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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/ X / 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)
Northwest Natural Gas Company
- - -----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ X / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A
/ / $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:
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2) Aggregate number of securities to which transaction
applies:
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3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11:*
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
* Set forth the amount on which the filing fee is
calculated and state how it was determined.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify
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<PAGE>
NORTHWEST NATURAL GAS COMPANY
ONE PACIFIC SQUARE
220 N.W. SECOND AVENUE
PORTLAND, OREGON 97209-3991
April 14, 1995
Dear Shareholder:
You are cordially invited to attend the 1995 Annual Meeting
of Shareholders of Northwest Natural Gas Company (the Company),
which will be held in the State Ballroom of the Hilton Hotel,
921 S. W. Sixth Avenue, Portland, Oregon, on Thursday, May 25,
1995, 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 four directors, (2) a proposal to amend the
Company's 1985 Stock Option Plan, and (3) the election of
independent auditors. Your Board of Directors unanimously
recommends that you vote FOR proposals 1, 2, and 3.
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,
/s/ ROBERT L. RIDGLEY
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 1995 ANNUAL MEETING OF SHAREHOLDERS
Portland, Oregon, April 14, 1995
To the Shareholders:
The 1995 Annual Meeting of Shareholders of Northwest Natural
Gas Company will be held in the State Ballroom of the Hilton
Hotel, 921 S. W. Sixth Avenue, Portland, Oregon, on Thursday,
May 25, 1995, at two o'clock in the afternoon, Pacific Daylight
Time, for the following purposes:
(1) to elect four Class II directors to a term of three years;
(2) to consider and approve amendments to the Company's 1985
Stock Option Plan;
(3) to elect independent auditors for the year 1995; and
(4) 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 6, 1995 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,
/s/ C. J. RUE
Secretary<PAGE>
NORTHWEST NATURAL GAS COMPANY
ONE PACIFIC SQUARE
220 N.W. SECOND AVENUE
PORTLAND, OREGON 97209
(503) 226-4211
1995 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 25, 1995
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 the State Ballroom of the Hilton Hotel, 921 S. W.
Sixth Avenue, Portland, Oregon, on Thursday, May 25, 1995, 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, 1994, 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 14, 1995.
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 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 6, 1995 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 14,629,183 shares of Common Stock outstanding on
March 20, 1995 were held by about 12,300 shareholders residing in
50 states and a number of foreign countries.
Each holder of Common Stock of record at the close of
business on April 6, 1995 will be entitled to one vote for each
share of Common Stock so held on all matters properly submitted
at the meeting. Such holder will be entitled to cumulative
voting for directors; that is, 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.
<PAGE>
A majority of the shares of Common Stock outstanding at the
close of business on April 6, 1995 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 II directors expires with this Annual
Meeting of Shareholders. Messrs. Tod R. Hamachek, Wayne D. Kuni
and Russell F. Tromley and Ms. Melody C. Teppola are nominees for
election to the Board as Class II directors to serve until the
1998 Annual Meeting or until their successors have been duly
elected and qualified. Messrs. Hamachek and Kuni and Ms. Teppola
were elected by the shareholders at the 1992 Annual Meeting.
Mr. Tromley was elected by the shareholders in 1994 for a one-year
term, to fill a vacancy created by an increase in the size
of the Board. In case any of the nominees 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 four 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.
<PAGE>
INFORMATION CONCERNING NOMINEES AND CONTINUING DIRECTORS
NOMINEES FOR ELECTION TO BOARD OF DIRECTORS
CLASS II
(FOR A THREE-YEAR TERM ENDING 1998)
{Photo TOD R. HAMACHEK
appears President and Chief Executive Officer, Penwest, Ltd.
here} Bellevue, Washington
Age: 49
Director since: 1986
Board Committees: Pension, Retirement, Organization
and Executive 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 Seattle Times, The Blethen Corporation (the majority
owner of The Seattle Times), and DEKALB Genetics Corporation. He
is a trustee of the Virginia Mason Medical Center, the Pacific
Science Center, the Seattle Foundation, The Washington Roundtable
and Lakeside School. He also chairs the advisory board of the
University of Washington Graduate School of Business. Mr. Hamachek
is a graduate of Williams College and the Harvard Business School.
{Photo WAYNE D. KUNI
appears President, Kuni Enterprises, Beaverton, Oregon
here} Age: 64
Director since: 1980
Board Committees: Executive, Audit (Chairman),
Finance, Organization and Executive Compensation
Mr. Kuni founded Kuni Enterprises, Inc., in Beaverton,
Oregon in 1970 and has been the President and principal
shareholder since that time. Kuni Enterprises manages the affairs
of Kuni Cadillac & B.M.W. and Lexus of Portland, in Portland,
Oregon, Hubacher Cadillac in Sacramento, California, South Bay
Buick, 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 a member of the Board of Trustees of Linfield
College, Chairman Emeritus of the Board of Governors of the
Portland Shriners Hospital for Crippled Children and is a past
President of the Arlington Club. Mr. Kuni is a graduate in
business administration from the General Motors Institute, Flint,
Michigan.
<PAGE>
{Photo MELODY C. TEPPOLA
appears Managing Partner, National Builders Hardware Company,
here} Portland
Age: 52
Director since: 1987
Board Committees: 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 of the Oregon
Community Foundation 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.
{Photo RUSSELL F. TROMLEY
appears President and Chief Executive Officer, Tromley
here} Industrial Holdings, Inc., Tualatin, Oregon
Age: 55
Director since: 1994
Board Committees: Audit, Finance
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 investments. Mr. Tromley is a past president
of the Casting Industry Suppliers Association, a past president
of the Arlington Club and is a non-lawyer arbitrator for the
Oregon State Bar Association. He also serves as a director of
the Evans Scholars Foundation and the Western Golf Association,
both located in Golf, Illinois. Mr. Tromley attended the
University of Washington, Northwestern University and the Harvard
Business School.
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
CLASS I
(TERM ENDING 1997)
{Photo RICHARD B. KELLER
appears President, Keller Enterprises Inc., Portland
here} Age: 66
Director since: 1983
Board Committees: Executive, Pension (Chairman),
Retirement (Chairman), Nominating, Organization and
Executive 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 member of the Board
of the Managing General Partner of Crown Pacific Partners, L. P.
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.
{Photo ROBERT L. RIDGLEY
appears President and Chief Executive Officer of the Company,
here} Portland
Age: 61
Director since: 1984
Board Committee: None
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 Oregon Business Council,
immediate past Chairman of the American Gas Association and is a
past Chairman of the Pacific Coast Gas Association. Mr. Ridgley
serves as a director of the Association for Portland Progress and
the Oregon Independnet College Foundation, and is a Trustee and
Vice Chair of the Oregon Chapter of The Nature Conservancy. He
is a graduate of Cornell University and the Harvard Law School.
<PAGE>
{Photo DWIGHT A. SANGREY
appears Former President and Chief Executive Officer, Oregon
here} Graduate Institute of Science & Technology, Portland,
Oregon
Age: 54
Director since: 1992
Board Committees: Environmental Policy (Chairman),
Pension, Retirement
Mr. Sangrey served as President of the Oregon Graduate
Institute of Science & Technology from his appointment to that
position in September 1988 until October 1994. He 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, Pacific University 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.
{Photo WILLIAM R. WILEY
appears Director, Battelle's Pacific Northwest Laboratories,
here} and Senior Vice President for Science and Technology,
Battelle Memorial Institute, Richland, Washington
Age: 63
Director since: 1994
Board Committees: Environmental Policy, Finance
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 Safeco Corporation, 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.
<PAGE>
CLASS III
(TERM ENDING 1996)
{Photo MARY ARNSTAD
appears President, The Heathman Management Group, Inc.,
here} Portland
Age: 46
Director since: 1992
Board Committees: Audit, Finance
Since January 1, 1992, Ms. Arnstad has served as President
of The Heathman Management Group, Inc., which owns and operates
The Heathman Hotel, the Airport Inn and the B. Moloch/Heathman
Bakery and Pub, all located in Portland, and The Greenwood Inn in
Beaverton, Oregon. The firm also is involved with other hotel
projects in the Pacific Northwest. From 1986 until January 1995,
she served as President and General Manager of The Heathman
Hotel. She also served from 1992 until 1994 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 Portland Metropolitan Sports Authority and the
Northwest Business Committee for the Arts. She is a graduate of
Wittenberg University.
{Photo THOMAS E. DEWEY, JR.
appears Partner, McFarland Dewey & Co. (investment banking
here} firm), New York, New York
Age: 62
Director since: 1986
Board Committees: Finance (Chairman), Audit
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 is a director of InPhyNet Medical Management,
Inc., and serves on the Board of Trustees, of which he is
Chairman Emeritus, of Lenox Hill Hospital. He formerly served as
a member of the Board, of which he was Vice Chairman, of New York
City Housing Development Corporation. Mr. Dewey is a graduate of
Princeton University and the Harvard Business School.
<PAGE>
{Photo BENJAMIN R. WHITELEY
appears Chairman of the Board, Standard Insurance Company, and
here} Lead Director of the Company, Portland
Age: 65
Director since: 1989
Board Committees: Executive (Chairman), Organization
and Executive 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 retired as Chief Executive
Officer of Standard in August 1994. He is also a director of
Standard Insurance Company, Gunderson, Inc., U. S. Bancorp, The
Greenbrier Companies, and Willamette Industries, Inc. In
September 1994, he was elected to the new position of Lead
Director of the Company's Board of Directors. 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.
{Photo CARLTON WOODARD
appears Retired Chairman of the Board, South Lane Investment
here} Corporation (manufacturing, hotel and real estate
interests), Cottage Grove, Oregon
Age: 71
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.
<PAGE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES:
There are eight standing committees of the Board: the Audit,
Retirement, Pension, Organization and Executive Compensation,
Nominating, Environmental Policy, Finance and Executive
Committees.
The Audit Committee is comprised of directors Arnstad,
Dewey, Kuni and 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 1994.
The Retirement Committee and the Pension Committee oversee
the administration of 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 directors Hamachek, Keller, Teppola and
Sangrey; 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 1994.
The Organization and Executive Compensation Committee
(formerly the Compensation Committee), which is comprised of
directors Hamachek, Keller, Kuni and Whiteley, each of whom is an
outside director, reviews the performance of executive officers,
considers executive compensation survey data in making
recommendations to the Board relating to the Company's executive
compensation program and benefit plans, and administers the 1985
Stock Option Plan. This Committee also makes recommendations to
the Board on organization and executive succession matters. Four
meetings of this Committee were held during 1994.
The Nominating Committee is comprised of directors Keller,
Teppola, Whiteley and Woodard. The Committee recommends to the
Board of Directors nominees for election as directors. No
meetings of this Committee were held during 1994. 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
directors Sangrey, Teppola, Wiley and Woodard. This Committee
held three meetings in 1994.
<PAGE>
The Finance Committee, which was formed effective January 1,
1995, is responsible for reviewing strategies and making
recommendations to the Board with respect to the Company's
financing programs, financial policy matters and material
regulatory issues. The Committee consists of directors Arnstad,
Dewey, Kuni, Tromley and Wiley.
The Executive Committee is empowered, during intervals
between Board meetings, to exercise all of the authority of the
Board in the management of the Company, except as otherwise may
be provided by law. This Committee, which is comprised of
directors Keller, Kuni, Whiteley and Woodard, met four times
during 1994.
In September 1994, the Board created the new position of
Lead Director and elected Mr. Whiteley to the position. The Lead
Director consults with the chief executive officer on board
organization matters, including the selection of committee
members and chairs. The Lead Director also chairs meetings of
the Executive Committee of the Board as well as regularly
scheduled meetings of outside directors, which will occur at
least twice yearly, and coordinates the annual evaluation by
outside directors of the Board's performance.
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. Prior to
1995, members of the Executive Committee, except Mr. Ridgley,
received an additional annual retainer of $6,000, but did not
receive a fee for attendance at meetings of such Committee unless
the meeting was held on a day other than the day a meeting of the
Board of Directors was held. Effective January 1, 1995, members
of the Executive Committee no longer receive this retainer. An
annual retainer of $6,000 is paid to each Committee chair, except
the chair of the Executive Committee/Lead Director who is paid
$2,000 per month for his services in these capacities.
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 $800 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 1994, there were seven meetings of the Company's
Board, an aggregate of 10 meetings of the boards of the above-
mentioned subsidiaries, and an aggregate of 21 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
<PAGE>
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 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. Shares awarded under this Plan vest in
monthly installments over the five-year period following the
award. Unvested shares are forfeited if the recipient ceases to
be a director. The shares awarded are purchased in the open
market by the Company at the time of award. Certificates
representing a director's vested shares are held by the Company
until the director leaves the Board at which time they are
transferred to the director. Non-employee directors have been
awarded an aggregate of 8,673 shares under this Plan.
<PAGE>
COMPLIANCE WITH OWNERSHIP REPORTING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors and executive 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 executive officers
during 1994. Based solely upon a review of the copies of such
reports furnished to it and written representations that no other
such reports were required, the Company believes that during
1994, all directors and executive 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, 1995 (except as otherwise noted) by all directors
and nominees, each of the executive officers named in the Summary
Compensation Table on page 14 and all directors and executive
officers as a group.
<TABLE>
<CAPTION>
Percent of
Names of Beneficial Owner Number of Shares /1 Outstanding Common Stock
- - ------------------------- ------------------- ------------------------
<S> <C> <C>
Mary Arnstad 587 /2 *
Bruce R. DeBolt 17,848 /3 *
Thomas E. Dewey, Jr. 1,301 /4 *
Dwayne L. Foley 18,385 /5 *
Tod R. Hamachek 1,467 /4 *
Richard B. Keller 8,267 /4, 6 *
Wayne D. Kuni 3,438 /4, 7 *
Michael S. McCoy 15,336 /8 *
Robert L. Ridgley 31,527 /9 *
Bruce B. Samson 14,029 /10 *
Dwight A. Sangrey 580 /2 *
Melody C. Teppola 1,572 /11 *
Russell F. Tromley 2,126 /12 *
Benjamin R. Whiteley 1,691 /13 *
William R. Wiley 513 /14 *
Carlton Woodard 2,151 /15 *
All directors and officers
as a group (20 in number) 152,423 /16 1.04
___________________
<FN>
* The total for each individual is less than 1.0 percent and the total for
all directors and executive officers as a group is 1.04 percent of the
shares of Common Stock outstanding.
/1 Unless otherwise indicated, beneficial ownership includes both sole
voting power and sole investment power.
<PAGE>
/2 Includes 521 shares awarded and subject to vesting under the Non-
Employee Directors Stock Compensation Plan (NEDSCP) of which 234 were
vested on February 28, 1995 and 287 will vest over the subsequent 33
months.
/3 Includes 4,122 shares held jointly with wife and 12,000 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 665 were vested on February 28, 1995 and 336 will vest over the
subsequent 46 months.
/5 Consists of 3,753 shares held jointly with wife and 14,632 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 2,422 shares held in trust.
/8 Consists of 3,366 shares held jointly with wife and 11,970 shares which
Mr. McCoy has the right to acquire within 60 days through the exercise
of options under the 1985 SOP.
/9 Includes 16,279 shares which Mr. Ridgley has the right to acquire within
60 days through the exercise of options under the 1985 SOP.
/10 Includes 300 shares held jointly with wife, 1,148 shares held indirectly
by Mr. Samson under the Retirement K Savings Plan (RKSP) at
September 30, 1994 and 10,000 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 665 (including 563 held in trust) were vested on February 28, 1995
and 336 will vest over the subsequent 46 months, and an additional 540
shares held in trust.
/12 Includes 438 shares awarded and subject to vesting under the NEDSCP of
which 102 were vested on February 28, 1995 and 336 will vest over the
subsequent 46 months.
/13 Includes 1,001 shares awarded and subject to vesting under the NEDSCP of
which 559 were vested on February 28, 1995 and 442 will vest over the
subsequent 54 months.
/14 Includes 413 shares awarded and subject to vesting under the NEDSCP of
which 89 were vested on February 28, 1995 and 324 will vest over the
subsequent 47 months.
/15 Includes 774 shares awarded and subject to vesting under the NEDSCP of
which 668 were vested on February 28, 1995 and 106 will vest over the
subsequent 14 months.
/16 Includes 13,095 shares held jointly with spouses, 2,181 shares held
indirectly under the RKSP at September 30, 1994, and 16,329 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.
/TABLE
<PAGE>
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, 1994, 1993 and 1992, of those
persons who were, during 1994 and at December 31, 1994 (i) the
chief executive officer and (ii) the other four most highly
compensated executive officers of the Company (the Named
Executive Officers):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES UNDER-
NAME AND PRINCIPAL ------------------- LYING OPTIONS/ ALL OTHER
POSITION YEAR SALARY BONUS SARs(#) COMPENSATION /1
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert L. Ridgley 1994 $360,800 $153,200 3,182 $13,656
President and Chief 1993 344,233 186,000 0 11,889
Executive Officer 1992 334,500 0 0 9,405
Bruce R. DeBolt 1994 177,067 55,300 4,000 6,970
Senior Vice President 1993 172,117 65,000 0 6,562
and Chief Financial Officer 1992 167,250 0 0 5,624
Dwayne L. Foley 1994 177,067 53,800 5,250 3,290
Senior Vice President 1993 172,117 64,000 0 3,662
1992 167,250 0 0 2,524
Bruce B. Samson 1994 156,883 52,900 2,000 6,138
Senior Vice President 1993 147,633 62,000 0 5,201
and General Counsel 1992 143,483 0 0 5,081
Michael S. McCoy 1994 142,617 53,000 4,750 6,002
Senior Vice President 1993 130,100 61,000 0 5,232
1992 118,451 0 0 2,345
___________________
<FN>
/1 Amounts for the year 1994 consist of: (1) amounts contributed or
accrued for the year 1994 for the Named Executive Officers under
the Company's Executive Deferred Compensation Plan ($8,180 for
Mr. Ridgley, $3,970 for Mr. DeBolt, $3,290 for Mr. Foley, $3,138 for
Mr. Samson, and $3,241 for Mr. McCoy) and its Retirement K Savings
Plan ($3,000 each for Messrs. Ridgley, DeBolt and Samson, $0 for
Mr. Foley and $2,761 for Mr. McCoy); and (2) $2,476 for
Mr. Ridgley, representing the employee portion of the Medicare
Hospital Insurance Tax tax liability paid by the Company on the
present value increase in 1994 of Mr. Ridgley's benefit under the
Executive Supplemental Retirement Income Plan.
/TABLE
<PAGE>
OPTIONS/SARs GRANTED IN 1994
The following table sets forth the number of shares of the
Company's Common Stock subject to stock options granted to the Named
Executive Officers listed in the Summary Compensation Table during
1994, together with related information.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
- - ----------------------------------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term /3
- - ------------------------------------------------------------------------------------------------------ ---------------------------
Number of Percent of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees in or Base Expiration
Name Granted (#) /1 Fiscal Year /2 Price ($/Sh) Date 5 Percent 10 Percent
- - ---- -------------- -------------- ------------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Robert L. Ridgley 3,182 4.2 $36.00 2/24/04 $ 72,040 $182,551
Bruce R. DeBolt 4,000 5.3 36.00 2/24/04 90,560 229,480
Dwayne L. Foley 5,250 7.0 36.00 2/24/04 118,860 301,193
Bruce B. Samson 2,000 2.7 36.00 2/24/04 45,280 114,740
Michael S. McCoy 4,750 6.3 36.00 2/24/04 107,540 272,508
___________________
<FN>
/1 Options become exercisable one year after the grant date.
/2 The indicated percentages represent the options to purchase the
Company's Common Stock granted to the Named Executive Officers
expressed as a percentage of the aggregate number of options to
purchase the Company's Common Stock granted to employees of the
Company in 1994.
/3 The 5 and 10 percent growth rates for the period ending February
24, 2004, which were determined in accordance with the rules of
the Securities and Exchange Commission, illustrate that the
potential future value of the granted options is linked to future
increases in growth of the price of the Company's Common Stock.
Because the exercise price for options equals the market price of
the Company's Common Stock on the date of grant, no gain to the
Named Executive Officers is possible without an increase in the
stock price. The 5 and 10 percent growth rates are intended for
illustration only and are not intended to be predictive of future
growth; the actual value, if any, that may be realized by any
Named Executive Officer will depend on the market price of the
Company's Common Stock on the date of exercise.
</TABLE>
<PAGE>
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 1994 and unexercised
options granted under the 1985 Stock Option Plan to the Named
Executive Officers and held by them at December 31, 1994.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN 1994 AND YEAR-END OPTION/SAR VALUES
No. of Securities Value of Unexercised
No. of Underlying Unexercised Options/ In-the-Money Options/SARs
Shares SARs at December 31, 1994 at December 31, 1994
Acquired on Value ---------------------------------- --------------------------------------
Name Exercise Realized Exercisable Unexercisable /1 Exercisable /2 Unexercisable /1,2
- - ---- -------- -------- ----------- ---------------- -------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Ridgley 0 $ 0 20,119 6,582 $168,610 $15,725
Bruce R. DeBolt 0 0 8,000 4,000 37,000 0
Dwayne L. Foley 750 13,594 9,382 5,250 53,411 0
Bruce B. Samson 0 0 8,000 2,000 37,000 0
Michael S. McCoy 3,366 45,020 7,220 4,750 49,488 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 and the
restriction that options are not exercisable during the first
year following the date they are granted.
/2 Represents the difference between the exercise prices for in-the-
money options and the closing price of $29.50 for the Company's
Common Stock as quoted on the Nasdaq Stock Market on December 30,
1994 times the number of in-the-money options. Options granted
in 1994 were not in-the-money at year-end 1994.
</TABLE>
<PAGE>
REPORT OF THE ORGANIZATION AND EXECUTIVE COMPENSATION COMMITTEE
ON
EXECUTIVE MANAGEMENT COMPENSATION
EXECUTIVE COMPENSATION PRINCIPLES
The Company's executive compensation program is administered by
the Organization and Executive Compensation Committee of the Board of
Directors which is comprised of directors 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:
- - -- Tieing 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.
In establishing executive compensation levels, the Committee also
takes into consideration the Company's reductions in recent years in
the total number of executive officers and re-assignments of the
responsibilities of officers who have retired. Through these actions,
the number of officers has been reduced by five, from a high of 14 in
1986 to the present nine executive officers, producing a flatter, more
efficient executive structure.
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 21). The Committee uses this information as a
<PAGE>
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 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, are 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
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.
As in prior years, 1994 performance goals 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 the
cost of connecting new customers, customer service and productivity.
In combination, these goals measured the Company's performance in
terms of its overall profitability, its financial performance, the
reduction of costs and the achievement of greater efficiency. 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. The grant of any award for 1994 was conditioned upon the
Company's 1994 net income exceeding a percentage of the target
designated in advance by the Board and being sufficient to cover the
payment of all dividends.
<PAGE>
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 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, as in 1994, the number of options
granted is not based upon a predetermined formula, but rather upon the
Committee's judgment as to how many options will provide meaningful
incentives to executives. The number of options granted to the Named
Executive Officers in 1994, as shown in the table on page 15, was
based on a consideration of factors that included the number of shares
available for grant under the Plan, the number of options previously
granted, state regulatory restrictions on option grants to executives,
and the number of shares then owned by each Named Executive Officer in
relation to an informal targeted objective for stock ownership by
executives.
CEO COMPENSATION
Compensation paid to Robert L. Ridgley, president and chief
executive officer, for the year 1994 consisted, in part, of an
increase in base salary and, in part, of an incentive bonus. Mr.
Ridgley's compensation reflects a 5.2% increase in base salary,
effective March 1, 1994, which 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
$153,200 under the Executive Annual Incentive Plan. Mr. Ridgley
received no bonus under that Plan for 1992. He received a bonus of
$186,000 for 1993, when the Company's earnings and net income were the
highest in its history. The award of the bonus for 1994, which is
equal to 42% of Mr. Ridgley's 1994 base salary, was based on the
Committee's evaluation of Mr. Ridgley's performance in relation to the
achievement of the 1994 financial goals and the partial achievement of
the operating goals described above. For 1994, the Company reported
earnings of $2.44 per share, the second highest level in its history,
and net income applicable to common stock of $32,478,000, as compared
to $2.61 per share and $34,159,000, respectively, in 1993. These 1994
results exceeded the financial performance goals established for the
year. For 1994, the Company's return on equity of 12.2% ranked
twelfth among 30 comparable companies. Combined with the return on
equity in 1993, the Company's weighted two-year ranking for return on
equity was tenth within this group. The Committee determined that the
achievements made with respect to these performance goals, together
with the partial achievement of the operating goals discussed above,
warranted the bonus awarded to Mr. Ridgley for 1994.
DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986 limits to
$1 million per person the amount that the Company may deduct for
compensation paid in any year to any of its five highest-paid
executive officers. The Company does not expect the base salary and
annual cash incentive bonus paid to any executive officer to exceed
$1 million in any year.
<PAGE>
Substantially all of the options granted under the 1985 Stock
Option Plan have been Incentive Stock Options. The Company receives
no tax deduction from the exercise of an Incentive Stock Option unless
the optionee disposes of the acquired shares before satisfying certain
holding periods. Under proposed IRS regulations, the $1 million cap
on deductibility applies to compensation recognized by an optionee
upon such an early disposition unless the option meets certain
requirements. It is the Company's policy generally to grant options
that meet the requirements of the proposed regulations so that any
compensation recognized by an optionee will be fully deductible. The
1985 Stock Option Plan is proposed to be amended to meet one of the
requirements of the proposed regulations (see Item (2), below). The
Committee believes that the grant of Incentive Stock Options, despite
the general nondeductibility, benefits the Company by encouraging the
long-term ownership of Company stock by officers and other employees.
Tod R. Hamachek, Chair
Richard B. Keller
Wayne D. Kuni
Benjamin R. Whiteley
<PAGE>
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, 1989 and ended December 31, 1994.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN *
(Based on $100 invested on 12/31/89)
[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, 1989. Data points for the Company, the S&P 500 and the
AGA LDC Index are shown below.]
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
N.W. Natural Gas $100.00 $109.60 $129.56 $136.19 $172.03 $157.01
S&P 500 $100.00 $ 96.90 $126.43 $136.06 $149.77 $151.75
AGA LDC Index** $100.00 $101.41 $122.88 $146.65 $170.37 $154.73
___________________
<FN>
* Total return assumes reinvestment of dividends daily for the 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. and Yankee Energy System, Inc.
</TABLE>
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 (consisting of all executive officers) 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.
<PAGE>
PENSION PLAN TABLE
<TABLE>
Years of Service
<CAPTION>
____________________________________________________________________________
Compensation 15 20 25 30 35
____________________________________________________________________________
<S> <C> <C> <C> <C> <C>
$150,000 $ 83,200 $ 83,200 $ 90,700 $ 90,700 $ 90,700
175,000 99,400 99,400 108,200 108,200 108,200
200,000 115,700 115,700 125,700 125,700 125,700
225,000 131,900 131,900 143,200 143,200 143,200
250,000 148,200 148,200 160,700 160,700 160,700
300,000 180,700 180,700 195,700 195,700 195,700
350,000 213,200 213,200 230,700 230,700 230,700
400,000 245,700 245,700 265,700 265,700 265,700
450,000 278,200 278,200 300,700 300,700 300,700
500,000 310,700 310,700 335,700 335,700 335,700
550,000 343,200 343,200 370,700 370,700 370,700
600,000 375,700 375,700 405,700 405,700 405,700
</TABLE>
For purposes of the ESRIP, "compensation" consists of the annual
salary of the plan participant last approved by the Organization and
Executive 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 34 years, 15 years, 27
years, 12 years and 25 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 AMENDMENTS TO THE 1985 STOCK OPTION PLAN
In 1985, the Board of Directors adopted and the shareholders
approved the Company's 1985 Stock Option Plan (the Plan). A total of
300,000 shares of the Company's Common Stock were reserved for
issuance under the Plan. At February 28, 1995, options for a total of
133,710 shares were outstanding, and only 1,000 shares were available
for future option grants.
On February 23, 1995, the Board adopted, subject to shareholder
approval, amendments to the Plan that would: (1) increase the number
of shares authorized to be issued under the Plan from 300,000 to
800,000 shares; (2) remove the Plan's termination date, March 27,
1995, thus allowing the Plan to continue indefinitely until all
reserved shares are issued; (3) restrict to 50,000 the number of
shares that may be covered by options granted under the Plan to any
one employee in any fiscal year; and (4) allow the Board to extend or
otherwise modify the term during which options may be exercised upon
termination of employment, retirement, death or physical disability.
<PAGE>
The Board also adopted amendments to the Plan, not requiring
shareholder approval, which eliminated Plan provisions permitting:
(1) the grant of limited Stock Appreciation Rights in connection with
options; and (2) the grant of options to employees of Company
subsidiaries.
The purpose of the Plan is to enable the Company to attract and
retain experienced and able employees and to provide additional
incentive to these employees to exert their best efforts for the
Company and its shareholders. Approval of the amendments to the Plan
will allow the Company to continue to grant Incentive Stock Options
and Non-Statutory Stock Options to officers and other key employees.
The material terms of the Plan, as proposed to be amended, are
described below, and a complete copy of the Plan, marked to show the
proposed amendments, is attached to this Proxy Statement as
Appendix A. The following description is qualified in its entirety by
reference to Appendix A. All capitalized terms have the meaning set
forth in the Plan.
ADMINISTRATION
- - --------------
The Board of Directors has delegated authority to administer the
Plan to the Organization and Executive Compensation Committee of the
Board of Directors (the Committee) which consists of four independent
directors. All determinations of the Committee are conclusive.
ELIGIBILITY
- - -----------
Only officers and other key employees of the Company whom the
Committee has determined will perform services of special importance
to the Company in the management, operation and development of its
business are eligible for receipt of options granted under the Plan.
SHARES AVAILABLE
- - ----------------
Subject to the provisions of the Plan regarding adjustments for
changes in capital structure, no more than 800,000 shares of
authorized but unissued or reacquired Common Stock may be issued
pursuant to the Plan. Any shares of Common Stock subject to an option
that are not issued before the expiration of the option will again be
available for award under the Plan.
INCENTIVE STOCK OPTIONS
- - -----------------------
The Plan authorizes the Committee to grant Incentive Stock
Options, as defined under Section 422 of the Internal Revenue Code of
1986, on terms and conditions it deems appropriate, subject to the
following: (1) the option price per share may not be less than 100%
of the fair market value of the Common Stock when the option is
granted; (2) the term of the option may not exceed ten years; (3) the
purchase price of Common Stock on exercise of an option will be paid
in cash or by surrender to the Company of shares of previously
acquired Common Stock held for one year or more valued at fair market
value on the date of the option exercise; (4) unless otherwise
<PAGE>
determined by the Committee, an option will expire on the earlier of
(i) the expiration of the term for which it was granted, (ii) 12
months after termination of an optionee's employment due to death or
physical disability, or (iii) three months after termination of an
optionee's employment for any reason other than death or physical
disability; (5) no optionee may be granted options for more than
50,000 shares of Common Stock in any fiscal year; and (6) the
aggregate fair market value (determined on the date of grant) of
shares for which Incentive Stock Options become exercisable for the
first time by an optionee in any calendar year shall not exceed
$100,000. No monetary consideration is received by the Company for
the granting of options. On March 20, 1995, the closing price of the
Common Stock on the Nasdaq Stock Market was $31.50 per share.
NON-STATUTORY STOCK OPTIONS
- - ---------------------------
The Committee may also grant Non-Statutory Stock Options. The
option price may not be less than 100% of the fair market value of the
Common Stock when the option is granted. The term of the option may
not exceed ten years plus seven days, the purchase price will be paid
as described in clause (3) above, the option will expire as described
in clause (4) above, and the number of shares covered by options
granted to any one employee in any fiscal year will be limited as
described in clause (5) above.
EXERCISE OF OPTIONS
- - -------------------
Generally, no option when granted under the Plan may, by its
terms, be exercisable during the first year following the date it is
granted. Thereafter, options may be exercised as prescribed by the
Committee and stated in the option.
AMENDMENT OR TERMINATION
- - ------------------------
The Board of Directors may alter, amend, suspend or terminate the
Plan at any time but may not, without shareholder approval, adopt any
alteration or amendment that would: (1) increase the total number of
shares of Common Stock that may be purchased under the Plan, unless
the increase results from a recapitalization, stock split, stock
dividend, or other change in the capital structure of the Company;
(2) change the minimum purchase price at which options may be granted;
(3) increase the maximum option period; or (4) materially modify the
requirements for eligibility for participation in the Plan. Unless
earlier terminated by the Board of Directors, the Plan will continue
in effect until options have been granted and exercised with respect
to all shares reserved for the Plan; provided, however, that no
Incentive Stock Options may be granted under the Plan on or after
February 23, 2005.
TAX CONSEQUENCES
- - ----------------
The principal federal tax consequences to participants and the
Company of the grant and exercise of Incentive Stock Options and Non-
Statutory Stock Options pursuant to the Plan are summarized below.
<PAGE>
Incentive Stock Options. Under federal income tax law currently
-----------------------
in effect, an optionee recognizes no income upon grant or exercise of
an Incentive Stock Option. Federal income tax upon any gain resulting
from exercise of an Incentive Stock Option is deferred until the
optioned shares are sold by the optionee. However, the gain resulting
from the exercise of an Incentive Stock Option is included in the
alternative minimum taxable income of the optionee and may, under
certain conditions, be taxed under the alternative minimum tax.
If an optionee exercises an Incentive Stock Option and does not
dispose of any of the optioned shares within two years following the
date of grant and within one year following the date of exercise, then
any gain upon subsequent disposition will be treated as long-term
capital gain for federal income tax purposes. If an optionee disposes
of shares acquired upon exercise of an Incentive Stock Option before
the expiration of either the one-year or the two-year holding period,
any amount realized will be taxable for federal income tax purposes as
ordinary income in the year of such disqualifying disposition to the
extent that the lesser of the fair market value of the shares on the
exercise date or the fair market value of the shares on the date of
disposition exceeds the exercise price.
The Company will not be allowed any deduction for federal income
tax purposes either at the time of the grant or exercise of an
Incentive Stock Option. Upon any disqualifying disposition by an
optionee, the Company will generally be entitled to a deduction to the
extent the optionee realizes ordinary income.
Non-Statutory Stock Options. Under federal income tax law
---------------------------
presently in effect, no income is realized by the grantee of a
Non-Statutory Stock Option until the option is exercised. At the time of
exercise of a Non-Statutory Stock Option, the optionee will realize
ordinary income, and the Company will generally be entitled to a
deduction, in the amount by which the market value of the shares
subject to the option at the time of exercise exceeds the exercise
price. Upon sale of shares acquired upon exercise of a Non-Statutory
Stock Option, the excess of the amount realized from the sale over the
market value of the shares on the date of exercise will constitute
long-term capital gain if the shares have been held for the required
holding period.
Deductibility of Compensation. Section 162(m) of the Internal
-----------------------------
Revenue Code of 1986 limits to $1,000,000 per person the amount that
the Company may deduct for compensation paid to any of its most highly
compensated officers in any year. Under proposed regulations,
compensation received through the exercise of an option will not be
subject to the $1,000,000 limit if the option and the Plan meet
certain requirements. One such requirement is that shareholders
approve a per-employee limit on the number of shares as to which
options may be granted, as proposed in this Item (2). Other
requirements are that the option be granted by a committee of at least
two outside directors and that the exercise price of the option be not
less than the fair market value of the Common Stock on the date of
grant. Accordingly, the Company believes that if this proposal is
approved by shareholders, compensation received on exercise of options
<PAGE>
granted under the Plan in compliance with all of the above
requirements will not be subject to the $1,000,000 deduction limit.
Approval of the Plan amendments by the shareholders will require
the affirmative vote of the holders of a majority of the shares of
Common Stock of the Company present, or represented by proxy, and
entitled to vote on the matter at the Annual Meeting. Abstentions
have the effect of "no" votes in determining whether the amendments
are approved. 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 LLP, independent certified public accountants,
be retained as independent auditors of the Company for the year 1995,
and that this firm be elected by the shareholders at the Annual
Meeting. Deloitte & Touche LLP has been engaged in this capacity by
the Company since 1932. A representative of Deloitte & Touche LLP
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. In case Deloitte & Touche LLP is not elected,
the Board of Directors will select another independent certified
public accounting firm to serve as independent auditors of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE ELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR THE
YEAR 1995.
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 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.
<PAGE>
On September 22, 1994, the Company entered into an agreement with
Mr. Ridgley which provides for him to perform certain services for the
Company following his planned retirement as president and chief
executive officer on February 28, 1997. This agreement provides that
Mr. Ridgley will serve as chairman of the board and as a consultant
for two years for which he will receive $10,000 per month. This
amount would continue to be paid to Mr. Ridgley's wife in the event of
his death or disability during the two-year period. The agreement
also provides for Mr. Ridgley's continued use of a Company automobile
during this two-year period, and the reimbursement by the Company of
certain business-related club dues and assessments until he reaches
age 72 or retires from the Board, whichever occurs earlier.
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.
1996 ANNUAL MEETING OF SHAREHOLDERS
The 1996 Annual Meeting of Shareholders is scheduled to be held
in Portland on Thursday, May 23, 1996. 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 1996
proxy materials by December 14, 1995.
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 Beacon
Hill Partners Inc. to assist in the solicitation of proxies from
banks, brokers and nominees at a fee of $2,000 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 14, 1995 Secretary
<PAGE>
Appendix A
PROPOSED AMENDED
NORTHWEST NATURAL GAS COMPANY
1985 STOCK OPTION PLAN *
1. Purpose. The purpose of this 1985 Stock Option Plan
(the "Plan") is to enable Northwest Natural Gas Company (the
"Company") to attract and retain experienced and able employees
and to provide additional incentive to these employees to exert
their best efforts for the Company and its shareholders.
2. Shares Subject to the Plan. Except as provided in
paragraph 15, the total number of shares of the Company's
Common Stock, $3-1/6 par value per share ("Common Stock"),
covered by all options granted under the Plan shall not exceed
[300,000] 800,000 authorized but unissued or reacquired shares.
-------
If any option under the Plan expires or is cancelled or
terminated and is unexercised in whole or in part, the shares
allocable to the unexercised portion shall again become
available for options under the Plan.
3. Duration of the Plan. The Plan shall continue until
options have been granted and exercised with respect to all of
the shares available for the Plan under paragraph 2 (subject to
any adjustments under paragraph 15), [provided, however, that]
unless sooner terminated by action of the Board of Directors[,
the Plan shall terminate on, and no option shall be granted
under the Plan after, March 27, 1995]. The Board of Directors
has the right to suspend or terminate the Plan at any time
except with respect to then outstanding options.
4. Administration.
4.1 The Plan shall be administered by the Board of
Directors, which shall determine and designate from time to
time the employees to whom options shall be granted and the
number of shares, option price, the period of each option, and
the time or times at which options may be exercised. Subject
to the provisions of the Plan, the Board of Directors may from
time to time adopt rules and regulations relating to
administration of the Plan, and the interpretation and
construction of the provisions of the Plan by the Board of
Directors shall be final and conclusive. No director who holds
or is eligible to hold an option under the Plan may vote on any
action taken by the Board of Directors involving such matter,
and such action may only be taken if both a majority of the
Board of Directors and a majority of directors voting on the
action are not eligible and have not at any time within one
year prior thereto been eligible to receive an option pursuant
to the Plan or any other stock plan of the Company or an
affiliate of the Company.
_____________
* NOTE: Matter in bold face is proposed new matter; matter in
brackets and italics is proposed to be deleted.
<PAGE>
4.2 The Board of Directors may delegate to a
committee of the Board of Directors consisting of three or more
members (the "Committee") any or all authority for
administration of the Plan. No person may be appointed to the
Committee if within one year prior thereto he or she was
eligible to receive an option pursuant to the Plan or any other
stock plan of the Company or an affiliate of the Company.
Members of the Committee are not eligible to receive an option
pursuant to the Plan or any other stock plan of the Company or
an affiliate of the Company while on the Committee. If a
Committee is appointed, all references to the Board of
Directors in the Plan shall mean and relate to the Committee
unless the context requires otherwise.
5. Eligibility; Grants.
5.1 Options may be granted under the Plan only to
officers and other key employees of the Company (including
employees who are directors) who, in the judgment of the Board
of Directors, will perform services of special importance to
the Company in the management, operation, and development of
its business.
5.2 Options granted under the Plan may be Incentive
Stock Options as defined in Section 422 of the Internal Revenue
Code of 1986, as amended ("IRC"), or Non-Statutory Stock
Options. A Non-Statutory Stock Option means an option other
than an Incentive Stock Option. The Board of Directors has the
sole discretion to determine which options shall be Incentive
Stock Options and which options shall be Non-Statutory Stock
Options, and, at the time of grant, it shall specifically
designate each option granted under the Plan as an Incentive
Stock Option or a Non-Statutory Stock Option. NO INCENTIVE
STOCK OPTION MAY BE GRANTED UNDER THE PLAN ON OR AFTER THE
TENTH ANNIVERSARY OF THE LAST ACTION BY THE BOARD OF DIRECTORS
APPROVING AN INCREASE IN THE NUMBER OF SHARES AVAILABLE FOR
ISSUANCE UNDER THE PLAN, WHICH ACTION WAS SUBSEQUENTLY APPROVED
WITHIN 12 MONTHS BY THE SHAREHOLDERS.
6. Limitation on Amount of Grants.
6.1 The aggregate fair market value (determined for
each Incentive Stock Option when it is granted) of shares for
which Incentive Stock Options are exercisable for the first
time by an optionee in any calendar year under the Plan and
under any other incentive stock option plan (within the meaning
of IRC Section 422) of the Company or any parent or subsidiary
of the Company shall not exceed $100,000.
6.2 NO EMPLOYEE MAY BE GRANTED OPTIONS UNDER THE
PLAN FOR MORE THAN 50,000 SHARES OF COMMON STOCK IN ANY FISCAL
YEAR.
7. Option Price. The option price per share under each
option granted under the Plan shall be determined by the Board
of Directors, but except as provided in paragraph 9, the option
price for an Incentive Stock Option and a Non-Statutory Stock
Option shall be not less than 100 percent of the fair market
<PAGE>
value of the shares covered by the option on the date the
option is granted. Except as otherwise expressly provided, for
purposes of the Plan, the fair market value shall be deemed to
be the closing sales price for the Common Stock as reported by
the Nasdaq Stock Market and published in the Wall Street
Journal for the day preceding the date of grant, or such other
fair market value of the Common Stock as determined by the
Board of Directors of the Company.
8. Duration of Options. Subject to paragraphs 9 and 13,
each option granted under the Plan shall continue in effect for
the period fixed by the Board of Directors, except that no
Incentive Stock Option shall be exercisable after the
expiration of 10 years from the date it is granted and no
Non-Statutory Stock Option shall be exercisable after the
expiration of 10 years plus seven days from the date it is
granted.
9. Limitations on Grants to 10 Percent Shareholders. An
Incentive Stock Option may be granted under the Plan to an
employee possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company, or of any
parent or subsidiary of the Company, only if the option price
is at least 110 percent of the fair market value of the stock
subject to the option on the date it is granted, as described
in paragraph 7, and the option by its terms is not exercisable
after the expiration of five years from the date it is granted.
10. Exercise of Options. Except as provided in
paragraphs 13 and 15, no option when granted under the Plan may
by its terms be exercisable during the first year following the
date it is granted. Thereafter, options may be exercised over
the period stated in each option in amounts and at times
prescribed by the Board of Directors and stated in the option.
If the optionee does not exercise an option in any period with
respect to the full number of shares to which the optionee is
entitled in that period, the optionee's rights shall be
cumulative and the optionee may purchase those shares in any
subsequent period during the term of the option.
11. Limitations on Rights to Exercise. Except as
provided in paragraph 13 OR AS OTHERWISE APPROVED BY THE BOARD
OF DIRECTORS, no option granted under the Plan may be exercised
unless when exercised the optionee is employed by the Company
and shall have been so employed continuously since the option
was granted. Absence on leave or on account of illness or
disability under rules established by the Board of Directors
shall not, however, be deemed an interruption of employment for
this purpose.
12. Nonassignability. Each option granted under the Plan
by its terms shall be nonassignable and nontransferable by the
optionee except by will or by the laws of descent and
distribution of the state or country of the optionee's domicile
at the time of death, and each option by its terms shall be
exercisable during the optionee's lifetime only by the
optionee.
<PAGE>
13. Termination of Employment.
13.1 Unless otherwise determined by the Board of
Directors, if employment of an optionee by the Company is
terminated by retirement or for any reason other than in the
circumstances specified in 13.2 below, any option held by the
optionee may be exercised at any time prior to its expiration
date or the expiration of three months after the date of
termination of employment, whichever is the shorter period, but
only if and to the extent the optionee was entitled to exercise
the option on the date of termination.
13.2 Unless otherwise determined by the Board of
Directors, if an optionee's employment by the Company is
terminated because of death or physical disability (within the
meaning of IRC Section 22(e)(3)), any option held by the
optionee may be exercised for all remaining shares subject
thereto, free of any restriction on exercise of the option
during the first year after the date of grant or any limitation
on the number of shares for which the option may be exercised
in any period, at any time prior to its expiration date or the
expiration of one year after the date of termination, whichever
is the shorter period. If an optionee's employment is
terminated by death, any option held by the optionee shall be
exercisable only by the person or persons to whom the
optionee's rights under the option pass by the optionee's will
or by the laws of descent and distribution of the state or
country of the optionee's domicile at the time of death.
13.3 To the extent an option held by any deceased
optionee or by any optionee whose employment is terminated is
not exercised within the limited periods provided above OR
OTHERWISE DETERMINED BY THE BOARD OF DIRECTORS, all further
rights to purchase shares pursuant to the option shall
terminate at the expiration of such periods.
14. Purchase of Shares. Shares may be purchased or
acquired pursuant to an option granted under the Plan only on
receipt by the Company of notice in writing from the optionee
of the optionee's intention to exercise, specifying the number
of shares the optionee desires to purchase and the date on
which the optionee desires to complete the transaction, which
may not be more than 30 days after receipt of the notice, and,
unless in the opinion of counsel for the Company such a
representation is not required to comply with the Securities
Act of 1933, containing a representation that it is the
optionee's intention to acquire the shares for investment and
not with a view to distribution. On or before the date
specified for completion of the purchase, the optionee must
have paid the Company the full purchase price in cash, in
shares of Common Stock previously acquired by the optionee and
held for at least one year, valued at fair market value as
defined in paragraph 7, or in any combination of cash and
shares of Common Stock. No shares shall be issued until full
payment therefor has been made, and an optionee shall have no
rights as a shareholder until a certificate for shares is
issued to the optionee. Each optionee who has exercised an
option shall, on notification of the amount due, if any, and
<PAGE>
prior to or concurrently with delivery of the certificates
representing the shares for which the option was exercised, pay
to the Company amounts necessary to satisfy any applicable
federal, state, and local withholding tax requirements. If
additional withholding becomes required beyond any amount
deposited before delivery of the certificates, the optionee
shall pay such amount to the Company on demand. If the
employee fails to pay the amount demanded, the Company shall
have the right to withhold that amount from other amounts
payable by the Company to the optionee, including salary,
subject to applicable law.
15. Changes in Capital Structure. If the outstanding
shares of Common Stock are increased or decreased or changed
into or exchanged for a different number or kind of shares or
other securities of the Company or of another corporation, by
reason of any reorganization, merger, consolidation, plan of
exchange, recapitalization, reclassification, stock split-up,
combination of shares, or dividend payable in shares,
appropriate adjustment shall be made by the Board of Directors
in the number and kind of shares for the purchase of which
options may be granted under the Plan. In addition, the Board
of Directors shall make appropriate adjustments in the number
and kind of shares as to which outstanding options, or portions
thereof then unexercised, shall be exercisable, to the end that
each optionee's proportionate interest shall be maintained as
before the occurrence of such event. Adjustments in
outstanding options shall be made without change in the total
price applicable to the unexercised portion of any option and
with a corresponding adjustment in the option price per share.
Any such adjustment made by the Board of Directors shall be
conclusive. In the event of dissolution or liquidation of the
Company or a merger, consolidation, or plan of exchange
affecting the Company, in lieu of providing for options as
provided above in this paragraph 15, the Board of Directors
may, in its sole discretion, provide a 30-day period prior to
such event during which optionees shall have the right to
exercise options in whole or in part without any limitation on
exercisability and upon the expiration of such 30-day period
all unexercised options shall immediately terminate.
16. Amendment of Plan. The Board of Directors may at any
time and from time to time modify or amend the Plan in such
respects as it deems advisable because of changes in the law
while the Plan is in effect or for any other reason. After the
Plan has been approved by the shareholders and except as
provided in paragraph 15, however, no change in an option
already granted to an employee shall be made without the
written consent of such employee. Furthermore, unless approved
at an annual meeting or a special meeting by a vote of
shareholders in accordance with Oregon law, no amendment or
change shall be made in the Plan (a) increasing the total
number of shares which may be purchased under the Plan, (b)
changing the minimum purchase price specified in the Plan, (c)
increasing the maximum option period, or (d) materially
modifying the requirements for eligibility for participation in
the Plan.
<PAGE>
17. Approvals. The obligations of the Company under the
Plan are subject to the approval of the Oregon Public Utility
Commission, the Washington Utilities and Transportation
Commission, and such other state and federal authorities or
agencies with jurisdiction in the matter. The Company will use
its best efforts to take steps required by state or federal law
or applicable regulations, including rules and regulations of
the Securities and Exchange Commission and any stock exchange
on which the Company's shares may then be listed, in connection
with the granting of any option under the Plan, the issuance or
sale of any shares purchased on exercise of any option under
the Plan, or the listing of such shares on said exchange. The
foregoing notwithstanding, the Company shall not be obligated
to issue or deliver shares of Common Stock under the Plan if
the Company is advised by its legal counsel that such issuance
or delivery would violate applicable state or federal laws.
The Company shall not be obligated to register shares issuable
on exercise of options under the Securities Act of 1933.
18. Employment Rights. Nothing in the Plan or any option
granted pursuant to the Plan shall confer on any optionee any
right to be continued in the employment of the Company or to
interfere in any way with the right of the Company by whom such
optionee is employed to terminate such optionee's employment at
any time, with or without cause.
<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 NW SECOND AVENUE, PORTLAND, OREGON 97209.
NORTHWEST NATURAL GAS COMPANY
PROXY FOR 1995 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 25, 1995,
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 of the
undersigned, if any, held under the Plan.
PLEASE MARK THE BOX IF YOU PLAN / / NUMBER OF ATTENDEES ____
TO ATTEND THE ANNUAL MEETING.
THE COMPANY WILL PROVIDE REASONABLE ACCOMMONDATION 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.
<PAGE>
- - ----------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Item 1. Election of Directors:
Class II Nominees: Tod R. Hamachek, Wayne D. Kuni, Melody C.
Teppola, Russell F. Tromley
/ / 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 1985 Stock / / / / / /
Option Plan
Item 3. Election of Deloitte & Touche / / / / / /
LLP as Auditors for 1995.
- - ----------------------------------------------------------------------
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 SHAREHOLDER
WHOSE SIGNATURE APPEARS
BELOW. IF NO DIRECTION
IS MADE, THE PROXY WILL
BE VOTED FOR ITEMS 1, 2
AND 3.
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.
