<PAGE>
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 [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Cascade Natural Gas Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:1
4) Proposed maximum aggregate value of transaction:
1 Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
CASCADE NATURAL GAS CORPORATION
NOTICE OF
ANNUAL MEETING OF
SHAREHOLDERS
to be held April 27, 1994
TO THE COMMON SHAREHOLDERS OF
CASCADE NATURAL GAS CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Common Shareholders of
Cascade Natural Gas Corporation will be held at offices of the Corporation
located at 230 Fairview Avenue North, Seattle, Washington 98109, on Wednesday,
April 27, 1994, at 9:30 o'clock in the forenoon for the following purposes:
1. To elect directors to hold office until the next Annual Meeting and
until their successors are elected and qualified;
2. Approval of a proposal to amend Article V of the Restated Articles of
Incorporation to increase from 10,000,000 to 15,000,000 the number of shares of
Common Stock which the Corporation shall have authority to issue; and
3. Transaction of such other business as may properly come before the
meeting or any adjournments thereof.
The close of business on February 28, 1994 has been fixed as the record date
for the determination of Common Shareholders entitled to notice of and to vote
at said Annual Meeting or any adjournments thereof.
Holders of the Common Stock of the Corporation are entitled to vote upon all
the matters set forth in this notice.
By Order of the Board of Directors
Seattle, Washington DONALD E. BENNETT
March 8, 1994 Executive Vice President,
Chief Financial Officer
and Secretary
IMPORTANT
To assure a proper representation at the meeting, each shareholder is urged to
complete, sign and return the enclosed proxy promptly, using the accompanying
postage prepaid and addressed envelope.
<PAGE>
CASCADE NATURAL GAS CORPORATION
222 FAIRVIEW AVENUE NORTH, SEATTLE, WA 98109
PROXY STATEMENT
TO THE COMMON SHAREHOLDERS OF CASCADE NATURAL GAS CORPORATION
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of the Corporation of proxies to be voted at the Annual
Meeting of the Common Shareholders ("Annual Meeting") to be held on Wednesday,
April 27, 1994, for the purposes set forth in the accompanying Notice of Annual
Meeting, and will be mailed on or about March 8, 1994.
A form of proxy is enclosed for use at the meeting. A shareholder giving a
proxy has the power to revoke it at any time before it is exercised. A proxy
may be revoked by delivering written notice of revocation to Donald E. Bennett,
Secretary, Cascade Natural Gas Corporation, 222 Fairview Avenue North, Seattle,
Washington 98109, or by filing a duly executed proxy card bearing a later date.
The powers of the proxy holders will be suspended if the person executing the
proxy is present at the meeting and elects to vote in person.
The persons named in the accompanying proxy card will vote as directed by
the proxy or, in the absence of such direction, as set forth below with respect
to the election of directors and amendment of the Restated Articles of
Incorporation of the Corporation, and in their discretion as to other items of
business which may come before the meeting.
On February 28, l994, the Corporation had outstanding ________ shares of
$1 par value Common Stock ("Common Stock"). Each holder of record of Common
Stock ("Common Shareholder") at the close of business on February 28, 1994, is
entitled to one vote for each share then held and to cumulate votes in the
election of directors. A majority of the shares entitled to vote, represented
in person or by proxy, will constitute a quorum at the meeting. If a quorum is
present, shares represented at the meeting but not voted on a matter (such as
shares held by a broker or other nominee who does not have authority to vote on
the matter) and shares voted as abstaining will not affect the outcome of the
matter.
ELECTION OF DIRECTORS
Nine directors will be elected at the Annual Meeting, each to hold office
until the next Annual Meeting or until his or her successor is elected and
qualified. The nominees elected will be those receiving the largest number of
votes cast by all shares entitled to vote in the election, up to the number of
directors to be elected. All of the nominees listed below presently are serving
as directors and were elected at the l993 Annual Meeting by over 86% of the
shares present and voting at the meeting. In the event any of the nominees
should be unavailable or unable to serve, the proxy holders may vote for
substitute nominees in their discretion. No circumstances are presently known
which would render any nominee named herein unavailable.
The right to cumulate votes in an election of directors entitles a
shareholder to as many votes as he or she has shares, multiplied by the number
of directors to be elected (in this case, 9), which votes may then be allocated
among the nominees in such proportion as the shareholder decides, including
casting all the votes for one nominee. If a shareholder wishes to cumulate his
or her votes, the proxy card should be marked in any way that the shareholder
desires in order to (i) indicate clearly that the shareholder is exercising the
right to cumulate votes and (ii) specify how the votes are to be allocated
among the nominees for director. For example, a shareholder may write next to
the name of each nominee for whom the shareholder desires to cast votes, the
number of votes to be cast for such nominee. There are no conditions precedent
to the exercise of cumulative voting rights.
Unless contrary directions are set forth on the proxy card, proxies will
be voted in such a manner as to elect all or as many of the nominees listed as
possible. If either of the "For All Nominees Listed Above" or "Exception" boxes
is marked or no instructions are given, the named proxies will have
discretionary authority to cumulate votes if they so choose and to allocate
votes among the nominees as they deem appropriate (except for any nominee
specifically excepted by the shareholder), including not casting any votes for
one or more nominees.
Brief statements appear on the following pages setting forth the age,
principal occupation, business experience and other information furnished by
each nominee and the year in which he or she first became a director.
<PAGE>
DONALD E. BENNETT Director since 1988
Executive Vice President,
Chief Financial Officer and Secretary
Cascade Natural Gas Corporation
Mr. Bennett, 61, has been Executive Vice President, Chief Financial
Officer and Secretary since December 1988. Previously, he was Vice
President-Finance and Assistant Secretary since December 1981 with principal
responsibilities for the Corporation's financial and accounting matters since
1978.
CARL BURNHAM, JR. Director since 1990
Attorney at Law
Yturri, Rose, Burnham, Bentz & Helfrich
Mr. Burnham, 54, is an attorney at law and, since 1967, has been a partner
of Yturri, Rose, Burnham, Bentz & Helfrich of Ontario, Oregon, Oregon counsel
for the Corporation.
MELVIN C. CLAPP Director since 1981
Chairman and Chief Executive Officer
Cascade Natural Gas Corporation
Mr. Clapp, 60, has been Chairman and Chief Executive Officer since
December 1988. Prior to that he was Executive Vice President since August 1981.
Mr. Clapp joined the Corporation in 1956 and held positions in district
management until moving to the general office in 1969, when he assumed
responsibility for the Corporation's personnel, safety and training.
DAVID A. EDERER Director since 1991
Owner
Ederer Investments, Inc.
Mr. Ederer, 51, has been the owner of Ederer Investments, Inc., since
1974. In this capacity he has been the owner or part owner and officer of
several privately owned manufacturing, property management and retail
companies.
HOWARD L. HUBBARD Director since 1981
Retired
Mr. Hubbard, 62, was President and a director of Washington Federal
Savings Bank in Hillsboro, Oregon from April 1982 until he retired in December
1991. Prior to that, Mr. Hubbard was President and a director of Equitable
Savings & Loan Association, Portland, Oregon since 1975.
W. BRIAN MATSUYAMA Director since 1988
President
Cascade Natural Gas Corporation
Mr. Matsuyama, 47, has been President since December 1988. He was employed
by the Corporation on February 1, 1987 as Vice President and General Counsel.
Prior to that date, he was a member of the law firm of Jones Grey & Bayley,
P.S., Seattle, Washington, with his principal client representation being on
behalf of the Corporation since 1976.
BROOKS G. RAGEN Director since 1984
Chairman and Chief Executive Officer
Ragen MacKenzie Incorporated
Mr. Ragen, 60, has been Chairman and Chief Executive Officer of Ragen
MacKenzie Incorporated, an investment banking firm headquartered in Seattle,
Washington , since November 1988. Prior to that, he was President of Cable,
Howse & Ragen, the predecessor to Ragen MacKenzie Incorporated, since July 1987
and was Managing Partner of Cable, Howse & Ragen from July 1982.
ANDREW V. SMITH Director since 1982
Retired
Mr. Smith, 69, was President of Pacific Northwest Bell, a diversified
telecommunications company now known as US WEST Communications, Inc. from 1978
to 1988. From January to July, 1989, when he retired, he was Executive Vice
President of US WEST, Inc. Mr. Smith also serves as a director of the following
publicly held corporations: Airborne Freight Corporation, Aldus Corporation,
U.S. Bancorp, Univar Corporation, Momentum Distribution, Inc., and Tektronix,
Inc.
MARY A. WILLIAMS Director since 1983
Consultant
Mrs. Williams, 59, has been a consultant since 1983. Prior to that she was
a Vice President of Seattle Trust & Savings Bank from 1977 to 1983.
BOARD AND COMMITTEE MEETINGS
The Board of Directors and the Executive Committee of the Board each met
five times in 1993. No director attended less than 75% of the meetings of the
Board or committees on which he or she served except Mr. Smith, who attended 9
of 13 meetings.
The Board has established an Executive Committee, an Audit Committee, a
Nominating and Compensation Committee and a Pension Committee, whose members
are as follows:
<TABLE>
<CAPTION>
Nominating and
Executive Audit Compensation
<S> <C> <C>
M.C. Clapp, Ch. Mary A. Williams, Ch. Brooks G. Ragen, Ch.
W. Brian Matsuyama Brooks G. Ragen Carl Burnham, Jr.
Brooks G. Ragen Andrew V. Smith David A. Ederer
Andrew V. Smith Mary A. Williams
Mary A. Williams
Pension
<C>
Donald E. Bennett, Ch.
David A. Ederer
Howard L. Hubbard
</TABLE>
The Audit Committee, which met five times in 1993, recommends the
engagement of the Corporation's independent accountants, reviews with the
independent accountants the plan for and results of the auditing engagement,
reviews the scope and results of the Corporation's procedures for internal
auditing, and reviews the adequacy of the Corporation's system of internal
accounting controls.
The Nominating and Compensation Committee, which held three meetings in
1993, is responsible for recommending candidates for seats on the Board of
Directors, as well as recommending compensation for officers and directors. The
Committee will consider nominees recommended by shareholders for the 1995
Annual Meeting if the nominations are received at the Corporation's executive
offices by November 8, 1994; provided that such nominations are accompanied by
a description of the nominee's qualifications, relevant biographical
information and the nominee's consent to be nominated and to serve if elected.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership, as of February 8, 1994, of the Corporation's Common Stock
by (a) each director, the Chief Executive Officer and the other four most
highly paid executive officers of the Corporation and (b) all directors and
executive officers as a group. None of such persons owned any of the
Corporation's outstanding preferred shares at that date. The Corporation is not
aware of any beneficial owner of 5% or more of the Common Stock. The
Corporation believes the beneficial owners of the shares listed below have sole
investment and voting power with respect to the shares.
<TABLE>
<CAPTION>
Directors and Shares Beneficially Percentage of
Executive Officers Owned Common Stock
<S> <C> <C>
Donald E. Bennett 3,343 <F2> *
Ralph E. Boyd 5,032 <F2> *
Carl Burnham, Jr. 3,150 *
Melvin C. Clapp 11,262 <F1> <F2> *
David A. Ederer 750 <F3> *
Howard L. Hubbard 11,431 *
W. Brian Matsuyama 4,029 <F2> *
Brooks G. Ragen 1,050 <F3> *
Andrew V. Smith 1,659 <F3> *
Jon T. Stoltz 2,290 <F2> *
Mary A. Williams 3,150 *
All executive officers
and directors as a
group (15 persons) 59,149 <F2> *
*Less than one percent.
<FN>
<F1> Does not include 571 shares owned by the spouse of Mr. Clapp.
<F2> Includes shares held in the Corporation's Employee Retirement Savings Plan
and Trust (the "401(k) Plan") as follows:
D. E. Bennett 1,804
R. E. Boyd 1,965
M. C. Clapp 3,647
W. B. Matsuyama 966
J. T. Stoltz 1,939
All executive officers as a group 15,620
<F3> Does not include shares awarded under the 1991 Director Stock Award Plan
to Messrs. Ederer, Ragen and Smith of 600, 600 and 900 shares, respectively, as
to which receipt has been deferred until they are no longer directors.
</FN>
</TABLE>
REPORT OF THE NOMINATING AND COMPENSATION COMMITTEE
TO THE SHAREHOLDERS
The Nominating and Compensation Committee of the Board of Directors is
responsible for reviewing the compensation levels for all officers of the
Corporation and making recommendations to the Board concerning officer salary
levels. The Committee is composed of four independent non-employee directors.
The Committee's review includes an assessment of the overall stewardship
of the Corporation and the officers' ability to achieve a reasonable net income
under a variety of conditions. In arriving at its recommendations regarding
officer salary levels, the Committee applied policies and principles which are
essentially subjective in nature, rather than embodying specific criteria. Such
policies and principles may be summarized as follows: Officer compensation
should be reasonably comparable with compensation paid to officers of like
companies, and particularly those with whom the Corporation must compete in
attracting and retaining skilled and competent individuals. Officers should
also be fairly compensated for their contributions to the performance of the
Corporation. In evaluating performance, the Committee considers net income and
those factors impacting net income. In a regulated energy business, factors
such as weather, interest rates and regulatory requirements significantly
impact net income but are generally outside the control of management. Due to
the Corporation's compensation structure, the Committee has not deemed it
necessary to adopt a policy regarding recent changes in the federal tax laws
relating to deductibility of certain executive compensation.
In arriving at its most recent salary recommendations, the Committee
considered the compensation paid by other energy utility companies in the
Northwest to their officers. One of these companies is included in the Edward
D. Jones & Co. Natural Gas Distribution Index included in the stock performance
graph which follows this report. The Committee took into account the relatively
larger size of the other Northwest utility companies in its peer group, the
greater number of officers involved in the various management functions of
those companies and the responsibilities of those officers. In addition, the
Committee reviewed the impact of the various forms of incentive compensation,
such as bonuses and stock options, utilized by other utility companies in
addition to base salaries. The Corporation does not have bonus, stock option or
other incentive compensation plans for its officers. While the Committee
acknowledges that the Corporation's executive compensation levels continue to
be below the median of its peers in the Northwest, it believes the levels are
appropriate given the relative size of the Corporation.
Salary adjustments are ordinarily made annually. In determining the salary
adjustment for Melvin C. Clapp, Chairman and Chief Executive Officer of the
Corporation, which was effective April 1, 1993, the Committee considered his
contribution to the performance of the Corporation and his overall
effectiveness in areas critical to the Corporation's success such as dealing
with the challenges of rapid growth, resolving regulatory issues and enhancing
shareholder values, as well as the factors affecting net income outside the
control of management as discussed above. The Committee did not rank the
various factors considered in terms of importance to the Corporation, but
rather assessed his contribution to the Corporation's performance as a whole.
All other named executives also received salary adjustments as of April 1,
1993, based on the same considerations.
Brooks G. Ragen, Chairman
Carl Burnham, Jr.
David A. Ederer
Mary A. Williams
STOCK PERFORMANCE GRAPH
The following graph compares the total cumulative returns to investors in
the Corporation's Common Stock, the Standard & Poors 500 Stock Index, and the
Edward D. Jones & Co. Natural Gas Distribution Index for the period from
January 1, 1989 through December 31, 1993. The graph assumes that $1,000 was
invested December 31, 1988, in the Common Stock and in each of the
above-mentioned indices and that all dividends were reinvested. The total
returns for the 30 companies included in the Edward D. Jones & Co. Natural Gas
Distribution Index have been weighted by their respective market
capitalizations. Such companies, of which the Corporation is one, derive at
least 90% of their revenues from regulated gas distribution.
CUMULATIVE RETURN TO INVESTORS
<TABLE>
<CAPTION>
12/88 12/89 12/90 12/91 12/92 12/93
<S> <C> <C> <C> <C> <C> <C>
Cascade Natural Gas Corporation $1,000 $1,134 $1,404 $1,938 $2,079 $2,470
Edward D. Jones & Co.
Natural Gas Distribution
Index $1,000 $1,351 $1,360 $1,648 $2,016 $2,358
S&P 500 Index $1,000 $1,316 $1,275 $1,663 $1,789 $1,970
</TABLE>
<PAGE>
EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE. The following table
sets forth the compensation paid to the Chief Executive Officer and each of the
other four most highly compensated executive officers of the Corporation. The
Corporation does not provide compensation in the form of bonuses or long term
compensation. The amounts shown under All Other Compensation represent the
Corporation's matching contribution to the 401(k) Plan.
<TABLE>
<CAPTION>
Name and All
Principal Years of Other
Position Service Year Salary Compensation
<S> <C> <C> <C> <C>
Melvin C. Clapp 37 1993 $196,947 $3,787
Chairman and 1992 187,422 2,182
Chief Executive Officer 1991 173,320 2,115
W. Brian Matsuyama 6 1993 158,236 3,754
President 1992 149,478 2,182
1991 141,115 1,895
Donald E. Bennett 16 1993 135,479 3,315
Executive Vice President, 1992 125,827 1,837
Chief Financial Officer 1991 120,653 1,608
and Secretary
Jon T. Stoltz 19 1993 107,436 0
Senior Vice President 1992 101,977 730
1991 96,360 1,406
Ralph E. Boyd 28 1993 105,429 2,576
Vice President 1992 101,223 1,463
and Chief Operating 1991 96,273 1,150
Officer
</TABLE>
RETIREMENT PLAN. Effective January 1, 1962, the Corporation adopted a
noncontributory retirement plan for its employees. To be eligible for
participation in the plan, an employee must have one year of service and be 21
years of age. Each participant's benefits are fully vested after 5 years of
employment. The level of benefits is determined by a formula, described below,
related to average monthly earnings over certain time periods and to years of
service. Covered earnings is straight salary or hourly compensation, plus 75%
of commissions. With respect to the executive officers named in the summary
compensation table above, covered compensation levels are slightly less than,
but at least 90% of, the amounts shown under "Salary" in such table. Benefits
are not subject to reduction for social security or any other benefits.
Accruals for contribution to the plan are computed on an actuarial basis and
aggregated $1,343,000 for all participants for 1993.
The amount of the monthly benefit under the plan is equal to 1.5% of the
participant's average monthly earnings for the five-year period ended December
31, 1989, multiplied by the participant's years of service before 1990. The
plan was amended in 1993 to increase the benefit for each year of future
service after 1989 to 2% of monthly compensation in lieu of the previous 1.5%.
The Corporation from time to time has updated the average monthly earnings used
to compute the benefit, and the plan may be similarly amended in the future.
EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME PLAN. Effective July 1, 1983, the
Board of Directors adopted a plan to provide executive officers, including
those listed in the foregoing summary compensation table, with retirement,
death and disability benefits supplementing the coverage payable under the
Corporation's retirement plan. This plan was established to enable the
Corporation to attract and retain highly competent persons in key executive
positions. The supplemental plan is designed so that each participant will
receive retirement plan payments, primary social security benefits and
supplemental plan payments each year equal, in the aggregate, to 70% of the
participant's highest annual salary during any of the five years preceding the
participant's retirement. Benefits vest under the plan on the first day of the
year after the employee has reached age 55 and has completed five years of
participation under the plan. Accruals for the plan are computed on an
actuarial basis and totalled $267,000 for 1993.
The plan also contains provisions for early retirement and total and
permanent disability. The Board of Directors may approve early retirement under
the plan without the normally required reduction in the amount of the
supplemental benefit. Participants whose age and number of years of service,
when added together, equal at least 90 are automatically eligible for early
retirement benefits without reduction.
The following table illustrates the estimated combined annual benefits
that would be received under the Corporation's Retirement Plan and the
Executive Supplemental Retirement Income Plan for the executives named in the
Summary Compensation Table above assuming that annual salaries increase at the
annual rate of 5% until retirement and that they retire at age 65. Amounts
shown are reduced by the estimated amount of social security benefits and are
based on a straight-life annuity with no spousal benefit.
<TABLE>
<CAPTION>
Present Estimated Combined
Name Age Annual Benefit
<S> <C> <C>
Melvin C. Clapp 60 $152,000
W. Brian Matsuyama 47 $226,000
Donald E. Bennett 61 $103,000
Jon T. Stoltz 47 $148,000
Ralph E. Boyd 57 $91,000
</TABLE>
If a participant dies before receiving 120 monthly payments from the plan,
the participant's designated beneficiaries will receive the remaining balance
of the 120 payments. The monthly payment is the amount the participant was
receiving or was entitled to receive before death, or, if the participant was
employed by the Company at death and the result would be larger, a monthly
amount ranging from $4,166.67 to $6,666.67, depending on the officer. This
monthly death benefit is reduced by any monthly benefit payable to the
participant's surviving spouse. The surviving spouse is entitled to a monthly
benefit for life equal to one-half the benefit to which the participant was
entitled before death.
EMPLOYMENT AGREEMENTS. The Corporation has employment agreements with six
of the Corporation's executive officers, including the persons named in the
summary compensation table above other than Mr. Clapp and Mr. Bennett. The
purpose of the agreements is to assure that key management personnel will
continue to function effectively and without distraction if uncertainties
regarding the future control of the Corporation should arise. Upon a change in
control of the Corporation or during the pendency of certain offers for a
change in control, as these terms are defined in the agreements, each such
officer is entitled to receive the severance benefits described below if the
Corporation terminates the officer's employment other than for cause as defined
in the agreement. In addition, for a period of three years after a change in
control of the Corporation, the officer shall be entitled to receive severance
benefits if the Corporation terminates the officer's employment other than for
cause or if the officer terminates his or her employment with good reason. The
payments on severance are equal to three times the officer's base salary and
incentive compensation at the time the change in control occurs, but are
reduced to the extent required to avoid subjecting the payments to penalty
taxes on parachute payments. In addition, the employee is entitled to continue
to participate in health, life, and disability plans in which the officer could
participate when employment terminated. Each agreement terminates upon the
vesting of the officer's benefits under the Executive Supplemental Retirement
Income Plan.
Each agreement is automatically extended one year on December 31 of each
year unless by 30 days' notice prior to year end either party elects not to
extend the term. The term of the agreements is extended automatically for a
period of three years upon a change in control of the Corporation.
Notwithstanding the foregoing, each agreement terminates if the employment of
the officer who is a party is terminated before a change in control occurs
while there is no offer pending for a change in control.
SUPPLEMENTAL BENEFIT TRUST. Although not obligated to do so, the
Corporation established a trust to fund some of the benefits which may be
payable under the Executive Supplemental Retirement Income Plan. The trust also
funds severance benefits which may be payable under the above described
employment agreements with certain executives. The Corporation has contributed
to the trust life insurance policies on the lives of participants. If the
assumptions as to mortality experience, interest and policy dividends are
correct, the Corporation will recapture the premiums and net cost of benefits
paid under the supplemental plan through operation of the insurance contracts.
The Corporation is obligated to pay any benefits not paid out of the
trust. In the event of certain circumstances, including a change in control, as
defined, the Corporation may be obligated to fund the trust with additional
amounts for some or all of the following purposes: to permit payment of
benefits from the supplemental plan and the employment contracts due in the
following 12 months, to fund separate subtrusts for legal expenses (including
certain legal expenses to require the Corporation to make required
contributions to the trust), and to permit payment of insurance premiums and
policy loan interest.
DIRECTOR COMPENSATION. In 1993, the Corporation paid each non-employee
director an annual stipend of $5,000 as well as a fee of $500 for each Board or
Committee meeting attended, except that the Committee fee was $250 if the
meeting was held on the same day as a Board meeting. Employee directors receive
no additional compensation for serving as directors. In addition, each
non-employee director was entitled to receive 300 shares of the Corporation's
common stock for service in 1993 pursuant to the 1991 Director Stock Award Plan
approved by shareholders at the 1992 Annual Meeting. Pursuant to the Plan, each
non-employee director may elect to defer receipt of his or her shares until he
or she is no longer a member of the Board of Directors; Messrs. Ederer and
Smith so elected for 1993.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1993, Messrs. Burnham, Ederer and Ragen and Ms. Williams served on
the Nominating and Compensation Committee.
Carl Burnham, Jr., a director, is a partner in the law firm of Yturri,
Rose, Burnham, Bentz & Helfrich, the Corporation's Oregon counsel, which firm
received $48,454 in 1993 for legal services to the Corporation.
Brooks G. Ragen, a director, is Chairman and Chief Executive Officer of
Ragen MacKenzie Incorporated, which firm acted as co-manager of the
Corporation's common stock offering in June 1993. The firm of Ragen MacKenzie
Incorporated received compensation at its normal rates for its services.
AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
Article V - Authorized Capital
General
The Board of Directors, at a meeting held on October 8, 1993, unanimously
adopted a resolution recommending that the shareholders approve and adopt an
amendment to the Corporation's Restated Articles of Incorporation ("Articles")
amending Article V relating to authorized capital. The proposed amendment which
would increase the number of authorized shares of Common Stock to 15,000,000 is
attached hereto as Exhibit A.
Of the 10,000,000 currently authorized shares of Common Stock, 517,388
shares were unissued and not reserved for issuance as of February 28, 1994.
Aside from the issuance of shares under the Corporation's dividend reinvestment
plan or the 401(k) Plan, the Corporation does not have any present plan,
understanding, or agreement to issue additional shares of Common Stock. The
Board of Directors believes that the proposed increase in authorized shares of
Common Stock is desirable to enhance the Corporation's flexibility in
connection with possible future actions, such as stock dividends, stock splits,
corporate mergers, acquisitions of property, and the possible funding of new
products, programs, or businesses, or other corporate purposes. Although the
Corporation has no present intention to do so, shares of Common Stock could be
issued in the future with the effect of making acquisition of control of the
Corporation more difficult. The Board of Directors will determine whether,
when, and on what terms the issuance of shares of Common Stock may be warranted
in connection with any of the foregoing purposes.
If the proposed amendment is approved, all or any of the authorized shares
of Common Stock may be issued without further action by the shareholders;
provided that the listing standards of the New York Stock Exchange, on which
the Common Stock is listed, require that separate shareholder approval be
obtained with respect to any transactions, other than a public offering for
cash, in which the number of shares of common stock to be issued is or will be
equal to or greater than 20% of the number of such shares outstanding prior to
such issuance. Issuance of Common Stock other than on a pro rata basis to all
current shareholders would reduce the current shareholders' proportionate
interests. However, in any such event, shareholders wishing to maintain their
interests could do so through normal market purchases and the Corporation's
dividend reinvestment plan.
Adoption by Shareholders
The affirmative vote of the holders of a majority of the shares of Common
Stock outstanding and entitled to vote at the annual meeting will be required
for adoption of the proposed amendment. Shareholders may expressly abstain from
voting on the proposal by so indicating on the proxy card enclosed herewith.
Abstentions and shares represented by duly executed and returned proxies of
brokers, or other nominees which are expressly not voted on the proposal will
have the effect of voting against the proposal. THE BOARD OF DIRECTORS AND
MANAGEMENT RECOMMEND THAT SHAREHOLDERS VOTE IN FAVOR OF ADOPTION OF THE
AMENDMENT TO ARTICLE V OF THE ARTICLES.
INDEPENDENT PUBLIC ACCOUNTANTS
The Corporation has selected the firm of Deloitte & Touche as its
principal independent public accountant for the current year. Deloitte & Touche
and its predecessor Touche Ross & Co. has served as the Corporation's principal
independent accountant since 1953. It is anticipated that representatives of
Deloitte & Touche will be present at the Annual Meeting. They will be afforded
an opportunity to make a statement if they desire to do so and will be
available to respond to questions from the shareholders.
SOLICITATION OF PROXIES
The solicitation of proxies will be principally by use of the mails. In
following up the original mail solicitation, the Corporation will arrange with
banks, brokerage houses, and other custodians, nominees and fiduciaries, to
forward copies of the proxy, proxy statement and annual report to persons for
whom they hold stock of the Corporation and to request authority for the
execution of proxies. In such cases, the Corporation will reimburse such banks,
brokerage houses, custodians, nominees and fiduciaries for their expenses
incurred in connection therewith. The entire cost of soliciting proxies will be
borne by the Corporation. The Corporation may also use its regular employees to
solicit proxies from shareholders either personally or by telephone or letter
without additional compensation.
ANNUAL REPORT
The Corporation's annual report for the 1993 calendar year containing
financial information for the years 1991, 1992 and 1993 is enclosed herewith.
SHAREHOLDER PROPOSALS
Proposals of shareholders for presentation at the 1995 Annual Meeting of
Shareholders must be received by the Corporation by November 8, 1994, for
inclusion in the Corporation's proxy statement and form of proxy relating to
that meeting. Such proposals must also comply with the requirements of the
Securities and Exchange Commission relating to proposals of security holders.
OTHER MATTERS
The Corporation does not know of any matters to come before the meeting,
other than those set forth in the proxy statement. If any further business is
presented to the meeting, the holders of the proxies solicited hereby will vote
on behalf of the shareholders they represent in their discretion.
By Order of the Board of Directors
Seattle, Washington DONALD E. BENNETT
March 8, 1994 Executive Vice President,
Chief Financial Officer
and Secretary
CASCADE NATURAL GAS CORPORATION
222 Fairview Avenue North
Seattle, Washington 98109
<PAGE>
Exhibit A
RESOLUTION TO AMEND ARTICLE V
OF THE ARTICLES OF INCORPORATION OF THE CORPORATION
RESOLVED, that the Board of Directors of the Corporation deems it advisable
that the Corporation's Restated Articles of Incorporation be amended to
increase the number of authorized shares of Common Stock from 10,000,000 to
15,000,000.
RESOLVED, that the Board of Directors proposes that the first paragraph of
Article V of the Restated Articles of Incorporation of the Corporation be
amended in its entirety to read as follows:
"The capital of this Corporation shall consist of a total of sixteen
million two hundred forty-nine thousand eight hundred seventy-nine shares
(16,249,879), divided into two hundred forty-nine thousand eight hundred
seventy-nine shares (249,879) of 55 cents Cumulative Preferred Stock,
without nominal or par value (hereinafter referred to as the "55 cents
Preferred Stock"), one million shares (1,000,000) of Preferred Stock, with
a par value of $1.00 per share (hereinafter referred to as the "$1.00
Preferred Stock"), and fifteen million shares (15,000,000) of Common
Voting Stock with a par value of $1.00 per share (hereinafter referred to
as "Common Stock").
RESOLVED, that the proposed amendment to the Corporation's Restated
Articles of Incorporation set forth above (the "Amendment") be submitted
and recommended to the shareholders of the Corporation for approval at the
Corporation's 1994 annual meeting of shareholders.
RESOLVED, that upon approval of the Amendment by the shareholders of the
Corporation, the Chairman, the President, and the Executive Vice
President, Chief Financial Officer and Secretary of the Corporation, or
any of them, are authorized and directed to file or cause to be filed the
Amendment with the Washington Secretary of State and to do or cause to be
done all acts or other things and to make, execute, and deliver, or cause
to be made, executed, and delivered, all agreements, documents,
instruments, and certificates, in the name of and on behalf of the
Corporation or otherwise, as they deem necessary or desirable to carry out
the purpose and intent of the foregoing resolutions.
Subsequent to adoption of the resolutions of the Board of Directors
appearing above, 60,218 shares of 55 cents Preferred Stock were retired leaving
a total authorized of 167,973 shares of such stock. After adjusting the
resolution to reflect this retirement, the first paragraph of Article V as
proposed to be amended will read as follows:
"The capital of this Corporation shall consist of a total of sixteen
million one hundred sixty-seven thousand nine hundred seventy three
(16,167,973) shares, divided into one hundred sixty-seven thousand nine
hundred seventy-three (167,973) shares of 55 cents Cumulative Preferred
Stock, without nominal or par value (hereinafter referred to as "Preferred
Stock"), one million (1,000,000) shares of Preferred Stock, with a par
value of $1.00 per share (hereinafter referred to as the "$1.00 Preferred
Stock"), and fifteen million (15,000,000) shares of Common Voting Stock
with a par value of $1.00 per share (hereinafter referred to as "Common
Stock")."
<PAGE>
M. C. CLAPP
CHAIRMAN & CEO
CASCADE NATURAL GAS CORPORATION
Dear Shareholders:
It is my pleasure to invite you to the 1994 Annual Meeting of Shareholders
of Cascade Natural Gas Corporation. The meeting will be held at 9:30 a.m.
on Wednesday, April 27, 1994, at the offices of the Corporation, 230
Fairview Avenue North, Seattle, Washington. Limited parking is available
at our 222 Fairview Avenue North building, next door to the meeting
location.
The Notice of the meeting and the Proxy Statement on the following pages
cover the formal business of the meeting, which includes election of
Directors, a proposal to amend Article V of the Restated Articles of
Incorporation to increase from 10,000,000 to 15,000,000 the number of
shares of common stock which the Corporation shall have authority to issue
and such other matters as may properly come before the meeting.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person, and regardless of the number of
shares you own. To be sure your shares are represented, we urge you to
complete and mail the attached proxy card as soon as possible.
Sincerely,
March 8, 1994 Melvin C. Clapp
Please Detach Proxy Card Here
- ---------------------------------------------------------------------------
1. Election of Directors
Nominees: D. E. Bennett, C. Burnham, Jr., M. C. Clapp, D. A.
Ederer, H. L. Hubbard, W. B. Matsuyama, B. G. Ragen, A. V. Smith,
and M. A. Williams
FOR ALL NOMINEES WITHHOLD AUTHORITY Exceptions* [ ]
listed above [ ] to vote for all nominees
listed above [ ]
*Instruction: If you wish to withhold your vote for an individual
nominee mark the "Exception" box and strike a line through the
nominee's name in the list above. Your shares will be voted for
all nominees not stricken.
2. Approval of a proposal to amend Article V of the Restated Articles of
Incorporation to increase from 10,000,000 to 15,000,000 the number of
shares of common stock which the Corporation shall have authority to
issue. (The Board of Directors recommends a vote FOR).
For [ ] Against [ ] Abstain [ ]
Votes MUST be indicated (x) in Black or Blue Ink. [ ]
Address Change and/or Comments Please Mark Here [ ]
PROXY DEPARTMENT
NEW YORK, N.Y. 10203-0297
Please Read Other Side Before Signing.
Sign exactly as name appears hereon.
Attorneys-in-fact, executors, trustees,
guardians, corporate officers, etc.
should give full title. If shares are
held jointly, each holder should sign.
Dated_____________________________, 1994
________________________________________
(Signature)
________________________________________
(Signature)
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY. <PAGE>
CASCADE NATURAL GAS CORPORATION
222 Fairview Avenue North, Seattle, Washington 98109
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Donald E. Bennett, Melvin C. Clapp and W.
Brian Matsuyama, and each or any of them, proxies for the undersigned, with
power of substitution, to vote with the same force and effect as the
undersigned at the Annual Meeting of the Common Shareholders of Cascade
Natural Gas Corporation, 230 Fairview Avenue North, Seattle, Washington, on
Wednesday, April 27, 1994, and at any adjournments thereof, upon the
matters more fully set forth in the accompanying Notice of Annual Meeting.
THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED
IN THE MANNER DIRECTED ON THE OTHER SIDE BY THE UNDERSIGNED SHAREHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS AND FOR ITEM 2. If any other business properly comes before the
meeting, the proxies named above will have discretionary authority to vote
thereon in accordance with their best judgment.
(Continued and to be MARKED, DATED AND SIGNED on the other side)<PAGE>
