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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
CLECO CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
Proxy Statement
and
Notice of
Annual Meeting
of Shareholders
to be held on
April 27, 2001
[CLECO LOGO]
March 16, 2001
Cleco Corporation
2030 Donahue Ferry Road
Pineville, Louisiana 71360-5226
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------
TIME............... 9:00 a.m., Central time, on Friday, April 27, 2001
PLACE.............. Louisiana Convention Centre
2225 N. MacArthur Drive
Alexandria, Louisiana
ITEMS OF BUSINESS.. (1) To elect three directors who will each serve a three-
year term expiring in 2004.
(2) To appoint PricewaterhouseCoopers LLP as independent
auditors for the year ending December 31, 2001.
(3) To approve Articles of Amendment to Cleco's Amended
and Restated Articles of Incorporation to increase the
amount of authorized common stock and to effect a two-
for-one split of Cleco's common stock.
(4) To transact any other business that may properly come
before the annual meeting or any adjournments or
postponements thereof.
RECORD DATE........ You can vote if you are a shareholder of record as of the
close of business on February 26, 2001.
ANNUAL REPORT...... Our 2000 Annual Report, which is not a part of the proxy
soliciting material, is enclosed.
PROXY VOTING....... It is important that your shares be represented and voted
at the annual meeting. Please mark, sign, date and
promptly return the enclosed proxy card in the postage-
paid envelope. Any proxy may be revoked at any time prior
to its exercise at the annual meeting.
/s/ Michael P. Prudhomme
Michael P. Prudhomme
Secretary
March 16, 2001
PROXY STATEMENT
CLECO CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 27, 2001
Cleco Corporation is furnishing you this proxy statement because you are a
holder of Cleco common stock or preferred stock. The Cleco board of directors
is soliciting proxies for use at the Cleco annual meeting of shareholders and
at any adjournments or postponements of the annual meeting. The annual meeting
will be held at 9:00 a.m., Central time, on April 27, 2001, at the Louisiana
Convention Centre, 2225 N. MacArthur Drive, Alexandria, Louisiana. The voting
stock of Cleco consists of shares of common stock and preferred stock, with
each share of common stock and preferred stock entitling its owner to one vote.
The holders of common stock and preferred stock vote together as a single
class, except in the election of directors, where holders of common stock can
cumulate their votes. At the annual meeting, holders of record of Cleco voting
stock at the close of business on February 26, 2001 will be entitled to vote
upon proposals relating to:
. the election of three directors who will each serve until the annual
meeting in 2004;
. the appointment of PricewaterhouseCoopers LLP as independent auditors for
the year ending December 31, 2001;
. the approval of Articles of Amendment to Cleco's Amended and Restated
Articles of Incorporation to increase the amount of authorized common
stock and to effect a two-for-one split of Cleco's common stock; and
. any other business that may properly come before the meeting.
----------------
The board of directors recommends that you vote "FOR" the election of the
three nominees for director, "FOR" the appointment of PricewaterhouseCoopers
LLP as independent auditors and "FOR" the approval of Articles of Amendment to
Cleco's Amended and Restated Articles of Incorporation.
----------------
This proxy statement and the accompanying proxy card are first being mailed
on or about March 16, 2001 to record shareholders of Cleco as of February 26,
2001.
TABLE OF CONTENTS
Page
----
INTRODUCTION.............................................................. 3
General................................................................. 3
Proxy Solicitation...................................................... 3
Record Date and Voting Rights........................................... 3
Execution and Revocation of Your Proxy.................................. 4
PROPOSAL NUMBER 1--ELECTION OF THREE CLASS I DIRECTORS.................... 5
Class I Directors (nominees to be elected at the 2001 annual meeting;
terms of office expire in 2004)........................................ 5
Class II Directors (terms of office expire in 2002)..................... 5
Class III Directors (terms of office expire in 2003).................... 6
Organization of the Board of Directors.................................. 6
Compensation of the Board of Directors.................................. 7
Interests of the Board of Directors..................................... 7
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT............................ 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS........................... 9
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE................... 10
EXECUTIVE COMPENSATION.................................................... 11
General................................................................. 11
Summary Compensation Table.............................................. 11
Stock Option Plans...................................................... 12
Long-Term Incentive Plan................................................ 13
Retirement Plans........................................................ 14
Employment Agreements and Change in Control............................. 15
Compensation Committee Report on Executive Compensation................. 17
Compensation Committee Interlocks and Insider Participation............. 21
Report of the Audit Committee........................................... 21
Performance Graph....................................................... 22
PROPOSAL NUMBER 2--APPOINTMENT OF INDEPENDENT AUDITORS.................... 24
PROPOSAL NUMBER 3--APPROVAL OF ARTICLES OF AMENDMENT TO THE AMENDED AND
RESTATED ARTICLES OF INCORPORATION TO INCREASE THE AMOUNT OF AUTHORIZED
COMMON STOCK AND TO EFFECT A TWO-FOR-ONE SPLIT OF COMMON STOCK........... 25
ANNUAL REPORT............................................................. 27
PROPOSALS BY SHAREHOLDERS................................................. 27
OTHER MATTERS............................................................. 28
APPENDIX A--AUDIT COMMITTEE CHARTER OF CLECO CORPORATION.................. A-1
APPENDIX B--ARTICLES OF AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION OF CLECO CORPORATION....................................... B-1
2
INTRODUCTION
General
This is the proxy statement of Cleco Corporation. Unless the context clearly
indicates otherwise or unless otherwise noted, all references in this proxy
statement to Cleco Corporation or Cleco include Cleco Corporation and its
predecessors.
Proxy Solicitation
The enclosed proxy is solicited on behalf of the Cleco board of directors to
be voted at the annual meeting. The management of Cleco will solicit proxies by
mail, telephone, facsimile, the Internet or overnight delivery. Proxies also
may be solicited in advertisements and in person by Cleco officers and
employees. Cleco has hired Morrow & Company, Inc. to assist in the solicitation
of proxies. Morrow's fee is approximately $7,500 plus expenses. Other than
Morrow, no specially engaged solicitors will be retained to solicit proxies.
Cleco is responsible for the payment of all expenses of the solicitation,
including the cost of preparing and mailing this proxy statement and the
reimbursement of brokerage firms and other nominees for their reasonable
expenses in forwarding proxy material to beneficial owners of Cleco voting
stock.
All duly executed proxies will be voted in accordance with their
instructions. If no instructions are in an executed proxy, the shares
represented by such proxy will be voted at the annual meeting or any
adjournments or postponements thereof "FOR" each of the proposals and, in the
discretion of the persons named in the proxy, on any other business that may
properly come before the annual meeting. Management is not aware of any other
matters that are likely to be brought before the annual meeting.
Cleco's principal executive offices are located at 2030 Donahue Ferry Road,
Pineville, Louisiana 71360-5226, and Cleco's telephone number is (318) 484-
7400.
Record Date and Voting Rights
Holders of record of outstanding voting stock as of the close of business on
February 26, 2001 are entitled to receive notice of and to vote at the annual
meeting. As of February 26, 2001, there were 280,897 shares of Cleco preferred
stock outstanding and 22,495,820 shares of Cleco common stock outstanding. As
of February 26, 2001, all officers and directors of Cleco, as a group,
beneficially owned 4.4% of the outstanding shares of Cleco common stock and
43.6% of the outstanding shares of Cleco preferred stock.
This proxy provides you with the opportunity to specify your approval or
disapproval of, or abstention with respect to, the following proposals:
. Proposal 1--the election of three directors to serve until the 2004
annual meeting of shareholders;
. Proposal 2--the appointment of independent auditors for 2001; and
. Proposal 3--the approval of Articles of Amendment to Cleco's Amended and
Restated Articles of Incorporation to increase the amount of authorized
common stock and to effect a two-for-one split of Cleco's common stock.
Generally, under Louisiana law and Cleco's Amended and Restated Articles of
Incorporation and Bylaws, an abstention by a shareholder who is either present
in person at the annual meeting or represented by proxy is not a vote "cast"
and is counted neither "for" nor "against" the matter subject to the
abstention. However, because a majority of outstanding voting stock is required
to adopt the Articles of Amendment described in Proposal 3, an abstention on
that proposal would have the same effect as a vote "against" the proposal.
Broker non-votes on matters are treated as shares as to which voting power has
been withheld by the beneficial holders of those shares and, therefore, as
shares not entitled to vote. Under Louisiana law and the Cleco Bylaws, a quorum
is based upon the number of outstanding shares of voting stock, including
shares relating to abstentions.
Election of directors is by plurality of the voting stock, with each holder
of Cleco common stock being able to cast as many votes as equal the number of
such holder's shares of common stock multiplied by the
3
number of directors to be elected. Each holder of Cleco common stock may
cumulate all or any part of these votes for one or more of the nominees. The
appointment of the independent auditors will be determined by a majority of the
voting stock cast, in person or by proxy, at the annual meeting. The approval
of Articles of Amendment to Cleco's Amended and Restated Articles of
Incorporation will be determined by a majority of the outstanding voting stock
of Cleco.
The proxy enclosed for record holders of voting stock is for the number of
shares registered in your name with Cleco, together with any additional full
shares held in your name in the Dividend Reinvestment Plan, or DRIP.
If you are an employee of Cleco and participate in the Cleco Savings and
Investment Plan, you may vote the number of shares of Cleco common stock
equivalent to your interest in the Cleco common stock fund as of the close of
business on February 26, 2001, the record date for the annual meeting. You also
may vote the number of shares of Cleco preferred stock allocated to your
account under the plan as of the record date for the annual meeting.
Additionally, if you are an employee of Cleco and participate in the Cleco
Employee Stock Purchase Plan, you may vote the number of shares of Cleco common
stock equivalent to your interest in that plan as of the record date. In either
case, complete and return the proxy card being mailed with this proxy
statement. The trustee under the Savings and Investment Plan and/or the
custodian under the Employee Stock Purchase Plan will vote the shares allocated
to your account(s) according to your instructions. If you do not send
instructions within the time required, the share equivalents credited to your
account(s) will not be voted.
Please call Cleco's office of Shareholder Assistance at 1-800-253-2652 with
any questions relating to the proposals to be considered at the annual meeting.
Execution and Revocation of Your Proxy
Shares represented by proxies properly signed and returned will be voted at
the annual meeting in accordance with the shareholder's specifications. If a
proxy is signed but no voting specification is made, then the shares
represented by the proxy will be voted "FOR" the election of the three nominees
for director, "FOR" the appointment of PricewaterhouseCoopers LLP as the
independent auditors for 2001, "FOR" the approval of Articles of Amendment to
Cleco's Amended and Restated Articles of Incorporation, and in accordance with
the recommendations of the Cleco board of directors on any other proposals that
may properly come before the annual meeting.
A shareholder who gives a proxy may revoke it at any time before the proxy
is voted at the annual meeting. To revoke a proxy, a written instrument signed
in the same manner as the proxy must be delivered to the Secretary of Cleco at
or before the annual meeting. Also, a shareholder who attends the annual
meeting in person may vote by ballot at the meeting, thereby canceling his or
her proxy.
4
PROPOSAL NUMBER 1--ELECTION OF THREE CLASS I DIRECTORS
Cleco's Bylaws provide for the division of Cleco's board of directors into
three classes, Class I, Class II and Class III, with each class consisting, as
nearly as possible, of one-third of the number of directors constituting the
whole board. Cleco's board of directors currently has a total of ten directors:
three are in Class I, three are in Class II (including Mr. Edward M. Simmons,
who will retire at the 2001 annual meeting, as discussed below) and four are in
Class III. The term of each directorship is three years. The terms of the three
classes are staggered in a manner so that only one class is elected by the
shareholders annually. The three Class I director positions are proposed for
election this year to serve as members of Cleco's board of directors until the
annual meeting of shareholders in 2004, or until their successors are elected
and qualified.
The persons named in the accompanying proxy may act with discretionary
authority to cumulate the votes attributable to shares of Cleco common stock
represented by the proxy and to vote for other nominees upon the unavailability
of a named nominee, although management is not aware of any circumstance likely
to render any of the named nominees unavailable for election. Unless a
shareholder specifies otherwise, the persons named in the accompanying proxy
intend to vote in favor of the nominees listed below. The three persons that
receive the most votes cast will be elected as directors.
All of the nominees listed below currently serve as directors of Cleco.
Directors who are members of Classes II and III, who are continuing as
directors at this time and whose terms of office expire in 2002 and 2003,
respectively, are named below and on page 6 of this proxy statement. Mr. Edward
M. Simmons, who has served as a director since 1992 and during the period 1971-
1981, will retire from the board of directors effective at the annual meeting
of shareholders, since he has reached the retirement age for outside directors
specified in Cleco's Bylaws.
Cleco's board of directors has unanimously approved the nomination of the
three nominees for Class I director and recommends that you vote "FOR" the
election of the three nominees for Class I director.
Below is information concerning the three nominees for election as Class I
directors at the annual meeting as well as the continuing Class II and Class
III directors, including the business experience of each during the past five
years.
Class I Directors (nominees to be elected at the 2001 annual meeting; terms of
office expire in 2004)
. Sherian G. Cadoria has served as president of Cadoria Speaker and
Consultancy Service since 1992. She retired in 1990 as Brigadier General
of the United States Army after a 29-year military career. Ms. Cadoria,
who is 61 years old, has been a director of Cleco since 1993 and is a
member of the Compensation Committee.
. Richard B. Crowell has been engaged in the practice of law for more than
five years as a member of the law firm of Crowell & Owens. Mr. Crowell,
who is 62 years old, has been a director of Cleco since 1997 and is a
member of the Audit Committee. He is also a director of Whitney Holding
Corporation and Whitney National Bank.
. David M. Eppler has served as chief executive officer of Cleco since May
2000, as president since 1999 and as a director since 1998; he had served
as chief operating officer from 1997 until May 2000, as executive vice
president from 1997 until 1999, as vice president of power supply and
energy transmission from 1995 to 1997 and as vice president of finance
and chief financial officer from 1993 to 1995. Prior to that time, Mr.
Eppler had served as vice president of finance and rates and as
treasurer. Mr. Eppler, who is 50 years old, joined Cleco in 1981. Mr.
Eppler is a member of the Executive Committee.
Class II Directors (terms of office expire in 2002)
. Robert T. Ratcliff has been chairman, president and chief executive
officer of Ratcliff Construction Company, Inc., a company primarily
engaged in the design and construction of industrial, commercial
5
and governmental facilities, since 1975. Mr. Ratcliff, who is 58 years
old, has been a director of Cleco since 1993 and is a member of the Audit
Committee. He is also a director of Hibernia Corporation and Hibernia
National Bank.
. William H. Walker, Jr. is president and a director of Howard, Weil,
Labouisse, Friedrichs Inc., an investment banking firm, and has served in
such positions for more than five years. Mr. Walker, who is 55 years old,
has been a director of Cleco since 1996 and is a member of the
Compensation Committee, the Executive Committee and the Nominating
Committee. He is also a director of Howard Weil Financial Corporation.
Class III Directors (terms of office expire in 2003)
. J. Patrick Garrett, who is retired, was employed by Windsor Food Company
Ltd., a privately held company engaged in the food processing business,
where he served as president and chief executive officer from 1995 until
1999. Prior to that time, he had been engaged in the practice of law for
more than five years as a member of the law firm of Baker Botts L.L.P.
Mr. Garrett, who is 57 years old, has been a director of Cleco since 1981
and is a member of the Compensation Committee.
. F. Ben James, Jr. has been president of James Investments, Inc., a
company primarily engaged in real estate development and international
marketing, for more than five years. Mr. James, who is 65 years old, has
been a director of Cleco since 1986 and is chairman of the Audit
Committee and a member of the Executive Committee and the Nominating
Committee.
. Elton R. King is retired from BellSouth Telecommunications Inc., where he
was employed from 1968 through 1999, serving most recently as the
president of its network and carrier services group. Mr. King, who is 54
years old, has been a director of Cleco since December 1999 and is a
member of the Compensation Committee. He is also a director of Hibernia
Corporation, Hibernia National Bank and Comm Touch, Inc.
. A. DeLoach Martin, Jr. has been chairman of Central Engineering Supply
Company, a company engaged in the wholesale distribution of refrigeration
and mill supplies, for more than five years. Mr. Martin, who is 71 years
old, has been a director of Cleco since 1978 and is chairman of the
Executive Committee and the Nominating Committee and a member of the
Audit Committee.
Organization of the Board of Directors
Cleco's board of directors has an Executive Committee, an Audit Committee,
a Compensation Committee and a Nominating Committee. The members of those
committees are identified, as appropriate, under "Class I Directors," "Class
II Directors" and "Class III Directors" above.
The Audit Committee recommends to Cleco's board of directors the
appointment of the independent auditors of Cleco, reviews the scope of audits,
reviews and recommends to Cleco's board of directors financial reporting and
accounting practices and reviews Cleco's procedures for internal auditing and
the adequacy of the system of internal accounting controls of Cleco. The Audit
Committee held three meetings during 2000.
The Compensation Committee approves, or in some cases recommends to Cleco's
board of directors, remuneration arrangements and compensation plans involving
Cleco's board of directors, officers and employees, and administers the
granting of restricted stock and other awards to eligible employees under the
long-term incentive plan and the annual incentive compensation program. The
Compensation Committee held three meetings in 2000.
At its January 2001 meeting, the Cleco board of directors approved the
formation of the Nominating Committee and appointed Mr. Martin, Mr. James, Mr.
Simmons and Mr. Walker to the Nominating Committee. Mr. Martin was appointed
chairman of the committee. All members of the Nominating Committee are non-
employee directors. The Nominating Committee considers and makes
recommendations to the board of
6
directors with respect to the size and composition of the board of directors
and with respect to potential candidates for membership on the board.
Cleco's board of directors held four regular meetings and one special
meeting during 2000. At intervals between formal meetings, members of Cleco's
board of directors hold informal telephone conference meetings, are provided
with written reports regarding the operations of Cleco and also are consulted
informally from time to time with respect to pending business. During 2000, all
directors attended at least 75% of the total number of meetings of Cleco's
board of directors and of the committees of Cleco's board of directors on which
such directors served.
During 2000, members of Cleco's board of directors began attending, on a
voluntary, rotational basis, the board of managers' meetings of certain of
Cleco's affiliates. At these meetings, Cleco's board members receive
information about the respective affiliates' operations but do not vote or act
in any official capacity.
Compensation of the Board of Directors
Any director who is an employee of Cleco receives no compensation for
service on the board. Currently, each non-employee director receives an annual
retainer of $18,000 for serving as a director. Each non-employee director who
is the chairman of a board committee receives an additional annual fee of
$3,000. Each non-employee director receives $800 for each day he or she attends
one or more meetings of Cleco's board of directors, board committees or Cleco's
affiliates' boards and $400 for each telephone conference meeting of the board
or its committees. The annual retainer, the annual fee for serving as a
chairman of a board committee and the attendance fees are paid, at the option
of each director, in cash, Cleco common stock or a combination of both. Cleco
also reimburses directors for travel and related expenses incurred in attending
meetings of Cleco's board of directors, board committees or affiliate boards.
During 2000, all non-employee directors served the entire year.
At the beginning of each director's full term, a director receives a grant
of options to purchase 2,500 shares of Cleco common stock. If the director's
initial term is less than a full three-year term, the grant is prorated
accordingly. Each grant is immediately exercisable, has a ten-year term and an
exercise price equal to the fair market value of Cleco common stock on the date
of the grant. During 2000, Mr. Garrett, Mr. James, Mr. King and Mr. Martin each
received grants of options. Additionally, upon initial election to the board,
each non-employee director is eligible to receive a restricted stock award in
the amount necessary to increase the director's ownership of Cleco common stock
to 1,000 shares. The purchase price is the fair market value of Cleco common
stock as of the date of the award. The stock is subject to restrictions on
transfer and alienation until the shares have been paid in full by application
of a portion of the director's annual retainer. During 2000, no directors
received restricted stock awards.
A non-employee director may elect to participate in a deferred compensation
plan and defer the receipt of all or part of his or her fees, whether payable
in cash or Cleco common stock, and option gain. Benefits are equal to the
amount credited to each director's individual account based on compensation
deferred plus applicable investment returns and are generally payable when a
director ceases to serve on the board or attains a specified age. Cleco has a
retirement plan for its non-employee directors under which directors with five
years of service receive, at age 65 or upon later retirement, a maximum annual
benefit of $12,000. Benefits are payable for life or a period equal to the
number of years of service as a director, whichever is shorter. Cleco also
provides its non-employee directors with $200,000 of life insurance and
permanent total disability coverage under a group accidental death and
dismemberment plan maintained by Cleco Power LLC, a wholly owned subsidiary of
Cleco.
Interests of the Board of Directors
Mr. Crowell is a member of the law firm of Crowell & Owens. Crowell & Owens
performed a minimal amount of legal services for Cleco in 2000. It is
anticipated that Crowell & Owens will be retained to perform legal services for
Cleco in 2001.
7
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table describes the Cleco common stock and Cleco preferred
stock beneficially owned by Cleco directors and nominees, the executive
officers named in the Summary Compensation Table below and the directors and
executive officers as a group. Shares of stock are "beneficially owned" by a
person if the person directly or indirectly has or shares the power to vote or
dispose of the shares, regardless of whether the person has any economic
interest in the shares. A person also beneficially owns shares as to which the
person has the right to acquire beneficial ownership within 60 days, as in the
case of the stock options set forth under the "Options Exercisable Within 60
Days" column in the following table.
All information in the table is as of January 31, 2001. The table is based
upon information supplied by the directors and officers. Unless otherwise
indicated in the footnotes and subject to community property laws where
applicable, each of the shareholders named in the table has sole voting and
investment power with respect to the shares indicated as beneficially owned.
Amount and Nature
of Beneficial
Amount and Nature of Beneficial Ownership Ownership of
of Common Stock Preferred Stock
----------------------------------------------- -----------------------
Options
Exercisable Percent Percent
Within 60 of Number of of
Direct(/1/) Days(/2/) Other(/3/) Class Shares(/4/) Class
----------- ----------- ---------- ------- ----------- -------
Directors and Nominees
Sherian G. Cadoria.... 1,000 2,500 0 * 0 *
Richard B. Crowell.... 25,961 2,500 56,174(/5/) * 0 *
J. Patrick Garrett.... 19,214 4,167 0 * 0 *
F. Ben James, Jr...... 5,000 4,167 0 * 0 *
Elton R. King......... 1,509 2,778 0 * 0 *
A. DeLoach Martin,
Jr................... 18,800 4,167 0 * 0 *
Robert T. Ratcliff.... 1,564 3,334 0 * 0 *
Edward M.
Simmons(/6/)......... 6,231 3,334 1,400(/6/) * 0 *
William H. Walker,
Jr................... 52,027 3,334 1,400(/7/) * 0 *
Named Executive Officers
Darrell J. Dubroc..... 9,997 0 1,685(/8/) * 351 *
David M. Eppler(/9/).. 26,838 0 2,928(/8/) * 610 *
Thomas J. Howlin...... 8,933 0 576(/8/) * 120 *
Gregory L. Nesbitt.... 56,809 24,000 0 * 0 *
Catherine C. Powell... 10,029 0 1,819(/8/) * 379 *
Mark H. Segura........ 9,483 0 1,723(/8/) * 359 *
All directors,
nominees and
executive officers as
a group (23 persons,
including those
listed above)........ 296,864 54,281 646,567(/10/) 4.44% 122,474(/10/) 43.6%
- --------
* Less than 1% of the outstanding stock of the class.
(/1/)"Direct" represents shares as to which each named individual has sole
voting or dispositive power, including shares of Cleco common stock
allocated under the Savings and Investment Plan and shares of common
stock granted as restricted stock awards under Cleco's long-term
incentive plans. Mr. Dubroc holds 634 common shares under the Savings
and Investment Plan. The other executive officers included in the
amount shown for all directors, nominees and executive officers as a
group hold 2,750 common shares under the Savings and Investment Plan.
Shares of stock awarded under Cleco's long-term incentive plans that
were restricted as of January 31, 2001 were held by the persons in the
table above as follows: Mr. Eppler, 14,856; Mr. Howlin, 6,565; Mr.
Dubroc, 6,661; Ms. Powell, 5,426; Mr. Segura, 6,103; and the other
executive officers included in the amount shown for all directors,
nominees and executive officers as a group, 16,046.
8
(/2/)"Options" reflects the number of shares that could be purchased by
exercise of options at January 31, 2001 or within 60 days thereafter
under Cleco's long-term incentive plans.
(/3/)"Other" represents the number of shares of common stock as to which
the named individuals share voting and dispositive power with another
person and also represents the equivalent common stock shares
convertible from the preferred stock in the Savings and Investment
Plan.
(/4/)Represents the number of shares of Cleco preferred stock allocated
under the Savings and Investment Plan that are convertible into Cleco
common stock.
(/5/)Includes 56,174 shares owned by members of Mr. Crowell's family and
family trusts, for which beneficial ownership is disclaimed.
(/6/)Mr. Simmons' term as a director will cease at the 2001 annual meeting
of shareholders in accordance with the retirement age provisions of
Cleco's Bylaws. The 1,400 shares listed in the "Other" column for Mr.
Simmons include 1,400 shares owned by Mr. Simmons' spouse and a family
trust, for which beneficial ownership is disclaimed.
(/7/)Includes 1,400 shares owned by a family trust, for which beneficial
ownership is disclaimed.
(/8/)Represents the number of shares of Cleco common stock into which
preferred stock held in the Savings and Investment Plan is
convertible.
(/9/)Mr. Eppler is also a director of Cleco.
(/10/)The Savings and Investment Plan holds Cleco preferred stock that is
convertible, at any time, into shares of Cleco common stock; 118,421
shares of Cleco preferred stock, convertible into 568,421 shares of
Cleco common stock (2.5% of such common stock), have not yet been
allocated to accounts of participants in the plan. Executive officers
of Cleco serve with other Cleco employees as the administrators of
the plan and make voting decisions with respect to the unallocated
shares. Such shares have been included only once in calculating the
beneficial ownership of all officers and directors as a group.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth as of December 31, 2000, each person known to
Cleco who is the beneficial owner of more than 5% of the outstanding shares of
any class of Cleco's voting securities.
Amount and Nature Percent
Name and Address of of Beneficial of
Title of Class Beneficial Owner Ownership Class
-------------- ------------------- ----------------- -------
Preferred Stock UMB Bank, N.A.
Trustee of Cleco's Savings and
Investment Plan
1010 Grand Boulevard, Kansas
City, MO 64106 270,609(/1/) 96.3
Common Stock T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, MD 21202 1,720,800(/2/) 7.6
(/1/)Based upon information contained in Cleco's records and those of
Cleco's transfer agent. The 270,609 shares are held by UMB Bank, N.A.,
as Trustee of the Savings and Investment Plan. The 270,609 shares are
convertible into 1,298,923 shares of Cleco common stock, subject to
antidilution adjustment, or approximately 5.8% of the common stock
outstanding as of December 31, 2000. Participants in the Savings and
Investment Plan have voting rights for shares of Cleco preferred stock
allocated to their accounts. The Trustee is required to vote
unallocated shares in accordance with instructions received from the
plan administrator of the Savings and Investment Plan. The Trustee
also holds 515,242 shares of Cleco common stock, which are allocated
to the accounts of individual plan participants. The Trustee may vote
shares of common stock allocated to a participant's account only in
accordance with instructions received from the participant. The
combined holdings of the Trustee under the Savings and Investment
Plan, on an as-converted basis with regard to the Cleco preferred
stock, are 1,814,165 shares, or 8.1%, of the outstanding shares of
Cleco common stock as of December 31, 2000.
9
(/2/)As of December 31, 2000, based solely on a Schedule 13G filed with the
Securities and Exchange Commission. These securities are owned by
various individual and institutional investors for which T. Rowe Price
Associates, Inc. serves as investment adviser with power to direct
investments and/or sole power to vote the securities. For purposes of
the reporting requirements of the Securities Exchange Act of 1934, T.
Rowe Price is deemed to be a beneficial owner of such securities;
however, T. Rowe Price expressly disclaims that it is, in fact, the
beneficial owner of such securities.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Cleco's executive officers and directors, and persons who beneficially own more
than 10% of a registered class of Cleco's equity securities, to file with the
Securities and Exchange Commission and the New York Stock Exchange initial
reports of ownership and reports of changes in ownership of Cleco's equity
securities. To Cleco's knowledge, based solely on review of the copies of such
reports furnished to Cleco, during the fiscal year ended December 31, 2000, and
except as described below, all Section 16(a) filing requirements applicable to
its executive officers, directors and greater-than-10% shareholders were
satisfied. Cleco filed a late report on Form 4 for Mr. Crowell relating to
compensation paid to him in the form of Cleco common stock in September 2000.
10
EXECUTIVE COMPENSATION
The stock split that would result from the amendment to Cleco's Amended and
Restated Articles of Incorporation proposed in Proposal 3 of this proxy
statement would affect the number of Cleco common shares outstanding and the
number of common shares reserved for issuance reflected in this executive
compensation section and in other portions of the proxy statement, generally by
doubling these numbers. Please see "Proposal Number 3--Approval of Articles of
Amendment to the Amended and Restated Articles of Incorporation to Increase the
Amount of Authorized Common Stock and to Effect a Two-For-One Split of Common
Stock" on page 25 of this proxy statement for more information.
General
The Summary Compensation Table below sets forth individual compensation
information for the chief executive officer, the four other most highly paid
executive officers of Cleco and Mr. Nesbitt, who retired as chief executive
officer in May 2000, for services rendered in all capacities to Cleco and its
affiliates during the fiscal years ended December 31, 2000, December 31, 1999
and December 31, 1998. The table discloses the annual salary, bonuses and other
compensation awards and payouts to the named executive officers.
Summary Compensation Table
Name and Principal Other Annual LTIP All Other
Position Year Salary Bonus(/1/) Compensation(/2/) Payouts(/3/) Compensation(/4/)
- ------------------ ---- -------- ---------- ----------------- ------------ -----------------
David M. Eppler.......... 2000 $308,274 $208,488 $20,238 $ 277,329 $7,190
President and Chief 1999 236,923 131,808 12,198 132,165 6,776
Executive Officer 1998 205,389 90,300 8,000 64,862 6,924
Thomas J. Howlin......... 2000 $192,693 $105,152 $10,782 $ 190,138 $7,190
Senior Vice President-- 1999 174,007 80,459 5,818 0 7,111
Financial Services and 1998 167,424 70,690 2,417 0 5,217
Chief Financial Officer
Darrell J. Dubroc........ 2000 $182,885 $122,670 $ 8,837 $ 146,729 $6,854
Senior Vice President-- 1999 154,081 65,616 5,394 53,921 6,476
Generation Services 1998 147,039 53,120 3,098 0 6,474
Catherine C. Powell...... 2000 $157,122 $ 86,278 $ 8,555 $ 147,615 $6,998
Senior Vice President-- 1999 134,231 66,074 6,499 86,223 6,565
Employee and 1998 128,334 48,380 5,047 44,453 6,624
Corporate Services
Mark H. Segura........... 2000 $171,547 $106,163 $ 7,909 $ 103,548 $6,878
Senior Vice President-- 1999 138,352 61,318 4,457 51,389 6,565
Utility Operations 1998 114,236 50,480 2,533 0 9,621
Gregory L. Nesbitt....... 2000 $198,752 $ 74,842 $ 8,700 $1,114,497 $6,800
Retired Chief 1999 348,081 216,248 27,200 367,109 6,400
Executive Officer 1998 334,623 176,090 21,645 184,859 6,400
- --------
(/1/)The "Bonus" column includes cash awards that are payable or have been
paid to executive officers for the following:
. An annual incentive compensation program under which participants
may receive incentive compensation determined by the performance
of Cleco and the individual participants;
. Merit lump-sum payments received by certain named executive
officers; and
. Payments received under Cleco's spot award incentive plan, which
rewards individual performance.
11
(/2/)For 2000, 1999 and 1998, the "Other Annual Compensation" column
includes dividends paid on restricted stock awards under Cleco's long-
term incentive plans. Dividends on restricted stock are paid quarterly
and at the same rate as dividends on Cleco common stock.
(/3/)Restricted stock awards granted under Cleco's long-term incentive
plans are reported under the "Long-Term Incentive Plan--Awards in
2000" table below. The number and value of the aggregate restricted
stock holdings at December 31, 2000, a portion of which is included in
the "LTIP Payouts" column, for each of the named executive officers
were as follows:
. Mr. Eppler-- 11,975 shares with a value of $655,631;
. Mr. Howlin-- 6,380 shares with a value of $349,305;
. Mr. Dubroc-- 5,229 shares with a value of $286,288;
. Ms. Powell-- 5,062 shares with a value of $277,145; and
. Mr. Segura-- 4,680 shares with a value of $256,230.
The "LTIP Payouts" column includes the value of restricted stock and
opportunity shares granted or awarded under Cleco's long-term incentive plans
that vested in the following years and the related tax gross-up amounts:
. 2000--relating to the performance period January 1, 1997 to
December 31, 1999;
. 1999--relating to the performance period January 1, 1996 to
December 31, 1998; and
. 1998--relating to the performance period January 1, 1995 to
December 31, 1997.
(/4/)The "All Other Compensation" column includes the following:
. Amounts contributed or accrued by Cleco under the Savings and
Investment Plan on behalf of the named executive officers as
follows:
1998 1999 2000
Mr. Eppler.............................................. $6,400 $6,400 $6,800
Mr. Howlin.............................................. $4,237 $6,400 $6,800
Mr. Dubroc.............................................. $6,400 $6,400 $6,800
Ms. Powell.............................................. $6,400 $6,400 $6,800
Mr. Segura.............................................. $6,018 $6,400 $6,800
Mr. Nesbitt............................................. $6,400 $6,400 $6,800
. Term life insurance premiums paid for the benefit of the named
executive officers as follows:
1998 1999 2000
Mr. Eppler.............................................. $ 524 $ 376 $ 390
Mr. Howlin.............................................. $ 980 $ 711 $ 390
Mr. Dubroc.............................................. $ 74 $ 76 $ 54
Ms. Powell.............................................. $ 224 $ 165 $ 198
Mr. Segura.............................................. $ 218 $ 165 $ 78
Stock Option Plans
Options to purchase shares of Cleco common stock are outstanding under two
plans. The first is the 1990 Long-Term Incentive Compensation Plan adopted and
maintained by Cleco Power LLC, a wholly owned subsidiary of Cleco. An aggregate
of 800,000 shares of Cleco common stock was reserved for issuance under the
plan. The plan expired on January 1, 2000, and no additional grants can be
made. As of December 31, 2000, grants of stock options representing 537,700
shares of Cleco common stock were made under the plan.
In April 2000, Cleco's shareholders approved the 2000 Long-Term Incentive
Compensation Plan, effective as of January 1, 2000. Under this plan, certain
officers, employees and non-employee directors of Cleco may receive restricted
stock, stock options, phantom stock or stock appreciation rights, among other
awards. An aggregate of 800,000 shares of Cleco common stock has been reserved
for issuance under the plan. As of December 31, 2000, grants or awards
representing 85,900 shares of Cleco common stock were made.
12
No options to purchase Cleco common stock were granted to or exercised by
any of the persons named in the Summary Compensation Table in 2000. No stock
appreciation rights with respect to Cleco stock were awarded to or exercised by
any of the persons named in the Summary Compensation Table in 2000.
The table below lists, for each of the persons in the Summary Compensation
Table, the total number of exercisable and unexercisable options held on
December 31, 2000.
2000 Year-End Option Values
Number of Securities Value of Unexercised In-the-
Underlying Unexercised Money Options
Options at December 31, 2000(/1/) at December 31, 2000 ($)(/2/)
--------------------------------- -------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ---------------- ----------------- ------------- ---------------
David M. Eppler......... 0 72,000 0 1,109,400
Thomas J. Howlin........ 0 46,800 0 712,600
Darrell J. Dubroc....... 0 45,500 0 683,350
Catherine C. Powell..... 0 34,100 0 511,950
Mark H. Segura.......... 0 29,700 0 455,500
Gregory L. Nesbitt...... 24,000 0 540,000 0
- --------
(/1/)The options are subject to a vesting schedule and ordinarily expire ten
years from the date of grant. Based on Mr. Nesbitt's retirement on May 1,
2000, the options granted to him on July 23, 1999 became exercisable on
July 24, 2000 and remain exercisable until May 1, 2003.
(/2/)The closing price of Cleco common stock at December 31, 2000 was $54.75.
Long-Term Incentive Plan
The following table describes restricted stock grants made under the 2000
Long-Term Incentive Compensation Plan. Restricted stock grants are made in a
target amount that is subject to forfeiture, in whole or in part, if specified
performance goals are not attained during a designated three-year performance
cycle. The number of shares granted are listed in the "Number of Shares"
column. During the performance cycle, the recipient of the grant is the record
owner of these securities and, as such, is entitled to vote the shares and
receive dividends. The recipient cannot sell, pledge or otherwise transfer the
shares during the cycle. Restricted stock is awarded at the end of the
performance cycle, but is subject to an additional three-year holding period
before it can be sold or otherwise transferred.
The amounts listed in the "Number of Threshold Shares" column represent the
restricted stock grants that will vest if only the threshold goals are attained
during the performance cycle. The amounts listed in the "Number of Target
Shares" column represent the restricted stock grants that will vest if the
target levels of performance goals are attained during the performance cycle.
No portion of the restricted stock grants will vest if comparative shareholder
return (defined as the Cleco common stock price appreciation plus dividends
paid during the performance cycle) is less than the pre-established performance
level of the 40th percentile; once the performance level is determined, the
vesting schedule for restricted stock grants is as follows:
. No awards will vest if Cleco's performance on growth in net income and
return on investment is less than 75% of plan.
. Threshold performance on both factors provides a 30% award payout.
. Target performance on both factors at 100% of plan provides 100% award
payout.
Restricted stock vesting for performance above the threshold level and below
the target level are prorated.
The amounts listed under the "Number of Maximum Shares" column represent the
number of performance-based restricted stock grants that vest at the target
level and the number of performance-based "opportunity shares" that will vest
between the target and maximum levels established by the Compensation
Committee. Opportunity shares are phantom shares that are awarded in connection
with a restricted stock grant. The award of phantom shares does not entitle the
recipient to the rights of a shareholder until the issuance of
13
Cleco common stock at the end of the performance cycle. The phantom shares vest
based on performance above target levels for growth in net income and return on
investment. The vesting or payout schedule for the "opportunity shares"
included in this column, based on Cleco's performance on growth in net income
and return on investment, is as follows:
. No awards of "opportunity shares" vest if Cleco's performance is at or
below 100% of plan for growth in net income and return on investment.
. Maximum performance provides 100% "opportunity shares" award payout,
which is equal to 100% of the number of target shares of restricted
stock, at 125% of plan for growth in net income and 130% of plan for
return on investment.
Phantom or opportunity shares vested for performance above the target level and
below the maximum level are prorated. Cleco common stock issued in satisfaction
of an opportunity share is subject to a three-year holding period.
Long-Term Incentive Plan--Awards in 2000
Estimated Future Payouts
-----------------------------
Performance or
Other Period until Number of Number of Number of
Number of Maturation or Threshold Target Maximum
Name Shares Payout Shares Shares Shares
- ---- --------- ------------------- --------- --------- ---------
David M. Eppler......... 6,341 1/1/2000-12/31/2002 1,902 6,341 12,682
Thomas J. Howlin........ 2,854 1/1/2000-12/31/2002 856 2,854 5,707
Darrell J. Dubroc....... 2,780 1/1/2000-12/31/2002 834 2,780 5,561
Catherine C. Powell..... 2,341 1/1/2000-12/31/2002 702 2,341 4,683
Mark H. Segura.......... 2,703 1/1/2000-12/31/2002 811 2,703 5,407
Retirement Plans
Cleco's executive officers are participants in the Savings and Investment
Plan, the Pension Plan and a Supplemental Executive Retirement Plan, or SERP,
all of which are maintained by Cleco Power LLC. Contributions made in 2000 to
the Savings and Investment Plan for the benefit of the named executive officers
are listed in the Summary Compensation Table.
Pension Plan
The Pension Plan generally covers employees of Cleco who have attained age
21 and completed one year of service. The monthly benefit payable under the
Pension Plan at the normal retirement age of 65 is an amount determined with
reference to a participant's "compensation base" and years of service at
termination of employment. A participant's "compensation base" is calculated by
averaging compensation paid during the highest successive five completed
calendar years during the ten years prior to termination of employment.
Compensation is determined taking into account the salaries and bonuses
reflected in the "Salary" and "Bonus" columns of the Summary Compensation
Table. Benefits under the Pension Plan are fully vested upon the completion of
five years of service. The maximum annual benefit payable under the Pension
Plan for employees who retire in 2001 is the lesser of $140,000, a limitation
imposed by the Internal Revenue Code (the "Code"), or 100% of "average
compensation," as defined in the Code. Payments from the Pension Plan are not
reduced for Social Security benefits.
As of December 31, 2000, the following individuals had the following years
of service credited under the Pension Plan:
. Mr. Eppler 19 years
. Mr. Howlin 3 years
. Mr. Dubroc 15 years
. Ms. Powell 9 years
. Mr. Segura 16 years
. Mr. Nesbitt 20 years
14
SERP
Cleco Power LLC maintains a supplemental executive retirement plan, or SERP,
for the benefit of key executives of Cleco and its affiliates when designated
by the Compensation Committee. The SERP benefit is a percentage of each
participant's eligible compensation and reduced by any amount payable from the
Pension Plan. Under the SERP, eligible compensation is based upon the sum of
the highest annual salary paid during the five years prior to termination of
employment and the average of the three highest annual incentive compensation
program awards paid to the participant during the preceding five years.
As of December 31, 2000, the chief executive officer and the four most
highly compensated executive officers of Cleco participated in the SERP. Some
of these amounts are reflected in the "Salary" and "Bonus" columns of the
Summary Compensation Table. The following table illustrates the combined
estimated annual benefit payable from both the Pension Plan and the SERP at age
65 to persons at specified compensation levels. Benefits are computed on a
joint and 100% survivor annuity basis.
Years of Service at Retirement
--------------------------------------------
Final Total Compensation 15 20 25 30 35
------------------------ -------- -------- -------- -------- --------
$125,000 $ 81,250 $ 81,250 $ 81,250 $ 81,250 $ 81,250
150,000 97,500 97,500 97,500 97,500 97,500
175,000 113,750 113,750 113,750 113,750 113,750
200,000 130,000 130,000 130,000 130,000 130,000
225,000 146,250 146,250 146,250 146,250 146,250
250,000 162,500 162,500 162,500 162,500 162,500
300,000 195,000 195,000 195,000 195,000 195,000
400,000 260,000 260,000 260,000 260,000 260,000
450,000 292,500 292,500 292,500 292,500 292,500
500,000 325,000 325,000 325,000 325,000 325,000
Other
Mr. Eppler, Mr. Howlin, Mr. Dubroc, Ms. Powell and Mr. Segura may elect to
participate in a deferred compensation plan and defer the receipt of all or
part of his or her salary, bonus and option gain. Benefits are equal to the
amount credited to each executive's individual account based on compensation
deferred plus applicable investment returns and are generally payable when an
executive retires or attains a specified age.
Employment Agreements and Change in Control
During 2000, Cleco restated its existing executive employment agreements
with Mr. Eppler, Mr. Howlin, Mr. Dubroc, Ms. Powell and Mr. Segura and other
executive officers and general managers of Cleco. Each agreement provides
generally for the payment of a minimum annual salary, participation in all
Cleco benefit plans and programs applicable to Cleco's executive officers and
reimbursement of employment-related expenses incurred during the term of
employment. Under the agreements, the 2001 base salaries for the individuals
named in the Summary Compensation Table are as follows:
. Mr. Eppler $375,000
. Mr. Howlin $195,000
. Mr. Dubroc $240,000
. Ms. Powell $176,000
. Mr. Segura $215,000
Each agreement provides for an initial three-year term that renews annually for
one additional year, unless either Cleco or the executive officer gives notice
prior to renewal that such officer's term of employment will not be extended.
The agreements also generally require the executives not to disclose
confidential information relating to Cleco and, for a period of one year after
termination, not to hire Cleco officers, employees or agents, or solicit or
divert any customer or supplier of Cleco.
15
Severance Payments
No severance is payable if Cleco terminates the executive for cause or the
executive terminates other than on account of a constructive termination
(generally, a material reduction in base compensation, authority or duties). If
the executive terminates on account of death or disability, he or she is
entitled to a prorated bonus for the year of termination. If Cleco terminates
the executive, without cause, or the executive terminates on account of a
constructive termination, he or she is entitled to the following: (a) payment
of at least 100% of his or her annual base compensation, (b) payment of an
incentive bonus payable in the target amount for the year of termination, (c)
full vesting under the SERP, regardless of his or her actual number of years of
service, (d) continued group medical coverage paid for by Cleco for up to 18
months after such termination, and (e) payment of certain relocation benefits.
Lesser severance benefits are payable to other executive officers and managers.
Change in Control
If a change in control occurs and Cleco terminates the executive's
employment without cause, or the executive terminates his or her employment for
good reason, either within 60 days before or 36 months after such change, the
executive will receive change in control benefits in lieu of any severance
obligation otherwise payable under the agreement. The term "change in control"
is defined in the 2000 Long-Term Incentive Compensation Plan and includes the
following events:
. Any person or group becomes the direct or indirect beneficial owner of
20% or more of Cleco's outstanding voting securities;
. The majority of Cleco's board changes during a 24-month period, except in
certain cases;
. As a result of a merger or consolidation, less than 80% of the surviving
corporation's outstanding voting securities are owned by former Cleco
shareholders (excluding the affiliates of any party to the transaction);
. Cleco transfers all or substantially all of its assets;
. Cleco's shareholders approve a plan of dissolution or liquidation;
. Cleco sells, leases or otherwise disposes of all or substantially all of
its interest in Cleco Power LLC; or
. Certain other significant events that Cleco would be required to report
in a proxy statement.
Cleco is obligated to provide the executive: (a) the target amount of the
executive's incentive bonus for the year of termination, (b) an amount equal to
three times the executive's average compensation paid during the five calendar
years preceding the change in control, (c) accelerated vesting, lapse of
restrictions and all performance objectives are deemed satisfied as to any
outstanding grants or awards made to the executive under Cleco's long-term
incentive plans, (d) full vesting under the SERP and a minimum benefit, (e) an
amount equal to Cleco's maximum matching contribution obligation under the
Savings and Investment Plan for a three-year period, (f) continued group
medical coverage paid for by Cleco for up to three years or until similar
coverage is obtained, and (g) certain relocation benefits.
16
In the event of a change in control, payments (for item (b) above) under the
agreements for the individuals named in the Summary Compensation Table, using
the average compensation for the years 1996 through 2000, will be approximately
as follows:
. Mr. Eppler $1,166,453
. Mr. Howlin $ 557,865
. Mr. Dubroc $ 592,582
. Ms. Powell $ 645,113
. Mr. Segura $ 529,145
Lesser change in control benefits are provided to other executive officers and
managers.
Business Transaction
If the executive's employment with Cleco and its affiliates is involuntarily
terminated on account of a business transaction, other than for cause, the
executive is entitled to the following: (a) payment of at least 100% of his or
her annual base compensation, (b) an incentive bonus payable in the target
amount for the year of termination, (c) accelerated vesting, lapse of
restrictions and all performance objectives are deemed satisfied as to any
outstanding grants or awards made to the executive under Cleco's long-term
incentive plans, (d) full vesting under the SERP and a minimum benefit, (e)
continued group medical coverage, and (f) relocation benefits. A business
transaction is defined as the sale of the stock or equity interests of an
affiliate of Cleco or the sale, lease or other disposition of all or a
substantial portion of the assets of an affiliate of Cleco other than a
transaction that constitutes a change in control.
Tax Payment
Payments to Mr. Eppler, Mr. Howlin, Mr. Dubroc, Ms. Powell and Mr. Segura in
connection with a change in control or business transaction will be increased,
to the extent necessary, to offset the effects of any golden parachute excise
taxes payable with respect to such payments. The agreements for other executive
officers and managers provide that benefits will be cut back in an amount
sufficient to avoid applicable excise taxes.
Compensation Committee Report on Executive Compensation
The Compensation Committee has prepared its report of 2000 executive
compensation. The committee, composed entirely of directors who are not current
or former officers or employees of Cleco, is responsible for implementing or
making recommendations to the board of directors with respect to Cleco's
officer compensation programs. The committee has retained the services of
executive compensation consultants to provide professional assistance, data and
advice regarding pay practices at Cleco. This report describes the basis on
which such 2000 compensation determinations or recommendations were made by the
committee with respect to Cleco's executive officers and provides specific
information regarding compensation of Cleco's executive officers as a group.
Cleco's chief executive officer and the four other most highly compensated
executive officers are sometimes referred to as the "Named Executives."
Section 162(m) of the Code limits to $1,000,000 in a taxable year the
deduction Cleco may claim for compensation paid to an executive officer, unless
certain performance-based requirements are met. Cleco has reviewed this
provision and does not anticipate any payment of compensation in the near term
in excess of that which is deductible under Section 162(m). Under the Cleco
Corporation 2000 Long-Term Incentive Compensation Plan, which was presented to
Cleco shareholders and approved at the 2000 annual meeting, the committee has
the discretion to determine whether to make grants or awards contingent upon
the achievement of objective performance goals necessary to qualify as
performance-based compensation under Section 162(m).
17
Compensation Philosophy and Overall Objective of Executive Compensation
Programs
Cleco seeks to ensure that executive compensation is directly linked to
corporate performance and increased shareholder value and is comparable with
pay practices in the industry. Each year, the committee, in making compensation
decisions and recommendations, and the board of directors, in approving base
salaries, review Cleco's performance and compare such performance to specified
internal and external performance standards. The following guidelines are used
by the committee to make compensation decisions and recommendations:
. To provide variable compensation opportunities that are linked to the
financial performance of Cleco and that align executive compensation with
the interests of shareholders.
. To provide incentives to increase corporate performance and shareholder
value relative to that of other electric utilities and energy services
companies.
. To establish executive officer base pay levels somewhat below the
competitive market, while providing incentive awards above the market
when designated performance objectives are achieved.
. To provide a competitive total compensation package that is "at-risk"
driven and enables Cleco to attract and retain key executives.
Compensation Program Components
The compensation program for executive officers is currently comprised of
base salary, annual performance-related incentives, performance-based awards of
restricted stock and related "opportunity shares" and grants of stock options.
The awards of performance-based restricted stock, related "opportunity shares"
and grants of stock options are made under Cleco's long-term incentive
compensation plans. The compensation programs for Cleco's executive officers
are further explained below.
Base Salaries
Base pay levels are recommended by the committee and are largely determined
through comparisons with those of utilities and other energy services companies
of similar size and complexity to Cleco and, as appropriate, are based on the
responsibilities of the specific executive and a blend of general industry and
utilities/energy services companies. Actual salaries are based on individual
performance contributions within an overall salary and total compensation
administration program. While the actual relationship may vary from year to
year, it is Cleco's policy to set base pay levels for Cleco's executive
officers, including the Named Executives, somewhat below the average of the
competitive market. Including 2000 base salary increases, actual base pay
levels for Cleco's executive officers, including the Named Executives, are
consistent with this policy. Increases in base salaries for 2000 for continuing
executive officers were recommended by the committee and approved by the board
of directors in January 2000. In January 2000, the Named Executives, other than
the chief executive officer, received pay increases that averaged 16.4%. These
adjustments reflected both increases in responsibilities and an assessment of
individual contributions, as well as increases in the competitive market.
Annual Incentive Compensation
Cleco's executive officers are eligible to participate in an annual
incentive compensation program, the objectives of which are to deliver
competitive levels of compensation for the attainment of short-term financial
objectives Cleco believes contribute to shareholder value over time and to
reinforce behavior that contributes to consistent growth of the enterprise. The
committee establishes total target annual bonus levels based on 50th percentile
bonus levels at other companies of similar size and complexity depending on the
defined competitive compensation market for the specific executive position.
Many of the utility/energy services companies utilized in the competitive
analysis are included in the Edison Electric Institute Index (found on page 22
of this proxy statement). In addition, other energy services companies used for
comparison purposes include Fortis SEC Inc., Consol Energy Inc., Calpine Corp.,
Midamerican Energy Holdings, St. Francis Cap Corp., and Florida Public
18
Utilities Co. Together with the Edison Electric Institute Index, these
companies are referred to in this report as the "Selected Peer Group
Companies." Targeted awards for Cleco's corporate officers under this program
range from 10% to 50% of base salary. Awards are paid in the first quarter of
the year following the year for which the award is earned. The amounts of
actual awards are further subject to the discretion of the committee, within
established program guidelines. For example, the committee has the ability to
make adjustments to reflect extraordinary items of income or expense. Awards
are based on both corporate and business unit performance. Corporate
performance awards range from 60% to 100% of total target bonus levels and are
based on earnings-per-share goals and Cleco's return on average equity in
relation to that of companies in the selected peer group. Based on actual
results, awards from 0% to 150% of corporate target incentive levels may be
made.
For awards based on 2000 performance, the primary earnings per share target
was $2.75. Cleco's return on average equity target was the 50th to 59th
percentile of the selected peer group companies. Cleco's actual 2000 return on
equity performance was in the 75th to 99th percentile of the selected peer
group companies, and its primary earnings per share in 2000 was $2.81. Based on
this corporate performance, the committee approved awards for 2000 at 128.3% of
corporate target annual bonus levels. Business unit performance awards ranged
from 0% to 40% of total target bonus levels and were based on various goals,
depending upon the responsibilities of the executive. Based on actual results,
awards from 0% to 250% of business unit target incentive levels may be made. On
a combined corporate and business unit basis, total annual incentive awards for
executive officers ranged from approximately 128% to 148% of target.
Long-Term Incentive Compensation Plan
The committee supports increased stock ownership by Cleco's key executives
and favors awards to key executives of stock and/or cash based on Cleco's stock
price appreciation and other measures of performance. The basis for such
position is the committee's belief that Cleco benefits by providing those
persons who have substantial responsibility for the management and growth of
Cleco with additional incentives. Thus, under the long-term incentive plan,
executive officers may be eligible to receive performance-based grants of
restricted stock, related "opportunity shares," restricted unit grant awards,
related "opportunity units," stock options and stock appreciation rights,
giving them the right to receive or purchase shares of Cleco common stock under
specified circumstances or to receive cash awards based on Cleco's stock price
appreciation or the achievement of pre-established long-term performance goals.
The committee believes that such programs are also important as a means of
retaining senior management over the long term. The number of shares of Cleco
common stock and other awards granted to executive officers under the long-term
incentive plan is based on competitive compensation practices of companies in
the defined market for the specific executive.
Grants and awards of restricted stock as well as related "opportunity
shares" under the long-term incentive plan were made to all named executive
officers in 2000, except the former Chief Executive Officer. Awards actually
earned are based on Cleco's performance during a three-year performance cycle
compared to the selected peer group companies over the same period. For the
eighth three-year performance cycle, which ended December 31, 2000, Cleco's
total return to shareholders placed it at the 90th percentile compared to the
selected peer group companies. As a result, the actual awards were made above
the target level in order to reflect Cleco's relative performance. Provisions
of the long-term restricted stock grants program require an additional three-
year holding period following vesting before any shares may be sold. With the
three-year performance cycle beginning January 1, 1999, the long-term incentive
plan was modified to incorporate strategic plan performance measures. These
measures included compound growth in net income and return on investment over
the performance period, as well as peer group comparative total shareholder
return for the three-year cycle.
19
Other Executive Compensation Plans
Cleco also provides executive officers with certain executive benefits, such
as a supplemental retirement plan, a deferred compensation plan and employment
agreements. The committee considers each of these programs to be reasonably
competitive and appropriate for Cleco's executive officers.
2000 Compensation for the President and Chief Executive Officer
The committee believes that the role of the chief executive officer is
particularly important in reaching corporate goals and accomplishing
organizational objectives. As such, for fiscal year 2000, the committee made
the following recommendations or determinations regarding the compensation for
Mr. Eppler:
. Base Salary--Mr. Eppler was promoted to president and chief executive
officer in May 2000. His base salary was increased in January 2000 from
$240,000 to $300,000, an increase of 25%. In May 2000, he received an
adjustment to $325,000. The amount of this increase was based on his
promotion to chief executive officer and the continued performance of Mr.
Eppler as evaluated by the committee. Even with this adjustment, his base
pay is significantly below peers in the industry.
. Annual Incentive--Mr. Eppler was eligible to participate in 2000 in
Cleco's annual incentive compensation program discussed above. The chief
executive officer's 2000 target award was 50% of his base salary. His
actual award for 2000 was 128.3% of target, or 64% of his base salary.
. Long-Term Incentive Plan--Grants and awards were made to Mr. Eppler under
the long-term incentive plan during 2000. The number of shares of stock
and other awards granted to the chief executive officer under the long-
term incentive plan are based on competitive practices within the defined
competitive market for the position. Administration is consistent with
the provisions of the plan as described above in "Long-Term Incentive
Compensation Plan." For the three-year performance cycle ended December
31, 2000, the chief executive officer's award was 150% of the target, or
3,243 shares.
For fiscal year 2000, the committee made the following recommendations
regarding the compensation of former chairman and chief executive officer, Mr.
Gregory L. Nesbitt, who retired effective May 1, 2000:
. Base Salary--Mr. Nesbitt retired effective May 1, 2000. In January 2000,
while he received no increase to his annual base salary of $350,000, he
received a lump-sum merit bonus of $50,000 based on his performance as
evaluated by the committee.
. Annual Incentive--Mr. Nesbitt was eligible to participate in 2000 in
Cleco's annual incentive plan discussed above. The former chief executive
officer's 2000 target award was 50% of his base salary. His actual award
was 128.3% of target, prorated based on the number of months of service
during 2000.
. Long-Term Incentive Plan--No new grants of restricted stock were made to
Mr. Nesbitt during 2000 under the long-term incentive plan. As provided
in the plan, upon retirement, Mr. Nesbitt was awarded a total of 18,062
shares. This number represents a prorated portion of restricted shares
for three-year performance cycles ending December 31, 1999, 2000 and
2001.
Summary
The committee believes that base pay levels and increases and performance-
based awards are reasonable and competitive with the compensation programs
provided to officers and other executives by other companies of similar size
and complexity to Cleco. The committee believes further that the degree of
performance sensitivity in the annual incentive program continues to be
reasonable, yielding awards that are directly linked to the annual financial
and operational results of Cleco. The long-term incentive compensation plan
provides, in the view of the committee, financial opportunities to participants
and retention features for Cleco that are consistent with the relative returns
that are generated on behalf of Cleco's shareholders.
20
The Compensation Committee of the Board of Directors of Cleco Corporation
Edward M. Simmons, Chairman
Brig. General Sherian G. Cadoria (U.S. Army Retired)
J. Patrick Garrett
Elton R. King
William H. Walker, Jr.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee of the board of directors are set
forth above. There are no matters relating to interlocks or insider
participation that Cleco is required to report.
Report of the Audit Committee
The Audit Committee of the board of directors is composed of four directors
who are independent directors as defined under the rules of the New York Stock
Exchange. The Audit Committee operates under a written charter adopted by the
board of directors in April 2000, a copy of which is included as Appendix A to
this proxy statement.
Management has the responsibility for the preparation of Cleco's financial
statements, and PricewaterhouseCoopers LLP (the "Independent Auditors") has the
responsibility for the audit of those statements. The Audit Committee
recommends to Cleco's board of directors the appointment of Cleco's independent
auditors, reviews the scope of audits, reviews and recommends to the board of
directors financial reporting and accounting practices and reviews Cleco's
procedures for internal auditing and the adequacy of the systems of internal
controls of Cleco.
The Audit Committee held three meetings during 2000. The meetings were
designed to facilitate and encourage private communication between the Audit
Committee and Cleco's internal auditors and Cleco's Independent Auditors.
During these meetings, the Audit Committee reviewed and discussed the
audited financial statements with management of Cleco and the Independent
Auditors. The discussions with the Independent Auditors included the matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees). In addition, the Audit Committee
received the written disclosures and the letter regarding independence from the
Independent Auditors as required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) and discussed this information
regarding PricewaterhouseCoopers' independence with PricewaterhouseCoopers LLP.
Based on the review and discussions referred to above, the Audit Committee
recommended to the board of directors that the audited financial statements be
included in Cleco's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 for filing with the Securities and Exchange Commission.
The Audit Committee of the Board of Directors of Cleco Corporation
F. Ben James, Jr., Chairman
Richard B. Crowell
A. DeLoach Martin, Jr.
Robert T. Ratcliff
21
Performance Graph
The following performance graph compares the performance of Cleco common
stock to the S&P 500 Index and to the Edison Electric Institute Index, which
includes Cleco, for Cleco's last five fiscal years. The graph assumes that the
value of the investment in Cleco common stock and each index was $100 at
December 31, 1995 and that all dividends were reinvested.
Performance Graph
[PERFORMANCE GRAPH]
December 31,
-----------------------------------------------
1995 1996 1997 1998 1999 2000
------- ------- ------- ------- ------- -------
Cleco........................... $100.00 $108.23 $128.04 $141.25 $138.86 $200.02
S&P 500 Index................... $100.00 $116.85 $144.51 $174.93 $203.51 $180.55
EEI Index(/1/).................. $100.00 $101.20 $128.90 $146.80 $119.50 $176.82
- --------
(/1/As)of December 31, 2000, the Edison Electric Institute Index was comprised
of: Allegheny Energy; ALLETE (Incorporated as Minnesota Power, Inc.,
formerly known as Minnesota Power & Light Co.); Alliant Energy; Ameren
Corporation; American Electric Power Company, Inc.; Avista; Bangor Hydro-
Elec Co.; Black Hills Corporation; Central Vermont Public Service
Corporation; CH Energy Group, Inc. (new holding company for Central Hudson
Gas & Electric Corporation); Cinergy Corp; Cleco Corporation; CMS Energy
Corp.; CONECTIV; Consolidated Edison Company of New York, Inc.;
Constellation Energy Group, Inc.; Dominion Resources, Inc.; DPL Inc.; DQE
Inc.; DTE Energy Co.; Duke Energy Corporation; Edison International; El
Paso Electric Company; Empire District Electric Company; Energy East Corp.;
Entergy Corporation; Exelon Corporation (a company formed by the business
combination of Unicom Corporation and Peco Energy Co.); FirstEnergy Corp.;
FPL Group, Inc.; GPU Inc.; Green Mountain Power Corporation; Hawaiian
Electric Industries, Inc.; IDACORP; IPALCO Enterprises Inc.; Kansas City
Power & Light Company; Keyspan Corp.; Madison Gas & Electric Co.; Maine
Public Service Co.; MDU Resources Group, Inc.; Montana Power Co.; Niagara
Mohawk Power Corp.; NiSource Inc.; Northeast Utilities; Northwestern
Corporation; NSTAR; OGE Energy; Otter Tail Power Company; PG&E Corp.;
Pinnacle West Capital Corp.; Potomac Electric Power Corporation; PPL
Corporation (formerly PP&L Resources Inc.); Progress Energy, Inc. (a
company formed by the business combination of CP&L Energy
(notes continued on following page)
22
(notes continued)
Inc., the holding company of Carolina Power & Light Company, and Florida
Progress Corporation); Public Service Company of New Mexico; Public Service
Enterprise Group Incorporated; Puget Sound Energy, Inc.; RGS Energy Group,
Inc.; Reliant Energy; Scana Corp; Sempra Energy; Sierra Pacific Resources;
Southern Company; TECO Energy, Inc.; TXU; UniSource Energy Corporation;
United Illuminating Company; Unitil Corp.; UtiliCorp United, Inc.; Western
Resources, Inc.; Wisconsin Energy Corporation; WPS Resources Corporation;
and Xcel Energy Inc. (a company formed by the business combination of
Northern States Power Co. and New Century Energies Inc.). The following
companies were deleted from the Edison Electric Institute Index used in
Cleco's proxy statement relating to its 2000 annual meeting of
shareholders: Central and South West Corporation (acquired by American
Electric Power Company Inc.); CMP Group, Inc. (acquired by Energy East
Corporation); Eastern Utilities Associates (acquired by National Grid Group
plc); Illinova Corp. (acquired by Dynegy Inc.); LG&E Energy Corp. (acquired
by Powergen plc); New England Electric System (acquired by National Grid
Group plc); SIGCORP, Inc. (acquired by Vectren Corporation); St. Joseph
Light & Power Company (acquired by UtiliCorp United, Inc.); and TNP
Enterprises, Inc. (acquired by an investor group).
23
PROPOSAL NUMBER 2--APPOINTMENT OF INDEPENDENT AUDITORS
The firm of PricewaterhouseCoopers LLP, or its predecessor, Coopers &
Lybrand LLP, independent certified public accountants, has served as auditors
of Cleco and its predecessor continuously since 1952. Cleco's board of
directors, upon recommendation of the Audit Committee, proposes to continue
such firm's services as auditors of Cleco for the year ending December 31,
2001. The persons named in the accompanying proxy will vote in accordance with
the choice specified thereon, or, if no choice is properly indicated, in favor
of the appointment of PricewaterhouseCoopers LLP as auditors of Cleco.
A representative of PricewaterhouseCoopers LLP is expected to attend the
annual meeting. If present, the representative will have an opportunity to
make a statement during the meeting if he or she so desires and will respond
to appropriate questions raised during the meeting.
Fees billed by PricewaterhouseCoopers LLP, Cleco's independent accountants,
in 2000 were as follows:
Audit Fees--Audit fees of PricewaterhouseCoopers LLP during 2000 for the
audit of Cleco's annual financial statements and the review of those
financial statements included in Cleco's quarterly reports on Forms 10-Q
are estimated to be $377,000, of which an aggregate amount of $228,000 has
been billed to Cleco through December 31, 2000.
Financial Information Systems Design and Implementation Fees--Aggregate
fees billed to Cleco by PricewaterhouseCoopers LLP during 2000 for
financial information systems design and implementation services totaled
$2,049,000.
All Other Fees--Aggregate fees billed to Cleco by PricewaterhouseCoopers
LLP during 2000 for all other services totaled $548,000.
The fees paid for financial information systems design and implementation
relate to two software projects on which PricewaterhouseCoopers' management
consulting services group consulted with Cleco. The other fees relate to
traditional accounting services such as tax planning, review of tax returns
and a regulatory compliance review. The Audit Committee has considered the
compatibility of these non-audit services with maintaining
PricewaterhouseCoopers' independence.
The board of directors has unanimously approved the appointment of
PricewaterhouseCoopers LLP as independent auditors and recommends that you
vote "FOR" the appointment of PricewaterhouseCoopers LLP as independent
auditors.
24
PROPOSAL NUMBER 3--APPROVAL OF ARTICLES OF AMENDMENT TO THE AMENDED AND
RESTATED ARTICLES OF INCORPORATION TO INCREASE THE AMOUNT OF AUTHORIZED COMMON
STOCK AND TO EFFECT A TWO-FOR-ONE SPLIT OF COMMON STOCK
Cleco's board of directors has unanimously approved Articles of Amendment to
Cleco's Amended and Restated Articles of Incorporation in which:
. the number of authorized shares of common stock would be increased from
50,000,000 shares to 100,000,000 shares;
. each presently issued share of common stock would be converted into two
shares of common stock; and
. the par value of the common stock would be reduced from $2 per share to
$1 per share.
A copy of the text of the proposed Articles of Amendment is attached as
Appendix B to this proxy statement. As of February 26, 2001 there were
22,495,820 shares of common stock outstanding. A maximum of 800,000 shares of
common stock was reserved for issuance under the 2000 Long-Term Incentive
Compensation Plan and a maximum of 322,000 shares of common stock was reserved
for issuance under the Employee Stock Purchase Plan; some of the shares are now
issued and outstanding.
The proposed Articles of Amendment to the Amended and Restated Articles of
Incorporation would increase the number of authorized shares of common stock
from 50,000,000 to 100,000,000 for general corporate purposes, including the
proposed two-for-one stock split. If the Articles of Amendment are approved by
the shareholders, Cleco's outstanding convertible securities and stock options,
and the number of shares reserved for issuance pursuant to employee benefit
plans, will be adjusted as appropriate to reflect the stock split. The unissued
additional shares of common stock would be available for issuance in the future
by the board of directors without further authorization by a vote of
shareholders other than as required by applicable law and stock exchange rules.
If approved by the shareholders, the stock split would be effected by filing
the Articles of Amendment with the Secretary of State of the State of
Louisiana. This would result in each holder of common stock of record at the
close of business on the date of filing receiving one additional share of
common stock for each share of common stock held. All certificates outstanding
on the date of filing would continue to be valid, and, after the filing of the
Articles of Amendment, would represent the same number of shares of common
stock as they represented prior to the split. Such shares would be deemed to
have a par value of $1 per share, regardless of any statement to the contrary
on the face of such certificates. Shareholders should not return their existing
certificates to Cleco or its transfer agent. Instead, shareholders should
retain their certificates and will receive a new certificate for one additional
share for each share held at the close of business on the date of filing. It is
expected that new certificates representing the additional shares would be
mailed to shareholders shortly after the date of filing.
Cleco expects that any per share quarterly dividends declared or paid with
respect to the common stock after the stock split would be reduced
proportionately to give effect to the increased number of shares of common
stock outstanding. The proposed stock split would not change the aggregate
amounts of Cleco's stated capital or surplus accounts and would not affect the
proportionate interest of any common shareholder or the ratio of issued common
shares to authorized but unissued common shares. The Articles of Amendment and
the stock split would not change the powers, preferences or rights of the
common stock. Holders of common stock of Cleco do not and would not have any
preemptive rights to subscribe to or purchase any of the authorized shares of
common stock. The Articles of Amendment and the stock split would not change
the powers, preferences or rights of the $100 Preferred Stock but would dilute
the current voting power of the $100 Preferred Stock with respect to any
corporate actions upon which the $100 Preferred Stock is entitled to vote,
except in instances where the $100 Preferred Stock votes as a single class.
The board of directors has proposed the Articles of Amendment to Cleco's
Amended and Restated Articles of Incorporation and the resulting two-for-one
stock split because the board believes that the split would result
25
in a decrease in the market price of the common stock to a level at which the
common stock would be more readily tradable and accessible to a broader base of
Cleco's investors. A lower per-share price would enable investors to purchase
"round lots" of Cleco's common stock for a lower total price than is the case
currently. It is expected that, at least initially, the trading price of the
common stock would be reduced to approximately one-half the trading price
immediately before the split. Shareholders should be aware, however, that
brokerage charges and any applicable transfer taxes on sales and transfers of
shares may be higher after the stock split on the same relative interest in
Cleco because that interest would be represented by a greater number of shares.
In the opinion of Cleco's tax counsel: (a) the stock split, if implemented,
will result in no gain or loss to shareholders for federal income tax purposes,
(b) the basis of the common stock, par value $1 per share, held by a
shareholder after the stock split will be equal to the basis of the common
stock, par value $2 per share, held before the split and (c) the holding period
of the common stock, par value $1 per share, held after the stock split will
include the period for which the common stock, par value $2 per share, held
before the split was held, provided that the common stock, par value $2 per
share, was held as a capital asset at the time of the split.
Cleco will apply for listing on the New York Stock Exchange and the Pacific
Stock Exchange, on which Cleco's common shares are listed, of the additional
shares of common stock that would be outstanding after the split.
Financial statements are not included in this proxy statement, as they are
not material to a decision upon the proposed amendment.
The board of directors recommends a vote "FOR" adoption of the proposed
Articles of Amendment to the Amended and Restated Articles of Incorporation. If
the Articles of Amendment are adopted, Cleco expects that they would be filed
with the Secretary of State of the State of Louisiana on a date shortly after
the annual meeting of shareholders and that the stock split would become
effective at the close of business on such date.
26
ANNUAL REPORT
A shareholder survey card and the enclosed 2000 Annual Report to
Shareholders, which contains Cleco's consolidated financial statements for the
year ended December 31, 2000, accompany the proxy material being mailed to all
shareholders. The shareholder survey card and the 2000 Annual Report to
Shareholders are not a part of the proxy solicitation material.
PROPOSALS BY SHAREHOLDERS
Any shareholder who intends to present a proposal at the 2002 annual meeting
of shareholders and who requests inclusion of the proposal in Cleco's 2002
proxy statement and form of proxy in accordance with applicable Securities and
Exchange Commission rules must file such proposal with Cleco no later than
November 16, 2001. Proposals should be addressed to: Cleco Corporation, P.O.
Box 5000, Pineville, Louisiana 71361-5000, Attn: Secretary.
The Bylaws of Cleco also require advance notice of other proposals by
shareholders to be presented at any meeting of Cleco shareholders. In the case
of the 2002 annual meeting, the required notice generally must be received by
the Cleco Secretary no later than December 20, 2001. In order for a matter to
be properly presented at the meeting, the notice must also set forth as to each
such matter of business proposed:
. a brief description of the matter and the reasons for conducting it at
the meeting;
. your name and address;
. the name of all other persons, if any, with whom you are acting in
concert;
. the class and number of Cleco shares you beneficially own;
. the class and number of Cleco shares beneficially owned by all other
persons, if any, with whom you are acting in concert; and
. any material interest of yours or any person with whom you are acting in
concert in the business proposed.
If you desire to nominate a director or amend Cleco's Amended and Restated
Articles of Incorporation or Bylaws at the 2002 annual meeting, the Bylaws
require that you give written notice to Cleco's Secretary no later than October
21, 2001.
The notice for nomination of a director must set forth, in addition to
certain information regarding the business experience of and your relationship
to your nominee:
. the number of Cleco shares you beneficially own;
. the names of all other persons, if any, with whom you are acting in
concert; and
. the number of Cleco shares beneficially owned by each such person.
The Nominating Committee will consider nominees for director who are
recommended by shareholders in accordance with the above procedures and Cleco's
Bylaws.
The notice for amendment of Cleco's Amended and Restated Articles of
Incorporation or Bylaws must be accompanied by:
. the text of your proposed amendment;
. evidence, reasonably satisfactory to Cleco's Secretary, of your status as
a shareholder and the number of Cleco shares you beneficially own;
. a list of the names of all other persons, if any, with whom you are
acting in concert and the number of Cleco shares beneficially owned by
them; and
27
. an opinion of counsel, reasonably satisfactory to Cleco's board of
directors, to the effect that Cleco's Amended and Restated Articles of
Incorporation or Bylaws, as amended, would not conflict with Louisiana
law.
You may obtain a copy of Cleco's Bylaws, in which these procedures are set
forth, upon written request to Michael P. Prudhomme, Secretary, Cleco
Corporation, 2030 Donahue Ferry Road, Pineville, Louisiana 71360-5226.
OTHER MATTERS
Management does not intend to bring any other matters before the meeting and
has not been informed that any other matters are to be presented to the meeting
by others. If other matters properly come before the meeting or any
adjournments or postponements, the persons named in the accompanying proxy and
acting thereunder intend to vote in accordance with their best judgment.
All shares of Cleco common stock or Cleco preferred stock that a shareholder
owns, no matter how few, should be represented at the annual meeting. The
accompanying proxy should therefore be completed, signed, dated and returned as
soon as possible.
By Order of Cleco's Board of
Directors,
/s/ DAVID M. EPPLER
David M. Eppler
President, Chief Executive Officer
and Director
March 16, 2001
28
APPENDIX A
AUDIT COMMITTEE CHARTER OF CLECO CORPORATION
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing:
a. The financial reports and other financial information provided by the
Corporation to its shareholders and others;
b. The Corporation's systems of internal controls regarding finance,
accounting, and ethics which management and the Board of Directors have
established; and
c. The Corporation's auditing, accounting, and financial reporting
processes.
The Audit Committee's primary duties and responsibilities are to:
a. Provide independent review of auditing, accounting and financial
reporting processes.
b. Advise the Board of Directors of needed changes in these processes.
c. Review and evaluate the activities of both independent public
accountants and internal auditors.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board of Directors, each of whom shall be free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment from management and the
Corporation. Each member shall be "independent" as defined from time to time by
the listing standards of the New York Stock Exchange (the "NYSE") and the
Pacific Stock Exchange (the "PSE") and by the applicable regulations of the
Securities and Exchange Commission (the "SEC"), and shall meet any other
applicable independence requirements of the NYSE, the PSE and the SEC.
Each member shall be (or shall become within a reasonable time after
appointment) financially literate, and at least one member shall have
accounting or related financial management expertise, as the Board of Directors
interprets such qualifications in its business judgment.
The members of the Committee shall be elected by the Board of Directors at
the annual organizational meeting of the Board held each April or until their
successors shall be duly elected and qualified. If the full Board does not
elect a Chair, then the members of the Committee may designate a Chair by
majority vote of the full Committee membership.
III. MEETINGS
The Committee shall meet at least two times annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee shall meet with management, the manager of the internal auditing
department, and the independent accountants in separate executive sessions to
discuss any matters that the Committee or each of these groups believes should
be discussed privately. In addition, the Committee or at least its Chair shall
meet by telephone conference with the independent accountants and management
quarterly to discuss any significant adjustments or required disclosures prior
to the filing of the Form 10-Q.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee shall:
Documents/Reports Review
a. Review and recommend to the Board of Directors changes to this Charter
periodically, at least annually, as conditions dictate.
A-1
b. Review the Corporation's annual financial statements and any reports or
other financial information submitted to any governmental/regulatory
body, or the public, including any certification, report, opinion, or
review rendered by the independent accountants.
c. Review the regular internal reports to management prepared by the
internal auditing department and any related response from management.
d. Review with financial management and the independent accountants the 10-
Q prior to its filing or prior to the release of earnings.
Independent Accountants
a. Have the ultimate authority and responsibility to select, evaluate and,
where appropriate, replace the independent public accountants. The
independent accountants are ultimately accountable to the Board of
Directors and the Audit Committee.
b. Assure that, on an annual basis, the independent accountants submit to
the Audit Committee a formal written statement delineating all
relationships between the accountants and the Corporation. The Audit
Committee should review and discuss with the accountants all significant
relationships the accountants have with the Corporation to determine the
accountants' independence.
c. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and
accuracy of the organization's financial statements.
Financial Reporting Processes
a. In consultation with the independent accountants and the internal
auditors, review the integrity of the organization's financial reporting
processes, both internal and external.
b. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in
its financial reporting.
c. Consider and approve, if appropriate, major changes to the Corporation's
auditing and accounting principles and practices as suggested by the
independent accountants, management, or the internal auditing
department.
d. Assure that management has the proper review system in place to ensure
that the Corporation's financial statements, reports and other financial
information disseminated to governmental/regulatory organizations and
the public satisfy legal requirements.
e. Review activities, organizational structure, and qualifications of the
internal audit department.
f. Review, with the Corporation's counsel, any legal matter that could have
a significant impact on the Corporation's financial statements.
g. Perform any other activities consistent with the Charter, the
Corporation's By-laws and governing law, as the Audit Committee or the
Board of Directors deems necessary or appropriate.
Process Improvement
a. Establish regular and separate systems of reporting to the Audit
Committee by management, the independent accountants, and the internal
auditors regarding any significant judgments made in management's
preparation of the financial statements and the view of each as to
appropriateness of such judgments.
b. Following completion of the annual audit, review separately with
management, the independent accountants, and the internal auditing
department any significant difficulties encountered during the course of
the audit, including any restrictions on the scope of work or access to
required information.
A-2
c. Review any significant disagreement among management and the independent
accountants or the internal auditing department in connection with the
preparation of the financial statements.
d. Review with the independent accountants, the internal auditing
department, and management the extent to which changes or improvements
in financial or accounting practices, as approved by the Audit
Committee, have been implemented.
A-3
APPENDIX B
ARTICLES OF AMENDMENT
TO THE
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CLECO CORPORATION
STATE OF LOUISIANA
PARISH OF RAPIDES
BE IT KNOWN, that on this day of May, 2001,
BEFORE ME, the undersigned authority, a Notary Public, duly qualified in and
for the aforesaid Parish and State, personally came and appeared David M.
Eppler and Michael P. Prudhomme, persons of the full age of majority, who
declared unto me, Notary, in the presence of the undersigned competent witness,
that they are the President and Chief Executive Officer and Corporate
Secretary, respectively, of Cleco Corporation, a Louisiana corporation (the
"Corporation"), and that, availing themselves of the provisions of the
Louisiana Business Corporation Law, and as adopted by the shareholders at their
annual meeting on April 27, 2001 ("Annual Meeting"), that they have executed
for filing the hereinbelow Articles of Amendment to the Amended and Restated
Articles of Incorporation of the Corporation, further declaring:
1. That shares of Preferred Stock of the par value of $100 per share
and shares of common stock of the par value of $2 per share,
voting together and not separately by class, were represented at the
Annual Meeting and of those shares, voting together and not
separately by class, voted for the amendment to the Amended and Restated
Articles of Incorporation of the Corporation and of those shares,
voting together and not separately by class, voted against the
amendment.
2. That the amendment, within the meaning of La. R.S. 12:31, does not
adversely affect the rights of the holders of shares of any class or
series of capital stock of the Company.
3. Each share of existing common stock, of the par of $2 per share, of the
Corporation issued and outstanding at the effective time of these
Articles of Amendment to the Amended and Restated Articles of
Incorporation of the Corporation is hereby reclassified into 2 shares of
common stock, of the par value of $1 per share, of the Corporation
authorized by these Articles of Amendment to the Amended and Restated
Articles of Incorporation. Immediately following the effective time of
these Articles of Amendment to the Amended and Restated Articles of
Incorporation, the number of authorized shares of common stock, of the
par value of $1 per share, of the Corporation shall be 100,000,000
shares.
4. That the amendment has been effected in conformity with law.
5. Section 1 of Article 6 of the Amended and Restated Articles of
Incorporation of the Corporation is deleted in its entirety and the
following is inserted in lieu thereof:
"ARTICLE 6
"Section 1. The authorized capital stock of the Corporation is hereby fixed
at $324,190,000, which shall be divided into and represented by 1,491,900
shares of Preferred Stock of the par value of $100 per share ("$100 Preferred
Stock"), 3,000,000 shares of Preferred Stock of the par value of $25 per share
("$25 Preferred Stock") and 100,000,000 shares of Common Stock of the par value
of $1 per share ("Common Stock").
B-1
"Upon the effectiveness of the amendments contained in these Articles of
Amendment to the Amended and Restated Articles of Incorporation of the
Corporation (the "Effective Date"), each share of Common Stock of the
Corporation issued at the close of business on the Effective Date shall be
reclassified, changed and converted, automatically and without any action on
the part of the Corporation or the holders thereof, into two shares of Common
Stock without change in the aggregate amount of capital represented by the
issued shares. Effective at the close of business on the Effective Date, each
certificate representing shares of Common Stock outstanding or held in treasury
immediately prior to the close of business on the Effective Date shall continue
to represent the same number of shares of Common Stock and as promptly as
practicable thereafter, the Corporation shall issue and cause to be delivered
to each holder of record of shares of Common Stock at the close of business on
the Effective Date an additional certificate or certificates representing one
additional share of Common Stock for each share of Common Stock held of record
immediately prior to the close of business on the Effective Date. On the
Effective Date, all references to Common Stock, par value of $2.00 per share,
in the Amended and Restated Articles of Incorporation of the Corporation, as
amended, shall be changed to Common Stock, par value of $1.00 per share."
THUS DONE AND PASSED, in multiple originals, on the day, month and year
herein first above written, in the presence of and
, competent witnesses of lawful age and domiciled in the
state and parish aforesaid, who hereunto sign their names with the said
appearers and me, Notary, after reading of the whole.
WITNESSES:
- ------------------------------- -------------------------------
David M. Eppler, President and
Chief Executive Officer
- ------------------------------- -------------------------------
Michael P. Prudhomme,
Corporate
Secretary
-------------------------------
NOTARY PUBLIC
B-2
PROXY CLECO CORPORATION PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS ON APRIL 27, 2001
The undersigned hereby appoint(s) Thomas J. Howlin and Michael P. Prudhomme or
either of them (each with full power to act alone and with power of
substitution), as proxies, to represent the undersigned, and to vote upon all
matters that may properly come before the meeting, including the matters
described in the proxy statement furnished herewith (receipt of which is hereby
acknowledged), subject to any directions indicated on the reverse side, with
full power to vote all shares of capital stock of Cleco Corporation held of
record by the undersigned on February 26, 2001, at the annual meeting of
shareholders to be held on April 27, 2001, and any adjournment(s) or
postponement(s) thereof. The following items of business will be considered at
the aforesaid annual meeting:
1. To elect three Class I directors:
01 - Sherian G. Cadoria, 02 - Richard B. Crowell, 03 - David M. Eppler;
2. To appoint PricewaterhouseCoopers LLP as independent auditors for the year
ending December 31, 2001; and
3. To approve Articles of Amendment to Cleco Corporation's Amended and Restated
Articles of Incorporation to increase the amount of authorized common stock
and to effect a two-for-one split of Cleco Corporation's common stock.
Instruction: Unless otherwise specified in the space provided immediately below,
this proxy shall authorize the proxies named herein to cumulate all votes which
the undersigned is entitled to cast at the annual meeting for, and to allocate
such votes among, one or more of the nominees for director listed above as such
proxies shall determine, in their sole and absolute discretion, in order to
maximize the number of such nominees elected to Cleco Corporation's Board of
Directors. To specify a different method of cumulative voting, write "Cumulate
For" and the number of shares and the name(s) of the nominee(s) in the space
provided immediately below.
Please complete, sign, date and mail in the accompanying postpaid envelope
unless you vote using the Internet.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
X Please mark your |
votes as in this | 1628
example |________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, AND 3.
This proxy will be voted as directed below on the proposals set forth in the proxy statement for the meeting:
FOR WITHHOLD AUTHORITY
all nominees to vote for all nominees
[ ] [ ]
1. To elect three
Class I directors.
(see reverse side)
FOR, except VOTE withheld from the following nominee(s):
- ------------------------------------------------------
2. To appoint PricewaterhouseCoopers LLP as independent auditors for the year FOR AGAINST ABSTAIN
ending December 31, 2001. [ ] [ ] [ ]
3. To approve Articles of Amendment to Cleco Corporation's Amended and Restated FOR AGAINST ABSTAIN
Articles of Incorporation to increase the amount of authorized common stock [ ] [ ] [ ]
and to effect a two-for-one split of Cleco Corporation's common stock.
4. To vote upon such other business as may properly come before the annual
meeting and any adjournment(s) or postponement(s) thereof, in their
discretion.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no specific directions are given, your
shares will be voted FOR each of the proposals, including FOR the nominees
listed on the reverse side hereof. The proxies retain the right to cumulate
votes for directors unless the specific number of votes for directors is listed
on the reverse side. The individuals designated on the reverse side hereof will
vote in their discretion on any other matter that properly may come before the
annual meeting and any adjournment(s) or postponement(s) thereof. The
undersigned hereby revokes all proxies heretofore given in connection with the
2001 annual meeting of shareholders.
Please sign exactly as name(s) appears on the certificate or certificates
representing shares to be voted by this proxy, as shown on the label above. When -------------------------------------------------
signing as executor, administrator, attorney, trustee or guardian, please give
full title as such. If a corporation, please sign full corporation name by
president or other authorized officer.
If a partnership, please sign in partnership name by authorized person(s). -------------------------------------------------
SIGNATURE(S) DATE
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
You may also vote your shares electronically through the Internet. Voting via
the Internet will eliminate the need to mail voted proxy cards representing your
shares. However, voting using the Internet does not allow you to cumulate votes
in the election of directors. If you wish to cumulate your director votes in a
specific manner, you must complete and mail in the proxy card and follow the
instructions for cumulative voting on the card.
To vote using the Internet, please follow the steps below:
. Have your proxy card and social security number available.
. Be ready to enter the PIN number indicated above just below the
perforation.
. Log on to the Internet and go to the website
http://www.eproxyvote.com/cnl
The Internet voting system preserves the confidentiality of your vote and will
confirm your voting instructions with you. You may also change your selections
on any or all of the proposals to be voted at any time until 24 hours before the
Annual Meeting.
YOUR VOTE IS IMPORTANT TO US. THANK YOU FOR VOTING.
CLECO CORPORATION
P CLECO CORPORATION
R
O PROXY SOLICITED ON BEHALF OF THE TRUSTEE OF THE
X CLECO CORPORATION SAVINGS AND INVESTMENT PLAN AND/OR THE
Y CUSTODIAN OF THE CLECO CORPORATION EMPLOYEE STOCK PURCHASE PLAN
FOR THE ANNUAL MEETING OF SHAREHOLDERS ON APRIL 27, 2001
The undersigned participant in the Cleco Corporation Savings and Investment Plan
and/or the Cleco Corporation Employee Stock Purchase Plan hereby appoints, as
applicable, UMB Bank, N.A., trustee of the Savings and Investment Plan and/or
The Bank of New York, custodian of the Employee Stock Purchase Plan (each, as
applicable, with full power of substitution), as proxy(ies) with respect to the
number of whole and fractional units representing shares of common and preferred
stock (if any) allocated to the undersigned's accounts in the plan(s) as of
February 26, 2001, to represent the undersigned, and to vote upon all matters
that may properly come before the meeting, including the matters described in
the proxy statement furnished herewith (receipt of which is hereby
acknowledged), subject to any directions indicated on the reverse side, with
full power to vote (and to cumulate votes, if applicable) at the annual meeting
of shareholders to be held on April 27, 2001, and any adjournment(s) or
postponement(s) thereof.
Please complete, sign, date and mail in the accompanying postpaid envelope
unless you vote using the Internet.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
The Board of Directors
recommends a vote
"FOR" Proposals
1, 2, and 3.
This proxy will be voted as directed below on the proposals
set forth in the proxy statement for the meeting.
FOR WITHHOLD AUTHORITY
all nominees listed below to vote for all nominees
(except as marked to the contrary below) listed below
[ ] [ ]
1. To elect three Class I directors.
(INSTRUCTION: To withhold authority to vote for any individual
nominee, check the box to vote "FOR" all nominees and strike
a line through the nominee's name in the list below. Common
stock units allocated under either plan may be cast
cumulatively for one or more directors. To cumulate votes,
place the number or percentage of votes for a director
below such director's name on the line provided.)
Number or percentage
of votes, if cumulated:
01 Sherian G. Cadoria 02 Richard B. Crowell 03 David M. Eppler
_____________________ _____________________ __________________
2. To appoint PricewaterhouseCoopers LLP as independent auditors or the year FOR AGAINST ABSTAIN
ending December 31, 2001. [ ] [ ] [ ]
3. To approve Articles of Amendment to Cleco Corporation's Amended and Restated FOR AGAINST ABSTAIN
Articles of Incorporation to increase the amount of authorized common stock [ ] [ ] [ ]
and to effect a two-for-one split of Cleco Corporation's common stock.
4. To vote upon such other business as may properly come before the annual
meeting and any adjournment(s) or postponement(s) thereof, in its or their
discretion.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned participant. If no specific directions are given, shares
subject to this proxy will NOT be voted by the trustee and/or the custodian, as
applicable. The trustee and the custodian retain the right to cumulate votes for
directors unless the specific number of votes for directors is listed under the
director's name. The trustee and/or the custodian, as applicable, will vote, in
their discretion, on any other matter that properly may come before the meeting
and any adjournment(s) or postponement(s) thereof.
The undersigned hereby revokes all proxies heretofore given in connection with
the 2001 annual meeting of shareholders with respect to common stock or
preferred stock allocated to the undersigned.
Please sign exactly as your name appears in the plan records, as shown on the
label above.
---------------------------------------------------
SIGNATURE OF PARTICIPANT DATE
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
VOTE BY INTERNET
QUICK * * * EASY * * * IMMEDIATE
Your Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your
proxy card. However, voting using the Internet does not allow you to cumulate votes in the election of directors. If you wish to
cumulate your director votes in a specific manner, you must complete and mail in the proxy card and follow the instructions for
cumulative voting on the card.
THE WEB ADDRESS IS www.proxyvoting.com/cleco
IF YOU VOTE BY INTERNET DO NOT MAIL THE PROXY CARD
THANK YOU FOR VOTING
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CONTROL NUMBER
for Internet Voting