(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 18, 1999
_______________________________________
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
18, 1999, at 10:00 a.m., local time, for the following purposes:
1. To elect four directors to hold office for three years;
2. To transact such other business as may properly come before the
meeting.
Stockholders of record as of March 22, 1999, 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
/s/ Connie C. Holbrook
Connie C. Holbrook
Vice President and Secretary
Salt Lake City, Utah
April 5, 1999
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.
QUESTAR CORPORATION
PROXY STATEMENT
May 18, 1999
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
18, 1999, 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 for three-year
terms that expire in May of 2002. Information concerning the Annual
Meeting and solicitation of proxies for it is presented in a question
and answer format.
Q: What am I voting on?
A: The election of Patrick J. Early, Marilyn J. Kite, Dixie L.
Leavitt, and D. N. Rose to serve as directors
Q: Who can vote?
A: Stockholders who owned shares as of the close of business on
March 22, 1999. Each holder is entitled to one vote for each share
held on such date.
Q: How do I vote?
A: Sign and date each proxy card you receive and return it in the
enclosed prepaid envelope. If you return your signed proxy card, but
do not indicate how you want to vote, your shares will be voted for
the named nominees. You have the right to revoke your proxy by
notifying the Company's Corporate Secretary prior to the meeting, by
returning a later dated proxy, or by voting in person at the Annual
Meeting.
If you own shares through a broker or other nominee, you must
return your proxy card to the broker. Your votes cannot be counted if
you send the proxy directly to the Company.
Q: What does it mean if I get more than one proxy card?
A: It means that you hold shares registered in more than one
account. Sign and return all proxies to make sure that all your votes
are counted, but consider consolidating your accounts to minimize the
administrative cost of sending materials to you.
Q: Who is soliciting my proxy?
A: Questar's Board of Directors. The Company has not hired an
independent proxy solicitor, but may use directors, officers, and
employees to personally solicit proxies.
Q: Who is paying for the solicitation?
A: The Company is paying for the solicitation of proxies and will
reimburse banks, brokers, and other custodians for reasonable charges
to forward proxy materials to beneficial holders.
Q: What constitutes a quorum?
A: On March 22, 1999, the Company had 82,876,168 shares of common
stock. A majority of the shares, or 41,438,085 shares, constitutes a
quorum. Once a quorum is present, the nominees will be elected upon
receiving a plurality of the shares represented at the meeting. The
Company's Bylaws provide that votes "withheld" from nominees will not
be counted for purposes of determining whether a nominee receives a
plurality of votes. Shares registered in the names of brokers for
which proxies are voted for some but not all matters will be
considered as voted only as to those matters actually voted.
Abstentions, broker nonvotes, and instructions to withhold authority
to vote for one or more of the nominees will result in such nominees
receiving fewer votes. Such action, however, will not reduce the
number of votes otherwise received by the nominee.
Q: Who can attend the Annual Meeting?
A: Any stockholder of record as of March 22, 1999, can attend. If
you own shares through a nominee or trustee, please obtain a letter,
account statement, or other evidence of your ownership of shares as of
such date.
Q: How will my vote be handled on other matters?
A: Questar's Bylaws limit the matters presented at an Annual Meeting
to those in the notice, those otherwise properly presented by the
Board of Directors and those presented by stockholders so long as the
stockholder gives the Corporate Secretary written notice of the matter
at least 90 days before the meeting. We do not expect any other
matter to come before the meeting. If any other matter is presented
at the Annual Meeting, your signed proxy gives the named proxies
authority to vote your shares. (See "Other Matters" on page 19 for a
detailed discussion of the Company's Bylaw requirements.)
Q: When are stockholder proposals due for the next Annual Meeting?
A: To be considered for presentation at the Company's Annual Meeting
scheduled for May of 2000 and included in the proxy statement, a
stockholder proposal must be received at the Company's office no later
than December 6, 1999.
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 has selected Patrick J. Early, Marilyn S.
Kite, Dixie L. Leavitt, and D. N. Rose as the nominees for election to
three-year terms that expire in May of 2002. Unless you give other
instructions for your shares, the proxies will be voted for the
nominees.
Each of the nominees has consented to serve for a new term.
However, in the event that any nominee is unwilling or unable to serve
as a director, the proxies named in the enclosed proxy may vote, in
their discretion, for any other person.
Biographical information concerning the nominees and the current
directors of the Company whose terms will continue after the Annual
Meeting is set forth on the following pages. 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.
Nominees
[Picture] Mr. Patrick J. Early, age 66, 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.
[Picture] Ms. Marilyn S. Kite, age 51, is a partner in the
law firm of Holland and Hart and practices in Jackson,
Wyoming. She was appointed to serve as a director in
May of 1997. She is a director of the University of
Wyoming Foundation and the Potash Foundation and serves
on the Board of Litigation for the Mountain States
Legal Foundation.
[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 69, 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.
[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 each corporate entity within
that group, e.g., Questar Gas Company (retail natural
gas distribution) and Questar Pipeline Company
(interstate transmission of natural gas). He has
served as a director of the Company since 1984. Mr.
Rose, age 54, is also a trustee of Westminster College.
Continuing Directors (Present Term Expires in 2000)
[Picture] Mr. U. Edwin Garrison retired as Chairman of
Cordant Technologies (formerly Thiokol Corporation) in
November of 1995. He previously served as Cordant's
President and Chief Executive Officer. Mr. Garrison,
age 71, has served as a director of the Company since
1991.
[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 67, 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.
[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 65, 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., and International
Forest Products Ltd.
[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 44, has served as a director since 1992.
He serves as a director of O. C. Tanner and trustee of
Salt Lake Community College.
Continuing Directors (Present Term Expires in 2001)
[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 56, 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.
[Picture] Mr. Gary G. Michael is Chairman and Chief
Executive Officer of Albertson's, Inc. and has served
in this position since February of 1991. Mr. Michael,
age 58, 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.
[Picture] Mr. Gary L. Nordloh, age 51, 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 each entity within that group, e.g. Wexpro
Company (oil and gas development) and Universal
Resources Corporation (oil and gas exploration and
production).
[Picture] Mr. Scott S. Parker, age 64, retired effective
December 31, 1998 as Chief Executive Officer of
Intermountain Health Care, Inc., a position he had held
since 1975. He was also President of this same
organization from April of 1975 to April of 1998. He
serves as a director of First Security Bank Corporation
(Salt Lake City) and MMI Companies, Inc. (Deerfield,
Illinois).
INFORMATION CONCERNING THE BOARD OF DIRECTORS
Board Committees
The following section contains information about Board
Committees:
Name of Director Finance/AuditManagement Performance Nominating Executive
R. D. Cash X* X
P. J. Early X X
U. E. Garrison X X X*
W. W. Hawkins X X
R. E. Kadlec X X X
M. S. Kite X X
D. L. Leavitt X X X
G. G. Michael X X* X
G. L. Nordloh
S. S. Parker X X
D. N. Rose
H. H. Simmons X* X X
Meetings held in 2 2 1 1
1998
______________
*Chairman
Finance and Audit: Reviews auditing, accounting, financial
reporting, and internal control functions; monitors financing
requirements, dividend policy, and investment relations activities;
oversees compliance activities and year 2000 readiness. All members
are nonemployee directors.
Management Performance: Reviews the performance of R. D. Cash,
salary and compensation arrangements paid to the Company's officers;
administers the Long-Term Stock Incentive Plan; and makes
recommendations about participants, performance objectives and awards
under the Annual Management Incentive Plans adopted by the Company and
its major operating subsidiaries. All members are nonemployee
directors.
Nominating: Recommends individuals for nomination to the Board of
Directors. Will consider director candidates suggested by
shareholders, but hasn't established formal procedure.
Executive: May act on behalf of the Board of Directors.
Attendance at Board and Committee Meetings
The Company's Board of Directors held four regular meetings
during 1998; Board Committees held a total of six meetings. All
directors attended at least 75 percent of the meetings. The Company's
directors had an overall attendance percentage of 98 percent.
Directors' Compensation
The Company's nonemployee directors receive the following
compensation for their service as directors:
Annual Retainer $14,400 (monthly installments of $1,200)
Board Meeting Fee $900
Committee Meeting Fee: $700 ($900 for Chairmen)
Directors also receive annual retainer fees of $4,800 (monthly
installments of $400) and meeting fees of $600 for service as
directors of the Company's primary subsidiaries.
Nonemployee directors can also defer the receipt of their fees
and have such deferred fees earn interest as if invested in long-term
certificates of deposit or be accounted for with "phantom shares" of
the Company's common stock.
Nonemployee directors also receive annual grants of nonqualified
stock options at the first regular meeting of the Board of Directors.
On February 9, 1999, such eligible directors, with the exception of
Messrs. Garrison, Michael, and Simmons, received a stock option to
purchase 6,400 shares. The three named directors each received a
stock option to purchase 8,000 shares, reflecting added
responsibilities as Chairmen of Board Committees. The options are
priced at the closing price on the date of grant, which was $17.00.
Nonemployee directors can elect to receive their fees in shares
of stock. The plan for payment of fees in stock and the stock option
plan have both been approved by the Company's shareholders.
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 still
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 Cordant Technologies. Cordant Technologies
purchases gas from Questar Energy Trading Company (a subsidiary of the
Company). Cordant Technologies paid Questar Energy a total of
$1,708,853 during 1998 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 1998, the Company and
its subsidiaries paid IHC a total sum of $629,473 in administrative
fees.
Mr. Kadlec is the former President and Chief Executive Officer of
BC Gas Inc. BC Gas has contracts with Questar Energy for the purchase
of gas during the winter heating season and for the sale of gas during
the summer months. During 1998, Questar Energy billed BC Gas
$7,098,811 for gas sales and was billed $2,799,767 for gas deliveries
from BC Gas. BC Gas also has long-term contracts with Questar
Pipeline for storage service and paid $2,522,324 for such service
during 1998.
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 competitive range paid by the Company for
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 at the same
rates charged other customers.
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. The Company and its affiliates paid $1,034,556 to Holland
and Hart for services rendered in 1998. Ms. Kite was not personally
involved with representing the Company's interests.
SECURITY OWNERSHIP, DIRECTORS AND EXECUTIVE OFFICERS
The following table lists the shares of stock beneficially owned
by each of the directors and each executive officer named on page 10,
and all directors and executive officers as a group as of March 1,
1999. Except as noted, each person has sole voting and investment
power over the shares shown in the table.
Amount and Nature of
Common Stock Beneficially Owned
Number of Right to Percent ofPhantom Stock
Shares Owned Acquire1 Class 2 Units3
R. D. Cash 4,5,6,7 253,737 288,610 0.65% 50,636
P. J. Early 2,000 17,000 * 5,639
U. Edwin Garrison 31,740 33,200 * 11,156
W. Whitley Hawkins 6,040 39,100 * 3,272
C. M. Heiner 5,6 120,858 105,500 0.27 6,409
Robert E. Kadlec 8 19,497 39,400 * 0
Marilyn S. Kite 200 6,400 * 0
Dixie L. Leavitt 7 32,283 33,800 * 25,092
Gary G. Michael 2,800 28,200 * 8,400
Gary L. Nordloh 5,6,7 80,419 54,500 0.16 7,836
Scott S. Parker 809 6,400 * 1,918
S. E. Parks 5, 6,7 69,667 70,608 0.17 1,018
D. N. Rose 5,6 90,047 105,108 0.24 8,220
Harris H. Simmons 2,200 33,800 * 10,237
All directors and 803,103 957,992 2.1 143,353
executive officers (15 individuals
including those listed above)
___________
1Shares that can be acquired by exercising stock options within
60 days of March 1, 1999.
2Unless 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.
3Phantom 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.
4Mr. 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
109,658 shares of the Company's common stock. As Chairman, Mr. Cash
has voting power for such shares, but disclaims any beneficial
ownership of the shares. The shares are not included in the total.
5The 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, 1998 as follows: Mr. Cash, 69,225 shares;
Mr. Rose, 37,492 shares; Mr. Nordloh, 19,732 shares; Mr. Heiner,
49,076 shares; and Mr. Parks, 20,409 shares.
6The 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, 1999: Mr. Cash,
3,556 shares; Mr. Rose, 2,980 shares; Mr. Nordloh, 1,327 shares; Mr.
Heiner, 590 shares; and Mr. Parks, 673 shares. The officers receive
dividends on such shares and have voting powers for such shares, but
cannot dispose of them until they vest.
7Of the total shares reported for Mr. Cash, 31,900 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.
8Mr. Kadlec's wife beneficially owns 400 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.
SECURITY OWNERSHIP, PRINCIPAL HOLDERS
The following table sets forth information, as of December 31,
1998, with respect to each person known by the Company to beneficially
own at least 5 percent of its common stock.
Name and Address of Shares and Nature of
Beneficial Owner Beneficial Ownership Percent of Class
First Security Bank, N.A. 6,951,078 8.41
79 South Main Street Trustee for Company
Salt Lake City, Utah 84111 Employee Benefit Plans
and Bank1
FMR Corporation 4,758,300 5.78
82 Devonshire Street Investment Advisor
Boston, Massachusetts 02109 Bank2
The Prudential Insurance 4,403,616 5.34
Company of America Insurance Company
751 Broad Street Investment Advisor3
Newark, New Jersey 07102-3777
_____________
1Of this total, First Security beneficially owns 6,411,244 shares
in its role as trustee of the Employee Investment Plan sponsored by
the Company. Participating employees control the voting of such
shares.
2Of this total, 4,296,200 shares are held by Fidelity Management
& Research Company, an investment advisor, and 462,100 shares are held
by Fidelity Management Trust Company, a bank. In its Schedule 13G
dated February 1, 1999, FMR indicated that it or its affiliates had
sole power to dispose of all these shares and sole power to vote
300,700 shares.
3In its Schedule 13G dated February 2, 1999, Prudential indicated
that it had sole power to vote and dispose of 26,000 shares and shared
power to vote and dispose of 4,377,616 shares.
EXECUTIVE COMPENSATION
The following Summary Compensation Table lists compensation
earned by Mr. Cash and the other four most highly compensated
executive officers during 1996, 1997, and 1998.
Summary Compensation Table
Annual Compensation Long-Term Compensation
Restricted All Other
Base Stock Options Compensation
Name and Principal Year Salary ($) Bonus ($)s Awards2 (#) ($)3
Position
R. D. Cash 1998 490,000 24,356 24,344 130,000 63,573
Chairman, President 1997 436,000 94,717 90,844 70,000 81,521
and Chief Executive 1996 413,000 144,340 135,979 70,000 67,683
Officer
D. N. Rose 1998 291,783 29,770 29,750 64,000 38,403
President and Chief 1997 273,517 55,118 52,582 46,000 54,891
Executive Officer 1996 258,833 70,639 70,571 46,000 39,483
Regulated Services Companies
G. L. Nordloh 1998 295,000 19,739 5,797 64,000 38,361
President and Chief 1997 258,500 50,783 42,194 53,000 50,001
Executive Officer 1996 254,583 89,269 86,214 50,000 39,250
Market Resources Companies
C. M. Heiner 1998 244,600 106,511 0 42,000 28,720
Senior Vice President1997 237,000 37,642 25,222 38,000 36,481
President and Chief 1996 227,500 56,829 48,960 38,000 34,972
Executive Officer
Questar InfoComm, Inc.
S. E. Parks 1998 171,550 12,377 4,195 34,000 21,383
Vice President, 1997 152,833 18,348 18,297 26,000 20,204
Treasurer, and 1996 143,450 25,477 25,436 24,000 14,363
Chief Financial Officer
____________
1Amounts listed under this heading for 1998 include cash payments
awarded under the 1998 Annual Management Incentive Plans (AMIPs) and
cash payments awarded under the 1998 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.
2Amounts under this heading for 1998 include the value (as of the
grant date) of any shares of restricted stock granted in 1999, in lieu
of cash, as partial payment of bonuses earned under the 1998 AMIPs and
the value of any shares of restricted stock granted in connection with
the 1998 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, 1998, the amounts were:
Mr. Cash, 7,804 shares worth $151,203
Mr. Rose, 4,304 shares worth $83,390
Mr. Nordloh, 4,228 shares work $81,918
Mr. Heiner, 2,460 shares worth $47,663
Mr. Parks, 1,520 shares worth $29,450.
3The number of shares reflects the Company's two-for-one stock
split in June of 1998.
4The 1998 figures include:
Employee Investment Plan, Deferred Share Plan, Fees Unused
Matching Contributions Matching Contributions Director Vacation
Mr. Cash $14,158 $45,215 $4,200
Mr. Rose $14,158 $21,445 $2,800
Mr. Nordloh $14,158 $21,403 $2,800
Mr. Heiner $14,158 $13,162 $1,400
Mr. Parks $14,158 $ 3,860 -- $3,365
The following table lists information concerning the stock
options that were granted to the Company's named executive officers
during 1998 under the Company's Long-Term Stock Incentive Plan. No
stock appreciation rights (SARs) were granted during 1998.
Option/Grants in Last Fiscal Year
% of Total
Options Options Granted Exercise or
Granted to Employees in Base Price Expiration Grant Date
Name (#)1 Last Fiscal Year ($/Share) Date Value ($)2
R. D. Cash 130,000 16.5 21.375 2/10/2008 512,200
D. N. Rose 64,000 8.1 21.375 2/10/2008 252,160
G. L. Nordloh 64,000 8.1 21.375 2/10/2008 252,160
C. M. Heiner 42,000 5.3 21.375 2/10/2008 165,480
S. E. Parks 34,000 4.3 21.375 2/10/2008 133,960
____________
1These stock options vest in four annual, equal installments,
with the first installment exercisable as of August 10, 1998.
Participants can use cash or previously-owned shares as consideration
for option shares. Options expire when a participant terminates his
employment, unless termination is caused by an approved retirement,
death, or disability. Options can be exercised 12 months following a
participant's death or disability. Options may be exercised after
retirement for terms specified in advance by the Committee.
2 When calculating the present value of options as of the date
granted (February 10, 1998), the Company used the Black-Scholes option
pricing model. The Company assumed a volatility of 20.2 percent, a
risk-free interest rate of 5.50 percent, a dividend yield of 3.09
percent, and an average life of 4.40 years. The real value of the
options in this table depends upon the actual performance of the
Company's stock during the applicable period. There can be no
assurance that the values shown in this table will be achieved.
The following table lists information concerning the stock
options that were exercised by the named executive officers during
1998 and the total options and their value held by each at year-end
1998.
Option Exercises in Last Fiscal Year
and Fiscal Year-end Option Values1
<TABLE>
<CAPTION>
Shares Number of Unexercised Value of Unexercised,
Acquired or Value Options at Year-End In-the-Money Options
Exercised1 Realized2 (#)1 At Year-End ($)2
Name (#) ($) Exercisable1 Unexercisable1 Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
R. D. Cash 7,344 71,634 288,610 150,000 1,000,256 53,594
D. N. Rose 25,392 141,243 105,168 82,500 247,923 35,219
G. L. Nordloh 55,044 294,459 54,500 86,500 38,531 38,531
C. M. Heiner 0 0 105,500 60,000 328,344 29,094
S. E. Parks 8,892 57,520 70,608 44,500 203,392 18,625
</TABLE>
____________
1All option numbers reflect the Company's two-for-one stock split
in June of 1998.
2The "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.
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, 1998, 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 1998, do not include Social
Security benefits, and reflect a 50% surviving spouse benefit.
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
Highest Consecutive
Three-Year Average Years of Service
Annual Compensation 15 20 25 30 35
$200,000 54,198 72,265 90,331 95,331 100,331
250,000 68,448 91,265 114,081 120,331 126,581
300,000 82,698 110,265 137,831 145,331 152,831
350,000 96,948 129,265 161,581 170,331 179,081
400,000 111,198 148,265 185,331 195,331 205,331
450,000 125,448 167,265 209,081 220,331 231,581
500,000 139,698 186,265 232,831 245,331 257,831
550,000 153,948 205,265 256,581 270,331 284,081
600,000 168,198 224,265 280,331 295,331 310,331
650,000 182,448 243,265 304,081 320,331 336,581
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 and all of them have vested benefits under the
SERP.
Information concerning each named executive officer's
compensation, final average earnings, and years of service as of
December 31, 1998 is shown below:
1998
Retirement Benefit Final
Compensation Average Earnings Years of Service
R. D. Cash $680,780 $620,477 22.5
D. N. Rose 406,740 374,862 29.6
G. L. Nordloh 406,853 373,232 14.4
C. M. Heiner 311,167 306,845 27.8
S. E. Parks 205,105 186,483 24.4
Each officer's 1998 compensation for purpose of the Retirement Plan is
different than shown on the table because the former includes cash
payments when made, not when earned, and the value of restricted stock
when distributed, not granted.
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 termination of their employment (as defined in the
plan).
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; $607,800 to Mr. Rose: $590,000 to Mr. Nordloh;
$491,600 to Mr. Heiner; and $375,000 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 return of the
Company's common stock with the cumulative total returns of a group of
diversified natural gas companies published by Value Line, Inc., a
peer group of nine diversified natural gas companies selected by the
Company, and of the S&P Composite-500 Stock Index. The Company
believes performance of the nine peer company group to be a better
benchmark of performance due to the higher concentration of commodity
price exposure, relative size, and business mix of such companies.
(The nine peer companies are Columbia Energy Group, Consolidated
Natural Gas, Energen, Equitable Resources, KN Energy, MCN Corporation,
National Fuel Gas, ONEOK, and Southwestern Energy.)
[The graph has four lines connecting the points in the following table.]
1993 1994 1995 1996 1997 1998
Questar $100.00 $ 86.51 $109.47 $124.28 $155.81 $139.86
Nine Peers 100.00 86.99 119.51 154.88 192.92 168.86
Value Line 100.00 95.35 125.51 169.43 210.30 217.38
S&P 500 100.00 101.60 139.71 172.18 229.65 294.87
The chart assumes $100 is invested at the close of trading on December
31, 1993 in the Company's common stock, the indices of peer companies,
and the S&P 500 Index. It also assumes all dividends are reinvested.
For 1998, the Company had a return of -10.2% compared to a return of
28.4% for the S&P Index and a return of 3.4% for the ValueLine group
and -12.5 for the Questar peer group. For the five-year period, the
Company had a compound annual return of 6.9% compared to returns of
24.1% for the S&P 500 Index, 16.8% for the ValueLine Index and 11.0%
for the Questar peer group.
<TABLE>
<CAPTION>
[The graph has three lines connecting the points in the following table.]
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Questar 100.0 125.4 125.0 155.1 199.2 258.9 224.0 283.4 321.7 403.4 362.1
Value 100.0 129.4 115.4 111.6 131.6 162.7 155.2 204.3 275.7 342.2 353.8
Line
S&P 500 100.0 131.5 127.3 166.2 179.2 197.2 200.4 275.6 339.6 453.0 581.6
</TABLE>
This chart assumes $100 is invested at the close of business on
December 31, 1988. For the ten-year period of time the Company had a
compound annual return of 13.7% compared to return of 19.3% for the
S&P 500 Index, and 13.5% for the Value Line group of diversified
natural gas companies.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Management Performance Committee (Committee) is a Committee
of outside directors that is chaired by Gary G. Michael. Other
members include Patrick J. Early, U. Edwin Garrison, W. Whitley
Hawkins, Robert E. Kadlec, and Scott S. Parker. This Committee
reviews and approves all elements of the total compensation program
for officers of the Company and administers the Company's Long-Term
Stock Incentive Plan. The Committee monitors 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. The Committee believes
that the total compensation earned by the Company's officers in 1998
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 other named executive 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
The Committee reviews base salaries for the Company's officers on
an annual basis. Such salaries are generally pegged at or near the
50th percentile or market average of survey data. The increases
historically awarded to Mr. Cash and other officers are based on an
assessment of each officer's comparison with survey data,
responsibilities, experience and performance. The salaries earned by
the named executive officers during 1998 are listed in the table shown
on page 10.
Annual Bonuses
All Company 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 annual specified performance objectives. 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. As a general rule, 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 change
the size of grants when participants are promoted to new positions or
when surveys indicate that stock options should be adjusted. The
Committee increased the size of options granted to the Company's
highest ranking officers in 1998 after receiving a consultant's report
that the option grants were not competitive, but did not increase them
to the levels recommended by the consultant. 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 1998 is included in the table
labeled "Option/Grants in Last Fiscal Year." The table labeled
"Option Exercises" provides information concerning the value realized
by the individual members of the group when exercising stock options
in 1998 and the year-end value of their remaining stock options.
Specific Compensation Decisions
The Company's consolidated 1998 performance is a direct result of
lower commodity prices, particularly crude oil. The Company's stock
price, in common with the stock prices of other integrated energy
companies, has also been negatively affected. The Committee, after
considering 1998 performance results, did not increase the 1999
salaries for Messrs. Cash and Nordloh, the individuals primarily
responsible for the performance of the Market Resources unit. Since
the Committee believes that the Company's executive officers should
continue efforts to achieve shareholder value and should be brought to
the level of the stock options recommended by the Committee's
consultant in 1998, the Committee increased the size of the options
granted to Messrs. Cash, Nordloh, and Rose. In February of 1999, the
Committee awarded Mr. Cash an option to purchase 140,000 shares at a
price of $17.00 per share, compared to his 1998 option grant of
130,000 shares. The 1999 stock options vest in four equal annual
installments beginning August 9, 1999.
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.
Federal tax law precludes the Company from deducting compensation
paid in excess of $1 million per year to any named executive officer.
Performance-based compensation, however, is not subject to this
deductibility limit. The Company's Long-Term Stock Incentive Plan
qualifies 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. As
is shown on the Summary Compensation Table, the annual compensation
earned by Mr. Cash, the Company's highest paid officer, is
significantly below the $1 million limit.
Management Performance Committee
Gary G. Michael, Chairman
Patrick J. Early
U. Edwin Garrison
W. Whitley Hawkins
Robert E. Kadlec
Scott S. Parker
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP, independent auditors, has audited
the accounts of the Company for a number of years, including 1998, 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 available
to respond to questions.
ANNUAL REPORT AND FORM 10-K REPORT
An annual report for the year ending December 31, 1998,
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 1998 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, General
Counsel, 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
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 at least 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 at least 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.
If the written notice is not received by the date specified in
the Bylaws, the named proxies will have discretionary voting to deal
with the nomination or 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
/s/ Connie C. Holbrook
Connie C. Holbrook
Vice President, General Counsel
and Secretary
QUESTAR CORPORATION SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
180 East 100 South FOR THE ANNUAL MEETING, MAY 18, 1999
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 100 South Street,
Salt Lake City, Utah, on Tuesday, May 18, 1999, 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 5, 1999,
receipt of which is hereby acknowledged, and upon any other business
that may come before the meeting or any adjournments or postponements.
Dated: , 1999
(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
(Please turn over)name by 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.
The Board recommends a vote FOR the election of directors.
To elect four directors of the Company.
Nominees: Patrick J. Early, Marilyn S. Kite, Dixie L. Leavitt, and D.
N. Rose.
[ ] 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.
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. [ ]
