SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by 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 Rule 14a-11(c) or
Rule 14a-12
The Montana Power Company
(Name of Registrant as Specified in Its Charter)
Rose Marie Ralph/Pam Merrell
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
X $125 per Exchange Act Rule 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 transactions
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction: N/A
___ 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.
N/A = NOT APPLICABLE
(1) Amount previously paid:
____________________________________________________________
(2) Form, schedule or registration statement no.:
____________________________________________________________
(3) Filing party:
____________________________________________________________
(4) Date filed:
___________________________________________________________
DRAFT
REVISED February 8, 1994
April 4, 1994
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of
Shareholders of The Montana Power Company. The meeting will be
held beginning at 10:00 a.m. on Tuesday, May 10, 1994 at the
Civic Center, 1340 Harrison Avenue, Butte, Montana.
At this meeting, you will be asked to elect five persons to
the Board of Directors; and if you are a Common shareholder, to
authorize the redemption of the $2.15 Series of the Company's
Preferred Stock.
We hope that you will be able to attend the meeting. To
make certain your vote is counted, please sign and date the
enclosed proxy card and return it in the envelope provided. No
postage is required. Sending in your proxy at this time will not
affect your right to vote in person, should you be present at the
meeting.
We look forward to seeing you on May 10. Thank you for your
continued confidence and support.
Sincerely,
Daniel T. Berube
Chairman of the Board of Directors
<PAGE>
THE MONTANA POWER COMPANY
_____________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
40 East Broadway
Butte, Montana 59701-9394
April 4, 1994
To the Shareholders of
THE MONTANA POWER COMPANY
You are invited to attend the Annual Meeting of the
Shareholders of The Montana Power Company which will be held at
the Civic Center, 1340 Harrison Avenue, Butte, Montana, on
Tuesday, May 10, 1994 at 10:00 a.m. for the following purposes:
1. To elect five Directors for a term of three years;
2. To obtain the approval of the Common shareholders of
the redemption of the $2.15 Series of the Company's
Preferred Stock.
3. To transact such other business as may properly come
before the meeting.
The Board of Directors has fixed the close of business on
March 11, 1994, as the record date for the determination of
shareholders entitled to vote at this meeting.
Your attention is directed to the Proxy Statement and Proxy
enclosed herewith.
By Order of the Board of Directors
Pamela K. Merrell
Vice President and Secretary
The interest and cooperation of all shareholders in the
affairs of The Montana Power Company are considered to be of the
greatest importance by your Company's Board of Directors. If you
do not expect to attend the annual meeting, it is urgently
requested that you promptly mark, sign, date and return the
enclosed proxy in the envelope provided herewith. If you do so
now, the Company will be saved the expense of follow-up
solicitations.
<PAGE>
THE MONTANA POWER COMPANY
40 EAST BROADWAY, BUTTE, MONTANA 59701-9394
April 4, 1994
PROXY STATEMENT
The accompanying proxy is solicited by the Board of
Directors of The Montana Power Company, a Montana corporation,
for use at the Annual Meeting of Shareholders on May 10, 1994, or
at any adjournment thereof.
This proxy statement and the accompanying proxy were mailed
on or about April 4, 1994.
VOTING SECURITIES AND PRINCIPAL HOLDERS:
The outstanding voting securities of the Company on
March 11, 1994 were:
(a) _____________ shares of no par value Common Stock.
(b) 1,919,589 shares of no par value Preferred Stock,
$6.00 Series, $4.20 Series, $2.15 Series and $6.875
Series.
Generally, shareholders will vote as a single class and are
entitled to one vote for each share held of Common Stock and
Preferred Stock. However, only Common shareholders are entitled
to vote on the proposal set forth in Item 2. With respect to
the election of Directors, each shareholder is entitled to as
many votes as equals the number of shares held of Common Stock
and Preferred Stock multiplied by the number of Directors to be
elected, and may cast all of such votes in person or by proxy for
a single Director or may distribute them among the number to be
voted for, or any two or more of them, as he or she may see fit.
Directors are elected by a plurality of the votes cast by the
shares entitled to vote at a meeting in which a majority of the
shares entitled to vote are present in person or by proxy. You
may withhold your vote from any nominee for Director by writing
his or her name in the appropriate space on the proxy card.
Where proxies are marked "withhold authority," these shares are
included in the determination of the number of shares present and
voting. Broker non-votes are counted in determining the presence
of a quorum, but will not be counted as a vote in favor of the
Proposal set forth in Item 2. If you return a signed proxy card
that does not indicate your voting preferences, your shares will
be voted for both the election of the nominated Directors and the
Proposal set forth in Item 2.
A shareholder giving a proxy has the power to revoke it at
any time before it is exercised. A proxy may be revoked by
filing with the Secretary of the Company a revoking instrument or
a duly executed proxy bearing a later date. The powers of the
proxy holders with respect to any proxy will be suspended if the
person executing the proxy is present at the meeting and elects
to vote in person.
Only shareholders of record at the close of business on
March 11, 1994 are entitled to vote at the meeting.
If you do not expect to be present at the meeting, kindly
mark, sign and date the accompanying proxy and return it promptly
in the enclosed envelope so that your shares may be represented
at the meeting.
Item 1. Election of Directors
Five Directors will be elected at the meeting for terms of
three years and until the election and qualification of their
respective successors. The five nominees for election are, at
present, members of the Board of Directors of the Company. The
names and certain information with respect to the nominees and
the ten other Directors whose terms do not expire this year are
as follows:
NOMINEES FOR ELECTION FOR TERMS OF THREE YEARS EXPIRING IN 1997
Kay Foster - Ms. Foster, 52, a Director of the Company since
January 1, 1992. She has been the owner of Planteriors
Unlimited, Billings, MT, an interior foliage plant sales and
maintenance business, since December 1980.
Chase T. Hibbard - Mr. Hibbard, 45, a Director of the
Company since October 1, 1993 when he was appointed to fill a
vacancy created by the retirement of Shag Miller. Mr. Hibbard
currently serves as a Montana State Representative for a term
from January 1, 1993 to December 31, 1994. Since January 1981 he
has been President of the Sieben Live Stock Co., a sheep and
cattle ranch and President of Hibbard Management Company since
January 1984, which provides consulting services to agriculture.
Daniel P. Lambros - Mr. Lambros, 62, a Director of the
Company since November 24, 1987. He has been President of
Lambros Realty, Missoula, MT, a real estate firm, since August
1961.
Carl Lehrkind, III - Mr. Lehrkind, 55, a Director of the
Company since July 1, 1984. He has been President of Lehrkind's,
Inc., a beverage bottler and distributor in Bozeman, MT, since
February 1970, and President of Yellowstone Country Food and
Beverage since February 1993.
J. P. Pederson - Mr. Pederson, 51, a Director of the Company
since July 1, 1993 when he was appointed to fill a vacancy
created by the retirement of W. P. Schmechel. He has been Chief
Financial Officer and Vice President of Corporate Finance since
June 1, 1990. Mr. Pederson was Controller of the Company from
August 1, 1982 to July 1, 1990.
DIRECTORS TO CONTINUE IN OFFICE WITH TERMS EXPIRING IN 1996
Daniel T. Berube - Mr. Berube, 60, a Director of the Company
since January 1, 1992. He has been Chief Executive Officer of
the Company since January 1, 1992 and Chairman of the Board since
July 1, 1992. He served as President and Chief Executive Officer
of Entech, Inc., the Company's subsidiary, from January 1, 1990
to December 31, 1991, as President and Chief Operating Officer of
Entech, Inc. from January 8, 1988 to December 31, 1989 and as
President and Chief Operating Officer of Western Energy Company,
Entech's subsidiary, from January 1, 1987 to January 8, 1988.
Alan F. Cain - Mr. Cain, 54, a Director of the Company since
January 31, 1989. He has been President and Chief Executive
Officer of Blue Cross/Blue Shield of Montana, Helena, MT, a
health insurance company, since March 1986.
Robert P. Gannon - Mr. Gannon, 49, a Director of the Company
since January 1, 1990. He is President and Chief Operating
Officer of the Company, responsible for utility operations since
January 1, 1990. He served as Vice President and General Counsel
of the Company from 1984 to December 31, 1989. Mr. Gannon is
also a Director of Buttrey Food and Drug Stores Company.
James P. Lucas - Mr. Lucas, 66, a Director of the Company
since March 1, 1982. He has been President and Senior Attorney
in the Law Firm of Lucas and Monaghan, P.C., Miles City, MT since
January 1977.
George H. Selover - Mr. Selover, 64, a Director of the
Company since 1986. He has been President of Selover Buick,
Inc., Billings, MT, an auto sales and service business since
November 6, 1961. Until January 20, 1994, Mr. Selover was a
Director of Big Sky Airlines and was also Director, Vice Chairman
and Corporate Secretary of Big Sky Transportation Company which
filed for bankruptcy under Chapter 11 on March 14, 1989. The
bankruptcy petition has been discharged.
DIRECTORS TO CONTINUE IN OFFICE WITH TERMS EXPIRING IN 1995
John J. Burke - Mr. Burke, 65, a Director of the Company
since February 23, 1982. He was Vice Chairman of the Board from
1984 until his retirement on August 1, 1993.
R. D. Corette - Mr. Corette, 53, a Director of the Company
since July 1, 1990. He has been an Attorney and Owner in the law
firm of Corette, Pohlman, Allen, Black and Carlson, Butte, MT
since 1966.
Beverly D. Harris - Ms. Harris, 59, a Director of the
Company since December 1, 1992. She has been President since
January 1971 and Director since January 1972 of Empire Federal
Savings & Loan Association, Livingston, MT.
Arthur K. Neill - Mr. Neill, 56, a Director of the Company
since January 1, 1990. He was appointed Executive Vice President
- - Generation and Transmission on January 1, 1994 and served as
Executive Vice President - Utility Services for the Company from
January 1987 to January 1994.
Noble E. Vosburg - Mr. Vosburg, 52, a Director of the
Company since 1988. He has been President and Chief Executive
Officer of Pacific Hide and Fur Depot, Great Falls, MT, a steel
service center and recycling business, since May 1982.
<PAGE>
SECURITY OWNERSHIP
The table below and information following set forth the
number of shares beneficially owned on February 4, 1994, by the
Directors of the Company and by the Directors and Officers of the
Company as a group. There are no persons known by the Company
who beneficially own 5 percent or more of any class of stock of
the Company.
Shares of Shares of
Common Stock Preferred Stock
Name of Director Beneficially Owned Beneficially Owned
Daniel T. Berube 16,698 (1) (8)
John J. Burke 26,453 (2) 30 (2)
Alan F. Cain 320 (3)
R. D. Corette 1,699 (4) 1 (4)
Kay Foster 299
Robert P. Gannon 9,374 (1) (8)
Beverly D. Harris 932
Chase T. Hibbard 1,400 (6)
Daniel P. Lambros 1,000
Carl Lehrkind III 2,044 (5)
James P. Lucas 1,247
Arthur K. Neill 17,028 (1) (8)
Jerrold P. Pederson 11,305 (1) (8)
George H. Selover 700 (9)
Noble E. Vosburg 728 (7)
James J. Murphy
(Mr. Murphy is not a
Director of the
Company, but is a
named executive
officer) 25,953 (1) (8)
<PAGE>
All Directors and Officers as a group (27 persons) own
224,689 Common shares (includes 65,690 shares held for Executive
Officers in the Deferred Savings and Employee Stock Ownership
Plan, 94,516 option shares exercisable within 60 days of the date
as to which ownership is stated, 12,992 shares of restricted
stock, awarded on January 10, 1994 under the Long-Term Incentive
Plan described on page 10) and 41 Preferred shares, which are
less than 1 percent of such Common and Preferred Stock
outstanding.
(1) Includes shares in the Deferred Savings and Employee
Stock Ownership Plan attributable to the Company's and
the employee's contributions. Shares included for
employee directors are: Mr. Berube - 7,240 shares,
Mr. Gannon - 4,874 shares, Mr. Neill - 3,872 shares,
Mr. Pederson - 4,505 shares and Mr. Murphy -
3,530 shares.
(2) Includes 400 shares of the Common Stock and 30 shares
of the $6.00 series Preferred Stock owned by the Myrtle
Campbell Trust of which Mr. Burke is the Trustee and of
which he disclaims beneficial ownership; 1,700 shares
owned by the Calvert Burke Trust of which Mr. Burke's
son is the Trustee and of which Mr. Burke disclaims
beneficial ownership; 3,000 shares owned by the Burke
Family Foundation of which Mr. Burke disclaims
beneficial ownership; and 1,000 shares owned by the
Burke Insurance Trust of which Mr. Burke disclaims
beneficial ownership.
(3) Includes 9 shares owned by Mr. Cain's spouse of which
Mr. Cain disclaims beneficial ownership.
(4) Includes 63 shares of Common Stock and 1 share of $6.00
series Preferred Stock owned by the estate of
Mr. Corette's deceased father of which estate
Mr. Corette is Personal Representative and of which
Mr. Corette disclaims beneficial ownership; 200 shares
owned by Mr. Corette's mother for whom Mr. Corette is
Conservator and of which he disclaims beneficial
ownership.
(5) Includes 600 shares of Common Stock held by the Trustee
for Lehrkind's, Inc. Profit Sharing Plan #2 of which
Mr. Lehrkind is a beneficiary and with respect to which
he has shared voting and investment power; and
1,044 shares of Common Stock held by Lehrkind's Inc.
and with respect to which he has shared voting and
investment power.
(6) Includes 1,200 shares held by Margaret Sieben Hibbard
Trust of which Mr. Hibbard has one-third beneficial
ownership. Mr. Hibbard has neither voting nor
investment power.
(7) Includes 134 shares held by Mr. Vosburg's spouse of
which Mr. Vosburg disclaims beneficial ownership.
(8) Includes 5,000 shares for Mr. Berube, 4,500 shares for
Mr. Gannon, 12,700 shares for Mr. Neill, 5,800 shares
for Mr. Pederson and 13,205 for Mr. Murphy of option
shares exercisable within 60 days of the date as to
which ownership is stated; and 8,296 shares of
restricted stock awarded to Mr. Murphy on January 10,
1994 under the Long-Term Incentive Plan described on
page 10 hereof.
(9) Includes 300 shares held in Selover Buick profit
sharing plan, of which Mr. Selover is a beneficiary and
with respect to which he has shared voting and
investment power.
<PAGE>
MEETINGS AND STANDING COMMITTEES OF THE BOARD OF DIRECTORS
There were ten Board of Director meetings in 1993. Each
Director attended 75 percent or more of the aggregate of the
meetings of the Board and the Board Committees to which he/she
was assigned as a regular member.
AUDIT COMMITTEE
The Board of Directors has a standing Audit Committee
composed of Mr. Vosburg, Chairman, and Messrs. Corette, Lucas and
Selover and Ms. Harris. The Audit Committee met four times
during 1993. The duties of the Audit Committee include
recommending to the Board of Directors a firm of independent
certified public accountants to audit the books and records of
the Company, reviewing such audit with the independent accounting
firm and recommending the approval thereof to the Board of
Directors. Also, the Committee reviews and approves major
accounting policies, reviews the adequacy of principal internal
controls, reviews the adequacy of disclosure of information
essential to a fair presentation of the financial affairs of the
Company and provides an avenue of communications between the
Board of Directors and accounting and financial personnel, both
external and internal. The Committee also reviews the scope and
content of the Company's Code of Business Conduct, and considers
any significant irregularities or exceptions reported to it.
PERSONNEL COMMITTEE
The Board of Directors has a standing Personnel Committee
composed of Mr. Lucas, Chairman, and Messrs. Cain, Corette,
Hibbard, Lambros, Lehrkind, Selover and Vosburg, and Ms. Foster
and Ms. Harris, all of whom are non-employee Directors. The
Personnel Committee met seven times during 1993. The duties of
the Personnel Committee include recommending to the Board of
Directors a slate of Officers for election for the ensuing year,
the administration of all employee retirement and welfare plans
and programs, and the compensation of Officers of the Company.
The Personnel Committee's report on Executive Compensation is
found on page 8.
NOMINATING COMMITTEE
The Board of Directors has a Committee on Directors' Affairs
which serves as a Nominating Committee. The Committee on
Directors' Affairs is composed of Mr. Lambros, Chairman, and
Messrs. Berube, Cain, Corette, Lehrkind and Lucas. The Committee
on Directors' Affairs met five times during 1993. The purpose of
the Committee is to recommend to the Board of Directors persons
to be elected to the Board when vacancies exist or when any
additions to the Board may be authorized. The Committee will
consider as potential nominees persons recommended by
shareholders. Recommendations should be submitted to the
Committee in care of the Secretary of the Company.
The Board of Directors also has an Executive Committee, a
Contributions Committee, a Public Policy Committee, a Finance
Committee and a Special Committee on Mergers and Acquisitions.
NON-EMPLOYEE DIRECTOR COMPENSATION
Non-employee Directors of the Company are paid $1,375 per
month plus $500 for each meeting of a Committee of the Board
attended, except those held in conjunction with regular Board
meetings. They also receive $850 per special meeting of the
Board, when such special meetings are held in addition to the
regularly scheduled Board meeting in any one month.
Non-employee Directors who serve on the Board of Entech,
Inc., the Company's subsidiary, are paid $1,375 per month plus
$500 for each committee meeting attended, except those held in
conjunction with regular Board meetings. They also receive $850
per special meeting of the Board of Directors, when such special
meetings are held in addition to the regularly scheduled Board
meeting in any one month.
The Company and Entech, Inc. have Deferred Compensation
Plans for non-employee Directors. Directors so electing may
defer their payments as Directors until their retirement from the
Boards of Directors. During 1993, Directors deferred $41,006
representing $9,000 for Mr. Vosburg, $16,500 for Mr. Lambros and
$15,506 for Mr. Lehrkind. The payments deferred earn interest at
the rate determined by the Company based on twenty-six week
United States Treasury Bill interest rates. Finally, all Company
and Entech Directors are eligible for a non-qualified benefit
restoration plan as described on page 15 infra.
PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
Under rules of the Securities and Exchange Commission (SEC),
the Company is required to provide certain information concerning
compensation provided to the Company's Chairman and Chief
Executive Officer and the four other most highly compensated
executive officers. Under a new SEC rule, disclosure is also
required for certain executive officers retiring in the last
fiscal year. The disclosure requirements for these individuals
(named executive officers) includes the use of tables and a
report of the committee responsible for compensation decisions
for the named executive officers, explaining the rationale and
considerations that led to those compensation decisions.
Therefore, the Personnel Committee of the Board of Directors has
prepared the following report for inclusion in this Proxy
Statement.
PERSONNEL COMMITTEE REPORT
The Personnel Committee of the Board of Directors is
responsible for making recommendations to the Board of Directors
concerning the salaries of officers. The Committee is also
responsible for overseeing other forms of compensation and
benefits to officers as well as for the employees of the Company
generally. The Personnel Committee was in 1993 and is now
comprised of all non-employee (outside, independent) directors.
COMPENSATION PHILOSOPHY
The compensation philosophy for executive officers conforms
to the compensation philosophy of the Company generally for all
employees. The Company's compensation is designed to:
- - provide compensation comparable to that offered by companies
with similar businesses, allowing the Company to
successfully attract and retain the employees necessary to
its long-term success;
- - provide compensation which relates to the performance of the
individual and differentiates based upon individual
performance;
- - provide an appropriate linkage between compensation and the
creation of shareholder value through awards tied to the
Company's performance and through facilitating employee
stock ownership; and
- - provide internal equity among employees, assuring reasonable
correspondence between salaries for positions and positional
relationships.
EXECUTIVE OFFICERS' SALARIES
The Personnel Committee reviewed the salaries of officers of
the Company in June 1993 and made salary adjustments based upon a
variety of considerations in conformance with the compensation
philosophy stated above.
The Committee considered market compensation information
provided by a self-conducted survey of utilities (primarily
electric) with similar revenues. The survey group consisted of
18 utilities and was chosen based on revenue similarity and on
willingness to provide survey information. The performance of
these companies was not a factor in their selection for the
survey. The group surveyed is not the same as the Standard and
Poor's 24 Electric Power Company peer group used for the
Performance Graph on page 16 infra nor is the Company aware of a
compensation survey of that group of electric utilities. The
Company's survey elicited information about salaries and cash
bonuses. It did not gather information on stock-based or other
long-term incentive compensation because awards of that type of
compensation were not granted to officers in 1992 or 1993.
The survey information was used by the Committee to assess
the officers' cash compensation relationship to comparable
officer positions in the participating utilities. Where the
officer's compensation was below the 1992 average, as it was in
most cases, that weighed in favor of increasing salaries. In the
few cases where the information showed salaries were at or above
the average, that weighed against increases, in accordance with
philosophy that compensation should be consistent with the
market.
The Committee also considered the performance of each
officer with respect to the areas under his or her
responsibility, including an assessment of the officer's value to
the Company. Internal equity among officers and employees was
another consideration and, finally, the Committee considered the
Company's performance in making the decision. The Committee's
consideration of these factors was subjective and no specific
criteria were used in this part of the evaluation.
The Committee made no adjustments to Mr. Burke's
compensation because of his anticipated retirement on August 1,
1993.
The Personnel Committee did not consider the salary of
Mr. Murphy, as Mr. Murphy is President of Entech, Inc., a
wholly-owned subsidiary of the Company. His salary was reviewed
by the Personnel Committee of the Entech Board of Directors (a
non-employee director committee) in 1993. Mr. Murphy's salary
was adjusted, effective in March, 1993, using the same criteria
and procedure as described above for the Company's officers,
except that the salary survey information was gleaned from
companies similar to Entech, Inc.--that is, coal and natural
resource companies. His salary was lower than the average for
comparable positions and, thus, it was increased to bring it
closer to the market.
CHIEF EXECUTIVE OFFICER'S SALARY
Chief Executive Officer, Daniel T. Berube, received a salary
adjustment in June 1993. Again, the salary survey of similar
(mostly electric) utilities was used to establish a market salary
for chief executive officers. It was determined that Mr.
Berube's salary was below the average of salaries for chief
executive officer positions, and the Committee determined that it
should bring Mr. Berube's salary closer to the average. In
arriving at this conclusion, the Committee considered its
evaluation of Mr. Berube's performance as well as the Company's
performance. The Committee concluded that Mr. Berube had
developed a strong vision for the Company during his short tenure
which complemented his dedication to the historic Company goals
of providing low cost energy to customers and reasonable returns
to shareholders. The Committee also determined that, through the
leadership of Mr. Berube, important objectives of the Company had
been achieved, including increasing the profitability of the Oil
Division, shedding non-producing assets, continuing progress
towards expanding the coal business and maintaining the Utility
performance levels despite reduced demand due to warmer than
usual weather in 1992. Overall, the Committee's evaluation of
Mr. Berube was high. Other than achievement of the specific
objectives noted, the Committee's consideration was subjective
without the use of specific criteria. Internal equity among
employees was also a factor in the Committee's decision. Even
after the increase, Mr. Berube's salary is below the average of
salaries of comparable chief executive officers, but it was moved
closer to the average.
LONG-TERM INCENTIVE PLAN
The Long-Term Incentive Plan approved by the shareholders in
May 1992 is intended to reward employees who make important
contributions to the continued growth, development and financial
success of the Company, or its subsidiaries, and to attract and
retain such employees. It provides for the granting of
restricted stock, stock options, stock appreciation rights,
performance shares and dividend equivalent shares. A Committee
of the Board composed of non-employee directors may from time to
time grant awards under the Plan to selected eligible employees.
The Plan provides a vehicle for the Board to include a long-term
incentive component (explicitly tied to the achievement of
certain Company performance goals) in the executive compensation
package. For example, the Plan would allow the Board to award
restricted stock subject to a restriction period during which
some event, such as the achievement of specific Company
performance goals, would have to occur before restrictions would
expire. No awards were made in 1993.
The Plan includes stock options granted under a prior plan
which were outstanding at the time the Plan became effective.
Grants of options under that prior Plan were made to executive
officers and other key employees at 100% of the market price at
the date of the grant, and the options could not be exercised for
two years from the date of grant. These grants of options served
the purpose of aligning the grantee's interest with those of
shareholders by providing compensation to the extent of increases
in value of the Company's Common Stock.
BENEFITS ENCOURAGING OWNERSHIP OF COMPANY STOCK
The executive officers also receive other benefits which are
designed to facilitate stock ownership and which are available to
all employees. The Company's Deferred Savings and Employee Stock
Ownership Plan (401(K)) is available to all regular employees of
the Company including officers. A member may elect to contribute
a maximum of 4% or 6% of qualifying pay, depending on years of
service, which is invested in a bond fund, Common Stock fund or
fixed rate income fund for the employee's benefit. Depending on
the employee's years of service, the Company contributes 60% to
70% of the employee's contribution. The Company's contribution
is invested in the Company Common Stock Fund. Thus, all
participating employees, including executive officers, are
beneficial owners of Company Common Stock.
The Company also has an Employee Stock Purchase Plan which
allows employees, including executive officers, to purchase
Company Common Stock at market prices regularly through payroll
deduction and directly without incurring brokerage fees. Again,
this Plan facilitates employee stock ownership.
Personnel Committee
J. P. Lucas, Chairman A. J.Cain
R. D. Corette K. Foster
B. D. Harris D. P.Lambros
Carl Lehrkind, III C. T. Hibbard
G. H. Selover N. E. Vosburg
<PAGE>
SUMMARY COMPENSATION TABLE
The following table shows compensation paid by the Company
for services rendered during the fiscal years 1993, 1992 and 1991
for named executive officers.
Long-Term
Compensation
Annual Securities
Name and Compensation Underlying All Other
Principal Salary Options Compensation
Position Year ($) (#) ($)
D. T. Berube 1993 274,100.06 0 6,295.80
CEO & Chairman 1992 231,999.86 0 6,109.60
of the Board 1991 182,548.79 5,000 5,932.50
J. J. Burke 1993 259,131.20 0 117,257.45
Vice Chairman 1992 272,115.55 0 31,840.404
of the Board 1991 229,711.36 0 5,932.50
R. P. Gannon 1993 225,000.10 0 5,846.10
President 1992 205,923.18 0 5,673.20
and COO 1991 164,742.14 4,500 5,508.75
J. J. Murphy 1993 188,307.00 0 6,295.80
President - 1992 178,846.24 0 6,109.60
Entech 1991 147,379.93 0 5,852.59
A. K. Neill 1993 147,999.93 0 6,177.50
Executive Vice 1992 140,961.56 0 5,837.09
President - 1991 124,201.06 3,200 4,932.17
Utility
J. P. Pederson 1993 138,500.18 0 5,797.97
Vice President 1992 124,761.13 0 5,202.22
and CFO 1991 109,374.53 2,800 4,106.20
AGGREGATED OPTIONS UNDER LONG-TERM INCENTIVE PLAN EXERCISED
IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table provides information with respect to the
named executive officers, concerning exercise of stock options at
fiscal year end.
<TABLE>
<CAPTION>
Value
Realized
(Market
Price at
Shares Exercise Number of Securities
Acquired Less Underlying Unexercised Value of Unexercised
on Exercise Options at Fiscal Year-End in-the-Money Options at
Exercise Price1) (#) Fiscal Year-End ($25.752)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
D. T. Berube 0 0 5,000 0 0 0
J. J. Burke 0 0 0 0 0 0
R. P. Gannon 6,000 42,375 4,500 0 $ 16,313 0
J. J. Murphy 295 2,802 13,205 0 $ 95,153 0
A. K. Neill 0 0 12,700 0 $ 75,131 0
J. P. Pederson 0 0 5,800 0 $ 19,213 0
1 Based on the closing price on the New York Stock Exchange - Composite Transactions of the
Corporation's Common Stock on date of stock option exercise.
2 Based on the closing price on the New York Stock Exchange - Composite Transactions of the
Corporation's Common Stock on December 31, 1993.
/TABLE
<PAGE>
RETIREMENT BENEFITS
QUALIFIED PENSION PLAN
The Retirement Plan (Plan) of the Company applies to all
eligible regular employees including officers. Benefits are
computed for all eligible employees by using the following
formula: .95 of 1% of the highest consecutive three year average
annual base compensation within the last ten years (Final Average
Compensation) up to the appropriate Social Security Integration
Level, plus 1.5 of 1% of the Final Average Compensation in excess
of the Social Security Integration Level ($24,312 for a normal
retiree in 1994) times the number of credited years of service up
to 35 years maximum. Remuneration covered by the Plan
corresponds to that reported in the Cash Compensation Column of
the Annual Compensation Table less payments in lieu of vacation
and payments made to the non-qualified retirement plan. As of
March 1, 1994, credited years of service under the Plan
are: 29 years for Mr. Berube, 20 years for Mr. Gannon, 16 years
for Mr. Murphy, 35 years for Mr. Neill and 28 years for Mr.
Pederson. Mr. Burke retired in 1993 with 34 years of service.
The following table shows the estimated annual benefits
payable upon retirement at age 65 to persons in specified
remuneration and years-of-service classifications calculated upon
accrued benefits to January 1, 1994. These benefits may be
reduced if such persons retire before reaching age 65. The
amounts presented in the table are single life annuity amounts
notwithstanding the availability of joint survivorship
provisions.
PENSION PLAN TABLE
Years of Service
Remuneration 10 15 20 25 30 35
$ 75,000 $ 9,913 $14,869 $19,826 $ 24,782 $ 29,739 $ 34,695
100,000 13,663 20,494 27,326 34,157 40,989 47,820
125,000 17,413 26,119 34,826 43,532 52,239 60,945
150,000 21,163 31,744 42,326 52,907 63,489 74,070
175,000 24,913 37,369 49,826 62,282 74,739 87,195
200,000 28,663 42,994 57,326 71,657 85,989 100,320
225,000 32,413 48,619 64,826 81,032 97,239 113,445
250,000 34,039 51,058 68,078 85,097 102,117 118,8001
275,000 34,039 51,058 68,078 85,097 102,1171 118,8001
300,000 34,039 51,058 68,078 85,097 102,1171 118,8001
1 IRS 1994 limitation on annual benefits
NON-QUALIFIED BENEFIT RESTORATION PLAN FOR SENIOR MANAGEMENT
EXECUTIVES
Executive officers also participated in a non-qualified
Benefit Restoration Plan for executive officers and certain other
key employees implemented in December 1986. In 1993, the named
executive officers participated in the Plan. This Plan provides
for annual benefit payments upon retirement to the participant
over the participant's lifetime or, in the event of the
participant's death, to the participant's beneficiary for the
remainder of a 15-year period commencing on the date of the
participant's retirement. This benefit is in addition to the
pension plan benefit shown above.
<PAGE>
Life insurance is carried on Plan participants in favor of
the Company to enable the Company to help fund the Plan.
Participants in the Plan contribute to the cost of life insurance
carried by the Company. All death proceeds are specifically
directed to the Plan trust for the sole purpose of paying for
Plan benefits and premium costs. The following table illustrates
benefits paid based on an annual salary immediately prior to the
time of normal benefit payment. The table represents full
benefits assuming a normal retirement at age 65. Benefits may be
reduced if the executive retires early.
BENEFIT RESTORATION TABLE
Years of Service
Remuneration 10 15 20 25 30 35
$ 75,000 $31,000 $31,000 $31,000 $ 31,000 $ 31,000 $ 31,000
100,000 41,000 41,000 41,000 41,000 41,000 41,000
125,000 51,000 51,000 51,000 51,000 51,000 51,000
150,000 61,000 61,000 61,000 61,000 61,000 61,000
175,000 71,000 71,000 71,000 71,000 71,000 71,000
200,000 81,000 81,000 81,000 81,000 81,000 81,000
225,000 91,000 91,000 91,000 91,000 91,000 91,000
250,000 103,1241 104,1861 105,2481 106,3101 107,3721 108,4341
275,000 116,8741 119,8111 122,7481 125,6851 128,6221 131,5591
300,000 130,6241 135,4361 140,2481 145,0601 149,8751 154,6841
1 Supplemental Defined Benefit with IRS 1994 Benefit Limitation Make-up.
NON-QUALIFIED BENEFIT RESTORATION PLAN FOR DIRECTORS
All Company and Entech Directors participated in a non-
qualified retirement plan (the Benefit Restoration Plan for
Directors). The Plan was implemented in 1986 for all eligible
Directors. This Plan provides for annual benefit payments to
vested participants upon retirement. It is intended to allow for
supplemental income to the Director at the time of retirement or
to beneficiaries in the event of the Director's death. The
duration of the benefit payments will be over the lifetime of the
participant or, in the event of the participant's death, the
participant's designated beneficiary will be paid for the
remainder of a 180 month period commencing on the date of the
participant's retirement. A schedule of Director's benefits is
as follows:
Years of Annual Years of Annual
Service Benefit Service Benefit
1 $ 1,200 6 $ 8,400
2 $ 2,400 7 $10,200
3 $ 3,600 8 $12,000
4 $ 5,100 9 $14,100
5 $ 6,600 10 $16,500
PERFORMANCE GRAPHS
The following performance graph shows the five-year cumulative
total return for the Company, the Standard and Poore's 500 and a
group of utilities which are included in the Standard and Poore's
24 Electric Power Company Index:
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN *
AMONG MONTANA POWER COMPANY,
THE S&P 500 INDEX AND THE S&P ELECTRIC CO. INDEX
1988 1989 1990 1991 1992 1993
MONTANA POWER CO 100 127 131 195 193 200
S&P ELECTRIC CO 100 133 137 178 188 212
S&P 500 100 132 128 166 179 197
* $100 invested on 12/31/88 in stock or index - including
reinvestment of dividends. Fiscal year ending December 31.
EMPLOYMENT AGREEMENTS
On October 23, 1989, the Company entered into employment
agreements with Messrs. Berube, Gannon, Murphy, Neill and
Pederson to provide benefits under certain circumstances after a
change of control of the Company if their employment is
subsequently terminated without cause by the Company or with good
reason by the employee. The agreements provide that each such
employee shall be employed by the Company in a position
comparable to his current position with compensation and benefits
which are at least equal to his then current compensation and
benefits through December 31, 1994 (subject to extension by the
Board of Directors or earlier termination due to voluntary
termination by the employee or termination by the Company for
cause).
<PAGE>
The agreements with Messrs. Berube, Gannon, Murphy, Neill
and Pederson provide that if, after a change of control, the
employee's employment is terminated by the Company without cause,
or if the employee terminates his employment for good reason, the
employee is entitled to (i) a lump sum payment in the amount of
299.9 percent of the base amount of his compensation, (ii)
calculation of retirement benefits as if the employee had
continued employment to Normal Retirement Date (as defined in the
Retirement Plan for Employees of The Montana Power Company)
subject to certain reductions and (iii) continued participation
in the Company's (or substantially equal substitute) life
insurance, health insurance, dental insurance and disability
insurance plan and other welfare benefit plans for a period of
three years following termination. In the event that any amounts
paid to Messrs. Berube, Gannon, Murphy, Neill, or Pederson under
their agreements are subject to excise tax imposed under the
Internal Revenue Code of 1986, the Company shall pay an
additional amount (the "Gross-Up Payment") equal to the amount of
any excise taxes and any state or federal taxes on the Gross-Up
Payment.
Item 2. Common Shareholder Approval of Redemption of $2.15
Series of Preferred Stock
THE PROPOSAL
The Articles of Incorporation (Article VII(h)) require the
written consent or affirmative vote of the holders of a majority
of the shares of the Common Stock prior to the redemption by the
Company of any of the shares of the Preferred Stock, $6 Series,
$4.20 Series and $2.15 Series. The Board of Directors requests
that the Common shareholders vote to authorize the Company to
redeem the $2.15 Series at such time and in such manner as the
Board may determine.
REASONS FOR THE PROPOSAL
The Company's management and Board of Directors are
considering redeeming the $2.15 Series Preferred Stock at its
redemption price of $25.25 per share with funds raised at a lower
cost through the sale of other debt or equity securities. In the
case of a refunding, management would like to be able to act
promptly should the financial market provide an attractive
opportunity to sell lower cost securities. By adopting the
proposal, the shareholders will permit the Board to act promptly
without the delay, and attendant expense, of a special meeting of
the Common shareholders to approve a redemption.
Adoption of the proposal requires the affirmative vote of
the holders of a majority of the outstanding shares of the Common
Stock. The Board of Directors believes that the proposal is in
the best interests of the Common shareholders.
The Board of Directors recommends that the Common
shareholders vote FOR the proposal.
SECTION 16(a) COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of
1934 and Securities and Exchange Commission ("SEC") regulations,
the Company's directors, certain officers, and greater than 10
percent shareholders are required to file reports of ownership
and changes in ownership with the SEC and the New York Stock
Exchange and to furnish the Company with copies of all such
reports they file.
To the Company's knowledge, based solely on review of copies
of such reports furnished to the Company and written
representations that no other reports were required, during the
fiscal year ended December 31, 1993, all Section 16(a) filing
requirements were complied with.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Price Waterhouse has been selected by the Board of Directors
upon recommendation of its Audit Committee as the independent
accountants for the Company and its subsidiaries for the year
1994.
A representative of Price Waterhouse will be present at the
shareholders' meeting and will have the opportunity to make a
statement if he/she desires to do so and will be available to
respond to questions. The same firm has audited the Company's
accounts for many years.
GENERAL
The cost of soliciting proxies will be borne by the Company.
Solicitation will be made by mail and may also be made by the
Company's Officers or other regular employees, personally or by
telephone. Brokers and other nominees will be requested to
solicit proxies or authorizations from beneficial owners.
The Company has selected Beacon Hill Partners, Inc. to
assist in the solicitation of proxies by personal interviews and
telephone for a fee of $4,000. The Company will also pay the
customary charge of brokers and nominees for forwarding proxy
material to beneficial owners.
Proposals of shareholders intended to be presented at the
next Annual Meeting, including nominations of Directors to be
elected at such meeting, must be received by the Office of the
Secretary, The Montana Power Company, 40 East Broadway, Butte,
Montana 59701-9394, no later than December 5, 1994.
By Order of the Board of Directors
Pamela K. Merrell
Vice President and Secretary
THE MONTANA POWER COMPANY - Annual Meeting, May 10, 1994
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints D. T. Berube, R. P. Gannon and
P. K. Merrell, and each of them, with power of substitution,
proxies to represent, and to vote all stock of the undersigned at
the Annual Meeting of Shareholders of The Montana Power Company
to be held in Butte, Montana, on May 10, 1994 at 10:00 A.M., and
at any and all adjournments thereof.
1. ELECTION OF DIRECTORS:
__ FOR all nominees listed __ WITHHOLD AUTHORITY to
below (except as marked vote for all nominees
contrary below) listed below
Foster, Hibbard, Lambros, Lehrkind, Pederson
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
The Board of Directors recommends a vote "For" Item 2.
2. TO AUTHORIZE THE REDEMPTION OF THE $2.15 SERIES OF THE
COMPANY'S PREFERRED STOCK.
__ FOR __ AGAINST __ ABSTAIN
(Continued and to be filled in and signed on reverse side)
COMMON STOCK
In their discretion, the proxies are authorized to vote upon such
other matters as may properly come before the meeting. This
proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. IF NO SPECIFICATION IS
MADE, THIS PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2.
Dated _______________________, 1994
ACCOUNT NUMBER
X _________________________________
X _________________________________
Signature of Shareholder
Please mark, date, sign and return this proxy in the accompanying
envelope. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If stock is
registered in joint tenancy, both tenants should sign the proxy.
THE MONTANA POWER COMPANY - Annual Meeting, May 10, 1994
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints D. T. Berube, R. P. Gannon and
P. K. Merrell, and each of them, with power of substitution,
proxies to represent, and to vote all stock of the undersigned at
the Annual Meeting of Shareholders of The Montana Power Company
to be held in Butte, Montana, on May 10, 1994 at 10:00 A.M., and
at any and all adjournments thereof.
1. ELECTION OF DIRECTORS:
__ FOR all nominees listed __ WITHHOLD AUTHORITY to
below (except as marked vote for all nominees
contrary below) listed below
Foster, Hibbard, Lambros, Lehrkind, Pederson
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
(Continued and to be filled in and signed on reverse side)
PREFERRED STOCK
In their discretion, the proxies are authorized to vote upon such
other matters as may properly come before the meeting. This
proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. IF NO SPECIFICATION IS
MADE, THIS PROXY WILL BE VOTED "FOR" ITEM 1.
Dated _______________________, 1994
ACCOUNT NUMBER
X _________________________________
X _________________________________
Signature of Shareholder
Please mark, date, sign and return this proxy in the accompanying
envelope. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If stock is
registered in joint tenancy, both tenants should sign the proxy.
