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EXHIBIT 10(b)

 

ANNUAL INCENTIVE COMPENSATION PLAN
CLECO CORPORATION
(As Amended and Restated January 23, 2003)

1.   Purpose of the Plan

      The purpose of the Annual Incentive Compensation Plan (hereinafter the
"Plan") for Cleco Corporation (hereinafter the "Company") is to:

        A.     Provide incentive compensation to those officers and key
employees who contribute significantly to the growth and success of the Company;

        B.     Attract and retain individuals of outstanding ability;

        C.     Align the interests of those who hold positions of major
responsibility in the Company with the interests of Company shareholders.

2.   Definitions

   As employed in the Plan and all related Attachments and Exhibits, the
following words and phrases should have the following meanings:

   "Base Salary" means the year-end base salary in effect for the Plan Year as
shown in the personnel records of the Company.

   "Board" means the Board of Directors of Cleco Corporation headquartered in
Pineville, Louisiana.

   "Committee" means the Compensation Committee of the Board of Directors of
Cleco Corporation, or any other committee of the Board designated by resolution
of the Board to administer the Plan.

   "Corporate Threshold" refers to the pre-established corporate performance
level that must be reached in order for any award(s) to be paid pursuant to
those portions of the Plan that incorporate, fully or partially, some measure of
Subsidiary or individual Participant performance to determine an individual's
award.

   "Earnings per Share" or "EPS" means the Company's net income attributable to
common stock divided by the average number of common shares outstanding.

   "Funding Formula" means the formula established by the Committee each year
that determines the maximum amount of payments that may be made from the Plan. 
This formula may be expressed as a percentage of net income or any other
relationship determined by the Committee to protect the interests of
shareholders.  Funds generated by the formula establish a pool of money that may
be used for payments to Participants under the Plan.

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   "Management by Objective" or "MBO" means that metric used at the Subsidiary
level to measure an individual Participant's performance as it relates to the
Annual Incentive Plan.  It may be expected that the MBO definition may vary from
one subsidiary to the next, and be weighted in varying percentages from
Participant to Participant.

   "Participant" means any officer, executive or key employee of the Company
selected by the Committee to receive an award under the Plan.  Members of the
Board who are not employed on a full-time basis by the Company are not eligible
to receive awards under the Plan.

   "Payout" means a payment made to a Participant under the terms and conditions
of the Plan.

   "Payout Matrix" means a chart that illustrates the relationship between the
performance criteria and the payouts that are generated by the actual
performance each year.  The matrix contains the various levels of performance
and the payouts, expressed as a percentage of targeted awards, that will be paid
for each level of performance.  Payouts determined by the payout matrix are
subject to availability of funds as computed by the Funding Formula.

   "Payout Schedule" means the incentive amount expressed as a percentage of
base salary that will be paid at various levels of actual performance when
compared to target performance.

   "Peer Companies" means a list of electric utility or other companies selected
or approved by the Committee, against which the performance of the Company is
compared each year (12 month performance cycle) as one element of determining
payouts under the Plan.

   "Performance Criteria or Performance Measure(s) " means those financial,
operational or individual measures that are selected each Plan Year by the
Committee and used to determine awards under the Plan.  Performance criteria may
be established for corporate, subsidiary, division, individual or other business
unit results.

   "Plan" means the Annual Incentive Compensation Plan for the Company.

   "Subsidiary" shall mean any subsidiary, strategic business unit, or limited
liability corporation as defined for the purposes of this Plan.

   "Subsidiary Measures" means those factors/performance metrics that are used
to determine that portion of a Participant's incentive award that is based on
Subsidiary performance, or some aspect of Subsidiary performance.   Subsidiary
measures may or may not be used in any given plan year.

   "Relative ROE" means the Company's Return on Equity in relation to the Peer
Group.  This relationship will normally be expressed as a percentile rank within
the group.

   "Return on Assets" or "ROA" means the ratio of net earnings to total assets
of the company, subsidiary or operating unit.

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   "Return on Equity" or "ROE" means the ratio of net earnings to shareholders'
equity for the Company.

   "Return on Revenue" or "ROR" means the ratio of income before taxes, interest
expense or corporate allocation to revenue for a subsidiary or operating unit.

   "Target" means the level of performance that is judged sufficient by the
Committee, based on predetermined objectives, to obtain the target award.

3.   Administration of the Plan

   The Plan shall be administered by the Compensation Committee of the Board of
Directors of the Company.  Subject to the provisions of the Plan, the Committee
shall have exclusive authority to amend, modify, suspend or terminate the Plan
at any time.

   At the beginning of each Plan Year, the President and Chief Executive Officer
of the Company will make recommendations to the Committee regarding
Participants, size of potential awards, corporate and individual performance
criteria, performance targets and corporate performance thresholds.  The
Committee will consider and approve or modify the recommendations as
appropriate.  At the conclusion of each Plan Year, the President and Chief
Executive Officer of the Company will present to the Committee a schedule
indicating actual performance and the recommended award earned by each
Participant.  The Committee will review the recommendations and approve or
modify the recommendations as presented and approve the award to be paid to each
Participant.

4.   Performance Criteria

   At the full discretion of the Compensation Committee of the Board of
Directors, performance criteria, by which all Annual Incentive awards shall be
determined, will be selected at the beginning of each Plan year.   Performance
criteria may vary from year to year and may be based on corporate, business
unit-specific, or individual criteria or some combination of the three.

5.   Weighting of Performance Criteria

   Each plan year, the Committee will consider and approve performance criteria
and relative weights which will be provided to each plan participant through the
plan agreement document.

6.   Peer Companies or Peer Group

   The President and Chief Executive Officer of the Company shall select, and
the Committee shall approve, a group of Peer Companies against which Company ROE
shall be compared to determine Company performance for purposes of the Plan. 
Such selection shall take place at the time of the adoption of the Plan Year and
for each Plan Year.

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   It is anticipated that the selected and approved group of Peer Companies may
change or otherwise be altered during the course of the Plan Year due to factors
including, but not limited to, corporate mergers, acquisitions, discontinuation
of normal business operations, etc.  In any situation that impacts or materially
alters the composition of the Peer Group, the President and Chief Executive
Officer shall recommend changes to the Peer Group and present those changes for
the Committee's approval before the end of the Plan Year.  Ultimate approval of,
or any modifications to, the Peer Group shall be at the sole discretion of the
Committee.

7.   The Award Process

      As soon as practicable after the end of each Plan Year, the Committee,
upon recommendation of the President and Chief Executive Officer of the Company,
will determine the actual level of performance for each Plan Incentive Measure. 
This level of performance will be matched to the appropriate range of
performance on the payout matrix and/or any other award/performance schedules. 
Based on an analysis of the relationship between the actual and Plan performance
levels, the award for each Participant, expressed as a percentage of the target
award for the Participant, will be determined.

      The Committee, based on the President and Chief Executive Officer's
recommendation, may adjust (up) the calculated award.  The purpose of such
adjustment is to recognize outstanding individual performance.  In the event
that performance is clearly below standards the President and Chief Executive
Officer may recommend reduction of the calculated award.  The magnitude of such
adjustments is limited to plus or minus 25% of the affected Participant's
calculated award.

8.   Funding Formula

      The Funding Formula for the Plan will be communicated to all Participants
through the Plan agreement.  Any unused portions in the fund so created by the
formula cannot be used in future years and must be returned to the general
assets of the Company.  If the funding formula produces a payout pool that is
not adequate for the payment of awards from the payout matrix, all awards will
be reduced on a proportional basis so that the total dollar amount of the pool
is not exceeded.

   Beginning with Plan Year 1999 the Funding Formula shall be 4.5% of Net
Income, subject to modification by the Compensation Committee of the Board of
Directors.

9.   Corporate Threshold

   The Committee may establish a Corporate Performance Threshold for each Plan
Year.  If a threshold is established and actual corporate performance is below
the established threshold, no payments will be made on business unit or
individual measures, regardless of actual

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individual or business unit results.  This threshold is included in the Plan
agreement signed by each individual Participant.

10. Revised Award Levels and Performance Criteria

   For Participants who are assigned to different position levels or transferred
between Company organizations during the Plan Year, the Committee may, at any
time, and upon recommendation of the President and Chief Executive Officer of
Cleco Corporation, establish revised award levels and performance criteria for
that Participant.

11. Form of Payment

      All awards under the Plan will be paid in cash, in one lump sum, subject
to such payroll taxes and other deductions, if any, as may be in effect at the
time of payment.

12. Timing of Payment

   All awards will be paid as soon as practicable following approval by the
Committee of actual awards.

13. Adjustments

   Neither may the Committee change any performance criteria, targets, payout
schedules or participation levels retroactively for a Plan Year, nor may the
Committee exclude any previously designated Plan Participant(s), except as and
to the extent determined by the Committee in the event of changes in accounting
practices or extraordinary or unanticipated circumstances which could have a
material adverse effect on the achievement of Performance Criteria.

14. Termination, Death or Disability

      Awards will be paid only to Participants who are actually employed by the
Company and on the Company payroll on the last day of each Plan Year, except as
indicated below.  A Participant whose employment terminates prior to the end of
the Plan Year shall forfeit any and all awards and payouts from the Plan, as
well as any rights thereto, whether terminated by the Company or terminating
employment voluntarily.  Those who terminate employment due to death,
disabilityor retirement under the Company's qualified retirement plan will be
paid a pro-rata portion of any award based on their date of termination.  Such
prorated payments will be made at the time and in the form that all payments are
normally made to all other Participants.  The pro rata award shall be calculated
by multiplying the full year's award by the percentage which is the result of
dividing the number of full months as an active employee and a Participant by
12.

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15. New Participants

      Participation for new employees will be determined as required by the
Committee.

16. Miscellaneous

   No Participant shall have the right to anticipate, alienate, sell, transfer,
assign, pledge or encumber his or her right to receive any award made under the
Plan until such award becomes payable to him or her.

   No Participant shall have any lien on any asset of the Company by reason of
any award, actual or inferred, under the Plan.

   The adoption of the Plan or any modification or amendment thereof does not
imply any commitment to continue or adopt the same Plan, or any modification
thereof, or any other Plan for incentive compensation for any succeeding year,
provided that no such modification or amendment shall adversely affect rights to
receive any amount to which Participants have become entitled prior to such
modifications and amendments.  Neither the Plan nor any award made under the
Plan shall create any employment contract or relationship between the Company
and any Participant.  This Plan supersedes all officer incentive compensation
plans of Cleco Corporation, its divisions and subsidiaries.

   Each Participant shall be provided with a Plan description and a Plan
Agreement for each Plan Year.  The Plan Agreement shall contain or have attached
to it the Plan specifics for each year, including the following:

            The corporate threshold
            The funding formula
            The payout matrix
            The payout schedule
            The list of peer companies

17. Plan Succession

   This Plan shall be binding on the successors of the Company (including any
Successor Company).

18. Adjustments in Performance

   For the purposes of calculating the incentive award, the Committee, based on
the President and Chief Executive Officer's recommendations, may make such
adjustments in order to more accurately reflect the true operating performance
of the Company and/or Subsidiary.  Adjustments may include, but are not limited
to, excluding or including extraordinary items of income or expense.

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19. Plan Termination and Amendment

   The Committee shall have the right to change, modify or terminate the Plan at
any time.  However, such modification, termination or change (except under
Paragraphs 17 and 18) shall not affect the Participants' awards once the Plan
has been reviewed and adopted for a Plan year.

20. Gender and Number

   Except when otherwise indicated by the context, any masculine terminology
used in this Plan shall also include the feminine.  Plural/singular terminology
used shall also include singular or plural as indicated by the context.

21. Liability/Powers of the Committee

   21.1 Powers of the Committee

   The Committee (under the authority delegated to it by the Board) shall have
the full authority to interpret, construe, modify and administer this Plan, to
adopt appropriate procedures and make all decisions necessary or proper to carry
out the terms of the Plan, including naming of those employees who shall
participate in the Plan.

   21.2 Liability

   In the absence of bad faith neither the Company, nor any of its affiliates,
officers, employees, members of the Committee or agents shall have any liability
to any person, firm, or corporation based on, or arising out of the Plan.

22. Governing Law

   The Plan shall be construed in accordance with and governed by the laws of
the state of Louisiana.

23. Severability

   The invalidity or unenforceability of any provision hereof shall in no way
affect the validity or enforceability of any other Plan provision(s).

24. Titles and Headings

   The titles and headings of the paragraphs of this Plan are for convenience of
reference and in case of any conflicts, the text of the Plan, rather than such
titles or headings shall control.

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