Logo]
PROXY SOLICITATION
CALENERGY COMPANY, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY FOR THE ANNUAL MEETING MAY 15, 1997
The undersigned hereby appoints David L. Sokol, John
G. Sylvia and Steven A. McArthur, or any one of them,
with full power of substitution, attorneys and proxies
of the undersigned, to represent the undersigned and
vote all shares of Common Stock par value $0.675, of
CalEnergy Company, Inc., which the undersigned would be
entitled to vote if personally present at the annual
meeting of Stockholders to be held at The Joslyn Art
Museum, 2200 Dodge Street, Omaha, Nebraska on May 15,
1997 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 the other side)
(SOLID TRIANGLE) FOLD AND DETACH HERE (SOLID TRIANGLE)
<PAGE>
[ X ] Please mark
your votes
like this in blue
or black ink
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN ITEM 1 AND
"FOR" ITEMS 2, 3 AND 4
WITHHOLD
FOR all authority to vote
Nominees for all nominees
1.ELECTION OF DIRECTORS:
DAVID H. DEWHURST [ ] [ ]
RICHARD R. JAROS
DAVID R. MORRIS
NEVILLE G. TROTTER
EDGAR D. ARONSON
BERNARD W. REZNICEK
WITHHELD for the following only: [Write the name of
the nominee(s) in the space below.]
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK FROM 80,000,000 TO 180,000,000
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. PROPOSAL TO APPROVE AN AMENDMENT OF THE EMPLOYEE STOCK OPTION
PLAN TO INCREASE THE OPTION SHARES AVAILABLE FOR GRANT BY 2,000,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. PROPOSAL TO RATIFY THE APPOINTMENT OF
DELOITTE & TOUCHE LLP, CERTIFIED PUBLIC ACCOUNTANTS,
AS THE COMPANY'S AUDITORS FOR FISCAL YEAR 1997.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
I PLAN TO ATTEND THE 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 ACCOR-
DANCE WITH THE CHOICES SPECIFIED ABOVE. IF A CHOICE IS NOT
SPECIFIED, THIS PROXY WILL BE VOTED TO APPROVE THAT PRO-
POSAL 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
FOR AGAINST ABSTAIN
as such. PLEASE MARK, DATE, SIGN, AND MAIL PROMPTLY IN THE POSTAGE-PAID
ENVELOPE ENCLOSED.
(SOLID TRIANGLE) FOLD AND DETACH HERE (SOLID TRIANGLE)
