<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
[ ] Confidential, for Use of the Commission Only as permitted by
Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CALPINE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
Calp.eps
CALPINE CORPORATION
50 WEST SAN FERNANDO STREET
SAN JOSE, CA 95113
------------------------
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1999
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders of
Calpine Corporation, a Delaware corporation (the "Company"), will be held at the
Hyatt Sainte Claire, located at 302 South Market Street, San Jose, California
95113, at 9:00 a.m., Pacific Time, on May 27, 1999, for the purpose of
considering and voting upon the following matters:
1. To elect two (2) Class III Directors to the Board of Directors, each to
serve for a term of three years;
2. To ratify the selection of Arthur Andersen LLP as independent
accountants for the Company for the year ending December 31, 1999; and
3. To transact such other business as may properly come before the meeting
and any adjournments or postponement thereof.
These matters are more fully described in the Proxy Statement accompanying
this Notice.
Only stockholders of record at the close of business on March 31, 1999 are
entitled to notice of and to vote at the 1999 Annual Meeting of Stockholders and
at any and all adjournments or postponements thereof. A list of stockholders
entitled to vote at the meeting will be available for inspection at the office
of the Secretary of the Company, 50 West San Fernando Street, San Jose, CA
95113, for at least ten days prior to the meeting, and will also be available
for inspection at the meeting.
Representation of at least a majority of all outstanding shares of Common
Stock of the Company is required to constitute a quorum. Accordingly, it is
important that your shares be represented at the meeting. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE. Should you receive more than one
proxy because your shares are registered in different names and addresses, each
proxy should be signed and returned to assure that all your shares will be
voted. Your proxy may be revoked at any time prior to the time it is voted.
Please read the proxy material carefully. Your vote is important and the
Company appreciates your cooperation in considering and acting on the matters
presented.
By Order of the Board of Directors
Peter Cartwright
Chairman of the Board, President
and Chief Executive Officer
April 9, 1999
San Jose, CA
<PAGE> 3
CALPINE CORPORATION
50 WEST SAN FERNANDO STREET
SAN JOSE, CA 95113
PROXY STATEMENT
FOR THE
1999 ANNUAL MEETING OF STOCKHOLDERS
OF
CALPINE CORPORATION
TO BE HELD ON MAY 27, 1999
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This Proxy Statement is being furnished to the stockholders of Calpine
Corporation, a Delaware corporation ("Calpine" or the "Company"), in connection
with the solicitation of proxies by the Board of Directors for use at the 1999
Annual Meeting of Stockholders of the Company, to be held at 9:00 a.m., Pacific
Time, on May 27, 1999, at the Hyatt Sainte Claire, and at any and all
adjournments or postponements thereof. At the 1999 Annual Meeting of
Stockholders, the stockholders of the Company are being asked to consider and
vote upon (i) the election of two Class III Directors, each to serve for a term
of three years, and (ii) a proposal to ratify the appointment of the Company's
independent accountants for the year ending December 31, 1999.
This Proxy Statement and the enclosed form of proxy are first being mailed
to stockholders of the Company on or about April 9, 1999. The Company's 1998
Annual Report to Stockholders, which includes audited financial statements, is
being mailed to stockholders of the Company concurrently with this Proxy
Statement. Additional copies are available without charge upon request. The 1998
Annual Report to Stockholders is not to be regarded as proxy soliciting material
or as a communication by means of which any solicitation of proxies is to be
made. In compliance with Rule 14a-3 promulgated under the Securities Exchange
Act of 1934, the Company hereby undertakes to provide without charge to each
person upon written request, a copy of the Company's Annual Report on Form 10-K
for the year ended December 31, 1998, including the financial statements and
financial schedules thereto. Requests for such copies or additional copies of
the 1998 Annual Report to Stockholders should be directed to the Secretary of
the Company, 50 West San Fernando Street, San Jose, CA 95113.
RECORD DATE, SHARE OWNERSHIP AND VOTING
The close of business on March 31, 1999 was the record date (the "Record
Date") for stockholders entitled to notice of and to vote at the 1999 Annual
Meeting of Stockholders. At the close of business on the Record Date, there were
26,267,297 shares of the Company's Common Stock, $.001 par value per share (the
"Common Stock"), outstanding.
Each stockholder will be entitled to one vote per share, in person or by
proxy, for each share of Common Stock held in such stockholder's name as of the
Record Date on any matter submitted to a vote of stockholders at the 1999 Annual
Meeting of Stockholders. An affirmative vote of a majority of the shares of
Common Stock present and voting at the meeting is required for approval of all
items being submitted to the stockholders for their consideration. In
determining whether each of the proposals submitted to a vote of stockholders
has received the requisite number of affirmative votes (i) abstentions will be
counted and will have the same effect as a vote against the proposal, except
that abstentions will not be counted as votes cast in connection with
determining the number of votes required to elect a director and will have no
effect on the outcome of that vote and (ii) proxies for which the broker does
not have discretionary authority and has not
<PAGE> 4
received voting instructions from the beneficial owners ("broker non-votes")
will be disregarded and will have no effect on the outcome of such vote.
The presence, either in person or by proxy, of the holders of a majority of
the shares of Common Stock outstanding on the Record Date is necessary to
constitute a quorum at the 1999 Annual Meeting of Stockholders. All abstentions
and broker non-votes will be included as shares that are present and entitled to
vote for purposes of determining the presence of a quorum at the meeting.
PROXIES AND SOLICITATION COSTS
Shares of Common Stock represented by properly executed proxies received on
time for voting at the 1999 Annual Meeting of Stockholders will, unless such
proxy has previously been revoked, be voted in accordance with the instructions
indicated thereon. In the absence of specific instructions to the contrary, the
persons named in the accompanying form of proxy intend to vote all properly
executed proxies received by them (i) FOR the election of the Board of
Director's nominees as Class III Directors and (ii) FOR the ratification of the
selection of Arthur Andersen LLP as the Company's independent accountants for
the year ending December 31, 1999. No business other than as set forth in the
accompanying Notice of Annual Meeting is expected to come before the 1999 Annual
Meeting of Stockholders, but should any other matter requiring a vote of
stockholders be properly brought before the 1999 Annual Meeting of Stockholders,
it is the intention of the persons named in the enclosed form of proxy to vote
such proxy in accordance with their best judgment on such matters.
This solicitation is being made by the Company. The entire cost of
soliciting proxies will be borne by the Company. Solicitation will be made by
mail, and may be made personally or by telephone by officers and other employees
of the Company who will not receive additional compensation for such
solicitation. Arrangements may be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy material to the
beneficial owners of the Company's Common Stock, and such persons may be
reimbursed for their expenses.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive offices, 50 West
San Fernando Street, San Jose, CA 95113, a written notice of revocation or a
duly executed proxy bearing a later date, or it may be revoked by attending the
1999 Annual Meeting of Stockholders and voting in person. Attendance at the 1999
Annual Meeting of Stockholders will not, by itself, revoke a proxy.
STOCKHOLDER PROPOSALS
In accordance with Rule 14a-8 under the Securities Exchange Act of 1934,
any stockholder proposals intended to be presented at the 2000 Annual Meeting of
Stockholders must be received by the Company no later than December 22, 1999, in
order to be considered for inclusion in the Company's Proxy Statement and form
of proxy relating to such meeting. The proposal must be mailed to the Secretary
of the Company, 50 West San Fernando Street, San Jose, CA 95113. Such proposals
may be included in the Proxy Statement if they comply with certain rules and
regulations promulgated by the Securities and Exchange Commission.
MATTERS TO BE CONSIDERED AT 1999 ANNUAL MEETING
PROPOSAL ONE: ELECTION OF DIRECTORS
GENERAL
The Company's Restated Certificate of Incorporation and Bylaws provide that
the Board of Directors shall be divided into three classes, with each class
having a three-year term. Directors are assigned to each class in accordance
with a resolution or resolutions adopted by the Board of Directors. Vacancies on
the Board of Directors resulting from death, resignation, disqualification,
removal or other causes shall be filled by either
2
<PAGE> 5
the affirmative vote of the holders of a majority of the then-outstanding shares
of the Company's Common Stock or by the affirmative vote of a majority of the
remaining directors then in office, even if less than a quorum of the Board of
Directors. Newly created directorships resulting from any increase in the number
of directors shall, unless the Board of Directors determines otherwise, be
filled only by the affirmative vote of the directors then in office, even if
less than a quorum of the Board of Directors. A director elected by the Board of
Directors to fill a vacancy (including a vacancy created by an increase in the
size of the Board of Directors) shall serve for the remainder of the full term
of the class of directors in which the vacancy occurred and until such
director's successor is elected and qualified.
The Company's Restated Certificate of Incorporation provides that the
number of directors which shall constitute the whole Board of Directors shall be
fixed exclusively by one or more resolutions adopted from time to time by the
Board of Directors. The authorized number of directors is currently set at
seven. Two seats on the Board of Directors, currently held by Peter Cartwright
and Susan C. Schwab, have been designated as Class III Board seats, with the
term of the directors occupying such seats expiring as of the 1999 Annual
Meeting of Stockholders. The directors elected to Class I will continue to hold
office until the 2000 Annual Meeting of Stockholders or until the director's
successor has been elected and qualified. The directors elected to Class II will
continue to hold office until the 2001 Annual Meeting of Stockholders or until
the director's successor has been elected and qualified.
At the 1999 Annual Meeting of Stockholders, two Class III Directors are to
be elected to serve three-year terms ending at the 2002 Annual Meeting of
Stockholders or until their respective successors are elected and qualified or
their earlier death, resignation or removal. The nominees for the Board of
Directors designated to serve as Class III are set forth below.
The proxy holders intend to vote all proxies received by them in the
accompanying form for the nominees for director listed below, unless
instructions to the contrary are marked on the proxy. In the event that a
nominee is unable or declines to serve as a director at the time of the 1999
Annual Meeting of Stockholders, the proxies will be voted for any nominee who
shall be designated by the present Board of Directors to fill the vacancy. In
the event that additional persons are nominated for election as directors, the
proxy holders intend to vote all proxies received by them for the nominees
listed below. As of the date of this Proxy Statement, the Board of Directors is
not aware of any nominee who is unable or will decline to serve as a director.
Set forth in the table below is a list of the Company's directors and
executive officers, together with certain biographical information.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION CLASS
---- --- -------------------- -----
<S> <C> <C> <C>
Peter Cartwright...... 69 Chairman of the Board, President and III
Chief Executive Officer of Calpine
Ann B. Curtis......... 48 Executive Vice President, Chief Financial II
Officer and Corporate Secretary of
Calpine
Jeffrey E. Garten..... 52 Dean of the Yale School of Management I
Susan C. Schwab....... 44 Dean of the School of Public Affairs at III
the University of Maryland
George J. Stathakis... 68 International Investment Banker I
John O. Wilson........ 60 Senior Research Fellow, Berkeley I
Roundtable on the International Economy
and Executive Vice President and Chief
Economist, SDR Capital Management
V. Orville Wright..... 78 Retired Co-Chief Executive Officer of MCI II
Communications Corp.
</TABLE>
NOMINEES FOR CLASS III DIRECTORS WITH TERMS EXPIRING IN 2002
PETER CARTWRIGHT founded the Company in 1984 and has since served as a
Director and as the Company's President and Chief Executive Officer. Mr.
Cartwright became Chairman of the Board of Directors of the Company on September
19, 1996. From 1979 to 1984, Mr. Cartwright was Vice President and
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<PAGE> 6
General Manager of Gibbs & Hill's Western Regional Office. From 1960 to 1979,
Mr. Cartwright worked for General Electric's Nuclear Energy Division. His
responsibilities included plant construction, project management and new
business development. He served on the Board of Directors of nuclear fuel
manufacturing companies in Germany, Italy and Japan. Mr. Cartwright was
responsible for General Electric's technology development and licensing programs
in Europe and Japan. Mr. Cartwright obtained a Master of Science Degree in Civil
Engineering from Columbia University in 1953 and a Bachelor of Science Degree in
Geological Engineering from Princeton University in 1952.
SUSAN C. SCHWAB became a Director of the Company in January 1997. Dr.
Schwab has served as Dean of the School of Public Affairs at the University of
Maryland since August 1995. Dr. Schwab served as Director, Corporate Business
Development at Motorola, Inc. from July 1993 to August 1995. She also served as
Assistant Secretary of Commerce for the U.S. and Foreign Commercial Service from
March 1989 to May 1993.
CLASS I DIRECTORS WITH TERMS EXPIRING IN 2000
JEFFREY E. GARTEN became a Director of the Company in January 1997. Mr.
Garten has served as Dean of the Yale School of Management and William S.
Beinecke Professor in the Practice of International Trade and Finance since
November 1995. Mr. Garten served as Undersecretary of Commerce of International
Trade from November 1993 to October 1995. He was a managing director of The
Blackstone Group, an investment banking firm, from October 1990 to October 1992.
Prior thereto, Mr. Garten founded and managed The Eliot Group, a small
investment bank, from November 1987 to October 1990, and served as managing
director of Lehman Brothers from January 1979 to November 1987.
GEORGE J. STATHAKIS became a Director of the Company on September 19, 1996
and has served as a Senior Advisor to the Company since December 1994. Mr.
Stathakis has been providing financial, business and management advisory
services to numerous corporations since 1985. He also served as Chairman of the
Board and Chief Executive Officer of Ramtron International Corporation, an
advanced technology semiconductor company, from 1990 to 1994. From 1986 to 1989,
he served as Chairman of the Board and Chief Executive Officer of International
Capital Corporation, a subsidiary of American Express. Prior to 1986, Mr.
Stathakis served thirty-two years with General Electric Corporation in various
management and executive positions. During his service with General Electric
Corporation, Mr. Stathakis founded the General Electric Trading Company and was
appointed its first President and Chief Executive Officer.
JOHN O. WILSON became a Director of the Company in January 1997. Mr. Wilson
has served as a Senior Research Fellow at the Berkeley Roundtable on the
International Economy and as Executive Vice President and Chief Economist of SDR
Capital Management since January 1999. Mr. Wilson served as Executive Vice
President and Chief Economist at Bank of America from August 1984 to January
1999. He joined Bank of America in June 1975 as Director of Economics-Policy
Research. He served as a faculty member at the University of California at
Berkeley from September 1979 to June 1991, at the University of Connecticut from
September 1974 to June 1975, and at Yale University from January 1967 to
September 1970. Mr. Wilson also served as Director of Regulatory Analysis of the
U.S. Atomic Energy Commission from April 1972 to October 1972, as Director of
Welfare Reform of the Department of Health, Education and Welfare from April
1971 to April 1972, and as Assistant Director of the U.S. Office of Economic
Opportunity from August 1969 to April 1971.
CLASS II DIRECTORS WITH TERMS EXPIRING IN 2001
ANN B. CURTIS has served as Executive Vice President of the Company since
August 1998, and before that was Senior Vice President of the Company since
September 1992, and has been employed by the Company since its inception in
1984. Ms. Curtis became a Director of the Company on September 19, 1996. She is
responsible for the Company's financial and administrative functions, including
the functions of general counsel, corporate and project finance, accounting,
human resources, public relations and investor relations. Ms. Curtis also has
overall management responsibility for the Company's Western, Central and Eastern
Regional Offices, and serves as Chief Financial Officer and Corporate Secretary
for the Company. From the
4
<PAGE> 7
Company's inception in 1984 through 1992, she served as the Company's Vice
President for Management and Financial Services. Prior to joining Calpine, Ms.
Curtis was Manager of Administration for Gibbs & Hill, Inc. ("Gibbs & Hill"), an
architect -- engineering firm which specialized in power engineering projects.
V. ORVILLE WRIGHT became a Director of the Company in January 1997. Mr.
Wright served in various positions with MCI Communications Corp., including Vice
Chairman and Co-Chief Executive Officer from 1988 to 1991, Vice Chairman and
Chief Executive Officer from 1985 to 1987, and President and Chief Operating
Officer from 1975 to 1985. Prior to 1975, Mr. Wright served in senior positions
at Xerox Corp. from 1973 to 1975, at Amdahl Corporation from 1971 to 1973, at
RCA from 1969 to 1971, and at IBM from 1949 to 1969.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Company's Board of Directors held eleven (11) meetings in 1998. The
Board of Directors has an Audit Committee, a Compensation Committee and an
Executive Committee. There is currently no Nominating Committee. The Audit
Committee meets with the Company's finance and accounting managers and its
independent public accountants to review the adequacy of internal controls and
the results and scope of the audit and other services provided by the
independent auditors. The Audit Committee is comprised of John O. Wilson
(Chair), Jeffrey E. Garten and V. Orville Wright. The Audit Committee held three
(3) meetings during 1998. The Compensation Committee administers salaries,
incentives and other forms of compensation for executive officers of the
Company, as well as certain incentive compensation and benefit plans of the
Company. The Compensation Committee is comprised of Susan C. Schwab (Chair),
Jeffrey E. Garten, and V. Orville Wright. The Compensation Committee held four
(4) meetings in 1998. The Executive Committee is empowered to take actions on
behalf of the Board of Directors, particularly in the event such action were
necessary on short notice. The Executive Committee is comprised of Peter
Cartwright (Chair), George J. Stathakis and John O. Wilson. The Executive
Committee did not hold any meetings in 1998.
DIRECTOR COMPENSATION
Non-employee members of the Board are each paid an annual fee of $25,000
and are reimbursed for all expenses incurred in attending meetings of the Board
of Directors or any committee thereof. The chair of the Compensation Committee
and the Audit Committee receive an additional annual fee of $5,000. Under the
Automatic Option Grant Program in effect under the Company's 1996 Stock
Incentive Plan (the "1996 Plan"), each individual who first joins the Board as a
non-employee Board member will receive, at the time of his or her initial
election or appointment to the Board, an option grant to purchase 10,000 shares
of Common Stock. On the date of each Annual Meeting of Stockholders, each
individual who is to continue to serve as a non-employee Board member will
receive an option grant under the Automatic Option Grant Program to purchase an
additional 1,500 shares of Common Stock, provided such individual has served as
a Board member for at least six months. Each option granted under the Automatic
Option Grant Program has an exercise price per share equal to the fair market
value per share of Common Stock on the grant date and a maximum term of ten (10)
years measured from such grant date, subject to earlier termination upon the
optionee's cessation of Board service. Each option granted under the Automatic
Option Grant Program is immediately exercisable for all the option shares, but
any shares purchased upon exercise of the option will be subject to repurchase
by the Company, at the option exercise price paid per share, upon the optionee's
cessation of Board service prior to vesting in those shares. The shares subject
to each 10,000-share grant will vest in a series of four successive equal annual
installments upon the optionee's completion of each year of Board service over
the four-year period measured from the grant date. The shares subject to each
1,500-share grant will vest upon the optionee's completion of one year of Board
service measured from the grant date. However, option shares issuable upon
exercise of options granted under the Automatic Option Grant Program will
immediately vest on an accelerated basis upon certain changes in control of the
Company or upon the death or disability of the optionee while a Board member.
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<PAGE> 8
Non-employee Directors are also eligible to participate in the Director Fee
Option Grant Program in effect under the 1996 Plan, pursuant to which they may
elect to apply a portion or all of their annual retainer fee towards the
acquisition of special below-market option grants. On January 2, 1998, Messrs.
Stathakis and Wilson, in connection with their elections to apply $30,000 of
their cash retainer fee for the 1998 fiscal year to the acquisition of a special
grant under the Director Fee Option Grant Program, were each granted options for
2,903 shares of Common Stock under that program. Mr. Wright, in connection with
his election to apply $25,000 of his cash retainer fee for the 1998 fiscal year
to the acquisition of a special grant, was granted an option for 2,419 shares of
Common Stock under the Director Fee Option Grant Program. The options have an
exercise price of $5.166 per share, one-third of the fair market value per share
of the Common Stock on the grant date. Accordingly, the spread on the option
shares at the time of grant (the fair market value of the option shares less the
aggregate exercise price) was equal to the $30,000, $30,000 and $25,000 of the
cash retainer fees which Messrs. Stathakis, Wilson and Wright (respectively)
elected to apply to their grants. The options became fully exercisable on
December 31, 1998. The options have a maximum term of 10 years measured from the
grant date, subject to earlier termination of two (2) years following cessation
of Board service.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the stockholders vote "FOR" the
election of the nominees listed above.
PROPOSAL TWO:
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP served as independent public accountants
for the Company for the fiscal year ended December 31, 1998. Subject to
stockholder ratification, the Board of Directors has reappointed the firm to
continue in this capacity for the year ending December 31, 1999. Accordingly, a
resolution will be presented at the 1999 Annual Meeting of Stockholders to
ratify the selection of Arthur Andersen LLP by the Board of Directors as
independent public accountants to audit the accounts and records of the Company
for the fiscal year ending December 31, 1999, and to perform other appropriate
services. In the event that stockholders fail to ratify the selection of Arthur
Andersen LLP, the Board of Directors would reconsider such selection. Even if
the selection is ratified, the Board of Directors in its discretion may direct
the appointment of a different independent public accounting firm at anytime
during the year if the Board of Directors believes that such a change would be
in the best interests of the Company and its stockholders.
One or more representatives of Arthur Andersen LLP are expected to be
present at the 1999 Annual Meeting of Stockholders, will have the opportunity to
make a statement if they desire to do so, and will be available to respond to
questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that stockholders vote "FOR" such
ratification.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
1999 Annual Meeting of Stockholders other than those set forth herein and in the
Notice accompanying this Proxy Statement. However, if any other matters properly
come before the meeting, it is intended that the persons named in the enclosed
proxy will vote on such matters in accordance with their best judgement.
Discretionary authority with respect to such other matters is granted by the
execution of the enclosed proxy.
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<PAGE> 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's Common Stock as of March 26,
1999 by: (i) each person known by the Company to be the beneficial owner of more
than five percent of the outstanding shares of the Company's Common Stock, (ii)
each Director of the Company, (iii) each executive officer of the Company listed
in the Summary Compensation Table, and (iv) all executive officers and Directors
of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) BENEFICIALLY OWNED(1)
------------------------------------ --------------------- ---------------------
<S> <C> <C>
Lazard Freres & Co. LLC(2)....................... 2,111,808 8.0%
30 Rockefeller Plaza
New York, NY 10020
Wellington Management Company, LLP(3)............ 1,995,400 7.6%
75 State Street
Boston, MA 02109
J. & W. Seligman & Co. Incorporated(4)........... 1,951,774 7.4%
100 Park Avenue
New York, NY 10017
Hartford Capital Appreciation HLS Fund,
Inc.(5)........................................ 1,886,500 7.2%
200 Hopmeadow Street
Simsbury, CT 06070
Public Employees Retirement System of Ohio....... 1,800,000 6.9%
277 East Town Street
Columbus, OH 43215
Peter Cartwright(6).............................. 1,004,626 3.7%
Ann B. Curtis(7)................................. 275,469 1.0%
Lynn A. Kerby(8)................................. 164,523 *
Robert D. Kelly(9)............................... 120,890 *
Gloria S. Gee(10)................................ 16,201 *
Jeffrey E. Garten(11)............................ 13,000 *
Susan C. Schwab(11).............................. 13,000 *
George J. Stathakis(12).......................... 45,220 *
John O. Wilson(11)............................... 15,903 *
V. Orville Wright(13)............................ 20,419 *
All executive officers and directors as a group
(10 persons)(14)............................... 1,689,251 6.0%
</TABLE>
- ---------------
* Less than one percent
(1) This table is based in part upon information supplied by Schedules 13G
filed by principal stockholders with the Securities and Exchange Commission
(the "Commission"). Beneficial ownership is determined in accordance with
the rules of the Commission and generally includes voting or investment
power with respect to securities. Shares of Common Stock subject to
options, warrants and convertible notes currently exercisable or
convertible, or exercisable or convertible within 60 days after a specified
date, are deemed outstanding for computing the percentage of the person
holding such options but are not deemed outstanding for computing the
percentage of any other person. Except as indicated by footnote, and
subject to community property laws where applicable, the persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them. The number of shares
of Common Stock outstanding as of March 26, 1999 was 26,267,297.
(2) According to the Schedule 13G filed with the Commission, Lazard Freres &
Co. LLC possesses sole voting power over 1,649,545 shares and sole
investment power over 2,111,808.
(3) According to the Schedule 13G filed with the Commission, Wellington
Management Company, LLP possesses shared voting power over 1,960,400 shares
and shared investment power over 1,995,400 shares.
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<PAGE> 10
(4) According to the Schedule 13G filed with the Commission, J. & W. Seligman &
Co. Incorporated possesses shared voting power over 1,568,500 shares and
shared investment power over 1,951,774 shares.
(5) According to the Schedule 13G filed with the Commission, Hartford Capital
Appreciation HLS Fund, Inc. possesses shared voting and investment power
over 1,886,500 shares.
(6) Includes options to purchase 998,676 shares of the Company's Common Stock
issuable upon the exercise of options outstanding as of March 26, 1999 or
within 60 days thereafter.
(7) Includes options to purchase 275,156 shares of the Company's Common Stock
issuable upon the exercise of options outstanding as of March 26, 1999 or
within 60 days thereafter.
(8) Includes options to purchase 164,023 shares of the Company's Common Stock
issuable upon the exercise of options outstanding as of March 26, 1999 or
within 60 days thereafter.
(9) Includes options to purchase 119,890 shares of the Company's Common Stock
issuable upon the exercise of options outstanding as of March 26, 1999 or
within 60 days thereafter.
(10) Includes options to purchase 15,811 shares of the Company's Common Stock
issuable upon the exercise of options outstanding as of March 26, 1999 or
within 60 days thereafter. Ms. Gee assumed a non-executive officer position
at the Company as of November 1, 1998.
(11) Represents shares of the Company Common Stock issuable upon exercise of
options that are exercisable as of March 26, 1999 or will become
exercisable within 60 days thereafter.
(12) Includes options to purchase 42,220 shares of the Company's Common Stock
issuable upon the exercise of options outstanding as of March 26, 1999 or
within 60 days thereafter.
(13) Includes options to purchase 15,419 shares of the Company's Common Stock
issuable upon the exercise of options outstanding as of March 26, 1999 or
within 60 days thereafter.
(14) Includes options to purchase 1,673,098 shares of the Company's Common Stock
issuable upon the exercise of options outstanding as of March 26, 1999 or
within 60 days thereafter.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
OTHER EXECUTIVE OFFICERS
Set forth in the table below is a list of the Company's executive officers
that are not directors, together with certain biographical information.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Executive Vice
Lynn A. Kerby.............. 60 President -- Operations
Robert D. Kelly............ 41 Senior Vice President -- Finance
</TABLE>
LYNN A. KERBY joined the Company in January 1991 and served as Vice
President of Operations through January 1993, at which time he became a Senior
Vice President -- Operations for the Company. Mr. Kerby became Executive Vice
President -- Operations of the Company in August 1998. Prior to joining the
Company, Mr. Kerby served as Senior Vice President -- Operations of Guy F.
Atkinson Company ("Guy F. Atkinson"), an engineering and construction company,
from 1989 to 1990, and served in various other positions within Guy F. Atkinson
since 1961. Mr. Kerby served on Calpine's Board of Directors from 1984 to 1988
as a Guy F. Atkinson representative. He obtained a Bachelor of Science Degree in
Civil Engineering and Business from the University of Idaho in 1961. Mr. Kerby
holds a Class A Contractors License in the states of California, Arizona and
Hawaii.
8
<PAGE> 11
ROBERT D. KELLY has served as the Company's Senior Vice
President -- Finance since January 1998 and Vice President, Finance from April
1994 to January 1998. Mr. Kelly's responsibilities include all project and
corporate finance activities. From 1992 to 1994, Mr. Kelly served as
Director -- Project Finance for the Company, and from 1991 to 1992, he served as
Project Finance Manager. Prior to joining the Company, he was the Marketing
Manager of Westinghouse Credit Corporation from 1990 to 1991. From 1989 to 1990,
Mr. Kelly was Vice President of Lloyds Bank PLC. From 1982 to 1989, Mr. Kelly
was employed in various positions with The Bank of Nova Scotia. He obtained a
Master of Business Administration Degree from Dalhousie University, Canada in
1980 and a Bachelor of Commerce Degree from Memorial University, Canada, in
1979.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning the
compensation earned for services rendered to the Company in all capacities
during each of the fiscal years ended December 31, 1996, 1997 and 1998 by the
Company's Chief Executive Officer and each of the three other most highly
compensated executive officers of the Company serving in that capacity as of
December 31, 1998. Ms. Gee is also included in the table because she would have
been among the four most highly compensated executive officers at the Company on
the last day of the 1998 fiscal year had she not assumed another non-executive
officer position at the Company as of November 1, 1998. No other executive
officer who would have otherwise been included in such table on the basis of
salary and bonus earned for the 1998 fiscal year has been excluded by reason of
his or her termination of employment or change in executive status during that
year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------------
-------------------------- SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS UNDERLYING OPTIONS COMPENSATION(1)
--------------------------- ---- -------- -------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Peter Cartwright..................... 1998 $400,000 $600,000 110,000 $3,330
Chairman of the Board, 1997 375,000 300,000 110,000 3,330
President and Chief 1996 341,000 272,071 181,790 3,330
Executive Officer
Lynn A. Kerby........................ 1998 228,250 175,000 25,000 --
Executive Vice 1997 220,000 90,000 25,000 --
President -- Operations 1996 206,250 75,000 41,552 --
Ann B. Curtis........................ 1998 220,000 250,000 30,000 --
Executive Vice President, 1997 205,000 90,000 30,000 --
Chief Financial Officer 1996 175,000 75,000 51,940 --
and Corporate Secretary
Robert D. Kelly...................... 1998 205,000 230,000 21,500 --
Senior Vice 1997 190,000 100,000 20,000 --
President -- Finance 1996 162,428 75,000 36,358 --
Gloria S. Gee(2)..................... 1998 124,500 26,175 6,500 --
Controller and Chief 1997 120,000 25,630 5,000 --
Accounting Officer 1996 106,000 19,190 15,582 --
</TABLE>
- ---------------
(1) Represents the premium paid on a special life insurance policy maintained by
the Company.
(2) Ms. Gee served as Corporate Controller and Chief Accounting Officer through
November 1, 1998, before assuming a non-executive officer position at the
Company.
9
<PAGE> 12
STOCK OPTIONS
The following table sets forth certain information concerning grants of
stock options during the fiscal year ended December 31, 1998 to each of the
executive officers named in the Summary Compensation Table above. The table also
sets forth hypothetical gains or "option spreads" for the options at the end of
their respective ten-year terms. These gains are based on the assumed rates of
annual compound stock price appreciation of 5% and 10% from the date the option
was granted over the full option term. No stock appreciation rights were granted
during the year ended December 31, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
------------------------------------- POTENTIAL REALIZABLE VALUE
PERCENTAGE OF AT ASSUMED ANNUAL RATES
OPTIONS TOTAL OPTIONS OF STOCK PRICE APPRECIATION
GRANTED GRANTED TO EXERCISE FOR OPTION TERM (3)
(NO. OF EMPLOYEES IN PRICE PER EXPIRATION ---------------------------
NAME SHARES) FISCAL YEAR(2) SHARE DATE 5% 10%
---- -------- -------------- --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Peter Cartwright............... 110,000 27.8% $17.20 3/5/08 $1,189,869 $3,015,361
Lynn A. Kerby.................. 25,000 6.3% $17.20 3/5/08 270,425 685,309
Ann B. Curtis.................. 30,000 7.6% $17.20 3/5/08 324,510 822,371
Robert D. Kelly................ 21,500 5.4% $17.20 3/5/08 232,565 589,366
Gloria S. Gee.................. 6,500 1.6% $17.20 3/5/08 70,310 178,180
</TABLE>
- ---------------
(1) Each option set forth in the table above has a maximum term of ten (10)
years measured from the grant date, subject to earlier termination upon the
executive officer's termination of service with the Company. Each option
will become exercisable for 25% of the option shares upon the officer's
completion of each of the four years of service measured from the grant
date. The option will immediately become exercisable for all of the option
shares upon an acquisition of the Company by merger or asset sale unless the
options are assumed by the successor corporation.
(2) The Company granted options to purchase 395,000 shares of Common Stock
during the year ended December 31, 1998.
(3) The 5% and 10% assumed annual rates of compound stock price appreciation are
mandated by the rules of the Securities and Exchange Commission and do not
represent the Company's estimate or a projection by the Company of future
stock prices.
10
<PAGE> 13
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information concerning the exercise
of options during the 1998 fiscal year and the number of shares subject to
exercisable and unexercisable stock options held by the executive officers named
in the Summary Compensation Table above as of December 31, 1998. No stock
appreciation rights were exercised by such executive officers during the year
ended December 31, 1998, and no stock appreciation rights were outstanding at
the end of that year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT DECEMBER 31, 1998 IN-THE-MONEY OPTIONS
SHARES (NO. OF SHARES) AT DECEMBER 31, 1998 (2)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Peter Cartwright..... -- -- 852,618 328,065 $18,662,231 $3,908,426
Lynn A. Kerby........ 10,000 226,200 127,734 77,927 2,519,509 956,340
Ann B. Curtis........ -- -- 233,582 91,871 5,104,468 1,110,409
Robert D. Kelly...... -- -- 94,465 60,264 1,871,525 698,650
Gloria S. Gee........ -- -- 9,040 18,042 138,992 209,475
</TABLE>
- ---------------
(1) Based upon the market price of the purchased shares on the exercise date
less the option exercise price paid for those shares.
(2) Based upon the market price of the Common Stock on December 31, 1998 ($25.25
per shares) less the option exercise price payable per share.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
The Company has entered into employment agreements with Mr. Cartwright, Mr.
Kerby, Ms. Curtis and Mr. Kelly. Each of the employment agreements expires
during 1999 unless earlier terminated or subsequently extended. The employment
agreements provide for the payment of a base salary, subject to periodic
adjustment by the Board of Directors, and provide for annual bonuses based on
the Company's bonus plans and participation in all benefit and equity plans. The
employment agreements also provide for other employee benefits such as life
insurance and health care, in addition to certain disability and death benefits.
Severance benefits, including the acceleration of outstanding options, are also
payable upon an involuntary termination or a termination following a change of
control in the Company. Severance benefits would not be payable in the event
that termination was for cause.
Should the Company be acquired by merger or asset sale, then all
outstanding options held by the Chief Executive Officer and the other executive
officers under the Company's 1996 Plan will automatically accelerate and vest in
full, except to the extent those options are to be assumed by the successor
corporation. In addition, the Compensation Committee as Plan Administrator of
the 1996 Plan has the authority to provide for the accelerated vesting of the
shares of Common Stock subject to outstanding options held by the Chief
Executive Officer or any other executive officer or any unvested shares of
Common Stock subject to direct issuances held by such individual, in connection
with the termination of that individual's employment following: (i) a merger or
asset sale in which these options are assumed or are assigned; or (ii) certain
hostile changes in control of the Company. In addition, certain executive
officers have existing employment agreements that provide for the acceleration
of their options upon a termination of their employment following certain
changes in control or ownership of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Company's Board of
Directors are as named below in the Compensation Committee Report. No member of
the committee was at anytime during 1998 or at any other time an officer or
employee of the Company.
11
<PAGE> 14
No executive officer of the Company serves as a member of the board of
directors or the compensation committee of any entity that has one or more
executive officers serving as a member of the Company's Board of Directors or
its Compensation Committee.
EXECUTIVE COMPENSATION REPORT
The following Report of the Compensation Committee on Executive
Compensation and related disclosure shall not be deemed incorporated by
reference by any general statement incorporating this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors administers the
Company's compensation policies and programs. The Compensation Committee was
established in 1996 following the Company's initial public offering. The
Compensation Committee sets the cash compensation of the Chief Executive Officer
and reviews the design, administration, and effectiveness of the cash
compensation programs for other key executives, as well as administering the
Company's stock incentive plans and approving stock option grants for all
employees, including executive officers. The Compensation Committee serves under
a charter adopted by the Board of Directors and is comprised entirely of outside
directors who have never served as officers of the Company. The Compensation
Committee is referred to herein as the "Committee".
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Company operates in the extremely competitive and rapidly changing
power industry. The Committee believes that the compensation programs for
executive officers of the Company should be designed to attract, motivate, and
retain talented executives responsible for the success of the Company and should
be determined within a competitive framework and based on the achievement of
overall financial results and individual contributions. Within this overall
philosophy, the Committee's objectives are to:
- Offer a total compensation program that takes into consideration the
compensation practices of certain comparable companies with whom the
Company competes for executive talent.
- Provide annual variable incentive awards that take into account the
Company's overall financial performance relative to corporate objectives
and based on individual contributions.
- Align the financial interests of executive officers with those of
shareholders by providing significant equity-based, long-term incentives.
COMPENSATION COMPONENTS AND PROCESS
The three major components of the Company's executive officer compensation
are: (i) base salary, (ii) variable incentive awards, and (iii) long-term
equity-based incentive awards.
The Committee determines executive officers' compensation levels with the
assistance of the Company's Human Resources Department, which works with an
independent consulting firm that furnishes the Committee with executive
compensation data drawn from a nationally recognized survey of comparable
companies.
The positions of the Company's CEO and executive officers were compared
with those of their counterparts at comparable companies, and the market
compensation levels for comparable positions were examined to determine base
salary, target incentives, and total cash compensation. In addition, comparable
companies' practices concerning stock option grants were reviewed and compared.
Base Salary. The base salary for each executive officer is determined at
levels considered appropriate for comparable positions at comparable companies.
The Company's policy is to target base salary levels between the 50th and 75th
percentile of compensation practices at comparable companies.
12
<PAGE> 15
Variable Incentive Awards. To reinforce the attainment of Company goals,
the Committee believes that a substantial portion of the annual compensation of
each executive officer should be in the form of variable incentive pay. The
annual incentive pool for executive officers is determined on the basis of the
Company's achievement of the financial performance targets established at the
beginning of the fiscal year and the executive's individual contribution. The
incentive plan requires that certain performance objectives be attained before
any incentives are awarded. Once the threshold is reached, specific formulas are
in place to calculate the actual incentive payment for each officer. A target is
set for each executive officer based on targets for comparable positions at
comparable companies. In 1998, the Company exceeded its performance objectives.
Awards paid reflected these results plus individual accomplishments of both
corporate and functional objectives.
Long-Term, Equity-Based Incentive Awards. The goal of the Company's
long-term equity-based incentive awards is to align the interests of executive
officers with stockholders and to provide each executive officer with a
significant incentive to manage the Company from the perspective of an owner
with an equity stake in the business. The Committee determines the size of
long-term, equity-based incentives according to each executive's position within
the Company and sets the incentives at a level it considers appropriate to
create a meaningful opportunity for stock ownership. In addition, the Committee
takes into account an individual's recent performance, his or her potential for
future responsibility and promotion, and comparable awards made to individuals
in similar positions with comparable companies. The relative weight given to
each of these factors varies among individuals at the Committee's discretion.
During 1998, the Board of Directors made option grants to Mr. Cartwright,
Mr. Kerby, Ms. Curtis, Mr. Kelly and Ms. Gee under the Company's Stock Option
Program. Each grant allows the officer to acquire shares of the Company's Common
Stock at a fixed price per share (the market price on the grant date) over a
specified period of time. Specifically, the option vests in periodic
installments over a four-year period, contingent upon the executive officer's
continued employment with the Company. Accordingly, the option will provide a
return only if the officer remains with the Company and only if the market price
appreciates over the option term.
CEO Compensation. The Company's Chairman, President and Chief Executive
Officer, Peter Cartwright, has an existing employment agreement with the Company
which has a term of five years (ending December 31, 1999 unless extended). The
annual base salary for Mr. Cartwright for 1998 was $400,000. The base
compensation payable to Mr. Cartwright was determined by the Board of Directors
based on Mr. Cartwright's personal performance of his duties and on salary
levels paid to chief executive officers of comparable companies. In setting the
compensation payable to Mr. Cartwright, a significant percentage of his total
compensation is tied to Company performance and long-term stock price
appreciation.
Mr. Cartwright's variable incentive award for 1998 was based on the actual
financial performance of the Company relative to corporate objectives and a
measure of his individual contribution. His award was based on the incentive
plan used for all executive officers. The option grant made to Mr. Cartwright
during 1998 was based upon his performance and leadership with the Company.
Compliance with Internal Revenue Code Section 162(m). As a result of
Section 162(m) of the Internal Revenue Code, which was enacted into law in 1993,
the Company will not be allowed a Federal income tax deduction for compensation
paid to certain officers, to the extent that compensation exceeds $1 million per
officer in any one year. This limitation will apply to all compensation which is
not considered to be performance based. Compensation which does qualify as
performance-based compensation will not have to be taken into account for
purposes of this limitation. Any compensation deemed paid in connection with the
exercise of stock options granted under the 1996 Plan will qualify as
performance-based compensation.
The cash compensation paid to the Company's executive officers during 1998
did not exceed the $1 million limit per officer. The Committee has decided not
to take any action at this time to limit or restructure the elements of cash
compensation payable to the Company's executive officers. However, the Committee
will reconsider this decision should the individual compensation of any
executive officer exceed the $1 million level for 1999.
13
<PAGE> 16
Submitted on behalf of the Compensation Committee of the Board of
Directors.
Compensation Committee:
Susan C. Schwab, (Chair)
Jeffrey E. Garten
V. Orville Wright
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1994, the Company entered into a Consulting Contract with Mr.
George Stathakis, a Director, which was amended and restated effective June 3,
1996. In April 1997, the Company entered into a Consulting Contract with Mr.
Stathakis, effective January 1, 1997, to replace the prior agreement. During
1998, Mr. Stathakis again served as a consultant to the Company. In April 1998,
the Company entered into a Consulting Contract with Mr. Stathakis, effective as
of January 1, 1998, which replaced the previous Consulting Contract. Pursuant to
the Consulting Contract, Mr. Stathakis has been retained to provide, among other
things, advice to the Company with regard to domestic and international
business, to identify project investment opportunities and to provide advisory
support to the Company's management. The Consulting Contract provides for a
monthly retainer of $5,000 plus reimbursement of expenses. In addition, pursuant
to the Consulting Contract, the Company granted to Mr. Stathakis a stock option
to purchase 10,000 shares of the Company's Common Stock under the Company's 1996
Plan at an exercise price of $15.50 per share, which was fully vested on October
1, 1998. The Company will also pay Mr. Stathakis a fee to be negotiated between
Mr. Stathakis and the Company for those project investment opportunities
identified and otherwise earlier terminated or extended by mutual agreement of
the parties. Under the Consulting Contract, Mr. Stathakis received total
compensation of $60,000 in 1998.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Officers, directors and greater than ten percent stockholders are
required by Securities and Exchange Commission regulation to furnish the Company
with copies of all Section 16(a) reports they file.
Based solely upon review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that there was compliance for the year ended December 31, 1998
with all Section 16(a) filing requirements applicable to the Company's officers,
directors and greater than ten percent beneficial owners except that Messrs.
Kerby and Stathakis were required to file amended Form 4's, and that Messrs.
Garten, Stathakis, Wilson and Wright and Dr. Schwab were required to file
delinquent Form 4's.
14
<PAGE> 17
STOCK PERFORMANCE GRAPH
The following performance graph shall not be deemed incorporated by
reference by any general statement incorporating this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
On September 20, 1996, the Company issued Common Stock in its initial
public offering. The Common Stock trades on the New York Stock Exchange under
the symbol "CPN". The following graph compares the total return on the Company's
Common Stock with the cumulative weighted average total return assuming
reinvestment of dividends of (i) the Standard & Poor's 500 Stock Index ("S&P
500"), and (ii) an index of comparable peer issuers ("Peer Group") which
includes AES Corp., MidAmerican Energy Company, Dynegy, Inc. and Trigen Energy
Corporation for the period of September 30, 1996 through December 31, 1998. In
accordance with the rules of the Securities and Exchange Commission, the returns
are indexed to a value of $100 at September 30, 1996 and the returns of each
company in the Peer Group have been weighted according to their market
capitalization as of the beginning of the period.
COMPARISON OF CUMULATIVE TOTAL EARNINGS*
LOGO
1996-98 MEASUREMENT PERIOD
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 DECEMBER 31, 1996 DECEMBER 31, 1997 DECEMBER 31, 1998
------------------ ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Calpine........................ $100.00 $125.00 $ 92.96 $157.80
S&P 500........................ $100.00 $108.34 $144.48 $185.78
Peer Group..................... $100.00 $125.74 $173.53 $168.87
</TABLE>
15
<PAGE> 18
It is important that your shares be represented at the meeting, regardless
of the number of shares which you hold. YOU ARE, THEREFORE, URGED TO EXECUTE
PROMPTLY AND RETURN THE ACCOMPANYING PROXY IN THE ENVELOPE WHICH HAS BEEN
ENCLOSED FOR YOUR CONVENIENCE. Stockholders who are present at the meeting may
revoke their proxies and vote in person or, if they prefer, may abstain from
voting in person and allow their proxies to be voted.
By Order of the Board of Directors,
Peter Cartwright
Chairman of the Board, President and
Chief Executive Officer
April 9, 1999
San Jose, CA
16
<PAGE> 19
PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE
FOR WITHHELD Nominees: Peter Cartwright
1. ELECTION OF DIRECTORS [ ] [ ] Susan C. Schwab
For, except vote withheld from the following nominee(s):
--------------------------------------------------------
2. Proposed to ratify the election of Arthur Anderson FOR AGAINST ABSTAIN
LLP as the independent auditors for the year ending [ ] [ ] [ ]
December 31, 1999.
I PLAN
TO ATTEND [ ]
THE MEETING
COMMENT/ADDRESS CHANGE
(Please mark this box if you [ ]
have written comments/address
change on the reverse side.)
SIGNATURE(S) DATE
----------------------------------------------- ----------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
FOLD AND DETACH HERE
ANNUAL MEETING OF STOCKHOLDERS
OF CALPINE CORPORATION
THURSDAY, MAY 27, 1999
9:00 A.M.
HYATT SAINTE CLAIRE
GRAND BALLROOM
SAN JOSE, CALIFORNIA
(SEE MAP ON REVERSE SIDE FOR DIRECTIONS)
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, DATE AND SIGN PROXY CARD AND
PROMPTLY RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
[CALPINE LOGO]
<PAGE> 20
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
CALPINE CORPORATION
1999 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of Calpine Corporation hereby acknowledges
receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement for
the 1999 Annual Meeting of Stockholders of Calpine Corporation to be held May
27, 1999 and hereby appoints Peter Cartwright and Ann B. Curtis, and each of or
either of them, proxy and attorney in-fact, with full power of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at
meeting and at any adjournment or postponement thereof, and to vote all shares
of Common Stock which the undersigned would be entitled to vote, if then and
there personally present, on the matters set forth below.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR ELECTION OF THE COMPANY'S NOMINEES AS DIRECTORS
AND THE RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT AUDITORS, AND THE PROXY HOLDER DEEM ADVISABLE ON SUCH OTHER MATTERS
AS MAY COME BEFORE THE MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
COMMENTS/ADDRESS CHANGE (PLEASE MARK COMMENTS/ADDRESS BOX ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-----------
SEE REVERSE
SIDE
-----------
FOLD AND DETACH HERE
DIRECTIONS TO HYATT SAINTE CLAIRE
302 SOUTH MARKET STREET, SAN JOSE, CALIFORNIA (408) 885-1234
[map with directions]
