[Federal Register Volume 63, Number 137 (Friday, July 17, 1998)]
[Notices]
[Pages 38682-38683]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19050]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26895; 70-9189]
Entergy Corporation; Order Authorizing the Issuance and Sale of
Common Stock in Connection With the Adoption of the 1998 Equity
Ownership Plan
July 10, 1998.
Entergy Corporation (``Entergy''), a registered holding company,
located in New Orleans, Louisiana, has filed with this Commission an
application-declaration under sections 6(a), 7 and 12(e) of the Public
Utility Holding Company Act of 1935, as amended (``Act''), and rules
54, 62 and 65 under the Act. The Commission issued a notice of the
filing on March 27, 1998 (HCAR No. 26852).
The Entergy Board of Directors (``Board'') has adopted the 1998
Equity Ownership Plan of Entergy Corporation and Subsidiaries (``Equity
Plan''), subject to shareholder approval. The Equity Plan will be an
amendment and restatement of Entergy's current Equity Ownership Plan
which was approved by its stockholders in 1991. Awards granted under
the Equity Plan are intended to qualify as performance based
compensation under section 162(m) of the Internal Revenue Code of 1986,
as amended.
Entergy proposes, through December 31, 2008, to grant Options,
Restricted Shares, Performance Shares and Equity Awards, all as defined
in the Equity Plan, and to issue or sell up to 12 million shares of its
common stock, $0.01 par value (``Common''), under the Equity Plan. The
purpose of the Equity Plan is to give certain designated officers and
executive personnel (``Key Employees'') and outside directors an
opportunity to acquire shares of Common to tie more closely their
interests with those of Entergy's shareholders and to reward effective
corporate leadership.
The Common will be available for awards under the Equity Plan,
subject to adjustment for stock dividends, stock splits,
recapitalizations, mergers, consolidations or other reorganizations.
Shares of Common awarded under the Equity Plan may be either authorized
but unissued shares or shares acquired
[[Page 38683]]
in the open market. Shares of Common covered by awards which are not
earned, or which are forfeited for any reason, and Options which expire
unexercised, will again be available for subsequent awards under the
Equity Plan. To the extent that shares of Common previously held in a
participant's name are surrendered upon the exercise of an Option or
shares relating to an award are used to pay withholding taxes, the
shares will become available for subsequent awards under the Equity
Plan.
The Equity Plan will be administered by the Board's Personnel
Committee, or any other committee designated by the Board
(``Committee''), to the extent required to comply with rule 16b-3 under
the Securities Exchange Act of 1934, as amended. The Committee will
have the exclusive authority to interpret the Equity Plan. The
Committee also will have the authority to select, from among Key
Employees and outside directors of Entergy and its subsidiaries, those
individuals to whom awards will be granted, to grant any combination of
awards to any participants and to determine the specific terms and
conditions of each award.
Entergy was authorized to solicit proxies from its stockholders for
use at the 1998 annual shareholders meeting (``Meeting'') with respect
to the approval of the Equity Plan, effective, as provided in rule
62(d) of the Act, on March 27, 1998 (HCAR No. 26852). The Equity Plan
was approved by Entergy's shareholders at the Meeting, held on May 15,
1998.
Entergy represents that, except for rule 53(a)(1), the requirements
of rule 53 are satisfied regarding Entergy's investments in exempt
wholesale generators (``EWGs'') and foreign utility companies
(``FUCOs''), as defined in sections 32 and 33 of the Act. Entergy
states that its aggregate investment in EWGs and FUCOs was equal to
approximately 54% of its consolidated retained earnings, as defined in
rule 53(a)(1), for the four quarters ended March 31, 1998 and,
therefore, exceeds the 50% limitation contained in the rule. Entergy
states that this is due to a decline in consolidated retained earnings,
resulting primarily from a one-time windfall profits tax of $234
million imposed in 1997 by the government of Great Britain on London
Electricity, a FUCO partially owned by Entergy.
Entergy states that, as of September 30, 1992, before Entergy
commenced its investments in EWGs or FUCOs, Entergy's consolidated
equity (including mandatorily redeemable preferred securities) to total
capital ratio was 45.4%. Entergy states that, as of March 31, 1998,
Entergy's consolidated capitalization consisted of 42.9% equity. On a
pro forma basis, taking into consideration the transactions
contemplated in this filing, this ratio would be 42.2%. In addition,
Entergy further states that, with one exception, the credit ratings of
debt issued by its subsidiaries remain at investment grade.\1\ Entergy
further notes that earnings from its investments in FUCOs and EWGs
would have been positive in 1997 but for the one time windfall profits
tax described above.
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\1\ Entergy notes that the credit rating assigned to debt issued
by one of its utility subsidiaries, Entergy Gulf States Utilities,
Inc. (``GSU''), other than its senior secured debt, is below
investment grade. In March of 1995, Standard & Poors (``S&P'')
lowered the ratings of GSU as follows: senior secured debt to triple
`B' minus from triple `B'; senior unsecured debt and preferred stock
to double `B' from triple `B' minus; and, preference stock to double
`B' from double `B' plus. Thereafter, Moody's Investors Service
(``Moody's'') downgraded GSU's First Mortgage Bonds to Baa3 from
Baa2; debentures and senior unsecured pollution control bonds to Ba1
from Baa3; and preferred stock to Ba1 from Baa3. Both S&P and
Moody's cited the River Bend Nuclear facility and the decision of
the Texas Public Utilities Commission to reduce rates by $52.9
million along with the then pending legal uncertainties surrounding
the Cajun bankruptcy, potential Riverbend writedowns, merger costs,
and, regulatory proceeding costs.''
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The Commission has considered the effect of the capitalization and
earnings of Entergy's EWGs and FUCOs on the Entergy system, together
with the impact of the proposed transactions. The facts and
representations described above are sufficient, for purposes of
granting the authority requested in this filing, to support a finding
that the proposed transactions satisfy the standards of section 6(a)
and 7
Fees and expenses in the estimated amount of $175,000 are expected
to be incurred in connection with these transactions. It is stated that
no state or federal commission, other than this Commission, has
jurisdiction over the proposed transactions.
Due notice of the filing of the declaration has been given in the
manner prescribed in rule 23 under the Act, and no hearing has been
requested of or ordered by the Commission. On the basis of the facts in
the record, it is found that the applicable standards of the Act and
rules are satisfied and that no adverse findings are necessary.
It is ordered, under the applicable provisions of the Act and rules
under the Act, that the amended declaration be permitted to become
effective immediately, subject to the terms and conditions prescribed
in rule 24 under the Act.
For the Commission, by the Division of Investment, under
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-19050 Filed 7-16-98; 8:45 am]
BILLING CODE 8010-01-M
