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[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
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