<PAGE>
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X] (R.R. DONNELLEY)
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
PACIFICORP
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] 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.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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[PACIFICORP LETTERHEAD]
March 31, 1997
To Our Shareholders:
Our annual meeting of shareholders will be held this year in Salt Lake City,
Utah and you are cordially invited to attend.
Date: Wednesday, May 14, 1997
Time: 1:30 p.m.
Place: DoubleTree Hotel, formerly Red Lion Hotel/Salt Lake
255 South West Temple
Salt Lake City, Utah
The official business portion of the meeting will cover the items described
in the notice of the annual meeting and the proxy statement that are attached.
Management will also report on operations and other matters affecting the
Company, followed by a question and answer session. After the meeting, officers
and directors will be available to visit with shareholders.
Should you have any questions about any of the matters to be considered at
the meeting, we would be happy to hear from you.
Sincerely,
/s/ Frederick W. Buckman
President and Chief Executive Officer
/s/ Keith R. McKennon
Chairman
P.S. A significant number of our shareholders own less than 100 shares each.
Regardless of the number of shares you own, your vote is important. The
prompt return of your proxy will save follow-up expenses and assure
proper representation at the meeting.
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of PACIFICORP:
The 1997 Annual Meeting of Shareholders of PacifiCorp will be held at The
DoubleTree Hotel, formerly the Red Lion Hotel/Salt Lake, 255 South West
Temple, Salt Lake City, Utah, on Wednesday, May 14, 1997, at 1:30 p.m.
Mountain Daylight Time, for the following purposes:
1. to elect four Class I directors, each to serve for a term of three
years, and one Class II director to serve for a term of one year, and
until their successors are duly elected and qualified;
2. to approve the PacifiCorp Stock Incentive Plan;
3. to act on the proposed ratification of the appointment of Deloitte &
Touche LLP to serve as independent auditor of the Company for the year
1997; and
4. to transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on March 14, 1997 will
be entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. The meeting is subject to adjournment from time to time as the
shareholders present in person or by proxy may determine.
All shareholders who find it convenient to do so are cordially invited to
attend the meeting in person.
Whether or not you plan to attend, please sign, date and return the
accompanying form of proxy in the enclosed postage paid return envelope. We
shall appreciate your giving this matter your prompt attention.
By Order of the Board of Directors
Sally A. Nofziger
Vice President and Corporate
Secretary
Portland, Oregon
March 31, 1997
<PAGE>
[LOGO OF PACIFICORP]
700 N.E. MULTNOMAH
PORTLAND, OREGON 97232
PROXY STATEMENT
A proxy in the accompanying form is solicited by the Board of Directors of
PacifiCorp, an Oregon corporation (the "Company"), for use at the meeting of
shareholders to be held at the The DoubleTree Hotel, formerly the Red Lion
Hotel/Salt Lake, 255 South West Temple, Salt Lake City, Utah, on Wednesday,
May 14, 1997, at 1:30 p.m. Mountain Daylight Time, and at any adjournment or
adjournments thereof. The approximate date this proxy statement and
accompanying proxy card are first being sent to shareholders is March 31,
1997.
Any person giving a proxy in the form accompanying this proxy statement has
the power to revoke it at any time before its exercise. The proxy may be
revoked by filing with the Corporate Secretary of the Company an instrument of
revocation or a duly executed proxy bearing a later date. The proxy may also
be revoked by electing to vote in person while in attendance at the meeting in
Salt Lake City. However, a shareholder who attends the meeting need not revoke
the proxy and vote in person, unless so desired.
The shares represented by each proxy will be voted in accordance with the
instructions specified in the proxy, if given. If a signed proxy is returned
without instructions, it will be voted for the directors, for approval of the
PacifiCorp Stock Incentive Plan, for approval of Deloitte & Touche LLP as
auditor and in accordance with this proxy statement on any other business that
may properly come before the meeting. Directors are elected by a plurality of
the votes cast by holders of the shares entitled to vote at the Annual Meeting
if a quorum is present. Abstentions and broker non-votes are counted for
purposes of determining whether a quorum exists at the Annual Meeting, but are
not counted for any purpose in determining whether a proposal is approved and
have no effect on the determination of whether a plurality exists with respect
to a given nominee.
The Company's outstanding voting securities at March 14, 1997 consisted of
295,614,932 shares of Common Stock, 126,533 shares of 5% Preferred Stock,
288,499 shares of Serial Preferred Stock, 30,000 shares of $7.12 No Par Serial
Preferred Stock, 1,000,000 shares of $7.70 No Par Serial Preferred Stock and
750,000 shares of $7.48 No Par Serial Preferred Stock, each of which is
entitled to one vote on all matters to be presented at the meeting, and
2,766,963 shares of the $1.98 No Par Serial Preferred Stock, Series 1992, each
of which is entitled to one-quarter of one vote on all matters to be presented
at the meeting. Only shareholders of record at the close of business on March
14, 1997 will be entitled to notice of and to vote at the meeting and any
adjournment thereof. See "Security Ownership of Certain Beneficial Owners and
Management" for information concerning beneficial ownership of the Company's
stock.
1. ELECTION OF DIRECTORS
The persons named in the proxy will vote your stock for the election of four
directors to serve in Class I of the Company's Board of Directors for terms
expiring at the Annual Meeting in the year 2000 and one Class II director to
serve for a term expiring at the 1998 Annual Meeting and until their
successors shall be duly elected and qualified. If any of the nominees becomes
unavailable for election for any reason (none currently being known), the
proxy holders will have discretionary authority to vote pursuant to the proxy
for a suitable substitute or substitutes. Each nominee for director to serve
in Classes I and II is now serving on the Board. There are no family
relationships among the directors and executive officers of the Company.
1
<PAGE>
The Board of Directors is divided into three classes: Class I, Class II and
Class III, each class as nearly equal in number as possible. The directors in
each class hold office for three-year terms. The four current Class I
directors, whose present terms expire in 1997, are being proposed for election
for new three-year terms (expiring in 2000) at this Annual Meeting. As a
result of an Oregon law requirement with respect to directors not previously
elected by the shareholders, the Class II director, a class whose term expires
in 1998, is being proposed for election for a one-year term. The tables that
follow include information with respect to each director's business experience
for the past five years. See "Security Ownership of Certain Beneficial Owners
and Management" for information concerning share ownership of nominees and
directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THESE NOMINEES.
NOMINEES FOR ELECTION AT THE 1997 ANNUAL MEETING
<TABLE>
<CAPTION>
NAME, AGE, CLASS, PRINCIPAL
OCCUPATION AND OTHER DIRECTORSHIPS DIRECTOR SINCE
---------------------------------- --------------
<S> <C>
W. Charles Armstrong, 52 (Class I, 2000) ....................... November 1996
Consultant, Vancouver, Washington; formerly Chief Executive
Officer, Bank of America Oregon, 1992-1996; President and Chief
Operating Officer, Honfed Bank, 1989-1992; Director of Epitope,
Inc.
C. Todd Conover, 57 (Class I, 2000)............................. 1991
President and Chief Executive Officer, The Vantage Company, a
business consulting firm, Los Altos, California, since 1992;
formerly General Manager, Finance Industry Group, Tandem
Computers Incorporated, 1994-1995; Director of Blount
International, Inc. and PacifiCorp Holdings, Inc.
Nolan E. Karras, 52 (Class I, 2000)............................. 1993
Investment Adviser, Karras & Associates, Inc., Roy, Utah, 1983
to date; former Member of Utah House of Representatives, 1981-
1990; Speaker of the House, 1989-1990; Director of PacifiCorp
Holdings, Inc. and Pacific Telecom, Inc.
Keith R. McKennon, 63 (Class I, 2000)........................... 1990
Chairman of the Board since 1994; formerly Chairman (1992-1994)
and Chief Executive Officer (1992-1993), Dow Corning
Corporation, Midland, Michigan; Executive Vice President and
Director, The Dow Chemical Company, 1990-1992; President, Dow
Chemical USA, 1987-1990; Director of Tektronix, Inc.
Alan K. Simpson, 65 (Class II, 1998)............................ January 1997
Former U.S. Senator, 1979-1996; Director of IDS Mutual Fund
Group.
</TABLE>
2
<PAGE>
DIRECTORS WHOSE TERMS CONTINUE
<TABLE>
<CAPTION>
NAME, AGE, CLASS, PRINCIPAL
OCCUPATION AND OTHER DIRECTORSHIPS DIRECTOR SINCE
---------------------------------- --------------
<S> <C>
Kathryn A. Braun, 45 (Class II, 1998)............................ 1994
Executive Vice President, Western Digital Corporation, a
computer equipment company, Irvine, California, since 1988;
Director of Artisoft, Inc.
Frederick W. Buckman, 51 (Class III, 1999)....................... 1994
President and Chief Executive Officer of the Company since 1994;
formerly President and Chief Executive Officer of Consumers
Power Company, Jackson, Michigan, 1992-1994; Director of
Standard Insurance Company, PacifiCorp Holdings, Inc. and
Powercor Australia, Ltd.
Robert G. Miller, 52 (Class II, 1998)............................ 1994
Chairman and Chief Executive Officer, Fred Meyer, Inc., a retail
merchandising company, Portland, Oregon, since 1991.
Verl R. Topham, 62 (Class II, 1998).............................. 1994
Senior Vice President and General Counsel of the Company since
1994; formerly President, Utah Power & Light Company, 1990-1994;
Director of Powercor Australia, Ltd.
Don M. Wheeler, 68 (Class III, 1999)............................. 1989
Chairman and Chief Executive Officer, ICM Equipment Company, a
materials handling and rental services company, Salt Lake City,
Utah, since 1996; formerly Chairman, Chief Executive Officer,
and President and General Manager, Wheeler Machinery Company,
1955-1996.
Nancy Wilgenbusch, 49 (Class III, 1999).......................... 1986
President, Marylhurst College, Portland, Oregon, since 1984;
Director of Federal Reserve Bank, Portland Branch; Pacific
Telecom, Inc. and Powercor Australia, Ltd.
Peter I. Wold, 49 (Class III, 1999).............................. 1995
Partner, Wold Oil & Gas Company, an oil and gas exploration and
production company, Casper, Wyoming, since 1981; Director of
Federal Reserve Bank of Kansas City, Denver Branch.
</TABLE>
3
<PAGE>
DIRECTOR COMPENSATION AND CERTAIN TRANSACTIONS
The Company's directors other than officers currently are compensated for
their board service by a combination of cash and Company Common Stock under a
Non-Employee Directors' Stock Compensation Plan that seeks to increase the
community of interest between the Company's shareholders and its directors.
Under this plan, non-employee directors of the Company are granted
approximately $75,000 worth of the Company's Common Stock every five years.
Non-employee directors having fewer than five years of service remaining
before reaching retirement age receive stock valued at approximately $15,000
for each remaining year. Stock granted under this plan vests over the five-
year period following the grant or shorter period to retirement, and unvested
shares are forfeited if the recipient ceases to be a director. The shares are
purchased in the market with funds supplied by the Company, and the
certificates are then held by the Company until the shares vest. During 1996,
an aggregate of 14,911 shares previously granted under the plan vested.
The Company's directors other than officers currently receive the balance of
their compensation in the form of cash. They are paid $16,000 per year plus
$750 for each Board or committee meeting attended. Mr. McKennon is paid
$155,000 per year in Company Common Stock for his service as Chairman of the
Board, plus his $15,000 per year participation in the Non-Employee Directors'
Stock Compensation Plan. Members of the Executive Committee and chairs of the
other committees of the Board are paid an additional $2,500 per year. Non-
employee members of the regional boards are paid $9,000 per year plus $600 for
each board or subcommittee meeting attended. Chairs of the subcommittees of
those boards receive $750 for each subcommittee meeting attended. See
"Regional Boards." In addition, members of the Utah Board who are former
directors of Utah Power & Light Company, including Messrs. Peterson and
Wheeler, participate in a retirement plan under which they are eligible to
receive benefits of $560 per month upon retirement at age 65 or older and
certain death benefits.
During 1996, Messrs. Conover and Karras received $15,500 and $3,750 in
directors' fees, respectively, from PacifiCorp Holdings, Inc.; Dr. Wilgenbusch
and Mr. Karras received $15,750 and $15,000 in directors' fees, respectively,
from Pacific Telecom, Inc. ("Pacific Telecom"), and Dr. Wilgenbusch received
$7,500 in directors' fees from Powercor Australia, Ltd. ("Powercor").
Mr. Wheeler was Chairman and Chief Executive Officer of Wheeler Machinery
Company, a company engaged in sales and service of large earth-moving and
grading equipment, engines and related machinery, until July 1996. At that
time, ICM Equipment Company ("ICM"), formerly a division of Wheeler Machinery
Company, was incorporated in the state of Utah. Mr. Wheeler resigned his
position with Wheeler Machinery Company and became Chairman and Chief
Executive Officer of ICM. ICM is a materials handling and rental services
company serving industrial construction and mining markets in the
intermountain area. During 1996, the Company and its subsidiaries purchased
equipment and services from Wheeler Machinery Company in the ordinary course
of business for a total of approximately $1,076,713. Of this amount, $199,150
was purchased from ICM and $877,563 was purchased from Wheeler Machinery
Company. Richard E. Wheeler, Mr. Wheeler's brother, is the owner of Wyoming
Machinery Company. During 1996, the Company and its subsidiaries purchased
equipment and services from Wyoming Machinery Company in the ordinary course
of business for a total of approximately $6,064,223. The Company believes that
the terms of these transactions were no less favorable to the Company than
those available from other parties. Similar purchases have been made by the
Company or its predecessors from these companies since 1951.
4
<PAGE>
BOARD COMMITTEES
The Board of Directors is responsible for the overall affairs of the
Company. To assist in carrying out its responsibilities, the Board has
delegated certain authority to several standing committees. The Board
generally appoints members of committees at its Annual Meeting in May of each
year. The membership of these committees as of March 31, 1997 is as follows:
<TABLE>
<CAPTION>
EXECUTIVE COMMITTEE COMMITTEE ON DIRECTORS AUDIT COMMITTEE
- ------------------- ---------------------- ---------------
<S> <C> <C>
Keith R. McKennon* C. Todd Conover* Nancy Wilgenbusch*
Frederick W. Buckman Alan K. Simpson Kathryn A. Braun
C. Todd Conover Don M. Wheeler Nolan E. Karras
Nolan E. Karras Peter I. Wold Alan K. Simpson
Robert G. Miller Don M. Wheeler
Nancy Wilgenbusch
<CAPTION>
PERSONNEL COMMITTEE FINANCE COMMITTEE PRICING COMMITTEE
- ------------------- ----------------- -----------------
<S> <C> <C>
Nolan E. Karras* Robert G. Miller* Frederick W. Buckman
W. Charles Armstrong W. Charles Armstrong Verl R. Topham
Kathryn A. Braun Frederick W. Buckman
Robert G. Miller C. Todd Conover
Nancy Wilgenbusch Peter I. Wold
</TABLE>
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*Chair
The Executive Committee held one meeting in 1996. The committee has and may
exercise all of the powers of the Board during the intervals between its
meetings that may be lawfully delegated, subject to such limitations as may be
provided by resolution of the Board.
The Committee on Directors seeks and recommends specific candidates for
directors. In addition, the Committee on Directors reviews and recommends to
the Board policies on the qualifications, tenure, compensation and retirement
of directors and monitors compliance by individual directors with the policies
adopted by the Board. Shareholders who wish to submit names to the Committee
on Directors for consideration should do so in writing addressed to the
Committee on Directors, c/o Corporate Secretary, PacifiCorp, 700 NE Multnomah,
Portland, Oregon 97232. The Committee on Directors held four meetings in 1996.
The Audit Committee held five meetings in 1996. It nominates the independent
auditor of the Company for approval by the Board of Directors and the
shareholders, reviews the planned scope and results of the annual audit,
confers with the independent auditor and reviews its recommendations with
respect to accounting, internal controls and other matters, and confers
periodically with accounting officers of the Company. The Audit Committee also
reviews assessments of risk within each organizational unit and important
regulatory and accounting pronouncements, meets with management and the
internal auditors to review the scope and results of internal audit activity,
as appropriate, and periodically reviews the adequacy of the Company's
accounting and financial personnel resources. The Audit Committee reports the
results of its reviews and meetings to the Board.
The Personnel Committee makes recommendations to the Board on executive
compensation plans, approves salaries for officers of the Company and
significant compensation and benefit changes, and administers the Long-Term
Incentive Plan, the Supplemental Executive Retirement Plan, the Compensation
Reduction Plan, the PacifiCorp Stock Incentive Plan and the Executive
Severance Plan. The Committee consists of five directors who are not current
or former officers or employees of the
5
<PAGE>
Company or any of its subsidiaries. The Personnel Committee held six meetings
in 1996. See "Personnel Committee Report on Executive Compensation" below.
The Finance Committee, to the extent authority is delegated to it by the
Board with respect to each issuance of securities, approves the final terms of
issuance. The committee also consults with appropriate officers of the Company
concerning requirements for capital, the condition of the capital markets and
the most appropriate means of obtaining capital as needed from time to time.
The committee also reviews the general terms of proposed financings when
requested by the Chairman of the Board, the President or any Vice President,
and reports thereon to the Board. The Board has delegated to the Finance
Committee responsibility for review and approval of the Company's interest,
currency rate and other hedging arrangements, as well as oversight
responsibility with respect to derivative products involving electricity and
other commodities. It held four meetings in 1996.
The Pricing Committee, to the extent authority is delegated to it by the
Board of Directors with respect to each issuance of securities, approves the
final terms of issuance within parameters set by the Board. The Pricing
Committee also authorizes redemptions of the Company's debt and equity
securities in accordance with their terms. The Pricing Committee held three
meetings during 1996, and it took action by consent of the members on four
occasions.
The Board of Directors held eight meetings in 1996, and it took action by
consent on three occasions. All Board members attended at least 75% of the
aggregate of the meetings of the Board and the committees of which they were
members.
REGIONAL BOARDS
In February 1995, the Board of Directors established the Pacific Board, the
Utah Board and the Wyoming Board, each of which has been delegated certain
responsibilities relating to the business and operations of the Company in a
designated service territory, including review of policies and practices with
respect to customer service and strategic planning. Membership of these boards
includes persons who are not directors of the Company. In 1996, each of these
Boards held four meetings.
<TABLE>
<CAPTION>
PACIFIC BOARD UTAH BOARD WYOMING BOARD
- ------------- ---------- -------------
<S> <C> <C>
John A. Bohling,* Chair John A. Bohling,* Chair Deborah Healy Hammons*
William B. Douglas* Nolan E. Karras John W. Hay III*
M. K. Felt* Paul G. Lorenzini* Brent R. Kunz*
Paul G. Lorenzini* Chase N. Peterson* Thomas A. Lockhart,* Chair
Michael D. Naumes* Peggy A. Stock* Margaret Maier Murdock*
Linda Shelk* Verl R. Topham Verl R. Topham
Ethel Simon-McWilliams* Don M. Wheeler Peter I. Wold
Verl R. Topham
</TABLE>
- ---------------------
* Not a director of the Company
6
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 1, 1997
regarding the beneficial ownership of the Company's Common Stock by (i) each
director or nominee for director of the Company, (ii) each of the executive
officers named in the Summary Compensation Table below, and (iii) all
executive officers and directors of the Company as a group. As of March 1,
1997, each of the directors and executive officers identified below and all
executive officers and directors of the Company as a group owned less than
0.3% of the Company's Common Stock. No person is known by the Company to be
the beneficial owner of more than 5% of any class of the Company's stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNER NUMBER OF SHARES(1)
- ---------------- ------------------
<S> <C>
Directors and Nominees
W. Charles Armstrong...................................... 3,845
Kathryn A. Braun.......................................... 4,260
Frederick W. Buckman...................................... 153,356
C. Todd Conover .......................................... 9,964
Nolan E. Karras .......................................... 3,909
Keith R. McKennon ........................................ 37,970(2)
Robert G. Miller.......................................... 4,286
Alan K. Simpson........................................... 3,700(2)
Verl R. Topham............................................ 53,027
Don M. Wheeler............................................ 15,938
Nancy Wilgenbusch ........................................ 9,943
Peter I. Wold ............................................ 6,351
Nondirector Executive Officers
John A. Bohling........................................... 43,596
Paul G. Lorenzini ........................................ 28,317
Charles E. Robinson....................................... 54,397
All executive officers and directors as a group (27
persons)................................................... 746,959
</TABLE>
- ---------------------
(1) Includes ownership of (a) shares held by family members even though
beneficial ownership of such shares may be disclaimed, (b) shares granted,
including shares not yet acquired in the market, and subject to vesting as
to which the individual has voting but not investment power under
individual compensation arrangements or one or more of the stock-based
compensation plans of the Company and (c) shares held for the account of
such persons pursuant to the Compensation Reduction Plan.
(2) Includes the estimated number of shares to be purchased based on a fixed
dollar amount of stock awarded under stock-based compensation plans.
7
<PAGE>
2. APPROVAL OF PACIFICORP STOCK INCENTIVE PLAN
In August 1996, the Company adopted the PacifiCorp 1996 Stock Retention Plan
(the "Incentive Plan") and reserved 3,000,000 shares of Common Stock for
issuance under the Incentive Plan. In August 1996, the Board of Directors also
approved grants of 57,100 shares of restricted stock under the Incentive Plan.
In February 1997, the Board of Directors amended and restated the PacifiCorp
1996 Stock Retention Plan, renaming it the PacifiCorp Stock Incentive Plan,
and reserved an additional 11,500,000 shares for issuance under the Incentive
Plan. A total of 14,442,900 shares currently remain available for future
grants under the Incentive Plan. The Board of Directors believes that the
availability of stock options and other stock incentives will be an important
factor in the Company's ability to attract and retain qualified employees and
to provide an incentive for them to exert their best efforts on behalf of the
Company.
Certain provisions of the Incentive Plan are summarized below. The complete
text of the Incentive Plan is attached to this Proxy Statement as Appendix A.
ELIGIBILITY. All employees, officers and directors of the Company and its
subsidiaries are eligible to participate in the Incentive Plan. Also eligible
are non-employee agents, consultants, advisors and independent contractors of
the Company or any subsidiary.
ADMINISTRATION. The Board of Directors has delegated authority for
administration of the Incentive Plan to the Personnel Committee, which
designates from time to time the individuals to whom awards are made under the
Incentive Plan, the amount of any such award and the price and other terms and
conditions of any such award. Subject to the provisions of the Incentive Plan,
the Personnel Committee may adopt and amend rules and regulations relating to
the administration of the Incentive Plan. Only the Board of Directors may
amend, modify or terminate the Incentive Plan.
SHARES AVAILABLE. The Incentive Plan permits the grants of incentive stock
options, nonstatutory stock options, stock awards, stock appreciation rights,
cash bonus rights, dividend equivalent rights, performance-based awards and
foreign qualified grants. The total number of shares reserved for issuance
under the Incentive Plan is 14,500,000 shares, of which 57,100 shares have
been issued pursuant to restricted stock awards. The shares awarded under the
Incentive Plan may be authorized and unissued shares or shares acquired in the
market. The Company may not directly issue any shares pursuant to the
Incentive Plan or take any action pursuant to the Incentive Plan that would
require approval of the public utility regulatory authorities having
jurisdiction over issuances of securities by the Company until it has received
all such required approvals. Prior to receipt of such approvals, any shares of
Common Stock to be issued under the Incentive Plan will be acquired in the
market. If any award granted under the Incentive Plan expires, terminates or
is cancelled, or if shares sold or awarded under the Incentive Plan are
forfeited to the Company or repurchased by the Company, the shares again
become available for issuance under the Incentive Plan.
TERM OF INCENTIVE PLAN. The Incentive Plan shall continue in effect until
August 13, 2006, subject to earlier termination by the Board of Directors. The
Board of Directors may suspend or terminate the Incentive Plan at any time.
STOCK OPTIONS. The Personnel Committee determines the persons to whom
options are granted, the option price, the number of shares to be covered by
each option, the period of each option, the times at which options may be
exercised and whether the option is an incentive stock option ("ISO"), as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or a non-statutory stock option ("NSO"). No employee may be granted
options or stock appreciation rights under the Incentive Plan for more than an
aggregate of 3,000,000 shares in any consecutive three-year period. No
monetary consideration is paid to the Company upon the granting of options.
8
<PAGE>
Options are exercisable in accordance with the terms of an option agreement
entered into at the time of grant. If the option is an ISO, all terms must be
consistent with the requirements of the Code and applicable regulations,
including that the option price cannot be less than the fair market value of
the Common Stock on the date of grant. If the option is an NSO, the option
price may be any price determined by the Personnel Committee, which may be
less than the fair market value of the Common Stock on the date of grant. On
March 14, 1997, the closing price of the Common Stock of the Company on the
New York Stock Exchange was $20.50 per share. Upon the exercise of an option,
the number of shares subject to the option is reduced by the number of shares
with respect to which the option is exercised, and the number of shares
available under the Incentive Plan for future option grants are reduced by the
number of shares with respect to which the option is exercised, less the
number of shares surrendered or withheld in connection with the exercise of
the option and the number of shares surrendered or withheld to satisfy
withholding obligations. No options have been granted under the Incentive
Plan.
STOCK AWARDS. The Personnel Committee may award shares of Common Stock under
the Incentive Plan as stock bonuses, restricted stock awards or otherwise. The
Personnel Committee may determine the persons to receive awards, the number of
shares to be awarded and the time of the award. Stock received as a stock
bonus is subject to the terms, conditions and restrictions determined by the
Personnel Committee at the time the stock is awarded. The aggregate number of
shares that may be awarded pursuant to stock awards under the Incentive Plan
may not exceed 1,500,000 shares. A total of 57,100 shares have been granted as
stock awards under the Incentive Plan.
PURCHASED STOCK. The Incentive Plan provides that the Company may issue
shares under the Incentive Plan subject to a purchase agreement between the
Company and the prospective recipient in such amounts, for such consideration,
subject to such restrictions and on such terms as the Personnel Committee may
determine.
STOCK APPRECIATION RIGHTS. Stock appreciation rights ("SARs") may be granted
under the Incentive Plan. SARs may, but need not, be granted in connection
with an option grant or an outstanding option previously granted under the
Incentive Plan. A SAR gives the holder the right to payment from the Company
of an amount equal in value to the excess of the fair market value on the date
of exercise of a share of Common Stock over its fair market value on the date
of grant or, if granted in connection with an option, the option price per
share under the option to which the SAR relates.
A SAR is exercisable only at the time or times established by the Personnel
Committee. If a SAR is granted in connection with an option, it is exercisable
only to the extent and on the same conditions that the related option is
exercisable. Payment by the Company upon exercise of a SAR may be made in
Common Stock valued at its fair market value, in cash, or partly in stock and
partly in cash, as determined by the Personnel Committee. The Personnel
Committee may withdraw any SAR granted under the Incentive Plan at any time
and may impose any condition upon the exercise of a SAR or adopt rules and
regulations from time to time affecting the rights of holders of SARs. No SARs
have been granted under the Incentive Plan.
The existence of SARs, as well as certain bonus rights described below,
would require charges to income over the life of the right based upon the
amount of appreciation, if any, in the market value of the common stock of the
Company over the exercise price of shares subject to exercisable SARs or bonus
rights.
CASH BONUS RIGHTS. The Personnel Committee may grant cash bonus rights under
the Incentive Plan in connection with (i) options granted or previously
granted, (ii) SARs granted or previously granted, (iii) stock awarded or
previously awarded and (iv) shares sold or previously sold under the
9
<PAGE>
Incentive Plan. Bonus rights may be used to provide cash to employees for the
payment of taxes in connection with awards under the Incentive Plan. No cash
bonus rights have been granted under the Incentive Plan.
DIVIDEND EQUIVALENT RIGHTS. The Board of Directors may grant dividend
equivalent rights ("DERs") under the Incentive Plan in connection with (i)
options granted or previously granted, (ii) SARs granted or previously
granted, (iii) stock awarded or previously awarded, (iv) shares sold or
previously sold under the Incentive Plan or (v) as a free standing award. Each
DER shall entitle the recipient to receive an amount based on cash dividends
that would be payable with respect to the number of shares specified in
connection with the grant of the DER if such shares had been held by the
recipient during the period specified in connection with such grant. No DERs
have been granted under the Incentive Plan.
PERFORMANCE-BASED AWARDS. The Personnel Committee may grant awards intended
to qualify as performance-based compensation under Section 162(m) of the Code
and the regulations thereunder ("Performance-based Awards"). Performance-based
Awards may be denominated either in Common Stock or in dollar amounts. All or
part of the awards will be earned if performance goals established by the
Personnel Committee for the period covered by the awards are met and the
employee satisfies any other restrictions established by the Personnel
Committee. The performance goals will be expressed as one or more targeted
levels of performance with respect to the Company or any subsidiary, division
or other unit of the Company: earnings, earnings per share, stock price
increase, total shareholder return (stock price increase plus dividends),
return on equity, return on assets, return on capital, economic value added,
revenues, operating income, cash flows or any of the foregoing. No participant
may receive Performance-based Awards denominated in Common Stock in any fiscal
year under which the maximum number of shares issuable under the award, when
aggregated with the shares issuable under any awards made in the preceding two
fiscal years, exceeds 500,000 shares or Performance-based Awards denominated
in dollars under which the maximum amount of cash payable under awards made in
the immediately preceding two fiscal years, exceeds an aggregate of
$3,000,000. No Performance-based Awards have been granted under the Incentive
Plan.
FOREIGN QUALIFIED GRANTS. Awards under the Incentive Plan may be granted to
eligible persons residing in foreign jurisdictions. The Board of Directors may
adopt supplements to the Incentive Plan necessary to comply with the
applicable laws of foreign jurisdictions and to afford participants favorable
treatment under those laws, but no award may be granted under any supplement
with terms that are more beneficial to the participants than the terms
permitted by the Incentive Plan. No foreign qualified grants have been awarded
under the Incentive Plan.
CHANGES IN CAPITAL STRUCTURE. The Incentive Plan provides that if the
outstanding Common Stock is increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company or of another corporation by reason of any recapitalization, stock
split or certain other transactions, appropriate adjustment will be made by
the Board of Directors in the number and kind of shares available for awards
under the Incentive Plan. In the event of a merger, consolidation or plan of
exchange to which the Company is a party or a sale of all or substantially all
of the Company's assets (each a "Transaction"), the Board of Directors will,
in its sole discretion and to the extent possible under the structure of the
Transaction, select one of the following alternatives for treating outstanding
options under the Incentive Plan: (i) outstanding options will remain in
effect in accordance with their terms, (ii) outstanding options shall be
converted into options to purchase stock in the corporation that is the
surviving or acquiring corporation in the Transaction, or (iii) the Board of
Directors will provide a 30-day period prior to the consummation of the
Transaction during which outstanding options shall be exercisable to the
extent exercisable and upon the expiration of such 30-day period, all
unexercised options shall immediately terminate. The Board of Directors may,
in its sole discretion, accelerate the exercisability of options so that they
are exercisable in full during such
10
<PAGE>
30-day period. In the event of the dissolution of the Company, options shall
be treated in accordance with clause (iii) above.
TAX CONSEQUENCES
Certain options authorized to be granted under the Incentive Plan are
intended to qualify as ISOs for federal income tax purposes. Under federal
income tax law currently in effect, the optionee will recognize no income upon
grant or upon a proper exercise of the ISO. The amount by which the fair
market value of the stock at the time of exercise exceeds the exercise price,
however, is includible in the optionee's alternative minimum taxable income
and may, under certain conditions, result in alternative minimum tax
liability. If an employee exercises an ISO and does not dispose of any of the
option shares within two years following the date of grant and within one year
following the date of exercise, any gain realized on subsequent disposition of
the shares will be treated as income from the sale or exchange of a capital
asset. If an employee disposes of shares acquired upon exercise of an ISO
before the expiration of either the one-year holding period or the two-year
waiting period, any amount realized will be taxable as ordinary compensation
income in the year of such disqualifying disposition to the extent that the
lesser of the fair market value of the shares on the exercise date or the fair
market value of the shares on the date of disposition exceeds the exercise
price. The Company will not be allowed any deduction for federal income tax
purposes at either the time of the grant or the exercise of an ISO. Upon any
disqualifying disposition by an employee, the Company will generally be
entitled to a deduction to the extent the employee realized ordinary income.
Certain options authorized to be granted under the Incentive Plan will be
treated as NSOs for federal income tax purposes. Under federal income tax law
currently in effect, no income is realized by the grantee of an NSO until the
option is exercised. At the time of exercise of an NSO, the optionee will
realize ordinary compensation income, and the Company will generally be
entitled to a deduction, in the amount by which the market value of the shares
subject to the option at the time of exercise exceeds the exercise price. The
Company is required to withhold on the income amount. Upon the sale of shares
acquired upon exercise of an NSO, the excess of the amount realized from the
sale over the market value of the shares on the date of exercise will be
taxable.
Under federal income tax law currently in effect, no income is realized by
the grantee of a SAR until the SAR is exercised. At the time the SAR is
exercised, the grantee will realize ordinary compensation income, and the
Company generally will be entitled to a deduction, in an amount equal to the
fair market value of the shares or cash received. The Company is required to
withhold on the income amount.
An employee who receives stock in connection with the performance of
services will generally realize taxable income at the time of receipt unless
the shares are substantially nonvested for purposes of section 83 of the Code
and no section 83(b) election is made. If the shares are not vested at the
time of receipt, the employee will realize taxable income in each year in
which a portion of the shares substantially vest, unless the employee elects
under section 83(b) within 30 days after the original transfer. The Company
will generally be entitled to a tax deduction in the amount includible as
income by the employee at the same time or times as the employee recognizes
income with respect to the shares. The Company is required to withhold on the
income amount. A participant who receives a cash bonus right under the
Incentive Plan will generally recognize income equal to the amount of the cash
bonus paid at the time of receipt, and the Company will generally be entitled
to a deduction equal to the income recognized by the participant.
Section 162(m) of the Code limits to $1,000,000 per person the amount that
the Company may deduct for compensation paid to any of its most highly
compensated officers in any year after 1993. Under IRS regulations,
compensation received through the exercise of an option or a SAR is not
subject to the $1,000,000 limit if the option or SAR and the Incentive Plan
meet certain requirements
11
<PAGE>
of the exception for performance-based compensation. One requirement is that
shareholders approve per-employee limits on the number of shares as to which
options and SARs may be granted. For other performance-based awards,
shareholders must approve the performance criteria upon which award payouts
will be based and the maximum amount payable under awards, both of which are
set forth in Section 12 of the Incentive Plan regarding performance-based
awards. Other requirements of the exception for performance-based compensation
are that the option or stock appreciation right be granted by a committee
composed solely of at least two outside directors and that the exercise price
of the option or the stock appreciation right be not less than fair market
value of the Common Stock on the date of grant. The Personnel Committee is
composed of five outside directors. The Company believes that if this Proposal
2 is approved by shareholders, compensation paid or deemed paid in connection
with options, SARs and other performance-based awards granted or made under
the Incentive Plan in compliance with the above requirements will not be
subject to the $1,000,000 deduction limit.
RECOMMENDATION BY THE BOARD OF DIRECTORS
The proposal to approve the Incentive Plan must be approved by the holders
of at least a majority of the outstanding shares of Common Stock present or
represented by proxy and entitled to vote on the matter at the Annual Meeting.
Abstentions have the effect of "no" votes in determining whether the amendment
is approved. Broker nonvotes are counted for purposes of determining whether a
quorum exists at the Annual Meeting but are not counted and have no effect on
the results of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE INCENTIVE PLAN.
3. APPOINTMENT OF INDEPENDENT AUDITOR
The Board of Directors, on recommendation of the Audit Committee and subject
to ratification by shareholders, has appointed Deloitte & Touche LLP to
perform an examination of the consolidated financial statements of the Company
and its subsidiaries for the year 1997 and to render its opinion thereon.
Deloitte & Touche LLP is an international accounting firm with substantial
experience in public utility accounting matters, an accounting area subject to
detailed regulation at both the national and state levels. The firm has acted
as independent auditor for PacifiCorp since 1933 and has competent,
professionally qualified personnel who are familiar with the history and
operations of the Company. Deloitte & Touche LLP follows the established
guidelines for periodic rotation of audit personnel for companies that are
reporting companies under the Securities and Exchange Act of 1934 (the
"Exchange Act"), as amended. The purpose of this planned rotation is to
periodically introduce a fresh view of the client's operations without losing
the benefits of continuity. The Board of Directors believes that the firm is
well qualified to serve as the Company's independent auditor for 1997.
Representatives of the firm are expected to be present at the Annual Meeting
with an opportunity to make a statement if they desire to do so and to be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
12
<PAGE>
PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Personnel Committee of the Board of Directors, which is composed
entirely of independent, non-employee directors, is responsible for approving
compensation levels for officers of the Company, administering executive
compensation plans as authorized by the Board and recommending executive
compensation plans and compensation of the Chief Executive Officer to the
Board for approval. The Committee is also responsible for approving incentive
plans for all employees, salary structure and merit programs for senior
management and changes in policy relating to employee benefits. Following is
the report of the Personnel Committee describing the components of the
Company's executive compensation program and the basis upon which 1996
compensation determinations were made.
COMPENSATION PHILOSOPHY
It is the philosophy of the Company that executive compensation be linked
closely to corporate performance and increases in shareholder value. The
Company's compensation program has the following objectives:
.Provide competitive total compensation that enables the Company to attract
and retain key executives.
.Provide variable compensation opportunities that are linked to performance.
.Establish an appropriate balance between incentives focused on short-term
objectives and those encouraging sustained superior earnings performance
and increases in shareholder value.
Qualifying compensation for deductibility under IRC Section 162(m), which
limits to $1,000,000 the annual deduction by a publicly held corporation of
compensation paid to any executive except with respect to certain forms of
incentive compensation that qualify for exclusion, is one of the important
factors the Committee considers in designing its incentive compensation
arrangements. However, although it is the Committee's intent to design and
administer compensation programs that maximize deductibility, the Committee
views the objectives outlined above as more important than compliance with the
technical requirements necessary to exclude compensation from the
deductibility limit of IRC Section 162(m). Nevertheless, the Committee
believes that all compensation paid to the executive officers for services
rendered in 1996 is fully deductible.
COMPENSATION PROGRAM COMPONENTS
The Personnel Committee, assisted by its outside consultant, evaluates the
total compensation package of executives annually in relation to competitive
pay levels. Given the increasingly competitive and complex global environment
in which the Company must operate and the competitive marketplace for
executive talent required for future success, in 1996 the Company reevaluated
its historical practice of using the electric utility industry as its primary
market reference point. The Committee has decided that, beginning in 1997, it
will make the transition over the next few years to a primary focus on general
industry for its market-based comparisons. Over time, the Committee also plans
to align the Company's long-term incentive arrangements more closely with
general industry practice.
In 1996, however, the Committee continued to use the electric utility
industry as its exclusive basis for market comparison for positions with a
principal focus on electric operations. For positions with a corporate-wide
focus, the Committee used a weighting of 80% electric utility industry and 20%
general industry. Although most of the electric utility companies represented
in the performance graph set forth below are part of the Company's comparison
group, not all of these companies are
13
<PAGE>
considered the Company's competitors for executive talent. For officers with
responsibilities outside the electric operations, relevant industry data were
used for comparison. In all cases, compensation is targeted at market average
levels, with a recognition that compensation greater than market average
requires that Company performance exceed the average performance of peer
companies.
The Company's executive compensation programs have three principal elements:
base salary, annual incentive compensation and long-term incentive
compensation as described below.
BASE SALARIES
The Committee decided not to increase base salaries in 1996 for executive
officers but instead increased the guideline incentive levels by 5%. This
action was consistent with the treatment of all electric operations employees.
The Committee's intent was to increase the variable or incentive portion of
total annual cash compensation to better align the amount of annual
compensation at risk with general industry practice.
ANNUAL INCENTIVES
All electric operations employees participated in an annual incentive plan
during 1996. Awards under the plan were to be earned based upon such factors
as Company earnings per share and business unit and individual performance in
relation to established objectives. The relative weights of the performance
criteria varied among organizational units in accordance with the nature of
their operations.
All corporate officers, including those listed in the Summary Compensation
Table, participated in the PacifiCorp Executive Incentive Program ("Executive
Incentive Program"). Performance goals included Company earnings per share
and, for certain executives, key financial measures for the business unit. The
Chief Executive Officer and all corporate staff officers had incentive awards
for 1996 determined based upon earnings per share results while the awards for
officers in the business units were determined in part by earnings per share
results and in part by financial measures such as operating income, economic
value added and return on equity. All Executive Incentive Program participants
may have their incentive awards modified by safety performance and their
individual performance, relative to established objectives, as evaluated by
their immediate supervisor. Safety is a negative modifier, and individual
performance can modify the award between zero and 120%. The maximum award from
the Executive Incentive Program for all participants is 150% of their
guideline award. Mr. Buckman received the maximum award in 1996, the amount of
which is shown in the Summary Compensation Table below.
LONG-TERM INCENTIVES
As part of the Committee's comprehensive review of the Company's
compensation program, the Company's outside consultant completed an assessment
of the long-term incentive component of the Company's executive compensation
program. The results of that assessment indicate that the long-term incentive
component of overall compensation is lower than general industry levels and,
unlike general industry, does not include stock options. The Committee has
been considering the use of stock options to focus executives on stock price
appreciation to better prepare the Company for the complex and competitive
environment it will face in the future and to better align the Company's pay
practices with those of general industry. As an initial step, in 1996, the
Board of Directors approved the Incentive Plan. The Incentive Plan, which is
being submitted for shareholder approval in this Proxy Statement, would allow
the Board to grant stock options. The Board also awarded restricted stock to
certain of its executive officers under the Incentive Plan, including one
named executive officer whose award is included in the Summary Compensation
Table below. If the shareholders approve the Incentive Plan, the Committee
plans to discontinue using the current PacifiCorp Long-Term Incentive Plan
("Long-Term Plan") for future grants of restricted stock.
14
<PAGE>
The Long-Term Plan was established to provide stock-based incentives in the
form of annual grants of restricted stock coupled with a requirement that
participants invest their own personal resources in the stock of the Company.
The objective of the Long-Term Plan has been to align the interests of
executive employees with those of shareholders, provide an opportunity to link
grant size to achievement of performance and provide a strong compensation
element for the retention of key employees.
The Long-Term Plan provides for grants of restricted stock based on past
performance rather than target awards for future performance cycles. The Long-
Term Plan provides that the Committee may vary the grants each year based on a
subjective assessment of the Company's overall performance in relation to
long-term goals and plans. In determining the individuals to whom awards will
be made and the amounts of the grants, the Committee considers criteria such
as the following: (a) total shareholder return relative to peer companies; (b)
earnings per share growth over time relative to peer companies; (c)
achievement of long-term goals, strategies and plans; and (d) maintenance of
competitive position. Shares awarded under the Long-Term Plan are subject to
such terms, conditions and restrictions as may be determined by the Committee
to be consistent with the purpose of the Long-Term Plan and the best interests
of the shareholders. The restrictions may include stock transfer restrictions
and forfeiture provisions designed to facilitate the achievement by
participants of specified stock ownership goals. Grants of restricted stock
made under the Long-Term Plan in 1995 and 1996 to the named executive officers
are shown in the Summary Compensation Table below.
In 1996, the Board of Directors approved the PacifiCorp Executive Severance
Plan ("Severance Plan"). This plan, which is described in more detail below,
replaces the former PacifiCorp Executive Severance Plan, which expired by its
terms on December 31, 1995.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
When Frederick W. Buckman joined the Company in 1994 as President and Chief
Executive Officer, he was offered a total compensation package that included a
grant of 25,000 shares of restricted stock to vest over a four-year period, of
which 18,750 shares have vested, and a grant of up to an additional 25,000
shares of restricted stock to be awarded contingent upon share-for-share
purchases by Mr. Buckman. In early 1995, Mr. Buckman completed the purchase of
25,000 shares of Common Stock and was awarded his final shares. In February
1996, the Committee, assisted by its outside consultant, reviewed compensation
levels of chief executive officers of companies similar in scope and
activities to the Company, evaluated Mr. Buckman's performance and recommended
an increase in the target guideline for his annual incentive award for 1996
from 50% to 55% but did not recommend an increase in salary. In 1996, the
Committee also approved a grant of 18,000 shares of restricted stock to Mr.
Buckman under the Long-Term Plan based on improvements in the Company's
competitive focus that had occurred during 1995 and the prospects of future
increases in shareholder growth. In February 1997, the Committee approved a
grant of 21,000 shares of restricted stock to Mr. Buckman under the Long-Term
Plan based on improvements in the Company's 1996 performance, including
expansion of its domestic operations in the eastern United States and the
performance of its international operations. By mid-1996, Mr. Buckman had
achieved his Long-Term Plan targeted ownership of PacifiCorp stock equal to
four times his annual base salary.
PERSONNEL COMMITTEE
Nolan E. Karras, Chair
W. Charles Armstrong
Kathryn A. Braun
Robert G. Miller
Nancy Wilgenbusch
15
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, S&P 500 INDEX, THE S&P ELECTRIC INDEX AND TOP 50
UTILITIES(1)
The following graph provides comparisons of the annual percentage change in
the cumulative total shareholder return on the Company's Common Stock, with the
cumulative total return of (a) the S&P Electric Index, (b) the S&P 500 Index
and (c) the top 50 electric utilities, ranked by 1996 revenues, as listed by
Salomon Brothers (the "Prior Index"). The comparisons assume that $100 was
invested on December 31, 1991 in the Company's Common Stock and in each of the
foregoing indices and assumes the reinvestment of dividends. The Company has
selected a new index, the S&P Electric Index, for purposes of its 1996 fiscal
year comparison. The Company believes that the S&P Electric Index, which is
published and more readily available to the public, includes companies whose
size and operations are more comparable to the Company than the Prior Index
and, thus, provides a more meaningful comparison of the Company's performance.
Between 1995 and 1996, the only changes in the companies included in the list
of the top 50 electric utilities in the Prior Index, other than the name
changes indicated below, are the replacement of DQE, Inc. and DPL, Inc. by
Hawaiian Electric and LG&E Energy Corp.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Period S&P TOP 50
(Fiscal Year Covered) PACIFICORP S&P 500 ELECTRICS UTILITIES
- ------------------- ---------- ------- --------- ---------
<S> <C> <C> <C> <C>
Measurement Pt- 1991 $100.00 $100.00 $100.00 $100.00
FYE 1992 $84.30 $107.60 $105.85 $106.93
FYE 1993 $87.48 $118.40 $119.14 $119.88
FYE 1994 $87.62 $120.00 $103.69 $106.54
FYE 1995 $107.89 $164.90 $135.78 $140.32
FYE 1996 $110.18 $202.60 $135.30 $142.60
</TABLE>
<TABLE>
<S> <C> <C>
(1) Allegheny Power
System Houston Industries, Inc.* PP&L Resources, Inc.*
American Electric
Power* Illinova Corp. Public Service Co. of Colo.
Baltimore Gas &
Electric* LG&E Energy Corp. Puget Sound Power & Light
Boston Edison Co. Long Island Lighting Public Service Entrp. Group*
Carolina Power &
Light* MidAmerican Energy Co. Enova, formerly
Centerior Energy
Corp. New England Electric System San Diego Gas & Electric
Central & South
West Corp.* New York State Electric & Gas SCANA Corp.
Cinergy* Niagara Mohawk Power* Edison International,
CMS Energy Corp. NIPSCO Industries Inc. formerly SCEcorp*
Consolidated Edison
of NY* Northeast Utilities Southern Co.*
Dominion Resources
Inc.* Northern States Power-MN* TECO Energy Inc.*
DTE Energy Co.* Ohio Edison Co.* Texas Utilities Co.*
Duke Power Co.* Oklahoma Gas & Electric Unicom Corp.*
Entergy Corp. Pacific Gas and Electric Co.* Union Electric Co.*
Florida Progress
Corp. PacifiCorp* UtiliCorp United Inc.
FPL Group Inc.* PECO* Western Resources Inc.
General Public
Utilities* Pinnacle West Capital Wisconsin Energy Corp.
Hawaiian Electric Potomac Electric Power
</TABLE>
- --------
*These companies are also included in the S&P Electric Index
16
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation for
services in all capacities to the Company and its subsidiaries for fiscal
years ended December 31, 1996, 1995 and 1994 of the person who was the Chief
Executive Officer of the Company during 1996 and the other four most highly
compensated executive officers of the Company during 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (1) LONG-TERM COMPENSATION
--------------------------------- ------------------------------------------
RESTRICTED LONG-TERM
NAME AND PRINCIPAL ANNUAL OTHER ANNUAL STOCK INCENTIVE ALL OTHER
POSITION SALARY (2) BONUS (3) COMPENSATION AWARD (4) PAYOUTS COMPENSATION (5)
- ------------------ ---------- --------- ------------ ---------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Frederick W. Buckman.... 1996 $590,000 $486,750 $ -- $498,419(6) $ -- $ 8,350
President and Chief 1995 570,002 88,500 -- 288,946(6) -- 8,218
Executive Officer 1994 504,116 302,083 -- 878,894(7) -- 7,180
Charles E. Robinson..... 1996 412,000 309,000 -- 212,500(6) -- 8,688
Chairman, President 1995 428,006 278,100 -- 282,938(6)(8) -- 8,832
and Chief Executive 1994 403,500 322,800 -- 87,294(8) -- 10,691
Officer of Pacific
Telecom, Inc.
Verl R. Topham.......... 1996 270,000 162,000 -- 281,190(6) -- 7,889
Senior Vice President 1995 280,000 -- -- 103,813(6) -- 7,853
and General Counsel 1994 270,000 103,400 -- -- -- 7,856
John A. Bohling......... 1996 240,000 144,000 -- 169,292(6) -- 7,846
Senior Vice President 1995 241,000 -- -- 103,813(6) -- 7,804
1994 230,000 88,086 -- -- -- 7,803
Paul G. Lorenzini....... 1996 240,000 126,000 -- 129,005(6) -- 7,846
Senior Vice President 1995 249,000 -- -- 75,688(6) -- 7,814
1994 240,000 87,125 -- -- -- 7,817
</TABLE>
- ---------------------
(1) May include amounts deferred pursuant to the Compensation Reduction Plan,
under which key executives and directors may defer, until retirement or a
preset future date, receipt of cash compensation to a stock account to be
invested in Company Common Stock or to a cash account on which interest is
paid at a rate equal to the Moody's Intermediate Corporate Bond Yield for
Aa rated Public Utility Bonds.
(2) Base salary for named officers did not increase in 1996. 1995 increases in
annual compensation include both increases in base salary and lump sum
payments that were effective July 1, 1995. Allocations between a base
salary increase and a lump sum payment differed among officers.
Accordingly, the amount shown for 1995 may appear greater or less than the
base salary for 1996.
(3) Please refer to the Personnel Committee Report on Executive Compensation
for a description of the Company's annual executive incentive plans.
Incentive amounts are reported for the year in which the related services
were performed.
(4) Participants may also defer receipt of restricted stock awards to their
stock accounts under the Compensation Reduction Plan.
(5) Amounts shown for 1996 include (a) contributions of $7,750 to the
PacifiCorp K Plus Employee Savings and Stock Ownership Plan for each of
Messrs. Buckman, Robinson, Topham, Bohling and Lorenzini and (b) $850,
$1,188, $389, $346 and $346 for the portion of premiums on term life
insurance policies for Messrs. Buckman, Robinson, Topham, Bohling and
Lorenzini, respectively, paid by the Company. These benefits are available
to all employees.
(Footnotes continued on following page.)
17
<PAGE>
(6) Includes restricted stock grants made in (a) February 1996 and February
1995 pursuant to the Long-Term Plan, (b) March 1996 as special recognition
for 1995 performance and (c) August 1996 under the Incentive Plan. (See
Personnel Committee Report on Executive Compensation for descriptions of
the Long-Term Plan and the Incentive Plan.) At December 31, 1996, the
aggregate value of all restricted stock holdings, based on the market
value of the shares at December 31, 1996, without giving effect to the
diminution of value attributed to the restrictions on such stock, of
Messrs. Buckman, Robinson, Topham, Bohling and Lorenzini, respectively,
were $1,277,212, $680,293, $475,477, $333,351, and $291,777. Regular
quarterly dividends are paid on the restricted stock.
(7) Restricted stock granted as part of compensation package. See Personnel
Committee Report on Executive Compensation for a description of the
compensation of the Chief Executive Officer. Regular quarterly dividends
are paid on the restricted stock.
(8) The 1994 and 1995 amounts represent restricted stock grants made in
February 1994 and February 1995 pursuant to the Pacific Telecom Long-Term
Incentive Plan 1994 Restatement. For the performance cycle ended December
31, 1994, the performance criteria were earnings per share growth and
return on equity compared to a five-year Treasury Bond rate. The plan was
terminated in 1995 in connection with the acquisition by PacifiCorp
Holdings, Inc. of the minority interest of Pacific Telecom and the
unvested portion of prior awards was forfeited in exchange for equivalent
awards under the Long-Term Plan.
SEVERANCE ARRANGEMENTS
The Company adopted the Severance Plan effective December 1, 1996 to replace
the prior severance plan, which terminated by its terms on December 31, 1995.
The Severance Plan provides severance benefits to certain executive level
employees who are designated by the Personnel Committee, in its sole
discretion. To qualify for severance benefits, the executive must have
terminated employment for one of the following reasons: (a) voluntary
termination as a result of (i) a change in reporting relationship, (ii) a
material change in authority or (iii) a change in control of the ownership of
the Company; provided that the change has a detrimental impact on the
executive's employment or (b) involuntary termination for reasons other than
for cause. For the 24 month period following a change in control of the
ownership of the Company, cause is defined as gross misconduct, gross
negligence or conduct which indicates a reckless disregard for the
consequences and has a material adverse effect on the Company or its
affiliates. For any other period, the definition of cause is determined by the
Company in its discretion and by the Personnel Committee in the event of an
appeal by the employee. The Severance Plan does not apply to the termination
of an executive for reasons of normal retirement, death or total disability or
to a termination for cause or for voluntary termination other than as
specified above. Executives who are designated to receive "Level I" benefits,
including Messrs. Buckman, Topham and Bohling, are eligible for a severance
payment equal to twice the executive's total cash compensation, three months
of health insurance benefits and outplacement benefits. Executives who are
designated to receive "Level II" benefits, including Mr. Lorenzini, are
eligible for a severance payment equal to one times the executive's total cash
compensation, three months of health insurance benefits and outplacement
benefits. For both levels, total cash compensation is defined as the
annualized base salary, target annual incentive opportunity and the annualized
auto allowance in effect on the earlier of a material alteration or
termination. Designated executives who may be eligible for severance benefits
under another plan or arrangement cannot participate in this plan unless they
elect to forego their rights under the other plan or arrangement.
Under an Executive Severance Plan adopted by Pacific Telecom in 1994, Mr.
Robinson would receive a severance payment equal to twice his total cash
compensation during the last full calendar year upon the termination of his
employment with Pacific Telecom. The severance payment would be made to Mr.
Robinson in 24 equal monthly payments following the date of the termination of
his employment, and the payments would be terminated by Pacific Telecom if Mr.
Robinson accepts
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employment with a competitor of Pacific Telecom or its affiliates. The Pacific
Telecom Executive Severance Plan does not apply to the termination of an
executive for reasons of normal retirement, death or total disability or to a
termination for cause or a voluntary termination. "Voluntary termination" does
not include a change in reporting relationship, a material change in authority
or a change in control of the ownership of Pacific Telecom that results in a
change in position that is detrimental to the executive, unless such change in
reporting relationship, authority or control is agreed to by the executive.
Under the plan, "cause" for termination includes any act by an executive that
is materially contrary to the interests of Pacific Telecom or its affiliates
and the willful and continued failure by an executive to devote his or her
full business time and efforts to the business affairs of Pacific Telecom. The
plan will terminate on December 31, 1997, unless extended by the Board of
Pacific Telecom.
RETIREMENT PLANS
The Company and most of its subsidiaries have adopted noncontributory
defined benefit retirement plans ("Retirement Plans") for their employees
(other than employees subject to collective bargaining agreements that do not
provide for coverage). Certain executive officers, including the executive
officers named in the Summary Compensation Table, are also eligible to
participate in the Company's non-qualified Supplemental Executive Retirement
Plan ("SERP"). The following description assumes participation in both the
Retirement Plans and the SERP. Participants receive benefits at retirement
payable for life based on length of service with the Company or its
subsidiaries and average pay in the 60 consecutive months of highest pay out
of the last 120 months, and pay for this purpose would include salary and
bonuses as reflected in the Summary Compensation Table above. Benefits are
based on 50% of final average pay plus up to an additional 15% of final
average pay depending upon whether the Company meets certain performance goals
set for each calendar year by the Personnel Committee. Actuarially equivalent
alternative forms of benefits are also available at the participant's
election. Retirement benefits are reduced to reflect Social Security benefits
as well as certain prior employer retirement benefits. Participants are
entitled to receive full benefits upon retirement after age 60 with at least
15 years of service. Participants are also entitled to receive reduced
benefits upon early retirement after age 55 and at least five years of
participation or after age 50 and at least 15 years of service.
The following table shows the estimated annual retirement benefit payable
upon retirement at age 60 as of January 1, 1997. Amounts in the table reflect
payments from the Retirement Plans and the SERP combined.
ESTIMATED ANNUAL PENSION AT RETIREMENT (1)
<TABLE>
<CAPTION>
FINAL AVERAGE YEARS OF SERVICE (2)
ANNUAL PAY AT --------------------------------------------------------
RETIREMENT DATE 5 15 25 30
--------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 200,000 $ 43,333 $130,000 $130,000 $130,000
400,000 86,667 260,000 260,000 260,000
600,000 130,000 390,000 390,000 390,000
800,000 173,333 520,000 520,000 520,000
1,000,000 216,667 650,000 650,000 650,000
</TABLE>
- ---------------------
(1) The benefits shown in the table above assume that the individual will
remain in the employ of the Company until retirement at age 60, that the
plans will continue in their present form and that the Company achieves
its performance goals under the SERP in all years. Amounts shown above do
not reflect the Social Security offset.
(2) The number of credited years of service used to compute benefits under the
plans for Messrs. Buckman, Robinson, Topham, Bohling and Lorenzini are 3,
30, 24, 29 and 9, respectively.
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COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than 10% of the Company's Common
Stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the New York Stock Exchange. Based
solely on reports and other information submitted by executive officers and
directors, the Company believes that during the year ended December 31, 1996,
each of its executive officers, directors and persons who own more than 10% of
the Company's Common Stock filed all reports required by Section 16(a), except
that one report covering a purchase transaction was filed late by William E.
Peressini.
ANNUAL REPORT
The Company's Annual Report for the year 1996 is being mailed to
shareholders with this proxy statement.
METHOD AND COST OF SOLICITING PROXIES
The cost of the solicitation of proxies will be paid by the Company. In
addition to solicitation by mail, employees of the Company may request the
return of proxies personally, by telephone or telegraph. The Company will, on
request, reimburse brokers and other persons holding shares for the benefit of
others for their expenses in forwarding proxies and accompanying material and
in obtaining authorization from beneficial owners of the Company's stock to
execute proxies. In addition, the Company has retained Georgeson & Company,
Inc. to aid in the solicitation at a fee not to exceed $18,000 plus expenses.
OTHER MATTERS
SHAREHOLDER PROPOSALS TO BE INCLUDED IN THE COMPANY'S PROXY STATEMENT. A
shareholder proposal to be considered for inclusion in proxy material for the
Company's 1998 Annual Meeting must be received by the Company not later than
December 2, 1997.
SHAREHOLDER PROPOSALS NOT IN THE COMPANY'S PROXY STATEMENT. Shareholders
wishing to present proposals for action at this annual meeting or at another
shareholders' meeting must do so in accordance with the Company's Bylaws. A
shareholder must give timely notice of the proposed business to the Secretary.
To be timely, a shareholder's notice must be in writing, delivered to or
mailed and received at the principal executive offices of the Company not less
than 60 days nor more than 90 days prior to the meeting; provided, however,
that if less than 70 days' notice or prior public disclosure of the date of
the meeting is given or made, notice by the shareholder, to be timely, must be
received no later than the close of business on the tenth day following the
earlier of the day on which such notice of the date of the meeting was mailed
or such public disclosure was made. For each matter the shareholder proposes
to bring before the meeting, the notice to the Secretary must include (a) a
brief description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting, (b) the name and
address of the shareholder proposing such business, (c) the class and number
of shares of the Company which are beneficially owned by the shareholder and
(d) any material interest of the shareholder in such business. The officer
presiding at the meeting may, if in the officer's opinion the facts warrant,
determine that business was not properly brought before the meeting in
accordance with the Company's Bylaws. If such officer does so, such officer
shall so declare to the meeting and any such business not properly brought
before the meeting shall not be transacted.
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SHAREHOLDER NOMINATIONS FOR DIRECTORS. Shareholders wishing to directly
nominate candidates for election to the Board of Directors must do so in
accordance with the Company's Bylaws by giving timely notice in writing to the
Secretary as defined above. The notice shall set forth (a) as to each person
whom the shareholder proposes to nominate (i) all information relating to such
person that is required to be disclosed in proxy solicitations pursuant to
Regulation 14A under the Exchange Act and (ii) the written consent of such
person to be named in the proxy statement as a nominee and to serve as a
director if elected and (b) as to the shareholder giving the notice (i) the
name and address of such shareholder and (ii) the class and number of shares
of the Company which are beneficially owned by such shareholder. If the
shareholder is not a shareholder of record at the time of giving the notice,
the notice must be accompanied by appropriate documentation of the
shareholder's claim of beneficial ownership. No person shall be eligible to
serve as a director of the Company unless nominated in accordance with the
procedures set forth in the Bylaws. The officer presiding at the meeting may,
if in the officer's opinion the facts warrant, determine that a nomination was
not made in accordance with the procedures prescribed by the Bylaws. If such
officer does so, such officer shall so declare to the meeting and the
defective nomination shall be disregarded.
OTHER BUSINESS. The Board of Directors does not intend to present any
business for action of the shareholders at the meeting except the matters
referred to in this proxy statement. If any other matters should properly come
before the meeting, it is the intention of the persons named in the
accompanying form of proxy to vote thereon in accordance with their judgment
on such matters.
Whether or not you expect to be present at the meeting, please sign the
accompanying form of proxy and return it promptly in the enclosed stamped
return envelope.
By Order of the Board of Directors
Sally A. Nofziger
Vice President and Corporate
Secretary
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APPENDIX A
PACIFICORP STOCK INCENTIVE PLAN
PacifiCorp, an Oregon corporation (the "Company"), amends and restates its
1996 Stock Retention Plan, as adopted effective August 14, 1996, to provide in
its entirety as set forth herein. The 1996 Stock Retention Plan, as amended
and restated (the "Plan"), shall be renamed the PacifiCorp Stock Incentive
Plan and shall govern awards made on or after the date the Plan is approved by
the Company's board of directors (the "Board of Directors"). The amendment and
restatement of the Plan will not affect the terms of any outstanding awards.
1. PURPOSE. The purpose of this Plan is to enable the Company to attract and
retain the services of and provide performance incentives to (1) selected
employees, officers and directors of the Company or of any subsidiary of the
Company ("Employees") and (2) selected nonemployee agents, consultants,
advisors and independent contractors of the Company or any subsidiary.
2. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided below and
in paragraph 14, the shares to be offered under the Plan shall consist of
Common Stock of the Company, and the total number of shares of Common Stock
that may be issued under the Plan shall not exceed 14,500,000 shares, all of
which may be issued pursuant to the exercise of options granted pursuant to
the Plan. The shares issued under the Plan may be authorized and unissued
shares or reacquired shares or shares acquired in the market; provided,
however, that the Company will not directly issue any shares pursuant to the
Plan or take any action pursuant to the Plan that would require approval of
the public utility regulatory authorities having jurisdiction over issuances
of securities by the Company until it has received all such required
approvals. Prior to receipt of such approvals, any shares of Common Stock to
be issued pursuant to the Plan will be acquired in the market. Subject to the
foregoing limitations, (a) if any award granted under the Plan expires,
terminates or is cancelled, the unissued shares subject to such award shall
again be available under the Plan and (b) if shares sold or awarded under the
Plan are forfeited to the Company or repurchased by the Company, that number
of shares shall again be available under the Plan.
3. EFFECTIVE DATE AND DURATION OF PLAN.
(a) EFFECTIVE DATE. The Plan (as amended and restated) shall become
effective on the date adopted by the Board of Directors. Awards may be granted
and shares may be awarded or sold under the Plan at any time after the
effective date and before termination of the Plan.
(b) DURATION. The Plan shall continue in effect for a period of 10 years
from the date adopted by the Board of Directors, subject to earlier
termination by the Board of Directors. The Board of Directors may suspend or
terminate the Plan at any time, except with respect to awards then outstanding
under the Plan. Termination shall not affect the terms of any outstanding
awards.
4. ADMINISTRATION.
(a) BOARD OF DIRECTORS. The Plan shall be administered by the Board of
Directors of the Company, which shall determine and designate from time to
time the individuals to whom awards shall be made, the amount of the awards
and the other terms and conditions of the awards. Subject to the provisions of
the Plan, the Board of Directors may from time to time adopt and amend rules
and regulations relating to administration of the Plan, advance the lapse of
any waiting period, accelerate any exercise date, waive or modify any
restriction applicable to shares (except those restrictions imposed by law)
and make all other determinations in the judgment of the Board of Directors
necessary or desirable for the administration of the Plan. The interpretation
and construction of the provisions of the Plan and related agreements by the
Board of Directors shall be final and conclusive. The Board of Directors may
correct any defect or supply any omission or reconcile any inconsistency
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in the Plan or in any related agreement in the manner and to the extent it
shall deem expedient to carry the Plan into effect, and it shall be the sole
and final judge of such expediency.
(b) COMMITTEE. The Board of Directors may delegate to a committee of the
Board of Directors (the "Committee") any or all authority for administration
of the Plan. If authority is delegated to a Committee, all references to the
Board of Directors in the Plan shall mean and relate to the Committee except
(i) as otherwise provided by the Board of Directors and (ii) that only the
Board of Directors may amend or terminate the Plan as provided in paragraphs 3
and 15.
(c) OFFICER. The Board of Directors or the Committee, as applicable, may
delegate to an executive officer of the Company authority to administer those
aspects of the Plan that do not involve the designation of individuals to
receive awards or decisions concerning the timing, amounts or other terms of
awards. No officer to whom administrative authority has been delegated
pursuant to this provision may waive or modify any restriction applicable to
an award to such officer under the Plan.
5. TYPES OF AWARDS; ELIGIBILITY. The Board of Directors may, from time to
time, take the following actions, separately or in combination, under the
Plan: (i) grant Incentive Stock Options, as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), as provided in
paragraph 6; (ii) grant options other than Incentive Stock Options ("Non-
Statutory Stock Options") as provided in paragraph 6; (iii) award stock as
provided in paragraph 7; (iv) sell shares subject to restrictions as provided
in paragraph 8; (v) grant stock appreciation rights as provided in paragraph
9; (vi) grant cash bonus rights as provided in paragraph 10; (vii) grant
dividend equivalent rights as provided in paragraph 11; (viii) grant
Performance-based Rights as provided in paragraph 12 and (ix) grant foreign
qualified awards as provided in paragraph 13. Any such awards may be made to
Employees, including Employees who are officers or directors, and to other
individuals described in paragraph 1 whom the Board of Directors believes have
made or will make an important contribution to the Company or any subsidiary
of the Company; provided, however, that only Employees shall be eligible to
receive Incentive Stock Options under the Plan. The Board of Directors shall
select the individuals to whom awards shall be made and shall specify the
action taken with respect to each individual to whom an award is made. Unless
otherwise determined by the Board of Directors with respect to an award, each
option, stock appreciation right, cash bonus right, dividend equivalent right
or performance-based right granted pursuant to the Plan by its terms shall be
nonassignable and nontransferable by the recipient, either voluntarily or by
operation of law, except by will or by the laws of descent and distribution of
the state or country of the recipient's domicile at the time of death. No
fractional shares shall be issued in connection with any award. In lieu of any
fractional shares, cash may be paid in an amount equal to the value of the
fraction or, if the Board of Directors shall determine, the number of shares
may be rounded downward to the next whole share. No Employee may be granted
options or stock appreciation rights under the Plan for more than an aggregate
of 3,000,000 shares of Common Stock in any consecutive three-year period.
6. OPTION GRANTS. With respect to each option grant, the Board of Directors
shall determine the number of shares subject to the option, the option price,
the period of the option, the time or times at which the option may be
exercised and whether the option is an Incentive Stock Option or a Non-
Statutory Stock Option and any other terms of the grant, all of which shall be
set forth in an option agreement between the Company and the optionee. In the
case of Incentive Stock Options, all terms shall be consistent with the
requirements of the Code and applicable regulations. Upon the exercise of an
option, the number of shares reserved for issuance under the Plan shall be
reduced by the number of shares issued upon exercise of the option less the
number of shares surrendered or withheld in connection with the exercise of
the option and the number of shares surrendered or withheld to satisfy
withholding obligations in accordance with paragraph 18.
7. STOCK AWARDS. The Board of Directors may award shares under the Plan as
stock bonuses or otherwise. The aggregate number of shares that may be awarded
pursuant to this provision shall not
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exceed 1,500,000 shares. Shares awarded pursuant to this paragraph shall be
subject to the terms, conditions, and restrictions determined by the Board of
Directors. The Board of Directors may require the recipient to sign an
agreement as a condition of the award, but may not require the recipient to
pay any monetary consideration other than amounts necessary to satisfy tax
withholding requirements. The agreement may contain any terms, conditions,
restrictions, representations and warranties required by the Board of
Directors. The certificates representing the shares awarded shall bear any
legends required by the Board of Directors. Upon the issuance of a stock
award, the number of shares available for issuance under the Plan shall be
reduced by the number of shares issued less the number of any shares
surrendered to satisfy withholding obligations in accordance with
paragraph 18.
8. PURCHASED STOCK. The Board of Directors may issue shares under the Plan
for such consideration (including promissory notes and services) as determined
by the Board of Directors. Shares issued under the Plan shall be subject to
the terms, conditions and restrictions determined by the Board of Directors.
All Common Stock issued pursuant to this paragraph 8 shall be subject to a
purchase agreement, which shall be executed by the Company and the prospective
recipient of the shares prior to the delivery of certificates representing
such shares to the recipient. The purchase agreement may contain any terms,
conditions, restrictions, representations and warranties required by the Board
of Directors. The certificates representing the shares shall bear any legends
required by the Board of Directors. Upon the issuance of purchased stock, the
number of shares available for issuance under the Plan shall be reduced by the
number of shares issued less the number of any shares surrendered to satisfy
withholding obligations in accordance with paragraph 18.
9. STOCK APPRECIATION RIGHTS.
(a) GRANT. Stock appreciation rights may be granted under the Plan by the
Board of Directors, subject to such rules, terms, and conditions as the Board
of Directors prescribes.
(b) EXERCISE. Each stock appreciation right shall entitle the holder, upon
exercise, to receive from the Company in exchange therefor an amount equal in
value to the excess of the fair market value on the date of exercise of one
share of Common Stock of the Company over its fair market value on the date of
grant (or, in the case of a stock appreciation right granted in connection
with an option, the excess of the fair market value of one share of Common
Stock of the Company over the option price per share under the option to which
the stock appreciation right relates), multiplied by the number of shares
covered by the stock appreciation right or the option, or portion thereof,
that is surrendered. Payment by the Company upon exercise of a stock
appreciation right may be made in Common Stock valued at fair market value, in
cash, or partly in Common Stock and partly in cash, all as determined by the
Board of Directors. The Board of Directors may withdraw any stock appreciation
right granted under the Plan at any time and may impose any conditions upon
the exercise of a stock appreciation right or adopt rules and regulations from
time to time affecting the rights of holders of stock appreciation rights.
Such rules and regulations may govern the right to exercise stock appreciation
rights granted prior to adoption or amendment of such rules and regulations as
well as stock appreciation rights granted thereafter. Upon the exercise of a
stock appreciation right for shares, the number of shares available for
issuance under the Plan shall be reduced by the number of shares issued less
the number of any shares surrendered or withheld to satisfy withholding
obligations in accordance with paragraph 18. Cash payments of stock
appreciation rights shall not reduce the number of shares of Common Stock
available for issuance under the Plan.
10. CASH BONUS RIGHTS. The Board of Directors may grant cash bonus rights
under the Plan in connection with (i) options granted or previously granted,
(ii) stock appreciation rights granted or previously granted, (iii) stock
awarded or previously awarded and (iv) shares sold or previously sold under
the Plan. Cash bonus rights will be subject to rules, terms and conditions as
the Board of Directors may prescribe. The payment of a cash bonus shall not
reduce the number of shares of
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Common Stock available for issuance under the Plan. A cash bonus right granted
in connection with an option will entitle an optionee to a cash bonus when the
related option is exercised (or terminates in connection with the exercise of
a stock appreciation right related to the option) in whole or in part if, in
the sole discretion of the Board of Directors, the bonus right will result in
a tax deduction that the Company has sufficient taxable income to use. A cash
bonus right granted in connection with a stock award pursuant to paragraph 7
or purchase of stock pursuant to paragraph 8 will entitle the recipient to a
cash bonus payable when the stock award is awarded or the shares are purchased
or restrictions, if any, to which the stock is subject lapse. If the stock
awarded or the shares purchased are subject to restrictions and are
repurchased by the Company or forfeited by the holder, the cash bonus right
granted in connection with the stock awarded or shares purchased shall
terminate and may not be exercised.
11. DIVIDEND EQUIVALENT RIGHTS. The Board of Directors may grant dividend
equivalent rights under the Plan in connection with (i) options granted or
previously granted, (ii) stock appreciation rights granted or previously
granted, (iii) stock awarded or previously awarded, (iv) shares sold or
previously sold under the Plan or (v) as a freestanding award. The terms and
conditions of a dividend equivalent right shall be specified by the Board of
Directors at the time of grant. Each dividend equivalent right shall entitle
the recipient to receive an amount based on cash dividends that would be
payable with respect to the number of shares specified in connection with the
grant of the dividend equivalent right (or other award to which it relates) if
such shares had been held by the recipient during the period specified in
connection with such grant. Payment with respect to a dividend equivalent
right shall be made, subject to the limitations set forth in paragraph 2, at
the discretion of the Board of Directors, in cash or in shares or in any
combination thereof. Upon the exercise of a dividend equivalent right for
shares, the number of shares available for issuance under the Plan shall be
reduced by the number of shares issued less the number of any shares
surrendered to satisfy withholding obligations in accordance with paragraph
18. Cash payments of dividend equivalent rights shall not reduce the number of
shares of Common Stock available for issuance under the Plan.
12. PERFORMANCE-BASED AWARDS. The Board of Directors may grant awards
intended to qualify as performance-based compensation under Section 162(m) of
the Code and the regulations thereunder ("Performance-based Awards").
Performance-based Awards shall be denominated at the time of grant either in
shares of Common Stock ("Stock Performance Awards") or in dollar amounts
("Dollar Performance Awards"). Payment under a Stock Performance Award or a
Dollar Performance Award shall be made, at the discretion of the Board of
Directors, subject to the limitations set forth in paragraph 2, in shares of
Common Stock ("Performance Shares"), or in cash or in any combination thereof.
Performance-based Awards shall be subject to the following terms and
conditions:
(a) AWARD PERIOD. The Board of Directors shall determine the period of
time for which a Performance-based Award is made (the "Award Period").
(b) PERFORMANCE GOALS AND PAYMENT. The Board of Directors shall establish
in writing objectives ("Performance Goals") that must be met by the Company
or any subsidiary, division or other unit of the Company ("Business Unit")
during the Award Period as a condition to payment being made under the
Performance-based Award. The Performance Goals for each award shall be one
or more targeted levels of performance with respect to one or more of the
following objective measures with respect to the Company or any Business
Unit: earnings, earnings per share, stock price increase, total shareholder
return (stock price increase plus dividends), return on equity, return on
assets, return on capital, economic value added, revenues, operating
income, cash flows or any of the foregoing (determined according to
criteria established by the Board of Directors). The Board of Directors
shall also establish the number of Performance Shares or the amount of cash
payment to be made under a Performance-based Award if the Performance Goals
are met or exceeded, including the fixing of a maximum payment (subject to
paragraph 12(d)). The Board of Directors may establish other restrictions
to payment under a Performance-based Award, such
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as a continued employment requirement, in addition to satisfaction of the
Performance Goals. Some or all of the Performance Shares may be issued at
the time of the award as restricted shares subject to forfeiture in whole
or in part if Performance Goals or, if applicable, other restrictions are
not satisfied.
(c) COMPUTATION OF PAYMENT. During or after an Award Period, the
performance of the Company or Business Unit, as applicable, during the
period shall be measured against the Performance Goals. If the Performance
Goals are not met, no payment shall be made under a Performance-based
Award. If the Performance Goals are met or exceeded, the Board of Directors
shall certify that fact in writing and certify the number of Performance
Shares earned or the amount of cash payment to be made under the terms of
the Performance-based Award.
(d) MAXIMUM AWARDS. No participant may receive Stock Performance Awards
in any fiscal year under which the maximum number of shares issuable under
the award, when aggregated with the shares issuable under any awards made
in the immediately preceding two fiscal years, exceeds 500,000 shares or
Dollar Performance Awards in any fiscal year under which the maximum amount
of cash payable under the award, when aggregated with the amount of cash
payable under awards made in the immediately preceding two fiscal years,
exceeds an aggregate of $3,000,000.
(e) EFFECT ON SHARES AVAILABLE. The payment of a Performance-based Award
in cash shall not reduce the number of shares of Common Stock available for
issuance under the Plan. The number of shares of Common Stock available for
issuance under the Plan shall be reduced by the number of shares issued
upon payment of an award, less the number of shares surrendered or withheld
to satisfy withholding obligations.
13. FOREIGN QUALIFIED GRANTS. Awards under the Plan may be granted to such
Employees and such other persons described in paragraph 1 residing in foreign
jurisdictions as the Board of Directors may determine from time to time. The
Board of Directors may adopt such supplements to the Plan as may be necessary
to comply with the applicable laws of such foreign jurisdictions and to afford
participants favorable treatment under such laws; provided, however, that no
award shall be granted under any such supplement with terms that are more
beneficial to the participants than the terms permitted by the Plan.
14. CHANGES IN CAPITAL STRUCTURE.
(a) STOCK SPLITS; STOCK DIVIDENDS. If the outstanding Common Stock of the
Company is hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company by
reason of any stock split, combination of shares or dividend payable in
shares, recapitalization or reclassification, appropriate adjustment shall be
made by the Board of Directors in the number and kind of shares available for
grants under the Plan. In addition, the Board of Directors shall make
appropriate adjustment in the number and kind of shares as to which
outstanding options, or portions thereof then unexercised, shall be
exercisable, so that the optionee's proportionate interest before and after
the occurrence of the event is maintained. Notwithstanding the foregoing, the
Board of Directors shall have no obligation to effect any adjustment that
would or might result in the issuance of fractional shares, and any fractional
shares resulting from any adjustment may be disregarded or provided for in any
manner determined by the Board of Directors. Any such adjustments made by the
Board of Directors shall be conclusive.
(b) MERGERS, REORGANIZATIONS, ETC. The Board of Directors may include such
terms and conditions, including without limitation, provisions relating to
acceleration in the event of a change in control, as it deems appropriate in
connection with any award under the Plan with respect to a merger,
consolidation, plan of exchange, acquisition of property or stock, separation,
reorganization or
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liquidation to which the Company or a subsidiary is a party or a sale of all
or substantially all of the Company's assets (each, a "Transaction").
Notwithstanding the foregoing, in the event of a Transaction, the Board of
Directors shall, in its sole discretion and to the extent possible under the
structure of the Transaction, select one of the following alternatives for
treating outstanding Incentive Stock Options or Non-Statutory Stock Options
under the Plan:
(i) Outstanding options shall remain in effect in accordance with their
terms.
(ii) Outstanding options shall be converted into options to purchase
stock in the corporation that is the surviving or acquiring corporation in
the Transaction. The amount, type of securities subject thereto and
exercise price of the converted options shall be determined by the Board of
Directors of the Company, taking into account the relative values of the
companies involved in the Transaction and the exchange rate, if any, used
in determining shares of the surviving corporation to be issued to holders
of shares of the Company. Unless otherwise determined by the Board of
Directors, the converted options shall be vested only to the extent that
the vesting requirements relating to options granted hereunder have been
satisfied.
(iii) The Board of Directors shall provide a 30-day period prior to the
consummation of the Transaction during which outstanding options may be
exercised to the extent then exercisable, and upon the expiration of such
30-day period, all unexercised options shall immediately terminate. The
Board of Directors may, in its sole discretion, accelerate the
exercisability of options so that they are exercisable in full during such
30-day period.
(c) DISSOLUTION OF THE COMPANY. In the event of the dissolution of the
Company, options shall be treated in accordance with paragraph 14(b)(iii).
(d) RIGHTS ISSUED BY ANOTHER CORPORATION. The Board of Directors may also
grant options, stock appreciation rights, performance units, stock bonuses and
cash bonuses and issue restricted stock under the Plan having terms,
conditions and provisions that vary from those specified in this Plan provided
that any such awards are granted in substitution for, or in connection with
the assumption of, existing options, stock appreciation rights, stock bonuses,
cash bonuses, restricted stock and performance units granted, awarded or
issued by another corporation and assumed or otherwise agreed to be provided
for by the Company pursuant to or by reason of a Transaction.
15. AMENDMENT OF PLAN. The Board of Directors may at any time, and from time
to time, modify or amend the Plan in such respects as it shall deem advisable
because of changes in the law while the Plan is in effect or for any other
reason. Except as provided in paragraphs 9, 10 and 14, however, no change in
an award already granted shall be made without the written consent of the
holder of such award.
16. APPROVALS. The obligations of the Company under the Plan are subject to
the approval of state and federal authorities or agencies with jurisdiction in
the matter, including without limitation, public utility regulatory
authorities. The Company will use its best efforts to take steps required by
state or federal law or applicable regulations, including rules and
regulations of the Securities and Exchange Commission and any stock exchange
on which the Company's shares may then be listed, in connection with the
grants under the Plan. The foregoing notwithstanding, the Company shall not be
obligated to issue or deliver Common Stock under the Plan if such issuance or
delivery would violate applicable state or federal securities laws or any
applicable law relating to the issuance of securities by a public utility.
17. EMPLOYMENT AND SERVICE RIGHTS. Nothing in the Plan or any award pursuant
to the Plan shall (i) confer upon any employee any right to be continued in
the employment of the Company or any subsidiary or interfere in any way with
the right of the Company or any subsidiary by whom such
A-6
<PAGE>
employee is employed to terminate such employee's employment at any time, for
any reason, with or without cause, or to decrease such employee's compensation
or benefits, or (ii) confer upon any person engaged by the Company any right
to be retained or employed by the Company or to the continuation, extension,
renewal, or modification of any compensation, contract, or arrangement with or
by the Company.
18. TAXES. Each participant who has received an award under the Plan shall,
upon notification of the amount due, pay to the Company in cash amounts
necessary to satisfy any applicable federal, state and local withholding
requirements. If the participant fails to pay the amount demanded, the Company
may withhold that amount from other amounts payable by the Company to the
participant including salary, subject to applicable law. With the consent of
the Board of Directors, a participant may satisfy this withholding obligation,
in whole or in part, by having the Company withhold from any shares to be
issued that number of shares that would satisfy the amount due or by
delivering Common Stock to the Company to satisfy the withholding amount.
19. RIGHTS AS A SHAREHOLDER. The recipient of any award under the Plan shall
have no rights as a shareholder with respect to any Common Stock until the
date of issue to the recipient of a stock certificate for such shares. Except
as otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date occurs prior to the date
such stock certificate is issued.
Approved by the Board of Directors: February 12, 1997
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<PAGE>
PACIFICORP PROXY
The proxy is instructed to vote as follows:
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
The Board of Directors recommends a vote "FOR" Items 1, 2 and 3.
<TABLE>
<S> <C> <C> <C>
WITH FOR ALL
FOR HOLD EXCEPT FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. Election of [_] [_] [_] 2. To approve the [_] [_] [_] 3. Approval of [_] [_] [_]
Directors in PacifiCorp Stock Deloitte &
Classes I & II Incentive Plan Touche LLP
As Auditor
</TABLE>
Nominees: CLASS I - W. Charles Armstrong, C. Todd
Conover, Nolan E. Karras and Keith R. McKennon;
CLASS II - Alan K. Simpson. (To withhold your vote
for a particular nominee, mark the "For all Except"
box and strike a line through the nominee's name in
the list above.)
0003018353
<TABLE>
<CAPTION>
Receipt is acknowledged of the notice and proxy statement relating to this meeting.
<S> <C> <C>
SIGNATURE DATE
--------------------------------------------- ---------------------
[ ] I Will attend the
Annual Meeting SIGNATURE DATE
--------------------------------------------- ---------------------
To facilitate meeting arrangements, NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
please indicate the number of persons When signing as attorney, executor, administrator, trustee or guardian, please
in you party planning to attend: give full title as such.
----------
</TABLE>
PACIFICORP PROXY VOTING INSTRUCTIONS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS ON MAY 14, 1997.
The undersigned hereby appoints Frederick W. Buckman, C. Todd Conover and Keith
R. McKennon and each of them, proxies with power of substitution, to vote in
behalf of the undersigned at the Annual Meeting of Shareholders of PacifiCorp on
May 14, 1997, and at any adjournment thereof, all shares of the undersigned in
PacifiCorp. The shares represented by this proxy will be voted in accordance
with instructions, if given. If no instructions are given, they will be voted
for the Directors, the auditor and the PacifiCorp Stock Incentive Plan. The
proxies may vote in their discretion as to other matters that may come before
the meeting."
Your vote for the election of Directors may be indicated on the reverse side.
The nominees for Class I are W. Charles Armstrong, C. Todd Conover, Nolan E.
Karras and Keith R. McKennon. The nominee for Class II is Alan K. Simpson.
* PACORP, as custodian under the Company's Dividend Reinvestment and Stock
Purchase Plan, Bankers Trust Company of California, as trustee under the
Company's K-Plus Employee Savings and Stock Ownership Plan and Trust, and
Wells Fargo Bank, as trustee for the Utah Power & Light Employee Savings and
Stock Purchase Plan of PacifiCorp, are instructed to execute a proxy, with
identical instructions, for any shares held for my benefit.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
