UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 8, 2005
CALPINE CORPORATION
(A Delaware Corporation)
Commission file number: 001-12079
I.R.S. Employer Identification No. 77-0212977
50 West San Fernando Street
San Jose, California 95113
Telephone: (408) 995-5115
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Chairman, President and Chief Executive Officer Employment Agreement
On March 9, 2005, the Board of Directors (the "Board") of Calpine
Corporation (the "Issuer") approved an employment agreement with Peter
Cartwright to serve as the Issuer's Chairman, President and Chief Executive
Officer. The agreement, attached as Exhibit 10.1 hereto, is made effective as of
January 1, 2005, and includes the following provisions:
1. The term of the agreement is two years (until December 31, 2006) and is
renewable for three successive one-year terms upon the mutual agreement of
the Board and Mr. Cartwright.
2. Mr. Cartwright will receive a minimum base salary of $1,000,000, as
adjusted annually by the Compensation Committee and Nominating and
Governance Committee of the Board, acting jointly (the "Joint Committee"),
and shall be eligible to receive an annual performance bonus as determined
by the Joint Committee. Mr. Cartwright's target bonus is 180% of his base
salary.
3. Upon signing the agreement, Mr. Cartwright will be granted an option to
purchase 1,250,000 shares of common stock pursuant to the Discretionary
Option Grant Program of the Issuer's 1996 Stock Incentive Plan, as amended.
Such option was granted on March 9, 2005 at an exercise price of $3.80 per
share (representing the closing price of Calpine common stock on January 3,
2005). The option has a six-year term and will vest upon the earlier of (i)
the Company's common stock closing price equaling at least $10.00 per share
for four consecutive trading days and (ii) December 31, 2009. A filing for
such equity award was made with the Securities and Exchange Commission on
Form 4 on March 10, 2005.
4. Mr. Cartwright shall continue to serve as Chairman of the Board for as long
as he continues to be nominated and elected.
5. Mr. Cartwright is entitled to certain severance benefits as set forth in
the agreement in the event that (i) Mr. Cartwright resigns for good cause,
(ii) the Company terminates his employment other than for cause or (iii)
the agreement is not renewed for any of the three one-year renewal terms.
The severance benefits include an annual amount equal to the sum of Mr.
Cartwright's base salary and target bonus at the time of the termination of
his employment, paid for the shorter of (i) two years and (ii) the period
from his termination date to December 31, 2009.
6. Disputes under the agreement will be resolved by arbitration.
Other Officer Compensation Arrangements
On March 8, 2005, the Compensation Committee of the Board approved annual
base salary and equity awards of (i) options to purchase common stock under the
Discretionary Option Program of the Issuer's 1996 Stock Incentive Plan, as
amended, and (ii) performance-based restricted stock under the Stock Issuance
Program of the Issuer's 1996 Stock Incentive Plan, as amended, for eligible
employees, including Peter Cartwright, Chairman, President and Chief Executive
Officer; Ann B. Curtis, Vice Chair, Executive Vice President and Corporate
Secretary; Robert D. Kelly, Executive Vice President, Chief Financial Officer
and President - Calpine Finance Company; E. James Macias, Executive Vice
President; and Thomas R. Mason, Executive Vice President and President - Calpine
Power Company. The Compensation Committee of the Board determined not to issue
bonus awards for performance in 2004 to the Issuer's executive officers under
the Issuer's Management Incentive Plan.
The Compensation Committee of the Board made the following approvals:
- --------------------------------------- ------------------- ----------------------- ------------------- ------------------------
2005 Stock Option 2005 Restricted Stock
Executive Officer 2005 Salary (1) 2004 Bonus (2) Grant (3) Grant (4)
- --------------------------------------- ------------------- ----------------------- ------------------- ------------------------
- --------------------------------------- ------------------- ----------------------- ------------------- ------------------------
Peter Cartwright, Chairman, President $1,000,000 $0 350,500 406,627
and Chief Executive Officer
- --------------------------------------- ------------------- ----------------------- ------------------- ------------------------
- --------------------------------------- ------------------- ----------------------- ------------------- ------------------------
Ann B. Curtis, Vice Chair, $550,000 $0 350,000 124,247
Executive Vice President
and Corporate Secretary
- --------------------------------------- ------------------- ----------------------- ------------------- ------------------------
- --------------------------------------- ------------------- ----------------------- ------------------- ------------------------
Robert D. Kelly, $530,000 $0 500,000 301,205
Executive Vice President,
Chief Financial Officer and
President - Calpine Finance Company
- --------------------------------------- ------------------- ----------------------- ------------------- ------------------------
- --------------------------------------- ------------------- ----------------------- ------------------- ------------------------
E. James Macias, $500,000 $0 225,000 112,952
Executive Vice President
- --------------------------------------- ------------------- ----------------------- ------------------- ------------------------
- --------------------------------------- ------------------- ----------------------- ------------------- ------------------------
Thomas R. Mason, $500,000 $0 200,000 112,952
Executive Vice President and
President - Calpine Power Company
- --------------------------------------- ------------------- ----------------------- ------------------- ------------------------
<FN>
(1) No increases for 2005, except that Mr. Kelly will receive an annual
base salary of $650,000, effective as of July 1, 2005.
(2) Bonus awards payable in 2005 for performance during 2004.
(3) Each stock option has an exercise price of $3.32 representing the
closing price of Calpine common stock on the New York Stock Exchange on the
date of grant. The options have a seven-year term and will vest in a series
of four successive equal annual installments upon completion of each year
of continued service as a service provider of the Issuer over the four-year
period measured from the grant date.
(4) The performance-based restricted stock has a purchase price of $3.32
per share representing the closing price of Calpine common stock on the New
York Stock Exchange on the date of grant and such purchase price is payable
in past services. Each restricted stock grant has an expiration date of
December 31, 2009. The performance-based restricted stock vests as follows:
50% shall vest upon such time as the closing selling price of the Issuer's
common stock is equal to or greater than $5.00 per share for four
consecutive trading days, and 50% shall vest upon such time as the closing
selling price of the Issuer's common stock is equal to or greater than
$10.00 per share for four consecutive trading days.
</FN>
The stock options were granted subject to the terms of a stock option
agreement, the form of which is attached as Exhibit 10.2 hereto. The restricted
stock awards were granted subject to the terms of a restricted stock agreement,
the form of which is attached as Exhibit 10.3 hereto.
As reported to the Securities and Exchange Commission on applicable Forms 4
on March 10, 2005, Mr. Cartwright and the other executive officers of the
Company were granted the performance-based restricted stock and stock option
awards described in the table above on March 8, 2005.
On March 8, 2005, the Compensation Committee of the Board approved an
increase in annual base salary from $530,000 to $650,000 for Robert D. Kelly,
Executive Vice President, Chief Financial Officer and President - Calpine
Finance Company, effective July 1, 2005.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
Not Applicable
(b) Pro Forma Financial Information.
Not Applicable
(c) Exhibits.
10.1 Employment Agreement, effective as of January 1, 2005, between Calpine
Corporation and Peter Cartwright
10.2 Form of Stock Option Agreement
10.3 Form of Restricted Stock Agreement
10.4 Base Salary, Bonus, Stock Option Grant and Restricted Stock Summary Sheet
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CALPINE CORPORATION
By: /s/ Charles B. Clark, Jr.
------------------------------------
Charles B. Clark, Jr.
Senior Vice President, Controller and
Chief Accounting Officer
Date: March 16, 2005
EXHIBITS
10.1 Employment Agreement, effective as of January 1, 2005, between Calpine
Corporation and Peter Cartwright
10.2 Form of Stock Option Agreement
10.3 Form of Restricted Stock Agreement
10.4 Base Salary, Bonus, Stock Option Grant and Restricted Stock Summary Sheet