SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Check the appropriate box:
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by Rule 14a-6(e)(2))
[] Definitive Proxy Statement
[] Definitive Additional Materials
[] Soliciting Materials Pursuant to section 240.14a-11(c) or
section 240.14a-12
Questar Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
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<PAGE>
PRELIMINARY PROXY MATERIALS
(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 20, 1997
_______________________________________
The Annual Meeting of Stockholders of Questar Corporation, a
Utah corporation (the "Company"), will be held at the Holiday
Inn, 1675 Sunset Drive, Rock Springs, Wyoming, on Tuesday, May
20, 1997, at 10:00 a.m., local time, for the following purposes:
1. To elect four directors to hold office for three years;
2. To consider and act on a stockholder proposal opposed
by the Board of Directors recommending the
declassification of the Board of Directors;
3. To transact such other business as may properly come
before the meeting.
Stockholders of record as of March 21, 1997, are entitled to
receive notice of and to vote at the Annual Meeting. If you have
your shares registered in the name of a brokerage firm or trustee
and plan to attend the meeting, please obtain a letter, account
statement, or other evidence of your beneficial ownership of
shares to facilitate your admittance to the meeting.
By Order of the
Board of Directors
Connie C. Holbrook
Vice President and Secretary
Salt Lake City, Utah
April [7], 1997
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 your white proxy card 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 is voted.
<PAGE>
QUESTAR CORPORATION
PROXY STATEMENT
May 20, 1997
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 20, 1997, at 10:00 a.m., local time, and any
adjournment or postponement of such meeting. At the Annual
Meeting, holders of common stock will elect four 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 21, 1997, will be entitled to notice of and to vote at the
Annual Meeting. At such date 41,__________ 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 four 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 stockholder's proposal requires the
receipt of more affirmative votes than negative votes for shares
represented at the meeting, assuming a quorum is present. 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 as 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 U. Edwin
Garrison, W. Whitley Hawkins, Robert E. Kadlec, and Harris H.
Simmons 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, 1997.
Nominees
[Picture] Mr. U. Edwin Garrison is the retired Chairman of
Thiokol Corporation, a position he held from July
of 1991 to November of 1995. 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 69, has served as a director of the Company
since 1991 and is also a director of Thiokol
Corporation. He is the beneficial owner of 17,942
shares of the Company's common stock, including
4,500 shares under vested stock options, and owns
5,224 shares of phantom stock under deferred
compensation plans.
[Picture] Mr. W. Whitley Hawkins is the owner of a
consulting firm, Hawkins Bricker International and
HBI, Inc., which manufactures chemical coating
products. He was President and Chief Operating
Officer of Delta Air Lines from May of 1991 to
March of 1993. Mr. Hawkins, age 65, has served as
a director of the Company since 1991 and also
serves on the Advisory Council of SunTrust Bank,
as a senior advisor to the American International
Group, and on the Advisory Board of the
International Airline Passengers Association. He
is the beneficial owner of 10,470 shares of the
Company's common stock, including 10,250 shares
under vested stock options, and owns 1,532 phantom
stock units under deferred compensation plans.
[Picture] Mr. Robert E. Kadlec has a venture capital firm,
Bentley Capital Corp. He retired as President and
Chief Executive Officer of BC Gas Inc., effective
December 31, 1995. Mr. Kadlec, age 63, has been a
director of the Company since 1987, is a director
of BC Gas Inc., Trans Mountain Pipe Line Company
Ltd., British Pacific Properties Ltd.,
International Forest Products Ltd., and is on the
Advisory Board of Anderson Consulting. He is the
beneficial owner of 17,850 shares of the Company's
common stock, including 11,450 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 December 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, an emeritus director of the
Company who was a director of the Company from
1968 to 1992. Mr. Simmons, age 42, has served as
a director since November 1, 1992. He serves as
Chairman of the Utah Symphony and the Economic
Development Corporation of Utah and as a trustee
of Salt Lake Community College. Mr. Simmons is
the beneficial owner of 7,600 shares of the
Company's common stock, including 7,000 shares
under vested stock options, and owns 3,441 phantom
stock units under deferred compensation plans.
Continuing Directors (Present Term Expires in 1998)
[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 54, has been a
director of the Company since 1977 and also serves
as a director of Zions First National Bank and
Zions Bancorporation, Energen Corporation, and
Associated Electric and Gas Insurance Services
Limited; a member of the Board of Directors of the
Federal Reserve Bank (Salt Lake Branch) of San
Francisco; a trustee of the Salt Lake Organizing
Committee for the Olympic Winter Games of 2002;
and a trustee of Southern Utah University. He is
the beneficial holder of 252,808 shares of the
Company's common stock, including 82,851 shares
under vested stock options and 47,529 shares that
are owned by two nonprofit foundations controlled
by the Company. He also has 19,498 phantom stock
units under deferred compensation plans.
[Picture] Mr. James A. Harmon is Senior Chairman of Schroder
Wertheim & Co. Incorporated (investment bankers).
He served as Chairman and Chief Executive Officer
from 1986 through December 31, 1995 and as
Chairman until July 1, 1996. Mr. Harmon, age 61,
has been a director of the Company since 1976 and
also serves as a non-executive Chairman of Latin
Communications Group and as a director of The Rank
Organization Plc; Chairman of the Advisory Board
of the Barnard-Columbia University Center for
Urban Public Policy; a trustee of Barnard College;
and a trustee emeritus of Brown University. He is
the beneficial holder of 32,064 shares of the
Company's common stock, including 8,050 shares
under vested stock options. Mr. Harmon also has
17,604 phantom stock units under deferred
compensation plans.
[Picture] Mr. William N. Jones is Chairman of the Board,
Lite Touch, Inc. (residential and commercial
lighting systems). Mr. Jones, age 70, has been a
director of the Company since 1981. He is a
trustee of Intermountain Health Care, Inc. He is
the beneficial holder of 14,794 shares of the
Company's common stock, including 6,300 shares
under vested stock options. He also has 1,359
phantom stock units under deferred compensation
plans.
[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.
Mr. Michael, age 56, has been a director of the
Company since February of 1994. 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 5,500 shares of the Company's common stock,
including 4,200 shares under vested stock options.
He also has 2,529 phantom stock units under
deferred compensation plans.
[Picture] Mr. Gary L. Nordloh serves the Company as
Executive Vice President, a position to which he
was appointed February 13, 1996. He was appointed
to serve as a director effective October 25, 1996,
to fill a vacancy created by the resignation of
Neal A. Maxwell. He has responsibility for the
Company's market resources activities and is the
President and Chief Executive Officer of Wexpro
Company, Celsius Energy Company, Universal
Resources Corporation, Questar Gas Management
Company, Questar Energy Trading Company, Questar
Energy Services, Inc., and Celsius Energy
Resources, Ltd. Mr. Nordloh, age 49, is the
beneficial holder of 60,998 shares of the
Company's common stock, including 27,750 shares
under vested stock options. He also has 1,967
phantom stock units under deferred compensation
plans.
Continuing Directors (Present Term Expires in 1999)
[Picture] Mr. Patrick J. Early, age 64, served as Vice
Chairman of Amoco Corporation from July of 1992
until his retirement in April of 1995. He was
also a director of Amoco Corporation from 1989 to
his retirement. Prior to service as Vice
Chairman, Mr. Early served as President of Amoco
Production Company from September 1987 to July of
1992. He is a member of the Board of Trustees of
the Museum of Science and Industry in Chicago and
a member of the Board of Advisors of Catholic
Charities in Chicago. Mr. Early owns 1,700 shares
of the Company's common stock, including 700
shares under a vested stock option, and has 1,274
phantom stock units under deferred compensation
plans.
[Picture] Mr. Dixie L. Leavitt is the founder and Chairman
of the Board of the Leavitt Insurance Group (a
group of approximately 54 independent insurance
agencies located in seven western states). Mr.
Leavitt, age 67, 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 22,123 shares of the
Company's common stock, including 7,000 shares
under vested stock options. He also has 10,386
phantom stock units under deferred compensation
plans.
[Picture] Mr. D. N. Rose serves the Company as Executive
Vice President, a position to which he was
appointed February 13, 1996. He is President and
Chief Executive Officer of Mountain Fuel Supply
Company (a subsidiary of the Company engaged in
retail natural gas distribution) and Questar
Pipeline Company (a subsidiary of the Company
engaged in the interstate storage and transmission
of natural gas). He is President and Chief
Executive Officer of Questar Regulated Services
Company, a new entity organized in late 1996 to
own Mountain Fuel and Questar Pipeline. He has
served as a director of the Company since 1984.
Mr. Rose, age 52, is also a trustee of Westminster
College. He is the beneficial holder of 74,035
shares of the Company's common stock, including
33,907 shares under vested stock options. He also
has 2,165 phantom stock units under deferred
compensation plans.
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. U. Edwin Garrison serves as the Chairman of this
Committee; other members include R. D. Cash, James A. Harmon,
W.Whitley Hawkins, and Robert E. Kadlec. The Executive Committee
did not hold any meetings during 1996.
The Finance and Audit Committee of the Board of Directors is
currently chaired by RobertE. Kadlec. Other members of this
Committee include James A. Harmon, William N. Jones, Dixie L.
Leavitt, Gary G. Michael, and Harris H. Simmons. During 1996,
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
Patrick J. Early, U. Edwin Garrison, William N. Jones, Robert E.
Kadlec, and Gary G. Michael. During 1996 the Committee held
three meetings. The Committee reviews the performance of R. D.
Cash; reviews salary and compensation arrangements paid the
Company's officers and makes recommendations to the Board of
Directors concerning such arrangements; administers the Long-Term
Stock Incentive Plan; and makes recommendations about 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.
The Company has a Nominating Committee consisting of R. D.
Cash (Chairman), Patrick J. Early, Dixie L. Leavitt, and Harris
H. Simmons. This Committee was organized to select individuals
for nomination as directors. The Nominating Committee held one
meeting in 1996. 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 1996; Board Committees held a total of six meetings. All
of the directors attended at least 75 percent of the meeting of
the Board and of the meetings of the Committees on which they
serve. With the exception of Mr. Harmon, all of the directors
attended 100 percent of the meetings to which they were invited
as directors and Committee members.
Directors' Compensation
Messrs. Cash, Nordloh, and Rose do not receive any
renumeration 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
$14,400 (increased from $12,000 effective September 1, 1996)
payable in 12 monthly installments. They also receive fees of
$900 (increased from $800 as of September 1, 1996) for each Board
meeting attended. With the exception of Mr. Cash, the Chairman
of each Board Committee receives a fee of $900 (increased from
$750 as of September1, 1996) for the meetings of the Committee
chaired by him. Other directors receive a fee of $700 (increased
from $600 as of September 1, 1996) 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 1996, 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, Rose, and Nordloh,
are also eligible to participate in the Stock Option Plan for
Directors (Directors' Option Plan), which was approved by the
Company's stockholders in May of 1987, subsequently amended with
shareholder approval effective March 1, 1991 and May 21, 1996.
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' Option 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 11, 1997, 10 nonemployee voting directors of the
Company received nonqualified stock options to purchase a total
of 34,400 shares of the Company's common stock at an exercise
price of $38.25 per share. Each eligible director, with the
exception of Messrs. Garrison, Hawkins, and Kadlec, received a
nonqualified stock option to purchase 3,200 shares. Messrs.
Garrison, Hawkins, and Kadlec each received options to purchase
4,000 shares reflecting their added responsibilities as Chairmen
of Board Committees. (These options will not begin to vest until
August 11, 1997; consequently, the shares covered by the options
are not included in the shares reported for the directors.)
In May of 1996, the Company's shareholders approved a new
plan, the Directors' Stock Plan, under which outside directors
can elect to receive their fees in shares of stock. Mr. Garrison
has elected to receive payment of his fees in actual shares of
stock.
The Company has entered into individual indemnification
agreements with all directors, including Messrs. Cash, Nordloh,
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. Garrison is the former Chairman, President and Chief
Executive Officer of Thiokol Corporation and still serves as a
director of Thiokol. Thiokol purchases gas from Questar Energy
Company (a subsidiary of the Company). Thiokol paid Questar
Energy a total of $1,323,277 during 1996 for gas supplies.
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 1996, the Company and its subsidiaries paid IHC a total
sum of $524,308 in administrative fees.
Mr. Kadlec is the former President and Chief Executive
Officer of BC Gas Inc. BC Gas has several gas supply contracts
with Questar Energy Trading Company to purchase gas during
portions of the 1995-96 and 1996-97 winter heating seasons and
also has long-term contracts with Questar Pipeline Company for
storage service. BC Gas paid Questar Energy Trading and Questar
Pipeline a total of $8,929,295 during 1996 for gas purchases and
storage services.
Mr. Simmons is the President and Chief Executive Officer of
Zions First National Bank. The Company has a line of credit
through Zions. Two of the Company's subsidiaries, Questar
InfoComm, Inc. and Mountain Fuel Supply Company, have accounts
with Zions. The Company's credit line with Zions is priced at
the same level that the Company pays for its other lines of
credit, and the services provided by Zions to Questar InfoComm
and Mountain Fuel are based on commercial terms that are
available to other clients.
EXECUTIVE COMPENSATION
The fadopted by the Company and its major operating subsidiaries and
about the performance objectives and awards made under such
plans. (This Committee functions as the "Compensation
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
Restricted
Stock All Other
Name and Principal Year Base Bonus($)1/ Awards Options Compensation
Position Salary($) ($)2/ (#) ($)3/
<S> <C> <C> <C> <C> <C> <C>
R. D. Cash 1996 413,000 144,340 135,979 35,000 67,683
Chairman, President 1995 395,000 28,463 23,336 30,000 54,240
and Chief Executive
Officer 1994 377,667 126,011 89,407 30,000 49,335
D. N. Rose 1996 258,833 70,639 70,571 23,000 39,483
President and Chief 1995 235,167 27,852 27,808 19,000 29,064
Executive Officer 1994 209,500 36,061 36,053 19,000 21,713
Regulated Services
Companies
G. L. Nordloh 1996 254,583 89,269 86,214 25,000 39,250
President and Chief 1995 235,000 25,099 16,039 22,000 25,521
Executive Officer 1994 164,583 44,127 45,333 22,000 20,658
Market Resouces Companies
A. J. Marushack4/ 1996 237,667 107,0884 N/A /4 19,000 31,592
1995 225,500 6,089 6,086 19,000 28,771
1994 201,333 39,254 39,201 19,000 20,671
C. M. Heiner 1996 227,500 56,829 48,960 19,000 34,972
Senior Vice President 1995 218,417 0 0 19,000 23,737
1994 208,983 55,264 39,256 19,000 21,891
</TABLE>
1/Amounts listed under this heading for 1996 include cash
payments awarded under the 1996 Annual Management Incentive Plans
(AMIPs), cash payments awarded under the 1996 general employee
compensation plans adopted by Celsius Energy Company/Universal
Resources Corporation and Wexpro Company (E&P Plans). The
amounts reported for 1994 include special cash bonuses paid to
Messrs. Cash and Heiner when a business unit was sold.
2/Amounts under this heading for 1996 include the value (as
of the grant date) of any shares of restricted stock granted in
1997, in lieu of cash, as partial payment of bonuses earned under
the 1996 AMIPs and the value of any shares of restricted stock
granted in connection with the 1996 E&P Plans. All shares of
restricted stock vest in two annual, equal installments on the
first business day in February of the first and second years
following the grant date. 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, 1996,
Mr. Cash had 2,327 shares of restricted stock having a market
value of $85,517; Mr. Rose had 1,485 shares having a market value
of $54,574; Mr. Nordloh had 1,305 shares worth $47,959; Mr.
Marushack had 897 shares worth $32,965; and Mr. Heiner had 717
shares worth $26,350.
3/The figure opposite Mr. Cash's name for 1996 includes
$13,106 in contributions to the Employee Investment Plan, $20,700
in directors' fees, and $33,877 in "matching contributions" to
the Deferred Share Plan. The figure listed opposite Mr. Rose's
name for 1996 includes $13,106 in contributions to the Employee
Investment Plan, $10,900 in director's fees, and $15,477 in
matching contributions to the Deferred Share Plan. The figure
listed opposite Mr. Nordloh's name for 1996 includes $13,106 in
contributions to the Employee Investment Plan; $10,900 in
director's fees, and $15,244 in matching contributions to the
Deferred Share Plan. The figure listed opposite Mr. Marushack's
name for 1996 includes $13,106 in contributions to the Employee
Investment Plan; $6,900 in director's fees; and $11,586 in
matching contributions to the Deferred Share Plan. The figure
listed opposite Mr. Heiner's name includes $13,106 in
contributions to the Employee Investment Plan, $6,900 in
director's fees, $10,562 in matching contributions to the
Deferred Share Plan, and $4,404 for unused vacation.
4/Mr. Marushack retired on February 28, 1997, as the
President and Chief Executive Officer of Questar Pipeline
Company, with over 39 years of service. Under the terms of the
AMIP, he was paid his final earned bonus in cash.
The following table lists information concerning the stock
options that were granted to Messrs. Cash, Rose, Nordloh,
Marushack, and Heiner during 1996 under the Company's Long-Term
Stock Incentive Plan. No stock appreciation rights (SARs) were
granted during 1996.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
% of Total
Options Options Granted Exercise or
Granted to Employees in Base Price Expiration Grant Date
Name (#)1/ Last Fiscal Year ($/Share) Date Value ($)2/
<S> <C> <C> <C> <C> <C>
R. D. Cash 35,000 8.8 33.625 2/13/2006 262,500
D. N. Rose 23,000 5.8 33.625 2/13/2006 172,500
G. L. Nordloh 25,000 6.3 33.625 2/13/2006 187,500
A. J. Marushack 19,000 4.8 33.625 2/13/2006 142,500
C. M. Heiner 19,000 4.8 33.625 2/13/2006 142,500
</TABLE>
1/These stock options vest in four annual, equal
installments, with the first installment exercisable as of August
13, 1996. Participants can use cash or previously-owned shares
as consideration for option shares. Option expire when a
participant terminates his employment, unless termination is
caused by an approved retirement, death, or disability. Options
can be exercised 12 months following a participant's death or
disability. Options granted prior to 1997 can be exercised for
three months following a participant's approved retirement.
Options granted in 1997 and subsequent years may be exercised for
a term not to exceed three years that is determined by the
Committee.
2/When calculating the present value of options as of the
date granted (February 13, 1996), the Company used the Black-Scholes option
pricing model. The Company assumed a volatility of 20.9 percent, a risk-free
interest rate of 5.73 percent, a dividend yield of 3.51 percent, and an
average life of 8 years. The real value of the options in this table depends
upon the actual performance of the Company's stock during the applicable
period. There can be no assurance that the values shown in this
table will be achieved.
The following table lists information concerning the stock
options that were exercised by Messrs. Cash, Rose, Nordloh,
Marushack, and Heiner during 1996 and the total options and their
value held by each at year-end 1996.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
Shares
Acquired Number of Unexercised Value of Unexercised
Or Value Options/SARs at Year- In-the-Money Options/
Exercised Realized1/ End (#)2/ SARs At Year-End ($)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
R. D. Cash 14,772 217,856 85,851 48,750 746,590 362,031
D. N. Rose 14,593 132,818 33,907 31,500 202,299 167,906
G. L. Nordloh 15,500 100,500 27,750 35,250 145,531 190,594
A. J. Marushack 12,000 195,750 65,500 28,500 636,594 158,531
C. M. Heiner 0 0 51,250 28,500 436,500 158,531
</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 1996 there were no outstanding stock appreciation
rights (SARs); they 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, 1996, 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
1996 and do not include Social Security benefits. Benefits under
the Retirement Plan are not reduced or offset by Social Security
benefits, although participants who retire prior to age 62 do
receive a temporary supplement until reaching age 62.
<TABLE>
<CAPTION>
Pension Plan Table
Highest Consecutive
Three-Year Average Years of Service
Annual Compensation 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$250,000 68,768 91,691 114,614 120,864 127,114
300,000 83,018 110,691 138,364 145,864 153,364
350,000 97,268 129,691 162,114 170,864 179,614
400,000 111,518 148,691 185,684 195,864 205,864
450,000 125,768 167,691 209,614 220,864 232,114
500,000 140,018 186,691 233,364 245,864 258,364
550,000 154,268 205,691 257,114 270,864 284,614
</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 permanent 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.
Federal tax laws impose limits on the amount of a
participant's annual compensation that can be used when calculating
benefits under qualified plans and on the amount of benefits that
can be paid to a participant from such plans. The SERP, a
nonqualified plan, was adopted in 1987 to compensate officers who
are affected by these limits. It provides for retirement benefits
equal to the difference between the benefits payable under the
qualified Retirement Plan and the benefits that would be payable
absent such limits. All of the officers listed in the table earn
annual compensation in excess of the current cap of $160,000
(increased from $150,000 effective January 1, 1997) and all of them
have vested benefits under the SERP.
The "final average earnings" (the average annual earnings for
the three highest-paid consecutive years of service} for purposes
of calculating retirement benefits for the executive officers named
above is as follows: Mr. Cash, $563,300; Mr. Rose, $306,079; Mr.
Nordloh, $306,015; and Mr. Heiner, $283,992. These numbers are
accurate as of December 31, 1996. 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. One-time extraordinary bonuses and payments for unused
vacation are reported in the table, but are not included in final
average earnings.
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 21 years
for Mr Cash, 28 years for Mr. Rose, 13 years for Mr. Nordloh, 39
years for Mr. Marushack, and 26 years for Mr. Heiner.
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 as of December 31, 1996 are as follows: Mr. Cash,
$39,522; Mr. Rose, $23,450; and Mr. Heiner, $21,830. Mr. Marushack
earned an annual benefit of $22,407 as of February 28, 1997.
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 $160,000 applicable to the Retirement
Plan, 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. The plan
also contains a provision that limits severance 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:
$880,000 to Mr. Cash; $551,400 to Mr. Rose: $517,000 to Mr.
Nordloh; and $477,200 to Mr. Heiner. 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 also deemed to occur once
any acquiring person becomes the beneficial owner, directly or
indirectly, of securities representing 15 percent or more of the
Company's outstanding shares of common stock.
CUMULATIVE TOTAL SHAREHOLDER RETURN
The following graph compares the cumulative total return 1/ 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.
[GRAPH]
[The graph has three lines connecting the points in the following table:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Questar $100.00 $128.42 $166.91 $144.40 $182.71 $207.43
S&P 500 100.00 107.79 118.66 120.56 165.78 204.30
Peer Group 100.00 116.32 137.99 125.41 168.33 220.67
</TABLE>
1/Assumes $100 vested at the close of trading on December 31,
1991 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 1996, the Company had a return of 13.5 percent
compared to a return of 23.2 percent for the S&P 500 Index and a
return of 31.1 percent for the published peer group index. For the
five-year period, the Company had a compounded annual return of
15.7 percent compared to similar returns of 15.4 percent for the
S&P 500 Index and 17.2 percent for the published peer group index.
2/The Company chose this index of diversified natural gas
companies for comparison purposes 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 Patrick J. Early, U. Edwin
Garrison, William N. Jones, Robert E. Kadlec, 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 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 Committee believes
that such programs 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 1996 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 also assesses the individual performance of
officers, particularly the performance of R. D. Cash and a group
that includes 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 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 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
components 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. The increases awarded
to Mr. Cash and other officers are based on an assessment of each
officer's comparison with survey data and individual performance.
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. Annual bonuses are directly linked to key
financial and operating objectives for the major business units and
for the Company on a consolidated basis. Each year, the Committee
reviews and approves specified performance objectives for the year.
Performance objectives are both financial (e.g., net income, return
on equity) and efficiency objectives (e.g., customer service
rating, safety performance, finding costs, operating and
maintenance costs). The performance objectives are set after the
Committee reviews actual results for the prior year and budgeted
results for the year in question and are generally higher than
actual results for the prior year and expectations for the current
year.
An overall performance factor is multiplied by each officer's
target bonus to determine his earned bonus. Each officer's target
bonus is a percentage of his base salary in effect at the time the
target bonus is approved. The Committee determines the allocation
of each officer's target bonus between business unit results and
consolidated results. One half of each officer's earned bonus is
paid in cash; the remainder is paid in shares of restricted stock
that vest in two annual, equal installments.
Stock Options
Annual grants of stock options are awarded to the Company's
officers and key employees as part of their "risk-based"
compensation. 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 when surveys indicate that stock
options should be increased to remain competitive. 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.
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.
The Committee has stock ownership guidelines for officers.
(Shares purchased through employer contributions are excluded from
the calculation, but phantom stock units attributable to an
officer's deferred compensation are included.) All of the officers
named in the Summary Compensation Table satisfy these guidelines,
which constitute a multiple of their base salaries.
Information concerning the stock options granted to the
Company's highest ranking executive officers in 1997 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 1996 and the year-end value
of their remaining stock options.
Specific Compensation Decisions
The Company, in 1996, generally exceeded its specified
performance objectives. It generated net income for common
shareholders of $97.8 million, (compared to $83.8 million in 1995),
for an overall earnings per share of $2.39, which represents a 17
percent increase from the $2.05 per share earnings figure in 1995.
Each of its major business units also exceeded performance
objectives which had been set in advance by the Committee.
Consequently, Mr. Cash earned a bonus of $271,990, or 137 percent
of his target bonus of $199,000. (Half of this amount was paid in
shares of restricted stock. He also received an additional $8,329
in cash bonuses for his participation in general employee incentive
compensation plans.) His salary was increased to $416,000
effective March 1, 1996, and further increased to $440,000
effective March 1, 1997. These salary increases were approved
after the Committee received survey data and reviewed Mr. Cash's
achievement of specified personal and corporate goals. In February
of 1997, the Committee awarded Mr. Cash an option to purchase
35,000 shares of stock at a price of $38.25 per share. The number
of shares covered by this option is identical to the number of
shares covered by the option granted to him in 1996. The 1997
stock options vest in four equal installments beginning August 11,
1997 and ending August 11, 2000.
Miscellaneous
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, their
experience, 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 service, 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 Company's Long-Term Stock Incentive Plan
does qualify under the regulations promulgated by the Treasury
Department for performance-based compensation. Consequently, the
Company can continue to take a deduction for any ordinary income
recognized by officers when exercising nonqualified stock options.
Management Performance Committee
W. Whitley Hawkins, Chairman
Patrick J. Early
U. Edwin Garrison
William N. Jones
Robert E. Kadlec
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, 1997.
<TABLE>
<CAPTION>
SHARES Percent of
Deferred Outstanding
Beneficial Compensation Total Shares 2/
Plans 1/
Directors:
<S> <C> <C> <C> <C>
R. D. Cash 3,4,5,6,7 252,808 19,498 272,306 .61%
P. J. Early 8 1,700 1,274 2,974 *
U. Edwin Garrison 8 17,942 5,224 23,166 *
James A. Harmon 8,9 32,064 17,604 49,668 *
W. Whitley Hawkins 8 10,470 1,532 12,002 *
William N. Jones 8,9 14,794 1,359 16,153 *
Robert E. Kadlec 8,10 17,850 0 17,850 *
Dixie L. Leavitt 7,8 22,123 10,386 32,509 *
Gary G. Michael 8 5,500 2,529 8,029 *
Gary L. Nordloh 4,5,6,7 60,998 1,967 62,965 .15%
D. N. Rose 4,5,6 74,035 2,165 76,200 .18%
Harris H. Simmons 8 7,600 3,441 11,041 *
Nondirector Executive Officers:
C. M. Heiner 4,5,6 101,795 1,891 103,686 .25%
A. J. Marushack 4,5,6, 7 128,937 2,833 131,770 .31%
All directors, senior 915,841 76,054 991,895 2.2%
directors, and executive
officers (18 individuals)
</TABLE>
1/Phantom stock units are held through the various deferred
compensation plans available to the Company's directors and
officers. Although these plans only permit such units to be paid
in the form of cash, investments in such units represent the same
investment in the performance of the Company's common stock as do
investments in actual shares of common stock.
2/Unless otherwise listed, the percentage of shares owned is
less than .1%. (The percentages do not include phantom stock
units.) The percentages of beneficial ownership have been
calculated in accordance with Rule 13d-3(d)(1) under the Securities
Exchange Act of 1934.
3/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 47,529 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.
4/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, 1996 as follows: Mr. Cash,
31,254 shares; Mr. Rose, 16,814 shares; Mr. Nordloh, 8,352 shares;
Mr. Marushack, 31,455 shares; and Mr. Heiner, 21,813 shares.
5/The Company's executive officers have options granted them
under the terms of the Company's 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, 1997 as follows: Mr. Cash, 82,851 shares; Mr. Rose,
33,907 shares; Mr. Nordloh, 27,750 shares; Mr. Marushack, 65,500
shares; and Mr. Heiner, 51,250 shares.
6/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, 1997: Mr. Cash, 3,902 shares; Mr. Rose, 2,258 shares; Mr.
Nordloh, 2,493 shares; and Mr. Heiner, 1,280 shares. The officers
receive dividends on such shares and have voting powers for such
shares, but cannot dispose of them until they vest.
7/Of the total shares reported for Mr. Cash, 3,270 are owned
jointly with his wife and 5,071 are controlled by him as custodian
for his son. Messrs. Leavitt and Marushack own their shares of
record jointly with their respective wives. Some of Mr. Nordloh's
record shares are owned by a family trust.
8/Messrs. Early, Garrison, Harmon, Hawkins, Jones, Kadlec,
Leavitt, Michael, and Simmons have vested nonqualified stock
options granted under the terms of the Directors' Plan to purchase
shares of common stock as follows: Mr. Early, 700 shares; Mr.
Garrison, 4,500 shares; Mr. Harmon, 8,050 shares; Mr. Hawkins,
10,250 shares; Mr. Jones, 6,300 shares; Mr. Kadlec, 11,450 shares;
Mr. Leavitt, 7,000 shares; Mr. Michael, 4,200 shares; and Mr.
Simmons, 7,000 shares.
9/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.
10/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.
11/The total number of shares reported for this group includes
vested options to purchase 389,220 shares of stock. When vested
options are excluded, the group owns approximately 1.3 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,
1996, 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.
<TABLE>
<CAPTION>
Name and Address of Shares and Nature of
Beneficial Owner Beneficial Ownership Percent of Class
<S> <C> <C>
First Security Bank, N.A. 4,024,042 9.8
79 South Main Street Trustee for Company
Salt Lake City, Utah 84111 Employee Benefit Plans
and Bank/1
FMR Corporation 2,693,11 6.6
82 Devonshire Street Investment Advisor
Boston, Massachusetts 02109 Bank/2
</TABLE>
1/Of this total, First Security beneficially owns 3,925,935
shares in its role as trustee of employee benefit plans sponsored
by the Company. Participating employees control the voting of such
shares.
2/Of this total, 1,969,000 shares are held by Fidelity
Management and Research Company, an investment advisor; 720,817
shares are held by Fidelity Management Trust Company, a bank; and
3,300 shares are held by Fidelity International Limited. In its
Schedule 13G filed on February 14, 1997, FMR indicated that it or
its affiliates had sole power to dispose of all these shares and
sole power to vote 535,317 shares.
UFCW PROPOSAL
The United Food and Commercial Workers Union, Local 99R,
with headquarters in Phoenix, Arizona (UFCW), has notified the
Company that it intends to present, at the Company's Annual
Meeting, a proposed recommendation in favor of electing directors
on an annual basis. The UFCW, the record shareholder of 100
shares, presented two resolutions last year, which received less
than a majority of the shares voting at the meeting.
The UFCW is engaged in a corporate campaign against
Albertson's, a large retail merchandiser with headquarters in
Boise, Idaho, and against Gary G. Michael, the Chairman and Chief
Executive Officer of Albertson's, who also serves as a director
of the Company. The corporate campaign arises from the UFCW's
unsuccessful efforts to organize some of Albertson's employees.
The UFCW has chosen to extend the campaign to corporations that
have links to Albertson's through its directors and officers and
acknowledges that it is pursuing proposals at four other
companies in addition to Questar that have ties to Albertson's.
In its solicitation materials, the UFCW also acknowledges that it
is not involved in a labor dispute with the Company. The UFCW is
not a bargaining agent for the Company's employees, all of whom
are nonunion.
The UFCW's resolution is as follows:
RESOLVED, that shareholders recommend the company have
all directors stand for election annually (in other words,
declassify its board of directors).
The Company's Board of Directors recommends that
shareholders vote "AGAINST" the proposed resolution. The
Company's Board of Directors has been segmented into three
classes since the Company was originally organized in 1984.
Prior to the Company's organization, shareholders approved the
division of Mountain Fuel's Board into three classes in May of
1983 by a margin of 4-1 when Mountain Fuel was the publicly-owned
entity. The Board has not changed its position since 1983 or
1984 and continues to believe that a classified Board serves the
best interests of the Company's shareholders.
The Board of Directors believes that the current division of
the Board into three classes, with one class elected each year
for a three-year term, provides continuity and stability in the
membership of the Board and in the policies established by the
Board. A classified Board increases the likelihood that at all
times at least two-thirds of the members will have experience and
familiarity with the business of the Company.
The Board of Directors is firmly committed to improving
performance and enhancing shareholder value and does not believe
that the presence of a classified Board diminishes its commitment
or its responsibility to shareholders.
The Company's Board of Directors continues to deplore the
tactics and question the motives of the UFCW. The Board of
Directors believes that labor management issues should be
resolved at the bargaining table or in other traditional labor-management
renas, not through corporate campaigns that use the
proxy process and increase costs to all shareholders. The Board
continues to believe that it is particularly unfair and
inappropriate for the UFCW to involve the Company and its
stockholders in the UFCW's dispute with another corporation by
proposing "corporate governance" resolutions and by citing
"shareholder democracy." Finally, the Board believes that the
UFCW's proposal is not in the best interest of the Company and
its shareholders and recommends that shareholders vote "AGAINST"
the resolution advocated by the UFCW.
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP, independent auditors, has
audited the accounts of the Company for a number of years,
including 1996 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 3, 1997, in order to have such proposals evaluated
for inclusion in the proxy materials relating to the Company's 1997
Annual Meeting of Stockholders, which is scheduled to be held on
May 19, 1998. 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, 1996,
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 1996
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, P. O. Box 45433, Salt Lake City,
Utah 84145-0433.
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 know of no additional 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 postponement of such meeting, 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 Bylaws
specifying the requirements will be furnished to any stockholder
upon written request to the Secretary.
By Order of the
Board of Directors
Connie C. Holbrook
Vice President and Secretary
<PAGE>
PRELIMINARY PROXY MATERIAL
QUESTAR CORPORATION
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING, MAY 20, 1997
180 East First South
P. O. Box 45433
Salt Lake City, Utah 84145-0433
PROXY The undersigned stockholder of QUESTAR CORPORATION does
hereby constitute and appoint R. D. CASH and JAMES A. HARMON, or
either of them, the true and lawful attorney-in-fact and proxy
with all the powers that the undersigned would possess, if
personally present, to vote the stock of the undersigned at the
Annual Meeting of Stockholders of the Company to be held at the
Holiday Inn, 1675 Sunset Drive, Rock Springs, Wyoming, on
Tuesday, May 20, 1997, at 10:00 a.m., local time, and at any
adjournments thereof, upon the matters described in the Notice of
Annual Meeting and Proxy Statement, dated April 7, 1997, receipt
of which is hereby acknowledged, and upon any other business that
may come before the meeting or any adjournments or postponements.
Dated: , 1997
(Signature)
(Signature)
Please date and sign exactly as name
appears hereon. When signing as
Attorney, Executor, Administrator,
Trustee, Guardian, etc., give full
title. If stock is held jointly, each
joint owner should sign. If stock is
owned by a corporation, please sign full
corporate name by
(Please turn over) duly authorized officer.
This proxy, when properly executed will be voted in the
manner directed by the stockholder. IF NO DIRECTION IS GIVEN,
THIS PROXY WILL BE VOTED FOR ALL NOMINEES AND AGAINST THE
STOCKHOLDER PROPOSAL.
The Board recommends a vote FOR the election of directors.
To elect four directors of the Company.
Nominees: U. Edwin Garrison, W. Whitley Hawkins, Robert E.
Kadlec, and Harris H. Simmons.
[] VOTE FOR all nominees listed above, except as
marked to the contrary above (if any). To
withhold your vote for any individual nominee,
strike a line through his name in the list above.
[] VOTE WITHHELD from all nominees.
The Board recommends a vote AGAINST the stockholder proposal.
To adopt a resolution recommending the declassification of
the Company's Board of Directors.
[] FOR [] AGAINST [] ABSTAIN
In their discretion, the proxies are authorized to vote upon
such other matters as may properly come before the meeting,
or any adjournments or postponements of such meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING
THE ENCLOSED ENVELOPE.
Please mark if your address has changed and correct your
address on the reverse side. []
