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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:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
TRIGEN ENERGY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] 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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<PAGE> 2
TRIGEN ENERGY CORPORATION
TRIGEN LOGO ONE WATER STREET, WHITE PLAINS, NEW YORK 10601
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 14, 1997
------------------------
To the Shareholders of Trigen Energy Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Trigen
Energy Corporation, a Delaware corporation (the "Company"), will be held at The
Cincinnatian at 601 Vine Street, Cincinnati, Ohio 45202 on Wednesday, May 14,
1997 at 9:30 a.m. for the following purposes:
1. To elect to the board four Class C directors for terms of three
years each, or until their respective successors are elected and shall
qualify.
2. To ratify the selection of the independent certified public
accountants for the Company's fiscal year ending December 31, 1997.
3. To amend the Company's 1994 Stock Incentive Plan.
4. To consider and act upon such business as may properly come before
the meeting or any adjournment thereof.
All of the above matters are more fully described in the accompanying Proxy
Statement.
Shareholders of record at the close of business on March 24, 1997 are
entitled to notice of and to vote at the annual meeting or any adjournment
thereof. A list of such shareholders will be available for inspection by any
shareholder, for any purpose germane to the meeting, for a period of 10 days
prior to the meeting at One Water Street, White Plains, New York 10601.
Regardless of whether you attend the meeting, please complete the enclosed
form of proxy, date and sign it exactly as your name appears on the proxy card
and return it promptly in the postpaid envelope furnished for that purpose to
ensure the voting of your shares if you do not attend the meeting. If you desire
to revoke your proxy for any reason, you may do so at any time prior to the
voting.
Shareholders are urged to send in their proxies as soon as possible. Prompt
response is helpful and your cooperation will be appreciated.
By order of the Board of Directors,
/S/ THOMAS R. CASTEN
<TABLE>
<S> <C>
White Plains, New York THOMAS R. CASTEN
March 27, 1997 President and Chief Executive Officer
</TABLE>
IMPORTANT
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE EVEN IF YOU PLAN TO ATTEND THE MEETING. IN THE EVENT YOU ARE
PRESENT AT THE MEETING AND WISH TO DO SO, YOU MAY WITHDRAW YOUR PROXY AND VOTE
IN PERSON.
<PAGE> 3
TRIGEN ENERGY CORPORATION
ONE WATER STREET
TRIGEN LOGO WHITE PLAINS, NEW YORK 10601
------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 14, 1997
------------------------
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Trigen Energy Corporation, a Delaware corporation (the
"Company" or "Trigen"), of proxies from the holders of the Company's common
stock, par value $.01 per share (the "common stock"), to be voted at the Annual
Meeting of Shareholders of the Company (the "Meeting") to be held at the time
and place and for the purposes set forth in the accompanying Notice, and at any
adjournment or postponement of the Meeting. The Notice of the Meeting, this
proxy statement, and the enclosed form of proxy card are being mailed to
shareholders on or about March 27, 1997.
The Board of Directors has fixed March 24, 1997 as the record date for the
determination of shareholders entitled to notice of and to vote at the Meeting.
At the close of business on such date, there were issued and outstanding
12,038,057 shares of common stock, which constitute the only outstanding capital
stock of the Company entitled to vote at the Meeting. Each outstanding share of
the common stock is entitled to one vote per proposal.
Shares represented by properly executed proxies received prior to or at the
Meeting will be voted in accordance with the choices specified thereon. As to
any matter for which no choice has been specified in a duly executed proxy, the
shares represented thereby will be voted in favor of (i) the proposal to elect
the four nominees specified herein as directors of the Company, (ii) the
proposal to ratify the selection of the independent certified public
accountants, and (iii) the proposal to approve the amendment to the 1994 Stock
Incentive Plan. Execution of a proxy will not prevent a shareholder from
attending the Meeting and voting in person. Any shareholder giving a proxy may
revoke it at any time before it is voted by giving to the Secretary of the
Company written notice bearing a later date than the proxy, by submission of a
later dated proxy, or by voting in person at the Meeting (although attendance at
the Meeting will not in and of itself constitute revocation of a proxy). Any
written notice revoking a proxy should be sent to Eugene E. Murphy, Secretary,
Trigen Energy Corporation, One Water Street, White Plains, New York 10601.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
AGENDA ITEM NO. ONE:
ELECTION OF FOUR DIRECTORS
The Board of Directors currently has eleven members, having been increased
from ten at the February 24, 1997 meeting of the Board, in accordance with the
by-laws of the Company. The Board is divided into three classes denoted as Class
A, Class B and Class C, serving staggered three-year terms with one class of the
Board of Directors elected each year. Four Class C directors are proposed to be
elected at the Meeting. The Board of Directors' nominees for the directorships
are listed below. The nominees are all currently directors of the Company. The
Class A Directors are Messrs. Faessel, Kessel and O'Herron and the Class B
Directors are Messrs. Keane, Casten, Desnos and Brongniart, Mr. Brongniart
having been elected at the February 24, 1997 meeting of the Board to fill the
newly created directorship. The terms of the Class A and Class B Directors will
expire at the annual meeting of the stockholders of the Company in 1998 and
1999, respectively. All directors hold office until the third succeeding annual
meeting of the shareholders of the Company or until their successors have been
elected and qualified. Certain executive officers of Trigen who are also
stockholders have entered into an agreement to vote their common stock for
election of members of
<PAGE> 4
the Board of Directors and certain other circumstances in accordance with
instructions from the Elyo Group. (See "Certain Relationships and Related
Transactions -- Relationships with the Elyo Group -- Stockholders' Agreement")
<TABLE>
<CAPTION>
POSITION WITH
NOMINEE AGE THE COMPANY
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<S> <C> <C>
Charles E. Bayless........................................ 53 Director
Michel Cassou............................................. 53 Director
Michel Bleitrach.......................................... 51 Director
Dominque Mangin d'Ouince.................................. 47 Director
</TABLE>
MANAGEMENT RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION TO THE
BOARD OF DIRECTORS OF MESSRS. BAYLESS, CASSOU, BLEITRACH, AND MANGIN D'OUINCE.
The following pages set forth information regarding the nominees for
election as well as information about the directors whose terms of office do not
expire this year. Each such nominee has consented to being named as nominee for
director and agreed to serve if elected.
Under applicable Delaware law, directors shall be elected by a plurality of
the shares present in person or represented by proxy at the Annual Meeting and
entitled to vote on the election of directors. The enclosed proxy, unless
authority to vote is withheld, will be voted for the election of the nominees
named above. Under the rules of the New York Stock Exchange, Inc. ("NYSE"),
brokers who hold shares in street name for customers have the authority to vote
on certain items when they have not received instructions from their customers,
the beneficial owners of the shares. Thus, brokers that do not receive
instructions are entitled to vote on the election of the foregoing four nominees
for director.
In the event one or more of the nominees become unavailable for election,
votes will be cast pursuant to the authority granted by the enclosed proxy for
such person or persons as may be designated by the Board of Directors. The Board
does not expect that any nominee will be unavailable for election.
NOMINEES FOR DIRECTOR:
CLASS C: serving until the annual election of directors in 2000 or until his
successor is elected and qualified.
Charles E. Bayless, 53, has served as a Director of Trigen since 1994. He
is a member of the Compensation Committee, the Nominating Committee and the
Audit Committee. He has been Chairman of Tucson Electric Power Company ("Tucson
Electric"), an electric utility corporation, since 1992. Since 1990 he has been
President and Chief Executive Officer of Tucson Electric. From 1989 to 1990 he
was Senior Vice President and Chief Financial Officer of Tucson Electric. From
1981 to 1989 he was Senior Vice President and Chief Financial Officer of Public
Service Company of New Hampshire, an electric utility corporation.
Michel Cassou, 53, has been a Director of Trigen since 1993. He is a member
of the Compensation Committee. Mr. Cassou has been Directeur General Adjoint of
Societe Lyonnaise des Eaux ("Lyonnaise") since 1994. From 1990 to 1994 he was
Vice President, Development of Lyonnaise. From 1988 to 1990 he was Directeur
Financier of Lyonnaise.
Michel Bleitrach, 51, has been a Director of Trigen since 1995. He is
Chairman of the Compensation Committee. Mr. Bleitrach has been the Chairman of
Elyo since 1995 and has been the Chief Executive Officer of Elyo since 1993.
From 1990 to 1993 he was Chief Executive Officer of PRIAM.
Dominique Mangin d'Ouince, 47, has been a Director of Trigen since 1995. He
is a member of the Executive Committee. Mr. Mangin d'Ouince has been an
Executive Vice President and Managing Director of Elyo since 1995 and a Managing
Director in charge of Business Development of Lyonnaise since 1990.
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DIRECTORS CONTINUING IN OFFICE:
CLASS A: serving until the annual election of directors in 1998 or until his
successor is elected and qualified.
Richard E. Kessel, 47, has served as a Director of Trigen since 1994. He is
also a member of the Executive Committee. He has been Executive Vice President
and Chief Operating Officer of Trigen since 1993 when the Company acquired
United Thermal Corporation ("UTC"). From 1991 to 1993 he was Managing Director
and Chief Executive Officer of UTC. From 1987 to 1991 he was Chief Operating
Officer of Sithe Energies USA, Inc., an independent power producer. From 1971 to
1987 he held various positions at Ebasco Services Incorporated, an international
engineering and construction company, the last being Vice
President -- Business/Project Development.
Francois Faessel, 52, has been a Director of Trigen since 1992. From 1989
to 1995 Mr. Faessel was Secretaire General of Elyo. Since 1995 he has been
Director, Major Projects Financing at Elyo.
Jonathan O'Herron, 67, has served as a Director of Trigen since 1994. He is
a managing director of Lazard Freres & Co. LLC and had previously been a general
partner of Lazard Freres & Co. since 1973. Mr. O'Herron has a broad range of
civic, educational and charitable interests and serves on various boards in
these areas.
CLASS B: serving until the annual election of directors in 1999 or until his
successor is elected and qualified.
George F. Keane, 67, has served as a non-management Director and Chairman
of the Board since 1994. He is the Chairman of the Audit Committee and a member
of the Nominating Committee. From 1993 through 1996, he served as President
Emeritus and Senior Investment Adviser to The Common Fund, a company that he
helped organize and that manages the investment of over $17 billion in endowment
funds and operating cash for more than 1,300 member colleges, universities and
independent schools. Mr. Keane served as Chief Executive Officer of The Common
Fund from 1971 to 1993. Since 1996, Mr. Keane has been self-employed. He serves
on the boards of Universal Stainless & Alloy Products, Global Pharmaceutical,
United Water Resources, The Bramwell Funds, Nicholas-Applegate Investment Trust
and Northern Trust of Connecticut.
Thomas R. Casten, 54, has been President, Chief Executive Officer and a
Director of Trigen since 1986. He is also a member of the Executive Committee.
From 1980 to 1986 he was President and Chief Executive Officer of Cogeneration
Development Corporation ("CDC"). From 1969 to 1980 he held various positions at
Cummins Engine Company, a diesel engine manufacturer, the last being Vice
President and General Manager of Cummins Cogeneration Company, a division of
Cummins Engine Company, from 1977 to 1980. He was President of the International
District Energy Association for the 1993-1994 term and in 1989 he was selected
"Man of the Year" by that association.
Patrick Desnos, 44, has been a Director of Trigen since 1992. He is
Chairman of the Executive Committee and the Nominating Committee and a member of
the Compensation Committee. Since 1995 he has been Deputy Managing Director of
Elyo and President of INES S.A., a French subsidiary of Elyo. From 1992 to 1995
he was Directeur General of Compagnie Parisienne de Chauffage Urban ("CPCU").
From 1987 to 1995 he was a Managing Director of INES S.A..
Philippe Brongniart, 58, was elected a Director of Trigen on February 24,
1997. Since 1993, he has been General Manager of Lyonnaise. He was Chairman and
Chief Executive Officer of Sita since 1988 and Chief Operating Officer of Sita
from 1986 to 1988.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met four (4) times in 1996. During 1996, each
director attended at least 75% of the total number of the board meetings and
meetings of all committees on which such director served.
Directors who are regularly employed officers of the Company receive no
fees for serving as directors of the Company. Each non-officer director receives
$20,000 (the Chairman receives $30,000) per year plus $1,000 per day of meetings
of the Board or Committee of the Board attended, and each may elect to receive
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<PAGE> 6
such compensation in shares of common stock. Upon his election to the Board in
1997, Philippe Brongniart received options to purchase 10,000 shares of common
stock exercisable at $25.00 per share (the price per share on the date of the
grant). Upon their election to the Board in 1995, Messrs. Bleitrach and Mangin
d'Ouince each received options to purchase 10,000 shares of common stock
exercisable at $22.13 per share (the price per share on the date of the grant).
During 1994, each individual who was then a Director received options to
purchase 10,000 shares of common stock (20,000 for the Chairman) exercisable at
$15.75 per share (the price per share on the date of the grant). In July 1996
the Chairman received additional options to purchase 10,000 shares of Common
Stock exercisable at $18.75 per share. Each Director is reimbursed for the
out-of-pocket costs of attending meetings.
The Board of Directors has an Executive Committee, a Compensation
Committee, an Audit Committee and a Nominating Committee.
The Executive Committee oversees all activities of the Company between
meetings of the Board of Directors and may exercise the power and authority of
the full Board of Directors to the extent permitted by Delaware law and the
Company's By-Laws. The Executive Committee consists of Messrs. Desnos
(Chairman), Mangin d'Ouince, Casten and Kessel (two non-employee Directors and
two employee Directors). Non-employee members of the Executive Committee receive
$1,000 per meeting not held on the same day as a Board meeting. The Executive
Committee met five (5) times in 1996.
The Compensation Committee reviews the salaries and bonuses of management
and administers the Company's 1994 Stock Incentive Plan. The Compensation
Committee has sole discretion to determine the number of option shares granted
to employees of the Company. The Compensation Committee consists of four (4)
Board members, currently Messrs. Bleitrach (Chairman), Bayless, Cassou and
Desnos and Mr. Keane, who serves as an ex officio member of the Committee, none
of whom is an employee of the Company. Members of the Compensation Committee
receive $1,000 per meeting not held on the same day as a Board of Directors'
meeting. The Compensation Committee met twice during 1996.
The Audit Committee consists of two (2) members, currently Messrs. Keane
(Chairman) and Bayless, and is responsible for (i) recommending independent
auditors, (ii) reviewing with the independent auditors the scope and results of
the audit engagement, (iii) monitoring the Company's financial policies and
control procedures and (iv) reviewing and monitoring the provision of non-audit
services by the Company's auditors. Members of the Audit Committee receive
$1,000 per meeting not held on the same day as a Board of Directors' meeting.
The Audit Committee met twice during 1996.
The Nominating Committee consists of three (3) members, currently Messrs.
Desnos (Chairman), Keane and Bayless, none of whom is an employee of the
Company. The Nominating Committee performs two principal functions: (i) to
review possible candidates for membership on the Board of Directors and make
recommendations to the Board concerning nominees to be elected by the
shareholders (or by the Board to fill vacancies), and (ii) to make
recommendations to the Board concerning membership and chairs of the various
board committees. Because of the existence of the Stockholders' Agreement
referred to below in this proxy statement, the Nominating Committee does not
consider nominees recommended by security holders other than parties to the
Stockholders' Agreement. Members of the Nominating Committee receive $1,000 per
meeting not held on the same day as a Board of Directors' meeting. The
Nominating Committee did not meet during 1996. Because two of the members of the
Nominating Committee were themselves due to be nominated to stand for election
to the Board in 1996, the entire Board, meeting as a Committee of the whole,
nominated the directors to stand for election in 1996.
AGENDA ITEM NO. TWO:
RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
For the fiscal year ending December 31, 1997, the Audit Committee
unanimously has recommended and the Board of Directors has selected KPMG Peat
Marwick LLP as the Company's independent certified public accountants.
Ratification of the appointment will require the affirmative vote of a majority
of the outstanding
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<PAGE> 7
shares of common stock represented at the Meeting. If the appointment is not
ratified, the Board of Directors will take the shareholders' concerns into
consideration in determining whether or not to engage KPMG Peat Marwick LLP for
future years.
A representative of KPMG Peat Marwick is expected to attend the Meeting and
will be available to respond to appropriate shareholder questions. The
representative will have an opportunity to make a statement at the Meeting, if
he or she so desires.
MANAGEMENT RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE RATIFICATION AND
SELECTION OF KPMG PEAT MARWICK LLP.
AGENDA ITEM NO. THREE:
AMENDMENT OF 1994 STOCK INCENTIVE PLAN
On February 24, 1997, the Board of Directors of the Company adopted an
amendment to the 1994 Stock Incentive Plan to increase the number of shares of
the common stock of the Company, available for options, stock appreciation
rights, performance shares, restricted or unrestricted stock which may be
awarded pursuant to the 1994 Stock Incentive Plan, from 1,050,000 shares to
2,000,000 shares. Approval of the adoption of the amendment will require the
affirmative vote of a majority of the outstanding shares of common stock
represented at the Meeting.
MANAGEMENT RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
AMENDMENT TO THE 1994 STOCK INCENTIVE PLAN.
OTHER MATTERS
Management does not intend to bring any other matters before the Meeting
and has not been informed that any other matters are to be presented to the
Meeting by others. If other matters properly come before the Meeting or any
adjournment thereof, the persons named in the accompanying proxy and acting
thereunder intend to vote in accordance with their best judgment.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and persons who own more than 10% of the Company's common
stock to file certain reports with respect to each such person's beneficial
ownership of the Company's common stock. In addition, Item 405 of Regulation S-K
requires the Company to identify in its Proxy Statement each reporting person
that failed to file on a timely basis reports required by Section 16(a) of the
Exchange Act during the most recent fiscal year or prior fiscal year. The
statement of changes in beneficial ownership on Form 4 for the month of February
1996 for Messrs. Bayless, Desnos, D'Ouince and Faessel were not filed on a
timely basis.
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ADDITIONAL INFORMATION FOR SHAREHOLDERS
EXECUTIVE OFFICERS
EXECUTIVE OFFICERS
The executive officers of the Company include Thomas R. Casten and Richard
E. Kessel, who are also on the Board of Directors, and the following:
Jean M. Malahieude, 58, has been Executive Vice President, Engineering
since February 1997. He was Vice President, Engineering of Trigen from 1987 to
1997. Since 1987 he has been Executive Vice President of Cofreth-American
Corporation ("CAC").
Carol R. Beerbaum, 53, has been Vice President -- Strategic Planning and
Strategic Resources since April 1996. From 1992 through 1995 she was Vice
President -- Human Resources for Santa Fe Pacific, a major transport and
railroad company.
David H. Kelly, 53, has been Vice President -- Finance and Chief Financial
Officer of Trigen since December 1994. From 1969 to 1994 he held various
financial positions at Air Products and Chemicals, Inc., an industrial gas,
specialty chemicals and energy company, as Treasurer in 1990 and as Vice
President and Treasurer from 1991 to 1994.
James F. Lowry, 58, has been Vice President of Acquisitions and National
Accounts since February 1997. He was Vice President, Development of Trigen from
1995 to 1997. From 1993 to 1995 he was a principal in International Ventures
Group. From 1992 to 1993 he was President of Commercial Fuel Cell Business Unit
of United Technologies, Inc. From 1991 to 1992 he was Vice President of ABB,
Inc.
Eugene E. Murphy, 62, has been Vice President and General Counsel of Trigen
since 1986. He has been Secretary of Trigen since 1988. From 1986 to 1994 he was
a Director of Trigen.
Daniel J. Samela, 49, has been Controller of Trigen since 1995. From 1991
to 1995 he was Controller of the Dealer Division of Savin Corporation.
Stephen T. Ward, 54, has been Treasurer of Trigen since 1995. From 1988 to
1995 he was Treasurer of TI Group Inc.
Michael Weiser, 54, has been Vice President, Development of Trigen since
1992. From 1986 to 1994 he was a Director of Trigen. From 1986 to 1992 he was
Treasurer of Trigen.
REPORT OF THE COMPENSATION COMMITTEE
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
All decisions on compensation of the Company's executive officers,
including decisions about awards under certain of the Company's stock-based
compensation plans, are made by the members of the Compensation Committee, each
of whom is a non-employee director. This report addresses the Company's
compensation policies for 1996 as they affected Messrs. Casten, Kessel, Kelly,
Murphy, Lowry and Weiser (the last two of which received the same compensation),
the six highest paid executive officers of the Company for 1996, and Messrs.
Steven G. Smith and Richard S. Strong, the two highest paid non-officer
employees who were among the five (5) highest paid employees of the Company
including the Chief Executive Officer, (collectively, the "Named Executive
Officers").
COMPENSATION POLICIES
The Compensation Committee's executive compensation policies are designed
to provide competitive compensation opportunities when financial and operational
performance attains pre-set ambitious levels, to reward executives consistent
with the Company's performance, to recognize individual performance and
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responsibility, to underscore the importance of shareholder value creation, and
to assist the Company in attracting, retaining and inspiring qualified
executives. The principal elements of compensation employed by the Committee to
meet these objectives are base salaries, annual cash incentives, and long term
stock-based incentives. By design, the variable or "at-risk" components of
compensation are proportionately greater for more senior executives, in
recognition of their greater potential impact on the Company's results.
All compensation decisions are determined following a detailed review of
many factors that the Committee believes are relevant, including external
competitive data, the Company's achievements over the past year, the
individual's contributions to the Company's success, any significant changes in
role or responsibility, and the reasonableness of compensation in relation to
that of other employees.
The competitiveness of the Company's total compensation program
(incorporating base salaries, annual cash bonuses, and long term stock-based
incentives) is assessed regularly with the assistance of the Company's outside
compensation consultant. Comparisons are made with executives in similarly sized
firms with comparable responsibilities. Data for these comparisons is drawn from
two primary sources: a national compensation survey of similar publicly traded
companies, and the proxy statements of identified competitors, including all
companies included in the Peer Group (as defined in "Stock Performance
Information"). The Company also considers comparisons to a national compensation
survey of independent power producers, including most members of the
Compensation Peer Group, as hereinafter defined.
At senior positions, one of the guiding principles is to pay at a level
that allows the Company to attract, retain and inspire key executives by paying
them competitively compared with similarly placed executives within a selected
group of peer industry organizations, as well as a group of similarly-sized
publicly traded diversified industry firms (the "Compensation Peer Groups").
This comparison is performed while considering the Company's performance in
relation to the performance results of those companies and to appropriately
recognize performance above that of the comparison group. In general, the
Committee intends to pay base salary levels at the median or average levels of
competitive compensation for executives with comparable responsibilities in the
Company's Compensation Peer Groups. In addition to base salary, the Company's
total compensation program includes an annual cash incentive plan and a
long-term stock-based incentive program. The targeted total compensation levels
for the Named Executive Officers are intended to be consistent with competitive
levels (as measured by the total compensation levels of similar positions at the
Compensation Peer Groups) when the Company attains its targeted corporate
performance objectives. Actual payouts, if any, depend upon actual Company
performance. Thus, the total compensation levels and individual compensation
components received in any particular year could be demonstrably lesser or
greater than the Compensation Peer Groups' average.
The Company compensation philosophy for senior management emphasizes pay at
risk, highlights a long-term performance results perspective, provides executive
commitment via stock ownership, and bolsters the creation of shareholder value.
Base Salary. Base salaries for all Named Executive Officers, including the
Chief Executive Officer, are reviewed by the Committee on an annual basis. In
determining appropriate base salaries, the Committee considers external
competitiveness, the roles and responsibilities of the individual, the
reasonableness of compensation in relation to that of other employees, and the
contributions of the individual.
Annual Cash Bonuses. The Company believes that the Incentive Compensation
Plan should reward executives for their contributions to the success and
profitability of the business. Bonuses paid under the Incentive Compensation
Plan reflect the Committee's assessment of the degree to which the Company met
predetermined revenue and profitability objectives. All Named Executive
Officers, including the Chief Executive Officer, are eligible to participate in
this program.
Long Term Stock-Based Incentives. The Company also believes that it is
essential to link employee and shareholder interests. To meet this objective,
the Company has implemented the 1994 Stock Incentive Plan ("Stock Plan"), which
allows the Committee to grant stock options, restricted stock, and stock
appreciation rights to help attract, retain, and motivate executives and other
employees by providing them with an opportunity to share in the Company's
success. In determining actual awards, the Committee considers the
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externally competitive market, the contributions of the individual to the
success of the Company, and the need to retain the individual over time. All
Named Executive Officers, including the Chief Executive Officer, are eligible to
participate in this program. No restricted shares or stock appreciation rights
have been granted under the Stock Plan. See "Option/SAR Grants in Last Fiscal
Year."
The Committee has reviewed Internal Revenue Code Section 162(m) and has
determined that, at present, its limitations are not applicable to the Company.
Over time, the Committee will continue to consider the implications of this
statute.
The Committee's policy regarding the compensation of other executive
officers of the firm is consistent with the approach outlined here.
1996 COMPENSATION
For the year ending December 31, 1996, net income was $12.1 million, a
14.2% advance from the $10.6 million net income in 1995. The past year had its
share of successes and shortcomings. The most notable positive results were the
Minot condemnation award which was largely used to cover liquidation costs
regarding debt to Trust Company of the West, and the successful conclusion of
the Company's claims against Long Island Lighting Company, which netted $1.0
million and savings going forward. Disappointments of note included the lack of
demand for energy due to the unusually warm weather patterns in the last quarter
of the year, failure to acquire the Montreal Steam System, and the loss of a
lawsuit concerning El Salvador. The latter two depressed net income by $1.0
million. In several important developments for the future, the Company signed
three significant joint venture agreements, with Gentor, Hydro-Quebec, and
Cinergy in 1996, while laying the groundwork for a fourth; and achieved a
strategic alliance with a chiller company. The Company also generated new
business in Tulsa and Philadelphia. The Company also acquired Ewing Power
Systems, a leading systems integrator of steam turbine cogenerator systems. All
of these actions were designed to increase the future growth of the Company.
As in prior years, the Company engaged the services of an outside,
independent compensation consulting firm to conduct and verify to the Committee
its findings concerning the compensation levels and practices of the
Compensation Peer Groups and its recommendations for compensation actions for
the Named Executive Officers. As outlined in the Compensation Policies Section,
the Committee is thoroughly committed to the Company's variable pay concept.
Under this philosophy, the Company is driven to leverage its compensation
dollars and reward above high performance levels when the Company's shareholder
value added levels warrant.
Base salaries paid in 1996 to the Named Executive Officers, including the
CEO, reflect the Committee's review of external competitiveness, the roles,
responsibilities and contributions of the individuals and the reasonableness of
compensation in relation to that of other employees.
Incentive Compensation Plan bonuses paid to all Named Executive Officers
for 1996 were determined in conjunction with the Committee's assessment of the
Company's performance with respect to predetermined revenue and profitability
objectives. The Company's performance was above average, but it failed to
achieve all of its predetermined financial and operational objectives, and thus,
the bonus levels are significantly less than the approved target levels for each
Named Executive Officer.
COMPENSATION COMMITTEE
Michel Bleitrach (Chairman)
Charles E. Bayless
Michel Cassou
Patrick Desnos
George F. Keane (ex officio)
COMPENSATION COMMITTEE INTERLOCKS AND INSIDE PARTICIPATION IN COMPENSATION
DECISIONS
There are no Compensation Committee interlocks. Mr. Bleitrach, a Director
of Trigen, is the Chairman and Chief Executive Officer of Elyo. Mr. Bayless, a
Director of Trigen, is Chairman of Tucson Electric.
8
<PAGE> 11
Mr. Cassou, a Director of Trigen, is Directeur General Adjoint of Lyonnaise. Mr.
Desnos, a Director of Trigen, is Deputy Managing Director of Elyo.
COMPENSATION AND OPTION TABLES
The following table presents before-tax information on compensation earned,
paid, awarded or accrued as of the end of fiscal years 1996, 1995 and 1994 for
services by the Named Executive Officers, including options granted.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------------------------
AWARDS
ANNUAL COMPENSATION -----------------------
---------------------------------- SECURITIES PAYOUTS
OTHER UNDERLYING ----------------------
ANNUAL RESTRICTED OPTIONS/ ALL OTHER
NAME AND (1) COMPEN- STOCK SARS LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION($) AWARDS($) GRANTED(#) PAYOUTS($) SATION($)
- ------------------------------ ---- --------- -------- --------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas R. Casten.............. 1996 375,000 125,500 -0- 1,317(2)
President & Chief 1995 350,000 175,000 4,200 1,301(2)
Executive Officer 1994 250,000 125,000 45,900 15,690(3)
Richard E. Kessel............. 1996 320,000 85,750 -0- 1,317(2)
Executive Vice Pres. & 1995 300,000 120,000 3,200 1,301(2)
Chief Operating 1994 275,000 110,000 25,800 1,244(4)
Officer
David H. Kelly,............... 1996 185,000 37,200 -0- 1,317(2)
Vice President -- 1995 175,000 52,500 -0- 1,301(2)
Finance 1994 13,664(5) -0- (6) 25,000 -0-
Eugene E. Murphy.............. 1996 165,000 33,150 -0- 1,317(2)
Vice President and 1995 157,000 47,100 1,500 1,301(2)
General Counsel 1994 143,000 42,900 13,500 14,300(3)
James F. Lowry................ 1996 151,000 18,100 -0- 1,261(2)
Vice President -- 1995 112,500 70,500 12,500 912(2)
Acquisitions and 1994 -0-(7) -0- -0- -0-
National Accounts
Michael Weiser................ 1996 151,000 18,100 -0- 1,317(2)
Vice President -- 1995 133,000 54,900 1,300 1,295(2)
Development 1994 123,000 36,900 11,800 8,610(3)
Richard S. Strong............. 1996 167,400 43,500 -0- 1,317(2)
President -- Trigen 1995 161,200 45,942 -0- 1,301(2)
- -- Boston Corp. 1994 153,500 72,144 14,400 1,215(4)
Steven G. Smith............... 1996 167,400 139,300 -0- 1,317(2)
President -- Trigen 1995 161,200 58,032 -0- 1,301(2)
- -- Philadelphia Corp. 1994 153,500 67,846 14,400 1,215(4)
</TABLE>
- ---------------
(1) Amounts shown in this column are bonuses earned in the year shown, rather
than bonuses paid in the year shown.
(2) Amount shown is the total of the Company's contribution to the 401(k) Plan
and term life insurance premiums.
(3) Amount shown is the Company's contribution to the Cash Balance Retirement
Plan, which provides for a maximum Company contribution of 7% with
guaranteed rate of interest returns.
(4) Amount shown is the Company's contribution to the 401(k) Plan of UTC.
(5) Mr. Kelly commenced his employment in December 1994.
(6) Mr. Kelly was not eligible for a cash bonus for 1994.
(7) Mr. Lowry commenced his employment in March 1995.
No stock option/SARs were granted to any of the Named Executive Officers in
1996.
9
<PAGE> 12
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS/SAR VALUES
<TABLE>
<CAPTION>
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED ON VALUE FISCAL YEAR-END(#) FISCAL YEAR-END($)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------------- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Thomas R. Casten............... 22,560/27,540 350,000/427,696
Richard E. Kessel.............. 13,520/15,480 209,966/240,404
David H. Kelly................. 10,000/15,000 155,300/232,950
Eugene E. Murphy............... 5,400 68,850 1,500/8,100 23,295/125,793
James F. Lowry................. 5,000/7,500 77,650/116,475
Michael Weiser................. 6,020/7,080 83,491/109,952
Richard S. Strong.............. 5,760/8,640 89,453/134,179
Steven G. Smith................ 5,760/8,640 89,453/134,179
</TABLE>
STOCK PERFORMANCE INFORMATION
The following graph assumes the investment on August 12, 1994 of $100 in
each of the three investment alternatives. For the Standard & Poor's Mid-Cap 400
Index and the Peer Group, the initial investment was assumed to be allocated
among the respective companies based on their market capitalizations at the
start of the period. The graphs assume dividends were reinvested when received.
The Peer Group is composed of companies in the independent power producer
sector, and includes the Company (which represented 4.0% of the market
capitalization of the Peer Group at the start of the period). The other
companies are AES Corporation, CalEnergy Company, Inc., Destec Energy, Inc.,
Kenetech Corp., Magma Power Company and Sithe Energies USA, Inc., during the
periods that each company has been publicly traded. Excluding the Company, the
Peer Group is included in the Compensation Peer Groups which are composed of the
firms with which the Company's compensation practices were compared.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD TRIGEN ENERGY S&P MIDCAP 400
(FISCAL YEAR COVERED) CORP INDEX PEER GROUP
<S> <C> <C> <C>
8/11/94 100 100 100
DEC-94 125 99 112
DEC-95 125 130 110
DEC-96 186 155 183
</TABLE>
10
<PAGE> 13
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements (the "Employment
Agreements") with Thomas R. Casten, Richard E. Kessel, Eugene E. Murphy, Michael
Weiser and David H. Kelly (the "Executive Officers"). Except for Mr. Kelly's,
each of the Employment Agreements is for a period of three years commencing as
of August 12, 1994 and provides for the payment of a 1996 base salary at an
annual rate not less than $375,000, $320,000, $165,000 and $151,000,
respectively. The Company entered into an employment agreement with Mr. Kelly in
1996 which expires in August 1997 and which provides for a base salary of
$185,000. The base salaries are subject to review by the Compensation Committee.
The Employment Agreements also provide for the payment of incentive
compensation. An Employment Agreement for a particular Executive Officer
contains other specified benefits only if those benefits have been approved by a
member of the Board of Directors who has been authorized to review and approve
such provisions.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the ownership of the Company's common stock
as of March 24, 1997, of each person known by the Company to own beneficially
more than 5% of the common stock outstanding as of such date. Except as
otherwise indicated, all shares are owned directly. Unless otherwise noted, each
of the stockholders has sole voting and investment power with respect to the
shares shown.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
---------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
---------------------------------------------------------- --------- -------
<S> <C> <C>
Societe Lyonnaise des Eaux................................ 8,025,011(1)(2) 66.7
7, avenue de la Liberte
Nanterre, France 92022
Elyo...................................................... 8,025,011(1)(2) 66.7
235, avenue Georges Clemenceau
Nanterre, France 92000
Cofreth American Corporation.............................. 6,387,737(1)(2) 53.1
c/o John M. Malahieude
One Water Street
White Plains, New York 10601
Compagnie Parisienne de Chauffage Urbain.................. 3,154,341(1)(2) 26.2
185 Rue de Bercy
75012 Paris, France
Janus Capital Corporation................................. 2,004,590(3) 16.7
100 Fillmore Street, Suite 300
Denver, Colorado 80206
Thomas R. Casten.......................................... 1,061,284(2)(4) 8.8
One Water Street
White Plains, New York 10601
</TABLE>
- ---------------
(1) Lyonnaise owns 98% of Elyo, which directly owns 76.9% of the outstanding
voting stock of CAC, and may be deemed to own beneficially 89.6% of the
outstanding voting stock of CAC due to its ownership of stock in certain
other entities which are themselves owners of outstanding voting stock of
CAC. CPCU is a direct subsidiary of Elyo. All shares directly held by CAC or
CPCU are indirectly held by Elyo and Lyonnaise.
(2) Messrs. Casten, Kessel, Weiser and Murphy have granted to the Elyo Group the
right to direct the voting of 1,517,067 shares of their common stock under
specified circumstances, and CAC and CPCU may be deemed to beneficially own
all outstanding common stock held by such persons. See "Certain Relationship
and Related Transactions-Relationships with the Elyo Group -- Stockholders'
Agreement."
(3) Based upon information filed by Janus Capital Corporation with the
Securities and Exchange Commission in a report on Schedule 13G dated
February 10, 1997, and the Company's actual knowledge of sales of 200,000 on
February 26, 1997. Janus Capital Corporation is a registered investment
adviser to
11
<PAGE> 14
managed portfolios. As such it may be deemed to be the beneficial owner of the
shares of stock set forth above. However, it does not have a right to dividends
or to proceeds of a sale of the stock. Janus Enterprise Fund is one of the
managed portfolios and owns 734,550 of the 2,004,590 shares.
(4) Includes 43,950 shares held by his wife and children and 62,071 shares owned
by an S-corporation in which he shares beneficial ownership with two other
officers of the Company. In order to finance the purchase of 400,000 shares
of common stock from CAC and CPCU in August 1994, Mr. Casten and another
officer incurred loans from Societe Generale for which they pledged as
security 769,618 shares of common stock, and Messrs. Casten and Murphy and
two other individuals, one an officer, incurred loans from Donaldson, Lufkin
& Jenrette Securities Corporation for which they pledged as security 301,750
shares of common stock.
The following table sets forth information furnished by the following
persons and, where possible, confirmed from records of the Company, as to the
number of shares of the Company's common stock beneficially owned by the
directors and Named Executive Officers of the Company and all directors and
executive officers as a group as of March 24, 1997.
<TABLE>
<CAPTION>
AMOUNTS IN COL.2
INCLUDE THE FOLLOWING
AMOUNT AND NATURE SHARES SUBJECT TO
OF BENEFICIAL PERCENT ACQUISITION THROUGH
NAME OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS CURRENTLY EXERCISABLE OPTIONS
----------------------------- ----------------- -------- -------------------------------
<S> <C> <C> <C>
Thomas R. Casten............. 1,061,284(2)(6) 8.8 22,560
George F. Keane.............. 45,275(3) (4) 30,000
Richard E. Kessel............ 26,911 (4) 13,520
Charles E. Bayless........... 13,319(5) (4) 10,000
Michel Cassou................ 12,758(5) (4) 10,000
Patrick Desnos............... 12,627(5) (4) 10,000
Francois Faessel............. 13,019(5) (4) 10,000
Jonathan O'Herron............ 16,984(5) (4) 10,000
Michel Bleitrach............. 11,076(5) (4) 10,000
Dominique Mangin d'Ouince.... 11,206(5) (4) 10,000
Philippe Brongniart.......... -0-(7) (4) -0-
Eugene E. Murphy............. 220,630(2)(6) 1.8 1,500
David H. Kelly............... 10,711 (4) 10,000
James F. Lowry............... 5,138 (4) 5,000
Michael Weiser............... 375,984(2)(6) 3.1 6,020
All directors and executive
officers as a group (19
persons)................... 1,737,988(2) 14.4 169,660
</TABLE>
- ---------------
(1) Includes shares subject to acquisition through currently exercisable stock
options. See column 4 for amounts.
(2) See Note 4 to the preceding table.
(3) Includes 15,000 shares held by the Keane Family Trust of which George Keane
is the trustee, and 275 shares held by his wife.
(4) Less than 1% of the outstanding shares.
(5) Includes shares acquired through the 1994 Director Stock Plan.
(6) Includes 62,071 shares owned by an S-corporation in which he is a director.
(7) Mr. Brongniart received options to purchase 10,000 shares of the Company's
common stock. However, such options are not exercisable until August 24,
1997.
12
<PAGE> 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIPS WITH THE ELYO GROUP
LICENSE AGREEMENT. Elyo and the Company have entered into an Intercompany
Services and License Agreement (the "License Agreement"). Under the License
Agreement, Elyo will continue to provide to the Company on a non-exclusive basis
technical assistance and technical knowledge. The Company will have the right to
use such technical knowledge to construct, operate and maintain community energy
systems within North America as well as the right to use patents and licenses of
Elyo and its subsidiaries in connection with the generation and distribution of
electricity, chilled water and waste incineration. The Company will pay Elyo on
a quarterly basis a fee of $62,500 and all related expenses for these rights to
technical assistance, patents and licenses, as well as intercompany financial
and other professional services. Elyo has also agreed that it may make available
to the Company, upon request, new support letters or other similar credit
support, at mutually agreed rates. Pursuant to the License Agreement the Company
will have the first right to develop any corporate opportunities relating to the
application of the licensed technologies in North America that are presented to
Elyo or its subsidiaries. Elyo also agreed that neither it nor its subsidiaries
will engage in activities that may cause the Company to become or be regulated
as a public-utility holding company or a subsidiary of a public-utility holding
company under federal, state or local laws or regulations. The initial term is
for three years with automatic two year renewals, unless terminated sooner as a
result of a default or bankruptcy or related event or a change of control with
respect to Trigen. The Company reimbursed Elyo Group $279,000 for salary, bonus
and fringe benefits paid to Jean Malahieude, an Executive Officer of Trigen, and
an additional $299,000 for the services of other professionals and out of pocket
costs in 1996. Elyo has guaranteed the Company's $5 million letter of credit to
fund construction of the Chicago system. For 1996, the Company paid Elyo a fee
of $65,094 for this guarantee.
STOCKHOLDERS' AGREEMENT. In August 1994, Messrs. Casten, Kessel, Weiser
and Murphy and a former officer of the Company (collectively, the "Management
Stockholders"), CAC and CPCU (collectively, the "Elyo Stockholder Group") and
the Company entered into a stockholders' agreement (the "Stockholders'
Agreement") which regulates certain aspects of their relationship with each
other. The Stockholders' Agreement provides a right of first offer upon a
private sale (as defined therein) and piggyback registration rights to the Elyo
Stockholder Group and the Management Stockholders. In addition, commencing in
August, 1996, CAC and CPCU jointly have the right to demand, not more than once
in any 12-month period during the term of the Stockholders' Agreement, that the
Company file a registration statement with the Securities and Exchange
Commission to permit the sale of common stock owned by them. No such demand has
yet been made.
Pursuant to the Stockholders' Agreement, the Management Stockholders have
agreed to vote their common stock for election of Directors in accordance with
the instructions of the Elyo Stockholder Group, provided that the Board of
Directors would include at least two Management Stockholders and two outside
directors. Elyo has indicated to the Company that it intends to vote for the
nominees for director and to direct the Management Stockholders to so vote. At
all annual or special meetings of stockholders, the Management Stockholders have
also agreed to exercise in accordance with the instructions of the majority of
the Elyo Stockholder Group their voting rights regarding any (i) merger or
consolidation of the Company or any subsidiary of the Company, (ii) sale, lease
or other disposition of substantial assets (as defined therein) of the Company
or of any significant subsidiary (as defined therein), (iii) purchase, lease,
exchange or other acquisition of substantial assets (as defined therein), (iv)
increase or reduction of the Company's authorized capital stock, or creation of
additional classes of stock, (v) modification of the Certificate of
Incorporation or By-laws or (vi) dissolution or liquidation by the Company. The
obligations of the Management Stockholders to exercise their voting rights
pursuant to the Stockholders' Agreement will terminate upon the earlier of (a)
the termination date of the Stockholders' Agreement or (b) the third anniversary
of the initial public offering.
The Stockholders' Agreement will terminate on the earliest to occur of (i)
August 12, 1999, (ii) the liquidation, dissolution, bankruptcy or insolvency of
the Company, (iii) the liquidation, dissolution, bankruptcy or insolvency of
CAC, CPCU, Elyo, Lyonnaise or any successor thereof or (iv) the date the voting
stock held by the Elyo Stockholder Group constitutes less than 10% of the voting
rights of all outstanding voting stock of the Company.
13
<PAGE> 16
LAZARD FRERES & CO.
Jonathan O'Herron, a director of the Company, is a managing director of
Lazard Freres & Co. LLC, which acted as managing underwriter in the Company's
initial public offering in August 1994.
TRENTON PARTNERSHIP
Trigen-Trenton Company, L.P., a limited partnership ("Trigen-Trenton"),
which was formed in 1982, four (4) years before the formation of the Company,
owns and operates the community energy system in Trenton, New Jersey. Trenton
Energy Corporation, a wholly owned subsidiary of Trigen ("TEC"), is the managing
general partner of Trigen-Trenton and owns a 72.25% partnership interest in
Trigen-Trenton. Mr. Casten, who is the chief executive officer and a director of
Trigen, Mr. Weiser, who is an officer of Trigen, and Jeanne N. Murphy, whose
husband is an officer of Trigen, are general partners in Trigen-Trenton owning
approximately 1.04%, 0.46%, and 0.12%, respectively, of the partnership
interests. CDC is also a general partner of Trigen-Trenton and owns 2.08% of the
partnership interests. Messrs. Casten, Weiser and Murphy own approximately 61%,
27% and 12%, respectively, of the shares of common stock of CDC. The remaining
general and limited partnership interests in Trigen-Trenton are owned by persons
not affiliated with the Company. The Company itself owns directly a 7.48%
limited partnership interest in Trigen-Trenton.
CERTAIN PROCEDURAL INFORMATION
The Company will pay the cost of the Meeting and the costs of solicitation
of proxies, including the cost of mailing the proxy material. In addition to
solicitation by mail, officers and employees of the Company may solicit proxies
by telephone, telegram or personal interview. Such persons will receive no
additional compensation for such services. Brokerage houses, nominees,
fiduciaries and other custodians will be requested to forward solicitation
material to the beneficial owners for shares held of record by them and will be
reimbursed for their expenses by the Company.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 1998 Annual
Meeting of Shareholders, including nominees for director (who have consented to
serve), must be received by the Secretary of the Company on or prior to November
26, 1997 to be eligible for inclusion in the 1998 Proxy Statement and form of
Proxy.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, INCLUDING CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996, IS BEING MAILED TO ALL SHAREHOLDERS WITH
THIS PROXY STATEMENT. SUCH ANNUAL REPORT IS NOT PART OF THE PROXY MATERIAL. AN
ADDITIONAL COPY OF SUCH ANNUAL REPORT IS AVAILABLE TO SHAREHOLDERS WITHOUT
CHARGE UPON WRITTEN REQUEST TO: SECRETARY, TRIGEN ENERGY CORPORATION, ONE WATER
STREET, WHITE PLAINS, NEW YORK 10601.
14
<PAGE> 17
BENEFIT PLANS
Certain information regarding the Company's 1994 Stock Incentive Plan is
included in Appendix A hereto. This plan has already been adopted and approved
by the Company's shareholders and Appendix A is provided for information
purposes in accordance with the rules and regulations under the Securities
Exchange Act of 1934. Agenda Item No. Three for the Annual Meeting of
Shareholders, as stated above, is to obtain approval of the shareholders to an
amendment of this plan.
By order of the Board of Directors,
TRIGEN ENERGY CORPORATION
THOMAS R. CASTEN
President and Chief Executive Officer
Dated: March 27, 1997
15
<PAGE> 18
APPENDIX A
1994 STOCK INCENTIVE PLAN
In August 1994, the Company adopted a stock option plan (the "1994 Plan")
that provides for the grant to key employees of the Company and its subsidiaries
of options to purchase an aggregate (subject to adjustments as provided in the
1994 Plan) of 1,050,000 shares of common stock. Options to purchase an aggregate
of 743,084 shares of common stock have been granted under the 1994 Plan. All
options were granted for a term of ten years. At March 24, 1997, the last sale
price reported on the NYSE was $24.625.
The following table shows as of March 6, 1997, the options granted and
outstanding, total exercisable options and the exercise price for (i) all
individuals named in the compensation table to whom options have been granted,
(ii) all executive officers as a group, (iii) all nominees for director, (iv)
all non-executive directors as a group, and (v) all employees other than
executive officers as a group:
<TABLE>
<CAPTION>
OPTIONS TOTAL
GRANTED AND EXERCISABLE EXERCISE
OUTSTANDING OPTIONS PRICE
----------- ----------- --------
<S> <C> <C> <C>
Thomas R. Casten............................. 45,900 18,360 $ 15.75
4,200 4,200 18.75
Richard E. Kessel............................ 25,800 10,320 15.75
3,200 3,200 18.75
David H. Kelly............................... 25,000 10,000 18.50
Eugene E. Murphy............................. 8,100 0 15.75
1,500 1,500 18.75
James F. Lowry............................... 12,500 5,000 20.125
Michael Weiser............................... 11,800 4,720 15.75
1,300 1,300 18.75
Richard S. Strong............................ 14,400 5,760 15.75
Steven G. Smith.............................. 14,400 5,760 15.75
Charles E. Bayless........................... 10,000 10,000 15.75
Michel Cassou................................ 10,000 10,000 15.75
Michel Bleitrach............................. 10,000 10,000 22.13
Dominique Mangin d'Ouince.................... 10,000 10,000 22.13
All executive officers as a group............ 156,818 69,660 (1)
All non-executive directors as a group....... 100,000(2) 90,000 (3)
All employees other than executive officers,
as a group................................. 314,282 88,780 (4)
</TABLE>
- ---------------
(1) Exercise prices range from $15.75 to $21.75.
(2) Options to acquire 10,000 shares of the Company's common stock were granted
to Mr. George F. Keane, the Chairman, outside of the 1994 Plan.
(3) Exercise prices range from $15.75 to $25.00.
(4) Exercise prices range from $15.75 to $25.00.
The 1994 Plan is administered by the Compensation Committee. The
Compensation Committee has authority, consistent with the 1994 Plan, to: (a)
grant options to key employees; (b) determine when options may be granted and
the number of shares of common stock to be subject to each option; (c) determine
option prices and the method of payment; (d) determine the time when each option
becomes exercisable and the duration of the exercise period; (e) adopt, amend
and rescind rules and regulations for the administration of the 1994 Plan and
the options; and (f) decide all questions and settle all controversies and
disputes that may arise in connection with the 1994 Plan.
The participants in the 1994 Plan are selected by the Compensation
Committee and will be key employees of the Company or its subsidiaries, whether
or not they are also officers or directors. Approximately
A-1
<PAGE> 19
99 such individuals are currently included under the 1994 Plan. Directors who
are not employees are eligible only to receive options for 10,000 shares (20,000
shares for the Chairman) upon becoming directors. For purposes of the 1994 Plan,
a subsidiary is any corporation in which the Company owns, directly or
indirectly, stock possessing 50% or more of the total combined voting power of
all classes of stock.
Options may be granted under the 1994 Plan until the year 2004. To the
extent that any option granted under the 1994 Plan expires or terminates
unexercised for any reason, such shares will be available for future grants
under the 1994 Plan.
Except as otherwise provided below, all options granted under the 1994 Plan
will be subject to the following terms and conditions and to such other terms
and conditions as the Compensation Committee may determine to be appropriate to
accomplish the purposes of the 1994 Plan.
(a) Option Exercise Price. The option exercise price under each option
will be determined by the Compensation Committee and may be equal to or more
than, but in no event less than, the market price of the common stock at the
time of the grant.
(b) Period of Option. The period for exercise of an option will be
determined by the Compensation Committee and will in no event be more than 10
years from the date of grant of such option. The date of grant of an option will
be the date specified by the Compensation Committee in its resolution granting
the option.
(c) Exercise of Options. Each option will be made exercisable at such time
or times as the Compensation Committee will prescribe at the time the option is
granted. Currently, optionees, other than non-executive directors, granted
options may purchase shares of common stock in accordance with the following
schedule:
<TABLE>
<CAPTION>
PERCENT OF SHARES OF COMMON
STOCK INITIALLY SUBJECT TO OPTION
EXERCISE PERIOD WHICH MAY BE PURCHASED
----------------------------------------------------------- ---------------------------------
<S> <C>
Beginning one year from date of grant...................... 20%
Beginning two years from date of grant..................... 40%
Beginning three years from date of grant................... 60%
Beginning four years from date of grant.................... 80%
Beginning five years from date of grant.................... 100%
</TABLE>
less, in the case of each exercise period, the number of shares of common stock,
if any, previously purchased under the option; provided, however, that if at any
time there is a change in control or certain other events take place, all
participants will immediately become 100% vested in their options. For these
purposes, a "change in control" includes, but is not limited to, a purchase or
other acquisition of a controlling interest in the Company.
Non-executive directors may exercise their options beginning six months
after the grant date.
Should an optionee leave the Company for any reason, including death or
disability, options that have not vested prior to termination of employment will
expire. If the optionee dies or is disabled, vested options may be exercised
within one year following such event, and if the optionee leaves for any other
reason, vested options may generally be exercised only within three months
following termination of employment. No vested option may be transferred by the
participant otherwise than by will or by the laws of descent and distribution.
During the participant's lifetime an option may be exercised only by the
participant. When an option is exercised, the optionee must pay in full the
total exercise price for all shares purchased.
The Company may grant options under the 1994 Plan on terms differing from
those provided in the 1994 Plan, if such options are granted in substitution for
options held by employees of other corporations who concurrently become
employees of the Company or a subsidiary as the result of a merger,
consolidation or other reorganization of the employing corporation with the
Company or subsidiary, or the acquisition by the Company or a subsidiary of the
business, property or stock of the employing corporation.
A-2
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FEDERAL INCOME TAX CONSEQUENCES
The following discussion outlines generally the federal income tax
consequences of participation under the 1994 Plan. Individual circumstances may
vary these results. This brief discussion is only a general summary based on
current federal income tax laws, regulations (including proposed regulations),
and judicial and administrative interpretations thereof. The federal income tax
law and regulations are frequently amended, and such amendments may or may not
be retroactive with respect to transactions described therein. Each participant
must rely on his or her own tax counsel for advice regarding federal income tax
treatment under the 1994 Plan.
Non-Qualified Stock Options. The granting of non-qualified stock options
by the Company has no impact on the Company's financial statements until
exercise of the options. The Company generally will be entitled to a federal
income tax deduction equal to the amount of ordinary income recognized by the
recipient when such ordinary income is recognized by the recipient, provided the
Company satisfies applicable federal income tax withholding requirements. The
recipient of a non-qualified option under the 1994 Plan is not subject to any
federal income tax upon the grant of such option nor does the grant of the
option result in an income tax deduction for the Company. As a result of the
exercise of an option, the recipient generally will recognize ordinary income
upon exercise in an amount equal to the excess, if any, of the fair market value
of the shares transferred to the recipient over the exercise price. The
recipient will recognize ordinary income in the year in which the fair market
value of the shares transferred is determined under Section 83 of the Code.
Ordinarily such determination will be made on the date the shares are
transferred pursuant to the exercise of such an option. However, in certain
circumstances the determination date may be postponed. Directors and executive
officers of the Company are generally subject to Section 16(b) of the Exchange
Act. Since this section limits such person's ability to transfer such
securities, the date on which the fair market value of the shares transferred
will be deemed to be delayed for up to six months if the recipient cannot sell
the stock without being subject to liability under Section 16(b) of the Exchange
Act. Alternatively, if such person makes a timely election under Section 83(b)
of the Code, such fair market value will be determined on the date the shares
are transferred pursuant to the exercise without regard to the effect of Section
16(b) of the Exchange Act.
Depending on the period the shares of common stock are held after exercise,
the sale or other taxable disposition of shares acquired through the exercise of
a non-qualified option generally will result in a short- or a long-term capital
gain or loss equal to the difference between the amount realized on such
disposition and the fair market value of such shares when the non-qualified
option was exercised.
Special rules apply to a recipient who exercises a non-qualified option by
paying the exercise price, in whole or in part, by the transfer of shares of
common stock to the Company.
Incentive Stock Options. The recipient of an incentive stock option under
the 1994 Plan is not subject to any federal income tax upon the grant of an
incentive stock option, nor does the grant of an incentive stock option result
in an income tax deduction for the Company. Further, recipient will not
recognize income for federal income tax purposes and the Company normally will
not be entitled to any federal income tax deduction as a result of the exercise
of an incentive stock option and the related transfer of shares of common stock
to the recipient. However, the excess of the fair market value of the shares
transferred upon the exercise of the incentive stock option over the exercise
price for such shares generally will constitute an item of alternative minimum
tax adjustment to the participant for the year in which the option is exercised.
Thus, certain recipients may increase their federal income tax liability as a
result of the exercise of an incentive stock option under the alternative
minimum tax rules of the Code.
If the shares of common stock transferred pursuant to the exercise of an
incentive stock option are disposed of within two years from the date the option
is granted or within one year from the date the option is exercised, the
recipient generally will recognize ordinary income equal to the lesser of (i)
the gain recognized (i.e., the excess of the amount realized on the disposition
over the exercise price) or (ii) the excess of the fair market value of the
shares transferred upon exercise over the exercise price for such shares. If the
recipient is subject to Section 16(b) of the Exchange Act, special rules may
apply to determine the amount of ordinary income recognized upon the
disposition. The balance, if any, of the recipient's gain over the amount
treated as
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<PAGE> 21
ordinary income on disposition generally will be treated as short- or long-term
capital gain depending upon whether the holding period applicable to long-term
capital assets is satisfied. The Company normally would be entitled to a federal
income tax deduction equal to any ordinary income recognized by the participant.
If the shares of common stock transferred upon the exercise of an incentive
stock option are disposed of after the holding periods have been satisfied, such
disposition generally will result in a long-term capital gain or loss treatment
with respect to the difference between the amount realized on the disposition
and the exercise price. The Company will not be entitled to a federal income tax
deduction as a result of a disposition of such shares after these holding
periods have been satisfied.
A-4
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TRIGEN ENERGY CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 14, 1997
The undersigned hereby appoints Thomas R. Caston and George F. Keane
and either of them (with full power of substitution and resubstitution) as
Proxies for the undersigned and to vote all of the shares of the Common Stock
of TRIGEN ENERGY CORPORATION (the "Company") which the undersigned is entitled
to vote at the Annual Meeting of Shareholders of Trigen Energy Corporation to
be held on May 14, 1997 and at any and all adjournments thereof.
(TO BE SIGNED ON REVERSE SIDE)
- -------------------------------------------------------------------------------
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<TABLE>
<S> <C> <C> <C>
PLEASE MARK YOUR
A [X] VOTES AS IN THIS
EXAMPLE.
FOR all nominees WITHHOLD
(except as indicated AUTHORITY to vote
below) for all nominees
1. ELECTION NOMINEES: 2. RATIFICATION OF APPOINTMENT OF
OF [ ] [ ] Charles E. Bayless KPMG PEAT MARWICK LLP AS INDEPENDENT
DIRECTORS: Michel Cassou CERTIFIED PUBLIC ACCOUNTANTS:
Michel Bleitrach
WITHHOLD AUTHORITY TO VOTE FOR Dominique Mangin d'Ouince FOR AGAINST ABSTAIN
THE FOLLOWING NOMINEE(S):
[ ] [ ] [ ]
- --------------------------------------------
3. APPROVAL OF AMENDMENT TO 1994
STOCK INCENTIVE PLAN TO INCREASE
THE NUMBER OF SHARES OF COMMON STOCK
AVAILABLE FOR AWARDS FROM 1,050,000
TO 2,000,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF TRIGEN ENERGY
CORPORATION AND WHEN PROPERLY EXECUTED
WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION
IS GIVEN, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3. IN THEIR DISCRETION
THE PROXIES ARE AUTHORIZED TO VOTE ON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING. THE UNDERSIGNED ACKNOWLEDGES
RECEIPT OF NOTICE OF SAID ANNUAL MEETING
OF SHAREHOLDERS AND THE RELATED PROXY
STATEMENT.
Signature of Shareholder(s) Date Signature of Shareholder(s) Date
-------------------------- -------- --------------------- ------
NOTE: If the stock is registered jointly in the name of two or more persons, all should sign. Signature(s) should correspond
exactly with the name(s) as shown above. Please sign and date and return promptly in the enclosed envelope. It is not
necessary to affix postage if mailed in the United States.
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</TABLE>
