<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SOUTHWEST GAS CORPORATION
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(Name of Registrant as Specified in Its Charter)
SOUTHWEST GAS CORPORATION
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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 transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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/ / 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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<PAGE> 2
[LOGO]
5241 SPRING MOUNTAIN ROAD - P.O. BOX 98510 - LAS VEGAS, NEVADA 89193-8510
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 12, 1994
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of Southwest
Gas Corporation ("Company") will be held on Thursday, May 12, 1994, at 10:00
a.m. in the auditorium of the Company's Headquarters office building, 5241
Spring Mountain Road, Las Vegas, Nevada, for the following purposes:
(1) To elect 11 directors of the Company;
(2) To consider and approve a proposed amendment to the Company's Restated
Articles of Incorporation, set forth as Exhibit A to this Proxy
Statement, to provide for a classified board of directors having
staggered three-year terms;
(3) To consider and approve the Management Incentive Plan, set forth as
Exhibit B to this Proxy Statement, for key management employees of the
Company;
(4) To consider the continued retention of Arthur Andersen & Co. as
independent public accountants; and
(5) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has established Tuesday, March 15, 1994, as the
record date for the determination of shareholders entitled to vote at the annual
meeting and to receive notice thereof. Only holders of the Company's Common
Stock are entitled to vote at the meeting.
Shareholders are cordially invited to attend the meeting in person. WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
Copies of the Summary Annual Report to Shareholders and Form 10-K Annual
Report for the year ended December 31, 1993 are enclosed.
[SIG]
Thomas J. Trimble
Senior Vice President/General Counsel
and Corporate Secretary
March 31, 1994
<PAGE> 3
LOGO
Michael O. Maffie, President and C.E.O.
March 31, 1994
Dear Shareholder:
You are cordially invited to the Annual Meeting of Shareholders of
Southwest Gas Corporation scheduled to be held on Thursday, May 12, 1994, in the
auditorium of the Company's Headquarters office building, 5241 Spring Mountain
Road, Las Vegas, Nevada, commencing at 10:00 a.m. Your Board of Directors looks
forward to greeting personally those shareholders able to attend.
It is important that your shares are represented and voted at the meeting
regardless of the number of shares you own and whether or not you plan to
attend. Accordingly, we request you to sign, date and mail the enclosed proxy at
your earliest convenience.
Your interest and participation in the affairs of the Company are sincerely
appreciated.
Sincerely,
[SIG]
<PAGE> 4
LOCATION OF 1994
ANNUAL MEETING OF SHAREHOLDERS
5241 SPRING MOUNTAIN ROAD
*SHAREHOLDER PARKING WILL
BE IN THE WEST PARKING LOT.
ATTENDANTS WILL BE AVAILABLE
TO PROVIDE ASSISTANCE.
(MAP)
<PAGE> 5
SOUTHWEST GAS CORPORATION
5241 SPRING MOUNTAIN ROAD - P.O. BOX 98510 - LAS VEGAS, NEVADA 89193-8510
PROXY STATEMENT
MARCH 31, 1994
This Statement is furnished in connection with the solicitation by the
Board of Directors of the Company of proxies representing Common Stock to be
voted at the annual meeting of shareholders of the Company to be held on May 12,
1994 and at any adjournment thereof. This proxy statement and accompanying proxy
card are being mailed to shareholders on or about March 31, 1994.
A form of proxy is enclosed for your use. The Company will acknowledge
revocation of any proxy upon request of the record holder made in person or in
writing prior to the exercise of the proxy, or upon receipt of a valid proxy
bearing a later date. Delivery of said revocation or valid proxy bearing a later
date shall be made upon the Corporate Secretary of the Company. If a shareholder
executes two or more proxies with respect to the same shares, the proxy bearing
the most recent date will be honored if otherwise valid. All shares represented
by valid proxies received pursuant to this solicitation will be voted at the
annual meeting. Where a shareholder specifies by means of the proxy a choice
with respect to any matter to be acted upon, his shares will be voted in
accordance with each specification so made.
The entire cost of soliciting proxies will be paid by the Company. In
following up the original mail solicitation of proxies, the Company will make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy material to the beneficial owners of the
shares and will reimburse them for their expenses in so doing. Under an
agreement with the Company, Beacon Hill Partners, New York, NY will assist in
obtaining proxies from certain larger and other shareholders at an estimated
cost of $3,000 plus certain expenses.
The total number of shares of Common Stock outstanding at March 15, 1994,
the record date for the determination of shareholders entitled to notice of and
to vote at the annual meeting, was 21,027,937. Only holders of Common Stock on
the record date are entitled to notice of and to vote at the annual meeting of
shareholders. The Company will appoint one or three employees to function as
inspectors of election in advance of the meeting to tabulate votes to ascertain
whether a quorum is present and to determine the voting results on all matters
presented to shareholders. A simple majority of all shares of Common Stock
entitled to vote, represented in person or by proxy, constitutes a quorum. The
affirmative vote of a simple majority of the shares represented and voting at a
duly held meeting (which shares voting affirmatively also constitute at least a
majority of the required quorum) is necessary for the election of each nominee
for director and for shareholder approval of the Company's Management Incentive
Plan. Shareholder approval of a classified board of directors requires an
affirmative vote of the majority of shares outstanding as of the Record Date.
Abstentions and broker non-votes are each included in the determination of the
number of shares present; however, they are not counted for the purpose of
determining the election of each nominee for director.
Each share of Common Stock is entitled to one vote. Shareholders have
cumulative voting rights with respect to the election of directors, if certain
conditions are met. Any shareholder otherwise entitled to vote may cumulate his
votes if, prior to the voting, he has given notice, either in person at the
meeting, or by proxy, that he intends to cumulate his votes. A shareholder
electing to
1
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cumulate his votes may cast as many votes as there are directors to be elected,
multiplied by the number of shares of Common Stock standing in his name on the
books of the Company at the close of business on the record date. He may cast
all of his votes for one candidate or allocate them among two or more candidates
in any manner he chooses. If any one shareholder has given such notice, all
shareholders may cumulate their votes for candidates in nomination.
The persons named in the proxies solicited by the Board of Directors,
unless otherwise instructed, intend to vote the shares represented by them
equally for each of the 11 candidates for the office of director named in this
Proxy Statement; HOWEVER, if sufficient numbers of shareholders exercise
cumulative voting rights to elect one or more other candidates, the management
proxies will (1) determine the number of directors they are entitled to elect,
(2) select such number from among the named candidates, choosing those having
the greatest number of other votes after taking into consideration all "Withhold
Authority" instructions, (3) cumulate their votes, and (4) cast their votes for
each candidate among the number they are entitled to elect in such manner that
each shall receive, as nearly as possible, the same number of votes.
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD)
NAMES AND QUALIFICATIONS OF NOMINEES
Each director elected at the annual meeting of shareholders will serve
until the next annual meeting (normally held on the second Thursday of May) and
until his or her successor shall be elected and qualified. On January 18, 1994
the Board of Directors amended the Company's bylaws decreasing the number of
directors to 11, effective May 12, 1994. The 11 nominees were elected to their
present term of office at the last annual meeting of shareholders on May 13,
1993. If Proposal 2 in this Proxy Statement, "APPROVAL OF AMENDMENT TO RESTATED
ARTICLES OF INCORPORATION WITH RESPECT TO THE CLASSIFICATION OF THE BOARD," is
approved by shareholders and each nominee is elected, Ralph C. Batastini, Manuel
J. Cortez and Thomas Y. Hartley will be designated as Class I directors and will
serve for a term ending as of the May 1995 Annual Meeting, Michael B. Jager,
Leonard R. Judd, Michael O. Maffie and Carolyn M. Sparks will be designated as
Class II directors and will serve for a term ending as of the May 1996 Annual
Meeting and Lloyd T. Dyer, Kenny C. Guinn, James R. Lincicome and Robert S.
Sundt will be designated as Class III directors and will serve for a term ending
as of the May 1997 Annual Meeting. If the classified board amendment is not
approved, all nominees will serve until the 1995 Annual Meeting and until his or
her successor shall be elected and qualified.
The names of the nominees for election to the Board of Directors, the
principal occupation of each nominee and his or her employer for the last five
years or longer, and the principal business of the corporation or other
organization, if any, in which such occupation or employment is carried on,
follow.
2
<PAGE> 7
RALPH C. BATASTINI
Former President, Vice Chairman and Chief Financial Officer,
The Dial Corp. (Formerly The Greyhound Corporation)
Director Since: 1992
Board Committees: Audit (Chairman), Pension Plan Investment
Mr. Batastini, 64, received his undergraduate degree from Illinois State
University and his M.B.A. degree in finance from the University of Chicago. He
joined The Greyhound Corporation in 1957 and retired in 1984 as vice chairman
and chief financial officer. At the time of his retirement Mr. Batastini headed
Greyhound's financial group of companies involved in capital equipment leasing,
computer leasing, reinsurance, money orders, mortgage insurance and real estate.
He subsequently served as president of Batastini & Co. from 1985 to 1990. He
currently serves on the boards of the Barrow Neurological Foundation and the
Arizona Club and was elected a director of PriMerit Bank in 1992.
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MANUEL J. CORTEZ
President and Chief Executive Officer
Las Vegas Convention and Visitors Authority
Director Since: 1991
Board Committees: Nominating and Compensation, Pension Plan Investment
Mr. Cortez, 55, served four terms (1977-1990) on the Clark County
Commission and is a former chairman of the Commission. He has been active on
various boards, including the Environmental Quality Policy Review Board, the Las
Vegas Valley Water District Board of Directors and the University Medical Center
Board of Trustees and has served as chairman of the Liquor and Gaming Licensing
Board and the Clark County Sanitation District. He has also held leadership
roles with numerous civic and charitable organizations such as Boys and Girls
Clubs of Clark County, Lied Discovery Childrens Museum and Boys Town. Currently,
Mr. Cortez holds professional memberships in the American Society of Association
Executives, the Professional Convention Managers Association, the International
Association of Convention and Visitors Bureaus and the American Society of
Travel Agents. He was elected a director of PriMerit Bank in 1991.
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LLOYD T. DYER
Retired President and Chief Executive Officer
Harrah's
Director Since: 1978
Board Committees: Executive, Nominating and Compensation
Mr. Dyer, 66, obtained a degree in banking and finance from the University
of Utah prior to his employment with Harrah's, a hotel/gaming corporation with
its principal facilities in Reno and Lake Tahoe, in 1957. He was elected
president and chief operating officer of Harrah's in 1975, and elected president
and chief executive officer in 1978. He remained in those positions with
Harrah's until his retirement in April 1980. Mr. Dyer became a director of
PriMerit Bank in 1986. He is also a trustee of the William F. Harrah estate.
3
<PAGE> 8
KENNY C. GUINN
Chairman of the Board
Southwest Gas Corporation and PriMerit Bank
Director Since: 1981
Board Committees: Executive, Nominating and Compensation
Mr. Guinn, 57, was appointed President and Chief Operating Officer of
Southwest Gas Corporation in May 1987, Chairman and Chief Executive Officer in
October 1988 and was elected Chairman of the Board in May 1993. He retired as a
full-time employee of the Company in August 1993. Mr. Guinn is actively involved
in numerous business, charitable and civic activities. He serves as chairman of
the Las Vegas Metropolitan Police Fiscal Affairs Committee and is chairman of
the Board of Trustees for the University of Nevada Las Vegas Foundation. He is
also a director for Oasis Residential, Inc. and Boyd Gaming Corporation. Mr.
Guinn was elected a director of PriMerit Bank in 1980 and has served as Chairman
of the Board of Directors of PriMerit since 1987.
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THOMAS Y. HARTLEY
President and Chief Operating Officer
Colbert Golf Design and Development, Inc.
Director Since: 1991
Board Committees: Audit, Nominating and Compensation
Mr. Hartley, 60, obtained his degree in business from Ohio University in
1955, and was employed in various capacities by Deloitte Haskins & Sells from
1959 until his retirement as an area managing partner in 1988. Mr. Hartley is
actively involved in numerous business and civic activities. He is past chairman
of the Nevada Development Authority, Chairman of the Las Vegas Founders Golf
Foundation, vice chairman of the University of Nevada Las Vegas Foundation, a
member of the board of trustees of the Las Vegas Chamber of Commerce and past
president of the Boulder Dam Area Council of the Boy Scouts of America. He is a
director of Rio Hotel and Casino, Inc., Sierra Health Services, Inc. and was
elected a director of PriMerit Bank in 1991.
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MICHAEL B. JAGER
Private Investor
Director Since: 1989
Board Committees: Audit, Pension Plan Investment
Mr. Jager, 62, obtained a degree in petroleum geology from Stanford
University in 1955. After a four-year employment with the Richfield Oil
Corporation as a petroleum geologist, he joined the Frank H. Ayres & Son
Construction Company and was involved in the construction of subdivisions and
homes in southern California until 1979. Since that time he has consulted in the
single family residential development industry, and owns and manages a number of
businesses in Oregon and Nevada. He was elected a director of PriMerit Bank in
1989.
4
<PAGE> 9
LEONARD R. JUDD
Former President, Chief Operating Officer and Director
Phelps Dodge Corporation
Director Since: 1988
Board Committees: Audit, Nominating and Compensation (Chairman)
Mr. Judd, 55, former president, chief operating officer and director of
Phelps Dodge Corporation, joined Phelps Dodge in 1963 and worked at that
company's operations in Arizona, New Mexico and New York City. He was elected to
the Phelps Dodge board of directors in 1987, president of Phelps Dodge Mining
Company in 1988 and became president and chief operating officer of Phelps Dodge
in 1989. He remained in those positions until November 1991. Mr. Judd is a
member of various professional organizations and is active in numerous civic
groups. He serves as a director of Kasler Holding Company and The University of
Arizona and Montana College of Mineral Science and Technology Foundations. He
was elected a director of PriMerit Bank in 1988.
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JAMES R. LINCICOME
Retired Executive Vice President and General Manager
Government Electronics Group, Motorola Corporation
Director Since: 1987
Board Committees: Audit, Executive, Nominating and Compensation
Mr. Lincicome, 68, was employed by Motorola in its Communications Division
in 1950. After progressing through positions in that Division, he transferred to
the Government Electronics Group, where from 1979 until his retirement in 1987,
he was General Manager responsible for various national defense, space
exploration and other government related programs. Mr. Lincicome is a member of
various professional organizations and is past Chairman of the Arizona State
University Engineering Advisory Council, Junior Achievement of Central Arizona,
the Phoenix Urban League, United for Arizona and the Valley of the Sun United
Way. He has held a number of leadership roles in other civic and charitable
organizations in Arizona, including the Research Committee of the Arizona Town
Hall and Board Member of the Goldwater Institute, and was vice chairman of the
Government Division of the Electronic Industries Association in 1986. He was
elected a director of PriMerit Bank in 1988 and of Atherton Technology in 1994.
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MICHAEL O. MAFFIE
President and Chief Executive Officer
Southwest Gas Corporation
Director Since: 1988
Board Committees: Executive
Mr. Maffie, 46, joined the company in 1978 as Treasurer after seven years
with Arthur Andersen & Co. He was named Vice President/Finance and Treasurer in
1982, Senior Vice President and Chief Financial Officer in 1984, Executive Vice
President in 1987, President and Chief Operating Officer in 1988 and President
and Chief Executive Officer in 1993. A graduate of the University of Southern
California, he is a member of various professional organizations, a board member
of United Way of Nevada, Nevada School of the Arts, Boys and Girls Clubs of Las
Vegas and a trustee of the Nevada Symphony Orchestra and the University of
Nevada Las Vegas Foundation. He is a director of both the American Gas
Association and the Pacific Coast Gas Association. He was elected a director of
PriMerit Bank in 1993.
5
<PAGE> 10
CAROLYN M. SPARKS
Co-Founder
International Insurance Services, Ltd.
Director Since: 1988
Board Committees: Audit, Pension Plan Investment (Chairman)
Mrs. Sparks, 52, graduated from the University of California at Berkeley in
1963, and with her husband, co-founded International Insurance Services, Ltd.,
in 1966 in Las Vegas, Nevada. She has served on the University and Community
College System of Nevada Board of Regents since 1984, and in 1991 was elected to
a two-year term as Chairperson of the Board of Regents. Mrs. Sparks is actively
involved with numerous charitable and civic organizations, including founding
chairperson of the University Medical Center Foundation and the Children's
Miracle Network Telethon. She also serves on the boards for the Las Vegas
Natural History Museum, Bishop Gorman High School and the Las Vegas Center for
Children. She was elected a director of PriMerit Bank in 1988 and was elected to
the board of the Showboat, Inc., a hotel/gaming corporation, in 1991.
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ROBERT S. SUNDT
Former Director and Executive Committee Chairman
SundtCorp
Director Since: 1987
Board Committees: Executive, Pension Plan Investment
Mr. Sundt, 67, has been associated with SundtCorp in a variety of positions
since 1948. He was named President of SundtCorp in 1983. He is now retired and
has no association with SundtCorp. He was elected a director of PriMerit Bank in
1988. He is a member of the American Institute of Constructors, Consulting
Constructors Council of America and a life director of the Associated General
Contractors of America. He is a member of the American Arbitration Association
and serves as an arbitrator for disputes concerning the construction industry.
He is a past member of the Construction Industry Presidents Forum. Mr. Sundt is
affiliated with a number of community organizations and is past chairman of the
Tucson Metropolitan Chamber of Commerce.
6
<PAGE> 11
SECURITIES OWNERSHIP BY NOMINEES AND EXECUTIVE OFFICERS
The following table discloses all Common Stock of the Company beneficially
owned by the nominees for Directors and the executive officers of the Company,
as of March 1, 1994.
<TABLE>
<CAPTION>
NO. OF SHARES
BENEFICIALLY
NOMINEE/EXECUTIVE OFFICER OWNED(1)(2)
--------------------------------------------- --------------------------
<S> <C>
Ralph C. Batastini 5,226
Manuel J. Cortez 1,085
Lloyd T. Dyer 3,536
Kenny C. Guinn 54,327(3)
Thomas Y. Hartley 7,500
Michael B. Jager 4,770(4)
Leonard R. Judd 2,000
James R. Lincicome 2,000
Michael O. Maffie 14,746(3)
Carolyn M. Sparks 2,215
Robert S. Sundt 4,500
George C. Biehl 9,131(3)
Dan J. Cheever 2,628
John L. Mayo 25,661
Marvin R. Shaw 9,323
L. Keith Stewart 1,470
Thomas J. Trimble 4,511
Other Executive Officers 8,452
</TABLE>
- ---------------
(1) As of March 1, 1994, the nominees and executive officers of the Company
beneficially owned 167,851 shares, which represents less than 1% of the
outstanding shares of the Company's Common Stock. No nominee or named
executive officer owns any shares of the Company's outstanding Preference or
Preferred Stock. No investor owned more than 5 percent of the outstanding
voting stock of the Company as of February 6, 1994.
(2) The Common Stock holdings listed in this column do not include the
performance shares granted to the Company's executive officers under the
terms of the Company's Management Incentive Plan ("Incentive Plan").
Performance shares will only be converted to Common Stock if the
shareholders approve the Incentive Plan, which is more fully describe in the
"APPROVAL OF THE COMPANY'S MANAGEMENT INCENTIVE PLAN," Proposal 3 in this
Proxy Statement.
(3) Number of shares does not include 6,618 shares held by the Southwest Gas
Corporation Foundation, which is a charitable trust. Messrs. Guinn, Maffie,
and Biehl are trustees of the Foundation but disclaim beneficial ownership
of said shares.
(4) Number of shares includes 3,000 shares held in trust for Margaret Jager,
over which Mr. Jager has no control.
- ---------------
APPROVAL OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
WITH RESPECT TO THE CLASSIFICATION OF THE BOARD
(ITEM 2 ON THE PROXY CARD)
The shareholders are being asked to approve an amendment to the Company's
Restated Articles of Incorporation to provide for classification of the Board of
Directors into three classes, each consisting of a number of directors equal as
nearly as practicable to one-third the total number of directors. After initial
implementation, each class of directors would be subject to election every
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<PAGE> 12
third year and would serve for a three-year term (or until their respective
successors are duly elected and qualified). Currently, all of the Company's
directors are elected each year for a one-year term.
The Board of Directors believes that this amendment to the Restated
Articles of Incorporation is in the best interest of the Company and its
shareholders. Board classification will help lend continuity and stability to
the management of the Company. Following adoption of the classified board
structure, at any given time over one-half of the members of the Board of
Directors will generally have had prior experience as directors of the Company.
The Board believes that this will facilitate long-range planning, strategy and
policy development and will have a positive influence on the Company's
day-to-day operations.
If the proposal is approved, the Board of Directors would designate the
three classes of directors. One class of directors would serve initially for a
one-year term, until the next Annual Meeting (or until each respective successor
is duly elected and qualified). The second class of directors would immediately
commence a two-year term, and serve until the Annual Meeting scheduled to occur
in May 1996 (or until each respective successor is duly elected and qualified).
The third class of directors would immediately commence a three-year term, and
serve until the Annual Meeting scheduled to occur in May 1997 (or until each
respective successor is duly elected and qualified). After each class of
directors has served its initial term, each class thereafter would be elected
for a three-year term.
If management's nominees are elected to the Board of Directors at the
Annual Meeting on May 12, 1994 and the classified board amendment is approved by
shareholders, the Board of Directors will designate Ralph C. Batastini, Manuel
J. Cortez and Thomas Y. Hartley as Class I directors, to serve for a term ending
as of the May 1995 Annual Meeting, Michael B. Jager, Leonard R. Judd, Michael O.
Maffie and Carolyn M. Sparks as Class II directors, to serve for a term ending
as of the May 1996 Annual Meeting and Lloyd T. Dyer, Kenny C. Guinn, James R.
Lincicome and Robert S. Sundt as Class III directors, to serve for a term ending
as of the May 1997 Annual Meeting. Information concerning the current nominees
for election as directors is set forth above under "ELECTIONS OF DIRECTORS." If
the proposal to adopt a classified board is not approved, all of the directors
elected at the Annual Meeting will serve for a one-year term.
PROPOSED AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
The amendment to the Company's Restated Articles of Incorporation to
implement a classified Board of Directors shall be in substantially the form of
the proposed new Article V set forth in Exhibit A to this Proxy Statement.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock outstanding as of the Record Date will be required to
approve the proposed amendment.
EFFECT OF A CLASSIFIED BOARD
If adopted, the classification of directors would apply to every future
election of directors. Under the proposal, the Board of Directors would be
divided into three classes. Directors would serve for a term of three years
rather than one year, and one-third of the directors (or as near to one-third as
practicable) would be elected each year. Initially, the Class I directors would
serve for a term of one year, the Class II directors would serve for a term of
two years and the Class III directors would serve for a term of three years, in
order to implement the staggered elections. In each year commencing with the May
1995 Annual Meeting, one class of directors would be considered for election for
a three-year term.
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<PAGE> 13
Under the proposed amendment to the Restated Articles of Incorporation, the
Board of Directors would consist of not less than 11 and not more than 14
directors, with the exact number to be specified by the Board. The Board
currently consists of twelve members. Mr. Guild is not standing for reelection
to the Board because of his mandatory retirement, and the Company's Bylaws,
which currently establishes the number of directors, have been amended effective
as of the Annual Meeting to reduce the number of directors to eleven. In the
event that the number of directors changes, the increase or decrease in the
number of directors will be apportioned by the Board among the three classes as
provided for in the proposed amendment. In no event, however, can a decrease in
the number of directors shorten the term of any incumbent director. Vacancies in
the Board created by any resignation, removal or other reason, or by an increase
in the size of the Board, may under California law and the Company's Bylaws be
filled by the vote of the majority of the directors remaining in office or by
the vote of holders of a majority of outstanding shares.
Pursuant to California law, members of the Board of Directors may be
removed by the Board of Directors for cause (defined to be a felony conviction
or court declaration of unsound mind), by the shareholders without cause or by
court order for fraudulent or dishonest acts or gross abuse of authority or
discretion. If a director or directors is sought to be removed by the
shareholders the votes cast against such removal (or, if done by written
consent, the votes eligible to be cast by the non-consenting shareholders) must
not be sufficient to elect such director or directors under cumulative voting in
an election of the number of directors authorized as of the last director
election (the "Relevant Number of Directors"), assuming that the same number of
votes were cast as are being cast for removal (or, in the case of a written
consent, assuming that all outstanding shares were voted). For a classified
board, the Relevant Number of Directors are the greater of the number of
directors elected at the most recent annual meeting of shareholders or the
number sought to be removed.
The classification of the Board of Directors will have the effect of making
it more difficult to replace incumbent directors and management, even if the
reason for the desired change is inadequate performance. A minimum of three
annual meetings of shareholders would generally be required to replace the
entire Board.
While the proposal is not intended as a takeover-resistive measure in
response to a specific threat, it may discourage the acquisition of large blocks
of the Company's Common Stock by causing it to take longer for a person or group
of persons who acquire such a block of stock to effect a change in management.
The proposal cannot, and is not intended to, prevent a purchase of all or a
majority of the Company's Common Stock, nor is it intended to deter bids for
such shares. The proposal would have the effect of encouraging persons seeking
to acquire control of the Company to initiate such an acquisition through
arms-length negotiations with the Board which should give shareholders a better
opportunity to evaluate any takeover action.
Any anti-takeover impact of the proposal is in addition to the
anti-takeover provisions of the current Restated Articles of Incorporation.
Article IV-A of the Restated Articles requires an affirmative vote of the
holders of not fewer than 85 percent of the outstanding shares of the Company's
Common Stock to approve or authorize any business combination of the Company
with any shareholder who beneficially owns 10 percent or more of the outstanding
shares of the Company's Common Stock, unless the business combination is
approved by the requisite vote of the Board of Directors. The provisions of
Article IV-A are designed to require a shareholder to negotiate with the Board
of Directors in order to avoid the supermajority voting requirements with
respect to the sale, merger or consolidation of the Company with such
shareholder or any entity controlled by such shareholder.
Any attempt to acquire control of the Company would also be subject to
state and federal regulatory approvals. Since the Company is a regulated
utility, prior regulatory approvals would be required before any sale, merger or
consolidation of the Company could occur. The regulatory approval process,
though not designed to protect shareholder interests, would require disclosures
9
<PAGE> 14
regarding the proposed sale, merger or consolidation and provide additional
opportunities to shareholders to evaluate any such action.
Adoption of this amendment to the Company's Restated Articles of
Incorporation will not affect the ability of holders of any one or more classes
or series of the Company's outstanding Preferred Stock, Cumulative Preferred
Stock, Preference Stock or Second Preference Stock to elect one or more
directors in the event of dividend arrearages as provided for in the Restated
Articles of Incorporation. Directors elected by such classes of stock will
continue to be elected for one year terms, without regard to the classification
of the remaining members of the Board of Directors, if the proposed amendment is
adopted.
REASONS FOR THE AMENDMENT
The Board of Directors has unanimously approved the classification of the
Board and recommends that the shareholders approve the proposal. The Board
believes that such classification will promote stability in the management of
the Company and in its long-term planning, strategies and policies, which will
be in the best interest of the Company and its shareholders.
The proposal to adopt a classified Board of Directors is not in response to
any effort by a minority shareholder or group of shareholders to attain
representation on the Board of Directors or acquire greater influence in the
management of the Company's business, nor is the Company aware of any such
effort. Further, it is not in response to any attempt to acquire control of the
Company, nor is the Company aware of any such attempt.
RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE AMENDMENT TO THE RESTATED
ARTICLES OF INCORPORATION TO PROVIDE FOR CLASSIFICATION OF THE BOARD OF
DIRECTORS INTO THREE CLASSES, AND RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL
OF THIS AMENDMENT.
APPROVAL OF THE COMPANY'S MANAGEMENT INCENTIVE PLAN
(ITEM 3 ON THE PROXY CARD)
The shareholders are being asked to approve the Company's new Management
Incentive Plan (Incentive Plan). Approval is being sought to permit the issuance
of Company Common Stock to key management employees under the long-term
performance provisions of the Plan.
In 1993 the Board of Directors replaced the Company's short-term bonus plan
with the Incentive Plan, effective January 1, 1993. The Incentive Plan is
designed to retain key management employees of the Company's utility operation
and to focus on specific short-and long-term Company financial performance
objectives. Under the Incentive Plan, the Company's annual performance is judged
in relation to its own performance standards and in relation to a peer group of
companies. Future Company performance is also taken into consideration by
subjecting one-half of any annual awards to the performance of the Company in
relation to designated performance measures over the succeeding three years.
The performance measures for both components of the Incentive Plan are
established annually by a subcommittee of the Nominating and Compensation
Committee of the Board of Directors. The performance measures and the associated
standards may change from year to year and may receive different emphasis or
weight according to the changing priorities of the Company. Award opportunities
are also established annually for the key management employees depending on
their position with the Company's utility operations.
Award opportunities under the Incentive Plan are expressed as a percentage
of each key management employee's base salary. Before or during each performance
period, each key
10
<PAGE> 15
management employee is assigned a specific target award within a range of the
potential award opportunities tied directly to the established short-term
performance measures.
The short-term performance measures adopted for 1993 consist of assessing
the Company's actual performance to a return on equity target (adjusted for
inflation, for the Company's utility operations), weighted to reflect the
Company's performance for the previous two years and its performance in
comparison to a peer group consisting of natural gas distribution companies.
Additional performance measures adopted for 1993 include a prohibition on any
awards unless the Company's Common Stock dividends equal or exceed the prior
year's dividends and the Company's performance equals or exceeds a threshold
percentage of the return on equity performance target. The long-term performance
measures for 1993 are designed to assess the Company's Common Stock dividend
performance in relation to the dividend performance of a peer group consisting
of diversified natural gas utilities over the succeeding three years.
The separate peer groups of natural gas companies selected to assess the
Company's performance are designed to correspond to the specific short-and
long-term performance measures. A peer group of natural gas distribution
utilities was selected to assess the short-term performance of the Company's
utility operations. A peer group of diversified natural gas distribution
utilities, which consists of the same companies used to assess the Company's
five year performance reflected in the "Performance Graph" portion of the Proxy
Statement, was selected to assess the long-term performance of the Company's
overall operations as a diversified natural gas utility.
If the short-term performance measures are satisfied, one-half the awards
are paid immediately to key management employees and the remaining one-half of
the awards will be converted into performance shares tied to the value of the
Company's Common Stock on the date of the awards. The performance shares will be
restricted for a period of three years and the ultimate payout will be subject
to continued employment and the performance of the Company's Common Stock during
the restriction period. During the restriction period, the performance shares
will be increased by the amount of any dividends paid on the Company's Common
Stock. The actual payout of performance shares at the end of the restriction
period may be modified by up to a 20 percent adjustment, upward or downward, to
reflect the Company's performance in relation to the long-term performance
measures established for the restriction period.
The Incentive Plan is administered by a committee consisting of not less
than three non-employee members of the Nominating and Compensation Committee of
the Board of Directors. The members of the Board of Directors chosen to
administer the Incentive Plan may not have received an award under the plan or
any prior incentive plan within the last calendar year. For 1993, the committee
selected the executive officers of the Company's utility operations, including
both of the Company's Chief Executive Officers, to participate in the Incentive
Plan. Other officers of the Company's utility operations, together with a group
of non-officer utility management employees were also selected to participate in
the Incentive Plan. The number of Incentive Plan participants for 1993 was 52.
The Board of Directors recommends that the shareholders approve the
Incentive Plan. Tying a significant portion of the key management employees'
salaries to the Company's short-and long-term performance should provide
substantial shareholder value. The Common Stock component of the Incentive Plan
should also enhance employee commitment to the Company. If the Incentive Plan is
not approved by shareholders, the plan will continue. The Common Stock payout,
however, will be replaced with a cash payout for the performance shares under
the long-term component of the Incentive Plan.
11
<PAGE> 16
The incentive awards earned for 1993 for the executive officers named in
the Summary Compensation Table and the other Incentive Plan participants are as
follows:
MANAGEMENT INCENTIVE PLAN(1)
<TABLE>
<CAPTION>
PERFORMANCE
NAME AND POSITION CASH AWARD SHARES(2)
------------------------------------------ ---------- ---------------------
<S> <C> <C>
Michael O. Maffie $ 48,510 2,733
President/C.E.O.
Kenny C. Guinn 78,579 0(3)
Retired Chairman/C.E.O
Thomas J. Trimble 19,219 1,083
Senior Vice President/
General Counsel/
Corporate Secretary
George C. Biehl 16,632 937
Senior Vice President/
Chief Financial Officer/Treasurer
Marvin R. Shaw 23,420 0(3)
Retired Executive Vice President/Rate,
Regulations and Gas Supply
John L. Mayo 21,655 0(3)
Retired Executive Vice
President/Operations
L. Keith Stewart 13,861 781
Senior Vice President/Operations
Executive Group 247,196 6,960
Non-Executive Director Group 0 0
Non-Executive Officers/Employees Group 195,329 10,325(3)
</TABLE>
- ---------------
(1) Mr. Cheever, because he is a full-time employee of the Company's financial
subsidiary, is not eligible to participate in the Incentive Plan.
(2) The number of performance shares was determined based on the closing price
of the Company's Common Stock on February 28, 1994.
(3) Key management employees who retire, die, become disabled or are
involuntarily terminated without cause during the annual performance period,
are entitled to receive their total awards, determined on a pro rata basis
according to the number of months of the year they were employed by the
Company, in cash, at the end of the performance period.
- ---------------
A copy of the Incentive Plan is attached to this Proxy Statement as Exhibit
B. Shareholders are encouraged to review the plan carefully. Any description in
this Proxy Statement regarding the new plan is qualified in its entirety by
reference to Exhibit B.
RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE NEW MANAGEMENT INCENTIVE
PLAN, AND RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL.
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
(ITEM 4 ON THE PROXY CARD)
The Board of Directors has selected Arthur Andersen & Co. as independent
public accountants for the Company for the year ending December 31, 1994 subject
to ratification by the shareholders. Arthur Andersen & Co. has served as
independent public accountants for the Company since 1957. To the knowledge of
the Company, at no time has Arthur Andersen & Co. had any direct or indirect
financial interest in or any connection with the Company or any of its
subsidiaries other than in connection with services rendered to the Company as
described below.
12
<PAGE> 17
The selection of Arthur Andersen & Co. by the Board of Directors was based
on the recommendation of the Audit Committee, which is composed wholly of
outside directors. The Audit Committee meets periodically with the Company's
internal auditors and independent public accountants to review the scope and
results of the audit function and the policies relating to auditing procedures.
In making its annual recommendation, the Audit Committee reviews both the audit
scope and estimated fees for the coming year. If the shareholders do not ratify
this appointment, other firms of certified public accountants will be considered
by the Board of Directors upon recommendation of the Audit Committee.
During 1993 the Company paid Arthur Andersen & Co. for (1) the examination
of the annual financial statements, (2) reviews of unaudited quarterly financial
information, (3) assistance and consultation in connection with preparing
various Securities and Exchange Commission filings, (4) the examination of the
annual financial statements of the Company's employee benefit plans, (5)
consultation in connection with various tax and accounting matters, and (6)
certain other professional services.
The Audit Committee approved the audit and other professional services and
considered the costs of all such services and what effect, if any, performance
of the other professional services might have on the independence of the
accountants.
Representatives of Arthur Andersen & Co. will be present at the annual
meeting of shareholders. They will have the opportunity to make statements, if
they are so inclined, and will be available to respond to appropriate questions.
GENERAL INFORMATION
BOARD OF DIRECTORS
The Board of Directors is responsible for the overall affairs of the
Company and for establishing broad corporate policies.
Regular meetings of the Board of Directors are scheduled for the third
Tuesdays of January, July, September and November, the first Tuesday of March
and the second Wednesday of May. An organizational meeting is also held
immediately following the Annual Meeting of Shareholders. The Board of Directors
held six regular meetings and one organizational meeting in 1993. Each director
attended more than 75 percent of the meetings of the Board of Directors and
standing committees on which he or she served during 1993.
DIRECTORS COMPENSATION
Outside directors receive an annual retainer of $20,000, plus $900 for each
Board or committee meeting attended. Committee chairpersons receive an
additional $500 for each committee meeting attended. The outside directors also
receive an annual retainer of $16,000 and fees for serving on the Board of
Directors for PriMerit Bank, the Company's financial services subsidiary. Each
director receives a fee of $700 for each Bank Board or committee meeting
attended, and the Bank committee chairpersons also receive an additional $250
for each committee meeting attended. Mr. Guild, who is the chairman of the
Executive Committees of the Boards for both the Company and PriMerit Bank,
receives an additional $50,000 annually for serving in those positions.
Directors who are fulltime employees of the Company or its subsidiaries receive
no additional compensation for Board service.
Outside directors may defer their compensation until retirement or other
termination of status as a director. Amounts deferred bear interest at 150% of
the Moody's Seasoned Corporate Rate.
The Company also provides a retirement plan for its outside directors. With
a minimum of ten years of service, an outside director can retire and receive a
benefit equal to the annual retainer at retirement for serving on the Company's
Board. Directors who retire before age 65, after satisfying
13
<PAGE> 18
the minimum service obligation will receive retirement benefits upon reaching
age 65. A director is also eligible for an increased retirement benefit of
$1,000 annually for each ten years of service on the Board beyond the minimum
qualifying service period. This increase in benefits is solely discretionary
with the Board.
COMMITTEES OF THE BOARD
In order to assist it in discharging its duties, the Board of Directors has
established four permanent committees: (1) the Executive Committee, (2) the
Audit Committee, (3) the Nominating and Compensation Committee and (4) the
Pension Plan Investment Committee.
The Executive Committee meets, if necessary, during the months that the
full Board does not meet. The committee considers corporate policy matters
requiring timely action and recommends that certain other matters be considered
and acted upon by the Board of Directors. The Executive Committee consists of
Directors Guild (Chairman), Dyer, Guinn, Lincicome, Maffie and Sundt.
The Audit Committee, whose functions are discussed above under the caption
"Selection of Independent Public Accountants," consists of Directors Batastini
(Chairman), Hartley, Jager, Judd, Lincicome and Sparks.
The Nominating and Compensation Committee makes recommendations to the
Board on such matters as director fees, officer compensation and benefit
programs and compensation and benefit programs for all employees. The Nominating
and Compensation Committee also makes recommendations to the Board regarding
nominees to be proposed by the Board for election as directors. In considering
candidates for the Board, the Nominating and Compensation Committee seeks to
achieve an appropriate balance of expertise and diversity of interests
recognizing factors such as the character and quality of individuals,
experience, age, education, geographic location, anticipated participation in
Board activities and other personal attributes or special talents. The
Nominating and Compensation Committee will consider written suggestions from
shareholders regarding potential nominees for election as directors. To be
considered by the Nominating and Compensation Committee for inclusion in the
slate of nominees to be proposed by the Board, such suggestions should be
addressed to the Company's Corporate Secretary. The Nominating and Compensation
Committee consists of Directors Judd (Chairman), Cortez, Dyer, Guinn, Hartley
and Lincicome.
The Pension Plan Investment Committee establishes, monitors and oversees
asset investment policy and practices of the retirement plan on a continuing
basis. The Pension Plan Investment Committee consists of Directors Sparks
(Chairman), Batastini, Cortez, Guild, Jager and Sundt.
In 1993 the Audit Committee held three meetings, the Nominating and
Compensation Committee held seven meetings and the Pension Plan Investment
Committee held two meetings. No Executive Committee meetings were held during
1993.
EXECUTIVE COMPENSATION AND BENEFITS
EXECUTIVE COMPENSATION REPORT
The Nominating and Compensation Committee of the Board of Directors (the
"Committee") has furnished the following report on the Company's executive
compensation program.
Under the supervision of the Committee, the Company has developed and
implemented an executive compensation program with the objectives of (1)
reasonableness, (2) competitiveness, (3) internal equity, and (4) performance.
This is accomplished through an executive compensation program consisting of
annual salaries established through industry-based compensation comparisons and
a management incentive plan that focuses on specific short-and long-term Company
financial performance objectives.
14
<PAGE> 19
The nature of the Company's operation has historically led to the
utilization of compensation systems widely used in industry, weighted for
utility companies, and accepted by various utility regulatory agencies.
Companies of comparable size used to establish the peer group index for the
"Performance Graph" portion of this Proxy Statement were factored into the
compensation review. Other utility and manufacturing sector surveys were also
used to assess the Company's compensation program. Continued use of such systems
is designed to address the first three compensation objectives. A range of
salaries that are comparable with industry provides an objective standard to
judge the reasonableness of the salaries, maintains the Company's ability to
compete for and retain qualified executive officers, and provides a means for
ensuring that internal responsibilities are properly rewarded. This same
approach is applied in establishing executive officer salaries for the Company's
financial services subsidiary, PriMerit Bank.
In 1993 the Board of Directors replaced the Company's short-term bonus plan
with the revised management incentive plan (Incentive Plan), which is more fully
described in the "APPROVAL OF THE COMPANY'S MANAGEMENT INCENTIVE PLAN," Proposal
3 in this Proxy Statement. The Incentive Plan is designed to retain key
management employees and to focus on specific short-and long-term Company
financial performance objectives. The Incentive Plan assesses the Company's
annual performance in relation to its own performance standards and in relation
to a peer group of companies. Future Company performance is also taken into
consideration by subjecting one-half of the annual awards to the performance of
the Company's Common Stock over the succeeding three years.
Salaries for executive officers are directly tied to the mid-point levels
for their positions based on the above described industry comparisons.
Compensation above those levels is tied to achieving specific financial
performance objectives under the Incentive Plan. No performance awards are
payable unless the Company's dividends equal or exceed the prior year's
dividends and the Company's performance equals or exceeds a threshold percentage
of the return on equity performance target. The maximum award opportunities can
not exceed 140 percent of the targeted awards for meeting the performance
objectives.
The annual awards under the Incentive Plan are determined by assessing the
Company's actual performance to a return on equity target (adjusted for
inflation, for the Company's utility operations), weighted to reflect the
Company's performance for the previous two years and its performance in
comparison to a peer group of natural gas distribution companies. If annual
performance awards are earned, one-half of the awards are paid immediately to
the key management employees and the remaining one-half of the awards are
converted into performance shares tied to the value of the Company's Common
Stock on the date of the awards (provided the shareholders approve the Incentive
Plan under Proposal 3 in this Proxy Statement). In the event the shareholders do
not approve Proposal 3, the value of performance shares will be paid in cash at
the end of the restriction period.
The performance shares will be restricted for a period of three years and
the ultimate payout will be subject to continued employment and the performance
of the Company's Common Stock during the restriction period. During the
restriction period, the performance shares will be increased by the amount of
any dividends paid on the Company's Common Stock. The payout of performance
shares may be modified by up to a 20 percent adjustment, upward or downward, to
reflect the Company's dividend performance over the restriction period compared
to the dividend performance of a peer group of diversified natural gas
distribution companies for same period.
The separate peer groups of natural gas companies selected to assess the
Company's performance are designed to correspond to specific short-and long-term
performance objectives. A peer group of natural gas distribution utilities was
selected to assess the short-term performance of the Company's utility
operations. A peer group of diversified natural gas distribution utilities,
which consists of the same companies used to assess the Company's five year
performance reflected in
15
<PAGE> 20
the "Performance Graph" portion of this Proxy Statement, was selected to assess
the Company's overall long-term performance.
In 1994, the Company's financial services subsidiary, PriMerit Bank,
implemented a management incentive plan that addresses both short-and long-term
performance objectives for the Bank. For 1993, the bonuses paid to the Bank's
key management employees were based on their success in implementing the
strategic plan of rebuilding the value of the Bank in light of the current
regulatory environment.
During 1993, Mr. Maffie's salary was adjusted to reflect his promotion to
the Chief Executive Officer of the Company. His base salary as the Company's
chief executive officer was set relative to the mid-point level of salaries
being paid to chief executive officers of comparable companies. The Company's
utility's performance during 1993 exceeded the threshold of the performance
target under the provisions of the Incentive Plan, thereby justifying the
granting of short-and long-term awards to key management employees. Mr. Maffie's
award opportunities were tied to his salary as the Company's Chief Executive
Officer, not the actual 1993 salary reflected in the Summary Compensation Table.
Mr. Maffie's opportunities for short-term cash awards under the Incentive Plan
ranged from 15 to 42 percent of his salary, with a like percentage applicable to
the long-term award opportunities. The short-and long-term awards earned by Mr.
Maffie for 1993 are reflected in the Summary Compensation Table.
Mr. Guinn, who also served as the Chief Executive Officer during 1993 prior
to Mr. Maffie's promotion, received a salary tied to the mid-point level of
salaries being paid to chief executive officers of comparable companies for
1992. No adjustment was made to his 1993 salary to reflect any movement in the
mid-point level for such salaries that occurred in 1993. Mr. Guinn was also
eligible to participate in the Company's Incentive Plan for 1993. His award
opportunities were identical to those for Mr. Maffie; however, his actual awards
were determined on a pro rata basis according to the number of months he was a
full-time employee of the Company during 1993. Also, because of Mr. Guinn's
retirement during 1993, both his short-and long-term awards were paid in cash.
The combined awards earned by Mr. Guinn during 1993 are shown in the bonus
column in the Summary Compensation Table.
Since the Company does not anticipate that the compensation for any
executive officer will exceed the $1 million threshold in the near term,
shareholder approval necessary to maintain the tax deductibility of compensation
at or above that level is not being requested at this time. The Committee will
reconsider this matter if compensation levels approach this threshold, in light
of the tax laws then in effect.
The Nominating and Compensation Committee believes that the compensation
program addresses the Company's compensation objectives and, with the adoption
of the Incentive Plan, enhances the commitment of key management employees and
strengthens long-term shareholder value.
Nominating and Compensation Committee
Leonard R. Judd, Chairman
Manuel J. Cortez
Lloyd T. Dyer
Kenny C. Guinn
Thomas Y. Hartley
James R. Lincicome
16
<PAGE> 21
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The above-named committee members served on the Company's
Nominating/Compensation Committee during 1993. Mr. Guinn retired as Chairman and
Chief Executive Officer of the Company on May 12, 1993 and retired as a
full-time employee of the Company on August 31, 1993. Mr. Guinn became a member
of the Committee after his retirement as an officer of the Company. Clark J.
Guild Jr. also served on the Committee through May 12, 1993.
During 1993 the Company retained the law firm of Guild, Russell, Morgan,
Gallagher & Fuller, Ltd. (formally Guild & Hagen, Ltd.) to provide professional
legal services. Mr. Guild is a partner in the firm and during 1993 the Company
paid the firm $16,661 for legal services. It is expected Mr. Guild's law firm
will continue to represent the Company in 1994 in such matters as management may
specify. The Company believes that the fees paid to the firm do not exceed the
fees which the Company would be required to pay for comparable legal services.
SUMMARY COMPENSATION TABLE
The following table provides for fiscal years ended December 31, 1991, 1992
and 1993, compensation earned by the Company's Chief Executive Officer, the
Company's Chief Executive Officer who retired during 1993, two executive
officers who retired during 1993 and each of the four other most highly
compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION(2)(3)
-----------------------------------
AWARDS
ANNUAL COMPENSATION -----------------------
---------------------------------------- RESTRICTED PAYOUTS
OTHER ANNUAL STOCK ---------- ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS/ LTIP COMPENSATION($)
PRINCIPAL POSITION(4)(5) YEAR ($) ($)(6) ($)(7) ($)(8) SARS(#) PAYOUTS($) (9)(10)(11)(12)
- --------------------------- ---- --------- ----------- ------------------ -------------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael O. Maffie 1993 316,904 48,510 0 48,510 N/A N/A 31,070
President/C.E.O. 1992 256,503 109,100 0 N/A N/A N/A 22,696
1991 234,863 0 0 N/A N/A N/A 20,195
Kenny C. Guinn 1993 340,618 78,579 8,151 N/A N/A N/A 63,250
Retired Chairman/C.E.O 1992 414,617 174,500 0 N/A N/A N/A 30,191
1991 396,233 0 0 N/A N/A N/A 21,948
Dan J. Cheever 1993 208,725 75,000 0 N/A N/A N/A 4,497
President/C.E.O. 1992 178,771 0 0 N/A N/A N/A 1,638
PriMerit Bank
Thomas J. Trimble 1993 206,345 19,219 0 19,219 N/A N/A 38,223
Senior Vice President/ 1992 204,000 46,400 0 N/A N/A N/A 31,178
General Counsel/ 1991 204,000 0 0 N/A N/A N/A 28,791
Corporate Secretary
George C. Biehl 1993 175,449 16,632 0 16,632 N/A N/A 8,732
Senior Vice President/ 1992 144,553 46,400 0 N/A N/A N/A 6,681
Chief Financial Officer/ 1991 128,870 0 0 N/A N/A N/A 5,473
Treasurer
Marvin R. Shaw 1993 153,742 23,420 4,021 N/A N/A N/A 10,093
Retired Executive Vice 1992 178,372 57,100 0 N/A N/A N/A 16,963
President/Rate, 1991 160,192 0 0 N/A N/A N/A 15,191
Regulation and Gas
Supply
John L. Mayo 1993 150,468 21,655 11,326 N/A N/A N/A 16,237
Retired Executive Vice 1992 187,503 60,200 0 N/A N/A N/A 34,363
President/Operations 1991 166,918 0 0 N/A N/A N/A 35,308
L. Keith Stewart 1993 144,622 13,861 0 13,861 N/A N/A 11,170
Senior Vice President/ 1992 132,432 30,000 0 N/A N/A N/A 9,528
Operations 1991 125,096 0 0 N/A N/A N/A 8,528
</TABLE>
17
<PAGE> 22
- ---------------
(1) All compensation reflected in the Summary Compensation Table is reported on
an earned basis for each fiscal year.
(2) For 1991 and 1992, the Company had no restricted stock, stock options or
other long-term incentive programs.
(3) In 1993 the Company introduced a revised Management Incentive Plan which
includes the issuance of restricted Common Stock. The Common Stock
component of the plan is subject to shareholder approval at this year's
Annual Meeting, and is described in this Proxy Statement under the heading
"APPROVAL OF THE COMPANY'S MANAGEMENT INCENTIVE PLAN."
(4) Mr. Guinn retired as the Company's Chairman and Chief Executive Officer in
May 1993 and as a full-time employee in August 1993. Mr. Guinn was provided
a severance arrangement on his retirement which consisted of two additional
years of service with the Company for the purpose of computing retirement
benefits. The two additional years of service eliminated a ten percent
reduction in Mr. Guinn's retirement benefits.
(5) Mr. Cheever was appointed President and Chief Executive Officer of the
Company's financial subsidiary, PriMerit Bank, in 1992. Prior to that time,
Mr. Cheever was not considered an executive officer of the Company.
(6) For Messrs. Guinn, Mayo and Shaw, the incentive awards they received under
the Company's Management Incentive Plan were pro-rated for the length of
time they were full-time employees during 1993, and their awards were paid
in cash, rather than being evenly distributed cash and the issuance of
performance shares under the long-term component of the plan.
(7) Compensation reported in this column consists of above-market interest
earned on deferred compensation paid or payable to Messrs. Guinn, Mayo and
Shaw after their retirement in 1993. Under the Company's executive deferral
plan, payment of deferred compensation can only commence upon the
retirement of a plan participant or at some other employment terminating
event.
(8) Dividends equal to the dividends paid on the Company's Common Stock will be
paid on the performance shares awarded under the long-term component of the
Management Incentive Plan, while such shares are restricted.
(9) For Messrs. Maffie, Trimble, Biehl, Mayo, Shaw and Stewart, the amounts
shown in this column for each year consist of above-market interest on
deferred compensation and matching contributions under the Company's
executive deferral plan. The amounts shown for Messrs. Mayo and Shaw for
1993 include above-market interest and contributions through the date of
their retirement. Under the plan, the executive officers may defer up to
50% of their annual compensation for payment at retirement or at some other
employment-terminating event. As part of the plan, the Company provides
matching contributions that parallel the contributions made under the
Company's 401(k) plan, which is available to all Company employees, equal
to one-half of the deferred amount, up to 6% of their annual salary.
(10) For Mr. Guinn, the amounts shown in this column for 1991 and 1992 consist
of above-market interest and matching contributions under the Company's
executive deferral plan. For 1993, the amount includes above-market
interest and matching contributions under the Company's executive deferral
plan earned through the date of Mr. Guinn's retirement, director's retainer
and fees paid after his retirement from the Company and an increase in
retirement benefits received in 1993 under the severance arrangement
provided to Mr. Guinn upon his retirement.
(11) For Mr. Cheever, the amounts shown in this column for each year consist of
matching contributions under PriMerit Bank's 401(k) plan.
(12) The breakdown of All Other Compensation for 1993 is as follows:
<TABLE>
<CAPTION>
ABOVE-MARKET COMPANY DIRECTOR'S SEVERANCE
INTEREST CONTRIBUTIONS FEES BENEFITS
------------ ------------- ---------- ---------
<S> <C> <C> <C> <C>
Mr. Maffie $ 21,216 $ 9,854 N/A N/A
Mr. Guinn 16,302 8,257 $ 16,766 $21,925
Mr. Cheever N/A 4,497 N/A N/A
Mr. Trimble 32,015 6,208 N/A N/A
Mr. Biehl 3,421 5,311 N/A N/A
Mr. Shaw 7,243 2,850 N/A N/A
Mr. Mayo 13,918 2,319 N/A N/A
Mr. Stewart 6,775 4,395 N/A N/A
</TABLE>
- ---------------
18
<PAGE> 23
BENEFIT PLANS
Southwest Gas Basic Retirement Plan. The named executive officers
participate in the Company's non-contributory, defined benefit retirement plan,
which is available to all employees of the Company and its subsidiaries (except
PriMerit Bank which has a separate plan). Benefits are based upon an employee's
years of service, up to a maximum of 30 years, and the employee's highest five
consecutive years salary within the final 10 years of service.
PENSION PLAN TABLE(1)(2)
<TABLE>
<CAPTION>
YEARS OF SERVICE
ANNUAL -----------------------------------------------------------
COMPENSATION 10 15 20 25 30
----------------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 8,750 $ 13,125 $ 17,500 $ 21,875 $ 26,250
100,000 17,500 26,250 35,000 43,750 52,500
150,000 26,250 39,375 52,500 65,625 78,750
200,000 35,000 52,500 70,000 87,500 105,000
250,000 43,750 65,625 87,500 109,375 131,250
300,000 52,500 78,750 105,000 131,250 157,500
350,000 61,250 91,875 122,500 153,125 183,750
400,000 70,000 105,000 140,000 175,000 210,000
450,000 78,750 118,125 157,500 196,875 236,250
500,000 87,500 131,250 175,000 218,750 262,500
</TABLE>
- ---------------
(1) Years of service beyond 30 years will not increase benefits under the basic
retirement plan.
(2) For 1994, the maximum annual compensation that can be considered in
determining benefits under the Plan is $150,000. For future years the
maximum annual compensation will be adjusted to reflect changes in the cost
of living as established by the Internal Revenue Service.
- ---------------
Compensation covered under the basic retirement plan is based on salary
depicted in the Summary Compensation Table. As of December 31, 1993, the
credited years of service for the named executive officers shown in the Summary
Compensation Table are as follows: Mr. Maffie, 15 years; Mr. Biehl, 8 years; Mr.
Stewart, 9 years; and Mr. Trimble, 7 years;
Amounts shown in the pension plan table are straight life annuity amounts
notwithstanding the availability of joint survivorship benefit provisions.
Benefits paid under the basic and supplemental retirement plans are not reduced
by any Social Security benefits received.
Supplemental Retirement Plan. The named executive officers also participate
in the Company's supplemental retirement plan. Such officers with 10 or more
years of service may retire at age 55 or older and will receive benefits under
the plan. Such benefits, when added to benefits received under the basic
retirement plan, will equal 60% of their highest 12-months of compensation with
the Company. The total benefit may be reduced if an officer retires prior to age
60, depending upon his age and total years of service with the Company. The cost
to the Company for benefits under the supplemental retirement plan for any one
of the named executive officers cannot be properly allocated or determined
because of the overall plan assumptions and options available.
PriMerit Bank Retirement Income Plan. Mr. Cheever, who is a named executive
officer, participates in PriMerit Bank's non-contributory, defined benefit
retirement plan, which is available to all employees of the Bank and its
subsidiaries. Through March 1994, benefits were based upon an employee's years
of service, up to a maximum of 15 years, and the employee's 60 highest paid
consecutive months of employment with the Bank. Commencing April 1, 1994, the
plan was curtailed. Employees hired on or after that date will not be able to
participate in the plan, while existing employees will not be able to increase
benefits under the plan through additional service with the Bank. Salary changes
for existing employees, however, will continue to affect plan benefits.
19
<PAGE> 24
PENSION PLAN TABLE(1)(2)
<TABLE>
<CAPTION>
YEARS OF SERVICE
ANNUAL ------------------------------------
COMPENSATION 5 10 15
----------------------- ------- ------- --------
<S> <C> <C> <C>
$ 50,000 $ 5,833 $11,667 $ 17,500
100,000 11,667 23,333 35,000
150,000 17,500 35,000 52,500
200,000 23,334 46,667 70,000
250,000 29,138 58,336 87,500
300,000 34,965 70,004 105,000
</TABLE>
- ---------------
(1) Prior to March 31, 1994, years of service beyond 15 years would not increase
benefits under the plan. With the curtailment of the plan, additional years
of service will no longer increase benefits under the plan.
(2) For 1994, the maximum annual compensation that can be considered in
determining benefits under the Plan is $150,000. For future years the
maximum annual compensation will be adjusted to reflect changes in the cost
of living as established by the Internal Revenue Service.
- ---------------
Compensation covered under the retirement plan is based on salary depicted
in the Summary Compensation Table. As of December 31, 1993, the credited years
of service for Mr. Cheever was 5 years.
Amounts shown in the pension plan table are straight life annuity amounts
notwithstanding the availability of joint survivorship benefit provisions.
Benefits paid under the Bank's basic and supplemental retirement plans are not
reduced by any Social Security benefits.
PriMerit Bank Supplemental Executive Retirement Plan. Mr. Cheever also
participates in the Bank's supplemental retirement plan. Participation in the
supplemental plan is limited to officers of the Bank selected by the Bank's
Board of Directors. Benefits under the plan, when added to benefits received
under the defined benefit retirement plan, will equal 60 percent of the
participant's average annual salary over the 60 highest paid consecutive months
of service. The total benefit will be reduced if a participant retires prior to
age 65, and with less than 15 years of service with the Bank. The cost to the
Bank for benefits under the supplemental retirement plan for Mr. Cheever cannot
be properly determined because of the overall plan assumptions and options
available.
20
<PAGE> 25
PERFORMANCE GRAPH
The performance graph below compares the five-year cumulative total return
on the Company's Common Stock, assuming reinvestment of dividends, with the
total returns on the Standard & Poor's 500 Stock Composite Index (S&P 500) and
the Edward D. Jones Natural Gas Diversified Index, a peer-group index compiled
by Edward D. Jones & Company, consisting of the Company and 21 other diversified
natural gas distribution companies.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
MEASUREMENT PERIOD E.D. JONES
(FISCAL YEAR COVERED) SOUTHWEST GAS S&P 500 INDEX
<S> <C> <C> <C>
1988 100.00 100.00 100.00
1989 106.30 131.60 140.80
1990 88.30 127.50 125.10
1991 77.90 166.30 108.50
1992 106.20 178.90 115.00
1993 129.10 197.00 130.20
</TABLE>
- ---------------
(1) The Company selected the Edward D. Jones Natural Gas Diversified Index as a
peer-group index because it provides a representative sample of natural gas
distribution companies with at least 30%, but less than 90%, of their gross
revenues from distribution operations. This index should be available on a
continuing basis.
(2) The Edward D. Jones Natural Gas Diversified Index, which is weighted
according to each respective issuer's market capitalization at the beginning
of each period, consists of the following companies; Alabama/Tennessee
Resources, Inc., Arkla, Inc., Chesapeake Utilities Corp., Columbia Gas
System, Consolidated Natural Gas, Eastern Enterprises, Energen Corp.,
Enserch Corp., Equitable Resources, Inc., KN Energy, Inc., National Gas &
Oil Co., Nicor, Inc., Oneok, Inc., Pacific Enterprises, Questar Corp., South
Jersey Industries, Southwest Gas Corporation, Southwestern Energy Co., UGI
Corp., Valley Resources, Inc., Washington Energy Co. and Wicor, Inc.
- ---------------
21
<PAGE> 26
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1993 some directors and executive officers of the Company were
depositors of, and had transactions with, PriMerit Bank, the Company's
wholly-owned subsidiary. These transactions were on the same terms (including
interest rates, repayment terms and collateral) as those prevailing at the time
for comparable transactions with other persons of similar credit-worthiness and,
in the opinion of the Board of Directors of PriMerit Bank, do not involve more
than a normal risk of collectibility or other unfavorable characteristics.
For other relationships between the Company and its Directors and officers
during 1993, please refer to the discussion in this statement under the caption,
"Compensation Committee Interlocks and Insider Participation."
OTHER MATTERS TO COME BEFORE THE MEETING
If any business not described herein should come before the meeting for
shareholder action, it is intended that the shares represented by proxies will
be voted in accordance with the best judgment of the persons voting them. At the
time this proxy statement was mailed, the Company knew of no other matters which
might be presented for shareholder action at the meeting.
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholders are advised that any shareholder proposal intended for
consideration at the 1995 annual meeting must be received in writing by the
Company on or before December 2, 1994 to be considered for inclusion in the
proxy materials for the 1995 annual meeting. All proposals must comply with
applicable SEC rules. It is recommended that shareholders submitting proposals
direct them to the Corporate Secretary of the Company and utilize Certified
Mail-Return Receipt Requested in order to ensure timely delivery.
By Order of the Board of Directors
[SIG]
Thomas J. Trimble
Senior Vice President/General Counsel
and Corporate Secretary
22
<PAGE> 27
EXHIBIT A
TO SOUTHWEST GAS CORPORATION'S
1994 PROXY STATEMENT
RESOLUTION ON AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
BY SHAREHOLDERS
WHEREAS, the outstanding shares of this Corporation are listed on the New
York Stock Exchange and, as a result this Corporation is eligible to divide its
Board of Directors into three classes each to serve for a term of three years;
WHEREAS, the Board of Directors of this Corporation has adopted and
approved an amendment to the Restated Articles of Incorporation of this
Corporation, as set forth below, that would divide the Board of Directors into
three classes each to serve for a term of three years; and
WHEREAS, it is deemed by the shareholders of this Corporation to be in
their best interests and in the best interest of this Corporation that the
Restated Articles of Incorporation of this Corporation be amended in the same
manner as adopted and approved by the Board of Directors.
NOW, THEREFORE, BE IT RESOLVED, that the Restated Articles of Incorporation
of this Corporation be amended by deleting Article V thereof in its entirety and
substituting the following therefor to read as follows:
"V
The business of this corporation shall be managed by a Board of
Directors, whose number shall be not fewer than eleven (11) nor more than
fourteen (14), as the Board of Directors or the shareholders by amendment
of this Article V may establish, provided, however, that a reduction in the
authorized number of directors shall not remove any director prior to the
expiration of his or her term. The directors of this corporation need not
be shareholders.
The directors shall be divided into three classes as follows:
(i) if the Board of Directors consists of eleven (11) directors,
the classes shall consist of three (3), four (4) and four (4) directors,
(ii) if the Board of Directors consists of twelve (12) directors,
the classes shall consist of four (4) directors each,
(iii) if the Board of Directors consists of thirteen (13)
directors, the classes shall consist of four (4), four (4) and five (5)
directors, and
(iv) if the Board of Directors consists of fourteen (14) directors,
the classes shall consist of four (4), five (5) and five (5) directors.
The term of office of one class shall expire at the first, the term of
office of the second class shall expire at the second, and the term of
office of the third class shall expire at the third, annual meeting of
shareholders held after the first election of directors in classes. At the
meeting of shareholders held on May 12, 1994, directors shall be elected in
classes as set forth herein, with the directors in each class to be
determined by designation of the Board of Directors. Each director shall
serve until the end of the term for which elected and until a successor has
been elected and qualified. Notwithstanding the foregoing, and except as
otherwise required by law, whenever the holders of any one or more classes
or series of outstanding Preferred Stock, Cumulative Preferred Stock,
Preference Stock and Second Preference Stock shall have the right, voting
separately as a class or series, to elect one or more directors of the
corporation, the terms of the director or directors elected by those
holders shall expire at the next succeeding annual meeting of
shareholders."
A-1
<PAGE> 28
EXHIBIT B
SOUTHWEST GAS CORPORATION
1993 MANAGEMENT INCENTIVE PLAN
1. PURPOSE OF THE PLAN
This 1993 Management Incentive Plan is intended to both replace the
existing Southwest Gas Corporation Management Incentive Plan and encourage a
selected group of highly compensated or management employees of the Company to
remain in its employment and to put forth maximum efforts to achieve the
Company's short-and long-term performance goals.
2. DEFINITIONS
(a) "Actual Award" means the dollar amount earned by a Participant on the
basis of the performance of the Company during the annual Performance
Period.
(b) "Annual Base Salary" means the calendar year-end rate of compensation
paid to a Key Employee, including salary deferrals, but excluding
bonuses, incentives, commissions, overtime, monetary and nonmonetary
awards for employment service to the Company or payments or Company
contributions to or from this Plan or any other Company retirement or
deferred compensation, or similar plans.
(c) "Annual Performance Measures" shall mean the performance criteria used
by the Committee in determining the performance of the Company for the
purpose of calculating Actual Awards for Participants earned under the
Plan during a Performance Period.
(d) "Award Conversion" means the division of Actual Awards earned into two
portions:
(i) A portion payable in cash as soon as the Committee deems
practicable following the end of an annual Performance Period.
(ii) A portion converted into Performance Shares and subject to a
Restriction Period.
(e) "Award Conversion Date" means the day that the Committee performs the
Award Conversion on Actual Awards for a Performance Period.
(f) "Board" or "Board of Directors" means the Board of Directors of
Southwest Gas Corporation.
(g) "Committee" means the Nominating and Compensation Committee of the
Board of Directors, or any such other committee designated by the Board
to administer the Plan.
(h) "Common Stock" means the common stock of Southwest Gas Corporation.
(i) "Company" means Southwest Gas Corporation and its present and future
subsidiaries (other than PriMerit Bank and its subsidiaries) and any
successor thereto.
(j) "Disability" or "Disabled". A Participant shall be considered to be
"Disabled" or to have incurred a "Disability" if he or she qualifies
for a disability benefit under Southwest Gas Corporation's group
long-term disability plan. In the event a Participant does not qualify
for benefits under such disability plan, the Committee, in its sole and
absolute discretion, may determine that a Participant is Disabled for
purposes of this Plan.
(k) "Dividend Credits" means the additional Performance Shares determined
as set forth in Plan Section 7(d) calculated for each Restriction
Period for the Participant's Performance Shares subject to such period.
(l) "Employee" means any person who is a regular full-time employee of the
Company, including those who are officers or Board members.
B-1
<PAGE> 29
(m) "Fiscal Year" means the Fiscal Year of the Company beginning each
January 1st and ending the following December 31st.
(n) "Incentive Award Opportunity" means the range of an Actual Award
available to each Participant in this Plan for a given Performance
Period.
(o) "Involuntary Termination Without Cause" means a Participant's
termination of employment (i) due to reorganization, downsizing,
restructuring or layoff and (ii) not due to what the Committee
determines was, in its sole and absolute discretion, either the
Participant's inability to adequately perform his or her job, a
violation of Company work rules or policies, or misconduct that the
Committee determines is detrimental to the Company's best interests.
(p) "Key Employee" means a management or highly compensated Employee of the
Company who the Committee determines to (i) have a direct and
significant impact on the performance of the Company, and (ii) has a
position or compensation that allows him or her to affect or influence,
through negotiation or otherwise, the design or operation of this Plan
so as to eliminate the Employee's need for the substantive rights and
protections of Title I of the Employee Retirement Income Security Act
of 1974.
(q) "Long-Term Performance Measures" means the performance measures
developed and utilized by the Committee in determining the performance
of the Company for the purpose of calculating the number of shares of
Common Stock payable to the Participant following the end of a
Restriction Period.
(r) "Participant" means a Key Employee who in the Committee's sole and
absolute discretion is determined to be eligible to receive an
Incentive Award Opportunity under this Plan.
(s) "Peer Group" means the companies comprising the group against which the
Committee assesses the performance of the Company for the purposes of
determining Actual Awards earned, or for modifying the number of shares
of Common Stock that are payable to Participants following the end of a
Restriction Period.
(t) "Performance Period" means a period of twelve months corresponding to
the Company's Fiscal Year and for which the Company's performance is
assessed by the Committee for the purpose of its determining Actual
Awards earned.
(u) "Performance Share" means a hypothetical share of Common Stock that
will be converted into, and paid out, as a share of Common Stock only
if all restrictions and conditions set forth in this Plan have been
satisfied. The Performance Share carries no voting rights but does
entitle the Participant to receive Dividend Credits determinable under
Plan Section 7(d).
(v) "Plan" means the Southwest Gas Corporation 1993 Management Incentive
Plan as set forth herein and as amended from time to time.
(w) "Restriction Period" means, with respect to each grant of Performance
Shares to a Participant, a period of at least thirty six (36)
consecutive calendar months beginning with the last day of February
prior to the Award Conversion Date applicable to such shares.
(x) "Retire" or "Retirement" means the termination of a Participant's
employment with the Company on or after the Participant has attained
his or her early retirement date, normal retirement date, or deferred
retirement date as defined in the Retirement Plan for Employees of
Southwest Gas Corporation, as amended and in effect from time to time.
(y) "Target Award" means the Incentive Award Opportunity available to each
Participant if all Performance Measures for a Performance Period are
fully met but not exceeded.
B-2
<PAGE> 30
3. ADMINISTRATION
(a) The Plan shall be administered by non-Employee members of the
Committee, which shall be composed of not less than three members of
the Board of Directors. The non-Employee members of the Committee
chosen to administer the Plan shall not have received an award under
this Plan or any plan preceding this Plan within the last calendar
year. The Board of Directors may designate alternate members of the
Committee from non-Employee Board members who satisfy the
above-criteria to act in the place and stead of any absent member of
the Committee.
(b) The Committee shall have full and final authority to operate, manage,
and administer the Plan on behalf of the Company. This authority
includes but is not limited to the following:
(i) Determination of eligibility for participation in the Plan;
(ii) Determination of Actual Awards earned and the Award Conversion of
the Actual Awards;
(iii) Payment of Actual Awards that have become nonforfeitable;
(iv) Directing the Company to make the accruals and payments provided
for by the Plan;
(v) Interpretation of the Plan and the resolution of any inconsistent
or conflicting Plan language as well as factual or nonfactual
questions regarding a Participant's eligibility for, and the
amount of, benefits payable under the Plan;
(vi) Power to prescribe, amend, or rescind rules and regulations
relating to the Plan;
(vii) Power to determine the vesting schedules, if any, for all
awards; and
(viii) Powers prescribed to the Committee elsewhere in the Plan.
(c) With respect to Incentive Award Opportunities and Actual Awards earned,
the Committee shall have full and final authority in its sole and
absolute discretion to determine the Incentive Award Opportunities for
individual Participants; determine the time or times at which Actual
Awards may be calculated; determine the length of all applicable
Performance Periods and/or Restriction Periods; determine the award
schedule and the Annual and Long-Term Performance Measures (and the
Company's satisfaction or failure to satisfy such measures) that will
be used in calculating Actual Awards and in determining the number of
shares of Common Stock payable to Participants at the end of the
Restriction Period; and determine the composition of the Peer Group to
be used in assessing the Company's performance.
(d) A majority of the Committee shall constitute a quorum, and the acts of
a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by all the members in the absence
of a meeting, shall be the acts of the Committee. All Committee
interpretations, determinations, and actions will be final, conclusive,
and binding on all parties.
(e) No member of the Board or the Committee will be liable for any action
taken or determination made in good faith by the Board or the Committee
with respect to the Plan or any Actual Award calculated and paid
hereunder.
4. ELIGIBILITY
(a) In determining the Key Employees that will be Participants and the
Incentive Award Opportunity for each Participant, the Committee shall
take into account the duties of the respective Participant, their
present and potential contributions to the success of the Company, and
such other factors as the Committee shall deem relevant in connection
with accomplishing the purpose of the Plan.
B-3
<PAGE> 31
(b) No Incentive Award Opportunity will be available to any person who, at
the beginning of the applicable Performance Period, is a member of the
Committee responsible for the administration of the Plan.
5. INCENTIVE AWARD OPPORTUNITIES
(a) The Committee will establish the Incentive Award Opportunity for each
Participant or class of Participants designated by the Committee. The
Incentive Award Opportunity will be expressed as percentages of the
Participant's Annual Base Salary.
(b) An Incentive Award Opportunity will range from zero to some specific
maximum percentage of the Participant's Annual Base Salary (or maximum
dollar amount).
(c) Before or during each Performance Period a Participant will be assigned
a specific Target Award that will fall within the range of the
Participant's Incentive Award Opportunity. The Target Award will be
awarded to the Participant if, in the judgement of the Committee, all
applicable Annual Performance Measures have been fully met.
(d) Actual Awards for each Participant in the Plan shall be determined by
the Committee following the end of the applicable Performance Period,
taking into account how the Company performed on the basis of the
Annual Performance Measures developed and utilized by the Committee for
the Performance Period. Notwithstanding the foregoing, if Southwest Gas
Corporation's Chief Executive Officer (hereinafter the "CEO") or Chief
Financial Officer (hereinafter the "CFO") are Participants, the
Committee may consider the performance of PriMerit Bank during a
Performance Period when examining the Annual Performance Measures and
determining the Actual Award for the CEO and/or CFO for the period.
6. PROCEDURES FOR CALCULATING AND PAYING ACTUAL AWARDS
(a) The Committee shall establish the Annual Performance Measures that will
be utilized for one or more Performance Periods in assessing the
performance of the Company for the purpose of determining the Actual
Awards earned under this Plan. These measures and the standards of
performance associated with them may change from year to year and may
receive different emphasis or weight according to the changing
priorities of the Company. It is expected that the Annual Performance
Measures generally will be tied to the financial performance of the
Company and will be based on a combination of (i) the Company's
performance in relation to its own performance standards and (ii) the
Company's performance in relation to that of its Peer Group.
(b) Following the end of each Performance Period, the Committee will
compare the Company's actual performance during such period with the
Annual Performance Measures it established for the period, and the
Actual Award, if any, for a Participant will be calculated. For each
Performance Period the Committee will utilize an award schedule for
calculating the Actual Awards earned on the basis of the Company's
performance. The award schedule may be modified by the Committee from
year to year as Annual Performance Measures or the standards of
performance associated with such measures change.
(c) Following the calculation of the Actual Awards, an Award Conversion
will be made whereby the Actual Awards for each Participant will be
split into two components. The first component will be a dollar amount
that is payable to the Participant in cash as soon as the Committee
deems practical following the Award Conversion Date. The second
component will be a dollar amount that is converted into whole or
partial Performance Shares, which shall be restricted for a period of
at least thirty six consecutive calendar months beginning on the Award
Conversion Date applicable to such shares. The number of Performance
Shares allocable to each Participant shall be determined by dividing
(i) the dollar amount
B-4
<PAGE> 32
available for the Participant's Performance Shares (determined by the
Award Conversion), by (ii) the closing per share value of the Common
Stock on the New York Stock Exchange on the last trading day on the
Exchange before the Award Conversion Date. Payment of Performance
Shares shall occur at the time provided in Plan Section 7(c).
(d) The Committee shall have the sole and absolute responsibility for
determining Actual Awards of Participants. Generally, the Actual Awards
generated by application of the award schedule established by the
Committee for one or more Performance Periods will be the Actual Awards
that will be payable to each Participant; provided, however, that the
Committee may, prior to the Award Conversion Date, alter the Actual
Awards generated by the awards schedule if, in the opinion of the
Committee, there have been exceptional circumstances that have either
created inappropriate windfalls or shortfalls in the Company's
performance (or the performance of PriMerit Bank in the case of the CFO
and CEO), which, in turn, have resulted in inappropriately large or
small Actual Awards.
(e) If, during a Performance Period, the Committee determines that the
established Annual Performance Measures are no longer suitable due to a
change in the Company's business, operations, corporate structure,
capital structure, or other conditions the Committee deems to be
material, the Committee may modify the Annual Performance Measures as
it considers appropriate and equitable.
7. PERFORMANCE SHARES
(a) On the Award Conversion Date, Participants who earned an Actual Award
during the preceding Performance Period will have an entry made on the
Company's books reflecting the Performance Shares allocable to them as
determined pursuant to Plan Section 6(c).
(b) A Participant's Performance Shares earned in a given Performance Period
will be subject to a Restriction Period of at least thirty six
consecutive calendar months beginning on the Award Conversion Date
applicable to such shares. During the Restriction Period, the
Participant may not, except as provided in Plan Section 8(d), receive
payment for his or her Performance Shares.
(c) For the Restriction Period applicable to each Performance Period, the
Committee shall establish certain Long-Term Performance Measures that
will be used to determine the number of Performance Shares that shall
be paid to the Participant on the date(s) determined by the Committee
which shall be within a reasonable period following the end of the
Restriction Period. Notwithstanding anything in this Plan to the
contrary, if the Committee determines that the Company has satisfied or
failed to satisfy the Long-Term Performance Measures, it may, as
provided in Plan Section 7(e), increase or decrease the number of
Performance Shares credited to the Participant at the beginning, and
over the course of the Restriction Period. The Long-Term Performance
Measures will be tied to the performance of the Company (in the case of
the CEO and CFO, the Committee may also consider the performance of
PriMerit Bank) as measured against certain financial criteria and may
be specified in absolute terms or specified relative to the performance
of a Peer Group (in the case of the CEO and CFO the Committee may also
consider the performance of PriMerit Bank).
(d) During each Restriction Period, a Participant will receive Dividend
Credits equal to the quarterly dividend paid per share of Common Stock,
multiplied by the number of Performance Shares then credited to the
Participant on the Company's records, and divided by the closing per
share value of the Common Stock on the New York Stock Exchange on the
date such dividends are paid or the last trading day on the Exchange
before such payment. These additional Performance Shares will be
subject to the same restrictions as the Performance Shares already
credited to the Participant, and such restrictions will lapse at
B-5
<PAGE> 33
the same time as the restrictions lapse on the Performance Shares
granted at the Award Conversion Date.
(e) Following the end of a Restriction Period, the Participant shall
receive a specific number of shares of Common Stock equal to the total
number of Performance Shares allocated to the Participant at the
beginning of such Restriction Period plus the Performance Shares
credited quarterly through Dividend Credits during the Restriction
Period. The total number of shares of Common Stock the Participant is
entitled to receive may be modified by up to plus or minus 20% on the
basis of how the Company performs (as to the CEO and CFO, the Committee
may also consider the performance of PriMerit Bank) during the length
of the Restriction Period against the Long-Term Performance Measures
established by the Committee for the Restriction Period. Payment of
Common Stock pursuant to this paragraph shall occur on the date(s)
determined by the Committee which shall be within a reasonable period
following the end of the Restriction Period applicable to such
Performance Shares.
(f) Notwithstanding anything else in this Plan to the contrary, if the Plan
is not approved by Southwest Gas Corporation shareholders pursuant to
Plan Section 12, the Performance Shares shall not entitle the
Participant to receive shares of Common Stock of the Company following
the end of the Restriction Period but shall instead entitle the
Participant to receive a cash payment following the end of the
Restriction Period. The cash payment shall equal the fair market value
of the shares of Common Stock the Participant would have received
hereunder. For this purpose, the fair market value of the Common Stock
shall be determined using closing per share value of the stock on the
New York Stock Exchange on the last trading day on the Exchange of the
applicable Restriction Period.
8. PARTICIPANT TERMINATIONS AND TRANSFERS
(a) Should a Participant's continuous employment with the Company terminate
for any reason other than death, Disability, Retirement, or Involuntary
Termination Without Cause during a Performance Period, the
Participant's right to receive an Actual Award for such period will be
forfeited by the Participant.
(b) Should a Participant's continuous employment with the Company terminate
for any reason other than death, Disability, Retirement, or Involuntary
Termination Without Cause during a Restriction Period, the
Participant's right to receive payments of his or her outstanding
Performance Shares will be forfeited by the Participant.
(c) Should a Participant die, become Disabled, Retire, or have his or her
employment Involuntarily Terminated Without Cause during the
Performance Period, the Participant (or the Participant's beneficiary
in the case of a deceased Participant) will be entitled to receive an
Actual Award at the end of the Performance Period determined on a pro
rata basis according to the number of months of the Performance Period
actually worked while being a Participant in the Plan.
(d) Should a Participant die, become Disabled, Retire, or have his or her
employment Involuntarily Terminated Without Cause during a Restriction
Period, the Participant (or the Participant's beneficiary in the case
of a deceased Participant) will receive a distribution of Common Stock
equal to the total number of Performance Shares then credited to the
Participant. If Plan Section 7(f) applies, cash and not Common Stock
shall be paid and the amount of such payment shall be determined by
multiplying the Participant's Performance Shares by the closing per
share value of the Common Stock on the New York Stock Exchange on the
date of such event or the last trading day on the Exchange before such
event. Payment of Common Stock (or cash if Plan Section 7(f) applies)
shall occur within a reasonable period (as determined by the Committee)
following the date of the Participant's death, Disability, Retirement,
Disability, or Involuntary Termination Without Cause.
B-6
<PAGE> 34
A Participant shall have the right to designate any person as his or her
Beneficiary to whom benefits determined under Plan Section 8(c) and the
preceding paragraph ("Death Benefits") shall be paid in the event of the
Participant's death prior to the total distribution of his/her Death
Benefits. If greater than 50 percent of the Death Benefits is designated
to a beneficiary other than the Participant's lawful spouse, such
beneficiary designation must be consented to by the Participant's lawful
spouse. Each beneficiary designation must be in written form prescribed
by the Committee and will be effective only when filed with the
Committee, or its designee, during the Participant's lifetime.
A Participant may change a beneficiary designation, subject to spousal
consent under the preceding paragraph, by filing a new beneficiary
designation with the Committee or its designee. The filing of a new
beneficiary designation form will cancel all beneficiary designations
previously filed. The Committee shall be entitled to rely on the
beneficiary designation last filed by the Participant prior to his/her
death. Any payment made in accordance with such designation shall
fully discharge the Company from all further obligations with respect
to the amount of such payments.
If a beneficiary entitled to receive benefits under the Plan is a minor
or a person declared incompetent, the Committee may direct payment of
such benefits to the guardian or legal representative of such minor
or incompetent person. The Committee may require proof of incompetency,
minority or guardianship as it may deem appropriate prior to
distribution of any Death Benefits. Such distribution shall completely
discharge the Committee and the Company from all liability with respect
to such payments.
If no beneficiary designation is in effect at the time of the
Participant's death, or if the named beneficiary predeceased the
Participant, then the beneficiary shall be: (1) the surviving
lawful spouse; (2) if there is no surviving lawful spouse, then
Participant's issue per stirpes; or (3) if no surviving lawful
spouse or issue, then Participant's estate.
(e) If a Participant changes jobs with the Company during the course of a
Performance Period and his or her new job has a different Incentive
Award Opportunity under the Plan, the Participant's Incentive Award
Opportunity for the Performance Period shall be the sum of the products
obtained by multiplying (i) the percentage of the full Performance
Period spent in each job by (ii) the Incentive Award Opportunity for
each such job. In special circumstances, which the Committee may
identify from time to time, the Participant may be assigned for the
full Performance Period the Incentive Award Opportunity that
corresponds to any one of the jobs held by the Participant during the
Performance Period rather than combining partial Incentive Award
Opportunities for the jobs.
(f) Should a Key Employee become eligible to participate in the Plan after
the beginning of a Performance Period, the Participant will be entitled
to an Incentive Award Opportunity on the basis of the number of months
of the full Performance Period the Key Employee is a Participant in the
Plan.
9. CHANGES IN CAPITAL STRUCTURE AND OTHER EVENTS
(a) Notwithstanding anything in the Plan to the contrary, upon dissolution
or liquidation of the Company (or upon a reorganization, merger, or
consolidation of the Company with one or more corporations as a result
of which the Company is not the surviving corporation,) or upon the
sale of all or substantially all of the assets of the Company,
Performance Shares then outstanding under the Plan will, within a
reasonable time period following such change, be determined by the
Committee and settled and paid on the basis of the amount, and other
terms, as determined by the Committee, unless provisions are made for
the continuance of the Plan and the assumption or the substitution of
such Performance Shares with new awards by such successor employer
corporation, or a parent or
B-7
<PAGE> 35
subsidiary thereof, with appropriate adjustments as to the number and
kind of units, prices, and Performance Share values.
(b) All determinations, decisions, and adjustments made by the Committee
pursuant to Plan Section 9(a) will be final, binding, and conclusive.
No fractional interest will be issued under the Plan on account of such
adjustments.
(c) In the event (i) a report on Schedule 13D is filed with the Securities
and Exchange Commission pursuant to Section 13(d) of the Securities
Exchange Act of 1934 (referred to as the "Act") disclosing that any
"person" (as defined in Section 13(d) of the Act) other than the
Company or one of its subsidiaries or an employee benefit plan
sponsored by the Corporation or one of its subsidiaries is the
beneficial owner, directly or indirectly, or twenty percent (20%) or
more of the combined voting power of the then outstanding securities of
the Company; (ii) any "person" (as defined in Section 13(d) of the Act)
other than the Company or one of its subsidiaries, or an employee
benefit plan sponsored by the Company or one of its subsidiaries shall
purchase securities pursuant to a tender offer or exchange offer to
acquire any Common Stock of the Company (or securities convertible in
Common Stock) for cash, securities, or any other consideration,
provided that after the consummation of the offer, the person in
question is the "beneficial owner" (as such term is defined in Rule
13d-3 under the Act), directly or indirectly or twenty percent (20%) or
more of the combined voting power of the then outstanding securities of
the Company (as determined under paragraph (d) of Rule 13d-3 under the
Act, in the case of rights to acquire Common Stock); (iii) the
stockholders of the Company shall approve (a) any consolidation or
merger of the Company (1) in which the Company is not the continuing or
surviving corporation, (2) pursuant to which shares of Common Stock of
the Company would be converted into cash securities, or other property,
or (3) with a corporation that prior to such consolidation or merger
owned twenty percent (20%) or more of the cumulative voting power of
the then outstanding securities of the corporation, or (b) any sale,
lease, exchange, or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of the
Company; or (iv) there shall have been a change in the majority of the
Board of the Company within a twelve-month period, unless the election
or nomination for election by the Company's stockholders of each
director during such twelve-month period was approved by the vote of
two-thirds ( 2/3) of the directors then in office who were directors at
the beginning of such twelve-month period, the Committee may in its
sole and absolute discretion, without obtaining stockholder approval,
at the time of any one or more of the foregoing actions, to the extent
permitted in Plan Section 7, with respect to all Participants:
(i) Accelerate the settlement dates of some or all outstanding
Performance Shares;
(ii) Make any other adjustments or amendments to the Plan and
outstanding Incentive Award Opportunities and Performance Shares;
or
(iii) Substitute new Incentive Award Opportunities.
10. PROVISIONS REGARDING WITHHOLDING TAXES
(a) The Committee may require a Participant receiving Common Stock upon
conversion of Performance Shares awarded hereunder to reimburse the
Company for any taxes required by any government to be withheld or
otherwise deducted and paid by the Company in respect of the issuance
to or disposition of shares by the Participant (a "Taxable Event"). Any
payment on account of a tax obligation shall be in a form acceptable to
the Committee. If upon the occurrence of a Taxable Event the
Participant does not, in the time required by law or designated by the
Committee, reimburse the Company for taxes as provided for above: (i)
the Company shall have the right to withhold some or all of the amount
of such taxes from any other sums due or to become due from the Company
to the Participant
B-8
<PAGE> 36
upon such terms and conditions as the Committee shall prescribe, and
(ii) the Company may satisfy some or all of the tax obligation of such
Participant by withholding shares of Common Stock acquired by the
Participant in the conversion of any Performance Shares and may in the
same manner satisfy some or all of any additional tax obligation
resulting from such withholding.
(b) At any time that the Company becomes subject to a withholding
obligation under applicable law with respect to the conversion of
Performance Shares, except as set forth below with respect to persons
subject to Section's 16(a) and (b) of the Exchange Act, a Participant
may elect to satisfy, in whole or in part, the Participant's related
estimated personal tax liabilities by directing the Company to withhold
from the shares of Common Stock issuable in the related conversion of
Performance Shares either (i) a specified percentage of shares, (ii) a
specified number of shares or (iii) shares having a specified value, in
each case with a value not in excess of such estimated tax liabilities.
Such an election shall be irrevocable. The shares of Common Stock
withheld in payment shall be valued at their fair market value on the
date that the withholding obligation arises (the "Tax Date"). The
Committee may disapprove of any election, suspend or terminate the
right to make elections or provide that the right to make elections
shall not apply to particular conversions. If a Participant is a person
subject to Sections 16(a) and (b) of the Exchange Act then (A) any
election by such Participant must be made either (i) at least six
months prior to the relevant Tax Date or (ii) on or prior to the
relevant Tax Date and during a period that begins on the third business
day following the date of release for publication of the Company's
quarterly or annual summary statements of sales and earnings and that
ends on the twelfth business day following such date and (B) the
election may not be made with respect to shares of Common Stock
representing a conversion of a Performance Shares grant, or the
withholding obligation arising thereon, if the relevant Performance
Shares were granted six months or less prior to the date of election.
The Committee may impose any other conditions or restrictions on the
right to make an election as it shall deem appropriate.
11. PROVISIONS APPLICABLE TO COMMON STOCK
(a) Shares of Common Stock to be delivered to Participants at the end of
the Restriction Period may be previously authorized but unissued shares
or may be previously issued and reacquired shares.
(b) If at any time the Board shall determine in its discretion that the
listing, registration or qualification upon any national securities
exchange or under any state or federal law, or the consent or approval
of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the sale, purchase, issuance or
delivery of Common Stock under the Plan, no Common Stock shall be sold,
purchased, issued or delivered, as the case may be, unless and until
such listing, registration, qualification, consent or approval shall
have been effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Board.
(c) Except as hereafter provided and if so required by the Committee, the
recipient of any Performance Share award shall, upon receipt of any
shares of Common Stock due to the Award Conversion of Performance
Shares represented by the award, execute and deliver to the Company a
written statement, in form satisfactory to the Company, in which such
Participant represents and warrants that such Participant is acquiring
the shares for such Participant's own account, for investment only and
not with a view to the resale or distribution thereof, and agrees that
any subsequent offer for sale or sale or distribution of any such
shares of Common Stock shall be made only pursuant to either (a) a
Registration Statement on an appropriate form under the Securities Act
of 1933, as amended (the "Securities Act"), which Registration
Statement has become effective and is current with
B-9
<PAGE> 37
regard to the shares of Common Stock being offered or sold, or (b) a specific
exemption from the registration requirements of the Securities Act, but in
claiming such exemption the holder or recipient shall, if required by the
Company, prior to any offer for sale or sale of such shares, obtain a
favorable written opinion, in form and substance satisfactory to the
Company, from counsel for or approved by the Company, as to the
applicability of such exemption thereto. The foregoing restriction shall
not apply to (i) issuances by the Company so long as the shares being
acquired are registered under the Securities Act and a prospectus in
respect thereof is current or (ii) reofferings of shares by affiliates
of the Company (as defined in Rule 405 or any successor rule or
regulation promulgated under the Securities Act) if the shares being
reoffered are registered under the Securities Act and a prospectus in
respect thereof is current.
(d) The Company may endorse such legend or legends upon the certificates
for shares of Common Stock issued upon conversion of Performance Shares
made and may issue such "stop transfer" instructions to its transfer
agent in respect of such shares as, in its discretion, it determines to
be necessary or appropriate to (i) prevent a violation of, or to
perfect an exemption from, the registration requirements of the
Securities Act, or (ii) implement the provisions of the Plan and any
agreement between the Company and the Participant.
(e) The Company shall pay all issue taxes with respect to the issuance of
shares of Common Stock upon conversion of Performance Shares, as well
as all fees and expenses necessarily incurred by the Company in
connection with such issuance.
12. EFFECTIVE DATE; STOCKHOLDER APPROVAL
The Plan shall become effective upon adoption by the Board, provided,
however, that unless and until the Plan is approved by a vote of the
shareholders of Southwest Gas Corporation at the 1994 annual shareholders'
meeting, all Performance Shares awarded hereunder shall, when otherwise payable
under the Plan, be, as provided in Plan Section 7(f), converted into cash and
not Common Stock.
13. AMENDMENT AND TERMINATION OF THE PLAN
The Board at any time and from time to time may, without prior notice to
Participants, suspend, terminate, modify, or amend the Plan. Except as otherwise
provided for in Plan Sections 5, 6, 7, 8 and 9, no suspension, termination,
modification, or amendment of the plan may adversely affect any award previously
granted, unless the written consent of the Participant is obtained.
Notwithstanding the authority granted to the Board herein, if the shareholders
of Southwest Gas Corporation have approved this Plan as contemplated in Plan
Section 12 above, no amendment to the Performance Share provisions of this Plan
shall become effective without shareholder approval if, as to executive officer
Participants, such amendment would:
(i) materially increase the benefits accruing to such Participants
under the Plan;
(ii) materially increase the number of Performance Shares which may be
issued to such Participants under the Plan; or
(iii) materially modify the requirements as to eligibility for
executive participation in the Plan.
14. BENEFIT CLAIMS PROCEDURE
(a) Any claim for money or stock awards under the Plan shall be made in
writing to the Committee. If such claim is wholly or partially denied,
the Committee shall, within ninety (90) days after receipt of the
claim, notify the Participant or Beneficiary of the denial of the
claim. Such notice of denial shall (i) be in writing, (ii) be written
in a manner
B-10
<PAGE> 38
calculated to be understood by the Participant or Beneficiary, and
(iii) contain the specific reason or reasons for denial of the claim, a
specific reference to the pertinent Plan provisions upon which the
denial is based, a description of any additional material or
information necessary to perfect the claim, along with an explanation
of why such material or information is necessary, and an explanation of
the claim review procedure. The ninety (90) day period may, under
special circumstances, be extended up to an additional ninety (90) days
upon written of such extension to the Participant or Beneficiary which
notice shall specify the special circumstances and the extended date of
the decision. Notice of extension must be given prior to expiration of
the initial ninety (90) day period. If not notice of decision is given
within the periods specified above, the claim shall, on the last day of
the notice period, be deemed to have been denied and the Participant or
Beneficiary may file a request for review as provided in the next
paragraph.
(b) Within sixty (60) days after the receipt of the decision denying a
claim (or the occurrence of the date that a claim is deemed denied) by
the Participant or Beneficiary, the Participant or Beneficiary may file
a written request with the Committee that it conduct a full and fair
review of the denial of the claim. The Participant or Beneficiary or
his or her duly authorized representative may review pertinent
documents and submit issues and comments in writing to the Committee in
connection with the review.
(c) The Committee shall deliver to the Participant or Beneficiary a written
decision on the review of the denial within sixty (60) days after
receipt of the aforesaid request for review, except that if there are
special circumstances (such as the need to hold a hearing, if
necessary) which require an extension of time for processing, the
aforesaid sixty (60) day period shall, upon written notice to the
Participant or Beneficiary be extended an additional sixty (60) days.
Such decision shall (i) be in writing, (ii) be written in a manner
calculated to be understood by the Participant or Beneficiary, (iii)
include the specific reason or reasons for the decision, and (iv)
contain a specific reference to the pertinent Plan provisions upon
which the decision is based. If the decision on review is not delivered
to the Participant or Beneficiary within the periods specified, the
claim shall be considered denied on the last day of the review period.
(d) Upon a Participant or Beneficiary filing a claim, the Committee shall
notify the party filing of the claim and review procedure including the
time periods involved.
15. GENERAL PROVISIONS
(a) Nothing in this Plan or in any award granted pursuant hereto shall
confer on an individual any right to continue in the employ of the
company or any of its subsidiaries or interfere in any way with the
right of the Company or any such subsidiary to terminate any
employment.
(b) Upon its adoption by the Board, this Plan shall replace the existing
Southwest Gas Corporation Management Incentive Plan with respect to
periods commencing January 1, 1993.
(c) Awards granted under the Plan shall not be transferable otherwise than
as provided for in Plan Section 8(d), by will or by the laws of descent
and distribution, and awards may be realized during the lifetime of the
Participant only by the Participant or by his guardian or legal
representative.
(d) The section and subsection heading are contained herein for convenience
only and shall not affect the construction hereof.
(e) A Participant's rights to Performance Shares and other Plan benefits
represent rights to merely an unfunded and unsecured promise of a
future payment of money or property. A Participant shall look only to
the Company for the payment of Performance Shares and
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<PAGE> 39
other Plan benefits and such shares and benefits shall, until paid, be
subject to the claims of Company creditors. A Participant's rights
under the Plan shall be only that of an unsecured general creditor of
the Company.
IN WITNESS WHEREOF, Southwest Gas Corporation has caused this Plan to be
executed this 12th day of May, 1993.
SOUTHWEST GAS CORPORATION
By MICHAEL O. MAFFIE
Its PRESIDENT
Logo-printed on recycled paper
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<PAGE> 40
SOUTHWEST GAS CORPORATION
P
P.O. Box 98510, Las Vegas, Nevada 89193-8510 R
O
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS X
Y
The undersigned hereby appoints Kenny C. Guinn and Lloyd T. Dyer as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote as designated below, all the shares of common
stock of the undersigned at the annual meeting of shareholders to be held on
Thursday, May 12, 1994, at the Company's Headquarters at 5241 Spring Mountain
Road, Las Vegas, Nevada, and any adjournments thereof; and at their discretion,
with authorization to vote such common shares on any other matters as may
properly come before the meeting or any adjournments thereof.
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C> <C> <C>
Ralph C. Batastini Kenny C. Guinn Leonard R. Judd Carolyn M. Sparks
Manuel J. Cortez Thomas Y. Hartley James R. Lincicome Robert S. Sundt
Lloyd T. Dyer Michael B. Jager Michael O. Maffie
</TABLE>
/ / FOR all the foregoing nominees / / WITHHOLD AUTHORITY to vote for all
the foregoing nominees
NOTE: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THAT NOMINEE'S NAME. UNLESS AUTHORITY TO VOTE FOR ALL THE FOREGOING
NOMINEES IS WITHHELD, THIS PROXY WILL BE DEEMED TO CONFER AUTHORITY TO VOTE
FOR EVERY NOMINEE WHOSE NAME IS NOT STRUCK.
2. PROPOSAL TO APPROVE THE CLASSIFICATION OF THE BOARD OF DIRECTORS:
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPROVE THE COMPANY'S MANAGEMENT INCENTIVE PLAN:
/ / FOR / / AGAINST / / ABSTAIN
4. PROPOSAL TO APPROVE THE APPOINTMENT OF ARTHUR ANDERSEN & CO. as the
independent public accountants of the corporation:
/ / FOR / / AGAINST / / ABSTAIN
(IMPORTANT -- SIGNATURE REQUIRED ON REVERSE SIDE)
- -------------------------------------------------------------------------------
P THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
R HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
O PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4. FURTHER, IF CUMULATIVE
X VOTING RIGHTS FOR THE ELECTION OF DIRECTORS (PROPOSAL 1) ARE EXERCISED,
Y THE PROXIES, UNLESS OTHERWISE INSTRUCTED, WILL CUMULATIVELY VOTE THEIR
SHARES AS PROVIDED FOR IN THE PROXY STATEMENT.
Dated:____________, 1994
_________________________
(Signature)
_________________________
(Signature if held
jointly)
Please sign exactly as
name appears on this
proxy card. When shares
are held by joint
tenants, both should
sign. When signing as
attorney, executor,
administrator, trustee
or guardian, please give
full title as such. If a
corporation, please sign
in full corporate name
by president or other
authorized officer. If a
partnership, please sign
in partnership name by
authorized person.
<PAGE> 41
April 11, 1994
Dear EIP Participant:
Enclosed please find the proxy statement and proxy card for the 1994
annual meeting. The statement contains important issues for your
consideration.
Please take the time to review the documents and cast your vote as
quickly as possible. If you have any questions regarding the issues,
please call Laura Hobbs, Manager/Investor Relations at (702) 876-7237.
Sincerely,
Roger Elbert
Manager/Benefits
Enclosures
<PAGE> 42
APPENDIX
Map located on fourth page of document shows location of 1994 Annual
Meeting of Shareholders being held at the Company's Headquarters office
building, 5241 Spring Mountain Road, Las Vegas, Nevada.
