UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form U-5S
ANNUAL REPORT
For the year ended December 31, 2003
Filed pursuant to the Public Utility Holding Company Act of 1935
by
CenterPoint Energy, Inc.
1111 Louisiana
Houston, Texas 70002
Utility Holding, LLC
200 West Ninth Street Plaza
Suite 411
Wilmington, Delaware 19801
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ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF DECEMBER 31, 2003
See Exhibit F-1 attached hereto for the information required by this Item for
CenterPoint Energy, Inc. ("CenterPoint") and its subsidiaries.
During 2003, CenterPoint formed CenterPoint Energy Service Company, LLC, and
pursuant to Commission order, that company began operation in January 2004 as a
common service company for CenterPoint and its system companies.
ITEM 2. ACQUISITIONS OR SALES OF UTILITY ASSETS
None.
ITEM 3. ISSUE, SALE, PLEDGE, GUARANTEE OR ASSUMPTION OF SYSTEM SECURITIES
All transactions have been reported in certificates filed pursuant to Rule 24.
ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES
In March and May 2003, CenterPoint Energy Houston Electric, LLC (the "T&D
Utility") redeemed approximately $62.3 million aggregate principal amount of its
8.75% first mortgage bonds due 2022 at 103.56% of their principal amount, $250
million aggregate principal amount of its 7.75% first mortgage bonds due 2023 at
103.77% of their principal amount, $200 million aggregate principal amount of
its 7.5% first mortgage bonds due 2023 at 103.51% of their principal amount, and
repaid $429 million of intercompany notes payable to CenterPoint. CenterPoint
used some of the proceeds of the intercompany note repayment to repay $150
million aggregate principal amount of medium-term notes maturing on April 21,
2003.
In September 2003, the T&D Utility repaid approximately $258 million of
intercompany notes payable to CenterPoint.
In March 2003, CenterPoint Energy Resources Corp. ("GasCo") refinanced $260
million aggregate principal amount ($266.6 million book value) of GasCo's Term
Enhanced ReMarketable Securities (the "TERM Notes") maturing in November 2003.
GasCo paid approximately $41 million of costs associated with the refinancing.
In April 2003, GasCo refinanced $100 million aggregate principal amount ($102.5
million book value) of TERM Notes. GasCo paid approximately $17.9 million of
costs and accrued interest associated with the refinancing.
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In November 2003, GasCo accepted $140 million aggregate principal amount ($143.2
million book value) of the TERM Notes and $1.25 million as consideration for
$160 million aggregate principal amount of GasCo's 5.95% senior notes due 2014.
GasCo retired the TERM Notes received.
In October 2003, CenterPoint refinanced its $2.36 billion bank facility having a
termination date of June 2005 with a $2.35 billion credit facility having a
termination date of October 2006, reducing the drawn cost of the amount
remaining outstanding from LIBOR plus 450 basis points to LIBOR plus 350 basis
points on the $925 million term loan and LIBOR plus 300 basis points on the
$1.425 billion revolver.
The above transactions were authorized pursuant to Rule 42 and/or CenterPoint's
June 30, 2003 omnibus financing order, as supplemented.
ITEM 5. INVESTMENTS IN SECURITIES OF NONSYSTEM COMPANIES
Description Number of % of Nature Owner's Book Value
Investor Investee of Security Shares Voting Power of Business (in millions)
---------------------- ---------------------- ----------- ----------- ------------ ------------------- ------------------
Reliant Energy AOL-Time Warner Common 21,640,246 0.5% media and $284
Investment Management entertainment
CenterPoint Houston Pantellos Corporation
Electric, LLC Common 191,950 1.9% supply chain
services for utility
and energy
industries
ITEM 6. OFFICERS AND DIRECTORS - PART I.
The names, principal address and positions held as of December 31, 2003
of the officers and directors of system companies is presented in the
tables on the following pages. The principal business address of each
officer and director is indicated in such tables by the numbers (1)
through (10). The addresses associated with these number designations
are shown in the address key below. The symbols used to indicate the
positions held by officers and directors are shown in the position
symbol key below.
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CENTERPOINT
CENTERPOINT ENERGY SERVICE UTILITY HOLDING, CNP FUNDING CNP HOUSTON CNP TRANSITION
DIRECTORS AND OFFICERS ENERGY, INC. COMPANY, LLC LLC COMPANY ELECTRIC, LLC BOND COMPANY
------------------------- -------------- ---------------- ---------------- ----------- ------------- --------------
Milton Carroll (1) D, COB COB
John T. Cater (1) D
Darrill Cody (1) D
O. Holcombe Crosswell (1) D
Thomas F. Madison (1) D
David M. McClanahan (1) D, P, CEO M, P, CEO D, C, P M, C
Michael E. Shannon (1) D
Scott E. Rozzell (1) EVP, GC, S EVP, GC, S VP, S EVP, GC, S EVP, GC, S
Stephen C. Schaeffer (1) EVP, GP EVP, GP
Gary L. Whitlock (1) EVP, CFO EVP, CFO VP EVP, CFO M, P
James S. Brian (1) SVP, CAO SVP, CAO SVP, CAO M, SVP, CAO
Johnny L. Blau (1) SVP SVP
Preston Johnson, Jr. (1) SVP SVP
Thomas R. Standish (1) P, COO
David G. Tees (1) SVP SVP
Bernard J. Angelo (10) M
Patricia F. Genzel (2) M, P, S
Andrew L. Stidd (10) M
Jeff W. Bonham (1) VP VP
Rick L. Campbell (1) VP VP
Walter L. Fitzgerald (1) VP, CO VP, CO VP, C
Patricia F. Graham (1) VP VP
John C. Houston (1) VP
Marc Kilbride (1) VP, T VP, T VP, T VP, T M, VP, T
Floyd J. LeBlanc (1) VP VP
Andi J. McCormac (1) VP
Joseph B. McGoldrick (1) VP VP
Doyle W. McQuillon (1) VP, GM
Sharon Michael-Owens (1) VP
H. Wayne Roesler (1) VP VP
Steven H. Schuler (1) VP VP
Rufus S. Scott (1) VP, DGC, AS VP, DGC, AS VP, AS VP, DGC, AS VP, DGC, AS
Jim F. Schaefer (1) VP, GM
Allan E. Schoeneberg (1) VP VP
C. Dean Woods (1) VP VP
Richard B. Dauphin (1) AS AS AS AS AS
Gretchen H. Denum (1) AS AS
Linda Geiger (1) AT AT AT AT AT
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HI FINANCECO
DIRECTORS AND OFFICERS GP, LLC
------------------------- ------------
David M. McClanahan (1) P
Scott E. Rozzell (1) EVP, S
Gary L. Whitlock (1) EVP, CFO
James S. Brian (1) SVP, CAO
Marc Kilbride (1) M, VP, T
Rufus S. Scott (1) VP, AS
Richard B. Dauphin (1) AS
Linda Geiger (1) AT
CNP ENERGY, INC. CNP INVESTMENT
DIRECTORS AND OFFICERS (DE) MANAGEMENT, INC.
--------------------------- ---------------- -----------------
David M. McClanahan (1) D
Scott E. Rozzell (1)
Gary L. Whitlock (1)
Patricia F. Genzel (2) D, P, S
Mike W. Watters (1) D
Marc Kilbride (1)
Kamini D. Patel (2) VP, AS
Richard B. Dauphin (1)
Linda Geiger (1)
DIRECTORS AND OFFICERS CNP POWER SYSTEMS, INC. CNP PRODUCTS, INC. CNP PROPERTIES, INC. CNP TEGCO, INC.
------------------------- ----------------------- ------------------ -------------------- ---------------
David M. McClanahan (1) C D, P D, C, P D, P
Scott E. Rozzell (1) VP, S VP, S VP, S VP, S
Stephen C. Schaeffer (1) D, VP
Gary L. Whitlock (1) VP
James S. Brian (1)
Marc Kilbride (1) VP, T VP, T D, VP, T VP, T
Allan E. Schoeneberg (1) VP
Rufus S. Scott (1) VP, AS VP, AS VP, AS
Richard Snyder (1) P, COO
Richard B. Dauphin (1) AS AS AS AS
Linda Geiger (1) AT AT AT AT
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DIRECTORS AND OFFICERS NORAM ENERGY CORP.
------------------------- ------------------
David M. McClanahan (1) P
Scott E. Rozzell (1) VP, S
James S. Brian (1)
Marc Kilbride (1) VP, T
Rufus S. Scott (1)
Richard B. Dauphin (1) AS
Linda Geiger (1) AT
TEXAS GENCO TEXAS GENCO GP, TEXAS GENCO LP, UTILITY RAIL
DIRECTORS AND OFFICERS HOLDINGS, INC. LLC LLC SERVICES, INC.
------------------------------ -------------- --------------- --------------- --------------
J. Evans Attwell (1) D
Donald R. Campbell (1) D
Robert J. Cruikshank (1) D
Patricia A. Hemingway Hall (1) D
David M. McClanahan (1) D, COB C, P
Scott E. Rozzell (1) D, EVP, GC, S EVP, GC, S VP, S
David G. Tees (1) D, P, CEO M, P
Gary L. Whitlock (1) D, EVP, CFO EVP, CFO
James S. Brian (1) SVP, CAO SVP, CAO D, VP
Patricia F. Genzel (2) M, P, S
Walter L. Fitzgerald (1) VP, C
Marc Kilbride (1) VP, T VP, T VP, T
Joseph B. McGoldrick (1) VP
Michael A. Reed (1) VP VP
Rufus S. Scott (1) VP, DGC, AS VP, DGC, AS VP, AS
Jerome D. Svatek (1) VP
Richard B. Dauphin (1) AS AS AS
Linda Geiger (1) AT AT AT
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ARKANSAS
CNP ALG GAS ALLIED LOUISIANA
RESOURCES, SUPPLY MATERIALS FINANCE ARKLA ARKLA PRODUCTS
DIRECTORS AND OFFICERS CORP. COMPANY CORPORATION CORPORATION INDUSTRIES, INC. COMPANY
--------------------------------- ------------- ---------- ----------- ----------- ---------------- --------------
David M. McClanahan (1) D, C, P, CEO D, C, CEO D, P
Scott E. Rozzell (1) EVP, GC, S VP, S VP, S VP, S VP, S EVP, S
Stephen C. Schaeffer (1) EVP, GP
Gary L. Whitlock (1) EVP, CFO D, VP D, VP
James S. Brian (1) SVP, CAO D, VP D, VP D, VP D
Preston Johnson, Jr. (1) SVP
Kathleen Gardner Alexander (5) AS D, VP, GC VP, AS D
Constantine S. Liollio (1) D, P D, P D, P
Jerry W. Plant (4) D, P
Wayne D. Stinnett, Jr. (1) D, VP
Walter L. Fitzgerald (1) VP, CO
Marc Kilbride (1) VP, T VP, T VP, T VP, T VP, T VP, T
Rufus S. Scott (1) VP, DGC, AS VP, AS VP, AS VP, AS VP, AS
Brenda A. Bjorklund (8) AS
Richard B. Dauphin (1) AS AS AS AS AS AS
Daniel O. Hagen (8) AS
George C. Hepburn, III (1) AS VP, AS
Linda Geiger (1) AT AT AT AT AT AT
Michelle Willis (3) AS
CNP FIELD
CNP CNP SERVICES CNP GAS CNP GAS
ALTERNATIVE CONSUMER CNP FIELD HOLDINGS, PROCESSING, MARKETING
DIRECTORS AND OFFICERS FUELS, INC. GROUP, INC. SERVICES, INC. INC. INC. COMPANY
---------------------------- ------------ ----------- -------------- --------- ----------- ---------
David M. McClanahan (1) D, P D, C
Scott E. Rozzell (1) VP, S VP, S VP, S VP, S VP, S VP, S
Edwin J. Spiegel (7) SVP
Kevin J. Blase (7) VP
Gary M. Cerny (8) P
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Walter L. Ferguson (1)
Hugh G. Maddox (3) D, SVP, COO D, SVP
Benjamin J. Reese (1) VP
Wayne D. Stinnett, Jr. (1) D, VP D, P
Cyril J. Zebot (1) D, VP
Marc Kilbride (1) VP, T VP, T VP, T VP, T VP, T VP, T
Andrea L. Newman (8) VP
Rufus S. Scott (1) VP, AS VP, AS VP, AS VP, AS VP, AS
Brenda A. Bjorklund (8) AS
Richard B. Dauphin (1) AS AS AS AS AS AS
George C. Hepburn, III (1) VP, AS
Linda Geiger (1) AT AT AT AT AT AT
Michelle Willis (3) AS AS
CNP GAS CNP - ILLINOIS GAS
CNP GAS TRANSMISSION CNP HUB SERVICES, TRANSMISSION
DIRECTORS AND OFFICERS RECEIVABLES, LLC COMPANY INC. COMPANY
----------------------------- ---------------- ------------ ----------------- ------------------
David M. McClanahan (1) D, P
Scott E. Rozzell (1) EVP, GC, S VP, S VP, S VP, S
Gary L. Whitlock (1) M, P
James S. Brian (1) SVP, CAO
Frank B. Bilotta (9) IM
Walter L. Ferguson (1) D, VP D, VP
Constantine S. Liollio (1)
Benjamin J. Reese (1)
Wayne D. Stinnett, Jr. (1)
Cyril J. Zebot (1) VP D, VP VP
Walter L. Fitzgerald (1) VP, CO
Robert C. Hausler (1) VP
Marc Kilbride (1) M, VP, T VP, T VP, T VP, T
Rufus S. Scott (1) VP, DGC, AS VP, AS VP, AS VP, AS
Robert A. Trost (7) VP
Richard B. Dauphin (1) AS AS AS AS
George C. Hepburn, III (1)
Linda Geiger (1) AT AT AT AT
Michelle Willis (3) AS
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PINE PIPELINE
CNP INTRASTATE ACQUISITION CNP GAS CNP RETAIL CNP - MRT CNP MRT
DIRECTORS AND OFFICERS HOLDINGS, LLC COMPANY SERVICES, INC. INTERESTS, INC. CORPORATION HOLDINGS, INC.
---------------------------- -------------- ------------- -------------- --------------- ----------- --------------
David M. McClanahan (1) D, P
Scott E. Rozzell (1) VP, S VP, S VP, S VP, S
Walter L. Ferguson (1) D, VP
Benjamin J. Reese (1) VP
Wayne D. Stinnett, Jr. (1) D, P D, P
Cyril J. Zebot (1) M, VP M, VP VP D, P
Marc Kilbride (1) VP, T VP, T VP, T VP, T VP, T
Rufus S. Scott (1) VP, AS VP, AS VP, AS VP, AS
Robert A. Trost (7) VP
Richard B. Dauphin (1) AS AS AS AS
Linda Geiger (1) AT AT AT AT AT
Michelle Willis (3) AS
Sylvia Z. Zuroweste (7) AS
Kevin J. Blase (7) VP
James Best (1) AS
George C. Hepburn, III (1) VP, GC, S
Edwin J. Spiegel (7) SVP
CNP TRADING &
CNP MRT SERVICES CNP PIPELINE SERVICES, TRANSPORTATION GROUP,
DIRECTORS AND OFFICERS COMPANY INC. CNP OQ, LLC INC.
-------------------------- ---------------- ---------------------- ----------- ---------------------
David M. McClanahan (1) D, P
Scott E. Rozzell (1) VP, S VP, S VP, S VP, S
Walter L. Ferguson (1) D, VP D, VP
Cyril J. Zebot (1) VP
Marc Kilbride (1) VP, T VP, T VP, T VP, T
Rufus S. Scott (1) VP, AS VP, AS VP, AS VP, AS
Robert A. Trost (7) D, VP, GM
Richard B. Dauphin (1) AS AS AS AS
Linda Geiger (1) AT AT AT AT
Michelle Willis (3) AS
Sylvia Z. Zuroweste (7) AS
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ENTEX GAS
MARKETING ENTEX NGV, ENTEX OIL & CNP INTRASTATE
DIRECTORS AND OFFICERS COMPANY INC. GAS COMPANY INTEX, INC. PIPELINES, INC.
----------------------------- --------- ---------- ----------- ----------- ---------------
David M. McClanahan (1) D, C, P D, P C, P
Scott E. Rozzell (1) VP, S VP, S VP, S VP, S
Benjamin J. Reese (1) VP VP VP
Wayne D. Stinnett, Jr. (1) D, SVP D, VP D, SVP D, P D, C, P
Marc Kilbride (1) VP, T VP, T VP, T VP, T VP, T
Rufus S. Scott (1) VP, AS VP, AS VP, AS
Richard B. Dauphin (1) AS AS AS AS AS
George C. Hepburn, III (1) VP, AS VP, GC, S
Linda Geiger (1) AT AT AT AT AT
MINNESOTA
INTRASTATE NATIONAL CNP FUNDS
PIPELINE FURNACE NORAM UTILITY MANAGEMENT, UNITED GAS,
DIRECTORS AND OFFICERS COMPANY COMPANY SERVICES, INC. INC. INC.
------------------------------- ---------- ---------- -------------- ----------- -----------
David M. McClanahan (1) D, C D, P D, P
Scott E. Rozzell (1) VP, S VP, S VP, S EVP, S VP, S
Benjamin J. Reese (1)
Wayne D. Stinnett, Jr. (1)
James S. Brian (1) D
Kathleen Gardner Alexander (5) D, VP, AS
Gary M. Cerny (8) D, P
Kenneth Clowes D, P
Phillip R. Hammond (8) D, VP
Constantine S. Liollio (1) D, P
Marc Kilbride (1) VP, T VP, T VP, T VP, T VP, T
Rufus S. Scott (1) VP, AS VP, AS VP, AS VP, AS VP, AS
Brenda A. Bjorklund (8) AS
Richard B. Dauphin (1) AS AS AS AS AS
George C. Hepburn, III (1)
Linda Geiger (1) AT AT AT AT AT
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CNP INTERNATIONAL, CNP INTERNATIONAL RE EL SALVADOR, CNP INTERNATIONAL HIE FORD HEIGHTS,
DIRECTORS AND OFFICERS INC. HOLDINGS, LLC S.A. DE C.V. II, INC. INC.
--------------------------- ------------------ ----------------- --------------- ----------------- -----------------
David M. McClanahan (1) D, C, P
Joseph B. McGoldrick (1) VP M, VP D, VP D, VP
Scott E. Rozzell (1) EVP, S VP, S VP, S VP, S
Gary L. Whitlock (1) D, EVP P P P
Marc Kilbride (1) VP, T VP, T D VP, T VP, T
Steven H. Schuler (1) VP VP VP
Rufus S. Scott (1) VP, AS VP, AS VP, AS VP, AS
Richard B. Dauphin (1) AS AS AS AS
Linda Geiger (1) AT AT AT AT
RAIN CNP
BLOCK 368 HIE FULTON, RE INDIA, CALCINING INTERNATIONAL CNP LIGHT,
DIRECTORS AND OFFICERS GP, LLC INC. INC. RE RAIN, INC. LIMITED SERVICES, INC. INC.
-------------------------- ------------ ---------- --------- ------------- --------- -------------- ----------
Joseph B. McGoldrick (1) P D, VP D, VP D, VP D, VP D, VP
Scott E. Rozzell (1) VP, S VP, S VP, S VP, S
Gary L. Whitlock (1) P P P
Marc Kilbride (1) VP, T VP, T VP, T VP, T VP, T VP, T
Steven H. Schuler (1) VP VP D, VP D, VP D VP D, VP
Rufus S. Scott (1) VP, DGC, AS VP, AS VP, AS
Douglas H. Darrow (1) D D D
Richard B. Dauphin (1) AS AS AS AS AS AS
Linda Geiger (1) AT AT AT AT AT AT
HIE RE WORLDWIDE
RE RE BRASIL RE BRAZIL RE RE VENUS ELECTRIC
BRASIL, BRAZIL RIO SUL INTERNATIONAL TIETE COLOMBIA OUTSOURCE GENERATION HOLDINGS
DIRECTORS AND OFFICERS LTDA. LTD. LTDA. BRASIL LTDA. LTD LTDA. LTD. EL SALVADOR B.V.
---------------------- ------- ------ ------- ------------- ------ -------- ---------- ----------- ----------
Steven H. Schuler (1) DM D DM DM D D D D
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A. POSITIONS CODES
ADT Administrative Trustee
AS Assistant Secretary
AT Assistant Treasurer
C Chairman
CAO Chief Accounting Officer
CEO Chief Executive Officer
CFO Chief Financial Officer
CIO Chief Information Officer
CO Controller
COB Chairman of the Board
COO Chief Operating Officer
D Director
DGC Deputy General Counsel
DM Delegate Member
DTR Delaware Trustee
EVP Executive Vice President
GC General Counsel
GM General Manager
GP Group President
IM Independent Manager
M Manager
P President
S Secretary
SVP Senior Vice President
T Treasurer
TR Trustee
VP Vice President
B. ADDRESS CODES
1 1111 Louisiana
Houston, Texas 77002
2 1011 Centre Road Suite 324
Wilmington, Delaware 19805
3 525 Milam Street
Shreveport, Louisiana 71101
4 2301 N. W. 39th Expressway, Suite 200
Oklahoma City, OK 73112
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5 401 West Capitol Avenue, Suite 102
Little Rock, AR 72201
6 700 W. Linden Avenue
Minneapolis, Minnesota 55403
7 9900 Clayton Road
St. Louis, Missouri 63124
8 800 LaSalle
Minneapolis, Minnesota 55402
9 114 West 47th Street, Suite 1715
New York, New York 10036
10 400 West Main Street, Suite 338
Babylon, New York 11702
ITEM 6. OFFICERS AND DIRECTORS - PART II. FINANCIAL CONNECTIONS AS OF DECEMBER
31, 2003
CenterPoint and its subsidiaries have no officers or directors with a financial
connection within the provisions of Section 17(c) of the Act.
ITEM 6. OFFICERS AND DIRECTORS - PART III.
(a) Compensation of Directors and Executive Officers and (e) Participation in
Bonus and Profit-Sharing Arrangements and Other Benefits
It is the executive compensation policy of CenterPoint to have compensation
programs that strengthen the relationship between executives and shareholder
interests by encouraging equity ownership; attract, retain and encourage the
development of highly qualified and experienced executives; strengthen the
relationship between individual pay and performance; promote overall corporate
performance; and provide compensation that is externally competitive and
internally equitable. The key elements of CenterPoint's executive compensation
program are base salary, short-term incentive awards and long-term incentive
awards. CenterPoint's compensation committee (the "Compensation Committee") has
three non-employee director members: Mr. Cater (Chairman), Mr. Carroll and Mr.
Madison, and it oversees compensation for CenterPoint Energy's senior officers,
including salary and short-term and long-term incentive awards. The committee
also administers incentive compensation plans and reviews some human resources
programs. The Compensation Committee evaluates each element of compensation
separately and in relation to the other elements of an executive's total
compensation package. The percentage of an executive's compensation that is
variable or performance-based generally increases with higher levels of total
compensation. The result is that the majority of the executive officers'
compensation is considered at risk. The ultimate value of this at-risk
compensation is determined based on the performance of the company and its stock
price. Common stock ownership guidelines, applicable to all of the officers of
CenterPoint, consist of a value of two times salary.
CenterPoint retains an independent consulting firm to review the competitiveness
of CenterPoint's base pay, short-term incentive and long-term incentive targets.
A group of both utility and other industrial companies was used to verify the
appropriate mix of base pay,
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short-term incentive and long-term incentives for CenterPoint executives. In
establishing individual compensation targets, the Compensation Committee
considers the level and nature of responsibility, experience and its own
subjective assessment of performance. In making these determinations, the
Compensation Committee also takes into account the Chief Executive Officer's
evaluations of the performance of other executive officers. The Compensation
Committee generally considers that the objectives of CenterPoint's pay
philosophy are best served when each element of total compensation for its
executives approximates the 50th percentile of the market represented by the
companies included in the review.
The Compensation Committee's annual recommendations to the Board concerning each
executive officer's base salary are based on its analysis of salary levels for
executive officer positions among comparable companies, and its subjective
evaluation of and management's evaluation of each executive officer's individual
performance and level of responsibility. Mr. McClanahan's performance is
evaluated solely by the Committee.
CenterPoint's outside compensation consultants prepared an independent report on
its Chief Executive Officer's compensation, which took into consideration
CenterPoint's size and complexity, and the markets in which it competes for
talent. In evaluating Mr. McClanahan's total compensation, the Compensation
Committee considered his contributions to the overall success of CenterPoint
through his leadership and individual performance. While Mr. McClanahan's
current compensation is below the 50th percentile of the market represented by
the companies included in the review, the Compensation Committee believes that
Mr. McClanahan's compensation package, in conjunction with anticipated future
base pay increases, is sufficient to ensure his continuing focus on creating
substantial improvements in shareholder value. During 2003, the Compensation
Committee set Mr. McClanahan's base salary at $725,000. His annual incentive
target was set at 75% of base salary, and his long-term incentive target was set
at 150% of base salary. When Mr. McClanahan's base salary reaches market levels,
his long-term incentive target, when combined with his short-term incentive
target, is intended to position Mr. McClanahan's total direct compensation at
the 50th percentile.
Annual bonuses are paid pursuant to CenterPoint's short-term incentive
compensation plan, which provides for cash bonuses based on achievement over the
course of the year of performance objectives approved by the Compensation
Committee at the commencement of the year, in addition to cash bonuses which are
based on individual performance and accomplishments. Target annual incentives
established at the beginning of the year 2003 for executive officers ranged from
40% to 75% of base salary. Depending on the performance objectives achieved each
year, performance-based payouts can vary from 0% to 150% of the targeted amount.
The plan provides for supplemental bonuses up to an additional 50% of an
individual's target. The performance goals for 2003 were based entirely on
consolidated earnings per share for the named executive officers excluding Mr.
Standish. Consolidated earnings per share performance for 2003 was attained at
150% and resulted in payments of 150% of targeted annual bonuses for these named
officers. The performance goals of Mr. Standish and certain other executive
officers consisted of consolidated earnings per share weighted 60%, business
unit earnings before interest and taxes weighted between 12% and 16%,
capabilities and system performance weighted between 14% and 20%,
customer-related goals of up to 8% and safety-related goals weighted between 4%
and 6%. The cumulative actual performance achievement for the other executive
officers ranged from 120% to 128%. Mr. Whitlock and certain other executive
officers received additional supplemental cash awards for 2003.
- 14 -
The current approach to long-term incentives consists of grants of stock
options, restricted stock, performance shares and/or performance units.
Performance units generally have a target value of $100 per unit. Under the
long-term incentive plan, officers receive grants of performance shares or
performance units with goals based upon the achievement of financial objectives
measurable over a three-year performance cycle. Payout levels for the
performance shares are calculated by determining the percentage of achievement
for each objective and can range from 0% to 150% of target. Payout values for
the performance units are calculated by determining the percentage of
achievement for each objective and can range from $0 to $150 per unit.
For the performance cycle that began in 2003, CenterPoint's goals consisted of
total shareholder return in relation to a peer group of companies (representing
those in which at least 80% of revenues are generated from regulated operations)
and operating cash flow, weighted 60% and 40%, respectively. Performance goals
for the executive officer of Texas Genco are based on financial and operating
objectives of Texas Genco weighted evenly.
In addition to the performance shares or units, annual grants of stock options
under CenterPoint's long-term incentive plan are made at an option price not
less than the fair market value of the common stock on the date of grant. This
design is intended to focus executive officers on the creation of shareholder
value over the long term and encourage equity ownership. The executive officer
of Texas Genco was not granted stock options of CenterPoint in 2003 so that his
total annual and long-term incentive compensation is tied solely to the
performance of Texas Genco.
For the performance cycle that ended in 2003, the cumulative performance
achievement level was 120% for the executive officers of CenterPoint. For the
executive officer of Texas Genco, the cumulative performance achievement level
was less than the threshold level, resulting in no payout under the terms of the
CenterPoint plan.
The Compensation Committee periodically evaluates executive compensation
programs in light of Section l62(m) of the Internal Revenue Code. This Section
generally disallows the deductibility of compensation in excess of $1 million
for certain executive officers, but excludes from the limitation certain
qualifying performance-based compensation. The Compensation Committee intends to
structure its compensation programs in a manner that maximizes tax
deductibility. However, it recognizes that there may be situations in which the
best interests of shareholders are served by administering some elements of
compensation such that they occasionally may not meet the requirements for
exclusion under Internal Revenue Code Section l62(m).
Compensation of Executive Officers. The following table summarizes compensation
for services to CenterPoint and its subsidiaries for the years 2003, 2002 and
2001 awarded to, earned by or paid to the Chief Executive Officer, the four
other most highly compensated executive officers as of December 31, 2003
(collectively these individuals constitute the "Named Officers").
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ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------- -----------------------------------
AWARDS PAYOUTS
---------------------- ----------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(1) COMPENSATION AWARDS(2) OPTIONS(3) PAYOUTS(4) COMPENSATION(5)
--------------------------- ---- --------- --------- ------------ ---------- ---------- ---------- ---------------
David M. McClanahan 2003 $ 687,500 $ 773,437 $ 1,985 $ 348,840 103,900 $ 962,013 $ 127,508
President and Chief 2002 575,000 646,875 1,074 -- 191,700 50,358 109,918
Executive Officer 2001 535,000 545,700 976 -- 101,720 134,424 92,126
Scott E. Rozzell(6) 2003 376,000 282,000 1,653 147,060 43,900 406,110 110,101
Executive Vice 2002 360,500 270,375 680 -- 77,800 -- 91,793
President, General 2001 291,667 131,250 594 50,454 112,890 -- 74,233
Counsel and
Corporate Secretary
Gary L. Whitlock(7) 2003 355,000 290,000 620 136,230 40,600 -- 52,690
Executive Vice 2002 334,000 250,500 48,607 -- 72,200 -- 37,145
President and Chief 2001 143,316 146,250 64,108 -- 25,000 -- 85,208
Financial Officer
Stephen C. Schaeffer 2003 336,250 252,188 625 131,100 39,200 495,672 55,284
Executive Vice 2002 322,500 241,875 653 -- 70,000 92,227 46,124
President and Group 2001 307,500 146,063 1,025 -- 52,390 98,581 51,077
President--Gas Distribution
and Sales
Thomas R. Standish 2003 279,250 200,000 1,367 97,470 29,100 267,131 39,156
President and Chief 2002 264,750 177,510 466 -- 51,000 33,502 33,360
Operating Officer, 2001 248,750 114,000 404 -- 28,190 57,003 34,320
CenterPoint
Houston Electric, LLC
----------
(1) The amounts shown include salary and bonus earned as well as earned but
deferred.
(2) Restricted stock awards are valued at the closing market price on the
date of the grant. The awards vest three years following the date of
grant. Dividends accrue on the awards from the date of grant.
Performance-based restricted stock awards are reported as a component
of LTIP payouts when paid.
As of December 31, 2003, the aggregate holdings of unvested shares of
common stock of CenterPoint, including performance-based restricted
stock, assuming the attainment of performance goals at the maximum
level, were as follows: Mr. McClanahan, 209,942 shares ($2,034,333);
Mr. Rozzell, 88,050 shares ($853,205); Mr. Whitlock 81,163 shares
($786,465); Mr. Schaeffer, 78,278 shares ($758,514); and Mr. Standish,
57,977 shares ($561,792).
- 16 -
(3) Securities underlying options are shares of CenterPoint common stock.
(4) Amounts shown represent the dollar value of CenterPoint common stock
paid out in the following year based on the achievement of performance
goals for the cycle ending in the current year plus dividend equivalent
accruals during the performance period.
In connection with the 2002 spin-off of Reliant Resources, all
outstanding performance shares for the performance cycle ending in 2002
were converted to restricted shares of CenterPoint common stock at the
maximum level of performance with the exception of those awarded to Mr.
McClanahan and certain other former officers of CenterPoint. Mr.
McClanahan's awards were 56.25% of target, which reflected actual
performance. All such shares vested if the officer holding the
restricted shares remained employed with CenterPoint through December
31, 2002.
(5) 2003 amounts include: (a) matching contributions to the savings plan
and accruals under the related savings restoration plan, as follows:
Mr. McClanahan, $100,078; Mr. Rozzell, $54,478; Mr. Whitlock, $51,413;
Mr. Schaeffer, $43,360; and Mr. Standish, $32,442; (b) the term portion
of the premiums paid under the executive life insurance plan, as
follows: Mr. McClanahan, $2,262; Mr. Rozzell, $1,186; Mr. Whitlock,
$1,126; Mr. Schaeffer, $1,136; and Mr. Standish, $821; and (c) accrued
interest on deferred compensation that exceeds 120% of the applicable
federal long-term rate, as follows: Mr. McClanahan, $25,168; Mr.
Whitlock, $151; Mr. Schaeffer, $10,788; and Mr. Standish $5,893.
(6) Mr. Rozzell was not employed by CenterPoint prior to March 2001.
CenterPoint extended a loan to Mr. Rozzell in the amount of $250,000 in
connection with his initial employment. In accordance with the loan
agreement, the loan bears interest at a rate of 8% and principal and
interest are to be forgiven in semi-monthly installments through March
15, 2006 so long as Mr. Rozzell remains employed by CenterPoint or one
of its subsidiaries as of each relevant anniversary of his employment
date. The maximum principal amount of the loan outstanding during 2003
was $160,417. As of March 31, 2004, the principal amount of the loan
outstanding was $97,917. The amount of loan and interest forgiveness of
$54,437 for 2003 is included in the "All Other Compensation" column.
(7) Mr. Whitlock was not employed by CenterPoint prior to July 2001. The
amounts shown in the "Other Annual Compensation" column include tax
reimbursement payments during 2001 and 2002 in connection with the
initial employment of Mr. Whitlock.
Option Grants in 2003. The following table sets forth information concerning the
grants of options to purchase common stock made during 2003 to the Named
Officers.
CENTERPOINT OPTION GRANTS IN 2003
NUMBER OF PERCENTAGE
SECURITIES OF TOTAL
UNDERLYING OPTIONS GRANT DATE
OPTIONS GRANTED TO EXERCISE EXPIRATION PRESENT
NAME GRANTED(1) EMPLOYEES PRICE DATE VALUE (2)
--------------------- ---------- ---------- -------- ---------- -----------
David M. McClanahan 103,900 4.69% $ 5.64 03/03/2013 $ 172,474
Scott E. Rozzell 43,900 1.98% 5.64 03/03/2013 72,874
Gary L. Whitlock 40,600 1.83% 5.64 03/03/2013 67,396
Stephen C. Schaeffer 39,200 1.77% 5.64 03/03/2013 65,072
Thomas R. Standish 29,100 1.31% 5.64 03/03/2013 48,306
----------
(1) Option grants vest in one-third increments per year from the date of
grant (so long as the officer remains an employee of CenterPoint). All
options would immediately vest upon a change of control (defined in
substantially the same manner as in the executive severance agreements
described under "Retirement Plans, Related Benefits and Other
Arrangements").
(2) Grant date present value is calculated using a Black-Scholes option
pricing model assuming a five-year term, volatility of 52.60%, the
current annual dividend of $.40 per share and a risk-free interest rate
of 2.62%. Actual gains, if any, will be dependent on future performance
of the common stock.
Option Exercises in 2003. The following table sets forth certain information
concerning the exercise of options or stock appreciation rights during 2003 by
each of the Named Officers and the number and value of unexercised options and
stock appreciation rights at December 31, 2003.
- 17 -
CENTERPOINT FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT DECEMBER 31, 2003 DECEMBER 31, 2003(2)
--------------------------------- ------------------------------------
NAME(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------- ----------- ------------- --------------- ---------------
David M. McClanahan 372,901 290,283 $ 220,473 $ 861,745
Scott E. Rozzell 118,864 144,605 89,475 356,754
Gary L. Whitlock 43,212 100,507 83,032 330,507
Stephen C. Schaeffer 148,938 114,268 80,505 319,773
Thomas R. Standish 73,906 78,922 58,653 235,165
----------
(1) None of the named executive officers exercised any options in 2003.
(2) Based on the year-end closing price of the common stock of CenterPoint
on the New York Stock Exchange Composite Tape on December 31, 2003.
- 18 -
Long-Term Incentive Plan Awards in 2003. The following table sets forth
information concerning the shares of restricted stock and shares of contingent
stock awarded pursuant to the Long-Term Incentive Plan during 2003 to each of
the Named Officers.
CENTERPOINT LONG-TERM INCENTIVE PLAN--AWARDS IN 2003(1)
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS(2)
------------------------------------------
PERFORMANCE THRESHOLD TARGET MAXIMUM
NUMBER PERIOD UNTIL NUMBER NUMBER NUMBER
NAME OF SHARES PAYOUT OF SHARES OF SHARES OF SHARES
--------------------- --------- ------------ --------- --------- ---------
David M. McClanahan 61,200 12/31/2005 30,600 61,200 91,800
Scott E. Rozzell 25,800 12/31/2005 12,900 25,800 38,700
Gary L. Whitlock 23,900 12/31/2005 11,950 23,900 35,850
Stephen C. Schaeffer 23,000 12/31/2005 11,500 23,000 34,500
Thomas R. Standish 17,100 12/31/2005 8,550 17,100 25,650
----------
(1) Amounts shown are potential payouts of awards in cash, common stock, or
a combination thereof under CenterPoint's long-term incentive plan.
These awards have a three-year performance cycle. Payouts will be based
on a total shareholder return measure (compared to a peer group of
companies in which at least 80% of revenues are generated from
regulated operations) and operating cash flow weighted 60% and 40%,
respectively. If a change of control occurs (as defined in
substantially the same manner as in the executive severance agreements
described under "Retirement Plans, Related Benefits and Other
Arrangements"), such amounts will be paid in cash at the maximum level,
without regard to the achievement of performance goals.
(2) The table does not reflect dividend equivalent accruals during the
performance period.
Equity Compensation Plan Awards in 2003. The following table sets forth
information concerning the shares of restricted stock and shares of contingent
stock awarded pursuant to the Equity Compensation Plan during 2003 to each of
the Named Officers.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information about CenterPoint's common
stock that may be issued under our existing equity compensation plans as of
December 31, 2003.
(a) (b) (c)
----------------------- ---------------------- -----------------------
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
FUTURE ISSUANCE UNDER
NUMBER OF SECURITIES TO WEIGHTED AVERAGE EQUITY COMPENSATION
BE ISSUED UPON EXERCISE EXERCISE PRICE OF PLANS (EXCLUDING
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, SECURITIES REFLECTED IN
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS(1) COLUMN (a))
------------------------------------------ ----------------------- ---------------------- -----------------------
Equity compensation plans approved by
security holders(2) 17,031,902(3) $ 14.29 7,999,130(4)
Equity compensation plans not approved by
security holders(5) 299,376(5) 18.18 --
-------------- ----------------- --------------
Total 17,331,278 $ 14.36 7,999,130
============== ================= ==============
- 19 -
----------
(1) The weighted average exercise price applies to outstanding options,
without taking into account performance units and performance shares
which do not have an exercise price.
(2) These plans consist of the 1989 and 1994 Long-term Incentive
Compensation Plans, the 2001 Long-term Incentive Plan and the Amended
and Restated Stock Plan for Outside Directors. No future grants may be
made under the 1989 and 1994 Long-term Incentive Compensation Plans.
(3) Includes, in addition to shares underlying options, an aggregate of
1,291,706 shares issuable upon settlement of outstanding grants of
performance shares (assuming maximum performance is achieved) and
401,276 shares issuable upon settlement of outstanding performance
units, using actual performance and assuming 70% of the payment of
outstanding performance units is made in shares based on the closing
price of the common stock on December 31, 2003. Does not include 5,640
shares subject to issuance upon exercise of options, having an average
exercise price of $6.41 per share, assumed in the 1997 merger in which
NorAm Energy Corp. was acquired.
(4) The securities remaining available for issuance may be issued in the
form of stock options, stock appreciation rights, restricted stock
awards, performance units and performance shares. The shares remaining
available for issuance may be used for any of these types of awards,
except that the Amended and Restated Stock Plan for Outside Directors
provides only for awards of common stock.
(5) Plans not approved by shareholders include the Common Stock
Participation Plan for Designated New Employees and Non-officer
Employees. Outstanding awards under the Common Stock Participation
Plan, in which participation is limited to new employees and existing
employees who are not officers of CenterPoint, consist of stock options
covering 298,451 shares of common stock which generally vest in equal
annual increments over three years from the grant date and awards of
925 restricted stock awards which generally vest in equal annual
increments for three years after grant. No future grants may be made
under the Common Stock Participation Plan.
RETIREMENT PLANS, RELATED BENEFITS AND OTHER ARRANGEMENTS
Pension Plan. The following table shows estimated annual benefits, giving effect
to CenterPoint's Pension Plan, payable upon retirement to persons in the
specified remuneration and years-of-service classifications.
PENSION PLAN TABLE
PRIOR PLAN GRANDFATHER BENEFIT(1)
FINAL AVERAGE
ANNUAL ESTIMATED ANNUAL PENSION BASED ON YEARS OF SERVICE(2)
COMPENSATION -----------------------------------------------------
AT AGE 65 30 35 OR MORE
------------ ------------- ------------
$ 450,000 $ 255,791 $ 298,422
500,000 284,891 332,372
750,000 430,391 502,122
1,000,000 575,891 671,872
1,250,000 721,391 841,622
1,500,000 866,891 1,011,372
1,750,000 1,012,391 1,181,122
2,000,000 1,157,891 1,350,872
----------
(1) Prior to January 1, 1999, the retirement plan and benefit restoration
plan accrued benefits based on a participant's years of service, final
average pay and covered compensation (final average pay formula). Final
average annual compensation means the highest compensation for 36
consecutive months out of the 120 consecutive months immediately
preceding retirement, based solely on base salary and, for purposes of
the benefit restoration plan, bonus amounts. For purposes of the table
above, final average compensation is frozen as of December 31, 2008
pursuant to the terms of the plans. Retirement benefits for persons who
were employees as of December 31, 1998 are based on the prior plan
grandfather benefit, which is the higher of (a) the benefit calculated
under the final average pay formula or (b) the cash balance formula
explained below. Messrs. McClanahan, Schaeffer and Standish are
eligible for the prior plan grandfather benefit. Since it is
anticipated that under the prior plan grandfather benefit, the final
average pay formula will provide the higher benefit, the benefits
reflected in the table entitled "Prior Plan Grandfather Benefit" are
based on the final average pay formula. Mr. McClanahan's, Mr.
Schaeffer's
- 20 -
and Mr. Standish's benefits are not expected to exceed the amounts
reflected in that table as of their age 65 normal retirement. Regarding
years of credited benefit service under the retirement plan as of
December 31, 2003, Mr. McClanahan had 29 years, Mr. Schaeffer had 34
years and Mr. Standish had 22 years. In some circumstances, Mr.
McClanahan is entitled to up to three additional years of credited
benefit service under a supplemental agreement.
(2) Amounts are determined on a single-life annuity basis and are not
subject to any deduction for Social Security or other offsetting
amounts. The qualified retirement plan limits compensation and benefits
in accordance with provisions of the Internal Revenue Code. Pension
benefits based on compensation above the qualified plan limit or in
excess of the limit on annual benefits are provided through the benefit
restoration plan.
Effective January 1, 1999, the retirement plan and benefit restoration plan
provide for benefit accruals based on a cash balance formula. Under the cash
balance formula, participants accumulate a retirement benefit based upon four
percent of eligible earnings each year and current interest credits. Messrs.
Rozzell and Whitlock were first employed after January 1, 1999 and thus their
benefits are based solely on the cash balance formula. The estimated annual
benefits payable as of their age 65 normal retirement are $43,477 for Mr.
Rozzell and $41,486 for Mr. Whitlock.
CenterPoint maintains an executive benefits plan that provides certain salary
continuation, disability and death benefits to certain key officers of
CenterPoint and certain of its subsidiaries. Messrs. McClanahan, Schaeffer and
Standish participate in this plan pursuant to individual agreements that
generally provide for (a) a salary continuation benefit of 100% of the officer's
current salary for 12 months after death during active employment and then 50%
of salary for nine years or until the deceased officer would have attained age
65, if later, and (b) if the officer retires after attainment of age 65, an
annual postretirement death benefit of 50% of the officer's preretirement annual
salary payable for six years. Coverage under this plan has not been provided to
persons attaining executive officer status after July 1, 1996.
CenterPoint has an executive life insurance plan providing split-dollar life
insurance in the form of a death benefit for designated officers. This plan
provides endorsement split-dollar life insurance, with coverage continuing after
the officer's termination of service at age 65 or later. The death benefit
coverage for each participating CenterPoint officer varies in proportion to
their current salary. The named executive officers have single-life coverage
equal to two times current salary. The annual premiums due on the policies are
payable solely by CenterPoint. In accordance with the Internal Revenue Code, the
officers must recognize imputed income currently based upon the policy holder's
one-year term rates. The plan also provides for CenterPoint to gross-up the
officer's compensation to cover the officer's after-tax cost of this imputed
income. Upon the death of the insured, the officer's beneficiaries will receive
the specified death benefit, and CenterPoint will receive any balance of the
insurance proceeds payable in excess of such death benefit. The executive life
insurance plan is designed so that the proceeds CenterPoint ultimately receives
are sufficient to cover the cumulative premiums paid and the after-tax cost to
CenterPoint of the gross-up payments. Officers hired after 2001 may not
participate in this plan.
Since 1985, CenterPoint and its predecessors have had in effect deferred
compensation plans that permit eligible participants to elect each year to
currently defer a percentage of that year's salary and up to 100% of that year's
annual bonus. In addition to salary and bonus deferrals, eligible participants
can also commence deferrals into the plan once they reach the qualified savings
plan compensation limit or the defined contribution annual addition limit under
the Internal Revenue Code. Interest generally accrues on deferrals made in 1989
and subsequent years at a rate equal to the average annual yield of the Moody's
Long-Term Corporate Bond Index plus 2%. Fixed rates of 19% to 24% were
established for deferrals made in 1985 through 1988, as a result of then-higher
prevailing rates and other factors. Current accruals of the above-market portion
of the interest on deferred compensation amounts are
- 21 -
included in the "All Other Compensation" column of the Summary Compensation
Table. Participants in the current plan may elect to receive distributions of
their deferred compensation and interest in three ways: (i) an early
distribution of either 50% or 100% of their account balance in any year that is
at least four years from the year of deferral; (ii) a lump sum distribution; or
(iii) 15 annual installments. If a participant terminates employment prior to
age 55, a lump-sum distribution of his deferral amount plus interest, calculated
using the Moody's rate and excluding the additional two percentage points, will
be made regardless of his form of election. If a participant retires between age
55 and 60, the deferral amount plus interest (including the additional two
percent) will be paid in accordance with the participant's distribution
elections in either (i) a lump-sum payment in the January after his retirement
or (ii) 15 annual installments commencing upon retirement. If a participant
retires after age 60, the deferral amount plus interest (including the
additional two percent) will be paid in accordance with the participant's
distribution elections after he reaches age 65. For purposes of the prior
deferred compensation plan, distribution payments generally follow the same
procedures described above for 15 annual installments; however, the fixed
interest rate established at the time of deferral is used.
CenterPoint maintains a trust agreement with an independent trustee establishing
a "rabbi trust" for the purpose of funding benefits payable to participants
(including each of its named executive officers) under CenterPoint's deferred
compensation plans, executive incentive compensation plans, benefit restoration
plan and savings restoration plan, also referred to as the "Designated Plans."
The trust is a grantor trust, irrevocable except in the event of an unfavorable
ruling by the Internal Revenue Service as to the tax status of the trust or
certain changes in tax law. It is currently funded with a nominal amount of
cash. Future contributions will be made to the grantor trust if and when
required by the provisions of the Designated Plans or when required by
CenterPoint's Benefits Committee. The Benefits Committee consists of officers of
CenterPoint designated by the Board of Directors and has general responsibility
for funding decisions, selection of investment managers for CenterPoint's
retirement plan and other administrative matters in connection with other
employee benefit plans of CenterPoint. If there is a change of control (defined
in substantially the same manner as in the executive severance agreements
described under "Retirement Plans, Related Benefits and Other Arrangements"),
the grantor trust must be fully funded, within 15 days following the change of
control, with an amount equal to the entire benefit to which each participant
would be entitled under the Designated Plans as of the date of the change of
control (calculated on the basis of the present value of the projected future
benefits payable under the Designated Plans). The assets of the grantor trust
are required to be held separate and apart from the other funds of CenterPoint
and its subsidiaries, but remain subject to claims of general creditors under
applicable state and federal law.
In December 2003, the company entered into severance agreements with certain
executive officers, including the named executive officers. The severance
agreements, effective January 1, 2004, provide for the payment of certain
benefits in the event of a Covered Termination of employment occurring after the
execution of a binding agreement to effect a Change of Control or within three
years (two years for Mr. Standish) after the date of a Change of Control. A
Change of Control will be deemed to occur under the severance agreement if:
o any person or group becomes the direct or indirect beneficial
owner of 30% or more of CenterPoint's outstanding voting
securities, unless acquired directly from CenterPoint;
o a majority of the Board members changes;
- 22 -
o there is a merger or consolidation of, or involving,
CenterPoint (a "transaction") unless:
o more than 70% of the surviving corporation's
outstanding voting securities is owned by former
shareholders of CenterPoint,
o if the transaction involves CenterPoint's acquisition
of another entity, the total fair market value of the
consideration plus long-term debt of the entity or
business being acquired does not exceed 50% of the
total fair market value of CenterPoint's outstanding
voting securities, plus CenterPoint's consolidated
long-term debt,
o no person is the direct or indirect beneficial owner
of 30% or more of the then outstanding shares of
voting stock of the parent corporation resulting from
the transaction and
o a majority of the members of the board of directors
of the parent corporation resulting from the
transaction were members of the Board immediately
prior to consummation of the transaction; or
o the sale or disposition of 70% or more of CenterPoint's assets
(an "asset sale") unless:
o individuals and entities that were beneficial owners
of CenterPoint's outstanding voting securities
immediately prior to the asset sale are the direct or
indirect beneficial owners of more than 70% of the
then outstanding voting securities of CenterPoint (if
it continues to exist) and of the entity that
acquires the largest portion of the assets (or the
entity, if any, that owns a majority of the
outstanding voting stock of such acquiring entity),
and
o a majority of the members of Board (if CenterPoint
continues to exist) and of the entity that acquires
the largest portion of the assets (or the entity, if
any, that owns a majority of the outstanding voting
stock of such acquiring entity) were members of the
Board immediately prior to the asset sale.
Under the new severance agreements, a Covered Termination occurs if the
officer's employment is terminated for reasons other than death, disability as
defined in the Company's long-term disability plan, termination on or after age
65, involuntary termination for Cause (as defined), or resignation of the
officer unless such resignation is due to (a) a failure to maintain the officer
in his position or a substantially equivalent position; (b) a significant
adverse change in the authorities, powers, functions, responsibilities or duties
held; (c) a reduction in the officer's base salary; (d) a significant reduction
in the officer's qualified, nonqualified and welfare benefits; (e) a reduction
in the officer's overall compensation; (f) a change in the location of the
officer's principal place of employment by more than 50 miles; or (g) a failure
to provide directors and officers liability insurance covering the officer. An
officer experiencing a Covered Termination of employment will be entitled to a
lump-sum payment of three times the sum of the officer's base salary plus target
short-term incentive plan bonus (two times for Mr. Standish), as well as certain
welfare benefits for a period of three years (two years for Mr. Standish). Three
years of service and age (two years for Mr. Standish) will be added for benefit
purposes under the retirement plan. The severance agreements also provide for a
prorata distribution of the short-term incentive plan bonus for the current plan
year, as well as continued coverage under the Company's executive life insurance
plan, if applicable. In addition, the agreements provide for career transition
placement services, the reimbursement of legal fees incurred related to the
severance, financial planning
- 23 -
fees under the Company's program for a period of up to the earlier of (a) six
months or (b) when the maximum reimbursement amount has been reached and a tax
gross-up payment to cover any excise taxes, interest and penalties that may be
assessed on the officer as a result of the severance payment. The term of the
severance agreements is three years, with an "evergreen" provision under which,
at the election of the Board of Directors, the term may be extended for an
additional year on an annual basis
Compensation of Directors.
CenterPoint employees receive no extra pay for serving as directors. In 2003,
compensation for each non-employee director, other than the Chairman, consisted
of an annual retainer fee of $30,000, a fee of $1,200 for each Board and
committee meeting attended and a supplemental annual retainer of $4,000 for
serving as a committee chairman. Acting on the recommendation of the Governance
Committee, the Board approved an increase effective as of June 3, 2004 in the
annual retainer fee to $50,000, the meeting fee to $1,500 and the supplemental
annual retainer for service as a committee chairman to $7,500 for the Audit
Committee and $5,000 for other Board committees. Each non-employee director also
receives an annual grant of up to 5,000 shares of CenterPoint common stock which
vest in one-third increments on the first, second and third anniversaries of the
grant date. Full vesting of such shares is provided in the event of the
director's death or upon a change of control (defined in substantially the same
manner as in the executive severance agreements described under "Retirement
Plans, Related Benefits and Other Arrangements"). If a director's service on the
Board is terminated for any reason other than due to death or change of control,
all rights to the unvested portion of the director's grant is forfeited as of
the termination date. Upon the initial nomination to the Board, in addition to
the annual grant, a non-employee director may be granted a one-time grant of up
to but not exceeding 5,000 shares of CenterPoint common stock which are subject
to the same vesting schedule outlined above. During 2003, each director received
an award of 3,000 shares of common stock under the Amended and Restated Stock
Plan for Outside Directors. The Chairman receives the compensation payable to
other non-employee directors plus a supplemental monthly retainer of $25,000. In
addition, in connection with his assuming the position of Chairman, Mr. Carroll
was granted 10,000 shares of CenterPoint common stock in November 2002 and
another 10,000 shares of common stock in October 2003.
Since 1985, CenterPoint and its predecessors have had in effect deferred
compensation plans that permit directors to elect each year to defer all or part
of their annual retainer fees and meeting fees. Directors participating in these
plans may elect to receive distributions of their deferred compensation and
interest in three ways: (i) an early distribution of either 50% or 100% of their
account balance in any year that is at least four years from the year of
deferral up to the year in which they reach age 70, (ii) a lump sum distribution
payable in the year after they reach age 70 or upon leaving the Board of
Directors, whichever is later, or (iii) 15 annual installments beginning on the
first of the month coincident with or next following age 70 or upon leaving the
Board of Directors, whichever is later. Interest accrues on deferrals made in
1989 and subsequent years at a rate equal to the average annual yield of the
Moody's Long-Term Corporate Bond Index plus 2%. Fixed rates of 19% to 24% were
established for deferrals made in 1985 through 1988, as a result of then-higher
prevailing rates and other factors.
Non-employee directors elected to the Board before 2004 participate in a
director benefits plan under which a director who serves at least one full year
will receive an annual cash amount equal to the annual retainer (excluding any
supplemental retainer) in effect
- 24 -
when the director terminates service. Benefits under this plan begin the January
following the later of the director's termination of service or attainment of
age 65, for a period equal to the number of full years of service of the
director.
Non-employee directors who were elected to the Board before 2001 participate in
CenterPoint's executive life insurance plan described under "Retirement Plans,
Related Benefits and Other Arrangements." This plan provides endorsement
split-dollar life insurance with a death benefit equal to six times the
director's annual retainer, excluding any supplemental retainer, with coverage
continuing after the director's termination of service at age 65 or later. The
annual premiums due on the policies are payable solely by CenterPoint, and in
accordance with the Internal Revenue Code, the directors must recognize imputed
income which is currently based upon the policy holder's one-year term rates.
The plan also provides for CenterPoint to gross-up the director's compensation
to cover the director's after-tax cost of this imputed income. Upon the death of
the insured, the director's beneficiaries will receive the specified death
benefit, and CenterPoint will receive any balance of the insurance proceeds
payable in excess of such death benefit. The executive life insurance plan is
designed so that the proceeds CenterPoint ultimately receives are sufficient to
cover the cumulative premiums paid and the after-tax cost to CenterPoint of the
gross-up payments. Directors elected to the Board after 2000 may not participate
in this plan.
During the first five months of 2002, Mr. Carroll received fees of $71,178 from
CenterPoint's then subsidiary Reliant Resources, Inc. for consulting in
connection with deregulation issues.
(b) Directors' and Executive Officers' Interests in Securities of System
Companies
The following table shows stock ownership of each director or nominee for
director, the Chief Executive Officer, the other most highly compensated
executive officers, and the executive officers and directors as a group. Except
as otherwise indicated, information for the executive officers, directors and
nominees is given as of March 1, 2004. The directors and officers, individually
and as a group, beneficially own less than 1% of CenterPoint's outstanding
common stock. For directors and executive officers, stock ownership is also
shown for CenterPoint's majority-owned subsidiary Texas Genco Holdings, Inc.
NUMBER OF SHARES OF NUMBER OF SHARES OF
CENTERPOINT TEXAS GENCO
NAME COMMON STOCK COMMON STOCK
------------------------------------------------- ---------------------- -------------------
Milton Carroll 25,000 750
John T. Cater 10,000 250
Derrill Cody 10,000 -0-
O. Holcombe Crosswell 11,595 579
Thomas F. Madison 2,500 -0-
David M. McClanahan 644,110(1)(2) 3,109(3)
- 25 -
Robert T. O'Connell 2,000(4) -0-
Scott E. Rozzell 248,142(1)(2) 503(3)
Stephen C. Schaeffer 310,616(1)(2)(5) 3,296(3)(5)
Michae1 E. Shannon 2,000 -0-
Thomas R. Standish 156,433(1)(2)(5)(6) 630(3)(5)(6)
Gary L. Whitlock 101,191(1)(2) 717(3)
All of the above officers and directors and other 1,755,846(1)(2) 12,476(3)
executive officers as a group (15 persons)
----------
(1) Includes shares covered by CenterPoint stock options that are
exercisable within 60 days as follows: Mr. McClanahan, 524,948 shares;
Mr. Rozzell, 206,688 shares; Mr. Schaeffer, 212,317 shares; Mr.
Standish, 115,393 shares; Mr. Whitlock, 82,278 shares; and the group,
1,306,863 shares.
(2) Includes shares of CenterPoint common stock held under CenterPoint's
savings plan, for which the participant has sole voting power (subject
to such power being exercised by the plan's trustee in the same
proportion as directed shares in the savings plan are voted in the
event the participant does not exercise voting power).
(3) Includes shares of Texas Genco common stock held under CenterPoint's
savings plan, as to which the participants do not have voting power but
retain dispositive power.
(4) Mr. O'Connell acquired the above-listed shares subsequent to March 1,
2004.
(5) As members of the CenterPoint Benefits Committee, Messrs. Schaeffer and
Standish are responsible for voting approximately 4,511,691 shares of
the Company's common stock and 225,584 shares of Texas Genco common
stock which are held in the CenterPoint retirement plan. The ownership
shown in the table excludes shares that may deemed to be beneficially
owned as a result of that voting power.
(6) Includes shares held by spouse.
(c) Directors' and Executive Officers' Contracts and Transactions with System
Companies
None.
(d) Directors' and Executive Officers' Indebtedness to System Companies
CenterPoint extended a loan to Mr. Rozzell in the amount of $250,000 in
connection with his initial employment. In accordance with the loan agreement,
the loan bears interest at a rate of 8% and principal and interest are to be
forgiven in semi-monthly installments through March 15, 2006 so long as Mr.
Rozzell remains employed by CenterPoint or one of its subsidiaries as of each
relevant anniversary of his employment date. The maximum principal amount of the
loan outstanding during 2003 was $160,417. As of March 31, 2004, the principal
amount of the loan outstanding was $97,917.
In addition, CenterPoint maintains an appliance loan program through which all
employees are allowed to purchase certain appliances on an interest-free basis,
subject to paying a five percent up-front administrative charge. Although some
officers of CenterPoint and its subsidiaries have loans under this program, no
senior or executive officer has a loan under this program.
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(f) Directors' and Executive Officers' Rights to Indemnity
The state laws under which each of CenterPoint and its domestic direct and
indirect subsidiaries is incorporated provide broadly for indemnification of
officers and directors against claims and liabilities against them in their
capacities as such. Refer to the disclosures made in the Amended and Restated
Bylaws of CenterPoint, adopted March 26, 2002 (incorporated by reference to
Exhibit 3.2 to CenterPoint's Form 10-K for the year ended December 31, 2001).
ITEM 7. CONTRIBUTIONS AND PUBLIC RELATIONS
To be filed by amendment.
Attached as Exhibit F-2 is a listing of expenditures to citizens groups and
public relations counsel (to be filed by amendment).
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS
Part I.
See Exhibits F-3 through F-6 hereto.
Part II. During 2003 no system companies had a contract to purchase
services or goods from any affiliate (other than a system company),
or from a company in which any officer or director of the receiving
company is a partner or owns 5% or more of any class of equity
securities.
Part III. No system company employs any other person for the performance
on a continuing basis of management, supervisory or financial
advisory services.
ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES
Part I.
In February 2003, CenterPoint sold its interest in Argener, a cogeneration
facility in Argentina. In April 2003, CenterPoint sold its remaining investment
in Argentina, a 90 percent interest in Empresa Distribuidora de Electricidad de
Santiago del Estero S.A., and in November 2003 completed the sale of its
interest in Rain Calcining, Ltd, a generation facility in India. With these
transactions CenterPoint has completed its strategy of exiting all its
international investments. The consolidated financial statements present these
operations as discontinued operations in accordance with SFAS No. 144.
(a) Texas Genco Holdings, Inc. was formed in 2002 in connection with the
restructuring of Reliant Energy, Incorporated. It was formed to own the
approximately 14,000 MW of formerly regulated electric generating assets of
Reliant Energy, Incorporated in order
- 27 -
to satisfy requirements under Texas legislation. Under that legislation,
integrated electric utilities like Reliant Energy, Incorporated were required to
separate their generation, transmission and distribution and retail marketing
functions into separate businesses. These electric generating assets are owned
by Texas Genco, LP, a Texas limited partnership that is owned 5% by Texas Genco
GP, LLC, as general partner and 95% owned by Texas Genco LP, LLC, as limited
partner. Texas Genco GP, LLC and Texas Genco LP, LLC are in turn wholly owned by
Texas Genco Holdings, Inc., which is now approximately 81% owned by Utility
Holding, LLC, a wholly owned subsidiary of CenterPoint, Inc (collectively, Texas
Genco, LP and Texas Genco Holdings, Inc. are hereinafter referred to as "Texas
Genco"). In January 2003, approximately 19% of the common stock of Texas Genco
Holdings, Inc. was distributed by CenterPoint and Utility Holding, LLC to the
shareholders of CenterPoint, Inc. pursuant to provisions of the Texas Electric
restructuring law enacted in 1999. The stock was distributed in order to provide
a market value for Texas Genco that will be used by the Public Utility
Commission of Texas to determine a market value for Texas Genco's generating
assets in connection with the Texas Commission's stranded cost determination
later in 2004. Currently, CenterPoint indirectly owns approximately 81% of the
80 million shares of Texas Genco Holdings, Inc. that are outstanding.
Although Texas Genco was initially treated as a public utility company under the
Act, in October 2003, FERC granted certification to Texas Genco, LP as an exempt
wholesale generator under Section 32 of the Act. Substantially all of the
business of Texas Genco, LP and of its parent Texas Genco Holdings, Inc. is the
ownership and operation of electric generating facilities in the state of Texas.
In accordance with requirements of Texas law, Texas Genco operates as a
wholesale electric supplier, selling power generated from its facilities to
retail electric providers, other generation companies, and municipal entities.
By law, Texas Genco may not own transmission and distribution facilities or make
sales of electricity at retail.
The generating facilities owned by Texas Genco, LP consist of gas, oil, coal,
lignite and nuclear fueled generating facilities that provide electric service
to meet baseload, cyclic, intermediate and peaking demands. Power has been sold
by Texas Genco during 2002 and 2003 primarily through auctions in which a
variety of types of power products are offered for sale for varying terms. For a
discussion of the properties, business and financial results and condition of
Texas Genco Holdings, Inc. and its subsidiaries see the Annual Report on Form
10-K of Texas Genco Holdings, Inc. for the year ended December 31, 2003 (File
No. 1-31449) filed with the Commission and incorporated herein by reference.
(b) When Texas Genco was incorporated, CenterPoint acquired all of the issued
and outstanding shares of Texas Genco's common stock for $1,000 in exchange for
certain assets. On January 6, 2003, CenterPoint distributed approximately 19% of
Texas Genco's common stock to CenterPoint's shareholders in a taxable
distribution.
Texas Genco does not have any debt or financial obligations for which there is
direct or indirect recourse to CenterPoint or any other system company.
CenterPoint has not made any financial guarantee to any party for Texas Genco
securities.
Texas Genco has not received any transfer of assets from any CenterPoint system
company except in connection with the formation of Texas Genco in August 2003 as
part of the restructuring of Reliant Energy, Incorporated.
- 28 -
(c) As of December 31, 2003, Texas Genco had no debt outstanding. Texas Genco
had net income of $250.1 million for 2003.
(d) Texas Genco has entered into a transition services agreement with
CenterPoint under which CenterPoint will provide Texas Genco through the earlier
of such time as all services under the agreement are terminated or CenterPoint
ceases to own a majority of Texas Genco's common stock, various corporate
support services that include accounting, finance, investor relations, planning,
legal, communications, governmental and regulatory affairs and human resources,
as well as information technology services and other previously shared services
such as corporate security, facilities management, accounts receivable, accounts
payable and payroll, office support services and purchasing and logistics. The
charges Texas Genco pays for the services are on a basis intended to allow
CenterPoint to recover the fully allocated direct and indirect costs of
providing the services, plus all out-of-pocket costs and expenses, but without
any profit to CenterPoint, except to the extent routinely included in
traditional utility cost of capital.
Part II.
Please see Exhibit F-1 for an organizational chart showing the relationship of
Texas Genco to other CenterPoint system companies.
See Exhibit H hereto for the most recent audited financial statements of Texas
Genco.
Part III.
To be filed by amendment.
ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENTS
The consolidated financial statements for CenterPoint and its subsidiaries as of
December 31, 2003 have heretofore been filed with the Commission and are
incorporated herein by reference and made a part hereof by reference to
CenterPoint's annual report on Form 10-K for the year ended December 31, 2003.
The consolidating financial statements for CenterPoint and its subsidiaries as
of December 31, 2003 are attached hereto as exhibit F-7 (to be filed by
amendment).
- 29 -
EXHIBITS
EXHIBIT A ANNUAL REPORTS FILED UNDER THE SECURITIES AND EXCHANGE ACT OF 1934
A-1 CenterPoint's Annual Report on Form 10-K for the year ended December 31,
2003 (File No. 1-31447) incorporated by reference herein.
A-2 CenterPoint's 2004 Proxy Statement (File No. 001-31447) incorporated by
reference herein.
A-3 CenterPoint's Annual Report to Shareholders for the year ended December 31,
2003 (filed in connection herewith under cover of Form SE).
A-4 CenterPoint Energy Houston Electric LLC's Annual Report on Form 10- for the
year ended December 31, 2003 (File No. 1-3187) incorporated by reference herein.
A-5 CenterPoint Energy Resources Corp's Annual Report on Form 10-k for the year
ended December 31, 2003 (File No. 1-13265) incorporated by reference herein.
EXHIBIT B CHARTERS, ARTICLES OF INCORPORATION, TRUST AGREEMENTS, BY-LAWS AND
OTHER FUNDAMENTAL DOCUMENTS OF ORGANIZATION
The articles, bylaws and other fundamental documents of organization of
CenterPoint are incorporated by reference to CenterPoint's 10-K for the year
ended December 31, 2001 (file number 1-31447):
CenterPoint 10-K Exhibit No. Description
---------------------------- -----------
2 Agreement and Plan of Merger, dated as of October 19, 2001, by and
among Reliant Energy, Incorporated, CenterPoint and Reliant Energy
MergerCo, Inc.
3(a)(1) Amended and Restated Articles of Incorporation of CenterPoint
3(a)(2) Articles of Amendment to Amended and Restated Articles of
Incorporation of CenterPoint
3(b) Amended and Restated Bylaws of CenterPoint
The organizational documents for CenterPoint's subsidiaries are
incorporated by reference to CenterPoint's Joint Registration Statement on Form
U5B (File No. 030-00360):
- 30 -
CenterPoint U5B Exhibit No. Description
--------------------------- -----------
B-2 Organizational documents of Utility Holding, LLC
B-3 Organizational Documents of CenterPoint Energy Houston Electric, LLC
B-4 Organizational Documents of Texas Genco Holdings, Inc.
B-5 Organizational Documents of Texas Genco LP, LLC
B-6 Organizational Documents of Texas Genco GP, LLC
B-7 Organizational Documents of Texas Genco, LP
B-8 Organizational Documents of CenterPoint Energy Resources Corp.
B-9 Organizational Documents of ALG Gas Supply Company
B-10 Organizational Documents of Allied Materials Corporation
B-11 Organizational Documents of Arkansas Louisiana Finance Corporation
B-12 Organizational Documents of Arkla Industries Inc.
B-13 Organizational Documents of Arkla Products Company
B-14 Organizational Documents of Blue Jay Gas Company
B-15 Organizational Documents of CenterPoint Energy Alternative Fuels, Inc.
B-16 Organizational Documents of Entex Gas Marketing Company
B-16A Organizational Documents of CenterPoint Energy Gas Receivables, LLC
- 31 -
B-17 Organizational Documents of CenterPoint Energy Gas Resources Corp.
B-18 Organizational Documents of Entex NGV, Inc.
B-19 Organizational Documents of Entex Oil & Gas Company
B-20 Organizational Documents of CenterPoint Energy - Illinois Gas Transmission
Company
B-21 Organizational Documents of Industrial Gas Supply Corporation
B-22 Organizational Documents of Intex, Inc.
B-23 Organizational Documents of Louisiana Unit Gas Transmission Company
B-24 Organizational Documents of Minnesota Intrastate Pipeline Company
B-25 Organizational Documents of CenterPoint Energy - Mississippi River
Transmission Corporation
B-26 Organizational Documents of CenterPoint Energy MRT Holdings, Inc.
B-27 Organizational Documents of CenterPoint Energy MRT Services Company
B-28 Organizational Documents of CenterPoint Energy Gas Marketing Company
B-29 Organizational Documents of National Furnace Company
B-30 Organizational Documents of NorAm Financing I
B-31 Organizational Documents of NorAm Utility Services, Inc.
- 32 -
B-32 Organizational Documents of CenterPoint Energy Consumer Group, Inc.
B-33 Organizational Documents of CenterPoint Energy Field Services, Inc.
B-34 Organizational Documents of CenterPoint Energy Field Services Holdings, Inc.
B-35 Organizational Documents of CenterPoint Energy Gas Processing, Inc.
B-36 Organizational Documents of Reliant Energy Funds Management, Inc.
B-37 Organizational Documents of CenterPoint Energy Gas Transmission Company
B-38 Organizational Documents of CenterPoint Energy Hub Services, Inc.
B-39 Organizational Documents of CenterPoint Energy Intrastate Holdings, LLC
B-40 Organizational Documents of Pine Pipeline Acquisition Company, LLC
B-41 Organizational Documents of CenterPoint Energy Pipeline Services, Inc.
B-42 Organizational Documents of CenterPoint Energy OQ, LLC
B-43 Organizational Documents of CenterPoint Energy Marketing, Inc.
B-44 Organizational Documents of CenterPoint Energy Retail Interests, Inc.
- 33 -
B-45 Organizational Documents of CenterPoint Energy Trading and Transportation
Group, Inc.
B-46 Organizational Documents of Unit Gas Transmission Company
B-47 Organizational Documents of United Gas, Inc.
B-48 Organizational Documents of HL&P Capital Trust I
B-49 Organizational Documents of HL&P Capital Trust II
B-50 Organizational Documents of HL&P Receivables, Inc.
B-51 Organizational Documents of Houston Industries Energy (UK), Inc.
B-52 Organizational Documents of Houston Industries FinanceCo GP, LLC
B-53 Organizational Documents of Houston Industries FinanceCo LP
B-54 Organizational Documents of CenterPoint Energy Funding Company
B-55 Organizational Documents of NorAm Energy Corp.
B-56 Organizational Documents of REI Trust I
B-57 Organizational Documents of REI Trust II
B-58 Organizational Documents of Reliant Energy FinanceCo II GP, LLC
B-59 Organizational Documents of Reliant Energy FinanceCo II LP
B-60 Organizational Documents of Reliant Energy FinanceCo III GP, LLC
B-61 Organizational Documents of Reliant Energy FinanceCo III LP
- 34 -
B-62 Organizational Documents of Reliant Energy FinanceCo IV GP, LLC
B-63 Organizational Documents of Reliant Energy FinanceCo IV LP
B-64 Organizational Documents of Reliant Energy Investment Management, Inc.
B-65 Organizational Documents of CenterPoint Energy Power Systems, Inc.
B-66 Organizational Documents of CenterPoint Energy Products, Inc.
B-67 Organizational Documents of CenterPoint Energy Properties, Inc.
B-68 Organizational Documents of CenterPoint Energy Tegco, Inc.
B-69 Organizational Documents of CenterPoint Energy Management Services, Inc.
B-70 Organizational Documents of Reliant Energy Thermal Systems (Delaware), Inc.
B-71 Organizational Documents of Northwind Houston L.P.
B-72 Organizational Documents of CenterPoint Energy District Cooling, LLC
B-73 Organizational Documents of CenterPoint Energy Transition Bond Company, LLC
B-74 Organizational Documents of Reliant Energy Water, Inc.
B-75 Organizational Documents of Utility Rail Services, Inc.
B-76 Organizational Documents of CenterPoint Energy International, Inc.
- 35 -
B-77 Organizational Documents of Reliant Energy Brazil Ltd.
B-78 Organizational Documents of Reliant Energy Brazil Tiete Ltd.
B-79 Organizational Documents of Reliant Energy Brazil Ventures Ltd.
B-80 Organizational Documents of Reliant Energy Holdings Ltd.
B-81 Organizational Documents of CenterPoint Energy International II, Inc.
B-82 Organizational Documents of HIE Ford Heights, Inc.
B-83 Organizational Documents of HIE Fulton, Inc.
B-84 Organizational Documents of Reliant Energy India, Inc.
B-85 Organizational Documents of Reliant Energy Rain, Inc.
B-86 Organizational Documents of CenterPoint Energy International Holdings, LLC
B-87 Organizational Documents of Reliant Energy Salvador Holding Company Ltd.
B-88 Organizational Documents of CenterPoint Energy International Services, Inc.
B-89 Organizational Documents of CenterPoint Energy Light, Inc.
B-90 Organizational Documents of Reliant Energy Cayman Holdings Ltd.
B-91 Organizational Documents of Reliant Energy Argentina S.A.
B-92 Organizational Documents of Reliant Energy Argener S.A.
- 36 -
B-93 Organizational Documents of Reliant Energy Argentine Holdings Ltd.
B-94 Organizational Documents of Reliant Energy Opco S.A.
B-95 Organizational Documents of Reliant Energy Cayman Investments Ltd.
B-96 Organizational Documents of Reliant Energy Cayman Ltd.
B-97 Organizational Documents of Reliant Energy Cayman Acquisitions Ltd.
B-98 Organizational Documents of Reliant Energy Outsource Ltd.
B-99 Organizational Documents of Venus Generation El Salvador
B-100 Organizational Documents of Reliant Energy Santiago Del Estero, S.A.
EXHIBIT C INDENTURES AND CERTAIN OUTSTANDING CONTRACTS
EXHIBIT C - PART (a) - INDENTURES
Information with respect to the indentures and other fundamental documents
defining the rights of holders of funded debt is incorporated herein by
reference to CenterPoint's Annual Report on Form 10-K for the year ended
December 31, 2003 and CenterPoint's Joint Registration Statement on Form U5B
(File No. 030-00360).
EXHIBIT C - PART (b) - OUTSTANDING AND UNCOMPLETED CONTRACTS OR AGREEMENTS
RELATING TO THE ACQUISITION OF ANY SECURITIES, UTILITY ASSETS (AS DEFINED IN
SECTION 2(a)(18) OF THE ACT), OR ANY OTHER INTEREST IN ANY BUSINESS.
None.
EXHIBIT D TAX ALLOCATION AGREEMENT PURSUANT TO RULE 45(c)
See Exhibit D attached hereto.
- 37 -
EXHIBIT E COPIES OF OTHER DOCUMENTS PRESCRIBED BY RULE OR ORDER
Exhibit E-1 2003 Annual Report to the State of Oklahoma Submitted by CenterPoint
Energy Arkla (filed under cover of Form SE in connection herewith)
Exhibit E-2 Gas Utilities 2003 Distribution Annual Report to the Railroad
Commission of Texas for CenterPoint Energy Arkla (filed under cover of Form SE
in connection herewith)
Exhibit E-3 2003 Annual Report to the Louisiana Public Service Commission for
CenterPoint Energy Arkla (filed under cover of Form SE in connection herewith)
Exhibit E-4 Gas Utilities 2003 Transmission Annual Report to the Railroad
Commission of Texas for Industrial Gas Supply Company (filed under cover of Form
SE in connection herewith)
Exhibit E-5 Gas Utilities 2003 Transmission Annual Report to the Railroad
Commission of Texas for Unit Gas Transmission Company (filed under cover of Form
SE in connection herewith)
Exhibit E-6 2003 Annual Report to the Arkansas Public Service Commission by
CenterPoint Energy Arkla (filed under cover of Form SE in connection herewith)
Exhibit E-7 2003 Annual Report to the Louisiana Public Service Commission for
CenterPoint Energy Entex (filed under cover of Form SE in connection herewith)
Exhibit E-8 2003 Annual Report to the Mississippi Public Service Commission for
CenterPoint Energy Entex (filed under cover of Form SE in connection herewith)
Exhibit E-9 2003 Annual Report of Affiliate Activities to the Public Utility
Commission of Texas for CenterPoint Energy Houston Electric, LLC (filed under
cover of Form SE in connection herewith).
Exhibit E-10 2003 Electric Investor-Owned Utilities Earnings Report to the
Public Utility Commission of Texas for CenterPoint Energy Houston Electric, LLC
(filed under cover of Form SE in connection herewith).
EXHIBIT F SCHEDULES SUPPORTING ITEMS OF THE REPORT
F-1 Chart setting forth system companies and investments therein as of December
31, 2003.
F-2 List of expenditures to citizens groups and public relations counsel (to be
filed by amendment).
- 38 -
F-3 Information on service transactions between CenterPoint and subsidiaries
(corporate services, support services and information technology services) for
first quarter 2003.
F-4 Information on service transactions between CenterPoint and subsidiaries
(corporate costs, shared services and information technology services) for
second quarter 2003.
F-5 Information on service transactions between CenterPoint and subsidiaries
(corporate services, support services and information technology services) for
third quarter 2003.
F-6 Information on service transactions between CenterPoint and subsidiaries
(corporate costs, shared services and information technology services) for
fourth quarter 2003.
F-7 Consolidating financial statements for CenterPoint and its subsidiaries as
of December 31, 2003 (to be filed by amendment).
F-8 For consent of the independent accountants as to their opinion on
CenterPoint's consolidated financial statements, see Independent Auditors'
Consent of Deloitte & Touche LLP (previously filed as Exhibit 23 to
CenterPoint's Annual Report on Form 10-K for the year ended December 31, 2003
and incorporated by reference herein).
EXHIBIT G ORGANIZATION CHART: EWGS AND FOREIGN UTILITY COMPANIES
See Exhibit F-1.
EXHIBIT H EWG OR FOREIGN UTILITY FINANCIAL STATEMENTS
Financial statements of Texas Genco are incorporated herein by reference to the
Annual Report on Form 10-K for the year ended December 31, 2003 of Texas Genco
Holdings, Inc. (file number 1-31449).
- 39 -
SIGNATURE
Each undersigned system company has duly caused this annual report to
be signed on its behalf by the undersigned thereunto duly authorized pursuant to
the requirements of the Public Utility Holding Company of 1935. The signature of
each undersigned company shall be deemed to relate only to matters having
reference to such company or its subsidiaries.
CENTERPOINT ENERGY, INC.,
for itself and on behalf of UTILITY
HOLDING, LLC
By: /s/ Rufus S. Scott
-----------------------------------------
Name: Rufus S. Scott
Title: Vice President, Deputy General Counsel
and Assistant Corporate Secretary
Date: May 3, 2004
- 40 -