SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

(Amendment No.)

Filed by the Registrant x

Filed by a Party other than the Registrant o

FUELCELL ENERGY, INC.
(Name of Registrant as Specified In Its Charter)

__________________________________________________________
Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

FUELCELL ENERGY, INC.
3 Great Pasture Road, Danbury, CT  06813
203-825-6000

Dear Shareholder:

          You are cordially invited to attend the Annual Meeting of Shareholders of FuelCell Energy, Inc. ("FuelCell"), which will be held on Tuesday, March 26, 2002 at 10:00 A.M., at our offices located at 3 Great Pasture Road, Danbury, CT. The formal Notice of Annual Meeting and Proxy Statement, fully describing the matters to be acted upon at the meeting, appear on the following pages.

          The matters scheduled to be considered at the meeting are the election of FuelCell's directors and amendment of FuelCell's 1998 Equity Incentive Plan.

          The Board of Directors recommends the approval of the proposals being presented at the Annual Meeting of Shareholders as being in the best interest of FuelCell. We urge you to read the Proxy Statement and give the proposal your careful attention before completing the enclosed proxy card.

          Your vote is important regardless of the number of shares you own. Whether or not you plan to attend the meeting, please take the time to vote in one of these ways:

• By mail -- fill in, sign and date the enclosed proxy card and return it promptly in the postage-paid envelope.
• By telephone -- call the toll-free telephone number on your proxy card to vote by phone.
• Via Internet -- visit the web site noted on your proxy card to vote via the Internet.

          You may attend the meeting and vote in person even if you have previously voted by proxy in one of the three ways listed above.

FUELCELL ENERGY, INC.
3 Great Pasture Road, Danbury, CT  06813
203-825-6000

TO THE SHAREHOLDERS OF FUELCELL ENERGY, INC.:

     NOTICE IS HEREBY GIVEN that the Annual Shareholders' Meeting of FuelCell Energy, Inc. (the "Company"), will be held at the offices of the Company located at 3 Great Pasture Road, Danbury, CT. on Tuesday, March 26, 2002 at 10:00 a.m. Eastern Standard Time for the following purposes:

1. To elect eleven (11) directors to serve for the ensuing year and until their successors are duly elected and qualified.
2. To amend the 1998 Equity Incentive Plan to increase the aggregate number of common shares available under this plan to 4,500,000 shares.
3. Such other business as may properly come before the Meeting or any adjournment thereof.

     Shareholders of record at the close of business on February 4, 2002 are entitled to notice of and to vote at the meeting.

     Your attention is directed to the attached Proxy Statement. If you do not expect to be present at the meeting, please fill in, sign, date and mail the enclosed Proxy or vote your shares by touchtone telephone or via the Internet as promptly as possible in order to save the Company further solicitation expense. There is enclosed with the Proxy an addressed envelope for which no postage is required if mailed in the United States.
 

Danbury, Connecticut
February 4, 2002

FUELCELL ENERGY, INC.
3 Great Pasture Road, Danbury, CT  06813
203-825-6000

          This Proxy Statement is furnished to the shareholders of FuelCell Energy, Inc. (the "Company") in connection with the solicitation of proxies by the Board of Directors of the Company to be voted at the 2002 Annual Meeting of Shareholders (the "Annual Meeting") and at any adjournments thereof. The Annual Meeting will be held at the offices of the Company located at 3 Great Pasture Road, Danbury, CT. on March 26, 2002 at 10:00 a.m. Eastern Standard Time. The Company is a Delaware corporation.

          The approximate date on which this Proxy Statement and the accompanying proxy card are first being sent or given to shareholders is February 19, 2002.

          The securities that can be voted at the Annual Meeting consist of Common Stock of the Company, $.0001 par value per share, with each share entitling its owner to one vote on each matter submitted to the shareholders. The record date for determining the holders of Common Stock who are entitled to notice of and to vote at the Annual Meeting is February 4, 2002. On the record date, 39,109,200 shares of Common Stock were outstanding and eligible to be voted at the Annual Meeting.

          The presence, in person or by proxy, of a majority of the outstanding shares of Common Stock of the Company is necessary to constitute a quorum at the Annual Meeting. The affirmative vote of the holders of a plurality of the shares of Common Stock represented in person or by proxy at the Annual Meeting is required to elect the directors. Abstentions, including broker non-votes, will have no effect on the outcome of this matter.

          In voting by proxy with regard to the election of directors, shareholders may vote in favor of all nominees, withhold their votes as to all nominees or withhold their votes as to specific nominees. Shareholders should specify their choices on the accompanying proxy card, by telephone or Internet. All properly executed proxies delivered by shareholders to the Company and not revoked will be voted at the Annual Meeting in accordance with the directions given. If no specific instructions are given with regard to the matters to be voted upon, the shares represented by a proxy will be voted "FOR" the election of all directors. If any other matters properly come before the Annual Meeting, the persons named as proxies will vote upon such matters according to their best judgment.

          Any shareholder delivering a proxy has the power to revoke it at any time before it is voted by giving written notice to the Secretary of the Corporation, by executing and delivering to the Secretary a proxy card bearing a later date or by voting in person at the Annual Meeting.

          In addition to soliciting proxies through the mail, the Company may solicit proxies through its directors and employees in person or by telephone. Brokerage firms, nominees, custodians and fiduciaries also may be requested to forward proxy materials to the beneficial owners of shares held of record by them. All expenses incurred in connection with the solicitation of proxies will be borne by the Company.

          Eleven directors are to be elected at the Annual Meeting, each to hold office until the next annual meeting of shareholders and until a successor is elected and qualified. It is the intention of the persons named in the enclosed form of proxy to vote, if authorized, the proxies for the election as directors of the eleven persons named below as nominees. All of the nominees are at present directors of the Company. If any nominee declines or is unable to serve as a director (which is not anticipated), the persons named as proxies reserve full discretion to vote for any other person who may be nominated.

          The following table sets forth certain information for each nominee for election as a director.

          Jerry D. Leitman has been nominated as a director pursuant to his employment agreement. See "Employment Agreements."

          The Board of Directors held eight meetings during the fiscal year ended October 31, 2001. All incumbent directors attended at least 75% of the meetings of the Board of Directors and Board committees of which they were members during the period they served as directors.

          The Board of Directors has an Executive Committee comprised of Bernard Baker, Warren Bagatelle, William Lawson, Jerry Leitman, and John Rolls. The Executive Committee, which held no meetings during fiscal 2001, exercises the powers of the Board in monitoring the management of the business of the Company between meetings of the Board of Directors.

          The Company has an Audit Committee consisting of Messrs. Rolls (Chairman), Bagatelle, and Bode. Mr. Lawson was a member until March 28, 2001 at which time Mr. Bode joined the Committee. The Audit Committee had five meetings in fiscal 2001 and has responsibility for consulting with the Company's officers regarding the appointment of independent public accountants as auditors, discussing the scope of the auditors' examination and reviewing annual financial statements.

          The Audit Committee of the Board of Directors of the Company is composed of three non-employee directors. The Board has made a determination that the members of the Audit Committee satisfy all requirements as to independence, financial literacy and experience. The responsibilities of the Audit Committee are set forth in the Charter of the Audit Committee, which was adopted by the Board of Directors of the Company on June 8, 2000. The Committee, among other matters, is responsible for the annual recommendation of the independent accountants to be appointed by the Board of Directors as the auditors of the Company, and reviews the arrangements for and the results of the auditors' examination of the Company's books and records, auditors' compensation, internal accounting control procedures, and activities. It also reviews the Company's accounting policies, control systems and compliance activities. The Committee also reviews the Charter of the Audit Committee. This is a report on the Committee's activities relating to fiscal year 2001.

          Review of Audited Financial Statements with Management

          The Audit Committee reviewed and discussed the audited financial statements with the management of the Company.

          Review of Financial Statements and Other Matters with Independent Accountant

          The Audit Committee discussed with the independent auditors the matters required to be discussed by SAS 61 (Codification of Statements on Auditing Standards, AU Section 380), as may be modified or supplemented. The Audit Committee has received the written disclosures and the letter from the independent accountants required by Independence Standards Board Standard No. 1 (Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees), as may be modified or supplemented, and has discussed with the independent accountant the independent accountants' independence.

          Recommendation that Financial Statements be Included in Annual Report

          Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company's Annual Report on Form 10-K for the last fiscal year for filing with the Securities and Exchange Commission.

          Other Matters

          In accordance with the rules of the Securities and Exchange Commission, the foregoing information, which is required by paragraphs (a) and (b) of Regulation S-K Item 306, shall not be deemed to be "soliciting material," or to be "filed" with the Commission or subject to the Commission's Regulation 14A, other than as provided in that Item, or to the liabilities of section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically requests that the information be treated as soliciting material or specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

February 4, 2002

          The Company has a Compensation Committee consisting of Messrs. Lawson (Chairman), Gerson and Casten. The Compensation Committee had five meetings in fiscal 2001. The functions of the Compensation Committee are to review, approve and recommend to the Board of Directors the terms and conditions of incentive bonus plans applicable to corporate officers and key management personnel, to review and approve the annual salary of the Chief Executive Officer, and to administer the FuelCell Energy, Inc. Section 423 Stock Purchase Plan, the FuelCell Energy, Inc. 1988 Stock Option Plan, as amended (the "1988 Plan"), and the FuelCell Energy, Inc. 1998 Equity Incentive Plan (the "1998 Plan")

          Each Board member not employed by the Company, except for Michael Bode, receives $10,000 per annum and was granted 16,000 nonqualified stock options on February 16, 2000. The stock options were granted pursuant to the Company's 1998 Equity Incentive Plan. The options are exercisable at $13.66 per share, commencing one year after grant, will vest at the rate of 25% per year from date of grant and have restrictions as to transferability. An additional $3,500 per annum will be paid to the Chairman and $2,000 per annum will be paid to each non-employee member of the Executive, Compensation and Audit Committees. The Company reimburses certain directors for reasonable expenses incurred in connection with the performance of their duties as directors.

          Upon joining the Board on February 16, 2000, Mr. Rolls was granted 40,000 nonqualified stock options. The stock options were granted pursuant to the Company's 1998 Equity Incentive Plan. The options are exercisable at $13.66 per share, commencing one year after grant, will vest at the rate of 25% per year from date of grant and have restrictions as to transferability.

          Upon joining the Board on March 28, 2000, Mr. Casten was granted 40,000 nonqualified stock options. The stock options were granted pursuant to the Company's 1998 Equity Incentive Plan. The options are exercisable at $19.56 per share, commencing one year after grant, will vest at the rate of 25% per year from date of grant and have restrictions as to transferability.

          In recognition of his service, Bernard Baker, the Chairman of the Board received an additional 80,000 nonqualified stock options pursuant to the Company's 1998 Equity Incentive Plan. The options are exercisable at $13.66 in two installments, 50% on February 16, 2001 and 50% on February 16, 2002, and have restrictions as to transferability.

          The following table sets forth certain information as of February 4, 2002 with respect to: (a) the only shareholders known to management to own beneficially more than 5% of the outstanding common stock of FuelCell; (b) each of FuelCell's directors; (c) each of the executive officers of FuelCell; and (d) all of FuelCell's directors and executive officers as a group.

          Unless indicated otherwise, each holder can be reached in care of FuelCell Energy, Inc., 3 Great Pasture Road, Danbury, Connecticut 06813-1305.

*   Less than one percent.

The following two tables set forth certain information with respect to (i) option grants to the named executive officers of the Company during the fiscal year ended October 31, 2001, and (ii) the aggregated number and value of options exercisable and unexercisable by the named executive officers as of October 31, 2001.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES

          In August 1997, the Company entered into an employment agreement with Mr. Leitman upon hiring him as its President and Chief Executive Officer. Under the agreement, which is terminable by either party upon 30 days notice, Mr. Leitman is entitled to a minimum annual salary and a bonus based upon an incentive compensation plan to be developed by Mr. Leitman with the Compensation Committee. In addition, upon entering into the agreement, the Company granted Mr. Leitman options to purchase 1,500,000 shares of Common Stock. The agreement also provides Mr. Leitman with the opportunity to participate in insurance plans and other employment benefits as may be generally available to other employees of the Company. In certain circumstances, if Mr. Leitman's employment is terminated during the first five years of his employment, including a termination by Mr. Leitman upon a change of control, Mr. Leitman will be entitled to a severance benefit equal to (i) two times his then base salary, plus (ii) an amount equal to Mr. Leitman's bonus from the Company for the immediately preceding year. The agreement also contains non-disclosure provisions and prohibits Mr. Leitman from competing with the Company during the term of his employment and for a period of two years thereafter. Under the Agreement, the Company has agreed to use its best efforts to cause Mr. Leitman to be elected to the Board of Directors and to appoint Mr. Leitman as a member of the Executive Committee of the Board of Directors.

          In October 1998, the Company entered into an employment agreement with Mr. Mahler upon hiring him as its Chief Financial Officer, Treasurer and Corporate Secretary. Under the agreement, which is terminable by either party upon 30 days notice, Mr. Mahler is entitled to a minimum annual salary and a bonus based upon the Company incentive compensation plan. In addition, upon entering into the agreement, the Company granted Mr. Mahler options to purchase 300,000 shares of Common Stock. The agreement also provides Mr. Mahler with the opportunity to participate in insurance plans and other employment benefits as may be generally available to other employees of the Company. In certain circumstances, if Mr. Mahler's employment is terminated, Mr. Mahler will be entitled to a severance benefit equal to (i) his then base salary, plus (ii) an amount equal to Mr. Mahler's bonus from the Company for the immediately preceding year. The agreement also contains non-disclosure provisions and prohibits Mr. Mahler from competing with the Company during the term of his employment and for a period of two years thereafter.

          Decisions regarding certain executive compensation are made by the Compensation Committee, which is composed of William A. Lawson, James Gerson, and Thomas R. Casten. The Compensation Committee makes decisions with respect to the salary and bonus of the Chief Executive Officer. The Chief Executive Officer is responsible for the salary administration of the remaining executive officers. The Company has an incentive compensation plan. The Compensation Committee is responsible for approval of the incentive awards with significant reliance on the recommendations of the Chief Executive Officer.

          Stock option awards under the 1998 Plan are approved by either the Compensation Committee or the Board of Directors with reliance upon the recommendations of the Compensation Committee. No member of the Compensation Committee was an officer or employee of the Company during the fiscal year ended October 31, 2001.

          The Company's primary objectives in developing executive compensation policies are to attract, motivate and retain superior talent to enable the Company to achieve its business objectives and to align the financial interests of the executive officers with the shareholders of the Company.

          The compensation of executive officers consists of base compensation, bonus, periodic grants of options and participation in benefit plans generally available to employees. In setting compensation, the Compensation Committee and the Chief Executive Officer strive to maintain base compensation for the Company's executive officers at levels which the Compensation Committee and the Chief Executive Officer, based on their experience, believe are competitive with the compensation of comparable executive officers in similarly situated companies while relying upon stock options and the informal bonus plan to provide significant performance incentives.

          Executive officers are eligible to participate in a bonus plan. Awards under the bonus plan are determined by the Compensation Committee. The Compensation Committee relies significantly upon the recommendation of the Chief Executive Officer with respect to the bonus to be awarded to the other executive officers. The executive officers, as well as other key employees, may receive bonuses based upon meeting the performance objectives of the Company and their contributions to the Company.

          Each of the executive officers and certain key employees are eligible to receive awards under the 1998 Plan. The 1998 Plan will be used to align a portion of the officers' compensation with the shareholders' interest and the long-term success of the Company. In determining the number of options to be granted to each executive officer, the Compensation Committee reviews the recommendations provided by the Chief Executive Officer with respect to the executive officers other than the Chief Executive Officer and makes a subjective determination regarding those recommendations. These determinations are based upon compensation surveys conducted during fiscal 2001 of executive officers and certain key employees in comparable companies.

          The compensation paid by the Company to its Chief Executive Officer for fiscal 2001 was based upon an employment agreement negotiated with Mr. Leitman. The Compensation Committee has recently conducted a survey of compensation packages of Chief Executive Officers in comparable companies, and believes, based upon the individual experience of its members, that the compensation package for Mr. Leitman for fiscal 2001 was reasonable based upon Mr. Leitman's experience, his level of responsibility and the contributions made and expected to be made by him to the Company. See "Employment Agreement" for a description of Mr. Leitman's employment agreement.

          The following graph compares the annual change in the Company's cumulative total shareholder return on its Common Stock for the five fiscal years ended October 31, 2001 with the cumulative total return on the Russell 2000 and a peer group consisting of SIC Group Code 369 companies listed on The American Stock Exchange, Nasdaq National Market and New York Stock Exchange for that period.

 

          The Securities Exchange Act of 1934 requires the Company's executive officers and directors, and any persons owning more than 10% of a class of the Company's stock to file certain reports of ownership and changes in ownership with the Securities and Exchange Commission (the "SEC"). All filings for 2001 were made on a timely basis except for one late Form 4 filing for James Gerson.

          The above information is to the Company's knowledge, based solely on a review of copies of reports furnished to the Company and representations of certain officers, directors and shareholders owning more than 10% of the Company's Common Stock.

          During fiscal year 2001, the Company sold to Daimler Benz affiliate MTU-Friedrichshafen GmbH ("MTU") fuel cell components for approximately $2,179,000.

          In December of 1999 the Company entered into an agreement with MTU granting an exclusive license to use the Company's DFC^® patent rights and know how in Europe and the Middle East and a non-exclusive license in South America and Africa subject to certain rights of the Company and others. MTU has agreed to make any improvements to the Company's DFC^® available to the Company. MTU plans to conduct further research, development, manufacturing and marketing programs in the area of carbonate fuel cell technology and has agreed to negotiate a license grant of the results to the Company. In addition, MTU has agreed to pay a royalty based on kilowatts of electrical generating capacity using the Company's DFC^® made or sold by MTU or its permitted licensees, including a minimum annual royalty commencing in 2000. Pursuant to this agreement, MTU has paid us $300,000 in fiscal 2001.

          In July 1998, the Company entered into a Cross-Licensing and Cross-Selling Agreement with MTU pursuant to which MTU and the Company have granted to each other the right to manufacture and sell each other's stationary power fuel cell products in their respective regions. Each company will pay the other royalties based upon sales.

          Mr. Bode is affiliated with MTU, and MTU is a shareholder of the Company. The Company believes that the terms of its transactions with MTU are no less favorable to the Company than it could have obtained from an unaffiliated third party.

          The Company has also entered into a consulting agreement with Bernard Baker for $5,000 per month for two years commencing on February 11, 2002. Dr. Baker is entitled to additional compensation if he consults for more than 48 days per year.

          Under the Company's 1998 Equity Incentive Plan (the "Plan"), the Company's Board of Directors may grant stock options to officers, key employees and others. Under the Plan, an aggregate of 3,500,000 shares of Common Stock have already been reserved for issuance. We are presently seeking to increase the aggregate number of shares available for grants or options under the Plan to 4,500,000.

          This proposal to increase the shares was included in our 2001 Proxy and approved by the shareholders, however the number of shares available for grant was inadvertently misstated as 3,500,000 instead of 4,500,000. This reduced the anticipated increase in available shares by 1,000,000. The current year proposal will satisfy the intent of last year's proposal by reinstating the shortfall caused by the misstatement.

          We believe that these shares of Common Stock are needed for issuance under the Plan so sufficient awards can continue to be made to attract, retain and motivate key employees, consultants, directors and others.

          The Board of Directors has appointed KPMG LLP, certified public accountants to audit the consolidated financial statements of the Company for the fiscal year ending October 31, 2002.

          A representative of KPMG LLP will be present at the Annual Meeting to make a statement if such representative desires to do so and to respond to appropriate questions.

          Shareholders who may wish to present proposals for inclusion in the Company's proxy materials and for consideration at the 2003 Annual Meeting of Shareholders should submit the proposals in writing to the Secretary of the Company in accordance with all applicable rules and regulations of the SEC no later than November 15, 2002.

As of the date of this proxy statement, the Board of Directors knows of no matters which will be presented for consideration at the Annual Meeting other than the proposals set forth in this Proxy Statement. If any other matters properly come before the meeting, it is intended that the persons named in the proxy will act in respect thereof in accordance with their best judgment.

Danbury, CT
February 15, 2002

          The undersigned hereby appoints Jerry D. Leitman and Dr. Bernard S. Baker, and each of them, attorneys with full power of substitution, to vote as directed below all shares of Common Stock of FuelCell Energy, Inc. registered in the name of the undersigned, or which the undersigned may be entitled to vote, at the Annual Meeting of Stockholders to be held at the Offices of the Company located at 3 Great Pasture Road, Danbury, Connecticut, on Tuesday, March 26, 2002 at 10:00 a.m. and at any adjournment or postponement thereof.

Warren D. Bagatelle, Bernard S. Baker, Christopher R. Bentley, Michael Bode, Thomas R. Casten, James D. Gerson, Thomas L. Kempner, William A. Lawson, Jerry D. Leitman, Hansraj C. Maru, John A. Rolls.

2.     To amend the 1998 Equity Incentive Plan to increase the aggregate number of common shares available under the Plan to 4,500,000 shares.

3.     As such proxies may in their discretion determine in respect of any other business properly to come before said meeting (the Board of Directors knowing of no such other business).

The directors recommend a vote FOR items 1 and 2.

(Continued on reverse side)

(Continued from other side)

UNLESS THE STOCKHOLDER DIRECTS OTHERWISE, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2 AS PROPOSED.

PLEASE DATE, SIGN AND RETURN IN THE ENVELOPE PROVIDED.