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EXHIBIT 99.1
PUGET ENERGY, INC.
NONEMPLOYEE DIRECTOR STOCK PLAN
1. Establishment, Purpose and Duration of the Plan
(a) The purpose of the Plan is to provide ownership of Puget Energy, Inc.
Common Stock to nonemployee members of the Board of Directors in order to
strengthen the commonality of interest between directors and stockholders and to
improve the Company's ability to attract and retain highly qualified individuals
to serve as directors of the Company.
(b) The Plan shall become effective as of January 1, 1998.
(c) The Plan shall remain in effect, subject to the right of the Board to
terminate the Plan at any time pursuant to Section 14, until all shares subject
to the Plan have been purchased or acquired according to the Plan's provisions.
2. Definitions
When used herein, the following terms shall have the respective meanings
set forth below:
(a) "Board" or "Board of Directors" means the Board of Directors of the
Company.
(b) "Common Stock" means the common stock, par value $.01 per share, of
the Company.
(c) "Company" means Puget Energy, Inc., a Washington corporation, or any
successor corporation as provided in Section 15.
(d) "Deferred Stock Account" has the meaning set forth in Section 8(b).
(e) "Employee" means any officer or employee of the Company or of any
Subsidiary. Directors who are not otherwise employed by the Company or any
Subsidiary shall not be considered employees for purposes of the Plan.
(f) "Market Price" means the average of the daily high and low per share
trading prices for the Common Stock as reported daily by the New York Stock
Exchange in the Wall Street Journal or similar readily available public source
for a single trading day.
(g) "Nonemployee Director" or "Participant" means any person who is
elected or appointed to the Board of Directors and who is not an Employee.
(h) "Plan" means the Company's Nonemployee Director Stock Plan as set
forth herein, as it may be amended from time to time.
(i) "Plan Administrator" means the Board or a committee whose members meet
the requirements of Section 4(a), appointed from time to time by the Board to
administer the Plan.
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(j) "Quarterly Retainer" means the quarterly retainer payable to all
Nonemployee Directors (exclusive of any per-meeting fees, committee chair fees
or expense reimbursements). The Quarterly Retainer shall be prorated based on
the number of calendar months (including partial calendar months) a director has
served as a Nonemployee Director during the fiscal quarter for which the
Quarterly Retainer is payable.
(k) "Stock Payment" means the fixed portion of the Quarterly Retainer to
be paid to Nonemployee Directors in shares of Common Stock rather than cash for
services rendered as a director of the Company as provided in Section 6 and that
portion of the Quarterly Retainer to be paid to Nonemployee Directors in shares
of Common Stock resulting from the election specified in Section 7.
(l) "Subsidiary" means any corporation that is a "subsidiary corporation"
of the Company, as that term is defined in Section 424(f) of the Internal
Revenue Code of 1986, as amended.
(m) "Trust" and "Trustee" have the meanings set forth in Section 4(b).
(n) "Trustee Shares" has the meaning set forth in Section 9.
3. Shares of Common Stock Subject to the Plan
Subject to Section 11, the maximum aggregate number of shares of Common
Stock that may be purchased by the Trustee as Trustee Shares for purposes of the
Plan shall be 100,000 shares. The Common Stock shall be purchased by the Trustee
on the open market. The Company shall not issue any Common Stock under the Plan
to the Trust or to any Participant, nor shall the Company purchase any Trustee
Shares from the Trust.
4. Administration of the Plan
(a) The Plan will be administered by the Board or by a committee appointed
by the Board consisting of one or more persons who are not eligible to
participate in the Plan. Members of such committee need not be members of the
Board. The Company shall pay all costs of administration of the Plan.
(b) Subject to the express provisions of the Plan, the Plan Administrator
has and may exercise such powers and authority of the Board as may be necessary
or appropriate for the Plan Administrator to carry out its functions under the
Plan. Without limiting the generality of the foregoing, the Plan Administrator
shall have full power and authority to (i) determine all questions of fact that
may arise under the Plan; (ii) interpret the Plan and make all other
determinations necessary or advisable for the administration of the Plan; (iii)
prescribe, amend and rescind rules and regulations relating to the Plan,
including, without limitation, any rules the Plan Administrator determines are
necessary or appropriate to ensure that the Company and the Plan will be able to
comply with all applicable provisions of any federal, state or local law,
including securities laws; and (iv) authorize the Trustee (the "Trustee" of the
Puget Sound Energy, Inc. Stock Plan Trust, a trust established under the laws of
the state of Washington (the "Trust"), to make Stock Payments to the
Participants. All interpretations, determinations and actions by the Plan
Administrator will be final, conclusive and binding upon all parties. Any action
of the Plan Administrator with respect to the administration of the Plan shall
be taken pursuant to a majority vote at a meeting of the Plan
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Administrator (at which members may participate by telephone) or by the
unanimous written consent of its members.
5. Participation in the Plan
All Nonemployee Directors shall participate in the Plan, subject to the
conditions and limitations of the Plan, so long as they remain eligible to
participate in the Plan as set forth below.
6. Determination of Quarterly Retainers and Stock Payments
(a) The Board, in its sole discretion, shall determine the Quarterly
Retainer for all Nonemployee Directors.
(b) Each director of the Company who is a Nonemployee Director at any time
during a calendar year shall receive a Stock Payment as a portion of the
Quarterly Retainer payable to such director. The Stock Payment shall be made as
soon as possible following a fiscal quarter end. The number of shares of Common
Stock to be issued to each Participant as a Stock Payment shall be determined by
dividing the Market Price of the Common Stock for the last business day of a
fiscal quarter into 40% of the Quarterly Retainer payable to such Participant
for that fiscal quarter; provided, however, that no fractional shares shall be
issued, and in lieu thereof the number of shares in the Stock Payment shall be
rounded to the nearest whole number of shares. Certificates evidencing the
shares of Common Stock constituting Stock Payments shall be registered in the
respective names of, or as directed by, the Participants and shall be issued to
each Participant.
(c) The cash portion of the Quarterly Retainer shall be paid to
Nonemployee Directors at such times and in such manner as may be determined by
the Board.
7. Election to Increase Amount of Stock Payment
(a) In lieu of receiving the cash portion of his or her Quarterly
Retainer, a Participant may make a written election to reduce up to 100% of the
cash portion of the Quarterly Retainers to be paid during a calendar year by a
specified percentage or dollar amount and have such amount applied to purchase
additional shares of Common Stock.
(b) The election shall be made on a form provided by the Plan
Administrator and must be returned to the Plan Administrator on a date the Plan
Administrator shall establish, but in any case no later than the first day of
the calendar year to which the election relates or within 60 days after the
Participant first becomes a Nonemployee Director. The election form shall state
the amount by which the Participant desires to reduce the cash portion of his or
her Quarterly Retainers for the calendar year, which shall be applied toward the
purchase of Common Stock in the same manner and on the same dates that the Stock
Payments are made pursuant to Section 6; provided, however, that no fractional
shares may be purchased, and in lieu thereof the number of shares in the Stock
Payment shall be rounded to the nearest whole number of shares. No Participant
shall be allowed to change or revoke any election for the relevant calendar
year, but may change his or her election for any subsequent calendar year.
8. Election to Defer Receipt of Stock Payment
Any director of the Company who may become entitled to a Stock Payment may
elect to have issuance of the shares deferred in accordance with the provisions
of this Section 8.
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(a) Any such election shall be made on a form provided by the Plan
Administrator and must be returned to the Plan Administrator on a date the Plan
Administrator shall establish, but in any case no later than the last day of the
calendar year prior to the calendar year to which the election relates or within
60 days after the date the participant first becomes a Nonemployee Director. Any
such election shall be effective for all Stock Payments in calendar years
following the calendar year in which it is filed; provided, however, that any
such election filed within 60 days after a Participant first becomes a
Nonemployeee Director shall be effective on the first day of the month following
the month in which the Participant files the election form. An election may
specify a distribution option for purposes of Section 8(c). A deferral election
may be revoked by written notice filed with the Plan Administrator. Any such
revocation shall be effective for all Stock Payments in calendar years following
the calendar year in which it is filed. Following any such revocation, a
director may subsequently elect to again have issuance of future Stock Payments
deferred in accordance with the provisions of this Section 8. Any such new
election shall comply with the procedures of this Section 8(a) and shall be
effective for all Stock Payments in calendar years following the calendar year
in which it is filed.
(b) For each Nonemployeee Director for whom one or more Stock Payments are
deferred under this Section 8, the Company shall maintain an unfunded account
(the "Deferred Stock Account") as follows:
(i) The Deferred Stock Account shall be credited with the number of
shares of Common Stock that are from time to time deferred. The number of shares
credited to the Deferred Stock Account (which number may be fractional) shall be
determined by dividing (A) the dollar amount of the Quarterly Retainer that
otherwise would be paid in Common Stock pursuant to Sections 6 and 7 by (B) the
Market Price of the Common Stock for the last business day of the fiscal quarter
for which the deferral is made.
(ii) Whenever cash dividends are declared on shares of Common Stock, a
dividend equivalent shall be computed with respect to each Deferred Stock
Account. The amount of the dividend equivalent shall be the product of (A) the
number of credited shares in the Deferred Stock Account on the date as of which
the Company determines the holders of record of the Common Stock who are
entitled to receive the dividend and (B) the per share dividend amount. The
dividend equivalent shall be deemed reinvested in additional shares of Common
Stock by crediting to the Deferred Stock Account, effective on the date the cash
dividend is paid, the number of shares (which number may be fractional) obtained
by dividing (1) the amount of the dividend equivalent by (2) the Market Price of
the Common Stock for the dividend payment date. Dividend equivalents shall be
credited and deemed reinvested under this Section 8(b), until all shares of
Common Stock credited to the Deferred Stock Account have been issued to the
Nonemployee Director or to his or her estate.
(iii) The Deferred Stock Account shall be debited for any shares of
Common Stock that are issued under Sections 8(c), 8(d) or 11.
(iv) The Deferred Stock Account shall be subject to any adjustment
required or permitted pursuant to Section 11.
(c) A Participant may elect, in a manner determined by the Plan
Administrator, to receive the shares issuable to him or her from the Deferred
Stock Account in a lump sum payment or in substantially equal annual
installments of not more than five years. The election may be changed to an
allowable alternative payment period by submitting a new election to the Plan
Administrator, provided that any such election is submitted at least one year
before the Participant ceases to be a
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director of the Company. The election most recently accepted by the Plan
Administrator shall govern the distribution of all shares issuable to the
Participant from his or her Deferred Stock Account. If a Participant does not
make any election with respect to the distribution of shares from the
Participant's Deferred Stock Account, then such shares shall be issued in a lump
sum payment. The lump sum payment shall be made, or installment payments shall
commence, no later than January 15 of the calendar year following the calendar
year in which such individual ceases to be a director of the Company.
(d) Notwithstanding the provisions of Section 8(c), if a Nonemployeee
Director should die prior to issuance of all shares of Common Stock that have
been credited to his or her Deferred Stock Account, the number of shares of
Common Stock remaining in the Deferred Stock Account shall be issued to the
Nonemployeee Director's estate as soon as practicable following the date of
death.
(e) No fractional shares of Common Stock shall be issued under this
Section 8, and in lieu thereof, the number of shares to be distributed shall be
rounded to the nearest whole number of shares.
9. Nonemployeee Director Stock Plan Trust
The Company shall pay to the Trustee sufficient amounts of cash to enable
the Trustee to purchase shares of the Common Stock (the "Trustee Shares") to
fund the Stock Payments to the Participants.
10. Stockholder Rights
Nonemployee Directors shall not be deemed for any purpose to be, or have
rights as, shareholders of the Company with respect to any shares of Common
Stock except as and when such shares are issued and then only from the date of
the certificate therefor. No adjustment shall be made for dividends or
distributions or other rights for which the record date precedes the date of
such stock certificate.
11. Adjustment for Changes in Capitalization
If the outstanding shares of Common Stock of the Company are increased,
decreased or exchanged for a different number or kind of shares or other
securities, or if additional shares or new or different shares or other
securities are distributed with respect to such shares of Common Stock or other
securities, through merger, consolidation, sale of all or substantially all of
the property of the Company, reorganization or recapitalization,
reclassification, stock dividend, stock split, reverse stock split, combinations
of shares, rights offering or other distribution with respect to such shares of
Common Stock or other securities or other change in the corporate structure or
shares of Common Stock, the maximum number of shares and/or the kind of shares
that may be issued under the Plan and the number and/or the kind of shares that
are credited to Deferred Stock Accounts may be appropriately adjusted by the
Plan Administrator. Any determination by the Plan Administrator as to any such
adjustment will be final, binding and conclusive. The maximum number of shares
issuable under the Plan as a result of any such adjustment shall be rounded down
to the nearest whole share.
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12. Continuation of Directors in Same Status
Nothing in the Plan or in any instrument executed pursuant to the plan, and
no action taken pursuant to the Plan, shall be construed as creating or
constituting evidence of any agreement or understanding, express or implied,
that a Nonemployee Director will have any right to continue as a director or in
any other capacity for any period of time or at a particular retainer or other
rate of compensation.
13. Nontransferability of Rights
No Participant shall have the right to assign the right to receive any
Stock Payment or any other right of interest under the Plan, contingent or
otherwise, or to cause or permit any encumbrance, pledge or charge of any nature
to be imposed on any such Stock payment (prior to the issuance of stock
certificates evidencing such Stock Payment) or any such right or interest.
14. Amendment and Termination of Plan
(a) The Board will have the power, in its discretion, to amend, suspend or
terminate the Plan at any time.
(b) No amendment, suspension or termination of the Plan will, without the
consent of the Participant, alter, terminate, impair or adversely affect any
right or obligations under any Stock Payment previously granted under the Plan
to such Participant, unless such amendment, suspension or termination is
required by applicable law.
(c) Notwithstanding the foregoing, and to the extent required to qualify
the Plan as a formula plan for purposes of exemption from Section 16(b) of the
Securities Exchange Act of 1934, as amended, any provision of the Plan that
either states the amount and price of securities to be issued under the Plan and
specifies the price and timing of such issuances, or sets forth a formula that
determines the amount, price and timing of such issuances, shall not be amended
more than once every six months, other than to comport with changes in the
Internal Revenue Code of 1986, as amended, the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.
15. Successors
All obligations of the Company under the plan shall be binding on any
successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation or otherwise, of all or
substantially all of the business and/or assets of the Company.
16. Severability
In the event any provision of the Plan shall be held illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining parts of
the Plan, and the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.
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17. Governing Law
The Plan shall be construed in accordance with, and governed by, the laws
of the state of Washington.
