-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jtd/SCzjgGAxsu18MMsypSYNU02QvaHIMoHCf/Ux25A1zt6ejfGPDzEd5gtLX8nC 6RlxFmzwIIlGMFlq5TftSg== 0000065984-98-000071.txt : 19980331 0000065984-98-000071.hdr.sgml : 19980331 ACCESSION NUMBER: 0000065984-98-000071 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980330 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERGY CORP /DE/ CENTRAL INDEX KEY: 0000065984 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 721229752 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-11299 FILM NUMBER: 98579703 BUSINESS ADDRESS: STREET 1: 639 LOYOLA AVE CITY: NEW ORLEANS STATE: LA ZIP: 70113 BUSINESS PHONE: 5045295262 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY GSU HOLDINGS INC /DE/ DATE OF NAME CHANGE: 19940329 FORMER COMPANY: FORMER CONFORMED NAME: ENTERGY CORP /FL/ DATE OF NAME CHANGE: 19940329 FORMER COMPANY: FORMER CONFORMED NAME: MIDDLE SOUTH UTILITIES INC DATE OF NAME CHANGE: 19890521 DEF 14A 1 Notice of Annual Meeting of Stockholders New Orleans, Louisiana March 30, 1998 To the Stockholders of ENTERGY CORPORATION: NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS Date: Friday, May 15, 1998 Time: 10:00 a.m. Central Daylight Time Place: The Woodlands Executive Conference Center 2301 North Millbend Drive The Woodlands, Texas 77380-1360 MATTERS TO BE VOTED ON 1. Election of Fourteen Directors. 2. Approval of the 1998 Equity Ownership Plan. 3. Approval of the Executive Annual Incentive Plan. 4. Ratification of the appointment of Coopers & Lybrand L.L.P. as our independent accountants for 1998. /s/ Michael G. Thompson Michael G. Thompson Secretary TABLE OF CONTENTS NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS 1 MATTERS TO BE VOTED ON 1 PROXY STATEMENT 4 GENEAL INFORMATION ABOUT VOTING 4 WHO CAN VOTE 4 VOTING BY PROXIES. 4 HOW YOU MAY REVOKE YOUR PROXY INSTRUCTIONS 4 QUORUM REQUIREMENT 4 VOTES NECESSARY FOR ACTION TO BE TAKEN. 5 COST OF THIS PROXY SOLICITATION. 5 ATTENDING THE ANNUAL MEETING. 5 STOCKHOLDERS WHO OWN AT LEAST FIVE PERCENT 5 PROPOSAL 1 ELECTION OF DIRECTORS 6 GENERAL INFORMATION ABOUT NOMINEES 6 TERM OF OFFICE. 6 INFORMATION ABOUT THE NOMINEES. 6 INFORMATION ABOUT THE BOARD AND ITS COMMITTEES 10 Audit Committee 10 Finance Committee 10 Personnel Committee 10 Nuclear Committee 11 Public Affairs Committee 11 Executive Committee 11 Director Affairs Committee 11 DIRECTOR COMPENSATION. 12 SERVICE AWARDS FOR DIRECTORS. 12 RETIREMENT FOR DIRECTORS 12 PERSONNEL COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION 12 SHARE OWNERSHIP OF DIRECTORS AND OFFICERS 12 SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. 13 REPORT OF PERSONNEL COMMITTEE ON EXECUTIVE COMPENSATION 13 COMPARISON OF FIVE YEAR CUMULATIVE RETURN 15 EXECUTIVE COMPENSATION TABLES 16 Summary Compensation Table 16 Option Grants to the Executive Officers in 1997 17 Aggregated Option Exercises in 1997 and Option Values as of Year End 1997 17 RETIREMENT INCOME PLAN 17 Retirement Income Plan Table 18 PENSION EQUALIZATION PAYMENTS. 18 SUPPLEMENTAL RETIREMENT PLANS. 18 SYSTEM EXECUTIVE RETIREMENT PLAN 18 System Executive Retirement Plan Table 19 EXECUTIVE MANAGMENT AGREEMENTS. 19 PROPOSAL 2 - APPROVAL OF THE 1998 EQUITY OWNERSHIP PLAN 19 MAXIMUM NUMBER OF SHARES. 19 PARTICIPANTS AND PURPOSE OF THE PLAN 19 FORMS OF AWARD 20 STOCK OPTIONS. 20 RESTRICTED SHARES. 20 PERFORMANCE SHARES. 20 EQUITY AWARDS 20 PERFORMANCE-BASED COMPENSATION 20 AMENDMENTS 21 TAX CONSEQUENCES OF THE PLAN. 21 NEW PLAN BENEFITS 21 PROPOSAL 3 - APPROVAL OF THE EXECUTIVE ANNUAL INCENTIVE PLAN 22 PARTICIPANTS AND PURPOSE OF THE PLAN. 22 PERFORMANCE GOALS 22 PERFORMANCE-BASED COMPENSATION 22 AMENDMENTS 22 NEW PLAN BENEFITS 22 PROPOSAL 4 - APPOINTMENT OF INDEPENDENT ACCOUNTANTS 23 STOCKHOLDER PROPOSALS FOR 1999 MEETING. 23 PROXY STATEMENT Your vote is very important. For this reason, the Board of Directors is requesting that you allow your Entergy Corporation Common Stock to be represented at the Annual Meeting by Edwin Lupberger and Bismark A. Steinhagen, the persons named as proxies on the enclosed proxy card. This proxy statement has been prepared for the Board by our management. The terms "We", "our", "Entergy" and the "Corporation" each refers to Entergy Corporation. This proxy statement is being sent to our stockholders on or about March 30, 1998. GENERAL INFORMATION ABOUT VOTING WHO CAN VOTE. You are entitled to vote your Common Stock if our records show that you held your shares as of March 16, 1998. At the close of business on March 16, 1998, a total of 245,881,656 shares of Common Stock were outstanding and entitled to vote. Each share of Common Stock has one vote. The enclosed proxy card shows the number of shares that you are entitled to vote. VOTING BY PROXIES. If your Common Stock is held by a broker, bank or other nominee, you will receive instructions from them which you must follow in order to have your shares voted in accordance with your instructions. If you hold your shares in your own name, you may instruct the proxies how to vote your Common Stock by using the toll free telephone number listed on the proxy card or by signing, dating and mailing the proxy card in the postage paid envelope provided to you. Of course, you may come to the meeting and vote your shares in person. When you use the telephone system, the system verifies that you are a stockholder through the use of a Personal Identification Number assigned to you. The procedure allows you to instruct the proxies how to vote your shares and to confirm that your instructions have been properly recorded. Specific directions for using the telephone voting system are on the proxy card. Whether you mail or telephone your instructions, the proxies will vote your shares in accordance with those instructions. If you sign and return a proxy card without giving specific voting instructions, your shares will be voted as recommended by our Board of Directors. We are not currently aware of any matters to be presented other than those described in this proxy statement. If any other matters not described in the proxy statement are presented at the meeting, the proxies will use their own judgment to determine how to vote your shares. If the meeting is adjourned, your Common Stock may be voted by the proxies on the new meeting date as well, unless you have revoked your proxy instructions. HOW YOU MAY REVOKE YOUR PROXY INSTRUCTIONS. To revoke your proxy instructions, you must either advise the Secretary in writing before your shares have been voted by the proxies at the meeting, deliver later proxy instructions, or attend the meeting and vote your shares in person. QUORUM REQUIREMENT. The Annual Meeting may not be held unless a quorum equal to a majority of the outstanding shares entitled to vote is represented at the meeting. If you have returned valid proxy instructions or attend the meeting in person, your shares will be counted for the purpose of determining whether there is a quorum, even if you wish to abstain from voting on some or all matters introduced at the meeting. "Broker non-votes" also count for quorum purposes. If you hold your Common Stock through a broker, bank or other nominee, it may only vote those shares in accordance with your instructions. However, if it has not received your instructions within ten days of the meeting, it may vote on matters which the New York Stock Exchange determines to be routine. All four proposals before the annual meeting are routine. If a nominee cannot vote on a matter because it is not routine or fails to vote on, there is a "broker non-vote". VOTES NECESSARY FOR ACTION TO BE TAKEN. Fourteen directors will be elected at the meeting, meaning that the fourteen nominees receiving the most votes will be elected. In this case, "broker non-votes" will not be counted as a vote for or against the election of directors. The three other proposals require an affirmative vote of a majority of shares entitled to vote. Therefore, abstentions and "broker non- votes" will have the effect of being a vote cast against those three proposals. COST OF THIS PROXY SOLICITATION. We will pay the cost of this proxy solicitation. In addition to soliciting proxies by mail, we expect certain of our employees may solicit stockholders for proxies, personally and by telephone. None of these employees will receive any additional or special compensation for doing so. We have retained Morrow & Co. Inc. for a fee of $12,500, plus reasonable out-of-pocket costs and expenses, to assist in the solicitation of proxies. We will, upon request, reimburse brokers, banks and other nominees for their expenses in sending proxy materials to their principals and obtaining their proxies. ATTENDING THE ANNUAL MEETING. If you are a holder of record and you plan to attend the Annual Meeting, please come to the registration desk before the meeting. If you are a beneficial owner of Common Stock held by a bank or broker (i. e., in "street name"), you will need proof of ownership of your Common Stock as of March 16, 1998 to be admitted to the meeting. A recent brokerage statement or letter from a bank or broker are examples of proof of ownership. If you want to vote in person your shares of Common Stock held in street name, you must obtain a proxy in your name from the registered holder. STOCKHOLDERS WHO OWN AT LEAST FIVE PERCENT. A stockholder "beneficially owns" Common Stock by having the power to vote, invest in, or acquire the common stock within 60 days. Stockholders who beneficially own at least five percent of the Common Stock are required to file certain reports with the Securities and Exchange Commission. Based on these reports, the following beneficial owners have reported their ownership as of December 31, 1997:
Name and Address of Amount and Nature of Percent Beneficial Owner Beneficial Ownership of Class Barrow, Hanley, Mewhinney & Strauss, Inc. ("BHM&S") 13,587,608 (1) 5.7% One McKinney Plaza 3232 McKinney Avenue, 15th Floor Dallas, Texas 75204-2429 Brinson Partners, Inc. ("BPI") 15,503,600 (2) 6.4% 209 South LaSalle Chicago, Illinois 60604-1295 Franklin Resources, Inc. ("FRI") 19,655,701 (3) 8.10% 777 Mariners Island Blvd. P.O. Box 7777 San Mateo, CA 94403-7777
(1) Of the 13,587,608 shares, BHM&S has sole voting power as to 3,356,458 shares, and shared voting power as to 10,231,150 shares. (2) BPI has shared voting power as to all 15,503,600 shares. BPI is wholly owned by Brinson Holdings, Inc., which is wholly owned by SBC Holding (USA), Inc., which is wholly owned by Swiss Bank Corporation. Each of the above companies reported identical ownership of the subject 15,503,600 shares in the report filed with the Securities and Exchange Commission. (3) FRI may not vote or transfer this Common Stock. These shares are beneficially owned by one or more investment companies or other managed accounts which are advised by investment advisory subsidiaries of FRI. Those subsidiaries, Franklin Advisors, Inc., Templeton Global Advisors, Limited, Templeton/Franklin Investment Services, Inc., Templeton Investment Management (Australia) Limited, Templeton Investment Counsel, Inc., Franklin Advisory Services, Inc., and Franklin Mutual Advisors, Inc., may vote and transfer 8,143,000, 10,155,800, 23,285, 25,000, 7,500, 1,300,000, and 1,116 shares, respectively. PROPOSAL 1 ELECTION OF DIRECTORS GENERAL INFORMATION ABOUT NOMINEES All nominees are currently members of the Board except Vice Admiral George W. Davis, who has been nominated to replace Mrs. Fjeldstad, who is not seeking re-election. Each has agreed to be named in this proxy statement and to serve if elected. Except where authority to vote for one or more nominee(s) is withheld, the proxies will vote all Common Stock represented by an executed proxy equally for the election of the nominees listed below. TERM OF OFFICE. Directors are elected annually to serve a term of one year and until the next annual meeting of stockholders and the election of their successors. INFORMATION ABOUT THE NOMINEES. The following biographical information was supplied by each nominee. Unless stated otherwise, all nominees have been continuously employed in their present positions for more than five years. The age of each individual is as of December 31, 1997. W. FRANK BLOUNT Age 59 Director Since 1987 Sydney, Australia - Chief Executive Officer of Telstra Communications Corporation (Australian telecommunications company) - Director of First Union National Bank, Atlanta, Georgia, LXE Incorporated, and Caterpillar, Inc. - Chairman of National Advisory Group for the National Technical Institute of the Deaf - Vice Chairman of the National Advisory Board of Georgia Institute of Technology - Executive Vice President of the A. G. Bell Association for the Deaf - Member of the Board of Trustees of the Rochester Institute of Technology - Member of the Business Council of Australia JOHN A. COOPER, JR. Age 59 Director Since 1985 Bella Vista, Arkansas - Chairman of the Board, President and CEO of Cooper Communities, Inc. (recreational and retirement community development) and of COFAM, Inc. - Director of Wal-Mart Stores, Inc., and J. B. Hunt Transport Services, Inc. - Honorary Director of First National Bank of Sharp County (Arkansas) VADM. GEORGE W. DAVIS Age 64 Nominee USN (Ret.) Plymouth, Massachusetts - Retired Director, President and Chief Operating Officer of Boston Edison Company - Vice Admiral (retired) U.S. Navy and former Commander Naval Surface Force, Pacific - Member, University of Chicago's Board of Governors for the Argonne National Laboratory DR. NORMAN C. FRANCIS Age 66 Director Since 1994 New Orleans, Louisiana - President of Xavier University of Louisiana, New Orleans, Louisiana - Director of The Equitable Life Assurance Society of the United States, First National Bank of Commerce, New Orleans, Louisiana and Piccadilly Cafeterias Inc., Baton Rouge, Louisiana - Member of the Advisory Board of The Times Picayune Publishing Co., New Orleans, Louisiana - Chairman of the Board of Liberty Bank and Trust Company, New Orleans, Louisiana - Chairman of the Board for the Southern Education Foundation, Atlanta, Georgia - Fellow, The American Academy of Arts and Sciences, Cambridge, Massachusetts - Member of the Board of Brandeis University, Waltham, Massachusetts - Member of the Board of the National Foundation for Improvement in Education - Former Chairman of the Board of Trustees, Educational Testing Service, Princeton, New Jersey ROBERT v.d. LUFT Age 62 Director Since 1992 Chadds Ford, Pennsylvania - Chairman of DuPont Dow Elastomers - Retired Senior Vice President-DuPont and President-DuPont Europe (industrial products, fibers, petroleum, chemicals, and specialty products businesses) - Retired Chairman of Dupont International - Member of the Board of Visitors, School of Engineering, University of Pittsburgh EDWIN LUPBERGER Age 61 Director Since 1985 New Orleans, Louisiana - Chairman of the Board, Chief Executive Officer, and Principal Financial Officer of Entergy Corporation - Chairman of the Board and Chief Executive Officer of Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., and Entergy New Orleans, Inc., domestic utility subsidiaries - Chairman of the Board of System Energy Resources, Inc., a nuclear generating subsidiary, and Entergy Operations, Inc., a nuclear management service subsidiary - Chairman of the Board and Chief Executive Officer of Entergy Services, Inc. - Chairman of the Board and President of Entergy Enterprises, Inc., a non-utility subsidiary - Chief Executive Officer of Entergy Power, Inc., Entergy Power Development Corporation, and Entergy-Richmond Power Corporation and Entergy Pakistan, Ltd. and Entergy Power Asia, Ltd., also subsidiaries - Director of First Commerce Corporation, First National Bank of Commerce; International Shipholding Corporation, New Orleans, Louisiana, and Pennington Biomedical Research Foundation - Member of the Board of Trustees of Millsaps College - Member of the Board of Administrators of Tulane University - Chairman of the Foundation for the Mid-South - Former Chairman of the U. S. Chamber of Commerce ADM. KINNAIRD R. MCKEE Age 68 Director Since 1990 USN (Ret.) Oxford, Maryland - Director of PECO Energy Company (formerly Philadelphia Electric Company) - Former Superintendent of the United States Naval Academy - Former Commander of the United States Third Fleet - Former Director of Navy Nuclear Propulsion DR. PAUL W. MURRILL Age 63 Director Since 1993 Baton Rouge, Louisiana - Retired Chairman of the Board and Chief Executive Officer of Entergy Gulf States, Inc. - Chairman of the Board of Piccadilly Cafeterias, Inc., Baton Rouge, Louisiana - Director of ChemFirst, Inc., Jackson, Mississippi; Tidewater, Inc., New Orleans, Louisiana; Zygo Corporation, Middlefield, Connecticut; and Howell Corporation, Houston, Texas - Chairman of Trustees, Burden Foundation JAMES R. NICHOLS Age 59 Director Since 1986 Boston, Massachusetts - Partner, Nichols & Pratt (family trustees), Attorney and Chartered Financial Analyst - Life Trustee of the Boston Museum of Science - Director, Babson-United, Inc. EUGENE H. OWEN Age 68 Director Since 1993 Baton Rouge, Louisiana - Chairman and President of Utility Holdings, Inc. (holding company for Baton Rouge Water Company, Parish Water Company, Inc., and Louisiana Water Company) - Chairman and Chief Executive Officer of Owen and White, Inc. (engineering consulting firm), Baton Rouge, Louisiana - President of Parish Water Company Inc., Baton Rouge Water Company, and Louisiana Water Company, Baton Rouge, Louisiana - Member, Board of Directors, Our Lady of the Lake Regional Medical Center, Baton Rouge, Louisiana JOHN N. PALMER, SR. Age 63 Director Since 1992 Jackson, Mississippi - Chairman of the Board of Mobile Telecommunication Technologies Corp., Jackson, Mississippi - Director of Deposit Guaranty National Bank, Jackson, Mississippi - Director of the University of Mississippi Foundation - Director of the Foundation for the Mid-South, Jackson, Mississippi - Member of the Board of Trustees, Millsaps College - National Trustee, National Symphony Orchestra, Washington, D.C. ROBERT D. PUGH Age 68 Director Since 1977 Portland, Arkansas - Chairman of the Board of Portland Gin & Warehouse, Inc. (agricultural and agri-business company), Portland Bank, and Portland Bankshares, Inc., Portland, Arkansas - Former Director of Winrock International - Former Chairman of the Board of Trustees of the University of Arkansas - Former President of Cotton Council International - Former Board of Trustees of Chatham Hall School, Chatham, Virginia WM. CLIFFORD SMITH Age 62 Director Since 1983 Houma, Louisiana - President of T. Baker Smith & Son, Inc. (consultants-civil engineering and land surveying). During 1997, T. Baker Smith & Son, Inc. performed land surveying services for Entergy Louisiana, Inc. and was paid approximately $80,985. Mr. Smith's children own 100% of the voting stock of T. Baker Smith & Son, Inc. BISMARK A. STEINHAGEN Age 63 Director Since 1993 Beaumont, Texas - Chairman of the Board of Steinhagen Oil Company, Inc. (oil and gasoline distributor), Beaumont, Texas INFORMATION ABOUT THE BOARD AND ITS COMMITTEES In 1997, the Board of Directors met seven times. Reference to the "Board" refers to the Board of Directors. In addition to meetings of the Board, directors attended meetings of separate Board Committees. All nominees who are now directors attended at least 75% of the Board meetings and committee meetings on which they serve. COMMITTEES OF THE BOARD. The Board of Directors has seven standing committees. Audit Committee. 3 meetings in 1997 Present Members: Paul W. Murrill (Chairman) Lucie J. Fjeldstad James R. Nichols Eugene H. Owen Bismark A. Steinhagen Functions: Discusses the audit results with independent accountants. Reviews internal controls, financial reporting and other financial matters. Reports to the Board and makes recommendations relevant to the audit. Finance Committee. 6 meetings in 1997 Present Members: Robert v.d. Luft (Chairman) W. Frank Blount John A. Cooper, Jr. James R. Nichols John N. Palmer, Sr. Function: Reviews all financial, budgeting and banking policies. Makes recommendations to the Board concerning financial transactions and the sale of securities. Personnel Committee.7 meetings in 1997 Present Members: W. Frank Blount (Chairman) Robert v.d. Luft Eugene H. Owen Norman C. Francis Functions: Reviews major employee relations matters, employment practices, compensation and employee benefit plans. Reviews officer performance and makes recommendations to the Board concerning officer compensation. Nuclear Committee. 6 meetings in 1997 Present Members: Kinnaird R. McKee (Chairman) Lucie J. Fjeldstad Robert D. Pugh Wm. Clifford Smith Functions: Provides non-management oversight and review of all the Corporation's nuclear generating plants, focusing on safety, operating performance, operating costs, staffing and training. Consults with management concerning internal and external nuclear related issues. Reports to the Board with respect to the Corporation's nuclear facilities. Public Affairs Committee. 3 meetings in 1997 Present Members: Norman C. Francis (Chairman) John N. Palmer, Sr. Wm. Clifford Smith Bismark A. Steinhagen Functions: Advises and counsels management regarding governmental, regulatory and public relations matters. Makes recommendations to the Board regarding public policy issues and equal opportunity in all corporate relationships. Executive Committee.2 meetings during 1997 Present Members: Edwin Lupberger (Chairman) W. Frank Blount Robert v.d. Luft John N. Palmer, Jr. Robert P. Pugh Functions: May exercise Board powers with respect to management and the business affairs of the Corporation between Board meetings. Reports all actions to the Board. Director Affairs Committee. 6 meetings in 1997 Present Members: Robert D. Pugh (Chairman) John A. Cooper, Jr. Kinnaird R. McKee Paul W. Murrill Functions: Advises and counsels the Board on all matters concerning Directors, including committee memberships, compensation and performance. Searches for and screens new nominees for positions on the Board. DIRECTOR COMPENSATION. Directors who are Entergy officers do not receive any fee for service as directors. Each non-employee director receives a fee of $1,500 for attendance at Board meetings, $1,000 for attendance at committee meetings scheduled in conjunction with Board meetings, and $2,000 for attendance at committee meetings not scheduled in conjunction with a Board Meeting. Directors also receive $1,000 for participation in any inspection trip or conference not held in conjunction with a Board or Committee meeting. In addition, committee chairpersons are paid an additional $3,000 annually. All non-employee directors receive 150 shares of Common Stock and one-half the value of the 150 shares in cash on a quarterly basis. SERVICE AWARDS FOR DIRECTORS. All non-employee directors are credited with 800 "phantom" shares of Common Stock for each year of service on the Board up to a maximum of ten years. The "phantom" shares are credited to a specific account for each director that is maintained solely for accounting purposes. After retirement, these directors receive in cash the value of their accumulated "phantom" shares which has the same value as the same number of shares of Common Stock at the time of each payment. Payments are made in at least five but no more than 15 annual payments. RETIREMENT FOR DIRECTORS. Before Entergy Gulf States, Inc. became a subsidiary, it established a deferred compensation plan for its officers and non-employee directors. A director could defer a maximum of 100% of his salary, and an officer could defer up to a maximum of 50% of his salary. Both Dr. Murrill, as an officer, and Mr. Steinhagen, as a director, deferred their salary. The directors' right to receive compensation is an unsecured obligation of the Corporation, which is held in the Corporation's general funds, and accrues simple interest compounded annually at the rate set by Entergy Gulf States, Inc. in 1985. In addition to payments received prior to 1997, on the January 1 after Dr. Murrill turns 65, he will receive an annual benefit for 15 years and on the January 1 after Mr. Steinhagen turns 70, he will receive an annual benefit for 10 years. PERSONNEL COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Messrs. Blount (Chairman), Luft, Owen, and Dr. Francis served during 1997 as members of the Personnel Committee of the Board. None of these directors during 1997, or prior to 1997, were an officer or employee of the Corporation or any of its subsidiaries. SHARE OWNERSHIP OF DIRECTORS AND OFFICERS The table below shows how much Common Stock each current director, nomin ee, and executive officer named in the Summary Compensation Table on page 16 beneficially owned as of January 31, 1998, as well as how much they and the other executive officers beneficially owned as a group. This information has been furnished by each individual. Each individual has sole voting and investment power, and the power to dispose of, unless otherwise indicated. The amount of Common Stock owned by all directors, nominees and executive officers as a group totals less than 1% of the outstanding Common Stock.
Entergy Corporation Common Stock Amount and Nature Amount and Nature of Beneficial Ownership of Beneficial Ownership Sole Voting Other Sole Voting Other and Beneficial and Beneficial Investment Power Ownership Investment Ownership Name (a) Name Power (a) W. Frank Blount 5,034 - ADM. Kinnaird R. McKee 3,067 - John A. Cooper, Jr. 7,534 - Dr. Paul W. Murrill 2,985 - VADM. George W. Davis - - James R. Nichols 6,065 - Lucie J. Fjeldstad 3,984 - Eugene H. Owen 3,692 - Dr. Norman C. Francis 1,200 - John N. Palmer, Sr. 16,481 - Frank F. Gallaher 19,641 17,500 Robert D. Pugh 8,300 6,500 (b) Donald C. Hintz 11,318 27,500 Wm. Clifford Smith 6,621 - Jerry D. Jackson 29,500 24,411 Bismark A. Steinhagen 8,237 - Robert v.d. Luft 4,284 - Edwin Lupberger 36,583 63,324 (b) Jerry L. Maulden 27,165 30,000 Gerald D. McInvale 10,901 20,000 All directors, 262,891 244,235 nominees, and executive officers
(a) Includes Common Stock in the form of stock options that are currently exercisable as follows: Mr. Gallaher, 17,500 shares; Mr. Hintz, 27,500 shares; Mr. Jackson, 24,411 shares; Mr. Lupberger, 58,824 shares; Mr. Maulden, 30,000 shares; and Mr. McInvale, 20,000 shares. (b) Includes Common Stock held by their spouses. The named persons disclaim beneficial ownership as follows: Mr. Lupberger, 2,500 shares; and Mr. Pugh, 6,500 shares. In addition, Mr. Lupberger owns 2,000 shares in joint tenancy with his mother, for which he disclaims beneficial ownership. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Directors and officers must file reports with the Securities and Exchange Commission indicating their ownership of any equity securities of the Corporation at the time they became a director or executive officer. Thereafter, reports must be filed to update any changes in ownership. In 1997, all directors and officers filed the necessary reports except that reports of the acquisition and sale of Common Stock acquired by conversion of phantom shares, were not filed on time by Michael R. Niggli (765 shares), Gerald D. McInvale (855 shares), Charles L. Kelly (7,937 shares), Michael B. Bemis (2,657 shares), Edwin Lupberger (2,232 shares), Jerry D. Jackson (1,873 shares) and Donald C. Hintz (2,428 shares). Additionally, Terry Ogletree, a former officer of the Corporation, was late in reporting his receipt during 1996 of 22,500 restricted shares, Louis Buck was late in reporting his receipt during 1996 of 488 phantom shares and Edwin Lupberger was late in reporting the acquisition in 1994 and 1997 of a total of 2,000 shares of Common Stock held jointly with his mother. All reports have now been filed. REPORT OF PERSONNEL COMMITTEE ON EXECUTIVE COMPENSATION The Personnel Committee of the Board reviews and makes recommendations to the Board about all aspects of executive compensation including the adoption or amendment1 of the various compensation, incentive, and benefit plans as well as programs maintained for officers and other key employees of the Corporation. The Corporation's executive compensation programs provide competitive rewards intended to attract, retain, and motivate key employees critical to the Corporation's success. The Committee has historically used similarly-sized electric utility companies as the peer group for assessing the competitiveness of its compensation programs. The electric utility companies included in this group are of similar revenue size. The Committee also uses a selected group of similar- sized telecommunications companies as an additional peer group. In 1997, these peer groups were utilized for all components of compensation including base salary, annual incentives, and long-term incentives. The executive total compensation package was targeted at the median of total compensation within the peer group. Incentive plans provided opportunities for executives to earn compensation in excess of peer group medians based on performance targets approved by the Board. The total executive compensation package consisted of the following four major components. Base Salary Base salary was set through a comparison with companies in the compensation peer groups. The Board of Directors granted Mr. Lupberger a 1997 increase as reflected in the "Summary Compensation Table" on page 16. Benefits and Perquisites Executives are provided benefits such as pension plan, medical insurance, life insurance, and long-term disability insurance. In addition, executives receive special executive remuneration including perquisites. Annual Incentive Compensation Each executive's annual incentive compensation is based on the attainment of key strategic goals and objectives including improvement in consolidated operational economic value added, control of operation and maintenance costs, customer satisfaction, and transition to a competitive environment. These measures have varying weights and are specifically tailored to each executive's responsibilities. For 1997, Mr. Lupberger received no cash incentive award. Stock option grants are considered on an annual cycle, in January of each year, based on the Corporation's prior year performance as reviewed by the Committee. Long-Term Incentive Compensation Long-term incentive compensation opportunities are tied to long-term shareholder value. In 1996, the Board of Directors adopted a three year Long-Term Incentive Plan which spans the 1996-1998 performance period. Under this Long-Term Incentive Plan, the corporation must achieve pre-set levels of performance against a selected group of other companies in the area of total return to shareholders over the three year performance period. Total Compensation As reported in the "Summary Compensation Table," in 1997, Mr. Lupberger's participation in each compensation component was as follows: - Salary 73% - Bonus 0% - Other Annual Compensation 25% - Long-Term Incentive Compensation 0% - All Other Compensation 2% Mr. Lupberger's total 1997 compensation level was below the target compensation level when compared to the compensation peer group companies. Deductibility of Executive Compensation Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for individual compensation over one million dollars paid to the Company's Chief Executive Officer and to the four other most highly paid executives, unless certain requirements are met. One of these requirements is that compensation over $1 million must be performance-based. In 1997, Mr. Lupberger earned slightly in excess of $1 million, but the tax effects of that amount were immaterial. None of the other five highest paid executives were compensated in excess of $1 million dollars. Members of the Personnel Committee: W. Frank Blount, Chairman Norman C. Francis Robert v.d. Luft Eugene H. Owen COMPARISON OF FIVE YEAR CUMULATIVE RETURN. The following graph compares the performance of the Common Stock of the Corporation to the S&P 500 Index and the S&P Electric Utilities Index (each of which includes the Corporation) for the last five years. Years Ended December 31 1992 1993 1994 1995 1996 1997 Entergy $100 $114 $74 $107 $108 $125 S&P 500 (1) $100 $110 $111 $153 $189 $251 S&P EUI (1) $100 $113 $98 $128 $128 $161 Assumes $100 invested on December 31, 1992, in Common Stock, the S&P 500, and the S&P Electric Utilities Index, and reinvestment of all dividends. (1) Cumulative total returns calculated from the S&P 500 Index and S&P Electric Utilities Index maintained by Standard & Poor's Corporation.
EXECUTIVE COMPENSATION TABLES Summary Compensation Table Long-Term Compensation Annual Compensation Awards Payouts Restricted Securities (a) Other Annual Stock Underlying LTIP All Other Name and Principal Year Salary Bonus Compensation Awards Options Payouts Compensation(b) Edwin Lupberger 1997 $ 785,385 $ 0 $271,422 $0 10,000 shares $ 0 $23,562 Chairman of the Board and 1996 735,577 448,794 123,601 (c) 10,000 0 23,567 Chief Executive Officer 1995 700,000 568,400 89,163 (c) 60,000 781,337 21,000 Frank F. Gallaher 1997 $ 327,385 $ 0 $11,132 $0 5,000 shares $ 0 $ 9,822 Group President and Chief 1996 276,538 130,150 35,641 (c) 5,000 0 10,321 Utility Operating Officer 1995 240,000 198,360 61,360 (c) 27,500 324,398 7,638 Donald C. Hintz 1997 $ 365,077 $ 0 $18,245 $0 5,000 shares $ 0 $10,952 Group President and Chief 1996 343,269 231,299 12,516 (c) 5,000 0 14,197 Nuclear Operating Officer 1995 325,000 265,049 13,394 (c) 30,000 409,414 9,750 Jerry D. Jackson 1997 $ 342,077 $ 0 $56,359 $0 5,000 shares $ 0 $10,262 Executive Vice President - 1996 332,115 209,489 37,928 (c) 5,000 0 13,862 External Affairs and Chief 1995 325,000 256,838 43,054 (c) 30,000 422,438 9,750 Administrative Officer Jerry L. Maulden 1997 $ 445,615 $ 0 $67,485 $0 5,000 shares $ 0 $13,369 Vice Chairman 1996 435,000 260,301 27,056 (c) 5,000 0 14,550 1995 435,000 353,220 26,248 (c) 30,000 422,438 13,050 Gerald D. McInvale (d) 1997 $ 331,154 $ 0 $17,389 $0 5,000 shares $ 0 $9,923 Former Executive Vice 1996 271,730 179,576 13,995 (c) 5,000 0 12,051 Chairman 1995 255,481 186,739 12,525 (c) 27,500 294,282 7,664
(a) Includes the value of restricted shares that vested in 1997, 1996, and 1995 (see note (c) below). (b) Includes the employer contributions under Section 401(k) plans and related defined benefit plans as follows: Mr. Lupberger $23,562; Mr. Gallaher $9,822; Mr. Hintz $10,952; Mr. Jackson $10,262; Mr. Maulden $13,369; and Mr. McInvale $9,923. (c) There were no restricted stock awards in 1997. At December 31, 1997, the number and value of the aggregate restricted stock holdings were as follows: Mr. Lupberger 60,000 shares, $1,796,250; Mr. Gallaher 30,000 shares, $898,125; Mr. Hintz 30,000 shares, $898,125; Mr. Jackson 30,000 shares, $898,125; Mr. Maulden 37,500 shares, $1,122,656; and Mr. McInvale 30,000 shares, $898,125. Accumulated dividends are paid on restricted stock when vested. The value of stock for which restrictions were lifted in 1997, 1996, and 1995, and the applicable portion of accumulated cash dividends, are reported in the LTIP Payouts column in the above table. The value of restricted stock awards as of December 31, 1997 is determined by multiplying the total number of shares awarded by the closing market price of Common Stock on the New York Stock Exchange Composite Transactions on December 31, 1997 ($29.9375 per share). (d) Gerald D. McInvale is a former Executive Officer. He is included in the table because, had he been an executive officer at the end of the year, he would have been one of the four most highly compensated executive officers.
Option Grants to the Executive Officers in 1997 Individual Grants Potential Realizable % of Total Value Number of Options at Assumed Annual Securities Granted to Exercise Rates of Stock Underlying Employees Price Price Appreciation Options in (per Expiration for Option Term Name Granted (a) 1997 share) Date 5% 10% Edwin Lupberger 10,000 3.9% $ 26.5 01/30/07 $ 166,657 $ 422,342 Frank F. Gallaher 5,000 2.0% 26.5 01/30/07 83,329 211,171 Donald C. Hintz 5,000 2.0% 26.5 01/30/07 83,329 211,171 Jerry D. Jackson 5,000 2.0% 26.5 01/30/07 83,329 211,171 Jerry L. Maulden 5,000 2.0% 26.5 01/30/07 83,329 211,171 Gerald D. McInvale 5,000 2.0% 26.5 01/30/07 83,329 211,171
(a) These options became exercisable on July 30, 1997. Aggregated Option Exercises in 1997 and Option Values as of Year End 1997 Number of Securities Value of Unexercised Underlying Unexercised Options In-the-Money Options as of December 31, 1997 as of December 31, 1997 Name Exercisable Unexercisable Exercisable Unexercisable Edwin Lupberger 58,824 50,000 $ 107,308 $ 453,125 Frank F. Gallaher 17,500 25,000 36,406 226,563 Donald C. Hintz 27,500 25,000 53,594 226,563 Jerry D. Jackson 24,411 25,000 20,841 226,563 Jerry L. Maulden 30,000 25,000 54,375 226,563 Gerald D. McInvale 20,000 25,000 37,188 226,563 RETIREMENT INCOME PLAN. The Corporation has a defined benefit plan for employees that provides for a retirement benefit calculated by multiplying the number of years of employment by 1.5% which is then multiplied by the final average pay. A single employee receives a lifetime annuity and a married employee receives a reduced benefit with a 50% surviving spouse annuity. Retirement benefits are not subject to any deduction for social security or other offset amounts. The credited years of service under the plan, as of December 31, 1997, for the following executive officers were: Mr. Gallaher (28) and Mr. Maulden (32). Because they entered into supplemental retirement agreements, the credited years of service under this plan for the following executive officers were: Mr. Hintz (26); Mr. Jackson (18); Mr. Lupberger (34); and Mr. McInvale (25). The following table shows the annual retirement benefits that would be paid at normal retirement (age 65 or later). Retirement Income Plan Table (1) Annual Covered Years of Service Compensation 15 20 25 30 35 $100,000 $ 22,500 $30,000 $37,500 $45,000 $52,500 200,000 45,000 60,000 75,000 90,000 105,000 300,000 67,500 90,000 112,500 135,000 157,500 400,000 90,000 120,000 150,000 180,000 210,000 500,000 112,500 150,000 187,500 225,000 262,500 650,000 146,250 195,000 243,750 292,500 341,250 950,000 213,750 285,000 356,250 427,500 498,750 (1) Benefits are shown for various rates of final average pay, which is the highest salary earned in any consecutive 60 months during the last 120 months of employment. PENSION EQUALIZATION PAYMENTS. Supplemental retirement benefits are provided to all executive officers and other participants whose benefits are limited under the qualified plans by applicable Federal tax laws and regulations equal to the difference between the benefits that would have been payable under the qualified plans but for the applicable limitations. SUPPLEMENTAL RETIREMENT PLANS. Two other supplemental plans are offered to executive officers. Executives may participate in one or the other of these supplemental plans at the invitation of the Corporation. These plans provide that a participant may receive a monthly payment for 120 months. The amount of monthly payment shall not exceed 2.5% or 3.33%, depending upon the plan, of the participant's average basic annual pay. Current estimates indicate that the annual payments to any executive officer under either of these two plans would be less than the payments to that officer under the System Executive Retirement Plan discussed below. SYSTEM EXECUTIVE RETIREMENT PLAN. This executive plan is an unfunded defined benefit plan for senior executives, that includes all of the executive officers named in the Summary Compensation Table. Executive officers can choose, at retirement, between the retirement benefits paid under provisions of this plan or those payable under the supplemental retirement plans discussed above. Under this plan, covered pay includes final annual base pay and the target for incentive awards in effect at retirement. Benefits are calculated by multiplying the covered pay times the maximum pay replacement ratios of 55%, 60%, or 65% (dependent on job rating at retirement) that are attained at 30 years of credited service. The ratios are reduced for each year of employment below 30 years. A single employee receives a lifetime annuity and a married employee receives the benefit with a 50% surviving spouse annuity. These retirement payments are guaranteed for ten years but are offset by any and all defined benefit plan payments from the Corporation and from prior employers. These payments are not subject to social security offsets. Receipt of benefits under any of the supplemental retirement plans described above are contingent upon several factors. The participant must agree not to take any employment after retirement with any entity that is in competition with or similar in nature to the Corporation or any affiliated company. Benefits are forfeitable for various reasons, including a violation of an agreement with the Corporation or resignation or termination of employment for any reason without the Corporation's permission. The credited years of service for the executive officers under this plan are as follows: Mr. Gallaher (28), Mr. Lupberger (34), Mr. Maulden (32), Mr. Hintz (26), Mr. Jackson (24), and Mr. McInvale (16). The following table shows the annual retirement benefits that would be paid at normal retirement (age 65 or later). System Executive Retirement Plan Table (1) Annual Covered Years of Service Compensation 10 15 20 25 30+ $ 200,000 $60,000 $90,000 $100,000 $110,000 $120,000 300,000 90,000 135,000 150,000 165,000 180,000 400,000 120,000 180,000 200,000 220,000 240,000 500,000 150,000 225,000 250,000 275,000 300,000 600,000 180,000 270,000 300,000 330,000 360,000 700,000 210,000 315,000 350,000 385,000 420,000 1,000,000 300,000 450,000 500,000 550,000 600,000 (1) Covered pay includes final average base pay and the incentive awards target in effect at retirement. Benefits shown are based on a replacement ratio of 50% based on the years of service and covered salary shown. The benefits for 10, 15, and 20 or more years of service at 45% and 55% replacement levels would decrease (in the case of 45%) or increase (in the case of 55%) by the following percentages: 3.0%, 4.5%, and 5.0%, respectively. EXECUTIVE MANAGEMENT AGREEMENTS. In connection with the resignation of his position as Vice Chairman, Mr. McInvale entered into a contract under which he will receive approximately $33,300 a month through May 31, 2001, subject to certain terms and conditions. Mr. McInvale will also receive comparable benefits under the benefit plans, including retirement plans in which he participated as an employee. In addition, he will not lose any awards previously granted under the incentive plans. In the event Mr. McInvale's death occurs prior to May 31, 2001, his surviving spouse or estate will receive a lump sum equal to the net present value of all monetary base payments due from the date of his death to May 31, 2001, together with the benefits lost, or the comparable value. PROPOSAL 2 - APPROVAL OF THE 1998 EQUITY OWNERSHIP PLAN The Board of Directors adopted, subject to stockholder approval, the 1998 Equity Ownership Plan of Entergy Corporation and Subsidiaries ("Equity Plan"). This Equity Plan replaces the plan previously approved by shareholders in 1991. There are no material differences between the Equity Plan and the prior plan except that the 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. Subject to shareholder approval, the Equity Plan will be effective as of January 1, 1998. MAXIMUM NUMBER OF SHARES. A maximum of 12,000,000 shares of Common Stock will be available for awards. The value of each share of Common Stock on December 31, 1997 was $29.9375. Common Stock awarded may be authorized but unissued shares or shares acquired on the open market. Those stock awards which are forfeited, terminated, or expire, will again be available for subsequent awards. Any Common Stock surrendered by a participant to pay withholding taxes shall become available for subsequent awards. PARTICIPANTS AND PURPOSE OF THE PLAN. The plan's purpose is to link a participant's performance to shareholder value and reward effective leadership with equity incentives. Only those officers and non- employee directors having significant responsibility for continued growth, development and financial success shall be eligible to participate. The Equity Plan will be administered by the Personnel Committee of the Board which will select the participants and determine the forms of award. Approximately 150 employees will be eligible for awards of stock options. For all other forms of awards, approximately 50 employees will be eligible to participate. The committee has no plans for any outside directors to participate in the Equity Plan at this time but does anticipate that all executive officers and current officers will participate. FORMS OF AWARD. The Equity Plan provides for several different forms of award including: (1) stock options to purchase Common Stock, which may be either non-statutory stock options or incentive stock options as defined by Federal tax laws, (2) restricted shares, which vest over time, (3) performance shares pursuant to which Common Stock is awarded upon reaching specific performance goals, and (4) equity awards in the form of phantom stock units convertible into Common Stock and/or cash. STOCK OPTIONS. When granting stock options, the committee will set the exercise price at not less than fair market value of the Common Stock on the date the award is granted. Options will not be exercisable for 6 months and will expire 10 years after the date of the award. Non-statutory stock options may be transferred to family members or charities. Incentive stock options must comply with applicable tax requirements and may not be exercised by a participant in an amount that exceeds $100,000 in any one year. The total number of stock options granted to a single participant shall not exceed 480,000 shares. RESTRICTED SHARES. At the time of an award of restricted shares, the committee will establish a period during which the restricted shares will be subject to certain restrictions and provide for the lapse or termination of restrictions upon the satisfaction of other conditions. Holders of restricted shares generally have the right to vote and receive dividends. PERFORMANCE SHARES. Common Stock may be awarded in the form of performance shares. The receipt of the Common Stock shall be contingent upon the participant meeting specified performance goals during a performance period. Performance goals can be based on one or more business criteria that apply to either the participant, a business unit or the Corporation. The performance goals may be stated in terms of absolute levels or relative to its subsidiaries or to an index or indices. The number of performance shares payable to a single participant shall not exceed 480,000 shares. EQUITY AWARDS. Equity awards in the form of phantom stock units may be awarded. The value of these units is related to the value of Common Stock. The committee shall determine the number of phantom stock units to be awarded and all other terms, restrictions and conditions of such awards. Each phantom stock unit will be credited to each participant's account for accounting purposes. Each matured phantom stock unit may be settled in cash, Common Stock or a combination of both, as determined by the committee. The committee may also permit participants to purchase phantom stock units, each of which represents one share of Common Stock, the purchase price of which shall not be less than 80% of the fair market value on the date such award is purchased. PERFORMANCE-BASED COMPENSATION. Section 162(m) of the Internal Revenue Code of 1986, as amended, prevents public corporations from deducting as a business expense that portion of compensation exceeding $1,000,000 paid to the Chief Executive Officer and any of the other four most highly compensated executive officers. This deduction limit does not apply, however, to "performance-based compensation." Performance-based compensation is compensation paid solely because a participant met one or more pre-established, objective performance goals. All awards of stock options and performance shares made to executive officers will be deemed to be performance-based compensation. Stock options are considered performance-based compensation because the exercise price of such option may not be less than the fair market value of a share of Common Stock on the date of the award. Performance shares are considered performance-based compensation because the goals, the period, and the objective formula for computing the number of performance shares which are payable when performance goals are met will be established by the committee in writing prior to the beginning of the performance period. Once performance goals are set, the committee may lower an award but may not increase an award. The performance goals for such executive officers shall be based upon or may relate to one or any combination of the following business criteria: Earnings before income taxes, depreciation and amortization (EBITDA), Earnings before income taxes (EBIT), net income, earnings per share, operating cash flow, cash flow, return on equity, sales, budget achievement, productivity, price of Common Stock, market share, total return to shareholder, return on capital, net cash flow, cash available to parent, net operating profit after taxes (NOPAT), economic value added (EVA), expense spending, operation and maintenance (O&M) expense, expense, O&M or capital/kWh, capital spending, gross margin, net margin, market capitalization, market value, debt ratio, equity ratio, return on assets, profit margin, customer growth or customer satisfaction. AMENDMENTS. The committee may amend or terminate the Equity Plan unless shareholder approval is required for an amendment to comply with any tax or regulatory requirements, or to ensure that the applicable requirements for deductibility of the performance based compensation are met. TAX CONSEQUENCES OF THE PLAN. The grant of a stock option will not result in taxable income for the optionee or the Corporation at the time of the grant. Upon the exercise of a non-statutory stock option, the optionee will recognize ordinary income in the amount by which the fair market value exceeds the option price. The Corporation will be entitled to a deduction for the same amount. The optionee will have no taxable income upon the exercise of an incentive stock option (except that the alternative minimum tax may apply), and the Corporation will receive no deduction when an incentive stock option is exercised. The tax treatment to an optionee of a disposition of shares acquired by the exercise of an option depends on the length of time the shares have been held and whether such shares were acquired by the exercise of an incentive stock option or non-statutory stock option. Generally, there will be no tax consequence to the Corporation in connection with the disposition of shares acquired under a stock option except that the Corporation may be entitled to a deduction in the case of a disposition of shares acquired upon exercise of an incentive stock option before the applicable incentive stock option holding periods have been satisfied. With respect to other awards granted under the Equity Plan that are settled either in cash, in Common Stock or other property and are either transferable or not subject to a substantial risk of forfeiture, the participant must recognize ordinary income equal to the cash or fair market value of shares or property received; the Corporation will be entitled to a deduction for the same amount. For awards that are settled in Common Stock or property and are restricted as to the transferability and subject to substantial risk of forfeiture, the participant must recognize ordinary income equal to the fair market value of the shares or other property received at the first time the shares or other property become transferable or not subject to substantial risk of forfeiture, whichever occurs earlier; the Corporation will be entitled to a deduction for the same amount. NEW PLAN BENEFITS. Providing that you approve the Equity Plan, stock options will be awarded in January 1999 and performance shares will be awarded in January 1998 based on performance goals set by the committee for 1998. Under applicable treasury regulations, the committee may set these performance goals no later than March 31, 1998 for the 1998 performance period as long as the attainment of the specific goals is still undeterminable. The performance goals will be based on one of the business criteria discussed above under the heading "Performance-Based Compensation." The Corporation is unable to provide meaningful disclosure as to what benefits will be payable under this plan for 1998, because the performance goals have not been set and the number of participants and the amount of stock options or performance shares to be awarded has not been determined. Under the 1991 plan, however, in January 1996 the committee granted performance shares at the superior target level as follows: Mr. Lupberger, 40,000 shares; Mr. Gallaher, 20,000 shares; Mr. Hintz, 20,000 shares; Mr. Jackson, 20,000 shares; Mr. Maulden, 25,000 shares; Mr. McInvale, 20,000 shares; all executive officers as a group, 163,000 shares; and all non-executive officers and employees as a group, 256,750 shares. These awards are subject to a three year performance period. It is impossible to determine, at this time, whether any or all awards will be earned. In January 1998, under the 1991 plan, the committee granted 71,250 options to all executive officers as a group and 50,000 options to all non-executive officers and employees as a group with an exercise price of $26.50. Options granted to the named executive officers are reported on the Option Grant Table on page 17. These options are currently exercisable. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 1998 EQUITY OWNERSHIP PLAN. PROPOSAL 3 - APPROVAL OF THE EXECUTIVE ANNUAL INCENTIVE PLAN The Board of Directors adopted, subject to stockholder approval, an Executive Annual Incentive Plan effective January 1, 1998. This Incentive Plan will be administered by the Personnel Committee of the Board which has broad authority to determine performance goals, the amount to be paid when performance goals are met and that the specific performance goals have been satisfied. PARTICIPANTS AND PURPOSE OF THE PLAN. The Incentive Plan is intended to provide incentive pay to executive employees based on the achievement of company-wide, business unit and/or individual performance goals. Participants shall include executive employees who are responsible for the establishment of the strategic direction of the Corporation and/or business units, the execution of tactical action plans, or achievement of bottom line results. Approximately 50 executives may participate in the plan. The maximum amount a single participant may be paid pursuant to this plan for any single calendar year performance period is $2,000,000. PERFORMANCE GOALS. Performance goals shall be established by the committee in writing prior to the beginning of the calendar year during which performance will be measured or by such later date as permitted under applicable Federal tax laws and regulations. Once performance goals are set, the committee may not increase an award, but may lower an award. The committee shall certify in writing prior to payment of any award that the performance goals have been satisfied. PERFORMANCE BASED COMPENSATION. Awards under the Incentive Plan are intended to qualify as performance based compensation under Section 162(m) of the Internal Revenue Code, as amended, of 1986. The payment of such awards would then be deductible by the Corporation as a business expense. The performance goals for executive officers under this plan will be based on the identical business criteria as specified for the Equity Plan on page 19. AMENDMENTS. The Committee may amend or terminate the Incentive Plan at any time, unless shareholder approval is necessary to comply with any tax or regulatory requirements or to ensure that the applicable requirements for deductibility of performance based compensation are met. NEW PLAN BENEFITS. The Incentive Plan is similar to the incentive plan currently in effect. The major difference is that you are being asked to approve the compensation payable under this plan as performance-based. Based on the performance targets set by the committee for 1997 under the prior plan, none of the executive officers earned any incentive awards for 1997. All non-executive officers and employees earned $1,262,093 under the current plan for 1997. If you assume, however, that the executive officers had met the 1997 performance goals under the current plan at the median target percent level, Mr. Lupberger would have received $464,000; Mr. Gallaher $168,200; Mr. Hintz $203,000; Mr. Jackson $200,100; and Mr. Maulden $261,000. All executive officers as a group would have received $1,797,176, and all non-executive officers and employees as a group would have received $5,152,469. The benefits that would be payable to executive officers and all other current officers and employees for 1998 are not determinable at this time because the committee has not set the performance goals for 1998 or the target percentages of base pay that a participant can earn as incentive compensation. Under applicable treasury regulations, the committee may set these performance goals no later than March 31, 1998 for the 1998 performance period as long as the attainment of the specific goals is still undeterminable. The performance goals will be based on one of the business criteria discussed above under the heading "Performance-Based Compensation". THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE EXECUTIVE ANNUAL INCENTIVE PLAN. PROPOSAL 4 - APPOINTMENT OF INDEPENDENT ACCOUNTANTS Unless otherwise specified by the stockholders, votes will be cast pursuant to the proxies in favor of the ratification of the appointment by the Board of Coopers & Lybrand L.L.P. as independent accountants for the Corporation for the year 1998. Coopers & Lybrand LLP has been the Corporation's auditors since 1994, and of Entergy Gulf States, Inc., an operating subsidiary, since 1933. Coopers & Lybrand LLP does not have any other relationship with the Corporation or any of its subsidiaries. A representative of Coopers & Lybrand LLP will be present at the meeting and will be available to respond to questions by stockholders and will be given an opportunity to make a statement if they desire to do so. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. STOCKHOLDER PROPOSALS FOR 1999 MEETING. For a stockholder proposal to be included in the proxy statement for our next annual meeting, the proposal must be received by the Corporation at its principal offices no later than November 30, 1998. Also, under our Bylaws, stockholders must give advance notice of nominations for director or other business to be addressed at the meeting not later than the close of business on March 16, 1999 and not earlier than February 19, 1999. By order of the Board of Directors, /s/ Edwin Lupberger Edwin Lupberger Chairman of the Board and Chief Executive Officer Dated: March 30, 1998 -----END PRIVACY-ENHANCED MESSAGE-----