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:
[] Preliminary Proxy Statement
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[X] Definitive Proxy Statement
[] Definitive Additional Materials
[] Soliciting Materials Pursuant to Sec. 240.14a-11(c) or Sec. 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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[x] No fee required
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1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
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[] Fee paid previously with preliminary materials.
[] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
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4) Date Filed:
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(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 19, 1998
_______________________________________
The Annual Meeting of Stockholders of Questar Corporation, a Utah
corporation (the "Company"), will be held at the Company's general
office, 180 East First South, Salt Lake City, Utah, on Tuesday, May 19,
1998, at 10:00 a.m., local time, for the following purposes:
1. To elect four directors to hold office for three years;
2. To amend the Company's Restated Articles of Incorporation to
increase the authorized shares of common stock from 175,000,000 to
350,000,000.
3. To transact such other business as may properly come before the
meeting.
Stockholders of record as of March 23, 1998, 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 6, 1998
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 19, 1998
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 19, 1998, 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, and consider a proposal to
increase the authorized number of shares of common stock.
Record Date: Vote Required
Only stockholders of record at the close of business on March 23,
1998, will be entitled to notice of and to vote at the Annual Meeting.
At such date 41,122,825 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 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. The
proposed amendment to the Company's Restated Articles of Incorporation
requires the favorable vote of the holders of a majority of the
outstanding shares. 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 and for adoption of the proposed
amendment to increase the authorized shares of common stock. 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,
Gary G. Michael, Gary L. Nordloh, and Scott S. Parker 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. Mr. Nordloh was appointed
to serve as a director of the Company effective October 25, 1996, and
Mr. Parker was appointed to serve as a director of the Company effective
October 23, 1997. Another director, William N. Jones, has a term that
expires in May of 1998. He will reach the mandatory retirement age in
May and will be appointed to serve as a senior director. The Board has
not nominated anyone to take his place.
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, 1998.
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 55, 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; and a trustee of the Salt
Lake Organizing Committee for the Olympic Winter Games
of 2002. He is the beneficial holder of 282,188 shares
of the Company's common stock, including 105,427 shares
under vested stock options, 46,829 shares that are
owned by two nonprofit foundations controlled by the
Company and 15,950 shares held by his family's private
foundation. He also has 22,854 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 57, has been a director of the Company since 1994.
He is a director of Albertson's and Boise Cascade
Corporation and Chairman of the Board of Directors of
the Federal Reserve Bank of San Francisco. Mr. Michael
is the beneficial holder of 10,800 shares of the
Company's common stock, including 9,500 shares under
vested stock options. He also has 3,327 phantom stock
units under deferred compensation plans.
[Picture] Mr. Gary L. Nordloh serves the Company as
Executive Vice President. He has served as a director
of the Company since October 25, 1996. 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 50, is the beneficial holder of 56,509
shares of the Company's common stock, including 19,000
shares under vested stock options. He also has 2,894
phantom stock units under deferred compensation plans.
[Picture} Mr. Scott S. Parker, age 63, is the president and
Chief Executive Officer of Intermountain Health Care,
inc. He was appointed to serve as a director effective
October 23, 1997, to fill a vacancy left by the
resignation of Mr. James A. Harmon. He serves as a
director of First Security Bank Corporation (Salt Lake
City) and MMI Companies, Inc. (Deerfield, Illinois).
He also serves as trustee of the National Committee for
Quality Health Care, as Chairman of the Board of
Hospital Research and Development Institute, and
recently completed a two-year term as President of the
International Hospital Federation. Mr. Parker owns 391
shares of the Company's common stock and has 301
phantom stock units under deferred compensation plans.
Continuing Directors (Present Term Expires in 1999)
[Picture] Mr. Patrick J. Early, age 65, served as Vice
Chairman of Amoco Corporation from July of 1992 until
his retirement in April of 1995. He has served as a
director of the Company since 1995. He was also a
director of Amoco Corporation from 1989 to his
retirement. 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 5,600 shares of the
Company's common stock, including 4,600 shares under
vested stock options, and has 2,016 phantom stock units
under deferred compensation plans.
[Picture] Ms. Marilyn S. Kite, age 50, is a partner in
Holland and Hart and practices in Jackson, Wyoming.
She was appointed to serve as a director in May of
1997. She is a trustee of the Rocky Mountain Mineral
Law Institute, a director of the University of Wyoming
Foundation, and serves on the Board of Litigation for
the Mountain States Legal Foundation. Ms. Kite owns
100 shares of the Company's common stock.
[Picture] Mr. Dixie L. Leavitt is the founder and Chairman
of the Board of the Leavitt Insurance Group (a group of
approximately 65 independent insurance agencies located
in seven western states). Mr. Leavitt, age 68, 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 27,899 shares of the Company's
common stock, including 12,300 shares under vested
stock options. He also has 11,400 phantom stock units
under deferred compensation plans.
[Picture] Mr. D. N. Rose serves the Company as Executive
Vice President. He has responsibility for the
Company's regulated activities and is the President and
Chief Executive Officer of Questar Gas Company (a
subsidiary of the Company engaged in retail natural gas
distribution), Questar Pipeline Company (a subsidiary
of the Company engaged in the interstate storage and
transmission of natural gas), and Questar Regulated
Services Company, a subholding company. He has served
as a director of the Company since 1984. Mr. Rose, age
53, is also a trustee of Westminster College. He is
the beneficial holder of 74,333 shares of the Company's
common stock, including 28,304 shares under vested
stock options. He also has 3,070 phantom stock units
under deferred compensation plans.
Continuing Directors (Present Term Expires in 2000)
[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 70, has served as a
director of the Company since 1991 and is also a
director of Thiokol Corporation. He is the beneficial
owner of 25,505 shares of the Company's common stock,
including 10,900 shares under vested stock options, and
owns 5,390 shares of phantom stock under deferred
compensation plans.
[Picture] Mr. W. Whitley Hawkins owns a consulting firm,
Hawkins Bricker International and HBI, Inc., which
manufactures chemical coating products. He retired as
President and Chief Operating Officer of Delta Air
Lines in March of 1993. Mr. Hawkins, age 66, has
served as a director of the Company since 1991 and also
serves on the Advisory Council of SunTrust Bank and on
the Advisory Board of the International Airline
Passengers Association. He is the beneficial owner of
16,870 shares of the Company's common stock, including
13,850 shares under vested stock options, and owns
1,581 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 64, 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 23,301
shares of the Company's common stock, including 14,300
shares under vested stock options.
[Picture] Mr. Harris H. Simmons is the President and Chief
Executive Officer of Zions Bancorporation and the
Chairman of the Board of Zions First National Bank and
is also a director of Zions Bancorporation. Mr.
Simmons, age 43, has served as a director since 1992.
He serves as a director of O. C. Tanner and trustee of
Salt Lake Community College. Mr. Simmons is the
beneficial owner of 12,900 shares of the Company's
common stock, including 12,300 shares under vested
stock options, and owns 4,236 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, W. Whitley Hawkins, and Robert E. Kadlec. The Executive
Committee held one meeting during 1997.
The Finance and Audit Committee of the Board of Directors is
currently chaired by Robert E. Kadlec. Other members of this Committee
include U. Edwin Garrison, William N. Jones, Marilyn S. Kite, Dixie L.
Leavitt, Gary G. Michael, and Harris H. Simmons. During 1997, 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, Gary G. Michael, and Scott
S. Parker. During 1997 the Committee held two 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 1997. 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
1997; Board Committees held a total of six meetings. All of the
Company's current directors attended 100 percent of the meeting of the
Board and of the meetings of the Committees on which they serve.
Directors' Compensation
Messrs. Cash, Nordloh, and Rose do not receive any renumeration
for service as directors of the Company. (Prior to March 1, 1998, they
received fees for service as directors of the Company's affiliates.)
All other directors are paid an annual fee of $14,400 payable in 12
monthly installments. They also receive fees of $900 for each Board
meeting attended. With the exception of Mr. Cash, the Chairman of each
Board Committee receives a fee of $900 for the meetings of the Committee
chaired by him. Other directors receive a fee of $700 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
1997, several directors of the Company and its affiliates chose to defer
receipt of the compensation earned by them for their service.
With the exception of Messrs. Cash, Rose, and Nordloh, the
directors 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 10, 1998, 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
$42.75 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 vest until August 10, 1998; 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. Messrs. Garrison and Kadlec have
elected to receive payment of 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.
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 Trading Company (a
subsidiary of the Company). Thiokol paid Questar Energy a total of
$2,071,675 during 1997 for gas supplies.
Mr. Parker 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 1997, the Company and its
subsidiaries paid IHC a total sum of $580,083 in administrative fees.
Mr. Kadlec is the former President and Chief Executive Officer of
BC Gas Inc. BC Gas has contracts with Questar Energy Trading Company
for the purchase of gas during the winter heating season and for the
sale of gas during the summer months. During 1997, Questar Energy
billed BC Gas $4,968,742 for gas sales and was billed $4,809,158 for gas
deliveries from BC Gas. BC Gas also has long-term contracts with
Questar Pipeline for storage services and paid $2,662,423 for storage
services during 1997.
Mr. Simmons is the Chairman of the Board of Zions First National
Bank. The Company has a line of credit through Zions. Two of the
Company's subsidiaries, Questar InfoComm, Inc. and Questar Gas 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
Questar Gas are based on commercial terms that are available to other
clients. A Zions' affiliate also leases space from a business
continuity center owned by Questar InfoComm.
Ms. Kite is a partner in Holland and Hart, a law firm that has
been used by the Company in conjunction with litigation and lobbying
activities in Colorado and Wyoming. During 1997, the Company paid
$401,695 to Holland and Hart for such activities. Ms. Kite has not been
personally involved with representing the Company's interests.
EXECUTIVE COMPENSATION
The following Summary Compensation Table lists annual and
long-term compensation earned by Mr. Cash and the other four most highly
compensated officers during 1995, 1996, and 1997.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation All Other
Restricted Options Compensation
Name and Principal Position Year Base Salary ($) Bonus ($)1/ Stock Awards ($)2/ (#) ($)3/
<S> <C> <C> <C> <C> <C> <C>
R. D. Cash 1997 436,000 94,717 90,844 35,000 81,521
Chairman, President and 1996 413,000 144,340 135,979 35,000 67,683
Chief Executive Officer 1995 395,000 28,463 23,336 30,000 54,240
D. N. Rose, President and 1997 273,517 55,118 52,582 23,000 54,891
Chief Executive Officer 1996 258,833 70,639 70,571 23,000 39,483
Regulated Services Companies 1995 235,167 27,852 27,808 19,000 29,064
G. L. Nordloh, President and 1997 258,500 50,783 42,194 26,000 50,001
Chief Executive Officer 1996 254,583 89,269 86,214 25,000 39,250
Market Resources Companies 1995 235,000 25,099 16,039 22,000 25,521
C. M. Heiner 1997 237,000 37,642 25,222 19,000 36,481
Senior Vice President 1996 227,500 56,829 48,960 19,000 34,972
President and Chief 1995 218,417 0 0 19,000 23,737
Executive Officer
Questar InfoComm, Inc.
S. E. Parks 4/ 1997 152,833 18,348 18,297 13,000 20,204
Vice President, Treasurer, 1996 143,450 25,477 25,436 12,000 14,363
and Chief Financial Officer
</TABLE>
1/Amounts listed under this heading for 1997 include cash payments
awarded under the 1997 Annual Management Incentive Plans (AMIPs), cash
payments awarded under the 1997 general employee compensation plans
adopted by Celsius Energy Company/Universal Resources Corporation,
Wexpro Company and Questar Gas Management Company (Market Resources Plans),
and Questar InfoComm.
2/Amounts under this heading for 1997 include the value (as of the
grant date) of any shares of restricted stock granted in 1998, in lieu
of cash, as partial payment of bonuses earned under the 1997 AMIPs and
the value of any shares of restricted stock granted in connection with
the 1997 Market Resources 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,
1997, Mr. Cash had 3,902 shares of restricted stock having a market
value of $174,127; Mr. Rose had 2,258 shares having a market value of
$100,763; Mr. Nordloh had 2,493 shares worth $111,250; Mr. Heiner had
1,280 shares worth $57,120, and Mr. Parks had 665 shares worth $29,676.
3/The figure opposite Mr. Cash's name for 1997 includes $15,070 in
contributions to the Employee Investment Plan, $21,600 in directors'
fees, and $44,851 in "matching contributions" to the Deferred Share
Plan. The figure listed opposite Mr. Rose's name for 1997 includes
$15,070 in contributions to the Employee Investment Plan, $14,400 in
director's fees, $20,119 in matching contributions to the Deferred Share
Plan, and $5,302 for unused vacation. The figure listed opposite Mr.
Nordloh's name for 1997 includes $15,070 in contributions to the
Employee Investment Plan; $14,400 in director's fees, and $20,531 in
matching contributions to the Deferred Share Plan. The figure listed
opposite Mr. Heiner's name includes $15,070 in contributions to the
Employee Investment Plan, $7,200 in director's fees, and $14,211 in
matching contributions to the Deferred Share Plan. The figure listed
opposite Mr. Parks' name includes $15,006 in contributions to the
Employee Investment Plan, $2,231 in matching contributions to the
Deferred Share Plan, and $2,967 for unused vacation.
4/Mr. Parks became an executive officer in February of 1996 when he
was named the Company's Chief Financial Officer. Consequently, no
information is reported concerning his 1995 compensation.
The following table lists information concerning the stock options
that were granted to Messrs. Cash, Rose, Nordloh, Heiner, and Parks
during 1997 under the Company's Long-Term Stock Incentive Plan. No
stock appreciation rights (SARs) were granted during 1996.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
% of Total
Options Options Granted Exercise or
Granted to Employees in Base Price Expiration Grant Date
Name (#)1/ Last Fiscal Year ($/Share) Date Value ($)2/
<S> <C> <C> <C> <C> <C>
R. D. Cash 35,000 9.5 38.25 2/11/2007 263,200
D. N. Rose 23,000 6.3 38.25 2/11/2007 172,960
G. L. Nordloh 26,000 7.1 38.25 2/11/2007 195,520
C. M. Heiner 19,000 5.2 38.25 2/11/2007 142,880
S. E. Parks 13,000 3.6 38.25 2/11/2007 97,760
</TABLE>
1/These stock options vest in four annual, equal installments, with
the first installment exercisable as of August 11, 1997. Participants
can use cash or previously-owned shares as consideration for option
shares. Options expire when a participant terminates his employment,
unless termination is caused by an approved retirement, death, or
disability. Options can be exercised 12 months following a
participant's death or disability. Options granted prior to 1997 can be
exercised for three months following a participant's approved
retirement. Options granted in 1997 and subsequent years may be
exercised for a term not to exceed three years that is determined by the
Committee.
2/When calculating the present value of options as of the date
granted (February 11, 1997), the Company used the Black-Scholes option
pricing model. The Company assumed a volatility of .19 percent, a
risk-free interest rate of 6.15 percent, a dividend yield of 3.19
percent, and an average life of 5.1 years. The real value of the
options in this table depends upon the actual performance of the
Company's stock during the applicable period. There can be no assurance
that the values shown in this table will be achieved.
The following table lists information concerning the stock options
that were exercised by Messrs. Cash, Rose, Nordloh, Heiner, and Parks
during 1997 and the total options and their value held by each at
year-end 1997.
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-end Option/SAR Values
<TABLE>
<CAPTION>
Shares Number of Unexercised Value of Unexercised, In-
Acquired or Value Options/SARs at Year-End the-Money Options/SARs
Exercised Realized1/ (#)2/ At Year-End ($)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
R. D. Cash 11,624 212,931 106,727 46,250 1,547,535 457,344
D. N. Rose 13,907 152,977 41,000 33,500 494,469 318,406
G. L. Nordloh 22,978 255,172 28,522 37,500 303,914 356,688
C. M. Heiner 37,000 499,094 33,250 28,500 442,937 277,281
S. E. Parks 10,000 133,750 26,750 18,250 347,344 171,281
</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 current value of the shares may be higher or lower than the
aggregate value reported in the table.
2/At year end 1997 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, 1997, and, if necessary, the Company's
Supplemental Executive Retirement Plan (SERP). The benefits shown
are based on earnings and years of service for an employee reaching
normal retirement age of 65 in 1997 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.
Pension Plan Table
<TABLE>
<CAPTION>
Highest Consecutive
Three-Year Average Years of Service
Annual Compensation 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$200,000 54,363 72,484 90,604 95,604 100,604
250,000 68,613 91,484 114,354 120,604 126,854
300,000 82,863 110,484 138,104 145,604 153,104
350,000 97,113 129,484 161,854 170,604 179,354
400,000 111,363 148,484 185,604 195,604 205,604
450,000 125,613 167,484 209,354 220,604 231,854
500,000 139,863 186,484 233,104 245,604 258,104
550,000 154,113 205,484 256,854 270,604 284,354
600,000 168,363 224,484 280,604 295,604 310,604
</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, $594,337; Mr. Rose, $340,784; Mr. Nordloh,
$347,358; Mr. Heiner, $300,550; and Mr. Parks $171,920. These numbers
are accurate as of December 31, 1997. 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. 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 22 years for Mr Cash, 29 years for Mr.
Rose, 13-1/2 years for Mr. Nordloh, 27 years for Mr. Heiner, and 24-1/2
years for Mr. Parks.
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 Parks 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, 1997 are as
follows: Mr. Cash, $41,467; Mr. Rose, $25,584; Mr. Heiner, $22,764 and
Mr. Parks, $14,284.
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:
$1,000,000 to Mr. Cash; $590,000 to Mr. Rose: $590,000 to Mr. Nordloh;
$491,600 to Mr. Heiner; and $350,000 to Mr. Parks. 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 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>
<S> <C> <C> <C> <C> <C> <C>
Questarl/ $100.00 $129.97 $112.44 $142.27 $161.53 $202.51
S&P 5002/ 100.00 110.09 111.85 153.80 189.56 252.52
Peer Group 100.00 123.64 117.89 155.18 209.48 260.01
</TABLE>
1/Assumes $100 vested at the close of trading on December 31, 1992
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
1997, the Company had a return of 25.4 percent compared to a return of
33.2 percent for the S&P 500 Index and a return of 24.1 percent for the
published peer group index. For the five-year period, the Company had a
compounded annual return of 15.2 percent compared to similar returns of
20.4 percent for the S&P 500 Index and 21.1 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, Gary G. Michael, and Scott S. Parker. 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 1997 achieves these objectives and is fair and reasonable. A
consulting firm hired by the Committee in late 1997 to review executive
compensation confirmed the Committee's basic evaluation, but suggested
that the total compensation awarded to Mr. Cash was somewhat lower than
earned by his peers in other companies.
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 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. The Company's use of stock options was recently reviewed
by an executive compensation consultant. The consultant recommended
that the size of option grants be adjusted to be more 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.
(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 1997 and the year-end value of their remaining stock
options.
Specific Compensation Decisions
The Company, in 1997, generally satisfied or exceeded its
specified minimum performance objectives. It generated net income for
common shareholders of $104.6 million, (compared to $97.8 million in
1996), for an overall basic earnings per share figure of $2.55, which
represents a 6.7 percent increase from the $2.39 per share earnings
figure in 1996. Each of its major business units also satisfied or
exceeded minimum performance objectives that had been set in advance by
the Committee. Consequently, Mr. Cash earned a bonus of $181,700, or 87
percent of his target bonus of $208,000. (Half of this amount was paid
in shares of restricted stock. He also received an additional $4,121 in
cash bonuses for his participation in general employee incentive
compensation plans.) His salary was increased to $440,000 effective
March 1, 1997, and further increased to $500,000 effective March 1,
1998. Mr. Cash's new salary reflects $21,600 that he formerly earned in
directors' fees. This latest salary increase was approved after the
Committee received the consultant's report and reviewed Mr. Cash's
achievement of specified personal and corporate goals. His new salary
is still below the 50th percentile information determined in the
consultant's report. In February of 1998, the Committee awarded Mr.
Cash an option to purchase 65,000 shares of stock at a price of $42.75
per share. The number of shares covered by this option was increased in
response to a finding in the consultant's report that the size of his
1997 option grant was not competitive with his peers in other
organizations. The 1998 stock options vest in four equal installments
beginning August 10, 1998 and ending August 10, 2001.
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
Scott S. Parker
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,
1998.
<TABLE>
<CAPTION>
Shares Percent of
Deferred Outstanding
Beneficial Compensation Plans1/ Total Shares2/
Directors:
<S> <C> <C> <C> <C>
R. D. Cash 3/4/5/6/7/ 282,188 22,854 305,042 .68%
P. J. Early 8/ 5,600 2,016 7,616 *
U. Edwin Garrison 8/ 25,505 5,390 30,895 *
W. Whitley Hawkins 8/ 16,870 1,581 18,451 *
William N. Jones 8/ 17,573 1,402 18,975 *
Robert E. Kadlec 8/9/ 23,301 0 23,301 *
Marilyn S. Kite 100 0 100
Dixie L. Leavitt 7/8/ 27,899 11,400 39,299 *
Gary G. Michael 8/ 10,800 3,327 14,127 *
Gary L. Nordloh 4/5/6/7/ 56,509 2,894 59,403 .14%
Scott S. Parker 391 301 692
D. N. Rose 4/5/6/ 74,333 3,070 77,403 .18%
Harris H. Simmons 8/ 12,900 4,236 17,136 *
Nondirector Executive Officers:
C. M. Heiner 4/5/6/ 92,843 2,534 95,377 .22%
S. E. Parks 4/5/6/7/ 59,701 333 60,034 .15%
All directors and 828,482 63,161 891,643 2.00%
executive officers (17 individuals) 10/
</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 .10%. (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 46,829
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 February 1, 1998 as follows: Mr. Cash, 32,975 shares;
Mr. Rose, 17,840 shares; Mr. Nordloh, 9,171 shares; Mr. Heiner, 23,199
shares; and Mr. Parks, 9,446 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, 1998 as
follows: Mr. Cash, 105,427 shares; Mr. Rose, 28,304 shares; Mr. Nordloh,
19,000 shares; Mr. Heiner, 33,250 shares; and Mr. Parks, 26,750 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, 1998: Mr. Cash, 3,902 shares; Mr.
Rose, 2,152 shares; Mr. Nordloh, 2,114 shares; Mr. Heiner, 1,230 shares;
and Mr. Parks, 760 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, 5,231 are controlled
by him as custodian for his son and 15,950 are owned by his family's
private foundation for which Mr. Cash shares voting and investment
control. Mr. Leavitt owns his shares of record jointly with his wife.
Some of Mr. Nordloh's record shares are owned by family trusts. Some of
Mr. Parks' record shares are owned jointly with his spouse.
8/Messrs. Early, Garrison, 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, 4,600 shares; Mr. Garrison, 10,900 shares;
Mr. Hawkins, 13,850 shares; Mr. Jones, 9,500 shares; Mr. Kadlec, 14,300
shares; Mr. Leavitt, 12,300 shares; Mr. Michael, 9,500 shares; and Mr.
Simmons, 12,300 shares.
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 354,189 shares of stock. When vested options
are excluded, the group owns approximately 1.1 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,
1997, 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>
FMR Corporation 4,059,150 9.88
82 Devonshire Street Investment Advisor
Boston, Massachusetts 02109 Bank 1/
First Security Bank, N.A. 3,912,498 9.52
79 South Main Street Trustee for Company
Salt Lake City, Utah 84111 Employee Benefit Plans
and Bank 2/
</TABLE>
1/Of this total, 3,265,150 shares are held by Fidelity Management
and Research Company, an investment advisor; 790,700 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, 1998, FMR indicated that it or its affiliates had sole power to
dispose of all these shares and sole power to vote 575,300 shares.
2/Of this total, First Security beneficially owns 3,827,151 shares
in its role as trustee of employee benefit plans sponsored by the
Company. Participating employees control the voting of such shares.
PROPOSED AMENDMENT TO INCREASE AUTHORIZED
COMMON STOCK
The Company's Board of Directors has unanimously approved and
recommends that Article IV of the Company's Restated Articles of
Incorporation be amended to increase the number of authorized shares of
common stock from 175,000,000 shares, without par value to 350,000,000
shares, without par value. (Article IV, as proposed to be amended, is
set forth in Appendix A to this Proxy Statement.)
The amendment is being proposed to permit the Company sufficient
flexibility to declare future stock splits and dividends and to have
sufficient shares available for the purposes of financing the Company's
businesses and acquiring other businesses. The Company's officers and
directors have discussed a stock split, but final determinations
concerning such action have not been made. Any stock split decisions
will depend upon whether the proposed amendment is approved, future
market conditions, and other factors.
The newly authorized shares would be part of the existing class of
common stock and would have the same rights and privileges as the
presently authorized shares of common stock. The holders of common
stock do not have preemptive rights to subscribe for or purchase any
newly issued shares of common stock. The proposed amendment would not
change the number of authorized shares of preferred stock or affect the
right of the Board of Directors to issue preferred stock.
At March 23, 1998, the Company had 41,122,825 shares of common
stock issued and outstanding. In addition, an aggregate of 3,978,364
shares are reserved for issuance in conjunction with the Dividend
Reinvestment and Stock Purchase Plan, the Directors' Option Plan, the
Directors' Stock Plan, and the Long-Term Stock Incentive Plan. (The
total of "reserved" shares does not include the shares that become
available each year from the Long-Term Stock Incentive Plan. The Plan
expires in 2001; an additional estimated 1,250,000 shares will become
available before it expires.) Finally, the Company is obligated, under
the terms of the Rights Agreement described below, to reserve sufficient
shares of common stock to satisfy potential obligations if the Rights
are issued and become exercisable.
The Company's Board of Directors cannot declare a two-for-one
stock split without having additional shares authorized.
Except as noted above, the Company has no present plans or
commitments to issue additional shares of common stock authorized by the
proposed amendment. The additional authorized shares of common stock
will be available for issuance in connection with possible future stock
splits, stock dividends, financings, acquisitions, employee benefit
plans, other general corporate purposes and, under certain
circumstances, in connection with the exercise of the Rights described
below. Having additional authorized shares available for issuance would
give the Company flexibility and would allow shares of common stock to
be issued without the expense and delay of a special meeting of
stockholders. The additional authorized shares of common stock could be
issued without further action by stockholders, unless such action is
required by applicable law or under the rules of any stock exchange on
which the Company's securities may then be listed.
The Board is not proposing the amendment in order to make it more
difficult for a third party to effect a change in control of the
Company. However, use of the additional authorized shares for that
purpose is possible. Consequently, the Company, under rules adopted by
the Securities and Exchange Commission, is required to disclose charter,
bylaw, and similar provisions that could have an anti-takeover effect.
These include the following: (1) the Company's classified Board with
directors serving three-year terms; (2) supermajority voting
requirements to remove directors for cause, to approve certain business
combinations in the absence of a fair price for all shareholders, and to
amend certain provisions in the Articles of Incorporation; (3) Board
authority to issue up to 10,000,000 shares of preferred stock; (4) plans
that provide for accelerated vesting of options or severance benefits in
the event of a change in control; (5) the Rights Agreement dated as of
February 13, 1996, between the Company and Chase Mellon Shareholder
Services, L.L.C. The Board of Directors has no present intention of
issuing additional shares to make it more difficult or expensive for a
third party to obtain control of the Company.
Adoption of the proposed amendment requires the affirmative vote
of the holders of a majority of the shares of the Company's common stock
entitled to notice of and to vote at the Annual Meeting.
The Board of Directors recommends a vote FOR the proposed
amendment to the Company's Restated Articles of Incorporation, which
increases the authorized shares of common stock from 175,000,000 to
350,000,000.
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP, independent auditors, has audited
the accounts of the Company for a number of years, including 1997, 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 7, 1998, in order to have such proposals evaluated for
inclusion in the proxy materials relating to the Company's 1998 Annual
Meeting of Stockholders, which is scheduled to be held on May 18, 1999.
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, 1997, 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 1997 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 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
Appendix A
ARTICLE IV
The Board of Directors have recommended that the first sentence of
Article IV of the Company's Restated Articles of Incorporation be
amended to read as follows:
The aggregate number of shares that the Corporation shall have
authority to issue is Three Hundred Sixty Million (360,000,000) of which
Three Hundred Fifty Million (350,000,000) shares shall be common stock
without par value (hereinafter called "Common Stock"), Five Million
(5,000,000) shares shall be Class A Preferred Stock without par value
(hereinafter called "Class A Preferred Stock"}; and Five Million
(5,000,000) shares shall be Class B Preferred Stock without par value
(hereinafter called "Class B Preferred Stock").
<PAGE>
QUESTAR CORPORATION SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
180 East First South ANNUAL MEETING, MAY 19, 1998
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 U. EDWIN GARRISON, 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 180 East First South Street, Salt Lake City, Utah,
on Tuesday, May 19, 1998, 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 6, 1998, receipt of which is
hereby acknowledged, and upon any other business that may come before
the meeting or any adjournments or postponements.
Dated: , 1998
(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 duly authorized
(Please turn over) 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 FOR THE PROPOSED AMENDMENTS.
The Board recommends a vote FOR the election of directors and FOR the
proposed amendment to increase the common stock.
1. To elect four directors of the Company.
Nominees: R. D. Cash, Gary G. Michael, Gary L. Nordloh, and Scott
S. Parker.
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.
2. To amend the Company's Restated Articles of Incorporation to
increase the authorized shares of common stock from 175,000,000 to
350,000,000.
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.
