[Logo]
QUESTAR CORPORATION
180 East First South Street
P. O. Box 45433
Salt Lake City, Utah 84145-0433
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on May 16, 1995
The Annual Meeting of Stockholders of Questar Corporation, a Utah
corporation (the "Company"), will be held at 1140 West Second South,
Salt Lake City, Utah, on Tuesday, May 16, 1995, at 10:00 a.m., local
time, for the following purposes:
1. To elect five directors to hold office for three years; and
2. To transact such other business as may properly come before the
meeting.
Stockholders of record as of March 20, 1995, are entitled to receive
notice of and to vote at the Annual Meeting.
By Order of the
Board of Directors
/s/ Connie C. Holbrook
Connie C. Holbrook
Vice President and Secretary
Salt Lake City, Utah
April 3, 1995
YOUR VOTE IS IMPORTANT.
It is important that as many shares as possible be represented at
the Annual Meeting. Please date, sign, and promptly return the proxy in
the enclosed envelope (which requires no postage if mailed within the
United States). Your proxy may be revoked by you at any time before it
has been voted.
Please note the location change for the Company's Annual Meeting.
The address given above is the address of a new office building owned by
Mountain Fuel Supply Company (a subsidiary of the Company). Free
parking is available at the building.
<PAGE>
QUESTAR CORPORATION
PROXY STATEMENT
May 16, 1995
This Proxy Statement is being furnished to stockholders of Questar
Corporation, a Utah corporation, in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual
Meeting of Stockholders to be held on Tuesday, May 16, 1995, at 10:00
a.m., local time, and any adjournment or adjournments of such meeting.
At the Annual Meeting, holders of common stock will elect five directors
of the Company, each for a three-year term.
Record Date; Vote Required
Only stockholders of record at the close of business on March 20,
1995, will be entitled to notice of and to vote at the Annual Meeting.
At such date, 40,501,220 shares of common stock were outstanding. Each
share of common stock will be entitled to one vote on each matter coming
before the meeting. In order to elect the five directors, the
affirmative vote of the holders of a plurality of the shares of common
stock present and entitled to vote at the Annual Meeting, provided a
quorum is present, is required. The Company's Bylaws provide that votes
"withheld" from director nominees will not be counted for purposes of
determining whether such individuals receive a plurality of votes.
Shares registered in the names of brokers or other "street name"
nominees for which proxies are voted for some but not all matters
(broker nonvotes) will be considered to be voted only as to those
matters actually voted.
Proxies and Solicitation
Shares of common stock represented by properly executed proxies
received at or prior to the Annual Meeting will be voted in accordance
with specified instructions. If no instructions are indicated, proxies
representing shares of common stock will be voted for the Board of
Directors' nominees for director. Execution of a proxy will not prevent
a stockholder from attending the Annual Meeting and voting in person.
Any stockholder giving a proxy may revoke it at any time before it is
voted by delivering to the Secretary of the Company written notice of
revocation bearing a later date than the proxy, by delivering a
later-dated proxy, or by voting in person at the Annual Meeting.
Attendance at the Annual Meeting, in and of itself, will not constitute
revocation of a proxy.
This solicitation is made on behalf of the Board of Directors, and
all expenses of this solicitation will be paid by the Company. In
addition to solicitation of proxies by use of mail, the directors,
officers, and regular employees of the Company may solicit proxies.
Such persons will receive no additional compensation for such services.
The Company has requested that brokerage houses, and other custodians,
nominees, and fiduciaries forward solicitation materials to the
beneficial owners of shares of common stock held of record by such
persons. The Company will reimburse such brokers and other fiduciaries
for their reasonable out-of-pocket expenses incurred in connection with
such request.
ELECTION OF DIRECTORS
The Company's Restated Articles of Incorporation provide for a
board of 13 directors, divided into three classes, approximately equal
in number, elected to serve three-year terms.
The Board of Directors of the Company has selected R. D. Cash,
James A. Harmon, William N. Jones, Neal A. Maxwell, and Gary G. Michael
as the nominees for whom shares of common stock represented by the
enclosed proxy will be voted, unless otherwise specified on the proxy.
All of the nominees currently serve as directors of the Company.
The Board of Directors has no reason to believe that any nominee
will be unwilling or unable to serve as a director. However, in the
event that any nominee is unwilling or unable to serve as a director,
the proxy holders named in the enclosed proxy may vote, in their
discretion, for any other person. The directors elected at the Annual
Meeting will serve three-year terms.
Information concerning the nominees for election as directors and
the current directors of the Company whose terms will continue after the
Annual Meeting is set forth below. Unless otherwise indicated, the
nominees have been engaged in the same principal occupation for the past
five years. Ages are correct as of the date of the Proxy Statement.
Share information is correct as of March 1, 1995.
Nominees
[Picture] Mr. R. D. Cash has served as the Company's President
and Chief Executive Officer since May of 1984 and as the
Company's Chairman of the Board since May of 1985. Mr.
Cash, age 52, has been a director of the Company since
1977 and also serves as a director of Zions First
National Bank and Zions Bancorporation, a director of
Associated Electric and Gas Insurance Services Limited,
and as a trustee of Southern Utah University. He is the
beneficial holder of 205,279 shares of the Company's
common stock, including 39,373 shares under vested stock
options and 55,776 shares that are owned by two nonprofit
foundations controlled by the Company.
[Picture] Mr. James A. Harmon is Chairman and Chief Executive
Officer of Wertheim Schroder & Co. Incorporated
(investment bankers). Mr. Harmon, age 59, has been a
director of the Company since 1976 and also serves as a
director of Schroder plc, The Rank Organization, the
United Way of New York City, the New York City
Partnership (principal vehicle for private sector
activities to improve New York City's economic and social
health), and as a trustee of Brown University. He is the
beneficial holder of 26,564 shares of the Company's
common stock, including 2,550 shares under vested stock
options.
[Picture] Mr. William N. Jones is Chairman of the Board, Lite
Touch, Inc. (residential lighting systems). Mr. Jones,
age 68, has been a director of the Company since 1981.
He is a trustee of Intermountain Health Care, Inc. He is
the beneficial holder of 10,118 shares of the Company's
common stock, including 1,400 shares under vested stock
options.
[Picture] Mr. Neal A. Maxwell is a member of the Council of
the Twelve for the Church of Jesus Christ of Latter-day
Saints. Mr. Maxwell, age 68, has been a director of the
Company since 1968 and also serves as a director of
Deseret News Publishing Company and as a trustee of
Brigham Young University. He is the beneficial holder of
12,793 shares of the Company's common stock, including
11,550 shares under vested stock options.
[Picture] Mr. Gary G. Michael is Chairman and Chief Executive
Officer of Albertson's, Inc. and has served in this
position since February 1, 1991. He served as Vice
Chairman of the Board and as Chief Financial and
Corporate Development Officer of Albertson's from 1984 to
January 31, 1992. Mr. Michael, age 54, was appointed to
serve as a director of the Company effective February 1,
1994 to fill a vacancy on the Board. He is a director of
Albertson's and a member of the Board of Directors of the
Federal Reserve Bank of San Francisco. Mr. Michael is
the beneficial holder of 1,200 shares of the Company's
common stock, including 700 shares under a vested stock
option.
Continuing Directors (Present Term Expires in 1996)
[Picture] Mr. Dixie L. Leavitt is the founder and Chairman of
the Board, Leavitt Group Agency Association (a group of
approximately 45 separate insurance agencies located in
six western states). Mr. Leavitt, age 65, is also
President and Chairman of entities engaged in dairy,
cattle, agriculture, and real estate operations in Utah
and southern Nevada. He has been a director of the
Company since 1987 and also serves as a director of Zions
First National Bank. Mr. Leavitt is the beneficial
holder of 16,503 shares of the Company's common stock,
including 10,500 shares under vested stock options.
[Picture] Mrs. Mary Mead is a rancher in Jackson, Wyoming.
Mrs. Mead, age 59, has served as a director of the
Company since 1990 and also serves as a director of
Jackson State Bank. She is the beneficial holder of
10,700 shares of the Company's common stock, including
1,400 shares under vested options.
[Picture] Mr. D. N. Rose is President and Chief Executive
Officer of Mountain Fuel Supply Company (a subsidiary of
the Company engaged in retail natural gas distribution).
He has served in this position and as a director of the
Company since 1984. Mr. Rose, age 50, is also a trustee
of Westminster College and a director of Key Bank of
Utah. He is the beneficial holder of 60,865 shares of
the Company's common stock, including 26,950 shares under
vested options.
Continuing Directors (Present Term Expires in 1997)
[Picture] Mr. U. Edwin Garrison is Chairman of Thiokol
Corporation, a position he has held since July of 1991.
He also served as Chief Executive Officer of Thiokol from
July of 1991 to July of 1993 and as President of Thiokol
from July of 1989 to July of 1992. Mr. Garrison, age 67,
has served as a director of the Company since 1991 and is
also a director of Thiokol Corporation and First Security
Corporation. He is the beneficial owner of 11,589 shares
of the Company's common stock, including 1,400 shares
under vested stock options.
[Picture] Mr. W. Whitley Hawkins is the owner of a consulting
firm, Hawkins Bricker International, that owns Pride
Products, Inc., a manufacturer of chemical coating
products. He was formerly President and Chief Operating
Officer of Delta Air Lines from May of 1991 to March of
1993. He also served Delta Air Lines as Executive Vice
President, Marketing and Stations, August 1990 to May
1991; and as Senior Vice President, Marketing, May 1985
to August 1990. Mr. Hawkins, age 63, has served as a
director of the Company since 1991 and also serves on the
advisory council of Trust Company Bank and Trust Company
of Georgia, as a director of Fleet Mortgage Group, and as
a senior advisor to the American International Group. He
is the beneficial owner of 5,120 shares of the Company's
common stock, including 4,900 shares under vested stock
options.
[Picture] Mr. Robert E. Kadlec is President and Chief
Executive Officer of BC Gas Inc. Mr. Kadlec, age 61, has
been a director of the Company since 1987 and is also a
director of BC Gas Inc., Trans Mountain Pipe Line Company
Ltd., Bank of Montreal, British Pacific Properties Ltd.,
and International Forest Products Ltd. He is the
beneficial owner of 15,350 shares of the Company's common
stock, including 11,550 shares under vested stock
options.
[Picture] Mr. Harris H. Simmons has been the President and
Chief Executive Officer of Zions First National Bank and
Zions Bancorporation since May of 1990. He has served as
President of Zions Bancorporation since April of 1986 and
is also a director of Zions Bancorporation. He is the
son of Roy W. Simmons, a senior director of the Company
who was a director of the Company from 1968 to 1992. Mr.
Simmons, age 40, has served as a director since November
1, 1992, when he was appointed to fill a vacancy. He
serves as a trustee of Salt Lake Community College. Mr.
Simmons is the beneficial owner of 2,700 shares of the
Company's common stock, including 2,100 shares under
vested stock options.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
Board Committees
The Board of Directors is responsible for the Company's overall
affairs. To assist with this responsibility, the Board has established
several standing committees.
The Executive Committee is vested with the authority to act as the
Board of Directors in managing the affairs of the Company. Although
this Committee has very broad powers, it meets only infrequently when it
would be impractical to call a meeting of the full Board. Neal A.
Maxwell serves as the Chairman of this Committee; other members include
R. D. Cash, U. Edwin Garrison, James A. Harmon, and W. Whitley Hawkins.
The Executive Committee did not hold any meetings during 1994.
The Finance and Audit Committee of the Board of Directors is
currently chaired by U. Edwin Garrison. Other members of this Committee
include James A. Harmon, William N. Jones, Robert E. Kadlec, Dixie L.
Leavitt, Neal A. Maxwell, and Harris H. Simmons. During fiscal year
1994, the Finance and Audit Committee held two meetings, at which time
the members reviewed financial statements, conferred with the Company's
internal auditors and representatives of the external auditors
concerning their respective examinations of the Company, and reviewed
reports prepared for the Board of Directors.
The Company's Board of Directors also has a Management Performance
Committee with W. Whitley Hawkins serving as the current Chairman.
Other members of this Committee include U. Edwin Garrison, James A.
Harmon, William N. Jones, Robert E. Kadlec, Mary Mead, and Gary G.
Michael. During 1994, the Committee held two meetings. The Committee
reviews the salary and compensation arrangements paid the Company's
officers and makes recommendations to the Board of Directors concerning
such arrangements, administers the Stock Option Plan and the Long-Term
Stock Incentive Plan, and makes recommendations about the employees
chosen to participate in the Annual Management Incentive Plans adopted
by the Company and its major operating subsidiaries and about the
performance objectives and awards made under such plans. (This
Committee functions as the "Compensation Committee.") A report from
this Committee concerning executive compensation is set forth later in
this document.
The Company has a Nominating Committee consisting of R. D. Cash
(Chairman), Robert E. Kadlec, Dixie L. Leavitt, Mary Mead, and Harris H.
Simmons. This Committee was organized to select individuals for
nomination as directors. The Nominating Committee held one meeting in
1994. Although the Nominating Committee will consider responsible
recommendations by stockholders concerning nominees, it has not
established any formal procedures for considering such nominees. The
Company's Bylaws do specify procedures to follow if shareholders want to
nominate candidates for election as directors at an annual meeting.
Attendance at Board and Committee Meetings
The Company's Board of Directors held four regular meetings during
1994; Board Committees held a total of seven meetings (including two
meetings of special purpose committees not described above). With the
exception of Mr. Jones, all of the directors attended at least 75
percent of the aggregate of the meetings of the Board and of the
meetings of the Committees on which they serve. Mr. Jones attended 5 of
7 or 71 percent of Board and Committee meetings to which he was invited.
He missed two meetings held on one day as a result of prior commitments.
The overall attendance at Board and Committee meetings was 97 percent.
Directors' Compensation
Messrs. Cash and Rose do not receive any remuneration for service
as directors of the Company. They do, however, receive fees for service
as directors of the Company's affiliates. All other directors are paid
an annual fee of $12,000, payable in 12 monthly installments. (The
annual fee paid to directors was increased from $10,800 as of June 1,
1994.) They also receive fees of $800 (increased from $700 as of June
1, 1994) for each Board meeting attended. With the exception of Mr.
Cash, the Chairman of each Board Committee receives a fee of $750
(increased from $600 as of June 1, 1994) for meetings of the Committee
chaired by him. Other directors receive a fee of $600 (increased from
$500 as of June 1, 1994) for each Committee meeting attended.
The Company and its major affiliated companies each have a Deferred
Compensation Plan for Directors, under which directors can elect to
defer all or any portion of the fees received for service as directors
until their retirement from such service and can choose to have the
deferred amounts earn interest as if invested in long-term certificates
of deposit or be accounted for with "phantom shares" of the Company's
common stock. (The term phantom stock refers to accounting entries that
parallel the value of the Company's common stock. Directors choosing
the phantom stock option are credited with the same number of shares and
fractional shares that could have been purchased using the closing price
of the Company's common stock on the date such fees would have been
payable. The account balances are also credited with "shares" purchased
with reinvested "dividends." Upon retirement, directors receive the
cash equivalent of these phantom shares.) During 1994, several
directors of the Company and its affiliates chose to defer receipt of
the compensation earned by them for their service.
The directors, other than Messrs. Cash and Rose, are also eligible
to participate in the Stock Option Plan for Directors (Directors' Plan),
which was approved by the Company's stockholders in May of 1987 and
amended with shareholder approval effective March 1, 1991. Under the
terms of this nondiscretionary plan, nonemployee voting directors
receive nonqualified stock options at the first regular meeting of the
Board of Directors held each year to purchase shares of the Company's
common stock using the closing price of such stock on the date of grant
as the exercise price. The number of shares covered by the options
granted to directors is specified in the plan. Optionees, under the
terms of the Directors' Plan, can use cash or other shares of the
Company's common stock (valued at the closing price of such stock on the
exercise date) as consideration.
On February 14, 1995, 10 nonemployee voting directors of the
Company received nonqualified stock options to purchase a total of
29,800 shares of the Company's common stock at an exercise price of
$27.375 per share. Each eligible director, with the exception of
Messrs. Garrison, Hawkins, and Maxwell, received a nonqualified stock
option to purchase 2,800 shares. Messrs. Garrison, Hawkins, and Maxwell
each received options to purchase 3,400 shares reflecting their added
responsibilities as Chairmen of Board Committees. (These options will
not begin to vest until August 14, 1995; consequently, the shares
covered by the options are not included in the shares reported for the
directors.)
The Company has entered into individual indemnification agreements
with all directors, including Messrs. Cash and Rose, indemnifying them
as directors. The form of these agreements was approved by the
Company's stockholders at the 1988 Annual Meeting.
Directors' Retirement Policy
In May of 1992, the Board of Directors adopted a retirement policy
that permits an outside director to continue serving in such position
until the annual meeting following his 72nd birthday if he is actively
engaged in business, financial, and community affairs. With the
exception of the Company's Chief Executive Officer, any inside director
is expected to resign as a director on or before the date of his
retirement as an employee. The former Chief Executive Officer may serve
out the remainder of his term once he retires as an active employee.
Certain Relationships and Related Transactions
Mr. Jones serves as a member of the Board of Trustees of
Intermountain Health Care, Inc. (IHC), a nonprofit corporation that
provides health care services in the Company's areas of operation. The
Company offers two health maintenance organizations and a preferred
provider organization through IHC as options available to employees
under the Company's health plan. In 1994, the Company and its
subsidiaries paid IHC a total sum of $397,019 in administrative fees.
Mr. Kadlec is the President and Chief Executive Officer of BC Gas
Inc. The Company and BC Gas, through subsidiaries, are each owners of
FuelMaker Corporation, a Canadian corporation that manufacturers and
markets small natural gas compressors for use with natural gas vehicles.
BC Gas also has several gas supply contracts with Universal Resources
Corporation (a subsidiary of the Company) to purchase gas during
portions of the 1994-95 winter heating season and also has long-term
contracts with Questar Pipeline Company (another subsidiary of the
Company) for storage service.
Compensation Committee Interlocks and Insider Participation
Mr. Harmon is Chairman and Chief Executive Officer of Wertheim
Schroder & Co. Incorporated, an investment banking firm that has served
the Company and its affiliates as an underwriter and agent in the past
and is expected to serve the Company in such capacities in the future.
He is a member of the Management Performance Committee. Other members
of the Management Performance Committee include Messrs. Garrison,
Hawkins, Jones, Kadlec, and Michael and Mrs. Mead.
EXECUTIVE COMPENSATION
The following Summary Compensation Table lists annual and long-term
compensation earned by Mr. Cash and the other four most highly
compensated officers during 1992, 1993, and 1994.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation
Name and Base Restricted All Other
Principal Position Year Salary($) Bonus($) 1 Stock Options Compensation($)3
Awards ($) 2 (#)
<S> <C> <C> <C> <C> <C> <C>
R. D. Cash 1994 377,667 126,011 89,407 30,000 49,335
Chairman, President 1993 363,533 99,899 89,271 30,000 43,099
Chief Executive 1992 347,900 91,008 83,478 30,000 38,493
Officer
D. N. Rose 1994 209,500 36,061 36,053 19,000 21,713
President and Chief 1993 200,417 38,572 38,525 19,000 18,786
Executive Officer 1992 190,833 31,388 31,358 19,000 17,002
Mountain Fuel Supply
Company
C. M. Heiner 1994 208,983 55,264 39,256 19,000 21,891
Senior Vice President 1993 199,833 40,613 40,604 19,000 18,983
1992 190,417 31,597 31,560 17,000 16,786
A. J. Marushack 1994 201,333 39,254 39,201 19,000 20,671
President and Chief 1993 191,217 31,867 31,847 19,000 18,164
Executive Officer 1992 180,583 28,917 28,875 18,000 16,130
Questar Pipeline
Company
G. L. Nordloh 1994 164,583 44,127 45,333 22,000 20,658
President and Chief 1993 161,500 47,804 43,313 20,000 18,065
Executive Officer 1992 158,500 49,030 49,203 19,000 14,994
Celsius Energy
Company, Universal
Resources Corporation
and Wexpro Company
</TABLE>
1/Amounts listed under this heading for 1994 include cash payments
awarded under the 1994 Annual Management Incentive Plans (AMIPs), cash
payments awarded under the 1994 general employee compensation plans
adopted by Celsius Energy Company/Universal Resources Corporation and
Wexpro Company (E&P Plans), and special cash bonuses awarded when a
business unit was sold during 1994. The amounts listed for earlier
years include similar items.
2/Amounts under this heading for 1994 include the value (as of the
grant date) of any shares of restricted stock granted in 1995, in lieu
of cash, as partial payment of bonuses earned under the 1994 AMIPs and
the value of any shares of restricted stock granted in connection with
the 1994 E&P Plans. All shares of restricted stock vest in two annaul
equal installments with the first installment occurring on the first
anniversary of the grant date and the second occurring one year later.
Dividends are paid on the restricted shares at the same rate dividends
are paid on other outstanding shares of the Company's common stock. As
of December 31, 1994, Mr. Cash had 4,279 sharesof resticted stock having
a market value of $117,673; Mr. Rose had 1,766 shares having a market
value of $48,565; Mr. Heiner had 1,835 shares worth $50,463; Mr.
Marushack had 1,511 shares worth $41,553; and Mr. Nordloh had 2,227
shares worth $61,243.
3/Amounts listed under this heading include employer matching and
nonmatching contributions to the Employee Investment Plan (formerly the
Employee Stock Purchase Plan), matching "contributions" to the Deferred
Share Plan, above-market earnings credited to the deferred compensation
accounts for Messrs. Cash and Nordloh in 1994, and directors' fees. The
figures opposite Mr. Cash's name include $8,345 in contributions to the
Employee Investment Plan for 1994, $12,228 for 1993, and $10,499 for
1992. They also include directors' fees amounting to $18,300 for 1994,
$15,600 for 1993, and $16,000 for 1992; matching contributions to the
Deferred Shares Plan of $22,687 for 1994, $15,271 for 1993, and $11,994
for 1992; and above-market earnings of $3 to his deferred compensation
account in 1994. The figures opposite Mr. Rose's name include $8,345 in
contributions to the Employee Investment Plan for 1994, $12,228 for
1993, and $10,499 for 1992. They also include directors' fees amounting
to $6,100 for 1994, $5,200 for 1993, and $5,600 for 1992, and matching
contributions to the Deferred Share Plan of $7,268 for 1994, $1,358 for
1993, and $903 for 1992. The figures opposite Mr. Heiner's name include
$8,345 in contributions to the Employee Investment Plan for 1994,
$12,228 for 1993, and $10,499 for 1992. They also include directors'
fees of $6,100 for 1994, $5,200 for 1993, and $5,200 for 1992 and
matching contributions to the Deferred Share Plan of $7,446 for 1994,
$1,555 for 1993, and $1,087 for 1992. The figures opposite Mr.
Marushack's name include $8,345 in contributions to the Employee
Investment Plan for 1994, $12,228 for 1993, and $10,499 for 1992. They
also include directors' fees of $6,100 for 1994, $5,200 for 1993, and
$5,200 for 1992 and matching contributions to the Deferred Share Plan of
$6,226 for 1994, $736 for 1993, and $431 for 1992. The figures opposite
Mr. Nordloh's name include $8,345 in contributions to the Employee
Investment Plan for 1994, $11,845 for 1993, and $9,794 for 1992. They
also include directors' fees of $6,100 for 1994, $5,200 for 1993, and
$5,200 for 1992 and matching contributions to the Deferred Share Plan of
$6,198 for 1994 and $1,020 for 1993; and above-market earnings of $15
credited to his deferred compensation account in 1994.
The following table lists information concerning the incentive
stock options that were granted to Messrs. Cash, Rose, Heiner,
Marushack, and Nordloh during 1994 under the Company's Long-Term Stock
Incentive Plan. No stock appreciation rights (SARs) were granted during
1994.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
% of Total
Options Options Granted Exercise or
Granted to Employees in Base Price Expiration Grant Date
Name (#)1 Last Fiscal Year ($/Share) Date Value ($)2
<S> <C> <C> <C> <C> <C>
R. D. Cash 30,000 8.0 31.50 2/8/2004 203,175
D. N. Rose 19,000 5.0 31.50 2/8/2004 128,678
C. M. Heiner 19,000 5.0 31.50 2/8/2004 128,678
A. J. Marushack 19,000 5.0 31.50 2/8/2004 128,678
G. L. Nordloh 22,000 5.8 31.50 2/8/2004 148,995
</TABLE>
1/These incentive stock options vest in four annual, equal
installments, with the first installment exercisable as of August 8,
1994. Participants can use cash or previously-owned shares as
consideration for option shares. Options expire when a participant
terminates his employment, unless termination is caused by an approved
retirement, death, or disability. Options can be exercised for three
months following a participant's approved retirement and 12 months
following a participant's death or disability.
2/When calculating the present value of options granted in 1994, the
Company used the Black-Scholes option pricing model. The Company
assumed a volatility of 22.27 percent, a risk free interest rate of 6.5
percent, a dividend yield of 4.4 percent and a vesting discount of 5.7
percent. The real value of the options in this table depends upon the
actual performance of the Company's stock during the applicable period.
There can be no assurance that the values shown in this table will be
achieved.
The following table lists information concerning the stock options
that were exercised by Messrs. Cash, Rose, Heiner, Marushack, and
Nordloh during 1994 and the total options and their value held by each
at year-end 1994.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
Shares Number of Unexercised Value of Unexercised,In-
Acquired or Value Options/SARs at Year-End the-Money Options/SARs
Exercised Realized1 (#)2 at Year-End ($)
<S> <C> <C> <C> <C> <C> <C>
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
R. D. Cash 0 0 39,373 45,000 132,875 59,063
D. N. Rose 0 0 26,950 28,500 100,013 37,406
C. M. Heiner 0 0 13,750 28,000 33,469 33,469
A. J. Marushack 0 0 39,750 28,250 224,063 35,438
G. L. Nordloh 4,750 16,124 10,500 31,250 0 37,406
</TABLE>
1 The "value" is calculated by subtracting the fair market value of
the shares purchased on the date of exercise minus the option price.
The value is equal to the amount of ordinary income recognized by each
officer. The current value of the shares may be higher or lower than
the aggregate value reported in the table.
2 At year end 1994, there were no outstanding stock appreciation
rights (SARs), which have not been granted since February of 1989.
Retirement Plans
The Company maintains a noncontributory retirement plan that is
funded actuarially and does not involve specific contributions for any
one individual. The following table lists the estimated annual benefits
payable on a straight line annuity basis under the Company's Retirement
Plan as of December 31, 1994, and, if necessary, the Company's
Supplemental Executive Retirement Plan (the SERP). The benefits shown
are based on earnings and years of service for an employee reaching
normal retirement age of 65 in 1994 and do not include Social Security
benefits. Benefits under the Retirement Plan are not reduced or offset
by Social Security benefits.
<TABLE>
<CAPTION>
Pension Plan Table
Highest Consecutive Years of Service
Three-Year Average
Annual Compensation 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$200,000 $54,956 $73,274 $91,593 $96,593 $101,593
250,000 69,206 92,274 115,343 121,593 127,843
300,000 83,456 111,274 139,093 146,593 154,093
350,000 97,706 130,274 162,843 171,593 180,343
400,000 111,956 149,274 186,593 196,593 206,593
450,000 126,206 168,274 210,343 221,593 232,843
500,000 140,456 187,274 234,093 246,593 259,093
550,000 154,706 206,274 257,843 271,593 285,343
</TABLE>
The Company's Retirement Plan has a "step rate/excess" benefit
formula. The formula provides for a basic benefit that is calculated by
multiplying the employee's final average earnings by a specified basic
benefit factor and by subsequently multiplying such sum by the
employee's years of service (to a maximum of 25). This basic benefit is
increased for each year of service in excess of 25 and is reduced for
retirement prior to age 62. Employees also receive a supplemental
benefit, under the Retirement Plan, calculated by multiplying the
difference between the employee's final average earnings and his
"covered compensation" by a supplemental factor that varies by age.
(The term "covered compensation" refers to the 35-year average Social
Security wage base tied to year of an employee's birth.) Employees who
retire prior to age 62 also receive a temporary supplement that is tied
to years of service until they are eligible to receive Social Security
benefits at age 62.
The "final average earnings" (the average annual earnings of the
three highest-paid consecutive years of service) for purposes of
calculating retirement benefits for the executive officers named above
is as follows: for Mr. Cash, $532,824; for Mr. Rose, $265,082; for Mr.
Heiner, $268,821; for Mr. Marushack, $251,612; and for Mr. Nordloh,
$242,064. The officer's base salary, cash bonus payments, and value of
restricted stock (paid in lieu of cash) reported in the Summary
Compensation Table would be included in the calculation of the officer's
final average earnings. The amounts reported in the Summary
Compensation Table are somewhat different than the final average
earnings figures because the latter figures include actual cash payments
when made, not when earned, and the value of restricted stock when
distributed, not granted. Dividends on the restricted shares are also
included in the officer's final average earnings, but are not reported
in the table.
These executive officers all participate in the Company's Executive
Incentive Retirement Plan (the EIRP), described below, and may receive
supplemental monthly payments after retirement in accordance with such
plan. The years of service for the individuals listed in the Summary
Compensation Table are 19 years for Mr. Cash, 26 years for Mr. Rose, 24
years for Mr. Heiner, 37 years for Mr. Marushack, and 11 years for Mr.
Nordloh.
The Company and its affiliates adopted the EIRP for officers in
1979. Under this nonqualified plan, a participant will receive monthly
payments upon retirement equal to 10 percent of the highest average
monthly base salary paid to the officer during any period of 36
consecutive months of employment. The plan also provides for a family
benefit in the event of an officer's death. Messrs. Cash, Rose,
Heiner, and Marushack have satisfied the 15 years of service required
and have a vested right to receive benefits. Mr. Nordloh has been
nominated to participate in the plan, but has not satisfied the years of
service requirement. Based on current compensation, the annual benefits
payable to the named officers under this plan are as follows: Mr. Cash,
$36,303; Mr. Rose, $20,025; Mr. Heiner, $19,974; and Mr. Marushack,
$19,104.
Any benefits payable under the SERP are offset against payments for
the EIRP. Consequently, an officer would not receive any benefits from
the SERP unless his benefit under the EIRP was less than the difference
between what he could be paid under the Company's Retirement Plan at the
date of his retirement and what he would have earned under such plan
absent federal tax limitations. Given this relationship between the two
nonqualified plans and the annual compensation cap of $150,000
applicable to the Retirement Plan as of January 1, 1994, the amounts
listed in the table above do not include benefits payable under the
EIRP.
Executive Severance Compensation Plan
The Company has an Executive Severance Compensation Plan that
covers the Company's executive officers and all other officers of the
Company and its affiliated companies. Under this plan, participants,
following a change in control of the Company, are eligible to receive
compensation equal to up to two years' salary and miscellaneous benefits
upon a voluntary or involuntary termination of their employment,
provided that they have continued working or have been agreeable to
continue working for six months following a potential change in control
of the Company. This plan was adopted in 1983 by Mountain Fuel, was
assumed by the Company as of October 2, 1984, and was amended and
restated effective January 1, 1986. The amended plan also contains a
provision that limits compensation and benefits payable under the plan
to amounts that can be deducted under Section 280G of the Internal
Revenue Code of 1986.
The dollar amounts payable to the Company's executive officers
(based on current salaries paid by the Company and its affiliates) in
the event of a change in control of the Company are as follows:
$796,000 to Mr. Cash; $480,000 to Mr. Rose; $440,000 to Mr. Heiner;
$460,000 to Mr. Marushack; and $470,000 to Mr. Nordloh. The Company's
executive officers would also receive certain supplemental retirement
benefits, welfare plan benefits, and cash bonuses.
Under the plan, a "change in control" is defined to include any
change in control required to be reported under Item 6(e) of Schedule A
of Regulation 14A of the Securities Exchange Act of 1934, as amended. A
change in control is deemed to occur once any person becomes the
beneficial owner, directly or indirectly, of securities representing 20
percent or more of the Company's outstanding shares of common stock.
CUMULATIVE TOTAL SHAREHOLDER RETURN
The following graph compares the cumulative total return1 of the
Company's common stock with the cumulative total returns of a peer group
index of diversified natural gas companies prepared and published by
Value Line, Inc.2, and of the S&P Composite-500 Stock Index.
[The graph has three lines connecting the points in the following table.]
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Questar 100.00 99.68 123.65 158.79 206.38 178.55
S & P 500 100.00 96.83 126.41 136.25 150.00 151.97
Peer Group 100.00 83.42 78.60 92.91 111.69 100.74
</TABLE>
1 Assumes $100 invested at the close of trading on December 31, 1989
in the Company's common stock, the published index of peer companies,
and the S&P 500 Index. Also assumes the dividends are reinvested. For
1994, the Company had a negative return of 13.5 percent compared to a
return of 1.3 percent for the S&P 500 Index and a negative return of 9.8
percent for the published peer group index. For the five-year period,
the Company had an average annual return of 13.7 percent compared to a
five-year average return of 9.3 percent for the S&P 500 Index, and a
five-year average return of .13 percent for the published peer group
index.
2 The Company chose this index of diversified natural gas companies
because it is a published and widely-used index.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Management Performance Committee (the "Committee") is a
Committee of outside directors that is chaired by W. Whitley Hawkins.
Other members include U. Edwin Garrison, James A. Harmon, William N.
Jones, Robert E. Kadlec, Mary Mead, and Gary G. Michael. This Committee
is responsible for reviewing and approving all elements of the total
compensation program for officers of the Company and its affiliates and
serves as the administrator of the Company's Stock Option Plan and
Long-Term Stock Incentive Plan. The Committee is also responsible for
monitoring the Company's executive compensation programs to verify that
they are aligned with the Company's business strategies and financial
goals. The Company believes that such programs also motivate the
Company's officers to acquire and retain appropriate levels of stock
ownership and are competitive with programs offered by the Company's
peers. It is the Committee's opinion that the total compensation earned
by the Company's officers in 1994 achieves these objectives and is fair
and reasonable.
Each year, the Committee reviews the performance of the Company on
a consolidated basis and the performance of the Company's major lines of
business and compares such performance to specified groups of peer
companies. The Committee was pleased that the Company performed as well
as it did in 1994, despite weather that was 9 percent warmer than normal
and a 30 percent decrease in natural gas prices between the first and
fourth quarters of 1994. The Company exceeded its target objective for
return on equity and its minimum performance objective for net income in
1994. On a consolidated basis, the Company's consolidated earnings
available for common increased by nearly $6 million between 1993 and
1994. As is shown on the performance graph, the Company achieved a
five-year average return of 13.7 percent for the period ending December
31, 1994, despite a negative return of 13.5 percent in 1994.
The Committee also assesses the individual performance of officers,
particularly the performance of R. D. Cash and the Senior Vice
Presidents (a group that includes W. F. Edwards, as the Company's Senior
Vice President and Chief Financial Officer, in addition to the officers
listed in the Summary Compensation Table). The Committee periodically
directs outside consultants to perform an in-depth audit and analysis of
the total compensation paid to the Company's officers. The most recent
audit was completed by William M. Mercer, Inc. (Mercer) in December of
1994. The Committee also reviews executive compensation surveys,
including an annual survey on executive compensation sponsored by the
American Gas Association (AGA) and several compensation surveys
published by consulting firms.
The Mercer audit compared the Company's base salaries, bonus
programs, stock option plans, and perquisites with survey and proxy
data. When reviewing proxy data, Mercer consultants used designated
groups of peer companies for the Company on a consolidated basis and for
each of the Company's three primary business units. (The entities used
in the Company's shareholder return graph are diversified natural gas
companies. Most, but not all of these organizations were included in
Mercer's data, which in turn included many more comparisons than are
used in the graph published by Value Line.) Mercer consultants also
reviewed the Company's severance and nonqualified compensation plans.
The Company's total compensation program for officers includes base
salaries, annual bonuses, and stock options. The total program is
designed to attract, motivate, reward and retain the broad-based
management talent required to achieve corporate objectives and increase
shareholder value. Each of these aspects of the total program is
discussed in greater detail below.
Base Salaries
Base salaries for the Company's officers, including those named in
the Summary Compensation Table, are reviewed on an annual basis. Such
salaries are generally pegged at or near the 50th percentile or market
average of survey data. Merit increases are generally based on merit
compensation programs in place for the employees of the various business
units. The merit increases awarded to Mr. Cash and other officers are
based on an assessment of each officer's individual performance, years
of experience, and comparison with survey data and have been in line
with, or below, the overall merit budget guidelines adopted for other
employees.
On March 1, 1994, Mr. Cash received an overall merit increase of
3.83 percent on his base salary (from $366,000 to $380,000) after the
Committee determined that Mr. Cash's base salary was below the 50th
percentile of AGA survey data for comparable positions in integrated
natural gas companies. The Mercer report concluded that the base
salaries paid to the named officers were below both the average and the
50th percentile of survey and proxy data, although the base salaries
paid to the Company's other officers were competitive or above the
average and 50th percentile of survey data. Consequently, the Board of
Directors, on the Committee's recommendation, approved an overall merit
increase of 4.74 percent for Mr. Cash effective March 1, 1995 (from
$380,000 to $398,000). Mr. Cash participates in the general employee
incentive compensation plan adopted by the Company's E&P affiliates.
Consequently, a portion of Mr. Cash's base salary ($48,500) has been
frozen since March 1, 1990, and a portion of his new base salary
($58,500) will be frozen through February of 1998.
Annual Bonuses
All of the Company's officers, but particularly the five highest
paid officers, have a significant portion of their total compensation at
risk. The Company and its affiliates adopted an annual incentive
compensation plan in 1982 and have consistently used the framework of
this plan for the past 12 years. The Committee reviews and approves
minimum (85 percent), target (100 percent), and maximum (125 percent)
performance levels for each specified performance objective. Factors
are assigned to these performance objectives and the resulting factors
are multiplied to obtain an overall factor which, in turn, is multiplied
against the target bonus. A participant cannot earn more than 141
percent of his target bonus. Annual bonuses are directly linked to the
key financial and operating objectives for the major business units and
for the Company on a consolidated basis.
The Committee, at a meeting held in February of 1994, approved 1994
performance objectives for the Company and each major business unit.
The performance results for the Company, on a consolidated basis, were
specified net income, return on equity, and corporate operating and
maintenance expense goals. The performance results for each major
business unit included at least one financial goal, i.e., net income or
net income and return on equity, and at least one operating efficiency
goal. The performance objectives for Mountain Fuel Supply Company, in
addition to net income and return on equity, included a customer service
rating and a productivity standard (year-end customers per average
full-time employee). The performance objectives for Questar Pipeline
Company, in addition to net income and return on equity, included an
operating efficiency standard of net operating income divided by average
full-time employees. The performance objectives for the Company's
exploration and production units included net income, return on equity,
and five-year average finding costs.
The Committee also approved target bonuses for each officer. Mr.
Cash's target bonus for 1994 was set at 40 percent of his base salary;
the 1994 target bonus for each of the remaining highest compensated
officers was set at 30 percent of his base salary. A portion of Mr.
Cash's target bonus was allocated to the performance of each major
business unit. The target bonuses for Messrs. Rose, Marushack, and
Nordloh were evenly split between the performance goals for their
respective business units and consolidated performance. All of Mr.
Heiner's target bonus was tied to consolidated results.
In 1994, the Company, on a consolidated basis, exceeded the target
performance objective for return on equity, i.e., 13.7 percent, and
exceeded the minimum performance objective for net income, i.e., $82
million. It also satisfied the goal to reduce corporate operating and
maintenance expense below a specified dollar figure. Consequently, the
Company's officers received bonuses based on an overall payout factor of
130 percent. Mountain Fuel satisfied its minimum net income and return
on equity goals and exceeded its target customer service rating
percentage and customer per employee numbers. Messrs. Cash and Rose
earned bonuses equal to 108 percent of their target bonuses allocated to
Mountain Fuel. Questar Pipeline exceeded its target net income and
return on equity goals and exceeded its maximum operating efficiency
goal. Messrs. Cash and Marushack earned bonuses equal to 141 percent of
their target bonuses allocated to Questar Pipeline's 1994 performance
objectives. Wexpro exceeded its target performance objectives for net
income and return on equity. Messrs. Cash and Nordloh earned bonuses
equal to 141 percent of their target bonuses allocated to Wexpro's
performance objectives. Finally, Celsius and Universal Resources
exceeded their combined minimum net income goals and their combined
minimum five-year average finding cost goal. Messrs. Cash and Nordloh
earned bonuses equal to 78 percent of their target bonuses allocated to
these objectives.
Mr. Cash earned a bonus of $178,820 for the performance of the
Company and its affiliates under the Company's 1994 Annual Management
Incentive Plan, or an overall 121 percent of his target bonus of
$146,400. Of this amount, $89,413 was paid in cash; the remainder of
the bonus was paid in 3,266 shares of the Company's restricted stock
that will vest in equal annual installments in February of 1996 and
February of 1997. (During the restricted period, Mr. Cash will receive
dividends on these shares; the dividends will be treated as additional
compensation.) For 1994, he was eligible to receive up to 25 percent of
his frozen salary ($48,500) if the Company's exploration and production
affiliates achieved specified performance objectives. He earned two
cash bonuses of $7,500 and $4,098 for his participation in two separate
general employee compensation plans adopted by the Company's exploration
and production affiliates. In addition, Mr. Cash received an
extraordinary bonus of $25,000 when the Company's specialized mobile
radio subsidiary was sold during 1994. (The 1994 bonus figure listed
for Mr. Cash in the Summary Compensation Table includes the cash bonus
payments identified above. The value of the restricted shares granted
to him in 1995 for 1994 performance is listed under the restricted stock
column.)
In February of 1995, the Committee approved annual performance
objectives for the Company, on a consolidated basis, and each of its
major business units. The Committee used the same categories for 1995
performance measurements as were used in 1994. The 1995 performance
objectives were set after the Committee reviewed actual results for 1994
and budget numbers for 1995 and are generally higher than 1994 results
and 1995 budget expectations.
In response to recommendations made by Mercer consultants, the
Committee also changed the allocation between consolidated and business
unit goals from a 50/50 split to a 40/60 split for officers who preside
over such business units. The Committee accepted a Mercer
recommendation to factor individual performance into the calculation of
bonus payments earned by the named officers and any other participant
who has a target bonus in excess of $10,000. For 1995 and subsequent
years, 20 percent of the bonuses "earned" by these participants by
reference to the specified performance objectives will be aggregated in
a pool for allocation based on an assessment of individual performance.
The Mercer report also noted that target awards for the named
officers were below comparable market data, but that actual bonuses paid
to such officers were generally at or above the average survey data due
to the Company's outstanding financial and operating performance during
the last several years. Mercer consultants recommended that the target
awards to the five named officers be increased to a higher percentage of
base salary.
The Committee set Mr. Cash's 1995 target bonus at 45 percent of his
base salary in effect at the time, or $171,000. A portion of his target
bonus was again allocated to the performance of each major business
unit. The 1995 target bonuses for Messrs. Rose, Heiner, Marushack, and
Nordloh were set at 40 percent of each officer's base salary. The
target bonuses were increased in response to recommendations made in the
Mercer report, which, in turn, were based on survey data and proxy
statement information.
Stock Options
Annual grants of stock options are awarded to the Company's
officers and key employees as part of their "risk-based" compensation.
The Committee considers the recommendations made by the Company's senior
officers for participants other than Mr. Cash, but independently
determines Mr. Cash's stock option. As a general rule, the Committee
uses the prior year's grant as the basis for determining each subsequent
year's grant, but does increase the size of grants when participants are
promoted to new positions or achieve noteworthy accomplishments. Mr.
Nordloh, for example, has received larger option grants than the
Company's other Senior Vice Presidents to recognize his role in the
significant achievements of the Company's exploration and production
operations and the impact of these successful operations on the
Company's consolidated results and stock price. These grants are
awarded pursuant to the terms of an omnibus Long-Term Stock Incentive
Plan, which allows the Committee broad flexibility to use a wide range
of stock-based performance awards.
The Committee historically has granted nonqualified stock options,
but determined to use incentive stock options in 1994 because the
differential between capital gains and ordinary income had increased and
because the tax advantages associated with nonqualified stock options
for the Company were minimized, as a result of the Company's inability
to use all of its tax credits. Incentive stock options were also
granted in 1995.
Stock options, from the Committee's perspective, focus attention on
managing the Company from a long-term investor's perspective and
encourage officers to have a significant, personal investment in the
Company through stock ownership. Stock options awarded to officers and
key employees become valuable only as the Company's performance is
reflected in increased stock prices. Stock options constitute the
Company's only long-term incentive compensation program. Officers are
encouraged to retain their stock for long-term investment, rather than
sell option shares after purchasing them.
Based on recommendations made in the Mercer report, the Company
recently adopted stock ownership guidelines for officers. Mr. Cash's
stock ownership guideline is to own shares that have a value equal to
four - five times his base salary. Mr. Cash currently satisfies the
ownership guideline. The stock ownership guideline for the other
officers in the Summary Compensation Table is three - four times their
respective base salaries.
According to the Company's information, Mr. Cash, with 105,411
shares (excluding options, shares controlled for his son, and shares
held by two nonprofit foundations for which Mr. Cash has voting power),
is the largest individual shareholder of record. As a group, the
Company's five highest paid officers actually own 273,394 shares of
stock and have vested options to purchase 130,323 shares of stock.
As the President and Chief Executive Officer, Mr. Cash has
consistently received the largest stock option grant. Information
concerning the stock options granted to Mr. Cash and the other four
named officers in 1994 is included in the table labeled "Option/SAR
Grants in Last Fiscal Year." The table labeled "Aggregated Option/SAR
Exercises" provides information concerning the value realized by the
individual members of the group when exercising stock options in 1994
and the year-end value of their remaining stock options. The decline in
the Company's stock price during 1994 resulted in a significant decrease
in the number of option shares purchased by the officers and a
significant decrease in the value of such shares at year end.
The Mercer report contained a general guideline that stock options
be tied to a base salary multiple using the face value of the stock at
the time of grant. The Committee chose to modify this recommendation by
formalizing multiples among the participants, using a base of 10,000
shares, rather than tying to stock price. The Committee determined that
Mr. Cash's multiple should be three, or 30,000 shares.
In February of 1995, Mr. Cash received a grant to purchase 30,000
shares of the Company's stock at a fair market price of $27.375 per
share. The number of shares subject to Mr. Cash's 1995 option is equal
to the number of shares subject to his options granted in 1992, 1993 and
1994. The 1995 stock options vest in four equal installments with the
first installment vesting as of August 14, 1995 and have a ten-year
term.
The Company's compensation program also includes qualified and
nonqualified plans to provide retirement benefits. The Committee
believes that officers should be kept "whole" with respect to qualified
plans that contain restrictions that penalize them from the benefit of
full participation. Consequently, the Company has two nonqualified
plans, the Supplemental Executive Retirement Plan and the Deferred Share
Plan, that provide benefits to the highest compensated employees
"equal" to those lost as a result of restrictions in the Company's
qualified plans,the Retirement Plan and the Employee Investment Plan.
Miscellaneous
During 1993, the Company's Board of Directors, acting upon a
recommendation made by the Committee, adopted a Deferred Compensation
Plan that permits all officers to defer the receipt of up to 50 percent
of their annual compensation and to have such deferred compensation
accounted for with phantom shares of the Company's common stock or at a
rate equal to a 10-year Treasury note plus 100 basis points. This Plan
was adopted to remain competitive with other employers of similar size
and scope.
The Committee supports the Company's historic philosophy that
officers are not fundamentally different than employees but are paid
more due to the nature of their responsibilities and the greater demands
on their time. Consequently, the Committee supports the Company's
traditional practice of limiting the perquisites granted to officers.
Company officers do not have first class travel privileges, cars,
country club memberships, supplemental welfare benefit plans, executive
dining room, or personal use of the Company's airplane.
In 1993, Congress enacted Section 162(m) of the Internal Revenue
Code that generally limits the dollar amount of "compensation" paid to
the individual executive officers named in the Summary Compensation
Table. The primary exception to this limit, which is $1,000,000 for
each officer, is for performance-based compensation. The Committee does
not anticipate that the compensation paid to executive officers in the
form of base salaries and incentive compensation will exceed $1,000,000
per year in the near future, but it is conceivable that an individual
officer's compensation could exceed this dollar limit when stock options
are included. The ordinary income recognized by executive officers when
exercising nonqualified stock options is compensation for purposes of
this federal tax provision. Stock options under the Company's Stock
Option Plan and Long-Term Stock Incentive Plan currently qualify as
performance-based compensation under the proposed regulations adopted by
the Treasury Department to interpret Section 162(m).
Management Performance Committee
W. Whitley Hawkins, Chairman
U. Edwin Garrison
James A. Harmon
William N. Jones
Robert E. Kadlec
Mary Mead
Gary G. Michael
SECURITY OWNERSHIP, DIRECTORS AND EXECUTIVE OFFICERS
The following table lists the shares of stock beneficially owned by
each of the directors, by each of the other named executive officers,
and by all directors and executive officers as a group as of March 1,
1995.
Percent of
Beneficial Owner Number of Shares Outstanding Shares1
Directors:
R. D. Cash 2,3,4,5,6 205,279 .51%
U. Edwin Garrison 7 11,589 1
James A. Harmon 7,8 26,564 1
W. Whitley Hawkins 7 5,120 1
William N. Jones 7,8 10,118 1
Robert E. Kadlec 7,9 15,350 1
Dixie L. Leavitt 6,7 16,503 1
Neal A. Maxwell 6,7 14,193 1
Mary Mead 7 10,700 1
Gary G. Michael 7 1,200 1
D. N. Rose 3,4,5 60,865 .15%
Harris H. Simmons 7 2,700 1
Nondirector Executive Officers:
C. M. Heiner 3,4,5 61,398 .15%
A. J. Marushack 3,4,5,6 96,798 .24%
G. L. Nordloh 3,4,5,6 40,872 .10%
All directors, senior directors,
and executive officers
(20 individuals) 10 784,236 1.92%
1 Unless otherwise listed, the percentage of shares owned is less
than .1%. The percentages of beneficial ownership have been calculated
in accordance with Rule 13d-3(d)(1) under the Securities Exchange Act of
1934.
2 Mr. Cash is the Chairman of the Board of Trustees of the Questar
Corporation Educational Foundation and the Questar Corporation Arts
Foundation, two nonprofit corporations that own an aggregate of 55,776
shares of the Company's common stock. As the Chairman, Mr. Cash has
voting power for such shares, but disclaims any beneficial ownership of
the shares.
3 The Company's executive officers have shares held for their
accounts in the Company's Employee Investment Plan. The number of
shares opposite each of their names includes shares of stock through
such plan as of December 31, 1994 as follows: Mr. Cash, 27,855 shares;
Mr. Rose, 14,850 shares; Mr. Heiner, 19,075 shares; Mr. Marushack,
28,050 shares; and Mr. Nordloh, 6,815 shares.
4 The Company's executive officers have options granted them under
the terms of the Company's Stock Option Plan and Long-Term Stock
Incentive Plan. The number of shares opposite each of their names
includes the number of shares each has vested options to acquire within
60 days after March 1, 1995 as follows: Mr. Cash, 39,373 shares; Mr.
Rose, 26,950 shares; Mr. Heiner, 13,750 shares; Mr. Marushack, 39,750
shares; and Mr. Nordloh 10,500 shares.
5 The Company's executive officers acquired restricted shares of the
Company's common stock in partial payment of bonuses earned under the
Annual Management Incentive Plans. Mr. Nordloh also acquired restricted
shares of the Company's common stock under employee compensation plans
adopted by Celsius Energy Company/Universal Resources Corporation and
Wexpro Company. The number of shares opposite each of their names
includes the following shares of restricted stock beneficially owned as
of March 1, 1995: Mr. Cash, 4,683 shares; Mr. Rose, 1,928 shares; Mr.
Heiner, 2,078 shares; Mr. Marushack, 1,937 shares; and Mr. Nordloh,
2,343 shares. The officers receive dividends on such shares and have
voting powers for such shares, but cannot dispose of them until they
vest.
6 Of the total shares reported for Mr. Cash, 3,270 are owned jointly
with his wife and 4,720 are controlled by him as custodian for his son.
Messrs. Leavitt, Marushack, and Maxwell own their shares of record
jointly with their respective wives. Some of Mr. Nordloh's record
shares are owned by his spouse's family trust.
7 Messrs. Garrison, Harmon, Hawkins, Jones, Kadlec, Leavitt,
Maxwell, Michael, and Simmons and Mrs. Mead have vested nonqualified
stock options granted under the terms of the Directors' Plan to purchase
shares of common stock as follows: Mr. Garrison, 1,400 shares; Mr.
Harmon, 2,550 shares; Mr. Hawkins, 4,900 shares; Mr. Jones, 1,400
shares; Mr. Kadlec, 11,550 shares; Mr. Leavitt, 10,500 shares; Mr.
Maxwell, 11,550 shares; Mr. Michael, 700 shares; Mr. Simmons, 1,400
shares; and Mrs. Mead, 1,400 shares.
8 Mr. Harmon's wife owns 2,000 shares of common stock. Mr. Harmon
disclaims any beneficial interest in these shares. Mr. Jones' wife owns
90 shares of the Company's common stock; Mr. Jones disclaims any
beneficial interest in the shares owned by his wife.
9 Mr. Kadlec's wife owns 200 shares of common stock. Mr. Kadlec has
voting control and investment control over such shares. Such shares are
included in the shares listed opposite his name.
10 The total number of shares reported for this group includes
vested options to purchase 269,508 shares of stock. When vested options
are excluded, directors and executive officers, as a group, own
approximately 1.27 percent of the outstanding shares of the Company's
common stock.
SECURITY OWNERSHIP, PRINCIPAL HOLDERS
The following table sets forth information, as of December 31,
1994, with respect to each person known or believed by the Company to be
the beneficial owner of five percent or more of its common stock:
Shares and
Name and Nature of
Address of Beneficial Percent
Beneficial Owner Ownership of Class
First Security Bank of Utah N.A. 4,232,694 10.5
79 South Main Street Trustee for
Salt Lake City, Utah 84111 Company Employee
Benefit Plans
and Bank 1
Delaware Management Company, Inc. 2,441,300 6.0
1818 Market Street Investment Advisor 2
Philadelphia, Pennsylvania 19103
1 Of this total, First Security beneficially owns 4,122,159 shares
in its role as trustee of employee benefit plans sponsored by the
Company. Participating employees control the voting of such shares.
2 On an initial Schedule 13G dated as of December 31, 1994, Delaware
Management Company reported sole voting power for 2,232,500 shares,
shared voting power for 30,800 shares, sole dispositive power for
2,341,300 shares, and shared dispositive power for 100,000 shares.
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP, independent auditors, has audited
the accounts of the Company for a number of years, including 1994 and is
expected to continue doing so. Representatives of Ernst & Young LLP are
expected to be present at the Annual Meeting, will have an opportunity
to make a statement if they desire, and will be able to respond to
questions.
STOCKHOLDER PROPOSALS
The Company must receive proposals from stockholders on or before
December 4, 1995, in order to have such proposals evaluated for
inclusion in the proxy materials relating to the Company's 1996 Annual
Meeting of Stockholders, which is scheduled to be held on May 15, 1996.
Any proposal submitted for the proxy materials will be subject to the
rules of the Securities and Exchange Commission concerning stockholder
proposals.
ANNUAL REPORT AND FORM 10-K REPORT
An annual report for the year ending December 31, 1994, containing
financial and other information about the Company, has been recently
mailed to all stockholders of record.
The Company will send, without charge, a copy of its 1994 Annual
Report on Form 10-K (excluding exhibits), as filed with the Securities
and Exchange Commission, to any stockholder upon written request.
Requests should be sent to Connie C. Holbrook, Vice President and
Corporate Secretary, 180 East First South, Salt Lake City, Utah 84111.
SECTION 16(a) COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934
and regulations promulgated by the Securities and Exchange Commission,
the Company's directors, certain officers, and persons that own more
than 10 percent of the Company's stock, are required to file reports of
ownership and changes in ownership with the Commission and the New York
Stock Exchange and to furnish the Company with copies of all such
reports they file.
Based solely on its review of copies of such reports received or
written representations for certain reporting persons, the Company
believes that all filing requirements were satisfied.
OTHER MATTERS
The directors and officers of the Company know of no other matters
that are likely to be brought before the meeting. If any other business
requiring a vote of the stockholders should properly come before the
meeting or any adjournment or adjournments thereof, the persons named in
the enclosed proxy intend to vote in accordance with their best
judgment.
Pursuant to the Company's Bylaws, business must be properly brought
before an annual meeting in order to be considered by stockholders. The
Bylaws specify the procedure for stockholders to follow in order to
bring business before an annual meeting. A stockholder who wants to
nominate a person for election as a director must deliver a written
notice, by certified mail, to the Company's Secretary. Such notice must
be received not less than 50 days nor more than 90 days prior to the
date of the meeting. The notice must set forth (1) the name, address,
and stock ownership of the person making the nominations; (2) the name,
age, business address, residential address, and principal occupation or
employment of each nominee; (3) the number of shares of the Company's
stock owned by each nominee; (4) a description of all arrangements and
understandings between the stockholder and nominee pursuant to which the
nomination is made; and (5) such other information concerning the
nominee as would be required, under the rules of the Securities and
Exchange Commission, in a proxy statement soliciting proxies for the
election of the nominee. The notice must also include the signed
consent of the nominee to serve as a director if elected.
The Company's Bylaws also require that any stockholder who is
entitled to vote at the annual meeting and who wants to submit a
proposal at such meeting without having it considered through the proxy
materials, must deliver a written notice of the proposal, by certified
mail, to the Company's Secretary. Such notice must be received not less
than 50 days nor more than 90 days prior to the date of such meeting.
The notice must set forth (1) a brief description of the proposal; (2)
the stockholder's name, address, and stock ownership; and (3) any
material interest of the stockholder in the proposal. A copy of the
Company's Bylaws specifying the requirements will be furnished to any
stockholder upon written request to the Secretary.
If you do not own shares in your own name, you must bring proof of
ownership, e.g., a broker's statement, in order to be admitted to the
meeting.
By Order of the
Board of Directors
/s/ Connie C. Holbrook
Connie C. Holbrook
Vice President and Secretary
