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TECO ENERGY, INC.
March 7, 1996
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 17, 1996
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 17, 1996 at 11:30
a.m., for the following purposes:
1. To elect six directors.
2. To approve the 1996 Equity Incentive Plan.
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 16,
1996 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 mark,
sign and date the enclosed proxy and to return it promptly in the
accompanying envelope. If you attend the meeting and wish to vote in
person, your proxy will not be used.
By order of the
Board of Directors,
R. H. Kessel,
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
p r o xy statement and the enclosed proxy are being mailed to
shareholders beginning on or about March 7, 1996.
VOTING OF SECURITIES
As of February 16, 1996, the record date for the determination of
shareholders entitled to vote at the meeting, the Corporation had
outstanding 116,960,307 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 giving 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 or a duly executed proxy
bearing a later date or by 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 six
nominees for director named below and for the approval of the 1996
Equity Incentive Plan.
The affirmative vote of a majority of the Common Stock of the
Corporation represented at the meeting in person or by proxy will be
required to elect directors and to approve the 1996 Equity Incentive
Plan. For each of these matters, (i) abstentions will be considered
as represented at the meeting and, therefore, will be the equivalent
of a negative vote and (ii) 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
1
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. Mr. Sovey has been nominated for a term
expiring in 1997, and Messrs. Ausley, Ferman, Hendrix, Ryan and Welch
have been nominated for a term expiring in 1999. Each nominee 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.
2
Principal Occupation During Present
Last Five Years and Director Term
Name Age Other Directorships Held(1) Since(1) Expires
Girard F. Anderson 63 President and Chief Operating Officer, 1994 1998
TECO Energy, Inc.; formerly Executive
Vice President-Utility Operations, TECO
Energy, Inc. and President and Chief
Operating Officer, Tampa Electric Company
*DuBose Ausley 58 Chairman, Macfarlane, Ausley, Ferguson & 1992 1996
McMullen (attorneys), Tallahassee, Florida;
formerly President, Ausley, McMullen, McGehee,
Carothers & Proctor, P.A. (attorneys),
Tallahassee, Florida; also a director of Sprint
Corporation and Capital City Bank Group Inc.
Sara L. Baldwin 64 Private Investor; formerly Vice President, 1980 1997
Baldwin and Sons, Inc. (insurance agency),
Tampa, Florida
Hugh L. Culbreath 74 Retired; formerly Chairman of the Board, 1971 1997
TECO Energy, Inc. and Tampa Electric
Company
*James L. Ferman, Jr. 52 President, Ferman Motor Car Company, Inc. 1985 1996
(automobile dealerships), Tampa, Florida;
also a director of The Bank of Tampa and its
holding company, The Tampa Banking Company
Edward L. Flom 66 Retired; formerly Chairman of the Board 1980 1997
and Chief Executive Officer, Florida Steel
Corporation (production and fabrication
of steel products), Tampa, Florida; also
a director of Outback Steakhouse, Inc.
Henry R. Guild, Jr. 67President and Director, Guild, Monrad & 1980 1997
Oates, Inc. (private trustees and family
investment advisers), Boston, Massachusetts
Timothy L. Guzzle 59 Chairman of the Board and Chief 1988 1998
Executive Officer, TECO Energy, Inc.;
also a director of NationsBank Corporation
*Dennis R. Hendrix 56 Chairman of the Board and formerly Chief 1995 1996
Executive Officer and President, Panhandle
Eastern Corporation (interstate gas pipeline),
Houston, Texas; also a director of Texas Eastern
Products Pipeline Company, general partner of
TEPPCO Partners, LP, a publicly traded limited
partnership
3
Principal Occupation During Present
Last Five Years and Director Term
Name Age Other Directorships Held(1) Since(1) Expires
*Robert L. Ryan 52 Senior Vice President and Chief Financial 1991 1996
Officer, Medtronic, Inc. (medical devices
manufacturer), Minneapolis, Minnesota;
formerly Vice President-Finance, Union
Texas Petroleum Holdings, Inc. (independent
oil and gas exploration and production),
Houston, Texas; also a director of Riverwood
International Corporation and Inter-Regional
Financial Group, Inc.
*William P. Sovey 62 Vice Chairman and Chief Executive Officer 1996 1996
and formerly President and Chief Operating
Officer, Newell Co. (consumer products),
Freeport, Illinois; also a director of Acme
Metals Co.
J. Thomas Touchton 57 Managing Partner, The Witt-Touchton 1987 1998
Company (private investment partnership),
Tampa, Florida; also a director of 19
Merrill Lynch-sponsored mutual funds
John A. Urquhart 67 President, John A. Urquhart Associates 1991 1998
(management consultants), Fairfield,
Connecticut and Vice Chairman and
Director of Enron Corp. (diversified
natural gas company), Houston, Texas;
formerly Senior Vice President, G. E.
Industrial & Power Systems, General Electric
Company; also a director of Hubbel Inc. and
Aquarion Company
*James O. Welch, Jr. 64 Retired; formerly Vice Chairman, RJR 1976 1996
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 five meetings in 1995. All directors
attended at least 75% of the meetings of the Board and Committees on
which they served.
4
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 four times in 1995, is currently
composed of Mrs. Baldwin and Messrs. Guild, Urquhart and Welch
(Chairman). The Audit Committee, which met twice in 1995, is
currently composed of Messrs. Ferman, Flom, Ryan and Touchton
(Chairman). For additional information about the Compensation
Committee and the Audit Committee, see "Executive Compensation
C o m pensation Committee Report on Executive Compensation and
Information Concerning Auditors and Audit Committee below.
Macfarlane, Ausley, Ferguson & McMullen, of which Mr. Ausley is
the Chairman, rendered legal services to the Corporation during 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 defer these amounts with
earnings credited 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. This benefit is payable under the same circumstances
as the benefits described under "Executive Compensation Employment and
Severance Agreements" below and will be reduced to the extent that
such benefit, taking into account any other compensation provided by
the Corporation, would not be deductible by the Corporation pursuant
to Section 280G of the Internal Revenue Code.
1991 Director Stock Option Plan. The Corporation has a Director
Stock Option Plan in which all non-employee directors participate.
The plan provides automatic annual grants of options to purchase
shares of Common Stock to each non-employee director serving on the
Board at the time of grant. The exercise price is the fair market
value of the Common Stock on the date of grant, payable in whole or in
part in cash or Common Stock. The plan provides for an initial grant
of options for 10,000 shares to each new director and an annual grant
of options for 2,000 shares to each continuing director. Grants are
made on the first trading day of the Common Stock after each annual
meeting of shareholders. The options are exercisable immediately and
expire ten years after grant or earlier as provided in the plan
following termination of service on the Board.
5
Directors Retirement Plan. All directors who have completed 60
months of service as a director and who are not employees or former
employees of the Corporation or any of its subsidiaries are eligible
to participate in a Directors Retirement Plan. Under this plan, a
retired director or his or her surviving spouse will receive a monthly
retirement benefit at the rate of $20,000 per year. Such payments
will continue for the lesser of the number of months the director
served as a director or 120 months, but payments will in any event
cease upon the death of the director or, if the director s spouse
survives the director, the death of the spouse.
SHARE OWNERSHIP
The following table sets forth information with respect to all
persons who are known to the Corporation to be the beneficial owner of
more than five percent of the outstanding Common Stock as of December
31, 1995.
Name and Address Shares Percent of Class
Franklin Resources, Inc.
("Franklin") 6,410,550 (1) 5.5%
777 Mariners Island Blvd.
San Mateo, California 94404
(1) Franklin's ownership information is based on its Schedule 13G
filed with the Securities and Exchange Commission, dated
February 12, 1996, which reported that Franklin had sole voting
power over 6,406,150 of these shares and shared investment power
over all of these shares.
The following table sets forth the shares of Common Stock
beneficially owned as of January 31, 1996 by the Corporation s
directors and nominees, its executive officers named in the summary
compensation table below and its 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 or by all directors and executive officers as a
group does not exceed 1% of such shares outstanding at January 31,
1996.
Name Shares (1) Name Shares (1)
Girard F. Anderson 144,368 (2)(3) Robert L. Ryan 20,000 (10)
DuBose Ausley 21,527 William P. Sovey 1,000
Sara L. Baldwin 20,918 (4) J. Thomas Touchton 22,000 (11)
Hugh L. Culbreath 75,825 (5) John A. Urquhart 19,452 (12)
James L. Ferman, Jr. 26,185 (6) James O. Welch, Jr. 26,600 (13)
Edward L. Flom 20,784 (7) Keith S. Surgenor 102,429 (2)(14)
Henry R. Guild, Jr. 121,604 (8) Roger H. Kessel 138,975 (2)
Timothy L. Guzzle 243,756 (2)(9) Alan D. Oak 98,723 (2)(15)
Dennis R. Hendrix 2,500 All directors and executive
officers as a group (18 persons) 1,071,821 (2)(16)
6
(1) The amounts listed include the following shares that are
subject to options granted under the Corporation s stock option
plans: Mr. Ausley, 16,000 shares; Mrs. Baldwin and Messrs.
Culbreath, Ferman, Flom, Guild, Ryan, Touchton and Welch,
18,000 shares each; Mr. Urquhart, 15,200 shares; Mr. Guzzle,
140,000 shares; Mr. Anderson, 112,000 shares; Mr. Surgenor,
77,000 shares; Mr. Kessel, 137,000 shares; Mr. Oak, 69,000
shares; and all directors and executive officers as a group,
725,200 shares.
(2) The amounts listed include the following shares that are held
by benefit plans of the Corporation for an officer s account:
Mr. Guzzle, 1,756 shares; Mr. Anderson, 8,448 shares; Mr.
Surgenor, 2,332 shares; Mr. Kessel, 1,975 shares; Mr. Oak,
9,593 shares; and all directors and executive officers as a
group, 24,104 shares.
(3) Includes 800 shares owned by Mr. Anderson s wife, as to which
shares he disclaims any beneficial interest.
(4) Includes 350 shares held by a trust of which Mrs. Baldwin is a
trustee.
(5) Includes 8,000 shares owned by Mr. Culbreath s wife, as to
which shares he disclaims any beneficial interest.
(6) Includes 2,584 shares owned jointly by Mr. Ferman and his wife.
Also includes 881 shares owned by Mr. Ferman s wife, as to
which shares he disclaims any beneficial interest.
(7) Includes 1,596 shares owned by Mr. Flom s wife, as to which
shares he disclaims any beneficial interest.
(8) Includes 101,204 shares held by trusts of which Mr. Guild is a
trustee. Of these shares, 49,825 are held for the benefit of
Mr. Culbreath and are also included in the number of shares
beneficially owned by him.
(9) Includes 20,000 shares owned by a Revocable Living Trust of
which Mr. Guzzle is a trustee.
(10) Includes 2,000 shares owned jointly by Mr. Ryan and his wife.
(11) Includes 4,000 shares owned by a Revocable Living Trust of
which Mr. Touchton is the sole trustee.
(12) Includes 1,000 shares owned by Mr. Urquhart's wife, as to which
shares he disclaims any beneficial interest.
(13) Includes 2,000 shares owned by a charitable foundation of which Mr.
Welch is a trustee.
(14) Includes 8,996 shares owned jointly by Mr. Surgenor and his
wife.
(15) Includes 20,130 shares owned by a Revocable Living Trust of
which Mr. Oak's wife is the sole trustee.
(16) Includes a total of 13,580 shares owned jointly with spouses.
Also includes a total of 12,277 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, 1995, and compares this return with that of
the S&P 500 Composite Index and the S&P Electric Utilities Index. The
7
graph assumes that the value of the investment in the Corporation's
Common Stock and each index was $100 on December 31, 1990 and that all
dividends were reinvested.
(PERFORMANCE GRAPH APPEARS HERE)
December 31,
1990 1991 1992 1993 1994 1995
TECO Energy, Inc. $100 $130 $136 $154 $145 $192
S&P Electric $100 $130 $138 $155 $135 $177
Utilities Index
S&P 500 Index $100 $130 $140 $155 $157 $215
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 stock option plan. The objective of the Corporation's
compensation program is to enhance shareholder value by attracting and
retaining the talent needed to manage and build the Corporation's
businesses. The Committee seeks, therefore, to provide compensation
o p portunities that are competitive and link the interests of
shareholders and executives.
8
T h e C o mpensation Committee, with the assistance of the
Corporation's outside consultant, Towers Perrin, conducted in 1995 a
comprehensive review of all of the components of the Corporation's
executive compensation program. Given the increasingly competitive
and complex environment in which the Corporation must operate and the
marketplace for the executive talent required for future success, the
Committee and the Board decided that general industry (as opposed to
the electric utility industry or a blend of that industry and general
industry) provides the appropriate market references for targeting
executive compensation. The components of the Corporation's executive
compensation program, base salary, annual incentive awards and long-
term incentive awards, are described below.
Base Salary. The Corporation's salary structure for its executive
o f f icers utilizes various salary grade ranges and associated
midpoints. It is designed to provide each executive with a fixed
a m o u nt of annual compensation that is competitive with the
marketplace. In 1995 and as part of the aforesaid comprehensive
compensation review, each executive officer was 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 the
market assessment by Towers Perrin of the median base compensation
paid to executives with similar positions in general industry by
organizations having comparable revenues. The Committee recommended
and the Board approved a salary increase in 1995 for the CEO, taking
into account the midpoint of the CEO's assigned salary grade and the
Committee's subjective evaluation of the CEO's individual performance.
After this increase, the CEO's base salary was approximately 90% of
the midpoint of his assigned salary grade.
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. If the net income for the year targeted in the Corporation's
business plan is achieved, awards can range up to 60% of the midpoint
of the salary range for the CEO, 50% and 45% for the other named
executive officers and lower percentages for other officers. These
percentages were set in connection with the aforesaid comprehensive
compensation review and likewise reflected the market assessment by
Towers Perrin of annual incentive compensation in general industry.
Under the Corporation's program, additional payments of up to 50% of
the target awards may be made if the net income target is exceeded;
lesser amounts may be paid if the target is not achieved, but only if
the Corporation s net income exceeds the threshold designated for that
year. The Board retains discretion to vary awards in extraordinary
circumstances to avoid unduly penalizing or rewarding management.
The 1995 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 the Corporation's
return on equity. One-half of the CEO s 1995 target award was based
on these factors. Additional quantitative targets were used for some
of the other executive officers including, in the case of certain
9
officers, targets relating specifically to the performance of the
companies for which they have chief operating responsibility.
In addition to measuring performance against the 1995 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. One-half of the CEO s 1995
target award was based on these qualitative objectives which were, in
his case, to provide the leadership necessary for the growth and
d e velopment of the Corporation and to manage effectively the
Corporation s external relations. The Committee's review consisted of
a subjective evaluation of his performance, with a significant focus
o n long-term strategies to increase earnings while preserving
financial strength. Based on this evaluation and the achievement of
the 1995 net income and return on equity objectives, the CEO received
an incentive award of 75% of the midpoint of his salary grade.
Long-Term Incentive Awards. The long-term component of the
Corporation s incentive compensation program has consisted of the
grant of non-transferable stock options. The options 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 award each
year about 400,000 options, or one-tenth of the total options
available under the 1990 Equity Incentive Plan, and to limit
individual awards to ranges based on an annual study by Towers Perrin
comparing option grants to salary levels in general industry. The
Committee does not normally consider the amount of an individual's
outstanding or previously granted options in determining the size of
the grant. The 60,000 options granted to the CEO in 1995 reflected
these policies 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 1995. In accordance with the
provisions of the 1990 Equity Incentive Plan, the exercise price of
all options granted was equal to the market value of the underlying
Common Stock on the date of grant. Accordingly, the value of these
grants to the officers is dependent solely upon the future growth in
share value of the Corporation s Common Stock.
As part of its comprehensive review, the Committee considered the
market assessment by Towers Perrin which indicated that the long-term
incentive component of the Corporation's executive compensation
program is significantly lower than general industry levels. In
January 1996, the Committee recommended that the Corporation close
this gap by supplementing the traditional grants of stock options with
grants of restricted stock that normally would vest at retirement. In
related action, the Committee recommended the establishment of stock
ownership guidelines of five times base salary for the CEO and three
times base salary for the other executive officers. These guidelines
would allow the executives five years to acquire this amount of stock
and would not recognize stock options as shares owned. Shareholders
are being asked to approve at the annual meeting an amendment and
restatement of the Corporation's 1990 Equity Incentive Plan that would
10
permit the type of grant, and facilitate the implementation of the
ownership guidelines, recommended by the Committee. See "Approval of
the 1996 Equity Incentive Plan" below.
The Corporation's severance agreements with its executive officers
previously contained a provision that reduced any benefit payable to
the officer in connection with termination of employment following a
change in control to the extent that payment of such benefit, taking
into account any other compensation provided by the Corporation, would
not be deductible by the Corporation pursuant to Section 280G of the
Internal Revenue Code. In connection with its comprehensive review of
the Corporation's executive compensation program, the Committee
determined that the limitation on benefits associated with Section
280G was impairing the retention incentive these severance agreements
were designed to provide. Accordingly, the Committee recommended, and
the Board approved, amendments to these severance agreements to (i)
remove the limitation on benefits associated with Section 280G and
(ii) provide for an additional payment to the executive officers to
compensate for any taxes imposed by the application of the excise tax
associated with that Section. See "Executive Compensation Employment
and Severance Agreements" below.
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 limitation. Accordingly, the Committee has
recommended that the Corporation continue to structure its executive
compensation program to meet the objectives described in this report,
rather than modifying it to achieve a relatively small decrease in its
federal income tax liability. Outstanding stock options granted under
the Corporation's 1990 Equity Incentive Plan will not be subject to
the limitation under applicable regulations, and the proposed 1996
Equity Incentive Plan is designed to maintain the exclusion for any
additional options that may be granted to employees covered by Section
162(m).
By the Compensation Committee,
James O. Welch, Jr. (Chairman)
Sara L. Baldwin
Henry R. Guild, Jr.
John A. Urquhart
The following tables set forth certain compensation information for
the Chief Executive Officer of the Corporation and each of the four
other most highly compensated executive officers of the Corporation
and its subsidiaries.
11
Summary Compensation Table
Long-Term
Annual Compensation
Compensation Awards
All Other
Name and Other Annual Shares Underlying Compen-
Principal Position Year Salary Bonus Compensation (1) Options/SARs(#)(2) sation(3)
Timothy L. Guzzle 1995 $493,750 $415,000 $50,925 60,000 $ 31,092
Chief Executive 1994 468,750 384,000 40,000 28,703
Officer 1993 443,750 194,000 40,000 28,267
Girard F. Anderson 1995 368,750 240,000 48,611 40,000 30,094
President and Chief 1994 320,461 275,000 24,000 25,076
Operating Officer (4) 1993 284,750 110,000 24,000 23,290
Keith S. Surgenor 1995 272,500 195,000 45,664 25,000 17,994
President and Chief 1994 215,376 225,000 12,000 13,728
Operating Officer of 1993 179,500 60,000 12,000 11,986
Tampa Electric
Company (4)
Roger H. Kessel 1995 238,500 135,000 44,765 17,000 9,052
Senior Vice President- 1994 228,750 150,000 14,000 10,257
General Counsel 1993 219,750 80,000 14,000 10,417
Alan D. Oak 1995 225,000 135,000 44,264 17,000 14,432
Senior Vice President- 1994 201,750 130,000 13,000 12,905
Finance 1993 192,875 74,000 13,000 12,843
(1) Participants in the Corporation's company car program received a
one-time cash payment in connection with its elimination in
1995. The amount set forth includes this payment, which in the
case of the named executive officers was $40,890.
(2) Limited stock appreciation rights were awarded in tandem with
the options granted. See note (2) under Option/SAR Grants in
Last Fiscal Year below.
(3) The reported amounts for 1995 consist of $924 of premiums paid
by the Corporation to the Executive Supplemental Life Insurance
Plan for each of the 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.
(4) Prior to July 19, 1994, Mr. Anderson served as Executive Vice
President-Utility Operations and President of Tampa Electric
C o mpany and Mr. Surgenor served as Vice President-Human
Resources.
12
Option/SAR Grants in Last Fiscal Year
Individual Grants
Number of % of Total
Shares Options/SARs Exercise Grant
Underlying Granted to or Base Date
Options/SARs Employees in Price Expiration Present
Name Granted(#)(1)(2) Fiscal Year Per Share Date Value(3)
Timothy L. Guzzle 60,000 12.29 $ 20.75 4/03/05 $ 236,799
Girard F. Anderson 40,000 8.19 20.75 4/03/05 157,866
Keith S. Surgenor 25,000 5.12 20.75 4/03/05 98,666
Roger H. Kessel 17,000 3.48 20.75 4/03/05 67,093
Alan D. Oak 17,000 3.48 20.75 4/03/05 67,093
(1) The options are exercisable beginning on the date of grant,
April 3, 1995.
(2) An equal number of stock appreciation rights which can only be
exercised during limited periods following a change in control
of the Corporation ( LSAR s) were awarded in tandem with the
options granted in 1995. Upon exercise of an LSAR, the holder
is entitled to an amount based upon the highest price paid or
offered for Common Stock during the 30-day period preceding a
c h ange in control of the Corporation, as defined under
"Employment and Severance Agreements" below. The exercise of an
option or an LSAR results in a corresponding reduction in the
other.
(3) The values shown are based on the Black-Scholes valuation model
and are stated in current annualized dollars on a present value
b a sis. The key assumptions used for purposes of this
calculation include the following: (a) a 7.5% discount rate; (b)
a volatility factor based upon the average trading price for the
36-month period ending December 31, 1994; (c) a dividend factor
based upon the 3-year average dividend paid for the period
ending December 31, 1994; (d) the 10-year option term; and (e)
the closing price of the Corporation's Common Stock on December
31, 1994. The present value of the options reported has been
calculated by multiplying $20.75, the share price on the date of
grant, by 0.1902, the Black-Scholes valuation factor, and by the
number of shares underlying the options granted. The actual
value an executive may realize will depend upon the extent to
which the stock price exceeds the exercise price on the date the
option is exercised. Accordingly, the value, if any, realized
by an executive will not necessarily be the value determined by
the Black-Scholes model.
13
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Value
Number of Value of
Shares Underlying Unexercised
Unexercised In-The-Money
Options/SARs Options/SARs
at Year-End(#) at Year-End
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($) Unexercisable Unexercisable
>
Timothy L. Guzzle 0 0 220,000/0 $ 1,210,000/0
Girard F. Anderson 24,000 150,000 112,000/0 548,749/0
Keith S. Surgenor 0 0 91,000/0 603,563/0
Roger H. Kessel 0 0 137,000/0 1,127,248/0
Alan D. Oak 0 0 69,000/0 381,220/0
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. Guzzle and Kessel.
Years of Service
5 10 15 20 or More
Final Three Years
Average Earnings
$200,000 . . . . . . . . . $ 30,000 $ 60,000 $ 90,000 $120,000
250,000 . . . . . . . . . 37,500 75,000 112,500 150,000
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
The annual benefits payable to each of the named executive officers
are equal to a stated percentage of such officer's average earnings
for the three years before his retirement multiplied by his number of
years of service, up to a stated maximum. The amounts shown in the
table are based on 3% of such earnings and a maximum of 20 years of
service. The amounts payable to Mr. Guzzle are based on 6% of
earnings and a maximum of 10 years of service, and the amounts payable
to Mr. Kessel are based on 5% of earnings and a maximum of 9 years of
service.
14
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. Guzzle (8 years), Mr. Anderson (36 years), Mr. Surgenor
(7 years), Mr. Kessel (6 years) and Mr. Oak (22 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. The normal retirement age is 62 for Messrs.
Guzzle, Anderson and Kessel and 63 for Messrs. Surgenor and Oak. 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. If Mr. Guzzle's employment is
terminated by the Corporation without cause or by Mr. Guzzle for good
reason (as such terms are defined in Mr. Guzzle's employment agreement
referred to below), his age and service for purposes of determining
benefits under the pension plan arrangements are increased by two
years.
Employment and Severance Agreements
The Corporation has severance agreements with the named executive
officers under which payments will be made under certain circumstances
following a change in control of the Corporation. A change in control
means in general the acquisition by any person of 30% or more of the
Common Stock, the change in a majority of the directors or the
approval by the shareholders of a merger or consolidation of the
Corporation in which the Corporation's shareholders do not have
majority voting power in the surviving entity or of the 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) following a change in
control, the Corporation will make a lump sum severance payment to the
o f ficer of three times annual salary and bonus. Upon such
termination, 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 and (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. In addition, these
officers will receive 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.
15
The Corporation has an employment agreement with Mr. Guzzle
providing that if his employment is terminated by the Corporation
without cause or by Mr. Guzzle for good reason, he will receive
benefits similar to those provided under the severance agreements
described above based upon a level of two times annual salary and
bonus and a two-year benefit continuation period. Consistent with his
employment agreement, Mr. Guzzle's 1995 option grant provides for a
two-year exercise extension period in the event of such a termination.
The Corporation also has an agreement with Mr. Kessel providing for a
minimum base salary of $189,000 and salary continuation payments for
one year in the event of termination by the Corporation without cause.
APPROVAL OF THE
1996 EQUITY INCENTIVE PLAN
General
On January 17, 1996, the Board of Directors adopted, subject to
shareholder approval, the 1996 Equity Incentive Plan (the "Plan") as
an amendment and restatement of the Corporation's 1990 Equity
Incentive Plan (the "1990 Plan"). If the Plan is approved by
shareholders, the Plan will supersede the 1990 Plan and no additional
grants will be made thereunder. The rights of the holders of
outstanding options under the 1990 Plan will not be affected. The
purpose of the Plan is to attract and retain key employees of the
Corporation, to provide an incentive for them to achieve long-range
performance goals and to enable them to participate in the long-term
growth of the Corporation. The Plan will continue to be administered
by a committee (the "Committee") of not less than three independent,
non-employee members of the Board of Directors, currently the
Compensation Committee. The Committee may grant awards to any
employee of the Corporation or its affiliates who is capable of
contributing significantly to the successful performance of the
Corporation. As of February 16, 1996, approximately 110 key employees
were eligible to participate in the Plan.
16
Proposed Amendments to the 1990 Plan
Approval of the Plan would amend the 1990 Plan to (a) increase the
number of shares of Common Stock subject to grants by 3,750,000
shares, (b) expand the types of awards available to be granted and
(c) specify a limit on the maximum number of shares with respect to
which stock options and stock appreciation rights ("SARs") may be made
to any participant under the Plan. The Board of Directors believes
(I) the increase in shares is needed to ensure that a sufficient
number of shares are available to be issued under the Plan in the
future and (ii) the additional types of awards available under the
P l a n will provide broad flexibility needed to meet changing
circumstances in the structuring of appropriate equity incentives for
key employees of the Corporation. For example, the Compensation
Committee has recommended the addition of restricted stock awards to
bring the long-term incentive component of the Corporation's executive
compensation program up to general industry levels, and the amendment
to the Plan would permit this type of grant. See "Executive
Compensation Compensation Committee Report on Executive Compensation"
above.
Shares Subject to Awards
As of February 16, 1996, 1,935,700 shares were available for awards
under the 1990 Plan. The proposed Plan would add 3,750,000 shares,
bringing the total number of shares available for awards under the
Plan to 5,685,700, or less than 5% of the Corporation's outstanding
shares, as of February 16, 1996. The number and kind of shares are
subject to adjustment to reflect stock dividends, recapitalizations or
other changes affecting the Common Stock. If any outstanding or
future award under the 1990 Plan or the Plan expires or is terminated
unexercised or settled in a manner that results in fewer shares
outstanding than were initially awarded, the shares which would have
been issuable will again be available for award under the Plan. The
closing price of the Common Stock on the New York Stock Exchange on
February 16, 1996 was $26.50 per share.
Description of Awards
The 1990 Plan currently provides for the granting of awards in the
form of stock options and stock appreciation rights ("SARs"). In
addition to these awards, the amendment to the 1990 Plan would allow
stock grants and other awards measured by the value of the Common
Stock. As amended, the Plan would provide the following three basic
types of awards:
Stock Grants. The Committee may make stock grants for no
consideration, for such minimum consideration as may be required by
applicable law or for such other consideration as the Committee may
determine. Stock grants may include without limitation shares
subject to forfeiture ("restricted stock"), grants conditioned upon
a t t a inment of performance criteria ("performance shares"),
restricted stock where vesting accelerates upon attainment of
performance criteria ("performance-accelerated restricted stock")
and outright stock grants ("bonus stock"). With respect to any
stock grant, the Committee has full discretion to determine the
17
number of shares subject to the grant and the terms and conditions
of the grant.
Stock Options. The Committee may grant options to purchase
Common Stock. Stock options may include without limitation
incentive stock options eligible for special tax treatment
("ISOs"), options not entitled to such tax treatment ("nonstatutory
stock options"), options where the exercise price is adjusted to
reflect market changes ("indexed stock options"), options that
become exercisable based on attainment of performance criteria
("performance-vested stock options"), options where exercisability
is accelerated upon attainment of performance criteria
("performance-accelerated stock options") and options that entitle
the optionee to an additional option grant at current fair market
value to replace shares used to exercise the options ("reload stock
options"). The Committee will determine the option price, term and
exercise period of each option granted, provided that the option
price may not be less than the fair market value of the Common
Stock on the date of grant. An option may be exercised by the
payment of the option price in whole or in part in cash or, to the
extent permitted by the Committee, by delivery of a promissory note
or shares of Common Stock owned by the participant valued at fair
market value on the date of delivery, or such other lawful
consideration as the Committee may determine.
Stock Equivalents. The Committee may make awards where the
amount to be paid to the participant is based on the value of the
Common Stock. Stock equivalents may include without limitation
payments based on the full value of the Common Stock ("phantom
stock"), payments based on the value of the Common Stock upon
attainment of performance criteria ("performance units"), rights to
receive payments based on dividends paid on the Common Stock
("dividend equivalents") and SARs where the participant receives
payment equal in value to the difference between the exercise price
of the award and the fair market value of the Common Stock on the
date of exercise. SARs may be granted in tandem with options (at
or after award of the option) or alone and unrelated to an option.
SARs granted in tandem with an option terminate to the extent that
the related option is exercised, and the related option terminates
to the extent that the tandem SAR is exercised. The exercise price
of an SAR may not be less than the fair market value of the Common
Stock on the date of grant or, in the case of a tandem SAR, the
exercise price of the related option. The provision of the 1990
Plan specifically authorizing tandem SARs exercisable only during
limited periods following a change in control of the Corporation is
not included in the Plan because the broader authority to grant
stock equivalents under the Plan is intended to include authority
to grant this type of SAR. The Committee also has discretion to
grant any other type of stock equivalent award and to determine the
terms and conditions of payment of the award and whether payment
values will be settled in whole or in part in cash or other
property, including Common Stock.
Awards under the Plan may contain such terms and conditions not
inconsistent with the Plan as the Committee in its discretion
approves. The Committee has discretion to administer the Plan in the
manner which it determines, from time to time, is in the best interest
18
of the Corporation. For example, the Committee will fix the terms of
stock options, stock grants and stock equivalents and determine
whether, in the case of options and SARs, they may be exercised
immediately or at a later date or dates. Awards may be granted
subject to conditions relating to continued employment and
restrictions on transfer. The Committee may provide, at the time an
award is made or at any time thereafter, for the acceleration of a
participant's rights or cash settlement upon a change in control of
the Corporation. The terms and conditions of awards need not be the
same for each participant. The foregoing examples illustrate, but do
not limit, the manner in which the Committee may exercise its
authority in administering the Plan.
The maximum aggregate number of shares subject to stock options or
SARs that may be granted under the Plan to a participant in any
calendar year will not exceed 1,000,000 shares. This limit is
intended to qualify stock options and SARs granted under the Plan as
performance-based compensation that is not subject to the $1 million
limit on deductibility for federal income tax purposes of compensation
paid to certain senior officers.
The foregoing summary of the Plan is qualified by reference to the
full text of the Plan attached as Appendix A to this proxy statement.
Amendment
The Board has authority to amend the Plan subject to any
shareholder approval that the Board determines is necessary or
advisable. The Committee has authority to amend outstanding awards,
including changing the date of exercise and converting an incentive
stock option to a nonstatutory option, if the Committee determines
that such actions would not adversely affect the participant. The
Plan has no expiration date.
Federal Income Tax Consequences Relating to Stock Options
Incentive Stock Options. An optionee does not realize taxable
income upon the grant or exercise of an ISO under the Plan. If no
disposition of shares issued to an optionee pursuant to the exercise
of an ISO is made by the optionee within two years from the date of
grant or within one year from the date of exercise, then (a) upon sale
of such shares, any amount realized in excess of the option price (the
amount paid for the shares) is taxed to the optionee as long-term
capital gain and any loss sustained will be a long-term capital loss
and (b) no deduction is allowed to the Corporation for Federal income
tax purposes. The exercise of ISOs gives rise to an adjustment in
computing alternative minimum taxable income that may result in
alternative minimum tax liability for the optionee. If shares of
Common Stock acquired upon the exercise of an ISO are disposed of
prior to the expiration of the two-year and one-year holding periods
described above (a "disqualifying disposition") then (a) the optionee
realizes ordinary income in the year of disposition in an amount equal
to the excess (if any) of the fair market value of the shares at
exercise (or, if less, the amount realized on a sale of such shares)
over the option price thereof and (b) the Corporation is entitled to
deduct such amount for federal income tax purposes. Any further gain
realized is taxed as a short-term or long-term capital gain and does
19
not result in any deduction to the Corporation. A disqualifying
disposition in the year of exercise will generally avoid the
alternative minimum tax consequences of the exercise of an ISO.
Nonstatutory Stock Options. No income is realized by the
optionee at the time a nonstatutory option is granted. Upon exercise,
(a) ordinary income is realized by the optionee in an amount equal to
the difference between the option price and the fair market value of
the shares on the date of exercise and (b) the Company receives a tax
deduction for the same amount. Upon disposition of the shares,
appreciation or depreciation after the date of exercise is treated as
a short-term or long-term capital gain or loss and will not result in
any deduction by the Corporation.
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 1995, the
Board reappointed Coopers & Lybrand L.L.P. to serve as independent
accountants and to audit the Corporation s financial statements for
1995. Consistent with past procedures, independent accountants for
the current fiscal year will be appointed by the Board at its April
1996 meeting.
Representatives of Coopers & Lybrand L.L.P. 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.
DEADLINE FOR SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 1997
Annual Meeting of Shareholders must be received on or before November
1, 1996 for inclusion in the Corporation s proxy materials relating to
that meeting. 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 less than 90 days before the meeting.
The notice must contain specified information about the proposed
20
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 ten days of the third Tuesday in April and notice thereof is
mailed to shareholders or publicly disclosed less than 100 days in
advance, 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 $6,000 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.
21
APPENDIX A
TECO ENERGY, INC.
1996 EQUITY INCENTIVE PLAN
1. Purpose.
The purpose of the TECO Energy, Inc. 1996 Equity Incentive Plan
(the "Plan") is to attract and retain key employees of TECO Energy,
Inc. (the "Company") and its affiliates, to provide an incentive for
them to achieve long-range performance goals, and to enable them to
participate in the long-term growth of the Company by the granting of
awards ("Awards") of, or based on, the Company's common stock, $1.00
par value (the "Common Stock"). The Plan is an amendment and
restatement of the Company's 1990 Equity Incentive Plan (the "1990
Plan"). No provision of the Plan will affect the rights and
privileges of holders of outstanding options under the 1990 Plan.
2. Administration.
The Plan will be administered by a committee of not less than
three members of the Board of Directors of the Company appointed by
the Board to administer the Plan (the "Committee"). Each member of
the Committee will be a "disinterested person" or the equivalent
within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934, as amended from time to time (the "Exchange Act"), and an
"outside director" within the meaning of Section 162 of the Internal
Revenue Code of 1986, as amended from time to time (the "Code"). The
Committee will select those persons to receive Awards under the Plan
("Participants") and will determine the terms and conditions of all
Awards. The Committee will have authority to adopt, alter and repeal
such administrative rules, guidelines and practices governing the
operation of the Plan as it from time to time considers advisable, and
to interpret the provisions of the Plan. The Committee's decisions
will be final and binding. To the extent permitted by applicable law,
the Committee may delegate to one or more executive officers of the
Company the power to make Awards to Participants who are not subject
to Section 16 of the Exchange Act and all determinations under the
Plan with respect thereto, provided that the Committee will fix the
maximum amount of such Awards for all such Participants and a maximum
for any one Participant.
3. Eligibility.
All employees of the Company (or any business entity in which the
Company owns directly or indirectly 50% or more of the total voting
power or has a significant financial interest as determined by the
Committee) capable of contributing significantly to the successful
performance of the Company, other than an employee who has irrevocably
elected not to be eligible, are eligible to be Participants in the
Plan.
4. Stock Available for Awards.
(a) Amount. Subject to adjustment under subsection (b), Awards
may be made under the Plan for up to 3,750,000 shares of Common Stock,
A - 1
together with all shares of Common Stock available for issue under the
1990 Plan on the effective date of the Plan. If any Award (including
any Award under the 1990 Plan) expires or is terminated unexercised or
is forfeited or settled in a manner that results in fewer shares
outstanding than were awarded, the shares subject to such Award, to
the extent of such expiration, termination, forfeiture or decrease,
will again be available for award under the Plan. Common Stock issued
through the assumption or substitution of outstanding grants from an
acquired company will not reduce the shares available for Awards under
the Plan. Shares issued under the Plan may consist in whole or in
part of authorized but unissued shares or treasury shares.
(b) Adjustment. In the event that the Committee determines that
any stock dividend, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares or other change affects the Common
Stock such that an adjustment is required in order to preserve the
benefits intended to be provided by the Plan, then the Committee
(subject in the case of incentive stock options to any limitation
required under the Code) will equitably adjust any or all of (i) the
number and kind of shares for which Awards may be made under the Plan,
(ii) the number and kind of shares subject to outstanding Awards and
(iii) the exercise price with respect to any of the foregoing. In
making such adjustments, the Committee may ignore fractional shares so
that the number of shares subject to any Award will be a whole number.
If considered appropriate, the Committee may make provision for a cash
payment with respect to all or part of an outstanding Award instead of
or in addition to any such adjustment.
(c) Limit on Individual Grants. The maximum number of shares of
Common Stock subject to Stock Options and SARs that may be granted to
any Participant in the aggregate in any calendar year will not exceed
1,000,000 shares, subject to adjustment under subsection (b).
5. Types of Awards.
(a) Stock Grants. The Committee may make awards of shares of
Common Stock ("Stock Grants") upon such terms and conditions as the
Committee determines. Stock Grants may include without limitation
restricted stock, performance shares, performance-accelerated
restricted stock and bonus stock. Stock Grants may be issued for no
cash consideration, such minimum consideration as may be required by
applicable law or such other consideration as the Committee may
determine.
(b) Stock Options. The Committee may grant options ("Stock
Options") to purchase shares of Common Stock at an exercise price
determined by the Committee of not less than 100% of the fair market
value of the Common Stock on the date of grant and upon such terms and
conditions as the Committee determines. Stock Options may include
w i thout limitation incentive stock options, nonstatutory stock
options, indexed stock options, performance-vested stock options,
A - 2
p e rformance-accelerated stock options and reload options. No
incentive stock option may be granted under the Plan more than ten
years after the effective date of this restatement of the Plan.
Payment of the exercise price may be made in cash or, to the extent
permitted by the Committee at or after the grant of the Stock Option,
in whole or in part by delivery of a promissory note or shares of
Common Stock owned by the optionee, including Stock Grants, or by
retaining shares otherwise issuable pursuant to the Stock Option, in
each case valued at fair market value on the date of delivery or
retention, or such other lawful consideration as the Committee may
determine.
(c) Stock Equivalents. The Committee may grant rights to
receive payment from the Company based in whole or in part on the
value of the Common Stock ("Stock Equivalents") upon such terms and
conditions as the Committee determines. Stock Equivalents may include
w i t hout limitation phantom stock, performance units, dividend
equivalents and stock appreciation rights ("SARs"). SARs granted in
tandem with a Stock Option will terminate to the extent that the
related Stock Option is exercised, and the related Stock Option will
terminate to the extent that the tandem SARs are exercised. An SAR
will have an exercise price determined by the Committee of not less
than 100% of the fair market value of the Common Stock on the date of
grant, or of not less than the exercise price of the related Stock
Option in the case of an SAR granted in tandem with a Stock Option.
The Committee will determine at the time of grant or thereafter
whether Stock Equivalents are to be settled in cash, Common Stock or
other securities of the Company, other Awards or other property.
6. General Provisions Applicable to Awards.
(a) Fair Market Value. The fair market value of the Common
Stock or any other property will be the fair market value of such
property as determined by the Committee in good faith or in the manner
established by the Committee from time to time.
(b) Reporting Person Limitations. Notwithstanding any other
provision of the Plan, to the extent required to qualify for the
exemption provided by Rule 16b-3 under the Exchange Act, Awards made
to a person subject to Section 16 of the Exchange Act will not be
transferable by such person other than by will or the laws of descent
and distribution and are exercisable during such person's lifetime
o n l y by such person or by such person's guardian or legal
representative. If then permitted by Rule 16b-3, such Awards will
also be transferable pursuant to a qualified domestic relations order
as defined in the Code or Title I of the Employee Retirement Income
Security Act or the rules thereunder.
(c) Documentation. Each Award under the Plan will be evidenced
by a writing delivered to the Participant specifying the terms and
conditions thereof and containing such other terms and conditions not
inconsistent with the provisions of the Plan as the Committee
A - 3
considers necessary or advisable to achieve the purposes of the Plan.
These terms and conditions may include without limitation performance
criteria, vesting requirements, restrictions on transfer and payment
rules. The Committee may establish the terms and conditions at the
time the Award is granted or may provide that such terms and
conditions will be determined at any time thereafter.
(d) Committee Discretion. Each type of Award may be made alone,
in addition to or in relation to any other Award. The terms of each
type of Award need not be identical, and the Committee need not treat
Participants uniformly. Except as otherwise provided by the Plan or a
particular Award, any determination with respect to an Award may be
made by the Committee at the time of grant or at any time thereafter.
(e) Dividends and Cash Awards. In the discretion of the
Committee, any Award under the Plan may provide the Participant with
(i) dividends or dividend equivalents payable currently or deferred
with or without interest and (ii) cash payments in lieu of or in
addition to an Award.
(f) Termination of Employment. The Committee will determine the
effect on an Award of the disability, death, retirement or other
termination of employment of a Participant and the extent to which,
and the period during which, the Participant's legal representative,
guardian or beneficiary may receive payment of an Award or exercise
rights thereunder. A Participant may designate a beneficiary in a
manner determined by the Committee. In the absence of an effective
designation, a Participant's beneficiary will be the Participant's
estate.
(g) Change in Control. In order to preserve a Participant's
rights under an Award in the event of a change in control of the
Company, the Committee in its discretion may, at the time an Award is
made or at any time thereafter, take one or more of the following
actions: (i) provide for the acceleration of any time period relating
to the exercise or payment of the Award, (ii) provide for payment to
the Participant of cash or other property with a fair market value
equal to the amount that would have been received upon the exercise or
payment of the Award had the Award been exercised or paid upon the
change in control, (iii) adjust the terms of the Award in a manner
determined by the Committee to reflect the change in control, (iv)
cause the Award to be assumed, or new rights substituted therefor, by
another entity, or (v) make such other provision as the Committee may
consider equitable to the Participant and in the best interests of the
Company.
(h) Loans. The Committee may authorize the making of loans or
cash payments to Participants in connection with the grant or exercise
of any Award under the Plan, which loans may be secured by any
security, including Common Stock, underlying such Award, and which may
be forgiven upon such terms and conditions as the Committee may
establish at the time of such loan or at any time thereafter.
A - 4
(i) Withholding Taxes. The Participant will pay to the Company,
or make provision satisfactory to the Committee for payment of, any
taxes required by law to be withheld in respect of Awards under the
Plan no later than the date of the event creating the tax liability.
In the Committee's discretion, such tax obligations may be paid in
whole or in part in shares of Common Stock, including shares retained
from the Award creating the tax obligation, valued at fair market
value on the date of delivery or retention. The Company and its
affiliates may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to the
Participant.
(j) Foreign Nationals. Awards may be made to Participants who
are foreign nationals or employed outside the United States on such
terms and conditions different from those specified in the Plan as the
Committee considers necessary or advisable to achieve the purposes of
the Plan or to comply with applicable laws.
(k) Amendment of Award. The Committee may amend, modify or
terminate any outstanding Award, including substituting therefor
another Award of the same or a different type and changing the date of
exercise or realization, provided that the Participant's consent to
such action will be required unless the action, taking into account
any related action, would not adversely affect the Participant.
7. Miscellaneous.
(a) No Right To Employment. No person will have any claim or
right to be granted an Award. Neither the Plan nor any Award
hereunder will be deemed to give any employee the right to continued
employment or to limit the right of the Company to discharge any
employee at any time.
(b) No Rights As Shareholder. Subject to the provisions of the
applicable Award, no Participant or beneficiary will have any rights
as a shareholder with respect to any shares of Common Stock to be
distributed under the Plan until he or she becomes the holder thereof.
A Participant to whom Common Stock is awarded will be considered the
holder of such Common Stock at the time of the Award except as
otherwise provided in the applicable Award.
(c) Effective Date. The Plan will be effective on April 17,
1996.
(d) Amendment of Plan. The Board of Directors of the Company
may amend, suspend or terminate the Plan or any portion thereof at any
time, subject to any shareholder approval that the Board determines to
be necessary or advisable, provided that the Participant's consent
will be required for any amendment, suspension or termination that
would adversely affect the rights of the Participant under any
outstanding Award.
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(e) Governing Law. The provisions of the Plan will be governed
by and interpreted in accordance with the laws of Florida.
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APPENDIX B
TECO Energy, Inc.
1996 Annual Meeting
Wednesday April 17, 1996
TECO Plaza
702 North Franklin Street
Tampa, Florida
Attached below is a proxy card for the 1996 Annual Meeting of
Shareholders of TECO Energy, Inc.
Please detach the proxy card and mark the boxes to indicate how your
shares should be voted. Sign and return your proxy as soon as
possible in the enclosed postage-paid envelope.
Enhanced Shareholder Services Telephone System
We are pleased to announce that effective March 31, 1996 a new toll-
free shareholder services telephone system will be available through
our Transfer Agent, Boston EquiServe. The new system will provide
shareholders with touch-tone phone access to certain routine account
information and TECO Energy news 24 hours a day, seven days of the
week. Shareholder service representatives will be available for those
shareholders with rotary dial phones or those wishing to speak to a
representative during normal business hours, Monday through Friday
9:00 a.m. to 6:00 p.m., simply by staying on the line or by pressing
0".
Please see the back of this notice for instructions for using this
service.
Effective March 31, 1996 Shareholder Services Toll Free Number:
(800) 650-9222
DETACH HERE DETACH HERE
B - 1
APPENDIX B
/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: C.D. Ausley, J.L. Ferman, Jr., D.R. Hendrix, R.L. Ryan, W.P.
Sovey and J.O. Welch, Jr.
/ / (A) FOR ALL NOMINEES / / (B)AGAINST ALL NOMINEES
/ / (C)
FOR ALL NOMINEES EXCEPT
/ / MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW
2. PROPOSAL TO APPROVE THE 1996 EQUITY INCENTIVE PLAN.
THE BOARD RECOMMENDS A VOTE FOR 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.
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_____
B - 2
APPENDIX B
How to use the enhanced TECO Energy Shareholder Services line:
When you dial 1-800-650-9222 you may select an option by pressing the
corresponding number on your touch-tone phone. If you have a rotary
dial phone or if you need to speak to an operator, just stay on the
line or press 0" and your call will be answered.
Options available:
* To hear TECO Energy s current quarterly financial results or
dividend information, Press 1
* To request information about your share balance, dividend
payments, dividend reinvestment share balance or to request a
duplicate 1099, Press 2
* To enroll in the TECO Energy dividend reinvestment program,
request information regarding transferring your stock or request
electronic deposit of dividend payments, Press 3
* To establish or change your personal identification number,
Press 4
* To hear further information on using the shareholder service
system, Press 5
Please have the following information ready when you call:
If you Press 2 or 3 to request information specific to your account or
to request materials, you will need to provide your nine digit social
security number or tax identification number (TIN); for added security
you will then have the option to establish a personal identification
number (4 to 8 digits) which can be used along with your tax
identification number. Please record this number for future use. Once
you establish a personal identification number you must use this
number, along with your TIN, every time you want to access account
information.
DETACH HERE DETACH HERE
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APPENDIX B
TECO ENERGY, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, APRIL 17, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TECO ENERGY, INC.
The undersigned hereby constitutes and appoints Hugh L. Culbreath,
Henry R. Guild, Jr. and Timothy L. Guzzle 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. standing in the name of the undersigned as of the close
of business February 16, 1996, at the Annual Meeting of Shareholders
of the Corporation to be held in accordance with notice received at
the principal office of the Corporation, TECO Plaza, 702 North
Franklin Street, Tampa, Florida, on April 17, 1996 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.
(THIS PROXY IS CONTINUED AND IS TO BE SIGNED ON REVERSE SIDE)
SEE REVERSE SIDE
B - 4