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. )
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Commission Only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14a-12
CLECO CORPORATION
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(Name of Registrant as Specified in Its Charter)
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PROXY STATEMENT
AND
NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD ON
APRIL 25, 2003
[CLECO LOGO]
MARCH 19, 2003
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 25,
2003
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 2006.
(2) To ratify the appointment of
PricewaterhouseCoopers LLP as independent
auditors for the year ending December 31,
2003.
(3) 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 24,
2003.
ANNUAL REPORT................. Our 2002 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, or
vote through the Internet as described in the
enclosed proxy card. 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 19, 2003
PROXY STATEMENT
CLECO CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 25, 2003
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 25, 2003, at the Louisiana
Convention Centre, 2225 N. MacArthur Drive, Alexandria, Louisiana (please see
map included as Appendix A). 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 24,
2003 will be entitled to vote upon proposals relating to:
- the election of three directors who will each serve until the annual
meeting in 2006;
- the ratification of the appointment of PricewaterhouseCoopers LLP as
independent auditors for the year ending December 31, 2003; and
- any other business that may properly come before the meeting.
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF THE
THREE NOMINEES FOR DIRECTOR AND "FOR" THE RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS.
---------------------
This proxy statement and the accompanying proxy card are first being mailed
on or about March 19, 2003 to record shareholders of Cleco as of February 24,
2003.
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 III
DIRECTORS................................................. 5
Class III Directors (nominees to be elected at the 2003
annual meeting; terms of office expire in 2006)........ 5
Class I Directors (terms of office expire in 2004)........ 5
Class II Directors (terms of office expire in 2005)....... 6
Organization of the Board of Directors.................... 6
Compensation of the Board of Directors.................... 7
Interests of the Board of Directors....................... 8
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT.............. 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS............. 11
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..... 11
EXECUTIVE COMPENSATION...................................... 12
General................................................... 12
Summary Compensation Table................................ 12
Stock Option Plans........................................ 14
Long-Term Incentive Plan.................................. 15
Retirement Plans.......................................... 16
Employment Agreements and Change in Control............... 17
Compensation Committee Report on Executive Compensation... 19
Compensation Committee Interlocks and Insider
Participation.......................................... 23
REPORT OF THE AUDIT COMMITTEE............................... 23
PERFORMANCE GRAPH........................................... 24
PROPOSAL NUMBER 2 -- RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS...................................... 25
ANNUAL REPORT............................................... 26
PROPOSALS BY SHAREHOLDERS................................... 26
OTHER MATTERS............................................... 27
APPENDIX A -- MAP OF LOCATION OF ANNUAL MEETING SITE........ A-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 24, 2003 are entitled to receive notice of and to vote at the annual
meeting. As of February 24, 2003, there were 47,100,551 shares of Cleco common
stock outstanding and 265,779 shares of Cleco preferred stock outstanding. As of
February 24, 2003, all officers and directors of Cleco, as a group, beneficially
owned 3.5% of the outstanding shares of Cleco common stock and 29.6% 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 2006
annual meeting of shareholders; and
- Proposal 2 -- the ratification of the appointment of independent auditors
for 2003.
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.
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 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 ratification of the appointment of
the
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independent auditors will be determined by a majority of the voting stock cast,
in person or by proxy, at the annual meeting.
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 24, 2003, 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 purchased
with your payroll deductions as of the record date. In any 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
and "FOR" the ratification of the appointment of PricewaterhouseCoopers LLP as
the independent auditors for 2003, 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.
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PROPOSAL NUMBER 1 -- ELECTION OF THREE CLASS III 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, four are in Class II and three 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 III 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 2006, 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 I and II, who are continuing as directors
at this time and whose terms of office expire in 2004 and 2005, respectively,
are named below following the information concerning the three nominees for
election as Class III directors.
Cleco's board of directors has unanimously approved the nomination of the
three nominees for Class III director and recommends that you vote "FOR" the
election of the three nominees for Class III director.
Below is information concerning the three nominees for election as Class
III directors at the annual meeting as well as the continuing Class I and Class
II directors, including the business experience of each during the past five
years.
CLASS III DIRECTORS (NOMINEES TO BE ELECTED AT THE 2003 ANNUAL MEETING; TERMS OF
OFFICE EXPIRE IN 2006)
- 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. Mr. Garrett, who is 59 years old, has been a director of Cleco
since 1981 and is chairman of the Executive Committee and the
Nominating/Governance Committee and 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 67 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/Governance Committee.
- Elton R. King, who is retired, was employed as president and chief
executive officer of and a director of Visual Networks, Inc. from June
2001 until August 2002. Mr. King retired from BellSouth
Telecommunications Inc. in 1999, where he had been employed for more than
five years, serving most recently as the president of its network and
carrier services group. Mr. King, who is 56 years old, has been a
director of Cleco since 1999 and is a member of the Compensation
Committee. He is also a director of Hibernia Corporation and Hibernia
National Bank.
CLASS I DIRECTORS (TERMS OF OFFICE EXPIRE IN 2004)
- Sherian G. Cadoria has served as president of Cadoria Speaker and
Consultancy Service for more than five years. She retired in 1990 as
Brigadier General of the United States Army after a 29-year military
career. Ms. Cadoria, who is 63 years old, has been a director of Cleco
since 1993 and is a member of the Compensation Committee.
5
- 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 64 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
2000, as president since 1999 and as a director since 1998; he had served
as chief operating officer from 1997 until 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 52 years old, joined Cleco in 1981. Mr.
Eppler is a member of the Executive Committee.
CLASS II DIRECTORS (TERMS OF OFFICE EXPIRE IN 2005)
- William L. Marks is a director of and has been chairman and chief
executive officer of Whitney Holding Corporation and Whitney National
Bank for more than five years. Mr. Marks, who is 60 years old, has been a
director of Cleco since 2001 and is a member of the Compensation
Committee. He is also a director of Adtran, Inc.
- Ray B. Nesbitt, who is retired, was employed by Exxon Chemical Company as
president for more than five years before retiring in 1998. Mr. Nesbitt,
who is 69 years old, has been a director of Cleco since 2001 and is a
member of the Audit Committee. He is also a director of Hibernia
Corporation, Hibernia National Bank and Vermilion Corporation.
- Robert T. Ratcliff has been chairman, president and chief executive
officer of Ratcliff Construction Company, a company primarily engaged in
the design and construction of industrial, commercial and governmental
facilities, for more than five years. Mr. Ratcliff, who is 60 years old,
has been a director of Cleco since 1993 and is a member of the Audit,
Executive and Nominating/Governance Committees. He is also a director of
Hibernia Corporation and Hibernia National Bank.
- William H. Walker, Jr. is president and a director of Howard Weil, a
division of Legg Mason Wood Walker, Inc., an investment banking firm, and
has served in such positions for more than five years. Mr. Walker, who is
57 years old, has been a director of Cleco since 1996 and is chairman of
the Compensation Committee and a member of the Executive Committee and
the Nominating/ Governance 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/Governance Committee. The members of
those committees are identified, as appropriate, under "Class III Directors,"
"Class I Directors" and "Class II Directors" above.
The Audit Committee selects 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 four meetings during 2002.
The Compensation Committee approves, or in some cases recommends to Cleco's
board of directors, remuneration arrangements and compensation plans involving
Cleco's officers and employees and administers the granting of stock options,
restricted stock and other awards to eligible employees under the long-term
incentive plan and the annual incentive compensation program. The Compensation
Committee held six meetings in 2002.
The Nominating/Governance Committee considers and makes recommendations to
the board of directors with respect to the size and composition of the board,
potential candidates for membership on the board, compensation of directors, the
effectiveness, structure and operation of the board and changes to
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Cleco's Corporate Governance Guidelines. The Nominating/Governance Committee
held two meetings in 2002.
Cleco's board of directors held four regular meetings and four special
meetings during 2002. At intervals between these 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
2002, all directors attended at least 75% of the total number of formal meetings
of Cleco's board of directors and of the committees of Cleco's board of
directors on which such directors served, except for Mr. King, who attended 10
of the 14 formal board and committee meetings held during the period in which he
served as a director in 2002.
During 2002, all members of Cleco's board of directors served as members of
the board of managers of Cleco Power LLC, Cleco's utility affiliate. Also during
2002, members of Cleco's board of directors attended, on a voluntary, rotational
basis, the board of managers' meetings of certain other Cleco affiliates at
which Cleco's board members received information about the respective
affiliates' operations but did not vote or act in any official capacity.
COMPENSATION OF THE BOARD OF DIRECTORS
Directors who are Cleco employees receive no additional compensation for
serving as a director. In 2002, compensation for non-employee directors included
annual retainer and meeting fees, stock options, restricted stock awards,
retirement plan participation and insurance benefits.
During 2002, each non-employee director received an annual retainer of
$20,000, an additional annual fee of $3,000 if the director was a chairman of a
committee, $1,000 for each day of in-person meeting attendance at a board or
committee meeting and $500 for each day of telephone conference meeting
attendance at a board or committee meeting. Annual retainer and meeting fees are
paid, at the election of each director, in the form of cash, Cleco common stock
or a combination of both cash and stock. Cleco reimburses directors for travel
and related expenses incurred for attending meetings of Cleco's board of
directors, board committees or affiliate boards. During 2002, all non-employee
directors served the entire year.
A non-employee director receives a grant of options to purchase 5,000
shares of Cleco common stock at the beginning of his or her three-year term.
Each grant is immediately exercisable, has a ten-year exercise period and an
exercise price equal to the fair market value of Cleco common stock on the date
of grant. If a director's initial term is less than three years, the grant is
prorated. During 2002, Mr. Marks, Mr. Nesbitt, Mr. Ratcliff and Mr. Walker each
received a grant of options to purchase 5,000 shares of Cleco common stock.
During 2002, each non-employee director also received an annual grant of options
to purchase 2,500 shares of Cleco common stock, subject to the same terms and
conditions as the term grant, and an annual restricted stock award of 250 shares
of Cleco common stock. Directors were not required to provide any consideration
in exchange for the restricted stock award. Stock subject to the award cannot be
sold or transferred for three years, measured from the date of the award.
Restricted stock awards are also made to each non-employee director upon
his or her initial election to the board. The amount of the award is equal to
the number of shares necessary to increase ownership of Cleco common stock to
1,000 shares. The purchase price is the fair market value of Cleco common stock
on the date of the award. The stock cannot be sold or transferred until the
shares have been paid, in full, by the application of a portion of the
director's annual retainer. During 2002, no directors received such 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. Accounts are payable when a director ceases
to serve on the
7
board or attains a specified age. In the event of a change in control, Cleco
will make a contribution to a rabbi trust to fund plan benefits. Prior to April
2002, Cleco had a retirement plan for its non-employee directors. In April 2002,
benefit accruals under the retirement plan were discontinued for directors
serving at the time, the plan was terminated and plan benefits were distributed.
The amounts distributed to each director were as follows: Mr. Garrett, $69,551;
Mr. James, $104,459; Mr. King, $12,152; Ms. Cadoria, $62,117; Mr. Crowell,
$43,014; Mr. Marks, $7,501; Mr. Nesbitt, $11,568; Mr. Ratcliff, $50,036; and Mr.
Walker, $28,230. Mr. A. DeLoach Martin, Jr., who retired from the board in April
2002, received $100,063. 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
In 2002, no non-employee member of Cleco's board performed services for or
received compensation from Cleco or its affiliates except for those services
relating to his or her duty as a member of Cleco's board.
8
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, 2003 and 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
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP OF OF BENEFICIAL
COMMON STOCK OWNERSHIP OF
-------------------------------------------- PREFERRED STOCK
OPTIONS -------------------
EXERCISABLE PERCENT NUMBER PERCENT
WITHIN OF OF OF
DIRECT(1) 60 DAYS(2) OTHER(3) CLASS SHARES(4) CLASS
--------- ----------- -------- ------- --------- -------
DIRECTORS AND NOMINEES
Sherian G. Cadoria........ 2,500 15,000 0 * 0 *
Richard B. Crowell........ 64,313 15,000 125,245(5) * 0 *
J. Patrick Garrett........ 38,949 13,334 0 * 0 *
F. Ben James, Jr. ........ 10,500 13,334 0 * 0 *
Elton R. King............. 6,098 10,556 0 * 0 *
William L. Marks.......... 12,500 11,667 0 * 0 *
Ray B. Nesbitt............ 4,500 11,667 0 * 0 *
Robert T. Ratcliff........ 4,415 16,668 0 * 0 *
William H. Walker, Jr. ... 73,350 16,668 0 * 0 *
NAMED EXECUTIVE OFFICERS
David M. Eppler(6)........ 82,297 48,000 7,181 * 748 *
Mark H. Segura............ 26,817 19,799 4,493 * 468 *
Dilek Samil............... 21,863 0 240 * 25 *
Darrell J. Dubroc......... 33,104 0 4,368 * 455 *
Samuel H. Charlton III.... 20,456 0 394 * 41 *
Catherine C. Powell....... 27,322 22,733 4,752 * 495 *
All directors, nominees
and executive officers
as a group (24 persons,
including those listed
above)................. 538,045 239,092 882,679(7) 3.5% 78,774(7) 29.6%
---------------
* 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 1,388 common shares, and Mr. Charlton holds 3,271 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 4,981 common shares under the Savings and Investment Plan. Shares
of stock awarded under Cleco's long-term incentive plans that were
9
restricted as of January 31, 2003 were held by the persons in the table
above as follows: Mr. Eppler, 46,175; Mr. Segura, 15,428; Ms. Samil, 16,045;
Mr. Dubroc, 0; Mr. Charlton, 13,185; Ms. Powell, 12,958; and the other
executive officers included in the amount shown for all directors, nominees
and executive officers as a group, 57,542.
(2) "Options Exercisable Within 60 Days" reflects the number of shares that
could be purchased by exercise of options at January 31, 2003 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) "Number of Shares" 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 125,245 shares owned by members of Mr. Crowell's family and family
trusts, for which beneficial ownership is disclaimed.
(6) Mr. Eppler is also a director of Cleco.
(7) The Savings and Investment Plan holds Cleco preferred stock that is
convertible, at any time, into shares of Cleco common stock; 74,163 shares
of Cleco preferred stock, convertible into 711,965 shares of Cleco common
stock (1.5% 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.
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth as of December 31, 2002, 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 OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
-------------- ------------------------------------ ----------------------- ----------
Preferred UMB Bank, N.A. 255,491(1) 96.1%
Stock Trustee of Cleco's Savings and Investment Plan
1010 Grand Boulevard, Kansas City, MO 64106
Common Stock T. Rowe Price Associates, Inc. 3,067,850(2) 6.5%
100 E. Pratt Street
Baltimore, MD 21202
---------------
(1) Based upon information contained in Cleco's records and those of Cleco's
transfer agent. The 255,491 shares are held by UMB Bank, N.A., as Trustee of
the Savings and Investment Plan. The 255,491 shares are convertible into
2,452,714 shares of Cleco common stock, subject to antidilution adjustment,
or approximately 5.2% of the common stock outstanding as of December 31,
2002. 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 1,054,665 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 3,507,379 shares, or 7.5%, of the
outstanding shares of Cleco common stock as of December 31, 2002.
(2) As of December 31, 2002, 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
Associates is deemed to be a beneficial owner of such securities; however,
T. Rowe Price Associates 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, for the fiscal year ended December 31, 2002, all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater-than-10% shareholders were satisfied.
11
EXECUTIVE COMPENSATION
GENERAL
The Summary Compensation Table below sets forth individual compensation
information for the chief executive officer and the five other most highly paid
executive officers of Cleco and certain affiliates for services rendered in all
capacities to Cleco and its affiliates during the fiscal years ended December
31, 2002, December 31, 2001 and December 31, 2000.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
-----------------------
NUMBER OF
SECURITIES
OTHER ANNUAL UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) OPTIONS PAYOUTS(3) COMPENSATION(4)
--------------------------- ---- -------- -------- --------------- ---------- ---------- ---------------
David M. Eppler........... 2002 $410,385 $159,360 $33,305 10,000 -- $ 8,005
President and Chief 2001 369,232 224,400 25,849 50,000 $347,020 7,197
Executive Officer -- 2000 308,274 208,488 20,238 -- 277,329 7,190
Cleco Corporation
Mark H. Segura............ 2002 $245,962 $ 76,544 $14,616 7,500 -- $ 7,515
Vice President -- 2001 210,389 130,249 10,619 10,000 $109,200 6,885
Transmission and 2000 171,547 106,163 7,909 -- 103,548 6,878
Distribution --
Cleco Power LLC
Dilek Samil(5)............ 2002 $223,269 $ 68,554 $10,043 -- -- $ 29,844
Senior Vice President -- 2001 47,654 99,523 1,980 9,000 $147,989 35,689
Finance and
Chief Financial
Officer --
Cleco Corporation
Darrell J. Dubroc......... 2002 $265,692 -- $15,455 -- $526,512 $790,207(6)
Senior Vice President -- 2001 236,538 $133,152 11,590 15,000 162,243 6,885
Generation Services -- 2000 182,885 122,670 8,837 -- 146,729 6,854
Cleco Corporation
Samuel H. Charlton III(5).. 2002 $215,924 $ 33,485 $ 9,939 -- -- $ 7,261
Vice President and 2001 197,917 78,178 6,301 7,000 -- --
Chief Operating
Officer --
Cleco Midstream
Resources LLC
Catherine C. Powell....... 2002 $188,385 $ 58,957 $10,466 -- -- $ 7,539
Senior Vice President -- 2001 174,158 83,412 9,441 6,000 $154,096 7,005
Corporate Services -- 2000 157,122 86,278 8,555 -- 147,615 6,998
Cleco Corporation
---------------
(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; and
- Merit lump-sum payments received by certain named executive officers.
(2) For 2002, 2001 and 2000, 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 2002" table below.
The number and value of the aggregate
12
restricted stock holdings at December 31, 2002, a portion of which is
included in the "LTIP Payouts" column, for each of the named executive
officers were as follows:
- Mr. Eppler -- 37,212 shares with a value of $520,968;
- Mr. Segura -- 16,331 shares with a value of $228,634;
- Ms. Samil -- 11,221 shares with a value of $157,094;
- Mr. Dubroc -- 0 shares with a value of $0;
- Mr. Charlton -- 11,105 shares with a value of $155,470; and
- Ms. Powell -- 11,694 shares with a value of $163,716.
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:
- 2002 -- relating to the performance period January 1, 1999 to December
31, 2001;
- 2001 -- relating to the performance period January 1, 1998 to December
31, 2000; and
- 2000 -- relating to the performance period January 1, 1997 to December
31, 1999.
(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:
2000 2001 2002
------ ------ ------
Mr. Eppler............................................. $6,800 $6,800 $7,607
Mr. Segura............................................. 6,800 6,800 7,429
Ms. Samil.............................................. -- 646 4,639
Mr. Dubroc............................................. 6,800 6,800 7,333
Mr. Charlton........................................... -- 0 6,383
Ms. Powell............................................. 6,800 6,800 7,334
- Term life insurance premiums paid for the benefit of the named executive
officers as follows:
2000 2001 2002
---- ---- ----
Mr. Eppler.................................................. $390 $397 $397
Mr. Segura.................................................. 78 85 85
Ms. Samil................................................... -- 43 205
Mr. Dubroc.................................................. 54 85 85
Mr. Charlton................................................ -- 0 877
Ms. Powell.................................................. 198 205 205
- Ms. Samil received a relocation bonus of $35,000 in 2001 and a sign-on
bonus of $25,000 in 2002.
(5) Ms. Samil joined Cleco in October 2001, and Mr. Charlton was appointed to
the Policy Committee of Cleco in 2001.
(6) Mr. Dubroc terminated his employment with Cleco on December 20, 2002. Under
the terms of his executive employment agreement, he received or will receive
one year's base salary, relocation assistance and continued medical coverage
for a period of 18 months. In consideration for the signing of a waiver and
release, he received or will receive an additional six months' base salary,
target annual incentive for 2002, cash in lieu of the aforementioned
relocation assistance, cash for outplacement assistance and a cash payment
equal to the Black-Scholes value of non-qualified stock options previously
granted to him, determined as if the exercise period of such options expired
five years from his resignation date. In addition, under the terms of
Cleco's 2000 Long-Term Incentive Compensation Plan, Mr. Dubroc received a
pro rata portion of target and opportunity shares for each of the
outstanding performance cycles. Restrictions lapsed on all shares held by
him as of his resignation date.
13
STOCK OPTION PLANS
Options to purchase shares of Cleco common stock are outstanding under two
plans. The first plan is the 1990 Long-Term Incentive Compensation Plan adopted
and maintained by Cleco Power LLC, a wholly owned subsidiary of Cleco. An
aggregate of 1,600,000 shares of Cleco common stock was reserved for issuance
under the 1990 plan. The 1990 plan expired on January 1, 2000, and no additional
grants can be made. As of December 31, 2002, grants of stock options
representing 751,428 shares of Cleco common stock were outstanding under the
1990 plan.
Under the 2000 Long-Term Incentive Compensation Plan ("Long-Term Incentive
Plan"), certain officers, employees and non-employee directors of Cleco may
receive restricted stock, stock options, phantom stock, stock appreciation
rights and certain other awards. An aggregate of 1,600,000 shares of Cleco
common stock has been reserved for issuance under the Long-Term Incentive Plan.
As of December 31, 2002, grants of stock options representing 501,569 shares of
Cleco common stock were outstanding.
OPTION GRANTS
The table below sets forth, for each of the six persons listed in the
Summary Compensation Table, the following information concerning non-qualified
stock options granted during 2002:
- The number of shares of Cleco common stock underlying options granted
during 2002;
- The percent such grants represent of the total number of options granted
to Cleco employees in 2002;
- The per share exercise price and expiration date of the options; and
- The potential realizable value of each grant of options, assuming that
the market price of Cleco common stock appreciates from the date of grant
to the end of the option term at a 5% and 10% compound annual rate.
OPTION GRANTS IN 2002
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES PRICE EXPIRATION ------------------------
NAME GRANTED(1) IN 2002 ($/SHARE) DATE 5%(2) 10%(2)
---- ----------- ---------- --------- ---------- ---------- -----------
David M. Eppler............. 10,000 12.2% $24.25 04/17/12 $152,507 $386,483
Mark H. Segura.............. 7,500 9.1% 24.25 04/17/12 114,380 289,862
Dilek Samil................. 0 -- -- -- -- --
Darrell J. Dubroc(3)........ 7,500 9.1% 24.25 -- 0 0
Samuel H. Charlton III...... 0 -- -- -- -- --
Catherine C. Powell......... 0 -- -- -- -- --
---------------
(1) The options vest in one-third increments per year beginning on the third
anniversary of the date of grant, so long as the executive remains a Cleco
employee. All options immediately vest upon the occurrence of a change in
control as defined in the Long-Term Incentive Plan. A "change in control" is
generally deemed to have occurred in accordance with the events described in
this proxy statement under Employment Agreements and Change in Control.
(2) These columns illustrate the gains that could be realized if the market
price of Cleco common stock appreciates at a 5% or 10% compound annual rate.
These growth rates are arbitrary rates specified by the SEC, not Cleco's
predictions.
(3) Mr. Dubroc was compensated for the value of his outstanding options upon his
termination as reflected in the Summary Compensation Table. Therefore, all
of his outstanding options were cancelled.
14
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, 2002. There were no options exercised by these persons during 2002.
2002 YEAR-END OPTION VALUES
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 2002 DECEMBER 31, 2002(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
David M. Eppler............................... 48,000 156,000 $0 $0
Mark H. Segura................................ 19,799 57,101 0 0
Dilek Samil................................... 0 9,000 0 0
Darrell J. Dubroc(2).......................... -- -- -- --
Samuel H. Charlton III........................ 0 43,000 0 0
Catherine C. Powell........................... 22,733 51,467 0 0
---------------
(1) The closing price of Cleco common stock at December 31, 2002 was $14.00.
(2) Mr. Dubroc was compensated for the value of his outstanding options upon his
termination as reflected in the Summary Compensation Table. Therefore, all
of his outstanding options were cancelled.
LONG-TERM INCENTIVE PLAN
The following table describes restricted stock grants made under the
Long-Term Incentive 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
is 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, except as provided for
in the Long-Term Incentive Plan. 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 is 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 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.
15
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.
The number of phantom or opportunity shares vested for performance above
the target level and below the maximum level is 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 2002
ESTIMATED FUTURE PAYOUTS
---------------------------------
NUMBER OF NUMBER OF NUMBER OF
NUMBER OF PERFORMANCE OR OTHER PERIOD THRESHOLD TARGET MAXIMUM
NAME SHARES UNTIL MATURATION OR PAYOUT SHARES SHARES SHARES
---- ---------------- --------------------------- --------- --------- ---------
David M. Eppler................... 14,444 1/1/2002 - 12/31/2004 4,334 14,444 28,888
Mark H. Segura.................... 6,381 1/1/2002 - 12/31/2004 1,915 6,381 12,762
Dilek Samil....................... 5,221 1/1/2002 - 12/31/2004 1,567 5,221 10,442
Darrell J. Dubroc(1).............. 6,636 1/1/2002 - 12/31/2004 0 0 0
Samuel H. Charlton III............ 4,047 1/1/2002 - 12/31/2004 1,215 4,047 8,094
Catherine C. Powell............... 3,968 1/1/2002 - 12/31/2004 1,191 3,968 7,936
---------------
(1) Mr. Dubroc received a pro rata portion of target and opportunity shares for
the performance cycle ending December 31, 2004 upon his termination.
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 2002 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 (not to
exceed 35 years) 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. However, the compensation that may be taken into account
under the Pension Plan is subject to an annual limit under the Internal Revenue
Code (the "Code"), which in 2002 was $200,000. 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 2003
is the lesser of $160,000, a limitation imposed by the Code, or 100% of "average
compensation," as defined in the Code. Payments from the Pension Plan are not
reduced for Social Security benefits.
16
As of December 31, 2002, the following individuals had the following years
of service credited under the Pension Plan:
- Mr. Eppler...................................... 21 years
- Mr. Segura...................................... 18 years
- Ms. Samil....................................... 1 year
- Mr. Dubroc...................................... 17 years
- Mr. Charlton.................................... 4 years
- Ms. Powell...................................... 11 years
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, 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
plan awards paid to the participant during the preceding 60 months. In the event
of a change in control, Cleco will make a contribution to a rabbi trust to fund
the benefit obligation.
As of December 31, 2002, the chief executive officer and the five most
highly compensated executive officers of Cleco participated in the SERP. 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
500,000........................ 325,000 325,000 325,000 325,000 325,000
600,000........................ 390,000 390,000 390,000 390,000 390,000
700,000........................ 455,000 455,000 455,000 455,000 455,000
OTHER
Mr. Eppler, Mr. Segura, Ms. Samil, Mr. Charlton and Ms. Powell may elect to
participate in a deferred compensation plan and defer the receipt of all or part
of 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. In the event of a change in control, Cleco
will make a contribution to a rabbi trust to fund plan benefits.
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL
Cleco has executive employment agreements with Mr. Eppler, Mr. Segura, Ms.
Samil, Mr. Charlton and Ms. Powell 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
17
incurred during the term of employment. Under the agreements, the 2003 base
salaries for the continuing Cleco executives named in the Summary Compensation
Table are as follows:
- Mr. Eppler...................................... $415,000
- Mr. Segura...................................... $185,000
- Ms. Samil....................................... $225,000
- Mr. Charlton.................................... $218,000
- Ms. Powell...................................... $190,000
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 related 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.
SEVERANCE PAYMENTS
No severance is payable if Cleco terminates an 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 of service requirements under the SERP, (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 Long-Term Incentive Plan and generally 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;
- As a result of a merger or consolidation, less than 80% of the surviving
corporation's outstanding voting securities is owned by former Cleco
shareholders (excluding the affiliates of any party to the transaction);
- Cleco sells, leases or otherwise disposes of 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.
The change in control benefits provided under the agreement consist of: (a)
an amount equal to three times the executive's annual base compensation plus
target incentive, (b) accelerated vesting, lapse of restrictions and all
performance objectives being deemed satisfied as to any outstanding grants or
awards made to the executive under Cleco's long-term incentive plans, (c) full
vesting of service requirements
18
under the SERP and a minimum benefit, (d) an amount equal to Cleco's maximum
matching contribution obligation under the Savings and Investment Plan for a
three-year period, (e) continued group medical coverage paid for by Cleco for up
to three years or until similar coverage is obtained, and (f) certain relocation
benefits.
In the event of a change in control, payments (for item (a) above) under
the agreements for the continuing executives named in the Summary Compensation
Table, using the base annual compensation and target incentive for 2003, will be
approximately as follows:
- Mr. Eppler..................................... $2,054,250
- Mr. Segura..................................... $ 749,250
- Ms. Samil...................................... $ 978,750
- Mr. Charlton................................... $ 915,600
- Ms. Powell..................................... $ 798,000
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 being deemed satisfied as to any
outstanding grants or awards made to the executive under Cleco's long-term
incentive plans, (d) full vesting of service requirements under the SERP and a
minimum benefit, (e) continued group medical coverage, and (f) relocation
benefits. A business transaction is defined as the sale, lease or other
disposition of all or a substantial portion of Cleco Midstream Resources LLC or
the transmission line of business of Cleco Power LLC other than a transaction
that constitutes a change in control as determined by the Compensation
Committee.
TAX PAYMENT
Payments to Mr. Eppler, Mr. Segura, Ms. Samil, Mr. Charlton and Ms. Powell
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 similar benefits or that benefits
will be cut back in an amount sufficient to avoid applicable excise taxes.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee ("Committee"), composed entirely of outside
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 2002 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 five
other most highly compensated executive officers are sometimes referred to as
the "Named Executives."
Section 162(m) of the Internal Revenue 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 ("Long-Term
Incentive Plan"), which
19
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).
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 similar to those of comparable electric utilities and energy services
companies. Each year, the Committee, in making compensation decisions and
recommendations, and the board of directors, in approving base salaries, reviews
Cleco's performance and compares such performance to specified internal and
external performance standards. The following guidelines are used by the
Committee to make compensation decisions and recommendations:
- Provide variable compensation opportunities that are directly linked to
the financial performance of Cleco and are aligned with the interests of
shareholders.
- Provide incentives to increase corporate performance and shareholder
value relative to the level achieved at comparable electric utilities and
energy services companies.
- Establish executive officer base pay levels somewhat below the average of
the competitive market, while providing incentive award opportunities
above the market when specific performance objectives are achieved.
- Provide a competitive total compensation package that has a significant
"at-risk" component that 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" (additional stock awards based
on exceeding company performance targets) and grants of stock options. The
awards of performance-based restricted stock, related "opportunity shares" and
grants of stock options are made under the Long-Term Incentive Plan. The
components of the compensation program for Cleco's executive officers are
further explained below.
BASE SALARIES
Base pay levels are largely determined through comparisons with those of
peer diversified energy services companies and other investor-owned utilities.
These individual position comparisons are based on the responsibilities of the
specific executive and the appropriate competitive market comparison. 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 2002 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 2002 for continuing executive officers were recommended by the Committee and
approved by the board of directors in January 2002. In January 2002, the Named
Executives, other than the chief executive officer, received pay increases that
averaged 9.7%. The individual performance adjustments reflect increases in
position responsibilities, an assessment of individual contributions, as well as
the current competitive market.
As a result of Cleco's corporate restructuring completed during 2002 and
industry trends, no increases were approved for Named Executives for 2003.
20
ANNUAL INCENTIVE COMPENSATION
Cleco's executive officers are eligible to participate in an annual
incentive compensation program ("AIP"). The objectives of the AIP are to deliver
competitive levels of bonus opportunity, based on the attainment of specific
short-term financial objectives. Performance measures used in the AIP are
selected as they contribute to enhanced shareholder value and 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 companies in the selected peer group. Many of the utility/energy
services companies utilized in this competitive analysis are included in the
Edison Electric Institute Index (found on page 24 of this proxy statement). In
addition, Florida Public Utilities Company, another energy services company, is
used for comparison purposes. Together with the companies comprising the Edison
Electric Institute Index, these companies are referred to in this report as the
"Selected Peer Group." Targeted awards for Cleco's corporate officers under this
program range from 20% to 60% 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
and may be increased or decreased by up to 25%. Awards are based on both
corporate and business unit performance. Corporate performance objectives
comprise 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. Business unit
performance objectives comprise from 0% to 40% of total target bonus levels and
are based on various goals, depending upon the responsibilities of the
executive.
For awards based on 2002 performance, the diluted earnings per share target
was $1.62. Cleco's return on average equity target was between the 50th to 59th
percentile of the Selected Peer Group. Cleco's actual 2002 return on equity
performance was in the 75th to 100th percentile of the Selected Peer Group, and
its diluted earnings per share in 2002 was $1.47. Based on this corporate
performance, the Committee approved awards for 2002 at 64% of corporate target
annual bonus levels as specified in the plan payout matrix. Business units which
met 2002 business unit performance goals were paid awards at 64% of the earned
performance levels to mirror payouts for corporate performance.
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 Selected Peer Group. One of the benefits realized from the use of restricted
stock awards has been executive stock ownership levels above those of companies
in the Selected Peer Group without establishment of formal ownership
requirements.
Provisions of the long-term performance-based restricted stock grants
program require an additional three-year holding period following vesting before
any shares may be sold or transferred. Because of this requirement, the
Long-Term Incentive Plan provides for the payment of a tax gross-up on the value
of the shares earned in each performance cycle. This allows executives to avoid
selling shares to cover the tax liability, thereby encouraging long-term stock
ownership. The added value resulting from the tax gross-up is considered when
determining the target award level for each executive. Grants and awards of
performance-based restricted stock as well as related "opportunity shares" under
the Long-Term Incentive
21
Plan were made to all Named Executives in 2002. Awards actually earned are based
on Cleco's performance during a three-year performance cycle compared to the
Selected Peer Group over the same period. In order for performance-based
restricted stock and "opportunity shares" to be earned, two criteria must be
met. First, in order for any payout to occur, Cleco's relative total shareholder
return must be at or above the 40th percentile of the Selected Peer Group.
Second, if relative total shareholder return meets the 40th percentile
threshold, actual payout is determined by performance on objective measures,
which include compound growth in net income and return on investment over the
performance period. For the tenth three-year performance cycle, which ended
December 31, 2002, Cleco did not achieve the required threshold performance at
or above the 40th percentile. Thus, no award was paid for the three-year
performance cycle ended December 31, 2002.
2002 SEVERANCE PAYMENT
On December 20, 2002, Mr. Dubroc terminated his employment with Cleco.
Under the terms of his executive employment agreement, Mr. Dubroc received or
will receive one year's base pay, relocation assistance and coverage under
Cleco's group medical plan for a period of 18 months. In consideration for the
signing of a waiver and release, Mr. Dubroc received or will receive payment of
target annual incentive for 2002, an additional six months' base pay, cash for
outplacement services, cash in lieu of the aforementioned relocation assistance
and a cash payment equal to the Black-Scholes value of the non-qualified stock
options previously granted to him determined as if the exercise period of such
options expired five years from his resignation date.
2002 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 2002, the Committee made the following
recommendations or determinations regarding the compensation for Mr. Eppler:
- Base Salary -- Mr. Eppler's annual base salary was increased in January
2002 from $375,000 to $415,000. The amount of this increase was based on
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 2002 in
Cleco's annual incentive compensation program discussed above. The chief
executive officer's 2002 target award was 60% of his base salary. Based
on the results of the annual incentive program's performance measures,
his actual award for 2002 was 64% of target, or 38.4% of his base salary.
- Long-Term Incentive Plan -- Grants and awards were made to Mr. Eppler
under the Long-Term Incentive Plan during 2002. 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, 2002, the chief executive officer's award was 0% of the
target, or 0 shares. Mr. Eppler received a grant of nonqualified stock
options to purchase 10,000 shares of Cleco common stock. The exercise
price of the options is $24.25, the average of the high/low price
(rounded to the nearest eighth) of Cleco common stock on the date of
grant. The options vest in one-third increments per year beginning on the
third anniversary of the date of the grant, so long as Mr. Eppler remains
a Cleco employee.
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
22
are directly linked to the annual financial and operational results of Cleco.
The Long-Term Incentive 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.
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF CLECO CORPORATION
William H. Walker, Jr., Chairman
Brig. General Sherian G. Cadoria (U.S. Army Retired)
J. Patrick Garrett
Elton R. King
William L. Marks
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 current 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 was attached as an
appendix to Cleco's proxy statement relating to its 2001 annual meeting of
shareholders.
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 selects
and 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 four meetings during 2002. The meetings were
designed to facilitate and encourage private communication between the Audit
Committee and Cleco's internal auditors and the 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
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, 2002 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
Ray B. Nesbitt
Robert T. Ratcliff
23
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, 1997 and that all dividends were reinvested.
(PERFORMANCE GRAPH)
DECEMBER 31,
---------------------------------------------------------
1997 1998 1999 2000 2001 2002
------- ------- ------- ------- ------- -------
Cleco............................... $100.00 $111.28 $109.63 $195.21 $162.97 $109.38
S&P 500 Index....................... $100.00 $128.52 $155.53 $141.36 $124.63 $ 97.15
EEI Index(1)........................ $100.00 $114.55 $ 91.80 $137.53 $127.98 $107.71
---------------
(1) As of December 31, 2002, the Edison Electric Institute Index was comprised
of: Allegheny Energy, Inc.; ALLETE, Inc.; Alliant Energy Corporation; Ameren
Corporation; American Electric Power Company, Inc.; Aquila, Inc. (formerly
UtiliCorp United Inc.); Avista Corporation; Black Hills Corporation;
CenterPoint Energy, Inc. (new holding company for Reliant Energy,
Incorporated); Central Vermont Public Service Corporation; CH Energy Group,
Inc.; Cinergy Corp.; Cleco Corporation; CMS Energy Corporation; Consolidated
Edison, Inc.; Constellation Energy Group, Inc.; Dominion Resources, Inc.;
DPL, Inc.; DQE, Inc.; DTE Energy Company; Duke Energy Corporation; Edison
International; El Paso Electric Company; The Empire District Electric
Company; Energy East Corporation; Entergy Corporation; Exelon Corporation;
FirstEnergy Corp.; FPL Group, Inc.; Great Plains Energy Incorporated; Green
Mountain Power Corporation; Hawaiian Electric Industries, Inc.; IDACORP,
Inc.; Keyspan Corporation; Maine Public Service Company; MDU Resources
Group, Inc.; MGE Energy Inc. (new holding company for Madison Gas and
Electric Company); NiSource Inc.; Northeast Utilities; Northwestern
Corporation; NSTAR; OGE Energy Corp.; Otter Tail Corporation; Pepco
Holdings, Inc. (new holding company for Conectiv and Potomac Electric Power
Company); PG & E Corporation; Pinnacle West Capital Corporation; PNM
Resources, Inc.; PPL Corporation; Progress Energy, Inc.; Public Service
Enterprise Group Incorporated; Puget Energy, Inc.; Scana Corporation; Sempra
Energy; Sierra Pacific Resources; The Southern Company; TECO Energy Inc.;
TXU Corp.; UIL Holdings Corporation; UniSource Energy Corporation; Unitil
Corporation; Vectren Corporation; Westar Energy, Inc. (formerly Western
Resources, Inc.); Wisconsin Energy Corporation; WPS Resources Corporation;
and Xcel Energy Inc. The following companies were deleted from the Edison
Electric Institute Index used in Cleco's proxy statement relating to its
2002 annual meeting of shareholders: Montana Power Company (merged with a
subsidiary of Touch America Holdings, Inc.), Niagara Mohawk Holdings, Inc.
(merged with National Grid Group plc) and RGS Energy Group, Inc. (merged
with a subsidiary of Energy East Corporation).
24
PROPOSAL NUMBER 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The board of directors, upon the selection and recommendation of the Audit
Committee, has appointed PricewaterhouseCoopers LLP as independent auditors to
conduct the annual audit of Cleco for the fiscal year ending December 31, 2003.
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. 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 ratification of the
appointment of PricewaterhouseCoopers LLP as independent 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.
Aggregate fees for professional services rendered for Cleco by
PricewaterhouseCoopers LLP as of or for the years ended December 31, 2002 and
2001, were as follows:
2002 2001
---------- ----------
Audit....................................................... $ 540,000 $ 465,000
Audit Related............................................... 38,000 27,000
Tax......................................................... 686,000 206,000
All Other................................................... 240,000 3,501,000
---------- ----------
TOTAL................................................ $1,504,000 $4,199,000
========== ==========
The Audit fees for 2002 and 2001 were for professional services rendered
for the audits of Cleco's consolidated financial statements, the review of
those financial statements included in Cleco's quarterly reports on Forms
10-Q, issuance of comfort letters, a security review of new financial
software, assistance in a special investigation and assistance with review
of documents filed with the SEC.
The Audit Related fees billed during 2002 and 2001 were for assurance and
other services related to employee benefit plan audits and due diligence
related to potential mergers and acquisitions.
Tax fees billed during 2002 and 2001 were for services related to tax
compliance reviews, and tax planning and tax advice, including assistance
with and representation in tax audits and appeals, advice related to
mergers and acquisitions, tax services for employee benefit plans, and
requests for rulings or technical advice from tax authorities.
All Other fees billed during 2002 and 2001 were for services rendered for
financial information systems implementation and design and strategic
advisory services.
The board of directors has unanimously approved the appointment of
PricewaterhouseCoopers LLP as independent auditors and recommends that you vote
"FOR" the ratification of the appointment of PricewaterhouseCoopers LLP as
independent auditors.
25
ANNUAL REPORT
A shareholder survey card and the enclosed 2002 Annual Report to
Shareholders, which contains Cleco's consolidated financial statements for the
year ended December 31, 2002, accompany the proxy material being mailed to all
shareholders. The shareholder survey card and the 2002 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 2004 annual
meeting of shareholders and who requests inclusion of the proposal in Cleco's
2004 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 20, 2003. 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 2004 annual meeting, the required notice generally must be received by
the Cleco Secretary no later than December 25, 2003. 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 2004 annual meeting, the Bylaws
require that you give written notice to Cleco's Secretary no later than October
26, 2003.
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/Governance 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
26
- 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 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, OR YOU SHOULD VOTE THROUGH THE INTERNET AS
DESCRIBED IN THE ENCLOSED PROXY CARD.
By Order of Cleco's Board of
Directors,
/s/ DAVID M. EPPLER
David M. Eppler
President, Chief Executive Officer and
Director
March 19, 2003
27
APPENDIX A
MAP OF LOCATION OF ANNUAL MEETING SITE
(MAP OF DIRECTIONS TO LOUISIANA CONVENTION CENTER)
A-1
PROXY PROXY
CLECO CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS ON APRIL 25, 2003
The undersigned hereby appoint(s) David M. Eppler, Michael P. Prudhomme and R.
O'Neal Chadwick, Jr. or any 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 as of the close of business on February 24, 2003, at
the annual meeting of shareholders to be held on April 25, 2003, 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 III directors:
01--J. Patrick Garrett, 02--F. Ben James, Jr., 03--Elton R. King; and
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
auditors for the year ending December 31, 2003.
Instruction: Unless otherwise specified in the space provided immediately below,
this proxy shall authorize the proxies named herein to cumulate all common stock
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 of common stock and the name(s) of the
nominee(s) in the space provided immediately below.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
PLEASE COMPLETE, SIGN, DATE AND MAIL IN THE ACCOMPANYING
POSTPAID ENVELOPE UNLESS YOU VOTE USING THE INTERNET.
[X] Please mark you
votes as in this
example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
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 FOR AGAINST ABSTAIN
1. To elect three [ ] [ ] 2. To ratify the appointment of [ ] [ ] [ ]
Class III directors. PricewaterhouseCoopers LLP as
(see reverse side) independent auditors for the
year ending December 31, 2003.
FOR, except VOTE withheld from the following nominee(s):
-------------------------------------------------------- 3. 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 COMMON STOCK 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 2003
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 SIGNATURE(S) DATE
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).
------------------------------------------------------------------------------------------------------------------------------------
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:
o HAVE YOUR PROXY CARD AND SOCIAL SECURITY NUMBER AVAILABLE.
o BE READY TO ENTER THE PIN NUMBER INDICATED ABOVE JUST BELOW
THE PERFORATION.
o 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 R O X Y
CLECO CORPORATION
PROXY SOLICITED ON BEHALF OF THE TRUSTEE OF THE CLECO CORPORATION SAVINGS AND
INVESTMENT PLAN AND/OR THE
CUSTODIAN OF THE CLECO CORPORATION EMPLOYEE STOCK PURCHASE PLAN
FOR THE ANNUAL MEETING OF SHAREHOLDERS ON APRIL 25,2003
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 the
close of business on February 24, 2003, 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 25, 2003, 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.
--------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
+ +
PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"PROPOSALS 1 AND 2.
THIS PROXY WILL BE VOTED AS DIRECTED BELOW ON THE PROPOSALS SET FORTH IN THE PROXY STATEMENT FOR THE MEETING.
-----------------------------------------------------------------------------------------------------------------------------------
FOR WITHHOLD AUTHORITY FOR AGAINST ABSTAIN
all nominees listed below to vote for all nominees 2. To ratify the appointment of [ ] [ ] [ ]
(except as marked to the contrary below) listed below PricewaterhouseCoopers LLP as
[ ] [ ] independent auditors for the
year ending December 31, 2003.
3. 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.
1. To elect three Class III 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 01 J. Patrick Garrett 02 F. Ben James, Jr.
of votes, if cumulated: 03 Elton R. King
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 2003 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.
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SIGNATURE OF PARTICIPANT DATE
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o FOLD AND DETACH HERE o
VOTE BY INTERNET
QUICK o o o EASY o o o 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 o DO NOT MAIL THE PROXY CARD
THANK YOU FOR VOTING
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CONTROL NUMBER
FOR INTERNET VOTING
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