Schedule 14A Information
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of
1934 (Amendment No. )
Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ x ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
Northwest Natural Gas Company
- ------------------------------------------------
(Name of Registrant as Specified In Its Charter)
C. J. Rue
- ------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ x ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rue 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
NORTHWEST NATURAL GAS COMPANY
220 NW Second Avenue
Portland, Oregon 97209-3991
April 15, 1994
Dear Shareholder:
You are cordially invited to attend the 1994 Annual
Meeting of Shareholders of Northwest Natural Gas Company (the
"Company"), which will be held in Ballroom 4 of the Oregon
Convention Center, 777 N. E. Martin Luther King Jr. Blvd.,
Portland, Oregon, on Thursday, May 26, 1994, commencing at 2:00
p.m. Pacific Daylight Time. We look forward to greeting as many
of our shareholders as are able to be with us.
At the meeting you will be asked to consider and vote
upon (1) the election of five directors, (2) a proposal to amend
the Restated Articles of Incorporation of the Company, (3) the
election of independent auditors, and (4) a shareholders'
proposal. Your Board of Directors unanimously recommends that
you vote FOR proposals 1, 2, and 3, and AGAINST proposal 4.
WHETHER OR NOT YOU EXPECT TO ATTEND, TO ASSURE YOUR
REPRESENTATION AT THE MEETING AND THE PRESENCE OF A QUORUM,
PLEASE COMPLETE, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY,
for which a return envelope is provided.
Sincerely,
Robert L. Ridgley
President and
Chief Executive Officer
<PAGE>
NORTHWEST NATURAL GAS COMPANY
ONE PACIFIC SQUARE
220 N.W. SECOND AVENUE
PORTLAND, OREGON 97209
(503) 226-4211
NOTICE OF 1994 ANNUAL MEETING OF SHAREHOLDERS
Portland, Oregon, April 15, 1994
To the Shareholders:
The 1994 Annual Meeting of Shareholders of Northwest Natural
Gas Company will be held in Ballroom 4 of the Oregon Convention
Center, 777 N. E. Martin Luther King Jr. Blvd., Portland, Oregon,
on Thursday, May 26, 1994, at two o'clock in the afternoon,
Pacific Daylight Time, for the following purposes:
(1) to elect four Class I directors to a term of three years and
one Class II director to a term of one year;
(2) to consider and take action with respect to a proposed
amendment to the Company's Restated Articles of
Incorporation to increase the authorized shares of Common
Stock, $3-1/6 par value per share, from 30,000,000 to
60,000,000 shares;
(3) to elect independent auditors for the year 1994;
(4) to consider and take action with respect to a shareholder
proposal relating to compensation of senior executives and
directors, if such proposal is brought before the meeting;
and
(5) to transact such other business as may properly come before
the meeting or any adjournment thereof.
Holders of Common Stock of record at the close of business
on April 7, 1994 are entitled to vote upon all matters properly
submitted to shareholder vote at the meeting.
The Board of Directors of the Company is soliciting the
proxies of all holders of the Common Stock who may be unable to
attend the meeting in person. These proxies also will instruct
the Administrator, or its agent, under the Company's Dividend
Reinvestment and Stock Purchase Plan to vote any shares held for
shareholders' benefit under this Plan, as indicated on the
proxies. A proxy and a stamped return envelope are enclosed
herewith for your use. No postage is needed if mailed in the
United States.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS
MEETING.
WE URGE YOU TO EXERCISE YOUR RIGHT TO VOTE BY PROMPTLY
MARKING, SIGNING, DATING AND RETURNING THE ENCLOSED PROXY CARD.
THE PROMPT RETURN OF YOUR PROXY WILL SAVE YOUR COMPANY THE
ADDITIONAL EXPENSE OF FURTHER REQUESTS TO ENSURE THE PRESENCE OF
A QUORUM. YOU MAY VOTE IN PERSON AT THE MEETING WHETHER OR NOT
YOU PREVIOUSLY HAVE RETURNED YOUR PROXY.
By Order of the Board of Directors,
Secretary
<PAGE>
NORTHWEST NATURAL GAS COMPANY
ONE PACIFIC SQUARE
220 N.W. SECOND AVENUE
PORTLAND, OREGON 97209
(503) 226-4211
1994 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 26, 1994
PROXY STATEMENT
The Board of Directors of Northwest Natural Gas Company is
soliciting the proxies of all holders of the Common Stock who may
be unable to attend in person the Annual Meeting of Shareholders
to be held in Ballroom 4 of the Oregon Convention Center, 777 N.
E. Martin Luther King Jr. Blvd., Portland, Oregon, on Thursday,
May 26, 1994, at two o'clock in the afternoon, Pacific Daylight
Time. The Company requests that you sign and return the enclosed
proxy promptly.
The Company's Annual Report for the fiscal year ended
December 31, 1993, including audited financial statements, has
been mailed to all shareholders. This proxy statement and the
accompanying proxy card are being mailed to shareholders
commencing April 15, 1994.
All shares represented by proxies which have been properly
executed and returned to the management will be voted at the
meeting. Where a shareholder eligible to vote specifies a choice
by means of the ballot space provided in the proxy, the shares
will be voted in accordance with the specification so made. If no
specification is made, such shares will be voted FOR Items 1, 2
and 3 and AGAINST Item 4, and may be cumulatively voted for the
election of directors. The proxy may be revoked by you at any
time before it is exercised by delivering to the Company a later
dated proxy, by giving written notice of revocation to the
Secretary of the Company at the address shown above, or by
attending the meeting and voting your shares in person.
The close of business on April 7, 1994 has been fixed as the
record date for the determination of shareholders entitled to
notice of and to vote at the meeting.
VOTING SECURITIES OF THE COMPANY
The ______________ shares of Common Stock outstanding on
March 22, 1994 were owned by about ______ shareholders living in
50 states and a number of foreign countries.
Each holder of Common Stock of record at the close of
business on April 7, 1994 will be entitled to one vote on all
matters properly submitted at the meeting for each share of
Common Stock so held of record. Such holder will be entitled to
cumulative voting for directors; that is, the right to cast as
many votes for one candidate as shall equal the number of shares
held of record multiplied by the number of directors to be
elected, or to distribute such number of votes among any number
of the candidates.
-1-
A majority of the shares of Common Stock outstanding at the
close of business on April 7, 1994 must be represented at the
meeting, in person or by proxy, to constitute a quorum for the
transaction of business.
The holders of Preferred Stock do not participate in the
election of directors unless Preferred dividends are in arrears
(none are in arrears). The holders of the Preference Stock do not
participate in the election of directors.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE
MEETING. YOU ARE URGED, REGARDLESS OF THE NUMBER OF SHARES HELD,
TO SIGN AND RETURN YOUR PROXY.
ITEM (1) - ELECTION OF DIRECTORS
The Company's Restated Articles of Incorporation provide
that the Board of Directors be comprised of not less than nine
nor more than thirteen directors, with the exact number of
directors to be determined by resolution adopted by the Board.
The Board has fixed the number of directors at twelve. The
Restated Articles also provide that the Board of Directors be
divided into three classes and that the number of directors in
each class be as nearly equal in number as possible.
Members of each class are elected to serve a three-year term
with the terms of office of each class ending in successive
years. The term of Class I directors expires with this Annual
Meeting of Shareholders. Messrs. Richard B. Keller, Robert L.
Ridgley and Dwight A. Sangrey and Dr. William R. Wiley are
nominees for election to the Board as Class I directors to serve
until the 1997 Annual Meeting or until their successors have been
duly elected and qualify. Messrs. Keller and Ridgley were
elected by the shareholders at the 1991 Annual Meeting. Mr.
Sangrey was elected by the Board in 1992, and by the shareholders
in 1993 for a one-year term, to fill a vacancy created by a
resignation. Dr. Wiley and Mr. Russell F. Tromley, a Class II
director and nominee for election as a Class II director to serve
until the 1995 Annual Meeting, were elected by the Board in 1994
to fill vacancies created by an increase in the size of the
Board. It is the intention of the persons named in the enclosed
proxy to vote pursuant to the proxies in favor of the election of
these nominees. In case any of them should become unavailable for
election for any reason, the persons named in the proxy will have
discretionary authority to vote for a substitute. Management
knows of no reason why any of the nominees would be unable to
serve if elected.
Under Oregon law, if a quorum of shareholders is
present at the Annual Meeting, the Class II nominee and the four
Class I nominees who receive the greatest number of votes cast at
the meeting shall be elected directors. Abstentions and broker
non-votes are counted for purposes of determining whether a
quorum exists at the Annual Meeting but are not counted and have
no effect on the results of the vote.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF THE
NOMINEES LISTED BELOW.
-2-
INFORMATION CONCERNING NOMINEES AND CONTINUING DIRECTORS
NOMINEES FOR ELECTION TO BOARD OF DIRECTORS
CLASS II
(For a one-year term ending 1995)
RUSSELL F. TROMLEY
President and Chief Executive Officer, Tromley
Industrial Holdings, Inc., Tualatin, Oregon
Age: 54
Director since: 1994
Board Committees: Audit, Nominating
Since 1978, Mr. Tromley has acquired and operated
several companies which are engaged in manufacturing and
distributing equipment for steel mills and foundries. In 1990,
he formed Tromley Industrial Holdings, Inc., and has served as
its President and Chief Executive Officer since that time. His
firm is involved in nonferrous metals alloying and distribution,
the manufacture and sale of equipment for the foundry and steel
industry, industrial equipment leasing and industrial and retail
business property investment. Mr. Tromley is immediate past
president and a director of the Casting Industry Suppliers
Association and also serves as a non-lawyer arbitrator for the
Oregon State Bar Association. Mr. Tromley attended the
University of Washington, Northwestern University and the Harvard
Graduate School of Business.
CLASS I
(For a three-year term ending 1997)
RICHARD B. KELLER
President, Keller Enterprises Inc., Portland, Oregon
Age: 65
Director since: 1983
Board Committees: Executive, Pension (Chairman),
Retirement (Chairman), Nominating, Compensation
Since 1975, Mr. Keller has served as President of Keller
Enterprises Inc., a holding company which has a number of
investments. For many years, Keller Enterprises owned Western
Paper Company, the major independent distributor of paper and
packaging in the Northwest. Mr. Keller is a director of CP
Management, Inc., the general partner of Crown Pacific Inland
Limited Partnership. He also is a life trustee of both the
Oregon Graduate Institute and Lewis & Clark College. Mr. Keller
is a graduate of the United States Military Academy and the
Harvard Business School.
-3-
ROBERT L. RIDGLEY
President and Chief Executive Officer of the Company,
Portland, Oregon
Age: 60
Director since: 1984
Board Committee: Executive (Chairman)
Mr. Ridgley has served as President and Chief Executive
Officer of the Company since January 1, 1985. He joined the
Company as Executive Vice President a year earlier. Mr. Ridgley
was a senior partner in a large Portland law firm with a business
and utility law practice prior to joining the Company. He is a
director of Kaiser Foundation Hospitals and the Kaiser Foundation
Health Plan. He is Chairman of the American Gas Association and
the Oregon Business Council, and a past Chairman of the Pacific
Coast Gas Association. Mr. Ridgley serves on the governing
boards of the Association for Portland Progress and the Oregon
Chapter of The Nature Conservancy, among others. He is a
graduate of Cornell University and the Harvard Law School.
DWIGHT A. SANGREY
President and Chief Executive Officer, Oregon Graduate
Institute of Science & Technology, Portland, Oregon
Age: 53
Director since: 1992
Board Committees: Audit, Nominating, Environmental
Policy (Chairman)
Mr. Sangrey is President of the Oregon Graduate Institute of
Science & Technology, having been appointed to that position in
September 1988. He also is Professor of Environmental Science
and Engineering at OGI. From 1985 until he joined OGI, he was
Dean of Engineering at Rensselaer Polytechnic Institute. He is a
board member of Precision Castparts and Oregon Ed-Net and also
serves on several national education and science policy
committees in the United States. Mr. Sangrey is a graduate of
Lafayette College, the University of Massachusetts and Cornell
University.
-4-
WILLIAM R. WILEY
Director, Battelle's Pacific Northwest Laboratories,
and Senior Vice President, Battelle Memorial Institute,
Richland, Washington
Age: 62
Director since: 1994
Board Committees: Environmental Policy, Nominating
Dr. Wiley has been associated with Battelle Memorial
Institute since 1965 and, in 1984, was appointed director of
Battelle's Pacific Northwest Laboratories and Senior Vice
President of Battelle Memorial Institute. Battelle's Pacific
Northwest Laboratories conduct private research at the Richland
Research Complex and the Marine Sciences Laboratory at Sequim,
Washington. Battelle also operates the U. S. Department of
Energy's Pacific Northwest Laboratory which develops and deploys
technology in support of DOE missions in energy and national
defense. Dr. Wiley is President of the Board of Regents of
Washington State University, a Foundation Associate of Seattle's
Pacific Science Center, and a member of the boards of directors
of Forward Washington, The Washington Roundtable and Oregon
Graduate Institute. He is a graduate of Tougaloo College, the
University of Illinois-Urbana and Washington State University.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
CLASS II
(Term ending 1995)
TOD R. HAMACHEK
President and Chief Executive Officer, Penwest, Ltd.
Bellevue, Washington
Age: 48
Director since: 1986
Board Committees: Pension, Retirement, Nominating,
Compensation (Chairman)
Mr. Hamachek was named President and Chief Executive Officer
of Penwest, Ltd., a diversified producer of specialty chemicals
and food and pharmaceutical ingredients, in 1985, after having
served as its President and Chief Operating Officer and as a
director since 1984. Mr. Hamachek is a director of Penwest,
Ltd., The Blethen Corporation and DEKALB Genetics Corporation.
He is a trustee of Virginia Mason Hospital, the Pacific Science
Center, the Seattle Foundation, The Washington Roundtable and
Lakeside School. He is a graduate of Williams College and the
Harvard Business School.
-5-
WAYNE D. KUNI
President, Kuni Enterprises, Beaverton, Oregon
Age: 63
Director since: 1980
Board Committees: Executive, Nominating, Compensation
Mr. Kuni founded Kuni Cadillac & B.M.W., Inc., in Beaverton,
Oregon in 1970 and has been the President and principal
shareholder since that time. In 1984, he established the
predecessor to Kuni Enterprises which manages the affairs of Kuni
Cadillac & B.M.W., Lexus of Portland, Hubacher Cadillac in
Sacramento, California, South Bay Pontiac-Cadillac, Inc., in San
Jose, California, Kuni Lexus in Denver, Colorado, and other
financial interests. He is past President of the Portland
Metropolitan Automobile Dealers Association, the Oregon
Automobile Dealers Association and the Portland Chamber of
Commerce. Active in numerous civic activities, he is President
of the Arlington Club and a member of the Board of Trustees of
Linfield College, and is Chairman Emeritus of the Board of
Governors of the Portland Shriners Hospital for Crippled
Children. Mr. Kuni is a graduate in business administration from
the General Motors Institute, Flint, Michigan.
MELODY C. TEPPOLA
Managing Partner, National Builders Hardware Company,
Portland, Oregon
Age: 51
Director since: 1987
Board Committees: Audit, Pension, Retirement,
Nominating, Environmental Policy
Ms. Teppola has been associated with National Builders
Hardware Company, a regional and national distributor of builders
hardware, woodworking machinery and decorative plumbing, since
1965. She is past Chair of the Portland Planned Parenthood
Association, the Reed College Women's Committee and the
Contemporary Crafts Association. She is currently a director of
the YWCA of Portland, the Bonnie Bronson Fund (OCF) and the
Bosco-Milligan Foundation for Historic Preservation, and is a
member of the Salvation Army Advisory Council of Harbor Light's
Recovery Road. Ms. Teppola is a graduate of Mills College.
-6-
CLASS III
(Term ending 1996)
MARY ARNSTAD
President, The Heathman Management Group, Inc.,
Portland, Oregon
Age: 45
Director since: 1992
Board Committees: Audit, Nominating
Since January 1, 1992, Ms. Arnstad has served as President
of The Heathman Management Group, Inc., which owns and operates
The Heathman Hotel in Portland, The Greenwood Inn in Beaverton,
Oregon and the Boise River Inn in Boise, Idaho. She has served
as President and General Manager of The Heathman Hotel since June
1986. She also serves as Vice Chairman of the Board of Directors
of Preferred Hotels and Resorts Worldwide, and is on the
governing boards of the Portland Oregon Visitors Association, the
Association for Portland Progress and the Northwest Business
Committee for the Arts. She is a graduate of Wittenberg
University.
THOMAS E. DEWEY, JR.
Partner, McFarland Dewey & Co., New York, New York
Age: 61
Director since: 1986
Board Committees: Executive, Audit (Chairman),
Nominating
Mr. Dewey is a general partner in the investment banking
firm of McFarland Dewey & Co. which was formed in 1989 to provide
clients with independent financial advice, including advice on
matters such as corporate financial strategies and
recapitalization proposals. Prior to his association with this
firm, Mr. Dewey was President of Thomas E. Dewey Jr. & Co., Inc.
which provided services covering all aspects of corporate and
public finance. He serves on the Board of Trustees and is
Chairman Emeritus of Lenox Hill Hospital and formerly served as a
member of the Board and Vice Chairman of New York City Housing
Development Corporation. Mr. Dewey is a graduate of Princeton
University and the Harvard Business School.
-7-
BENJAMIN R. WHITELEY
Chairman of the Board and Chief Executive Officer,
Standard Insurance Company, Portland, Oregon
Age: 64
Director since: 1989
Board Committees: Pension, Retirement, Compensation,
Nominating
Mr. Whiteley was appointed Chairman of the Board and Chief
Executive Officer of Standard Insurance Company effective
January 1, 1993 after having served as President and Chief
Executive Officer since 1983. He is also a director of Standard
Insurance Company, Gunderson, Inc., United States National Bank
of Oregon, and Willamette Industries, Inc. Mr. Whiteley has been
active in numerous civic organizations and currently serves on
the boards of the Oregon Independent College Foundation, Pacific
University, the Oregon State University Foundation, the Oregon
Business Council, the Oregon Health Sciences University
Foundation, and the St. Vincent Medical Foundation. He is a
graduate of Oregon State University, the University of Michigan,
and the advanced management program at the Harvard Business
School.
CARLTON WOODARD
Retired Chairman of the Board, South Lane Investment
Corporation, Cottage Grove, Oregon
Age: 70
Director since: 1976
Board Committees: Executive, Nominating (Chairman),
Environmental Policy
Mr. Woodard is the Retired Chairman of the Board of South
Lane Investment Corporation which owns Kimwood Corporation, a
woodworking machine manufacturer, the Valley River Inn, Eugene,
Oregon, and other real estate and financial interests. Formerly
President and Chairman of Kimwood Corporation which he founded in
1951, Mr. Woodard is a retired director of United States National
Bank of Oregon, a board member of the University of Oregon
Foundation and a trustee of Lewis & Clark College. He is a
graduate of the University of Southern California.
-8-
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES:
There are seven standing committees of the Board: the Audit,
Retirement, Pension, Compensation, Nominating, Environmental
Policy and Executive Committees.
The Audit Committee of the Board is comprised of Ms.
Arnstad, Mr. Dewey, Mr. Sangrey, Ms. Teppola and Mr. Tromley,
each of whom is an outside director. The Committee approves the
work program of the Company's internal audit staff and reviews
the corporate audit and other internal accounting control matters
with the independent certified public accountants elected by the
shareholders. It reports regularly to the Board. The Committee
held four meetings during 1993.
The Retirement Committee and the Pension Committee
administer the Company's two defined benefit plans, its
Retirement Plan for Non-Bargaining Unit Employees and its
Retirement Plan for Bargaining Unit Employees. The Retirement
Committee consists of Ms. Teppola and Messrs. Hamachek, Keller,
and Whiteley; and they, together with a representative chosen by
the bargaining unit members, also constitute the Pension
Committee. The two Committees, in aggregate, met six times during
1993.
The Compensation Committee, which is comprised of Messrs.
Hamachek, Keller, Kuni and Whiteley, each of whom is an outside
director, reviews the performance of executive officers and
considers executive compensation data in making recommendations
to the Board relating to the Company's executive compensation
program and benefit plans. This Committee also makes
recommendations to the Board on executive succession matters.
Three meetings of this Committee were held during 1993.
The Nominating Committee is comprised of all directors
except Mr. Ridgley. The Committee recommends to the Board of
Directors nominees for election as directors. No meetings of
this Committee were held during 1993. Shareholders' suggestions
for director-nominees may be submitted to the Secretary of the
Company for consideration by the Nominating Committee. The
Company's Restated Articles of Incorporation provide that no
person, except those nominated by the Board, shall be eligible
for election as a director unless a written request that his or
her name be placed in nomination, together with the written
consent of the nominee, shall be received from a shareholder of
record entitled to vote at such election by the Secretary of the
Company not later than (a) the thirtieth day prior to the date
fixed for the meeting, or (b) the tenth day after the mailing of
the notice of that meeting, whichever is later.
The Environmental Policy Committee develops and recommends
to the Board appropriate environmental policies and advises the
Board concerning the status of the Company's compliance with
environmental regulations. The Committee is comprised of Ms.
Teppola, Messrs. Sangrey and Woodard and Dr. Wiley. This
Committee held three meetings in 1993.
The Executive Committee is empowered to exercise all of the
authority of
-9-
the Board in the management of the Company except as otherwise
may be provided by law. This Committee, which is comprised of
Messrs. Dewey, Keller, Kuni, Ridgley, and Woodard, met nine times
during 1993.
Directors who are not employees of the Company receive an
annual retainer of $8,000, and a fee of $800 for each Board and
Committee meeting attended. Non-employee directors who retire
from the Board at age 72 with at least ten years of service are
eligible to receive an annual retirement benefit equal to the
annual retainer. The benefit is payable for life. Members of
the Executive Committee, except Mr. Ridgley, receive an
additional annual retainer of $6,000, but do not receive a fee
for attendance at meetings of such Committee unless the meeting
is held on a day other than the day a meeting of the Board of
Directors is held. Non-employee directors who also serve as
directors of Oregon Natural Gas Development Corporation and NNG
Energy Systems, Inc., each a subsidiary of the Company, receive a
fee of $700 and $800, respectively, for each subsidiary board
meeting attended. Non-employee directors of Pacific Square
Corporation and NNG Financial Corporation, also subsidiaries of
the Company, receive a fee of $250 for each board meeting
attended.
During 1993, there were nine meetings of the Company's
Board, an aggregate of 11 meetings of the boards of the above-
mentioned subsidiaries, and an aggregate of 25 committee
meetings. No director attended fewer than 75 percent of the
total meetings of the Board, subsidiary boards, and committees on
which he or she served.
DIRECTORS DEFERRED COMPENSATION PLAN
Directors may elect to defer the receipt of all or a part of
their directors' fees under the Company's Directors Deferred
Compensation Plan. Deferred amounts are credited to a deferred
compensation account to which interest is credited quarterly at a
rate equal to the annual rate of interest paid on 30-year U.S.
Treasury securities plus three percentage points, subject to a
six percent minimum rate. The rate is adjusted quarterly. A
participant may elect to receive deferred amounts and accrued
interest in a lump sum, in installments over a period not to
exceed ten years, or in a combination of lump sum and installment
payments.
The Company's obligations under the Plan are unfunded and
benefits will be paid from the general funds of the Company. The
Company has purchased life insurance policies on the lives of the
participants, the proceeds from which will be used to reimburse
the Company for the payment of Plan benefits. This insurance is
designed so that, if the assumptions made as to mortality
experience, policy dividends and other factors are realized,
insurance policy proceeds paid to the Company will be at least
equal to all the premium payments and benefits paid under the
Plan. The cost of any one individual participant cannot be
properly allocated or determined because of overall Plan
assumptions.
In connection with this Plan, the Company has established
the Umbrella
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Trust for Directors, with Bank of America Oregon serving as the
trustee. The Company may from time to time transfer assets to
the trustee to hold in trust for the benefit of Plan
participants. The Company's obligations under the Plan are not
limited to trust assets, and Plan participants will have a claim
against the Company for any payments not made by the trustee. The
Company instructs the trustee as to the investment of the trust's
assets and the trustee's fees and expenses are paid by the
Company.
In addition, upon the occurrence of certain events, such as
a change in control of the Company, termination of the Plan or
the failure by the Company to provide the trust with adequate
funds to pay current benefits, the Company may be required under
the terms of the trust to contribute to the trust the amount by
which the present value of all benefits payable under the Plan
exceeds the value of the trust's assets.
NON-EMPLOYEE DIRECTORS STOCK COMPENSATION PLAN
Non-employee directors of the Company are awarded
approximately $15,000 worth of the Company's Common Stock every
five years pursuant to the Company's Non-Employee Directors Stock
Compensation Plan. Non-employee directors having fewer than five
years of service remaining before retirement receive stock awards
equivalent to approximately $3,000 for each remaining year.
Shares awarded under this Plan vest monthly over the five-year
period following the award or shorter period to retirement, and
unvested shares are forfeited if the recipient ceases to be a
director. The shares awarded are purchased in the open market
with funds supplied by the Company, and the certificates are held
by the Company until the director retires or otherwise ceases to
serve as a director. Non-employee directors have been awarded an
aggregate of 8,182 shares under this Plan.
COMPLIANCE WITH OWNERSHIP REPORTING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors and officers to file reports of
ownership and changes in ownership of Company Common Stock with
the Securities and Exchange Commission. The Company is required
to disclose in this proxy statement any late filings of those
reports made by its directors and officers during 1993. To the
Company's knowledge, during 1993 all directors and officers
timely filed all such required reports.
BENEFICIAL OWNERSHIP OF COMMON STOCK BY DIRECTORS AND EXECUTIVE
OFFICERS
Set forth below is certain information with respect to
beneficial ownership of the Company's Common Stock as of February
28, 1994 by all directors and nominees, each of the executive
officers named in the Summary Compensation Table on page 13 and
all directors and executive officers as a group.
-11-
Percent of
Number Outstanding
Names of Beneficial Owner of Shares (1) Common Stock
------------------------- ----------- ------------
Mary Arnstad 555 (2) *
Bruce R. DeBolt 14,048 (3) *
Thomas E. Dewey, Jr. 1,301 (4) *
Dwayne L. Foley 13,135 (5) *
Tod R. Hamachek 1,396 (4) *
Richard B. Keller 8,196 (4), (6) *
Wayne D. Kuni 3,245 (4), (7) *
Michael S. McCoy 12,500 (8) *
Robert L. Ridgley 31,844 (9) *
Bruce B. Samson 10,669 (10) *
Dwight A. Sangrey 547 (2) *
Melody C. Teppola 1,484 (11) *
Russell F. Tromley 1,455 (12) *
Benjamin R. Whiteley 897 (13) *
William R. Wiley 413 (14) *
Carlton Woodard 2,094 (15) *
All directors and officers
as a group (20 in number) 125,790 (16) 0.95
[FN]_________________________
* The total for each individual is less than 1.0 percent of
the shares of Common Stock outstanding.
(1) Unless otherwise indicated, beneficial ownership includes
both sole voting power and sole investment power.
(2) Includes 521 shares awarded and subject to vesting under
the Non-Employee Directors Stock Compensation Plan
(NEDSCP) of which 130 shares were vested on February 28,
1994 and 391 shares will vest over the subsequent 45
months.
(3) Includes 4,122 shares held jointly with wife and 8,000
shares which Mr. DeBolt has the right to acquire within 60
days through the exercise of options under the 1985 Stock
Option Plan (1985 SOP).
(4) Includes 1,001 shares awarded and subject to vesting under
the NEDSCP of which 577 shares were vested on February 28,
1994 and 424 shares will vest over the subsequent 58
months.
(5) Consists of 3,753 shares held jointly with wife and 9,382
shares which Mr. Foley has the right to acquire within 60
days through the exercise of options under the 1985 SOP.
(6) Includes 6,000 shares held by Keller Enterprises.
(7) Includes 2,232 shares held in trust.
(8) Consists of 1,914 shares held jointly with wife and 10,586
shares which Mr. McCoy has the right to acquire within 60
days through the exercise of options under the 1985 SOP.
(9) Includes 20,119 shares which Mr. Ridgley has the right to
acquire within 60 days through the exercise of options
under the 1985 SOP.
(10) Includes 903 shares held indirectly by Mr. Samson under
the Retirement K Savings Plan (RKSP) at December 31, 1993
and 8,000 shares which Mr. Samson has the right to acquire
within 60 days through the exercise of options under the
1985 SOP.
(11) Includes 1,001 shares awarded and subject to vesting under
the NEDSCP of which 577 shares (including 563 held in
trust) were vested on February 28, 1994 and 424 shares
will vest over the subsequent 58 months, and an additional
478 shares held in trust.
(12) Includes 438 shares awarded and subject to vesting under
the NEDSCP of which 14 shares were vested on February 28,
1994 and 424 shares will vest over the subsequent 58
months.
(13) Includes 510 shares awarded and subject to vesting under
the NEDSCP of which 452 shares were vested on February 28,
1994 and 58 shares will vest over the subsequent 6 months.
(14) Consists of 413 shares awarded and subject to vesting
under the NEDSCP of which 6 shares were vested on
February 28, 1994 and 407 shares will vest over the
subsequent 59 months.
(15) Includes 774 shares awarded and subject to vesting under
the NEDSCP of which 578 shares were vested on February 28,
1994 and 196 shares will vest over the subsequent 26
months.
(16) Includes 11,722 shares held jointly with spouses, 1,588
shares held under the RKSP at December 31, 1993, and 8,701
shares which the executive officers not named above have
the right to acquire within 60 days through the exercise
of options under the 1985 SOP.
-12-
EXECUTIVE COMPENSATION
Shown below is information concerning the annual and other
compensation for services in all capacities to the Company for
the years ended December 31, 1993, 1992 and 1991, of those
persons who were, during 1993 and at December 31, 1993 (i) the
chief executive officer and (ii) the other four most highly
compensated executive officers of the Company (the Named
Executive Officers):
SUMMARY COMPENSATION TABLE
NAME AND PRINCIPAL ANNUAL COMPENSATION ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(1)
- ------------------ ---- ------ ----- --------------
(a) (b) (c) (d) (e)
Robert L. Ridgley 1993 $344,233 $186,000 $11,889
President and Chief 1992 334,500 0 9,405
Executive Officer 1991 316,667 0
Bruce R. DeBolt 1993 172,117 65,000 6,562
Senior Vice President 1992 167,250 0 5,624
and Chief Financial 1991 159,149 0
Officer
Dwayne L. Foley 1993 172,117 64,000 3,662
Senior Vice President 1992 167,250 0 2,524
1991 156,800 0
Bruce B. Samson 1993 147,633 62,000 5,201
Senior Vice President 1992 143,483 0 5,081
and General Counsel 1991 137,000 0
Michael S. McCoy 1993 130,100 61,000 5,232
Senior Vice President 1992 118,451 0 2,345
1991 107,767 0
(1) In accordance with the transitional provisions applicable to
the revised rules on executive officer compensation
disclosure adopted by the Securities and Exchange
Commission, as informally interpreted by the Commission
Staff, amounts of All Other Compensation (column (e)) are
excluded for the year 1991. Amounts in column (e) for the
year 1993 consist of amounts contributed or accrued for the
year 1993 for the Named Executive Officers under the
Company's Executive Deferred Compensation Plan ($9,641 for
Mr. Ridgley, $4,314 for Mr. DeBolt, $3,662 for Mr. Foley,
$2,953 for Mr. Samson, and $3,434 for Mr. McCoy) and its
Retirement K Savings Plan ($2,248 each for Messrs. Ridgley,
DeBolt and Samson, $0 for Mr. Foley and $1,799 for Mr.
McCoy).
-13-
OPTIONS/SAR EXERCISES AND YEAR-END VALUES
Shown below is information with respect to options to
purchase shares of the Company's Common Stock exercised in 1993
and unexercised options granted in prior years under the 1985
Stock Option Plan to the Named Executive Officers and held by
them at December 31, 1993.
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN 1993 AND YEAR-END OPTION/SAR VALUES
<CAPTION>
No. of No. of Securities Underlying Value of Unexercised
Shares Unexercised Options/ In-the-Money Options/
Acquired SARs at December 31, 1993 SARs at December 31, 1993
on Value -------------------------------- -------------------------------------
Name Exercise Realized Exercisable Unexercisable(1) Exercisable(2) Unexercisable
- ------------------ --------- -------- --------- ----------- ------------ -----------
(a) (b) (c) (d) (e) (f) (g)
<S> <C> <C> <C> <C> <C> <C>
Robert L. Ridgley 8,805 $168,331 16,219 7,300 $227,613 $68,438
Bruce R. DeBolt 4,116 70,245 8,000 0 75,000 0
Dwayne L. Foley 0 0 10,132 0 110,445 0
Bruce B. Samson 0 0 8,000 0 75,000 0
Michael S. McCoy 1,914 30,863 10,586 0 139,742 0
<FN>
(1) Unexercisable options are those options which have been granted but cannot yet be exercised due to Internal Revenue Code
restrictions on the value of incentive options granted.
(2) Represents the difference between the exercise prices for the options and the closing price of $34.25 for the Company's Common
Stock as quoted on the NASDAQ National Market on December 31, 1993 times the number of options.
</TABLE>
-14-
REPORT OF THE COMPENSATION COMMITTEE
ON
EXECUTIVE MANAGEMENT COMPENSATION
EXECUTIVE COMPENSATION PRINCIPLES
The Company's executive compensation program is
administered by the Compensation Committee of the Board of
Directors which is comprised of Messrs. Hamachek, Keller, Kuni
and Whiteley, each of whom is an outside director. The program
is designed to attract, motivate and retain talented executives
critical to the achievement of the Company's long-term business
strategy, its annual goals and objectives, the enhancement of
shareholder value, and the implementation of corporate values.
The program seeks to do this by:
- - Tying a portion of each executive's total compensation to
the achievement of previously-established annual performance
goals.
- - Aligning executives' long-term interests with those of the
Company's shareholders by encouraging ownership of the
Company's Common Stock.
- - Providing total compensation, including base salary and
incentive compensation, which is competitive with that of
other utilities and service and industrial companies of
comparable size and circumstances.
EXECUTIVE COMPENSATION COMPONENTS
There are three primary components of the Company's
executive compensation program - annual base salary, annual
incentive cash bonuses and long-term incentive stock options.
BASE SALARIES
Base salaries paid to executives are established by the
Board of Directors upon the recommendation of the Committee
based, in part, on market salary analyses prepared by the
Company's independent compensation consultant and used by the
Company in setting salary levels. This same methodology is used
for all non-bargaining unit employees. These analyses include
salary data for comparable executive positions of electric and
gas utilities as well as service and industrial companies of
approximately the same size in terms of total revenues located
throughout the United States. The gas utility portion of the
analysis includes data from the American Gas Association
executive compensation survey, which includes substantially the
same companies which comprise the American Gas Association Local
Distribution Company Index appearing on the performance graph
(page 18). The Committee uses this information as a guide to
establish base salaries that are competitive with those paid to
executives in similar positions in comparable companies.
Generally, it is the Committee's policy to target executives'
base salaries at a level equivalent to the 50th percentile for
base salaries for comparable positions included in the
consultant's analyses. Each executive's targeted salary level may
be adjusted, at the discretion of the Committee, on the basis of
such
-15-
executive's performance and potential, as well as changes in
duties and responsibilities. Executives' salaries are reviewed
by the Committee annually.
EXECUTIVE ANNUAL INCENTIVE PLAN
The Company's Executive Annual Incentive Plan is
intended to advance the interests of the Company and its
shareholders by means of an incentive cash bonus program which
will motivate key executives to achieve previously-established
annual performance goals. The amounts to be paid if these goals
should be achieved, when added to base salaries, is intended to
place the Company's executives' compensation at between the 50th
and 75th percentiles of total cash compensation for comparable
positions included in the consultant's analyses.
Participation in the Plan currently is limited to nine
executive officers designated by the Board. The payment of
awards under this Plan is contingent upon meeting predetermined
individual and Company performance goals.
At the beginning of each year, weighted performance
goals are established. At year-end, performance is measured
against these goals on an arithmetic scale. The results are
considered by the Committee in determining the amounts, if any,
to be awarded.
The amounts of these awards are based on a formula
which reflects, as to each executive, an allocation between
Company and individual performance criteria. The allocation
depends upon each executive's ability to influence corporate
performance. Depending upon position, performance and the other
factors considered by the Committee, an executive can earn from
20% to 40% of base salary if the prescribed Company and
individual performance goals are met, and up to 30% to 60% of
base salary if these goals are exceeded.
Performance goals for 1993 focused on strengthening the
Company's financial position. These included the achievement
of: (1) net income in an amount which the Committee determined
would demonstrate above average performance; (2) a weighted
average ranking for return on equity over a two-year period which
would exceed a base level among a peer group of other gas
utilities; and (3) several operating goals, related to marketing,
control of costs of connecting new customers and improved
customer service which, if achieved, would enhance long-term
corporate profitability. In determining the awards, the
Committee utilized a performance matrix which accorded 50% to net
income and 25% to each of the other two goals. In combination,
these goals measured the Company's performance in terms of its
overall profitability, its financial performance versus a group
of peer utilities and its reduction of costs and achievement of
greater efficiency. The grant of any award for 1993 was
conditioned upon the Company's 1993 net income exceeding a
percentage of the target designated in advance by the Board and
being sufficient to cover the payment of all dividends.
1985 STOCK OPTION PLAN
The long-term component of the Company's executive
compensation program consists of the 1985 Stock Option Plan.
Stock options enable executives
-16-
to benefit from increases in the price of the Company's Common
Stock, thereby aligning their interests with those of the common
shareholders.
The Company has not made grants under the Plan on an
annual basis. When grants are made, the number of options
granted is not based upon a predetermined formula, but rather
upon the Committee's judgment as to how many options would
provide meaningful incentives to executives. No grants were made
in 1993.
CEO COMPENSATION
The increase in compensation paid to Robert L. Ridgley,
president and chief executive officer, for the year 1993
consisted, in part, of an increase in base salary and, in part,
of an incentive bonus. Mr. Ridgley's compensation reflects a
2.8% increase in base salary, effective March 1, 1993. This
increase, which was the same as the average percentage salary
increase for the Company's non-bargaining unit employees
effective January 1, 1993, was deemed by the Committee and the
Board to be appropriate to maintain the competitiveness of Mr.
Ridgley's base salary. His compensation also reflects a cash
bonus of $186,000 under the Executive Annual Incentive Plan. Mr.
Ridgley did not receive a bonus under that Plan for either 1991
or 1992. The award of the bonus for 1993, which is equal to 54%
of Mr. Ridgley's 1993 base salary, was based on the Committee's
evaluation of Mr. Ridgley's performance in relation to the
achievement of the 1993 financial and operating goals described
above. For 1993, the Company reported record earnings of $2.61
per share and record net income applicable to common stock of
$34,159,000, as compared to $1.11 per share and $13,215,000,
respectively, in 1992. These 1993 results far exceeded the
financial performance goals established for the year. This
improved financial performance has contributed to a significant
increase in shareholder value as reflected by the price of the
Company's Common Stock, which traded at an all-time high in 1993.
During the year, the total return on the Company's Common Stock
was 26.3% while the average total return on stocks of the
American Gas Association Local Distribution Company Index was
16.2% and the S&P 500's total return was 10.1%. For 1993, the
Company's return on equity of 13.6% ranked sixth among 30
comparable companies. Combined with the return on equity in
1992, when earnings were adversely impacted by the warmest
weather in history, the Company's weighted two-year ranking for
return on equity was twelfth within this group. The Committee
determined that the achievements made with respect to these
performance goals, together with the achievement of the operating
goals discussed above, warranted the bonus awarded to Mr. Ridgley
for 1993.
Tod R. Hamachek, Chair
Richard B. Keller
Wayne D. Kuni
Benjamin R. Whiteley
-17-
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the annual
percentage change in the cumulative total shareholder return on
the Company's Common Stock against the cumulative total return of
the S&P Composite - 500 Stock Index and the American Gas
Association (AGA) Local Distribution Company (LDC) Index for the
period of five years commencing December 31, 1988 and ended
December 31, 1993.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN *
(Based on $100 invested on 12/31/88)
[Performance line graph depicting five-year cumulative total
return information for the Company, the S&P 500 and the American
Gas Association Local Distribution Company Index based on $100
invested on December 31, 1988. Data points for the Company, the
S&P 500 and the AGA LDC Index are shown below]
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
N.W. Natural
Gas $100.00 $125.96 $138.06 $163.20 $171.55 $216.69
S&P 500 $100.00 $131.69 $127.61 $166.49 $179.18 $197.24
ADA LDC Index $100.00 $131.91 $133.77 $162.10 $193.45 $224.74
* Total return assumes reinvestment of dividends daily for S&P
500 and at year-end for the Company and the AGA LDC Index.
** The AGA LDC Index is comprised of the following companies:
Atlanta Gas Light Co., Atmos Energy Corporation, Bay
State Gas Company, Brooklyn Union Gas Co., Cascade
Natural Gas Corp., Colonial Gas Company, Connecticut
Energy Corp., Connecticut Natural Gas, Delta Natural Gas
Co., Inc., EnergyNorth Inc., Energy West Inc., Essex
County Gas Company, Indiana Energy, Inc., MCN
Corporation, Mobile Gas Service Corp., New Jersey
Resources Corp., North Carolina Natural Gas, Northwest
Natural Gas Company, NUI Corporation, Peoples Energy
Corporation, Piedmont Natural Gas Co., Providence Energy
Corp., Public Service Co. of North Carolina, Southern
Union Company, United Cities Gas Company, Washington Gas
Light Co., Wisconsin Southern Gas Co. and Yankee Energy
System, Inc.
-18-
RETIREMENT PLANS
The following table shows the estimated annual retirement
benefit payable on a straight life annuity basis (net of Social
Security offset) for participants in the Company's Executive
Supplemental Retirement Income Plan (ESRIP) from all Company
defined benefit plans: the qualified Retirement Plan for Non-
Bargaining Unit Employees, the Executive Deferred Compensation Plan
supplemental benefit and the ESRIP. Optional forms of payment,
including joint and survivor forms, are available, subject to an
actuarial adjustment in the amount of payment.
PENSION PLAN TABLE
YEARS OF SERVICE
--------------------------------------------------
COMPENSATION 15 20 25 30 35
---------------------------------------------------
$150,000 $ 82,050 $ 82,050 $ 89,550 $ 89,550 $ 89,550
175,000 98,300 98,300 107,050 107,050 107,050
200,000 114,550 114,550 124,550 124,550 124,550
225,000 130,800 130,800 142,050 142,050 142,050
250,000 147,050 147,050 159,550 159,550 159,550
300,000 179,550 179,550 194,550 194,550 194,550
350,000 212,050 212,050 229,550 229,550 229,550
400,000 244,550 244,550 264,550 264,550 264,550
450,000 277,050 277,050 299,550 299,550 299,550
500,000 309,550 309,550 334,550 334,550 334,550
550,000 342,050 342,050 369,550 369,550 369,550
For purposes of the ESRIP, "compensation" consists of the
annual salary of the plan participant last approved by the
Compensation Committee of the Board of Directors and being paid
by the Company at the date of retirement plus the average of the
last three bonus awards (if any) paid prior to retirement.
The credited years of service under the ESRIP for Messrs.
Ridgley, DeBolt, Foley, Samson, and McCoy are 33 years, 14 years,
26 years, 11 years and 24 years, respectively. For purposes of
the ESRIP, Messrs. Ridgley and Samson were granted an additional
23 years and 7 years, respectively, of past service credit which
are included in years of service shown.
ITEM (2) - PROPOSED AMENDMENT OF RESTATED ARTICLES OF
INCORPORATION TO INCREASE AUTHORIZED COMMON STOCK
The Board of Directors has unanimously adopted resolutions
approving and recommending that the shareholders adopt an
amendment to the Company's Restated Articles of Incorporation
increasing the total authorized shares of the Common Stock,
$3-1/6 par value per share, from the presently authorized
30,000,000 shares to 60,000,000 shares.
As of February 28, 1994, of the 30,000,000 presently
authorized shares of Common Stock, 13,219,706 shares were issued
and outstanding, and 16,780,294 were unissued shares which
included 577,558 unissued shares reserved for issuance upon
conversion of shares of the Company's Convertible Preference
Stock, $2.375 Series, and its Convertible Debentures, 7-1/4%
Series
-19-
due 2012. Also, 835,027 unissued shares were reserved for
issuance under the Company's Dividend Reinvestment and Stock
Purchase Plan, its 1985 Stock Option Plan and its Employee Stock
Purchase Plan. Accordingly, 15,367,709 shares of authorized
Common Stock remained unreserved and available for issuance.
Shareholders are requested to authorize an additional
30,000,000 shares at this time to provide a reasonable reserve of
authorized but unissued Common Stock. Upon approval of the
proposed amendment, the additional shares may be issued by the
Board at such times and on such terms as deemed by the Board of
Directors to be in the best interest of the Company and its
shareholders, without further action by the shareholders, except
as otherwise may be required by applicable laws or by the
requirements of any stock exchange upon which securities of the
Company may be listed. Under present law, approval of the Oregon
Public Utility Commission and the Washington Utilities and
Transportation Commission will be required to issue the
additional shares.
The Board believes that it is in the best interest of the
Company and its shareholders to have the additional shares
authorized and available for issuance, at the Board's discretion,
for the purposes of financing the Company's businesses and
acquiring other businesses. The Board could authorize a public
offering or a private offering of additional shares of Common
Stock or of debt or other securities convertible into shares of
Common Stock. Such offering could be made for cash or in
exchange for other securities of the Company, in connection with
the acquisition of the assets or securities of another business,
in connection with a stock split or stock dividend, pursuant to
the Company's Dividend Reinvestment and Stock Purchase Plan or
its employee benefit programs or for any purpose the Board may in
its discretion deem to be in the best interest of the Company and
its shareholders. However, the Company has no plans to issue
additional Common Stock for any of these purposes, except as may
be publicly offered from time to time for the purpose of
financing the Company's business, as permitted under the
Company's Dividend Reinvestment and Stock Purchase Plan and its
employee benefit plans, and as required for the conversion of
shares of the Convertible Preference Stock, $2.375 Series, and
the Convertible Debentures, 7-1/4% Series due 2012.
The issuance of the additional shares of Common Stock would
make a change in control of the Company more difficult if the
Board should cause such shares to be issued to holders who might
side with the Board in opposing a takeover bid that the Board
determines is not in the best interests of the Company and its
shareholders. The availability of the additional shares might
discourage an attempt by another person or entity to acquire
control of the Company through the acquisition of a substantial
number of shares of Common Stock, since the issuance of such
shares could dilute the stock ownership of such person or entity.
Similarly, the existence or issuance of such shares might make it
more difficult or discourage attempts to remove incumbent
management. Future issuances of such shares might have a
dilutive effect on earnings per share and on the voting rights of
the holders of the then
-20-
outstanding Common Stock.
It is proposed that subdivision A. of Article III of the
Restated Articles of Incorporation be amended to read (underlined
portions indicate changes):
"The aggregate number of shares of capital stock which
the corporation shall have authority to issue is
63,500,000 shares, divided into 1,500,000 shares of
----------
Preferred Stock without par value, issuable in series
as hereinafter provided, 2,000,000 shares of Preference
Stock without par value, issuable in series as
hereinafter provided, and 60,000,000 shares of Common
----------
Stock of the par value of $3-1/6 per share."
The proposed amendment will not change any present right of
holders of the Common Stock, the Preference Stock or the
Preferred Stock. The additional shares of Common Stock would
become part of the existing class of Common Stock, and the
additional shares, when issued, would have the same rights and
privileges as the outstanding shares of Common Stock. The
holders of Common Stock do not have pre-emptive rights to
subscribe for any of the Company's securities and will not have
any such rights to subscribe for the additional Common Stock
proposed to be authorized.
ADOPTION BY THE SHAREHOLDERS
Under Oregon law, if a quorum of shareholders is present at
the Annual Meeting, the proposed amendment to the Restated
Articles of Incorporation will be approved if the shares voted in
favor of the amendment exceed the shares voted against it.
Abstentions and broker non-votes are counted for purposes of
determining whether a quorum exists at the Annual Meeting but are
not counted and have no effect on the results of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
ITEM (3) - ELECTION OF AUDITORS
The Audit Committee of the Board of Directors has
recommended that Deloitte & Touche, independent certified public
accountants, be retained as independent auditors of the Company
for the year 1994, and that this firm be elected by the
shareholders at the Annual Meeting. Deloitte & Touche has been
engaged in this capacity by the Company since 1932. A
representative of Deloitte & Touche will be present at the Annual
Meeting of Shareholders and will be provided with the opportunity
to make a statement and to respond to appropriate questions. It
is the intention of the persons named in the proxy enclosed
herewith to vote as specified in the proxies. In case Deloitte &
Touche is not elected, the persons named in the proxy will have
discretionary authority to vote for a suitable substitute.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE ELECTION OF DELOITTE & TOUCHE AS INDEPENDENT AUDITORS FOR
THE YEAR 1994.
ITEM (4) - SHAREHOLDER PROPOSAL
The Company has been notified that Murray Katz and Beatrice
M. Katz of 11435 Monterrey Drive, Silver Spring, Maryland intend
to present for consid-
-21-
eration and action at the annual meeting the proposal set forth
below. Mr. & Mrs. Katz jointly own of record 50 shares of the
Company's Common Stock.
Under Oregon law, the proposal will be approved if the
shares voted in favor of the proposal exceed those voted against
it. Abstentions and broker non-votes are counted for purposes of
determining whether a quorum exists at the Annual Meeting but are
not counted and have no effect on the results of the vote.
FOR THE REASONS DISCUSSED HEREINAFTER, THE BOARD OF
DIRECTORS UNANIMOUSLY BELIEVES THAT THIS PROPOSAL IS NOT IN THE
BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS
THAT SHAREHOLDERS VOTE AGAINST THIS PROPOSAL.
The following constitutes Mr. & Mrs. Katz's proposal:
PROPOSAL
"RESOLVED: That the shareholders of Northwest Natural
Gas Co. recommend that the Board of Directors take the
necessary steps to institute a salary and compensation
ceiling such that as to future employment contracts, no
senior executive officer or director of the Company
receive combined salary and other compensation which is
more than two times the salary provided to the
President of the United States, that is, no more than
$400,000."
The following statement has been supplied by the
shareholders submitting this proposal:
"REASONS: There is no corporation which exceeds the
size and complexity of operation of the government of
the United States of which the President is the chief
executive officer. Even most government agencies far
exceed the size, as measured by personnel and budget,
of most private corporations. The President of the
United States now receives a salary of $200,000; even
heads of agencies and members of Congress are paid only
somewhat in excess of $100,000. The recommended
ceiling is sufficient to motivate any person to do his
best.
"While the duties of the President of the United States
are not comparable to those of senior executive
officers or directors (the President has a much more
demanding job), and while the President has many
valuable compensations, we use the salary of the
President only as a reference point for the
shareholders to consider as they evaluate this
resolution.
"Officers of public corporations are the employees and
not the owners, except as they may be shareholders in
common with other stockholders. Yet, officers give the
appearance that they run the corporation primarily for
their benefit rather than for the benefit of the
shareholders. Thus, they may drain away millions of
dollars in salary, stock options and other
compensation. When more than the recommended ceiling
on salary and compensation is taken, this is an
expression of greed and abuse of power.
"Usually, there is no direct correlation between the
profitability of a corporation and the compensation to
officers. In fact, in many corporations,
-22-
compensation increases even as profits fall. It is
apparent that high compensation does not usually serve
as an incentive for a better run or more profitable
corporation. Obscene compensation packages illustrate
the power of the Board of Directors, a closed group
which perpetuates itself, by determining who is to be
selected to the Board and who is to be an officer of
the company, as well as the compensation to be
received. The Board of Directors does not own the
corporation, but it can run the corporation as if it
were their property. There is a general consensus in
the United States that corporate officials are grossly
overpaid and that this state of affairs is promulgated
by the policy of Boards of Directors. There is no
shortage of qualified people who would gladly step in
and do as good a job as the incumbent officers of the
Corporation and who would have no hesitation serving
within the aforementioned pay ceiling.
"Any officer who believes he can better the corporation
should be sufficiently motivated to purchase stock on
the open market or to receive stock options as part of
his salary and compensation package. To remain
competitive in world markets we must cut our costs and
not overcompensate directors and officers.
"If you AGREE, please mark your proxy FOR this
resolution."
Submitted By Murray Katz and Beatrice M. Katz
THE BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO THE
FOREGOING PROPOSAL
If the Company and its shareholders are to prosper, the
Company must have talented and motivated leadership. Contrary to
the assertion of the proposal's proponents, persons with such
ability are in great demand and are of limited availability. To
attract, motivate and retain qualified executives, the Company's
compensation levels must be competitive. While aware of concerns
over levels of corporate compensation, the Board believes that
the shareholders want the Company to have a compensation program
that is designed to provide effective leadership.
As discussed in the Report of the Compensation Committee on
Executive Management Compensation on page 15, the Company's
executive compensation program bases pay upon both Company and
individual performance, including the enhancement of shareholder
value, as well as competitive conditions in the marketplace for
executive talent.
At Northwest Natural Gas Company, officers' base salaries
and incentive bonuses are determined by the Compensation
Committee and the Board each year based upon the foregoing
principles. The Company's performance and the quality of each
officer's individual performance are measured against previously
established goals. Contrary to the suggestion of the proposal's
proponents that usually there is no direct correlation between
the profitability of a corporation and the compensation of its
officers, the Company's Executive Annual Incentive Plan (see page
16), which constitutes an important part of executive
compensation, provides for incentive payments only if, and to the
extent, executives succeed in meeting previously established
Company and
-23-
individual goals. For example, no incentive payments were made
for either 1991 or 1992 because the Company did not achieve the
minimum earnings threshold in either year. The Board also
considers Company and individual performance in adjusting
executives' base salaries.
The Company's 1985 Stock Option Plan provides for grants of
stock options to executives. These options enable executives to
benefit from increases in the price of the Company's Common
Stock, thereby aligning their interests with those of the common
shareholders. The Stock Option Plan has succeeded in providing
executives with the incentives to acquire and retain significant
shareholdings; the Company's executives as a group owned 39,400
shares as of February 28, 1994.
Compensation is only one of a number of considerations that
motivate individuals in choosing, and succeeding in, their
careers, be they in politics, business, sports or any number of
other callings. Those who seek the Presidency of the United
States are motivated by desires, such as national leadership and
the implementation of political programs, which differ sharply
from those in business concerns. The Board does not believe the
salary paid to the President of the United States is relevant to
the proper level of compensation for its executives.
Furthermore, since the President of the United States enjoys
substantial perquisites which the Company does not provide to its
executives, the President's salary alone is a particularly
inappropriate yardstick against which to measure the total
compensation paid to Company officers. More appropriate for
comparison purposes are the compensation policies and practices
of comparable companies. The Company's officers are compensated
at levels which are targeted at approximately the 50th percentile
for base salaries and between the 50th and 75th percentiles for
total compensation (base salary and bonuses) at comparable
companies.
The proposal would place an artificial ceiling on the
Company's executive compensation and would restrict the Board's
ability to administer the compensation program discussed above.
The Board believes that, if the proposal were to be adopted, the
Company could not attract, motivate and retain talented
executives, including younger persons who aspire to lead the
Company in future years.
FOR THESE REASONS, THE BOARD OF DIRECTORS UNANIMOUSLY
BELIEVES THAT THIS PROPOSAL IS NOT IN THE BEST INTERESTS OF THE
COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS THAT SHAREHOLDERS
VOTE AGAINST THIS PROPOSAL.
OTHER MATTERS
The management does not know of any other matters to be
presented at the Annual Meeting. If other matters should be
properly presented at the meeting, the persons named in the
accompanying proxy will vote the shares represented by such proxy
with respect to such matters in accordance with their best
judgment.
EMPLOYMENT AGREEMENTS
On October 27, 1983, the Company entered into an employment
agreement
-24-
with Mr. Ridgley which provides for the continuation of his
salary in the event his employment as an executive officer is
terminated by the Company for reasons other than malfeasance in
office. This agreement provides that Mr. Ridgley will receive
payment of one year's salary if employment is terminated, for
reasons other than a change in control of the Company, prior to
his reaching age 65. However, should Mr. Ridgley's employment be
terminated as the result of a change in control of the Company
prior to his reaching age 65, he will receive payment of three
years' salary.
Under this agreement with Mr. Ridgley, the Company also
agreed to recognize 23 years of past service for purposes of the
Executive Supplemental Retirement Income Plan. Accordingly, upon
retirement, Mr. Ridgley will be eligible for benefits under this
Plan as if he had commenced employment with the Company on
January 1, 1961.
Under an agreement with Mr. Samson dated November 27, 1989,
the Company agreed to recognize seven years of past service for
purposes of the Executive Supplemental Retirement Income Plan.
Mr. Samson will be eligible for benefits under this plan as if
he had commenced employment with the Company on March 1, 1983.
1995 ANNUAL MEETING OF SHAREHOLDERS
The 1995 Annual Meeting of Shareholders is scheduled to be
held in Portland on Thursday, May 25, 1995. Specific proposals
of common shareholders intended to be presented at this meeting
must comply with the requirements of the Securities Exchange Act
of 1934 and be received by the Secretary of the Company for
inclusion in its 1995 proxy materials by December 15, 1994.
GENERAL
Proxies may be solicited on behalf of the Board of Directors
by regular employees in person or by mail, telephone or facsimile
transmission. The Company will reimburse brokers or other
persons holding stock in their names or in the names of their
nominees for their reasonable expenses incurred in forwarding
proxies and proxy materials to the beneficial owners of such
shares. All solicitation costs will be borne by the Company. The
Company has retained D. F. King & Co., Inc. to assist in the
solicitation of proxies from banks, brokers and nominees at a fee
of $8,000 plus reasonable out-of-pocket expenses.
If you are unable to be present at the Annual Meeting in
person, please mark, date, sign and mail the enclosed proxy so
that the business of the meeting can be transacted.
By Order of the Board of Directors,
Portland, Oregon C. J. Rue
April 15, 1994 Secretary
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<PAGE>
PROXY FORM PROXY FORM
- ---------- ----------
Please date and sign this proxy on the reverse side
and mail without delay in the enclosed envelope to the
Company, 220 N.W. Second Avenue, Portland, Oregon 97209.
NORTHWEST NATURAL GAS COMPANY
PROXY FOR 1994 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Wayne D. Kuni, Robert L. Ridgley
and Carlton Woodard and each or any of them, the proxy or
proxies, with power of substitution and with authorization to
vote all of the common shares of the undersigned at the annual
meeting of shareholders of Northwest Natural Gas Company to be
held on Thursday, May 26, 1994, and at all adjournments thereof,
(i) as designated on the reverse of this card and, (ii) at their
discretion, upon any and all other matters which properly may be
brought before such meeting or any adjournment thereof.
The Administrator, or its agent, under the Company s Dividend
Reinvestment and Stock Purchase Plan hereby is instructed to
execute a proxy with identical instructions to vote those shares,
if any, held under the Plan.
PLEASE MARK THE BOX IF YOU PLAN TO ATTEND THE ANNUAL MEETING. [ ]
THE COMPANY WILL PROVIDE REASONABLE ACCOMMODATION FOR A
DISABILITY. IF YOU NEED AN ACCOMMODATION, PLEASE CONTACT THE
COMPANY AT (503) 226-4211 EXT. 3410 AT LEAST 72 HOURS
BEFORE THE MEETING.
=================================================================
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Item 1. Election of Directors:
Class II Nominee: Russell F. Tromley
Class I Nominees: Richard B. Keller, Robert L. Ridgley,
Dwight A. Sangrey, William R. Wiley
[ ] VOTE FOR all nominees listed, except as marked to
the contrary above (if any).
[ ] VOTE WITHHELD from all nominees.
(TO WITHHOLD YOUR VOTE FROM ANY NOMINEE STRIKE A LINE
THROUGH THAT NOMINEE S NAME IN THE LIST ABOVE.)
FOR AGAINST ABSTAIN
--- ------- -------
Item 2. Amendment of Restated Articles
of Incorporation to increase
authorized shares of Common
Stock, $3-1/6 par value,
from 30,000,000 to 60,000,000
shares. [ ] [ ] [ ]
Item 3. Election of Deloitte & Touche
as Auditors for 1994. [ ] [ ] [ ]
Item 4. Shareholder proposal to limit
executive compensation. [ ] [ ] [ ]
PLEASE SEE THE OTHER SIDE IF YOU PLAN TO ATTEND THE ANNUAL
MEETING.
This proxy when properly
executed will be voted in the
manner directed herein by the
above-signed shareholder. If no
direction is made, the proxy
will be voted FOR Items 1, 2
and 3, and AGAINST Item 4.
SIGNATURE___________ SIGNATURE ________________ DATE __________
When signing as attorney-in-fact, executor, administrator,
trustee, guardian or officer of a corporation, please give full
title as such. On joint accounts, each owner should sign.
<PAGE>
NORTHWEST NATURAL GAS COMPANY
220 N. W. Second Avenue
Portland, Oregon 97209
(503) 226-4211
March 21, 1994
Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, D. C. 20549
Re: Northwest Natural Gas Company
Preliminary Proxy Solicitation
Material (File No. 0-994)
Dear Sir or Madam:
Pursuant to Regulation 14A under the Securities
Exchange Act of 1934 (the Act), we transmit herewith through the
EDGAR System the Company's preliminary proxy solicitation
materials for Northwest Natural Gas Company's 1994 Annual Meeting
of Shareholders, consisting of form of proxy, president's letter,
notice of meeting and proxy statement. The performance graph
required by Item 402(l) of Regulation S-K is being forwarded to
the Commission separately under Form SE. We plan to mail proxy
materials to common shareholders on April 15, 1994. Bulk
mailings will be made to brokers, depositories and others so that
materials also may be provided to beneficial owners beginning
April 15.
Pursuant to Rule 14a-6(i)(2) under the Act, the fee in
the amount of $125.00 for filing preliminary proxy material which
solicits proxies for business for which a stockholder vote is
necessary has been sent by Fedwire to the SEC Account number 910-
8739, at the Mellon Bank, ABA number 043000261.
On March 16, 1994 the Company submitted draft portions
of its 1994 Proxy Statement, consisting of the Report of the
Compensation Committee on Executive Compensation Management and
related executive compensation disclosure required by Item 402 of
Regulation S-K to Mr. John Bernas for review as permitted by
Securities and Exchange Commission Release Nos. 33-7032 and
34-33229.
The preliminary proxy solicitation materials include:
(1) a proposal to amend the Company's Restated Articles of
Incorporation to increase the authorized shares of Common Stock,
$3-1/6 par value per share, from 30,000,000 shares to 60,000,000
shares; and (2) a shareholder proposal to limit executive
compensation.
Except as discussed above, the preliminary proxy
materials merely reflect an updating of last year's materials
<PAGE>
with respect to the election of directors and the election of
independent auditors.
We understand that if no comments have been received
from the Commission regarding the enclosed preliminary proxy
materials by April 5, 1994, the Company may proceed with the
printing of definitive copies of these materials for timely
release to shareholders.
Proxies were solicited with respect to the 1993 Annual
Meeting of Shareholders in accordance with the Commission's proxy
rules. A report setting forth the results of voting on each item
submitted for a vote at the 1993 meeting previously was furnished
to all shareholders.
Very truly yours,
NORTHWEST NATURAL GAS COMPANY
By: /s/ C. J. Rue
Secretary
