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 ____ Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2)
Definitive proxy statement
___ Definitive additional materials
___ Soliciting material pursuant to Rule 240.14a-11(c) or Rule 240.14a-12
The Montana Power Company
(Name of Registrant as Specified in Its Charter)
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:
___________________________________________________________
March 29, 1996
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
of The Montana Power Company. The meeting will be held at the Civic Center,
1340 Harrison Avenue, Butte, Montana, on Tuesday, May 14, 1996, at 10:00 a.m.
At this meeting, you will be asked to elect seven persons to the Board
of Directors and to authorize an amendment to the Articles of Incorporation.
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 14. Thank you for your continued
confidence and support.
Sincerely,
Daniel T. Berube
Chairman of the Board of Director
THE MONTANA POWER COMPANY
_____________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
40 East Broadway
Butte, Montana 59701-9394
March 29, 1996
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 14, 1996, at
10:00 a.m. for the following purposes:
1. To elect six Directors for a term of three years and to elect
one Director for a term of two years.
2. To consider an amendment to the restated Articles of
Incorporation which would conform its provisions with respect to
Directors' liabilities to those of Montana law; and
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 7, 1996, 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.
THE MONTANA POWER COMPANY
40 EAST BROADWAY, BUTTE, MONTANA 59701-9394
March 29, 1996
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 14, 1996, or at any adjournment thereof.
This proxy statement and the accompanying proxy were mailed on or
about March 29, 1996.
VOTING SECURITIES AND PRINCIPAL HOLDERS:
The outstanding voting securities of the Company on March 7, 1996
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. 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 candidate or may distribute
them among 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.
Abstentions and Broker non-votes are counted in determining the presence of
a quorum, but will not be counted and have no effect on the results of any
vote. 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 (cumulatively or otherwise) and the Item 2 Proposal.
The affirmative vote of the holders of at least a majority of the shares
present and voting will be required for the approval of the Item 2 Proposal.
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 7, 1996
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
As a means of broadening its membership, both professionally and
geographically, the Board of Directors, in 1995, amended the By-laws to
increase the number of Directors from fourteen to sixteen and, effective
September 1, appointed Tucker Hart Adams and John Jester as Directors.
Prior to their appointment, these new Directors had been Directors of
Entech, Inc., the Company's wholly-owned subsidiary. The By-laws require
Directors who are appointed to the Board as a result of an increase in its
number to stand for election at the next Annual Meeting of Shareholders. In
order to keep the group of Directors who are up for election each year as
nearly equal as possible, Mr. Jester will stand for a term of two years.
Seven Directors will be elected at the meeting, six for terms of
three years and one for a term of two years or until the election and
qualification of their respective successors. The seven 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
nine other Directors whose terms do not expire this year are as follows:
NOMINEES FOR ELECTION FOR TERMS OF THREE YEARS EXPIRING IN 1999
Tucker Hart Adams - Dr. Adams, 57, a Director of the Company since
September 1, 1995. She has been President and Chief Executive Officer of
The Adams Group Inc., a consulting firm which specializes in economic
research, analysis and forecasting, and publishes the newsletter, Today's
Economy. Dr. Adams is also a Director of Guarantee National Corporation, an
insurance company, and a Director for ROC Communities, a real estate
investment trust. She is also a trustee for the Tax Free Fund of Colorado,
and for the Aquila Rocky Mountain Equity Fund. She is a resident of
Colorado Springs, Colorado.
Daniel T. Berube - Mr. Berube, 62, 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 was
President and Chief Executive Officer of Entech, Inc., the Company's
subsidiary, from January 1, 1990 to December 31, 1991.
Alan F. Cain - Mr. Cain, 56, a Director of the Company since
March 28, 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, 51, a Director of the Company since
January 1, 1990. He was elected Vice Chairman and President of the Company
on January 23, 1996 and had been President and Chief Operating Officer
responsible for utility operations since January 1, 1990. Mr. Gannon also
has been a Director of Buttrey Food and Drug Stores Company, a food and drug
retailer, since May 1992.
James P. Lucas - Mr. Lucas, 68, a Director of the Company since
March 1, 1982. He has been President of and Senior Attorney in Lucas and
Monaghan, P.C., a law firm, Miles City, MT, since January 1977.
George H. Selover - Mr. Selover, 66, 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, Vice Chairman and Corporate Secretary of Big Sky
Airlines, Billings, MT, a commuter airline, doing business as Big Sky
Transportation Company.
NOMINEE FOR ELECTION FOR A TERM OF TWO YEARS EXPIRING IN 1998
John R. Jester - Mr. Jester, 55, a Director of the Company since
September 1, 1995. He has been President of Muzak Limited Partnership, a
telecommunications based business, since January 1, 1988. He is a resident
of Seattle, Washington.
DIRECTORS TO CONTINUE IN OFFICE WITH TERMS EXPIRING IN 1998
R. D. Corette - Mr. Corette, 55, a Director of the Company since
July 1, 1990. He has been an Attorney, owner, and employee in the law firm
of Corette, Pohlman, Black, Carlson, Mickelson and Johnston, Butte, MT,
since 1966.
Beverly D. Harris - Ms. Harris, 62, 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, 58, a Director of the Company since
January 1, 1990. He has been Executive Vice President - Generation and
Transmission since January 1, 1994 and was Executive Vice President -
Utility Services of the Company from January 1987 to January 1994.
Noble E. Vosburg - Mr. Vosburg, 54, a Director of the Company since
October 25, 1988. He has been President and Chief Executive Officer of
Pacific Steel & Recycling, Great Falls, MT, a steel service center and
recycling business, since May 1982.
DIRECTORS TO CONTINUE IN OFFICE WITH TERMS EXPIRING IN 1997
Kay Foster - Ms. Foster, 54, 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, 47, a Director of the Company since
October 1, 1993. He has been a Montana State Representative since January
1, 1993. He has been President of the Sieben Live Stock Co., MT, a sheep
and cattle ranch, since January 1981 and President of Hibbard Management
Company, Helena, MT, which provides consulting services to agriculture,
since January 1984.
Daniel P. Lambros - Mr. Lambros, 64, 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, 57, a Director of the Company since
July 1, 1984. He has been President of Lehrkind's, Inc., Bozeman, MT, a
beverage bottler and distributor, since February 1970, and President, Owner
and Operator of Yellowstone Country Food and Beverage, a restaurant,
Livingston, MT and Miles City, MT, since February 1993.
Jerrold P. Pederson - Mr. Pederson, 53, a Director of the Company
since July 1, 1993. He has been Vice President and Chief Financial Officer
of the Company since May 14, 1991, and was Vice President of Corporate
Finance and Controller from June 1, 1990 to May 14, 1991.
SECURITY OWNERSHIP OF MANAGEMENT
The table below and information following set forth the number of
shares beneficially owned on February 9, 1996, by each of the directors and
each of the named executive officers in the Summary Compensation Table and
all of the directors and all executive officers as a group. The shares
beneficially owned by any director or named executive officer, or by all
directors and executive officers as a group, do not exceed one percent of
the Common and Preferred Stock outstanding.
Shares of
Name of Common Stock
Beneficial Owner Beneficially Owned
Tucker Hart Adams 43
Daniel T. Berube 45,834 (1) (8)
Alan F. Cain 643 (2)
R. D. Corette 2,280 (3)
Richard F. Cromer 23,205 (1) (4) (8)
Kay Foster 1,328
Robert P. Gannon 27,748 (1) (8)
Beverly D. Harris 2,511
Chase T. Hibbard 1,400 (5)
John R. Jester 500
Daniel P. Lambros 1,000
Carl Lehrkind, III 3,011 (6)
James P. Lucas 1,401
James J. Murphy 22,598 (1) (8)
Arthur K. Neill 26,615 (1) (8)
Jerrold P. Pederson 20,707 (1) (8)
George H. Selover 700
Noble E. Vosburg 1,102 (7)
All Directors and
Executive Officers
as a group (28 in
number) 307,883 (9)
(1) Includes shares in the Deferred Savings and Employee Stock Ownership
Plan attributable to the Company's and the employee's contributions as
follows: Mr. Berube - 8,917 shares, Mr. Cromer - 4,502 shares,
Mr. Gannon - 6,199 shares, Mr. Murphy - 4,656 shares, Mr. Neill -
5,091 shares, and Mr. Pederson - 5,807 shares.
(2) Includes 10 shares owned by Mr. Cain's spouse of which Mr. Cain
disclaims beneficial ownership.
(3) Includes 72 shares of Common Stock owned by the estate of Mr. Corette's
deceased father (which also owns 1 share of the $6.00 Series Preferred
Stock) of which estate Mr. Corette is Personal Representative and of
which shares 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.
(4) Includes 1,097 shares held by Mr. Cromer's spouse of which he disclaims
beneficial ownership; and 59 shares held in a custodian account for his
granddaughter of which Mr. Cromer is the custodian and with respect to
which he has voting and investment power.
(5) 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.
(6) 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
1,911 shares of Common Stock held by Lehrkind's Inc., with respect to
which he has shared voting and investment power.
(7) Includes 134 shares held by Mr. Vosburg's spouse of which Mr. Vosburg
disclaims beneficial ownership.
(8) Includes, option shares exercisable within 60 days of the date as to
which ownership is stated in the following amounts: 31,800 for
Mr. Berube, 14,616 for Mr. Cromer, 21,200 for Mr. Gannon, 10,144 for
Mr. Murphy, 21,000 for Mr. Neill and 13,900 for Mr. Pederson. Also
includes 3,814 of restricted stock awarded to Mr. Murphy.
(9) Includes 71,424 shares held for executive officers in the Deferred
Savings and Employee Stock Ownership Plan described on page _ hereof,
189,257 option shares exercisable within 60 days of the date as to
which ownership is stated, and 5,972 shares of restricted stock.
MEETINGS AND STANDING COMMITTEES OF THE BOARD OF DIRECTORS
There were nine Board of Directors meetings in 1995. Each Director
attended at least 87 percent of the aggregate of the meetings of the Board
and the Board Committees of which he or she was a member, except for Mr.
Lucas, who attended 63 percent of the aggregate of the meetings of the Board
and the Board Committees of which he was a member and was excused from the
remainder due to illness.
AUDIT COMMITTEE
The Audit Committee is composed of Directors Vosburg (Chairman),
Adams, Corette, Harris, Lucas and Selover, none of whom are employees of the
Company. The Audit Committee met four times during 1995. 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 the audit with the independent accounting firm and
recommending its approval to the Board of Directors. The Committee also
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 Personnel Committee is composed of Directors Lucas (Chairman),
Adams, Cain, Corette, Foster, Harris, Hibbard, Jester, Lambros, Lehrkind,
Selover and Vosburg, all of whom are non-employee Directors. The Personnel
Committee met six times during 1995. 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 on
page _.
NOMINATING COMMITTEE
The Committee on Directors' Affairs, which serves as a Nominating
Committee, is composed of non-employee Directors Lambros (Chairman), Cain,
Corette, Jester, Lehrkind, and Lucas, and Director Berube, the Company's
Chief Executive Officer and Chairman of the Board. The Committee on
Directors' Affairs met four times during 1995. 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 $18,500 per year 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 for
attending each special meeting of the Board held in addition to the
regularly scheduled Board meeting.
Non-employee Directors who served on the Board of Entech, Inc., the
Company's subsidiary were paid $12,333 plus $500 for each committee meeting
attended, except those held in conjunction with regular Board meetings
The Company has a Deferred Compensation Plan for non-employee Directors
which permits such directors to defer their compensation until their
retirement from the Board of Directors. During 1995, Mr. Vosburg deferred
$10,250, Mr. Lambros $19,500 and Mr. Lehrkind $13,333. The deferred
compensation earns interest at the rate determined by the Company based on
Moody's Average Baa Corporate Bond rates. In addition, all Directors are
eligible to participate in the Non-Qualified Benefit Restoration Plan
described on page __.
PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
In accordance with Securities and Exchange Commission (SEC) rules, the
Company provides certain information concerning compensation of the Company's
Chairman and Chief Executive Officer and its four other most highly compensated
officers,(named executive officers). This information includes the tables set
forth herein and this report of the Personnel Committee of the Board of
Directors which explains the rationale and considerations that led to the
reported compensation of such officers.
The Personnel Committee makes recommendations to the Board of Directors
concerning the salaries of officers and oversees other forms of compensation
and benefits to officers as well as to the employees of the Company generally.
The Personnel Committee was in 1995 and is now comprised of all non-employee
directors.
COMPENSATION PHILOSOPHY
The compensation philosophy for executive officers conforms to the
compensation philosophy of the Company generally for all employees. The
Company endeavors 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 relationship
between salaries for positions and positional relationships.
EXECUTIVE OFFICERS' COMPENSATION
BASE SALARIES
The Personnel Committee made a comprehensive review of executive
compensation in 1994. The Committee engaged Towers Perrin, a compensation
consultant, to conduct a competitive total compensation review of utility
officers and the President of the Independent Power Group, including all of the
named executive officers except James J. Murphy, whose compensation was
addressed separately, as he is the President of a wholly-owned non-utility
subsidiary.
In 1995, the Committee had the Towers Perrin study updated as it
related to base salary. The Edison Electric Institute (EEI) compensation
survey was used as the primary data base for base salary comparisons, as it had
been in the 1994 study. The EEI survey data of 95 electric utilities was
adjusted for company revenue size using regression analysis. Many of the
companies in the Peer Group shown in the Performance Graph, the Standard and
Poor's 24 Electric Company Index, are included in this EEI data base. Other
survey data, including private Towers Perrin surveys, were also used in a few
instances where the EEI survey did not have adequate position comparisons.
Comparisons for each position were made to the median compensation for the EEI
revenue adjusted data base, and to the other surveys where necessary. Towers
Perrin provided its 1994 opinion to the Committee that the methodology for
determining market base salaries was consistent with the methodology used in
the 1994 Towers Perrin comprehensive compensation study, and that the
Committee's recommendations for salary adjustments were reasonable in
comparison to the market data.
Based upon the results of the base salary surveys, as well as
consideration of other subjective factors, such as the performance of the
individual officer, an assessment of the officer's value to the Company,
internal equity among officers and employees, and the Company's 1994
performance, the Committee adjusted base salaries to bring them closer to
competitive levels. However, even the adjusted base salaries remain at or
below median base salary levels in the surveys.
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.
Mr. Murphy's salary was reviewed by the Personnel Committee of the Entech Board
of Directors in 1995. His salary was adjusted using the same criteria and
procedure as described above for the Company's officers, except the survey
information was gathered from companies similar to Entech, Inc.--that is, coal
and natural resource companies. Hay executive compensation surveys were also
used for comparison. His salary was lower than the median for comparable
positions and, thus, it was increased to bring it closer to the market,
although it remains below the median.
INCENTIVE COMPENSATION
In addition to adjusting salaries in 1995, the Committee continued its
program of awarding long-term incentive opportunities. The Committee made the
awards based upon the 1994 Towers Perrin advice that compensation should
include an incentive component which objectively relates compensation to
Company performance and its compensation philosophy of providing an appropriate
linkage between compensation and the creation of shareholder value and of
providing compensation comparable to that offered by similar companies as
determined by the compensation surveys.
The Committee awarded options and the right to receive the equivalent, in
cash, of the dividends on the options. These awards made in 1995 were
virtually identical to those made in 1994. The dividend equivalent awards
are subject to the achievement of certain performance criteria over the three
years from January 1, 1995 to December 31, 1997. The amount of the awards for
each officer was determined by comparison of the value of the awards to the
1994 survey information, with the goal of bringing the total compensation
opportunity closer to the median for the survey groups. The options, granted
under the Company's Long-Term Incentive Plan described below, were granted at
100% of the closing price on the New York Stock Exchange - Composite
Transaction on the date of grant. One-third of the options are exercisable
after December 31, 1995, one-third after December 31, 1996 and one-third after
December 31, 1997; all have an exercise period of ten years from the date of
grant. The dividend equivalent performance criteria for officers with
responsibilities for both the utility and the non-utility subsidiaries is a
comparison of the performance of the Company to the same Peer Group used in the
performance graph in this Proxy Statement--the Standard and Poor 24 Electric
Company Index. For these officers, in order to receive maximum payout (125%)
of the dividend equivalent opportunity, the Company's total shareholder
return (TSR) for the years 1995 through 1997 must be in at least the 90th
percentile of the TSR for the Standard and Poor's 24 Electric Companies.
Payout decreases proportionately with the Company's decrease in TSR performance
and no payout will be made if the Company's TSR is less than the 50th
percentile of the Index companies. Officers responsible only for the utility
have two additional performance measures: predetermined return on equity and
utility rate competitiveness goals for the 1995-1997 time period. Richard F.
Cromer, President of the Independent Power Group, also has two additional
performance measures: predetermined return on equity and net income goals for
the same period. Each performance measure accounts for one-third of the total
measures. Payout of any of the dividend equivalents will not be determined or
made until after the 1995-1997 period is over and the Committee determines the
extent to which the goals have been achieved. Because the first dividend
equivalent awards were made in 1994, no payouts were possible until 1997 and,
thus, there were no payouts in 1995.
The option grants to the named executive officers are shown on the Option
Grant Table, infra, and the dividend equivalent awards are shown on the Long-
Term Incentive Plan Table, infra.
In 1994, Howard Johnson & Company performed an analysis of Entech's
compensation for its Officers and recommended that an incentive compensation
element be added. Therefore, grants of restricted stock which had performance
and time restrictions were awarded to Entech, Inc. Officers in 1994. The
performance restrictions for Mr. Murphy for 1994, 1995, and 1996 are the
achievement of annually predetermined net income targets for Entech, Inc.
The amounts of restricted stock which can be earned is reduced
proportionately with reductions in the performance actually achieved and none
of the award is earned if actual performance is less than 85% of the target.
To the extent the annual performance targets are met, there is an additional
three year restriction which must pass before unrestricted stock is issued. To
the extent performance measures are not met, restricted shares are cancelled.
In 1995, based upon Entech's 1994 results, the performance restrictions were
removed on approximately one-third of the 1994 shares. The performance targets
in 1995 were not met and the 1995 restricted stock was cancelled entirely.
Regular dividends are paid on the outstanding, uncancelled restricted stock.
CHIEF EXECUTIVE OFFICER COMPENSATION
BASE SALARY
The base salary of the Chief Executive Officer (CEO) was also the subject
of the base salary analysis which showed that his base salary was below the
median in the salary surveys. The Committee increased his base salary in 1995.
After the adjustment, his base salary is slightly above the median base
salary, but below the median for total cash compensation. In making this
decision, the Committee considered the leadership provided by the CEO of
Montana's largest company, the Company's general performance the previous
year and a number of factors and criteria. The Committee noted that
important information is provided to Board members in a timely fashion, that
the CEO has assembled a strong management team and has a sound succession
plan for key management positions, that under the CEO's leadership the
Company is among the lowest cost providers of energy services in the
country, that utility customer service and satisfaction is high, that the
Company is making positive contributions to the social and economic well-
being of the various areas in which it operates and has developed and abides
by an exemplary code of business conduct, and that the previous year's
financial performance was reasonable considering intensified competition, a
period of slower growth, poor weather conditions, adverse regulatory
decisions, and relatively flat earnings of Entech. Considered to be of
importance also is that good relationships with key regulators of the
Company have been maintained.
The Committee also considered the continued attention of the CEO to
short-term and long-term strategic business and financial plans, which are
periodically revised to reflect new opportunities or unforeseen
circumstances; and his involvement in frequent strategic discussion and
planning that addresses the corporate environment in which the Company finds
itself today.
The Committee concluded that the performance of the CEO was strong.
INCENTIVE COMPENSATION
Mr. Berube was also given an award of options and the right to receive
the equivalent of dividends on the options if the TSR performance measure is
achieved over the three years 1995 through 1997. The purpose of the award
was the same as described above for the officers generally: to tie his
compensation more closely and objectively to the creation of shareholder
value and to provide compensation comparable to that offered by similar
companies. The amount of his award was determined based upon the goal of
bringing his total compensation closer to total compensation as determined
in the 1994 Towers Perrin market survey.
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, thereby, to attract and retain such employees. It is the vehicle used for
making the awards of options and restricted stock described above.
The Plan also 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 closing price on the New York Stock Exchange Composite Transactions at
the date of grant and the options could not be exercised for two years from the
date of grant.
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 (401(K)) Plan is
available to all regular employees of the Company including officers. A member
may elect to contribute a pretax maximum of 4% or 6% of qualifying pay,
depending on years of service. The members contribtion is invested at the
member's election, 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 matches 60%, 65% or 70% of the employee's contribution. The Company's
match is in the form of Company Common stock. Thus, all participating
employees, including executive officers, are beneficial owners of Company
Common Stock.
The Company also facilitates employee stock ownership through its
Dividend Reinvestment and Stock Purchase Plan, which enables employees,
including executive officers, to purchase Company Common Stock at market prices
regularly through payroll deductions.
Personnel Committee
J. P. Lucas, Chairman T. H. Adams
A. F. Cain R. D. Corette
K. Foster B. D. Harris
C. T. Hibbard J. R. Jester
C. Lehrkind, III D. P. Lambros
G. H. Selover N. E. Vosburg
PERFORMANCE GRAPH
The following performance graph shows the five-year cumulative total
return for the Company, the Standard & Poor's 500 and a group of utilities
which comprise the Standard & Poor's 24 Electric Power Company Index:
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG MONTANA POWER COMPANY (MPC), THE S & P 500 INDEX AND
THE S & P ELECTRIC CO. INDEX
Indexed\Cumulative Returns
Base
Period Return Return Return Return Return
Company\Index Name 1990 1991 1992 1993 1994 1995
- ------------------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
MONTANA POWER CO 100 149.09 147.78 152.93 145.95 153.95
S&P 500 INDEX 100 130.47 140.41 154.56 156.60 215.45
ELECTRIC COMPANIES 100 130.18 137.84 155.21 134.92 176.87
*$100 INVESTED ON 12/31/90 IN STOCK OR INDEX, INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
</TABLE>
SUMMARY COMPENSATION TABLE
The following table shows compensation paid by the Company for services
rendered during the fiscal years 1995, 1994 and 1993 for named executive
officers.
<TABLE>
<CAPTION>
All
Name and Principal Annual Long-Term Compensation Other
Position Year Compensation Compensation(3)
Securities LTIP ($)
Salary ($)(1)Underlying Payouts
Options (#) ($)(2)
<S> <C> <C> <C> <C> <C>
D. T. Berube 1995 322,500 6,468
CEO & Chairman of 1994 305,100 26,800 6,300
the Board 1993 274,100 6,296
R. P. Gannon 1995 257,185 6,468
Vice Chairman 1994 237,800 16,700 6,247
& President 1993 225,000 5,846
J. J. Murphy 1995 227,558 0 5,850
President & 1994 211,543 0 22,704 5,850
COO - Entech 1993 188,307 5,846
R. F. Cromer
President & COO 1995 169,700 6,468
- - Independent 1994 152,000 9,700 6,219
Power Group 1993 136,000 5,439
A. K. Neill 1995 165,300 6,468
Executive V. P. - 1994 156,800 8,300 6,300
Utility 1993 148,000 6,177
</TABLE>
_________________
(1)R. P. Gannon and J. J. Murphy's Annual Compensation includes $7,385 and
$22,904 respectively received for selling vacation time back to the Company.
The vacation sell-back is available to all employees.
(2)Since 1995 performance measures were not met, Mr. Murphy's 1995 grant
has been cancelled. His payout of $22,704 under the Entech Restricted Stock
Plan resulted from the calculation of the extent to which 1994 performance
measures were met.
(3)All Other Compensation for the named executive officers is the value of
the Company's matching contribution of stock made to the executives'
accounts under the Deferred Savings and Employee Stock Ownership (401(K))
Plan sponsored by the Company.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to the named
executive officers, concerning individual grants of stock options at fiscal
year-end.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
Number of Percent of
Securities Total Options
Underlying Granted to Grant Date
Options Employees in Exercise or Expiration Present
Name Granted(1) Fiscal Year Base Price(2) Date Value(3)
(#) (%) ($/SH) ($)
<S> <C> <C> <C> <C> <C>
D. T. Berube 26,800 22.6 22.50 05-22-2005 42,813(4)
R. P. Gannon 16,700 14.1 22.50 05-22-2005 26,678
J. J. Murphy(5) - - - - -
A. K. Neill 8,300 7. 22.50 05-22-2005 13,259
R. F. Cromer 9,700 8.2 22.50 05-22-2005 15,496
</TABLE>
(1)The options granted will be exercisable as follows: one-third
beginning on January 1, 1996, one-third beginning on January 1, 1997 and
one-third beginning on January 1, 1998, and thereafter for a period of ten
years from the date of grant.
(2)The Exercise price based on the closing price as reported in The Wall
Street Journal as New York Stock Exchange - Composite Transaction, on date
of grant, May 22, 1995.
(3)The Binomial option pricing model was used to determine the present
value of the options granted. The assumptions used in the Binomial equation
to determine the present value are as follows: market price of stock -
$22.50; exercise price of option - $22.50; stock volatility - 10.05%;
annualized risk free interest rate - 5.67%; 10-year option term; and a stock
dividend yield of 6.33%.
(4)The exercise period for the options granted is ten years from the date
of grant, however Mr. Berube's normal retirement will occur approximately
three years from the date of grant, and the option must be exercised within
three months of retirement. Therefore, the Binomial value calculated for
Mr. Berube for this shorter exercise period, with all other assumptions the
same, is $31,356.
(5)Mr. Murphy, as an Officer of Entech, did not participate in the Option
Grant.
AGGREGATED OPTION EXERCISES 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 Price(1)) (#) Fiscal Year-End ($22.625(2))
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
D. T. Berube 0 0 31,800 26,800 $ 1,117 $ 2,233
R. P. Gannon 0 0 21,200 16,700 $ 2,946 $ 1,392
J. J. Murphy 1,419 7,296 10,378 0 $ 39,929 $ 0
A. K. Neill 0 0 21,000 8,300 $ 35,790 $ 692
R. F. Cromer 265 679 14,616 9,700 $ 8,258 $ 808
</TABLE>
(1)Based on the closing price as reported in The Wall Street Journal as
New York Stock Exchange - Composite Transactions, of the Company's Common
Stock on date of exercise.
(2)Based on the closing price as reported in The Wall Street Journal as
New York Stock Exchange - Composite Transactions, of the Company's Common
Stock on December 31, 1995.
LONG TERM INCENTIVE PLAN ("LTIP") - AWARDS IN LAST FISCAL YEAR
The following table provides information with respect to the named
executive officers, regarding each award made in the last completed fiscal
year.
<TABLE>
<CAPTION>
Performance Estimated Future Payouts Under
or Other Non-Stock Price Based Plans(2)
Name Number of Period Until
Shares, Units Maturation Threshold Target Maximum
or Rights (1) or Payout $ $ $
(#)
<S> <C> <C> <C> <C> <C>
01/01/95
thru
D. T. Berube 26,800 12/31/97 57,888 128,640 160,800
01/01/95
thru
R. P. Gannon 16,700 12/31/97 36,339 80,160 100,200
J. J. Murphy(3) - - - -
01/01/95
thru
A. K. Neill 8,300 12/31/97 18,061 39,840 49,800
01/01/95
thru
R. F. Cromer 9,700 12/31/97 20,952 46,560 58,200
</TABLE>
(1)Messrs. Berube, Gannon, Neill and Cromer also were awarded the right to
receive the equivalent, in cash, of the value of the dividends on the number
of options granted for the period January 1, 1995 through December 31, 1997,
to the extent that certain performance criteria are achieved as described
under Executive Officers Compensation in the Personnel Committee Report on
Executive Compensation, supra.
(2)The dividend equivalent estimates for Messrs. Berube, Gannon, Neill and
Cromer are based upon the current $1.60 per share annual dividend.
(3)Mr. Murphy, as an Entech Officer, did not participate in the Option-
Dividend Equivalent Grant.
<TABLE>
<CAPTION>
RETIREMENT BENEFITS
The table below illustrates the estimated annual benefits payable to
executives under the Company's Retirement Plan (a qualified defined benefit
plan) and under the Company's Benefit Restoration Plan for Senior Management
Executives (a non-qualified defined benefit plan for senior management
executives).
The table shows the estimated annual benefits payable upon retirement
at age 65 based on the listed remuneration and years of service
classifications calculated upon accrued benefits to January 1996.
These benefits may be reduced if such persons retire before reaching
age 65. The amounts presented in the table are based upon single life
annuity calculations notwithstanding the availability of joint and survivor
provisions provided by the qualified pension plan.
PENSION PLAN PLUS BENEFIT RESTORATION
Years
<S> <C> <C> <C> <C> <C>
Remuneration 15 20 25 30 35
150,000 92,475 102,967 113,458 123,950 134,442
175,000 108,100 120,467 132,833 145,200 157,567
200,000 123,725 137,967 152,208 166,450 180,692
225,000 139,350 155,467 171,583 187,700 203,817
250,000 154,975 172,967 190,958 208,950 226,942
275,000 170,600 190,467 210,333 230,200 250,067
300,000 186,225 207,967 229,708 251,450 273,192
325,000 201,850 225,467 249,083 272,700 296,317
350,000 217,475 242,967 268,458 293,950 319,442
375,000 233,100 260,467 287,833 315,200 342,567
400,000 248,725 277,967 307,208 336,450 365,692
</TABLE>
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 ($27,576 for a normal
retiree (age 65) in 1996) 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, 1996, credited years of service under the
Plan are: 31 years for Mr. Berube, 29 years for Mr. Cromer, 22 years for
Mr. Gannon, 18 years for Mr. Murphy, and 37 years for Mr. Neill.
NON-QUALIFIED BENEFIT RESTORATION PLAN FOR SENIOR MANAGEMENT EXECUTIVES
Executive officers also participate in a non-qualified Benefit
Restoration Plan for executive officers and certain other key employees.
The named executive officers participate 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.
Life insurance which is carried on Plan participants is owned by a
Rabbitrust. This life insurance helps 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.
NON-QUALIFIED BENEFIT RESTORATION PLAN FOR DIRECTORS
All Company Directors participated in a non-qualified retirement plan
(the Benefit Restoration Plan for 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 15-year period commencing on the date of
the participant's retirement. A schedule of Director's benefits is as
follows:
Years of Service Annual Benefit Years of Service Annual Benefit
1 $ 1,400 6 $ 9,400
2 $ 2,700 7 $11,400
3 $ 4,000 8 $13,400
4 $ 5,700 9 $15,800
5 $ 7,400 10 $18,500
EMPLOYMENT AGREEMENTS
The Company has entered into severance benefit agreements with
Messrs. Berube, Cromer, Gannon, Murphy, and Neill 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 initial term of the agreements runs
through December 31, 1998, with the potential of year by year extensions
thereafter.
The agreements with Messrs. Berube, Cromer, Gannon, Murphy, and Neill
provide that if, after a change of control, the employee 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, Cromer, Gannon, Murphy, or Neill 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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Blue Cross/Blue Shield of Montana, a health insurance company of which
Alan F. Cain, a director of the Company, is CEO and President, administers
the Company's and its subsidiaries' health plan for which it was paid
$510,440 in 1995.
ITEM 2. PROPOSED AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
INTRODUCTION
The Board of Directors of the Company unanimously recommends that the
shareholders vote in favor of amending Article VI of the Company's Restated
Articles of Incorporation, which limits the liability of the Directors to
the Company or its shareholders. The proposed amendment would conform
Article VI to the present Montana Business Corporation Act ("Act"), which
was amended subsequent to the adoption of Article VI. Existing Article VI
conforms to the Montana Business Corporation Act which was in effect at the
time of its adoption.
EFFECT OF THE AMENDMENT
Article VI, which conforms to the provisions of Section 35-1-216 of
the Act as in effect at the time of its adoption, provides that:
"No Director of the Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for the breach of
fiduciary duty as a Director; provided, however, that this Article VI
shall not eliminate or limit the liability of a Director to the extent
provided by applicable law (a) for a breach of a Director's duty of
loyalty to the Corporation or its shareholders, (b) for acts or
omissions that constitute willful misconduct, recklessness, or a
knowing violation of law, (c) under 35-1-409 of the Montana Code
Annotated, (d) for a transaction from which the Director derives an
improper personal benefit, or (e) for any act or omission occurring
prior to the effective date of this Article VI. No amendment to or
repeal of this Article VI shall apply to or have any effect on the
liability or alleged liability of any Director of the Corporation for
or with respect to any acts or omissions of such Director occurring
prior to such amendment or repeal."
Subsequent to the adoption of Article VI, Section 35-1-216 was amended
to provide that the articles of incorporation of a corporation may set
forth:
"...a provision eliminating the liability of a director to the
corporation or its shareholders for money damages for any actions
taken or any failure to take any action, as a director, except
liability for:
(i) the amount of a financial benefit received by a director to which
the director is not entitled;
(ii) an intentional infliction of harm on the corporation or the
shareholder;
(iii) a violation of 35-1-713; or
(iv) an intentional violation of crimination law."
Section 35-1-409 formerly set forth, and Section 35-1-713 presently sets
forth, the liabilities of directors for unlawful distribution of corporate
assets.
The proposed amendment, which conforms to the present provisions of
Section 35-1-216, would revise Article VI to read as follows:
"No Director of the Corporation shall be personally liable to the
Corporation or its shareholders for money damages for any actions
taken or any failure to take any action, as a Director, except
liability for: (a) the amount of a financial benefit received by a
Director to which the Director is not entitled; (b) an intentional
infliction of harm on the corporation or its shareholders; (c) a
violation of 35-1-713 of the Montana Code Annotated; or, (d) an
intentional violation of criminal law. No amendment to or repeal of
this Article VI shall apply to or have any effect on the liability or
alleged liability of any Director of the Corporation for or with
respect to any acts or omissions of such Director occurring prior to
such amendment or repeal."
PURPOSE OF AMENDMENT
The purposes of the amendments to Section 35-1-216 of the Act and of
the proposed amendment to Article VI are the same: to state more precisely
the limitations of directors liability for monetary damages to corporations
and their shareholders. The Official Comments accompanying the amendment of
Section 35-1-216, which quote the American Bar Association Official Comments
on the Revised Model Business Corporations Act ("RMBCA"), from which the
Montana law is drawn verbatim, state that:
(a) The existing law does not allow a corporation to limit
directors' liability if the actions amount to "willful misconduct,
recklessness, or knowing violation of law." MCA Section 35-1-
202(2)(a)(v)(B) [now repealed]. The standard under the RMBCA is an
"intentional infliction of harm" standard. The Committee was
convinced that the "intentional infliction of harm" standard was
superior. The ABA Official Comment expressed the sentiments of the
Committee:
Because adoption of a liability-limitation provision is left to
the decision of the shareholders, they are given considerable latitude
in the extent to which they are permitted to limit directors'
liability. Accordingly, the exceptions to the statute are few and
narrow. As important as validating the shareholders' right to
determine for themselves the extent of the directors' liability is
stating the limits of this right in terms promoting a clear
understanding of the conduct which is and which is not included in the
limitation of liability. Terms such as "duty of loyalty," "good
faith," "bad faith," and "recklessness" seem no more precise than (and
therefore as potentially expansive as) "gross negligence." All of
these formulations are characterizations of conduct rather than
definitions of it. Characterizations by nature tend to be more
elastic than definitions.
Directors should be afforded reasonable predictability; they are
entitled to know whether a contemplated course of action will result
in personal liability for money damages. Limits on their exculpation
from liability are appropriate but should be expressed in terms that
minimize the opportunity for after-the-fact second-guessing.
The language of the exceptions to section 2.02(b)(4) [subsection
(2)(d) of this section] is intended to express the parameters of the
shareholders' right to limit the directors' liability in terms that
will promote predictability. First, some types of improper conduct
are so clearly without any societal benefit that the law should not
appear to endorse such conduct, especially in the case of a state-
created entity such as a corporation. Second, any liability
limitation will be prospective and, therefore, by definition, the
shareholders will not be able to know in advance the exact nature or
extent of any claims that they may be giving up. Third, the public
has an interest in encouraging good corporate governance. While the
exceptions to the shareholders' right to limit liability are few and
narrow, they validate important standards of conduct. Finally, in
many cases, there will be shareholders who do not vote in favor of the
liability limitation. For these shareholders, there should be an
irreducible core of protection, especially in view of the fact that in
some cases the votes of the directors themselves as shareholders may
be sufficient to approve adoption of the provision.
The Board of Directors believes that the proposed amendment of Article
VI to reflect the new statutory language would be of benefit both to the
directors and to the shareholders. Replacing imprecise characterizations of
conduct with the definitions contained in the amended Section 35-1-216
creates more certainty in determining the extent of the limitations on a
director's liability and in determining those liabilities for which a
director cannot be exempted. This certainty will aid the directors in
determining the scope of their authority in managing the Company, and the
shareholders in determining the limitations of such authority.
VOTE REQUIRED
Adoption of the proposed amendment will require the affirmative vote
of the holders of a majority of the shares present and voting.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE IN FAVOR OF AMENDING ARTICLE VI OF THE COMPANY'S RESTATED
ARTICLES OF INCORPORATION, WHICH LIMITS THE LIABILITY OF THE DIRECTORS TO
THE COMPANY OR ITS SHAREHOLDERS.
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, 1995, all
Section 16(a) filing requirements were complied with, except for one late
report filed by Mr. Gannon reporting a gift of shares from his mother-in-law
to his wife. The gift was made unbeknownst to either Mr. Gannon or his
wife.
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 1996.
A representative of Price Waterhouse will be present at the
shareholders' meeting and will have the opportunity to make a statement if
he or 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.
SUBMISSION OF SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at next year's
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 November
30, 1996.
By Order of the Board of Directors
Pamela K. Merrell
Vice President and Secretary
MAP TO CIVIC CENTER
1340 Harrison Avenue, Butte, MT 59701
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"
Items 1 and 2.
ACCOUNT NUMBER Dated _________________________, 1996
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,
all tenants must sign the proxy.
THE MONTANA POWER COMPANY - ANNUAL MEETING, MAY 14, 1996
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints D. T. Berube, R. P. Gannon and R. M. Ralph,
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 14, 1996 at
10:00 a.m., and at any and all adjournments thereof.
1. ELECTION OF DIRECTORS:
_ FOR all nominees listed below _ WITHHOLD AUTHORITY
(except as marked contrary below) to vote for all nominees
listed below
Adams, Berube, Cain, Gannon, Jester, Lucas, Selover
INSTRUCTION: To withhold authority to vote for any nominee, write that
nominee's name here:
The Board of Directors recommends a vote "For" Item 2.
2. Adopt the Amendment to the Articles of Incorporation.
_ 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.
ACCOUNT NUMBER Dated _________________________, 1996
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,
all tenants must sign the proxy.
THE MONTANA POWER COMPANY - ANNUAL MEETING, MAY 14, 1996
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints D. T. Berube, R. P. Gannon and R. M. Ralph,
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 14, 1996 at
10:00 a.m., and at any and all adjournments thereof.
1. ELECTION OF DIRECTORS:
_ FOR all nominees listed below _ WITHHOLD AUTHORITY
(except as marked contrary below) to vote for all nominees
listed below
Adams, Berube, Cain, Gannon, Jester, Lucas, Selover
INSTRUCTION: To withhold authority to vote for any nominee, write that
nominee's name here:
The Board of Directors recommends a vote "For" Item 2.
2. Adopt the Amendment to the Articles of Incorporation.
_ FOR _ AGAINST _ ABSTAIN
(CONTINUED AND TO BE FILLED IN AND SIGNED ON REVERSE SIDE)
3
28
