SCHEDULE 14A INFORMATION
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TECO Energy, Inc.
(Name of Registrant as Specified In Its Charter)
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[TECO Energy Logo]
March 6, 2000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 19, 2000
The Annual Meeting of the Shareholders of TECO Energy, Inc. will be
held at the principal office of the Corporation, TECO Plaza, 702 North
Franklin Street, Tampa, Florida, on Wednesday, April 19, 2000 at 11:30
a.m., for the following purposes:
1. To elect five directors.
2. To approve the Corporation's performance-based compensation
program for purposes of Section 162(m) of the Internal Revenue
Code.
3. To consider and act on such other matters as may properly come
before the meeting.
Shareholders of record at the close of business on February 11,
2000 will be entitled to vote at the meeting and at any adjournments
thereof.
Even if you plan to attend the meeting, you are requested to either
mark, sign and date the enclosed proxy card and return it promptly in
the accompanying envelope or vote by telephone or internet by following
the instructions on the proxy card. If you attend the meeting and wish
to vote in person, your proxy will not be used.
By order of the Board of Directors,
D. E. Schwartz, Secretary
TECO ENERGY, INC.
P.O. Box 111 Tampa, Florida 33601 (813) 228-4111
TECO ENERGY, INC.
P.O. Box 111, Tampa, Florida 33601
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors
of TECO Energy, Inc. (the "Corporation") to be voted at the Annual
Meeting of Shareholders of the Corporation to be held at the time and
place and for the purposes set forth in the foregoing notice. This
proxy statement and the enclosed proxy are being mailed to shareholders
beginning on or about March 6, 2000.
VOTING OF SECURITIES
As of February 11, 2000, the record date for the determination of
shareh olders entitled to vote at the meeting, the Corporation had
outstanding 126,618,249 shares of Common Stock, $1 par value ("Common
Stock" ), the only class of stock of the Corporation outstanding and
entitled to vote at the meeting. The holders of Common Stock are
entitled to one vote for each share registered in their names on the
record date with respect to all matters to be acted upon at the meeting.
The presence at the meeting, in person or by proxy, of a majority
of the shares outstanding on the record date will constitute a quorum.
Abstentions and broker non-votes will be considered as shares present
for purposes of determining the presence of a quorum.
A shareholder submitting a proxy may revoke it at any time before
it is exercised at the meeting by filing with the Secretary of the
Corporation a written notice of revocation, submitting a proxy bearing
a later date or attending the meeting and voting in person.
Shares represented by valid proxies received will be voted in the
manner specified on the proxies. If no instructions are indicated on
the proxy, the proxy will be voted for the election of the nominees for
director named below and for the approval of the performance-based
compensation criteria described below.
The affirmative vote of a majority of the Common Stock represented
at the meeting in person or by proxy will be required to elect directors
and to approve the performance-based compensation criteria. Abstentions
will be considered as represented at the meeting and, therefore, will be
the equivalent of a negative vote; broker non-votes will not be
considered as represented at the meeting.
ELECTION OF DIRECTORS
The Corporation's Bylaws provide for the Board of Directors to be
divided into three classes, with each class to be as nearly equal in
number as possible. As the term of one class of directors expires,
their successors are elected for a term of three years at each annual
meeting of shareholders. Mrs. Baldwin and Messrs. Fagan, Guinot and
Sovey have been nominated for terms expiring in 2003, and Mr. Culbreath
has been nominated to serve for a term expiring in 2001. Each of these
nominees has consented to serve if elected. If any nominee is unable to
serve, the shares represented by valid proxies will be voted for the
election of such other person as the Board may designate.
The following table contains certain information as to the nominees
and each person whose term of office as a director will continue after
the meeting. Information on the share ownership of each of these
individuals is included under " Share Ownership" below.
Name Age Principal Occupation Director Present
During Last Since (1) Term
Five Years and Other Expires
Directorships Held (1)
DuBose Ausley 62 Chairman, Ausley & 1992 2002
McMullen (attorneys),
Tallahassee, Florida;
formerly Chairman,
Macfarlane, Ausley,
Ferguson & McMullen
(attorneys) ,
Tallahassee, Florida;
also a director of
Sprint Corporation and
Capital City Bank
Group, Inc.
*Sara L. 68 Private Investor ; 1980 2000
Baldwin formerly Vic e
President, Baldwin and
Sons, Inc. (insurance
agency), Tampa ,
Florida
*Hugh L. 78 Retired; formerl y 1971 2000
Culbreath Chairman of the Board,
TECO Energy, Inc.
*Robert D. 55 Chairman of the Board, 1999 2000
Fagan President and Chief
Executive Officer,
TECO Energy, Inc.;
formerly President,
PP&L Global, Inc.
(independent power),
Fairfax, Virginia
Name Age Principal Occupation Director Present
During Last Since (1) Term
Five Years and Other Expires
Directorships Held (1)
James L. 56 President, Ferman 1985 2002
Ferman, Jr. Motor Car Company,
Inc. (automobile
dealerships), Tampa,
Florida; also Chairman
of The Bank of Tampa
and its holding
company, The Tampa
Banking Company
*Luis Guinot, 64 Partner, Shapiro and 1999 2000
Jr. Olander, P.A .
(attorneys) ,
Washington, D.C. ;
formerly United States
Ambassador to the
Republic of Costa
Rica; also a director
of Rica Foods, Inc.
Tom L. Rankin 59 Independent Investment 1997 2001
Manager; formerl y
Chairman of the Board
and Chief Executive
Officer, Lykes Energy,
Inc. (the former
holding company for
the Peoples Gas
companies) and Lykes
Bros. Inc.
*William P. 66 Chairman of the Board, 1996 2000
Sovey Newell Ru bbermaid,
Inc. (consume r
products), Freeport,
Illinois; formerly
Chairman of the Board
and Chief Executive
Officer, Newell Co.;
also a director of
Acme Metals, Inc.
Name Age Principal Occupation Director Present
During Last Since (1) Term
Five Years and Other Expires
Directorships Held (1)
J. Thomas 61 Managing Partner, The 1987 2001
Touchton Witt-Touchton Company
(private investment
partnership), Tampa,
Florida; also a
director of 18 Merrill
Lynch-sponsored mutual
funds
John A. 71 President, John A. 1991 2001
Urquhart Urquhart Associates
(managemen t
consultants) ,
Fairfield, Connecticut
and Senior Advisor to
the Chairman, Enron
Corp. (di versified
natural gas company),
Houston, Texas ;
formerly Senior Vice
President, G.E .
Industrial & Power
Systems, Genera l
Electric Company; also
a director of
Catalytica, Inc. ,
Enron Corp. and
Hubbell Incorporated
James O. 68 Retired; formerly Vice 1976 2002
Welch, Jr. Chairman, RJR Nabisco,
Inc. and Chairman,
Nabisco Brands, Inc.;
also a director of
Kmart Corporation and
Vanguard Group of
Investment Companies
____________
*Nominee for election as director
(1) All of the directors of the Corporation also serve as directors of
Tampa Electric Company, and the period of service shown includes
service on Tampa Electric Company's Board prior to the formation of
the Corporation on January 15, 1981. On April 15, 1981, the
Corporation became the corporate parent of Tampa Electric Company
as a result of a reorganization.
The Board of Directors held seven meetings in 1999. All directors
attended at least 75% of the meetings of the Board and Committees on
which they served.
The Corporation has standing Audit and Compensation Committees of
the Board of Directors. It does not have a Nominating Committee. The
Compensation Committee, which met five times in 1999, is currently
compos ed of Mrs. Baldwin and Messrs. Sovey, Urquhart and Welch
(Chairman). The Audit Committee met twice in 1999; it is currently
composed of Messrs. Ferman, Rankin and Touchton (Chairman), as well as
Edward L. Flom, who is retiring from the Board effective the date of the
annual meeting. For additional information about the Compensation
Committee and the Audit Committee, see "Executive Compensation -
Compensation Committee Report on Executive Compensation" and
"Information Concerning Auditors and Audit Committee" below.
The Corporation paid $1,002,339 for legal services rendered during
1999 by Ausley & McMullen, of which Mr. Ausley serves as Chairman. In
addition, the Corporation paid $75,000 in 1999 for the use of an outdoor
recreational and conference facility operated by a partnership in which
Mr. Ausley has an indirect 50% interest.
Lykes Bros. Steamship Co., Inc., of which Mr. Rankin served as an
executive officer until May 1996, filed for reorganization under Chapter
11 of the federal bankruptcy laws on October 11, 1995.
Compensation of Directors
Directors who are not employees or former employees of the
Corporation or any of its subsidiaries are paid an annual retainer of
$27,000 and attendance fees of $750 for each meeting of the Board of the
Corporation, $750 for each meeting of the Board of Tampa Electric
Company and $1,000 for each meeting of a Committee of the Board on which
they serve. Directors may elect to receive all or a portion of their
compensation in the form of Common Stock. Directors may also elect to
defer any of their cash compensation with a return calculated at either
the 90-day U.S. Treasury bill rate or a rate equal to the total return
on the Corporation's Common Stock.
The Corporation has an agreement with Mr. Culbreath under which he
will provide consulting services to the Corporation through December 31,
2000 for compensation at a rate of $175,000 per year. Mr. Culbreath
served as Chief Executive Officer of the Corporation until April 1989
and retired as an employee in April 1990 at which time the consulting
relationship commenced. The agreement provides a severance benefit (in
the event of termination of Mr. Culbreath's consultancy following a
change in control of the Corporation) equal to the total compensation
that would have been payable over the remaining term of the agreement.
All non-employee directors participate in the Corporation's 1997
Director Equity Plan, which allows for a variety of equity-based awards.
In 1999, each new non-employee director received an option for 10,000
shares of Common Stock and each reelected non-employee director received
a grant of 325 shares and an option for 2,000 shares of Common Stock.
The exercise price for these options is the fair market value on the
date of grant. They are exercisable immediately and expire ten years
after grant or earlier as provided in the plan following termination of
service on the Board.
SHARE OWNERSHIP
There is no person known to the Corporation to be the beneficial
owner of more than five percent of the outstanding Common Stock as of
December 31, 1999.
The following table sets forth the shares of Common Stock
beneficially owned as of January 31, 2000 by the Corporation's directors
and nominees, the individuals named in the summary compensation table
below and the Corporation's directors and executive officers as a group.
Except as otherwise noted, such persons have sole investment and voting
power over the shares. The number of shares of the Corporation's Common
Stock beneficially owned by any director or executive officer does not
exceed 1% of such shares outstanding at January 31, 2000; the percentage
beneficially owned by all directors and executive officers as a group as
of such date is 1.8%.
Name Shares(1) Name Shares(1)
Girard F. Anderson 336,667(2) J. Thomas Touchton 36,811
DuBose Ausley 42,473 John A. Urquhart 33,848(8)
Sara L. Baldwin 32,729(3) James O.Welch, Jr. 38,411(9)
Hugh L. Culbreath 62,800(4) Roger H. Kessel 147,844(2)
Robert D. Fagan 195,717(2) John B. Ramil 96,277(2)(10)
James L. Ferman, Jr. 43,400(5) William N. Cantrell 148,404(2)(11)
Edward L. Flom 37,738(6) Royston K. Eustace 96,051(2)
Luis Guinot, Jr. 10,000 All directors and
Tom L. Rankin 936,619(7) executive officers as
William P. Sovey 18,757 a group (21
persons) 2,275,886(2)(12)
(1) The amounts listed include the following shares that are subject to
options granted under the Corporation's stock option plans: Mr.
Anderson, 264,290 shares; Mr. Ausley, 24,000 shares; Mrs. Baldwin
and Messrs. Culbreath, Ferman, Flom, Touchton and Welch, 26,000
shares each; Mr. Fagan, 140,000 shares; Mr. Guinot, 10,000 shares;
Mr. Rankin, 14,000 shares; Mr. Sovey, 16,000 shares; Mr. Urquhart,
23,200 shares; Mr. Kessel, 129,018 shares; Mr. Ramil, 75,837
shares; Mr. Cantrell, 83,515 shares; Mr. Eustace, 74,574 shares;
and all directors and executive officers as a group, 994,607
shares.
(2) The amounts listed include the following shares that are held by
benefit plans of the Corporation for an officer's account: Mr.
Anders on, 9,692 shares; Mr. Fagan, 30 shares; Mr. Kessel, 3,406
shares; Mr. Ramil, 3,682 shares; Mr. Cantrell, 8,387 shares; Mr.
Eustace, 4,107 shares; and all directors and executive officers as
a group, 38,551 shares.
(3) Includes 350 shares held by a trust of which Mrs. Baldwin is a
trustee.
(4) Includes 6,000 shares owned by Mr. Culbreath's wife, as to which
shares he disclaims any beneficial interest.
(5) Includes 11,395 shares owned jointly by Mr. Ferman and his wife.
Also includes 985 shares owned by Mr. Ferman's wife, as to which
shares he disclaims any beneficial interest.
(6) Includes 1,596 shares owned by Mr. Flom's wife, as to which shares
he disclaims any beneficial interest.
(7) Includes 1,343 shares owned by Mr. Rankin's wife, as to which
shares he disclaims any beneficial interest.
(8) Includes 1,000 shares owned by Mr. Urquhart's wife, as to which
shares he disclaims any beneficial interest.
(9) Includes 2,000 shares owned by a charitable foundation of which Mr.
Welch is a trustee.
(10) Includes 1,586 shares owned jointly by Mr. Ramil and other family
members.
(11) Includes 16,600 shares owned by Mr. Cantrell's wife, as to which
shares he disclaims any beneficial interest.
(12) Includes a total of 37,280 shares owned jointly. Also includes a
total of 27,524 shares owned by spouses, as to which shares
beneficial interest is disclaimed.
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph shows the cumulative total shareholder return
on the Corporation's Common Stock on a yearly basis over the five-year
period ended December 31, 1999, and compares this return with that of
the S&P 500 Composite Index and the S&P Electric Utilities Index. The
graph assumes that the value of the investment in the Corporation's
Common Stock and each index was $100 on December 31, 1994 and that all
dividends were reinvested.
[SHAREHOLDER RETURN PERFORMANCE GRAPH]
December 31, 1999
1994 1995 1996 1997 1998 1999
TECO Energy, Inc. $100 $133 $131 $160 $167 $117
S&P Electric $100 $131 $131 $165 $191 $154
Utilities Index
S&P 500 Index $100 $138 $169 $226 $290 $351
EXECUTIVE COMPENSATION
Compensation Committee Report On Executive Compensation
The Compensation Committee of the Board of Directors, composed
entirely of independent, non-employee directors, recommends to the Board
the compensation of executive officers and administers the Corporation's
long-term incentive plan. The objective of the Corporation's
compensation program is to enhance shareholder value by attracting and
retain ing the talent needed to manage and build the Corporation's
businesses. The Committee seeks, therefore, to provide compensation
opportunities that are competitive and link the interests of
shareholders and executives.
Upon the Committee's recommendation, the Board in 1996 adopted
stock ownership guidelines of five times base salary for the CEO and
three times base salary for the other executive officers. These
guidelines allow the executives five years to acquire this amount of
stock and do not recognize stock options as shares owned.
The components of the Corporation's executive compensation program,
base salary, annual incentive awards and long-term incentive awards, are
described below.
Base Salary. Base salary is designed to provide each executive
with a fixed amount of annual compensation that is competitive with the
marketplace. The Corporation's salary structure for its executive
officers utilizes various salary grade ranges and associated midpoints.
Each executive officer is assigned to a salary grade by the Board, on
the recommendation of the Committee, based on the officer's experience
level and scope of responsibility and a market assessment conducted by
the Corporation's outside consultant, Towers Perrin, of the median
compensation paid to executives with similar positions by organizations
having comparable revenues. For purposes of this market assessment,
general industry organizations are used as the benchmark for all
executive officers except the operating unit presidents who are
benchmarked against organizations in the respective industries in which
they operate. Each year, the Committee adjusts the salary ranges based
on surveys by outside consultants of expected changes in compensation
levels at general industrial and electric utility companies and
recommends adjustments to the base salaries for the executive officers.
In 1999, adjustments were made to the base salaries for each continuing
executive officer. In making these adjustments, the Committee took into
accoun t the midpoint of the officer's assigned salary grade and the
Committee's subjective evaluation of the officer's individual
performance. For 1999, Mr. Anderson's and Mr. Fagan's base salaries
were 97% and 99% of the midpoint of their respective salary grades.
Annual Incentive Awards. The Corporation has an annual incentive
program intended to encourage actions that contribute to improved
operating and financial results which provides for incentive awards
based on the achievement of corporate and individual performance goals.
Target awards can range up to 60% of the midpoint of the salary range
for the CEO, 40-50% for the other named executive officers and lower
percentages for other officers. In setting these percentages, the
Committee used data from the market assessment referred to above. Under
the Corporation's program, additional payments of up to 50% of the
target awards may be made if the goals are exceeded; lesser amounts may
be paid if the goals are not achieved, but only if the Corporation's net
income exceeds a threshold designated for that year. The Board may
decide to adjust awards if the plan formula would unduly penalize or
reward management and, in individual cases, to vary the calculated award
based on the officer's total performance. Executive officers may elect
to receive all or a portion of their annual incentive award in the form
of Common Stock.
The 1999 objectives for all the executive officers under the
incentive program included overall operating and financial performance
targets measured by the Corporation's net income and return on equity on
an absolute basis and by the Corporation's earnings per share growth and
return on equity relative to other companies in the industry. 60% of
Mr. Anderson's and Mr. Fagan's 1999 target award was based on these
factor s. Additional quantitative targets were used for some of the
other executive officers including, in the case of certain officers,
targets relating specifically to the performance of the companies for
which they have chief operating responsibility. The financial results
for 1999 were adjusted for these purposes to exclude the favorable
impact of the Corporation's share repurchase program, as well as one-
time charges that related to management transition costs and prior
periods.
In addition to measuring performance against the 1999 quantitative
targets, the Committee evaluated each executive's performance against
qualitative objectives. These objectives focused on aspects of the
Corporation's business that directly related to the executive officer's
individual responsibilities. 40% of Mr. Anderson's and Mr. Fagan's 1999
target award was based on these qualitative objectives. In Mr.
Anderson's case, these objectives related to management succession and
actions with respect to opportunities for future growth. In Mr. Fagan's
case, these objectives related to the sharpening of strategic direction
and focus to enhance shareholder value and actions with respect to
opportunities for future growth. The Committee's review consisted of a
subjective evaluation of the officer's achievement of these objectives.
Based on this evaluation and the Corporation's 1999 net income, earnings
per share and return on equity, Mr. Anderson and Mr. Fagan received an
incentive award of 54% and 50% of the midpoint of their respective
salary grades.
Long-Term Incentive Awards. The long-term component of the
Corporation's incentive compensation program consists of equity-based
grants which have been in the form of stock options and restricted
stock. These grants are designed to create a mutuality of interest with
shareholders by motivating the CEO and the other executive officers and
key personnel to manage the Corporation's business so that the
shareholders' investment will grow in value over time. The Committee's
policy has been to base individual awards on an annual study by Towers
Perrin comparing the value of long-term incentive grants to salary
levels in general industry.
For 1999, the value of the long-term incentive grants to executive
officers was split evenly between stock options and performance-based
restricted stock. The payout for this performance-based restricted
stock is dependent upon the total return of the Common Stock over a
three-year period relative to that of the Dow Jones Electric Utility
Index. If the Common Stock underperforms this index during the three-
year period, all of the shares are forfeited; if the total return is
equal to that of the index, 1/2 of the shares are forfeited; and if the
total return exceeds that of the index by 30 percentage points or more,
the shares are paid out at 200% of the amount awarded. Payouts can also
occur at varying levels if the total return is greater than that of the
index by less than 30 percentage points.
The Committee does not normally consider the amount of an
individual's outstanding or previously granted options or shares in
determining the size of the grant. The 85,790 options and the 15,141
shares of performance-based restricted stock granted to Mr. Anderson in
April of 1999 reflected the policies described above and, as in the case
of the other executive officers, the results of the Committee's review
of his performance conducted when it considered his base salary for
1999. The 140,000 options and 25,000 shares of performance-based
restri cted stock granted to Mr. Fagan in May of 1999 reflect the
recommendations of Towers Perrin as to a competitive long-term incentive
package with a payout that is dependent upon share price performance.
The exercise prices for Mr. Fagan's options were fair market value
("FMV") for one-third, 105% of FMV for one-third and 110% of FMV for
one-third of the options. To replace restricted stock from Mr. Fagan's
previous employer that was forfeited as a result of his employment by
the Corporation, the Committee made a one-time grant to Mr. Fagan of
14,015 shares of restricted stock that will vest after five years of
continued employment.
With respect to qualifying compensation paid to executive officers
under Section 162(m) of the Internal Revenue Code, the Corporation does
not expect to have any significant amount of compensation exceeding the
$1-million annual limitation. Accordingly, the Committee has
recommended that the Corporation continue to structure its executive
compensation program to meet the objectives described in this report.
Upon approval by the shareholders of the proposal set forth below
relating Section 162(m), the performance-based restricted stock will
be eligible for an exemption as performance-based incentive compensation
pursuant to Section 162(m). Compensation attributable to the
Corporation's stock options will not be subject to the Section 162(m)
limit because of the performance-based exemption.
By the Compensation Committee,
James O. Welch, Jr. (Chairman)
Sara L. Baldwin
William P. Sovey
John A. Urquhart
The following tables set forth certain compensation information for
both of the individuals who served as Chief Executive Officer of the
Corporation and each of the four other most highly compensated executive
officers of the Corporation and its subsidiaries in 1999.
Summary Compensation Table
Long-Term
Annual Compensation
Compensation Awards
Other
Annual Restricted Shares All Other
Name and Compen- Stock Underlying Compen-
Principal Position Year Salary Bonus(1) sation(2) Awards(3) Options/SARs(#) sation(4)
Girard F. Anderson 1999 $500,000 $280,000 85,790 $19,347
Former Chairman, 1998 500,000 270,500 $360,713 66,500 20,472
President and Chief 1997 418,250 193,247 386,613 17,487
Executive Offiver(5)
Robert D. Fagan 1999 253,333 266,321 $243,070 328,477 140,000 2,111
Chairman, President
and Chief Executive
Officer
Roger H. Kessel 1999 290,000 81,688 30,918 12,378
Former Executive 1998 271,500 115,000 99,675 25,100 11,286
Vice President(6) 1997 258,500 100,000 179,763 11,161
John B. Ramil 1999 255,000 125,982 36,807 10,317
President of Tampa 1998 237,500 147,500 132,208 16,830 10,490
Electric Company 1997 175,833 48,000 96,038 7,975
William N. Cantrell 1999 255,000 101,579 33,485 10,776
President-Peoples 1998 230,000 115,000 132,208 16,830 9,342
Gas Companies 1997 180,000 75,000 118,200 8,052
Royston K. Eustace 1999 232,500 70,856 27,849 9,998
Senior Vice 1998 218,750 85,000 79,048 20,125 9,166
President-Business 1997 200,000 67,500 130,513 8,844
Development
(1) Since the portion of each executive officer's annual bonus that
is based on the Corporation's 1999 earnings per share growth and
return on equity relative to that of other companies in the
industry is determined using comparative data that was not
available at the time of printing of this document, this portion
of the annual bonus for 1999 will be reported in the 2001 proxy
statement. Messrs. Fagan and Cantrell elected to receive their
1999 annual incentive award in the form of Common Stock.
(2) Included in the reported amount is $239,472 for Mr. Fagan's
relocation expenses and an associated tax gross-up.
(3) The reported values of the restricted stock awards were
determined using the closing market price of the Common Stock on
the date of grant. Restricted stock holdings and the values
thereof based on the closing price of the Common Stock on
December 31, 1999 were as follows: Mr. Fagan, 39,015 shares
($724, 216); Mr. Ramil, 15,171 shares ($281,612); Mr. Cantrell,
15,485 shares ($287,440); and Mr. Eustace, 17,370 shares
($322,431). Holders of restricted stock receive the same
dividends as holders of other shares of Common Stock.
(4) The reported amounts for 1999 consist of premiums paid by the
Corporation to the Executive Supplemental Life Insurance Plan
($248 for Mr. Fagan and $372 for each of the other named
executive officers), with the balance in each case being employer
contributions under the TECO Energy Group Retirement Savings Plan
and Retirement Savings Excess Benefit Plan.
(5) Mr. Anderson retired from the Corporation effective November 30,
1999.
(6) Mr. K essel retired from the Corporation effective December 31,
1999.
Option/SAR Grants in Last Fiscal Year
Individual Grants
Number % of Total
Of Shares Options/SARs Exercise Grant
Underlying Granted to or Base Date
Options/SARs Employees in Price Expiration Present
Name Granted(1) Fiscal Year Per Share Date Value(2)
Girard F. Anderson 85,790 7.41 $21.4063 04/20/09 $324,133
Robert D. Fagan 46,667 4.03 21.4063 05/23/09 176,318
46,667 4.03 22.4766 05/23/09 172,127
46,666 4.03 23.5469 05/23/09 167,573
Roger H. Kessel 30,918 2.67 21.4063 04/20/09 116,815
John B. Ramil 36,807 3.18 21.4063 04/20/09 139,065
William N. Cantrell 33,485 2.89 21.4063 04/20/09 126,513
Royston K. Eustace 27,849 2.41 21.4063 04/20/09 105,219
(1) The options are exercisable in three equal annual installments
beginning one year from the date of grant.
(2) The values shown are based on the Black-Scholes valuation model and
are stated in current annualized dollars on a present value basis.
The key assumptions used for purposes of this calculation include the
following: (a) a 5.56% discount rate; (b) a volatility factor based
upon the average trading price for the 36-month period ending March
31, 1999; (c) a dividend factor based upon the 3-year average dividend
paid for the period ending March 31, 1999; (d) the 10-year option
term; and (e) an exercise price equal to the fair market value on the
date of grant (except in the case of Mr. Fagan's grants, 93,333 of
which were granted with an exercise price above the fair market value
on the date of grant). The values shown have not been reduced to
refl ect the non-transferability of the options or the vesting or
forfeiture provisions. The actual value an executive may realize will
depend upon the extent to which the stock price exceeds the exercise
price on the date the option is exercised. Accordingly, the value,
if any, realized by an executive will not necessarily be the value
determined by the Black-Scholes model.
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Value
Number of Value of
Shares Underlying Unexercised
Unexercised In-The-Money
Options/SARs Options/SARs
At Year-End at Year-End
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized($) Unexercisable Unexercisable
Girard F. Anderson 0 0 264,290/0 0/0
Robert D. Fagan 0 0 0/140,000 0/0
Roger H. Kessel 0 0 129,018/0 $18,806/0
John B. Ramil 0 0 39,030/36,807 0/0
William N. Cantrell 0 0 54,030/33,485 $23,339/0
Royston K. Eustace 0 0 46,725/27,849 0/0
Long-Term Incentive Plans - Awards in Last Fiscal Year
Number of Performance or
Shares, units other period
or until maturation
Name other rights or payout Threshold(#) Target(#) Maximum(#)
Girard F. Anderson 15,141 April 1, 1999 to 7,571 15,141 30,282
March 31, 2002
Robert D. Fagan 25,000 April 1, 1999 to 12,500 25,000 50,000
March 31, 2002
Roger H. Kessel 5,457 April 1, 1999 to 2,729 5,457 10,914
March 31, 2002
John B. Ramil 6,496 April 1, 1999 to 3,248 6,496 12,992
March 31, 2002
William N. Cantrell 5,910 April 1, 1999 to 2,955 5,910 11,820
March 31, 2002
Royston K. Eustace 4,915 April 1, 1999 to 2,458 4,915 9,830
March 31, 2002
Executive Officers as a 60,193 April 1, 1999 to 30,097 60,193 120,386
group (9 persons) March 31, 2002
Non-Executive Officers 17,294 April 1, 1999 to 8,647 17,294 34,588
and Employees as a March 31, 2002
group (16 persons)
For additional information about the 1999 awards of performance-based
restricted stock, see "Executive Compensation - Compensation Committee
Report on Executive Compensation - Long-Term Incentive Plans" above.
Pension Table
The following table shows estimated annual benefits payable under
the Corporation's pension plan arrangements for the named executive
officers other than Messrs. Fagan, Kessel and Eustace.
Years of Service
Final
Average Earnings 5 10 15 20 or More
$300,000 ...... $45,000 $90,000 $135,000 $180,000
350,000 ...... 52,500 105,000 157,500 210,000
400,000 ...... 60,000 120,000 180,000 240,000
450,000 ...... 67,500 135,000 202,500 270,000
500,000 ...... 75,000 150,000 225,000 300,000
550,000 ...... 82,500 165,000 247,500 330,000
600,000 ...... 90,000 180,000 270,000 360,000
650,000 ...... 97,500 195,000 292,500 390,000
700,000 ...... 105,000 210,000 315,000 420,000
750,000 ...... 112,500 225,000 337,500 450,000
800,000 ...... 120,000 240,000 360,000 480,000
850,000 ...... 127,500 255,000 382,500 510,000
900,000 ...... 135,000 270,000 405,000 540,000
950,000 ...... 142,500 285,000 427,500 570,000
1,000,000 ...... 150,000 300,000 450,000 600,000
The annual benefits payable to each of the named executive
officers are equal to a stated percentage of such officer's final
average earnings multiplied by his number of years of service, up to
a stated maximum. Final average earnings are based on the greater of
(i) the officer's final 36 months of earnings or (ii) the officer's
highest three consecutive calendar years of earnings out of the five
calendar years preceding retirement. The amounts shown in the table
are based on 3% of such earnings and a maximum of 20 years of service.
The amount payable to Mr. Fagan is based on 20% of earnings plus 4% of
earnings for each year of service, up to a maximum of 60% of earnings.
The amount payable to Mr. Kessel is based on 5% of earnings and his 10
years of service. The amount payable to Mr. Eustace is based on 4% of
earnings for each year of service, up to a maximum of 60% of earnings.
The earnings covered by the pension plan arrangements are the same
as those reported as salary and bonus in the summary compensation table
above. Years of service for the named executive officers are as
follows: Mr. Anderson (40 years), Mr. Fagan (1 year), Mr. Kessel (10
years), Mr. Ramil (23 years), Mr. Cantrell (24 years) and Mr. Eustace
(12 years). The pension benefit is computed as a straight-life annuity
commencing at the officer's normal retirement age and is reduced by the
officer's Social Security benefits. Messrs. Anderson and Kessel
reached their normal retirement age. The normal retirement age is 63
for Messrs. Fagan, Cantrell and Eustace and 63 and 2 months for
Mr. Ramil.
The present value of the portion of the officer's pension benefit
that is in excess of the amount payable under the Corporation's
qualified retirement plan is, at the election of the officer, payable
in the form of a lump sum. The pension plan arrangements also provide
death benefits to the surviving spouse of an officer equal to 50% of
the benefit payable to the officer. If the officer dies during
employment before reaching his normal retirement age, the benefit is
based on the officer's service as if his employment had continued until
such age. The death benefit is payable for the life of the spouse.
Employment and Change in Control Arrangements
The Corporation has severance agreements with the named executive
officers under which payments will be made under certain circumstances
in connection with a change in control of the Corporation. A change
in control means in general an acquisition by any person of 30% or more
of the Common Stock, a change in a majority of the directors, a merger
or consolidation of the Corporation in which the Corporation's
sharehold ers do not have at least 65% of the voting power in the
surviving entity or a liquidation or sale of the assets of the
Corporation. Each of these officers is required, subject to the terms
of the severance agreements, to remain in the employ of the Corporation
for one year following a potential change in control (as defined)
unless a change in control earlier occurs. The severance agreements
provide that in the event employment is terminated by the Corporation
without cause (as defined) or by one of these officers for good reason
(as defined) in contemplation of or following a change in control, or
if the officer terminates his employment for any reason during the
thirteenth month following a change in control, the Corporation will
make a lump sum severance payment to the officer of three times annual
salary and bonus. In such event, the severance agreements also provide
for: (i) a cash payment equal to the additional retirement benefit
which would have been earned under the Corporation's retirement plans
if employment had continued for three years following the date of
termination, (ii) participation in the life, disability, accident and
health insurance plans of the Corporation for such period except to the
extent such benefits are provided by a subsequent employer and (iii)
a payment to compensate for the additional taxes, if any, payable on
the benefits received under the severance agreements and any other
benefits contingent on a change in control as a result of the
application of the excise tax associated with Section 280G of the
Internal Revenue Code. In addition, the terms of the Corporation's
stock options and restricted stock provide for vesting upon a change
in control.
The Corporation has an agreement with Mr. Fagan which provides
that, within the first three years of employment, if his employment is
terminated by the Corporation without cause or by Mr. Fagan for good
reason, he will receive severance benefits equal to two times annual
salary and bonus. Any payments under this agreement would be offset
against the amount payable under Mr. Fagan's change-in-control
severance agreement.
APPROVAL OF THE CORPORATION'S
PERFORMANCE-BASED COMPENSATION PROGRAM
FOR PURPOSES OF SECTION 162(m)
OF THE INTERNAL REVENUE CODE
Background
The Corporation is proposing that shareholders approve the
material terms under which the Corporation's stock-based awards that
are subject to performance criteria ("performance awards") are made.
Approval by the shareholders will ensure that the Corporation's tax
deduction for compensation paid through performance awards is not
limited by the Internal Revenue Code's (the "Code") $1,000,000 limit
on deductible compensation.
Section 162(m)
Section 162(m) of the Code denies an employer a deduction for
compensation in excess of $1,000,000 paid to "covered employees"
(generally, the named executives in the summary compensation table) of
a publicly held company, unless the compensation is subject to
performance goals and, in the case of awards other than stock options
and stock appreciation rights granted at not less than fair market
value, the material terms of the goals have been approved by
shareholders.
Performance Awards
The Corporation's performance awards are made under its 1996
Equity Incentive Plan which was approved by the shareholders on April
17, 1996 (the "Plan"). A committee (the "Committee") consisting of not
less than three independent members of the Board of Directors appointed
by the Board, currently the Compensation Committee, administers the
Plan. The Plan provides for issuance of several types of equity
compensation awards, including performance shares and performance-
accele rated restricted stock. Performance shares are a type of
restricted stock with vesting (nonforfeitability) and/or payout
dependent upon the level of attainment of specified performance goals.
Performance-accelerated restricted stock vests at a specified date,
unless the vesting is accelerated to an earlier date upon attainment
of performance goals.
In 1999, the Corporation granted performance share awards to 28
employees. Information on these awards is included under "Executive
Compensation - Long Term Incentive Plans - Awards in Last Fiscal Year"
above. These awards provide for the issuance of Common Stock, subject
to forfeiture if the Corporation's performance over a three-year period
does not meet the specified goal, and subject to an increase in the
number of shares awarded if the Corporation's performance exceeds the
goal. The performance goal for these awards is based on the total
return on the Common Stock as compared with the total return on the Dow
Jones Electric Utility Index.
Material terms of performance goals
One of the requirements for exempting performance-based
compensation from Section 162(m) is that shareholders approve the
material terms of the performance goals. This requirement does not
apply to awards of stock options or stock appreciation rights, which
the Plan requires to be granted at not less than fair market value,
since by their nature any value from those awards is attributable to
an increase in the price of the Common Stock. Therefore, the
performance awards to which this proposal relates are performance
awards other than stock options and stock appreciation rights granted
at fair market value.
One of the material terms of the performance goals is the
definition of the group of employees eligible to receive performance
awards. Since the shareholders have already approved the Plan, they
have already approved the group to whom the Committee in its discretion
may make awards: employees of the Corporation or its affiliates who
are capable of contributing significantly to the successful performance
of the Corporation. Currently, approximately 150 employees are
eligible to receive awards under the Plan.
The other proposed material terms of the performance goals which
the shareholders are being asked to approve are as follows:
Business criteria on which performance goal is based
The business criteria on which the Committee may set performance
goals for performance awards include one or more of the following
criteria selected by the Committee, measured either absolutely or
relative to an index: total shareholder return; stock price; earnings
per share; net earnings; consolidated pre-tax earnings; revenues;
operating income; earnings before interest and taxes; cash flow; return
on equity; return on net assets employed; value created; operating
margin ; and strategic business criteria, consisting of one or more
objectives based on meeting specified market penetration, geographic
business expansion goals, cost targets, and goals relating to
acquisitions or divestitures.
Maximum amount of compensation payable if performance goals are
met
The maximum number of shares with respect to which performance
awards (other than stock options and stock appreciation rights granted
at not less than fair market value) may be made to any one person in
any one calendar year will be limited to 1,000,000, subject to the
Plan's overall limit on the number of shares remaining available for
all forms of equity compensation awards to all participants in the
Plan. The maximum amount of compensation that would be attributable
to performance awards is dependent on the future price of the Common
Stock.
Effects of shareholder approval
If the shareholders approve the material terms of the performance
goals, performance awards consistent with those material terms will be
exempt from Section 162(m)'s $1,000,000 limit on compensation that is
tax-de ductible by the Corporation. The shareholders would need to
reapprove the material terms within five years of this approval, or
sooner if the Committee changes the material terms from those that the
shareholders have approved, in order to continue the Section 162(m)
exemption. If the shareholders do not approve the material terms, (i)
such portion of the performance awards previously granted as would
cause the 162(m) limit to be exceeded would be forfeited and (ii) the
tax deductibility of any performance awards that may be granted in the
future (other than stock options and stock appreciation rights granted
at not less than fair market value) would be limited by Section 162(m).
The Board of Directors recommends a vote FOR this proposal.
INFORMATION CONCERNING AUDITORS AND AUDIT COMMITTEE
The Audit Committee reviews the scope of the audit procedures
followed by the independent accountants and the results of their yearly
audit, including the audited financial statements. The Committee also
reviews the Corporation's internal auditing policies and procedures and
the adequacy of the system of internal accounting and financial
controls. After its review of the yearly audit, the Committee
recommends the independent accountants to be appointed for the
following year.
Based on the Audit Committee's recommendation in April 1999, the
Board reappointed PricewaterhouseCoopers LLP to serve as independent
accountants and to audit the Corporation's financial statements for
1999. Consistent with past procedures, independent accountants for the
current fiscal year will be appointed by the Board at its April 2000
meeting.
Representatives of PricewaterhouseCoopers LLP are expected to be
present at the Annual Meeting of Shareholders and to be available to
respond to appropriate questions. They will also have the opportunity
to make a statement if they so desire.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented pursuant to
Rule 14a-8 under the Securities Exchange Act of 1934 (the "Exchange
Act") for inclusion in the Corporation's proxy materials relating to
the Annual Meeting of Shareholders in the year 2001 must be received
on or before November 3, 2000. In order for a shareholder proposal
made outside of Rule 14a-8 under the Exchange Act to be considered
"timely" within the meaning of Rule 14a-4(c) of the Exchange Act, such
proposal must be received by the Corporation not later than January 19,
2001. Any such proposals should be sent to: Secretary, TECO Energy,
Inc., P.O. Box 111, Tampa, Florida 33601.
ADVANCE NOTICE PROVISIONS FOR SHAREHOLDER PROPOSALS AND NOMINATIONS
The Bylaws of the Corporation provide that in order for a
shareholder to bring business before or propose director nominations
at an annual meeting, the shareholder must give written notice to the
Secretary of the Corporation not later than 90 days in advance of the
anniversary date of the immediately preceding annual meeting of
shareholders. The notice must contain specified information about the
proposed business or each nominee and the shareholder making the
proposal or nomination. If the annual meeting is scheduled for a date
that is not within 30 days before or after such anniversary date, the
notice given by the shareholder must be received no later than the
tenth day following the day on which the notice of such annual meeting
date was mailed or public disclosure made, whichever first occurs.
SOLICITATION OF PROXIES
In addition to the solicitation of proxies by mail, proxies may
be solicited by telephone, facsimile or in person by regular employees
of the Corporation. The Corporation has also retained Morrow & Co.,
Inc. to assist in the solicitation of proxies for a fee of $6,500 plus
out-of-pocket expenses. All expenses of this solicitation, including
the cost of preparing and mailing this proxy statement, and the
reimbursement of brokerage houses and other nominees for their
reasonable expenses in forwarding proxy material to beneficial owners
of stock, will be paid by the Corporation.
OTHER MATTERS
The Board of Directors does not know of any business to be
presented at the meeting other than the matters described in this proxy
statement. If other business is properly presented for consideration
at the meeting, the enclosed proxy authorizes the persons named therein
to vote the shares in their discretion.
Dated: March 6, 2000
Exhibit A
[TECO ENERGY LOGO]
2000 Annual Shareholders' Meeting
Wednesday April 19, 2000, 11:30 A.M.
TECO Plaza
702 North Franklin Street
Tampa, Florida 33602
Attached below is a proxy card for the 2000 Annual Meeting of
Shareholders of TECO Energy, Inc.
You may vote by Telephone, by Internet, or by Mail.
To vote by Telephone or Internet, see instructions on reverse side.
To vote by Mail, please return your proxy in the enclosed Business Reply
Envelope.
P.O. Box 9373 Boston, MA 02205-9944.
DETACH HERE
------------------------------------------------------------------------
PROXY
TECO ENERGY, INC.
Proxy for Annual Meeting of Shareholders, April 19, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TECO ENERGY, INC.
The undersigned hereby constitutes and appoints DuBose Ausley, Hugh L.
Culbreath and Robert D. Fagan and any one or more of them, attorneys and
proxies of the undersigned, with full power of substitution to each
attorney and substitute, for and in the name of the undersigned to
appear and vote all shares of Common Stock of TECO Energy, Inc. that the
undersigned is entitled to vote at the Annual Meeting of Shareholders of
the Corporation to be held on April 19, 2000 at 11:30 A.M., and at any
and all adjournments thereof, with all powers the undersigned would have
if personally present, hereby revoking all proxies previously given.
SEE (THIS PROXY IS CONTINUED AND IS TO BE SIGNED ON REVERSE SIDE) SEE
REVERSE REVERSE
SIDE SIDE
[TECO ENERGY LOGO]
702 North Franklin Street
Tampa, FL 33602
/Vote by Telephone/ /Vote by Internet/
It's fast, convenient, and immediate! It's fast, convenient, and your
Call Toll-Free on a Touch-Tone Phone vote is immediately confirmed
1-877-PRX-VOTE (1-877-779-8683) and posted.
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement and Proxy Card. Statement and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/te
For shareholders outside the
United States call collect on a
touch-tone phone 1-201-536-8073. 3. Enter your 14-digit Voter
Control Number located on
your Proxy Card above your
3. Enter your 14-digit Voter Control name.
Number located on your Proxy Card
above your name. 4. Follow the instructions
provided.
4. Follow the recorded instructions.
Your vote is important! Your vote is important!
Call 1-877-PRX-VOTE anytime! Go to http://
www.eproxyvote.com/te
anytime!
Do not return your Proxy Card if you are voting by Telephone or Internet
DETACH HERE
------------------------------------------------------------------------
/X/ Please mark votes as in this example.
1. ELECTION OF DIRECTORS
The Board Recommends a Vote FOR all Nominees.
Instructions - To vote against any individual nominee(s), mark Box (C)
and write the name(s) of such nominee(s) above the line provided below.
Nominees: (01) S.L. Baldwin, (02) H.L. Culbreath, (03) R.D. Fagan,
(04) L. Guinot, Jr. and (05) W.P. Sovey.
/ / (A) FOR ALL NOMINEES / / (B) AGAINST ALL NOMINEES
/ / (C)
FOR ALL NOMINEES EXCEPT
2. PROPOSAL TO APPROVE PERFORMANCE-BASED
COMPENSATION PROGRAM
The Board Recommends a Vote AGAINST the Proposal.
/ / FOR / / AGAINST
/ / ABSTAIN
In their discretion, the proxies are also authorized to vote upon
such other matters as may properly come before the meeting.
This proxy will be voted as specified, or if no specification is
made, FOR Proposals 1 and 2.
PLEASE SIGN AND MAIL THIS PROXY TODAY
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
INSTRUCTIONS - Signatures should correspond exactly with the name or names
of Shareholders as they appear on this proxy. Persons signing as Attorney,
Executor, Administrator, Trustee or Guardian should give their full titles.
Execution on behalf of corporations should be by a duly authorized officer
and on behalf of partnerships by a general partner or in the firm name by
another duly authorized person.
Signature: _____________ Date: _____ Signature: ____________ Date: _____