(Logo)
QUESTAR CORPORATION
180 East 100 South
P. O. Box 45433
Salt Lake City, Utah 84145-0433
______________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on May 16, 2000
_______________________________________
The Annual Meeting of Stockholders of Questar Corporation, a Utah
corporation (the "Company"), will be held at The Oxford Hotel, 1600
Seventeenth Street, Denver, Colorado, on Tuesday, May 16, 2000, at 10:00
a.m., local time, for the following purposes:
1. To elect three directors to hold office for three years;
2. To transact such other business as may properly come before the
meeting.
Stockholders of record as of March 20, 2000, are entitled to
receive notice of and to vote at the Annual Meeting. If you have your
shares registered in the name of a brokerage firm or trustee and plan to
attend the meeting, please obtain a letter, account statement, or other
evidence of your beneficial ownership of shares to facilitate your
admittance to the meeting.
By Order of the
Board of Directors
/s/Connie C. Holbrook
Connie C. Holbrook
Vice President, General Counsel,
and Secretary
Salt Lake City, Utah
April 3, 2000
YOUR VOTE IS IMPORTANT.
It is important that as many shares as possible be represented at
the Annual Meeting. Please date, sign, and promptly return your white
proxy card in the enclosed envelope (which requires no postage if mailed
within the United States). Your proxy may be revoked by you at any time
before it is voted.
QUESTAR CORPORATION
PROXY STATEMENT
May 16, 2000
This Proxy Statement is being furnished to stockholders of Questar
Corporation, a Utah corporation, in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual
Meeting of Stockholders to be held on Tuesday, May 16, 2000, at 10:00
a.m., local time, and any adjournment or postponement of such meeting.
At the Annual Meeting, holders of common stock will elect three
directors of the Company for three-year terms that expire in May of
2003. Information concerning the Annual Meeting and solicitation of
proxies for it is presented in a question and answer format.
Q: What am I voting on?
A: The election of W. Whitley Hawkins, Robert E. Kadlec, and Harris
H. Simmons to serve as directors.
Q: Who can vote?
A: Stockholders who owned shares as of the close of business on March
20, 2000. Each holder is entitled to one vote for each share held on
such date.
Q: How do I vote?
A: Sign and date each proxy card you receive and return it in the
enclosed prepaid envelope. If you return your signed proxy card, but do
not indicate how you want to vote, your shares will be voted for the
named nominees. You have the right to revoke your proxy by notifying
the Company's Corporate Secretary prior to the meeting, by returning a
later dated proxy, or by voting in person at the Annual Meeting.
If you own shares through a broker or other nominee, you must
return your proxy card to the broker. Your votes cannot be counted if
you send the proxy directly to the Company.
Q: What does it mean if I get more than one proxy card?
A: It means that you hold shares registered in more than one account.
Sign and return all proxies to make sure that all your votes are
counted, but consider consolidating your accounts to minimize the
administrative cost of sending materials to you.
Q: Who is soliciting my proxy?
A: Questar's Board of Directors. The Company has not hired an
independent proxy solicitor, but may use directors, officers, and
employees to personally solicit proxies.
Q: Who is paying for the solicitation?
A: The Company is paying for the solicitation of proxies and will
reimburse banks, brokers, and other custodians for reasonable charges to
forward proxy materials to beneficial holders.
Q: What constitutes a quorum?
A: On March 20, 2000, the Company had 80,378,006 shares of common
stock. A majority of the shares, or 40,189,004 shares, constitutes a
quorum. Once a quorum is present, the nominees will be elected upon
receiving a plurality of the shares represented at the meeting. The
Company's Bylaws provide that votes "withheld" from nominees will not be
counted for purposes of determining whether a nominee receives a
plurality of votes. Shares registered in the names of brokers for which
proxies are voted for some but not all matters will be considered as
voted only as to those matters actually voted. Abstentions, broker
nonvotes, and instructions to withhold authority to vote for one or more
of the nominees will result in such nominees receiving fewer votes.
Such action, however, will not reduce the number of votes otherwise
received by the nominee.
Q: Who can attend the Annual Meeting?
A: Any stockholder of record as of March 20, 2000, can attend. If
you own shares through a nominee or trustee, please obtain a letter,
account statement, or other evidence of your ownership of shares as of
such date.
Q: How will my vote be handled on other matters?
A: Questar's Bylaws limit the matters presented at an Annual Meeting
to those in the notice, those otherwise properly presented by the Board
of Directors and those presented by stockholders so long as the
stockholder gives the Corporate Secretary written notice of the matter
at least 90 days before the meeting. We do not expect any other matter
to come before the meeting. If any other matter is presented at the
Annual Meeting, your signed proxy gives the named proxies authority to
vote your shares. (See "Other Matters" on page 20 for a detailed
discussion of the Company's Bylaw requirements.)
Q: When are stockholder proposals due for the next Annual Meeting?
A: To be considered for presentation at the Company's Annual Meeting
scheduled for May of 2001 and included in the proxy statement, a
stockholder proposal must be received at the Company's office no later
than December 5, 2000.
ELECTION OF DIRECTORS
The Company's Restated Articles of Incorporation provide for a
board of 13 directors, divided into three classes, approximately equal
in number, elected to serve three-year terms.
The Board of Directors has selected W. Whitley Hawkins, Robert E.
Kadlec, and Harris H. Simmons as the nominees for election to three-year
terms that expire in May of 2003. (Mr. U. Edwin Garrison will be
retiring as a voting director in May of 2000. The Board of Directors
has not nominated anyone to replace him.) Unless you give other
instructions for your shares, the proxies will be voted for the
nominees.
Each of the nominees has consented to serve for a new term.
However, in the event that any nominee is unwilling or unable to serve
as a director, the proxies named in the enclosed proxy may vote, in
their discretion, for any other person.
Biographical information concerning the nominees and the current
directors of the Company whose terms will continue after the Annual
Meeting is set forth on the following pages. Unless otherwise
indicated, the nominees have been engaged in the same principal
occupation for the past five years. Ages are correct as of the date of
the Proxy Statement.
Nominees
[Picture] Mr. W. Whitley Hawkins owns a consulting firm,
Hawkins Bricker International and HBI, Inc., which
manufactures chemical coating products. He retired as
President and Chief Operating Officer of Delta Air
Lines in March of 1993. Mr. Hawkins, age 68, has
served as a director of the Company since 1991 and also
serves on the Advisory Council of SunTrust Bank and on
the Advisory Board of the International Airline
Passengers Association.
[Picture] Mr. Robert E. Kadlec has a venture capital firm,
Bentley Capital Corp. He retired as President and
Chief Executive Officer of BC Gas Inc., effective
December 31, 1995. Mr. Kadlec, age 66, has been a
director of the Company since 1987, is a director of BC
Gas Inc., Trans Mountain Pipe Line Company Ltd.,
British Pacific Properties Ltd., and International
Forest Products Ltd.
[Picture] Mr. Harris H. Simmons is the President and Chief
Executive Officer of Zions Bancorporation and the
Chairman of the Board of Zions First National Bank and
is also a director of Zions Bancorporation. Mr.
Simmons, age 45, has served as a director since 1992.
He also serves as a director of O. C. Tanner Company.
Continuing Directors (Present Term Expires in 2001)
[Picture] Teresa Beck was appointed to serve as a director
effective October 28, 1999. Ms. Beck, age 45, was
President of American Stores from 1998 to 1999. She
also served as American Stores' Chief Financial Officer
from 1993 to 1998. She is a director of Textron, Inc.,
Albertson's Inc., and a trustee of Intermountain Health
Care, The Children's Center, and of the Salt Lake
Organizing Committee for the Olympic Winter Games of
2002.
[Picture] Mr. R. D. Cash has served as the Company's
President and Chief Executive Officer since May of 1984
and as the Company's Chairman of the Board since May of
1985. Mr. Cash, age 57, has been a director of the
Company since 1977 and also serves as a director of
Zions Bancorporation and Associated Electric and Gas
Insurance Services Limited; a member of the Board of
Directors of the Federal Reserve Bank (Salt Lake
Branch) of San Francisco; and a trustee of the Salt
Lake Organizing Committee for the Olympic Winter Games
of 2002.
[Picture] Mr. Gary G. Michael is Chairman and Chief
Executive Officer of Albertson's, Inc. and has served
in this position since February of 1991. Mr. Michael,
age 59, has been a director of the Company since 1994.
He is a director of Albertson's and Boise Cascade
Corporation and Chairman of the Board of Directors of
the Federal Reserve Bank of San Francisco.
[Picture] Mr. Gary L. Nordloh, age 52, serves the Company
as Executive Vice President. He has served as a
director of the Company since October of 1996. He has
responsibility for the Company's market resources
activities and is the President and Chief Executive
Officer of each entity within that group, e.g. Wexpro
Company (oil and gas development) and Questar
Exploration and Production Company (oil and gas
exploration and production).
[Picture] Mr. Scott S. Parker, age 65, retired effective
December 31, 1998 as Chief Executive Officer of
Intermountain Health Care, Inc., a position he had held
since 1975. He was also President of this same
organization from April of 1975 to April of 1998 and
now serves as a member of the Board of Trustees. He
serves as a director of First Security Corporation, MMI
Companies, Inc., First Consulting Group, Sutter Health,
Inc., and Bonneville International Inc.
Continuing Directors (Present Term Expires in 2002)
[Picture] Mr. Patrick J. Early, age 67, served as Vice
Chairman of Amoco Corporation from July of 1992 until
his retirement in April of 1995. He has served as a
director of the Company since 1995. He was also a
director of Amoco Corporation from 1989 to his
retirement. He is a member of the Board of Trustees of
the Museum of Science and Industry in Chicago.
[Picture] Ms. Marilyn S. Kite, age 52, is a partner in the
law firm of Holland & Hart and practices in Jackson,
Wyoming. She has served as a director since May of
1997. She is a director of the University of Wyoming
Foundation.
[Picture] Mr. Dixie L. Leavitt is the founder and Chairman
of the Board of the Leavitt Insurance Group (a group of
approximately 75 independent insurance agencies located
in nine western states). Mr. Leavitt, age 70, is also
President and Chairman of entities engaged in dairy,
cattle, agriculture, and real estate operations in Utah
and southern Nevada. He has been a director of the
Company since 1987.
[Picture] Mr. D. N. Rose serves the Company as Executive
Vice President. He has responsibility for the
Company's regulated activities and is the President and
Chief Executive Officer of each corporate entity within
that group, e.g., Questar Gas Company (retail natural
gas distribution) and Questar Pipeline Company
(interstate transmission of natural gas). He has
served as a director of the Company since 1984. Mr.
Rose, age 55, is also a trustee of Westminster College.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
Board Committees
The following section contains information about Board Committees:
Name of Director Finance/Audit Management Performance Nominating
Executive
T. Beck X
R. D. Cash X1 X
P. J. Early X X
U. E. Garrison2 X X X1
W. W. Hawkins X X
R. E. Kadlec X X X
M. S. Kite X X
D. L. Leavitt X X X
G. G. Michael X X1 X
G. L. Nordloh
S. S. Parker X X
D. N. Rose
H. H. Simmons X1 X X
Meetings held in 1999 2 1 1 3
_____________
1Chairman
2Mr. Garrison has reached the mandatory retirement age and will
retire in May.
Finance and Audit: Reviews auditing, accounting, financial
reporting, and internal control functions; monitors financing
requirements, dividend policy, and investment relations activities;
oversees compliance activities and year 2000 readiness. All members are
nonemployee directors.
Management Performance: Reviews the performance of R. D. Cash,
salary and compensation arrangements paid to the Company's officers;
administers the Long-Term Stock Incentive Plan; and makes
recommendations about participants, performance objectives and awards
under the Annual Management Incentive Plans adopted by the Company and
its major operating subsidiaries. All members are nonemployee
directors.
Nominating: Recommends individuals for nomination to the Board of
Directors. Will consider director candidates suggested by shareholders,
but hasn't established formal procedure.
Executive: May act on behalf of the Board of Directors and handle
special assignments.
Attendance at Board and Committee Meetings
The Company's Board of Directors held four regular meetings during
1999; Board Committees held a total of seven meetings. With the
exception of Mr. Parker, all directors attended at least 75 percent of
the meetings. The Company's directors had an overall attendance
percentage of 97.4 percent.
Directors' Compensation
The Company's nonemployee directors receive the following
compensation for their service as directors:
Annual Retainer: $15,600 (monthly installments of $1,300)
(Increased from $14,400 as of June 1, 1999)
Board Meeting Fee: $1,000
(Increased from $900 as of June 1, 1999)
Committee Meeting Fee: $800 ($1,000 for Chairmen)
(Increased from $700 and $900 as of June 1, 1999)
Telephone Attendance: All meeting fees are reduced by $200 if
director participates by telephone call.
Directors also receive annual retainer fees of $4,800 (monthly
installments of $400) and meeting fees of $600 for service as directors
of the Company's primary subsidiaries.
Nonemployee directors can defer the receipt of their fees and have
such deferred fees earn interest as if invested in long-term
certificates of deposit or be accounted for with "phantom shares" of the
Company's common stock.
Nonemployee directors also receive annual grants of nonqualified
stock options at the first regular meeting of the Board of Directors.
On February 8, 2000, eligible directors, with the exception of Messrs.
Garrison, Michael, and Simmons, each received a stock option to purchase
6,400 shares. The three named directors each received a stock option to
purchase 8,000 shares, reflecting added responsibilities as Chairmen of
Board Committees. The options are priced at the closing price on the
date of grant, which was $15.00.
Nonemployee directors can elect to receive their fees in shares of
stock. The plan for providing payment of fees in stock and the stock
option plan have both been approved by the Company's shareholders.
The Company has entered into individual indemnification agreements
with all directors, including Messrs. Cash, Nordloh, and Rose,
indemnifying them as directors. The form of these agreements was
approved by the Company's stockholders at the 1988 Annual Meeting.
Directors' Retirement Policy
In May of 1992, the Board of Directors adopted a retirement policy
that permits an outside director to continue serving in such position
until the annual meeting following his 72nd birthday if still actively
engaged in business, financial, and community affairs. With the
exception of the Company's Chief Executive Officer, any inside director
is expected to resign as a director on or before the date of his
retirement as an employee.
Certain Relationships and Related Transactions
Ms. Beck and Mr. Parker serve as members of the Board of Trustees
of Intermountain Health Care, Inc. (IHC), a nonprofit corporation that
provides health care services in the Company's areas of operation. Mr.
Parker is also the former President and Chief Executive Officer of IHC.
The Company offers two health maintenance organizations through IHC as
options available to employees under the Company's health plan. In
1999, the Company and its subsidiaries paid IHC a total sum of $837,460
in administrative fees.
Mr. Kadlec is a director of BC Gas Inc. BC Gas has contracts with
Questar Energy Trading for the purchase of gas during the winter heating
season and for the sale of gas during the summer months. During 1999,
Questar Energy received $5,218,838 from BC Gas and paid BC Gas $231,965
for gas deliveries from it. BC Gas also has long-term contracts with
Questar Pipeline for storage service and was charged $1,855,136 for such
service during 1999.
Mr. Simmons is the Chairman of the Board of Zions First National
Bank. The Company has a line of credit through Zions, which is priced
at the same competitive range paid by the Company for other lines of
credit. Some Company subsidiaries have accounts with Zions, which have
commercial terms available to other clients. If a pending merger
between Zions Bancorporation and First Security Corporation occurs, Mr.
Simmons will assume executive officer positions with First Security.
First Security provides a variety of trustee, banking and financial
services for the Company and its affiliates. These services are
provided at prices and at terms available to other large clients.
Ms. Kite is a partner in Holland and Hart, a law firm that has
been used by the Company in conjunction with litigation and lobbying
activities. The Company and its affiliates paid approximately
$1,350,200 to Holland and Hart for services rendered in 1999. Ms. Kite
was not personally involved with representing the Company's interests.
SECURITY OWNERSHIP, DIRECTORS AND EXECUTIVE OFFICERS
The following table lists the shares of stock beneficially owned
by each of the directors and each executive officer named on page 11 and
all directors and executive officers as a group as of March 1, 2000
(unless otherwise noted). Except as noted, each person has sole voting
and investment power over the shares shown in the table.
Amount and Nature of
Common Stock Beneficially Owned
Number of Right to Percent of Phantom Stock
Shares Owned Acquire1 Class 2 Units3
Teresa Beck 561 0 * 784
R. D. Cash 4, 5, 6, 7 265,863 382,627 .80 % 55,397
P. J. Early 2,000 24,800 * 7,619
U. Edwin Garrison 41,894 35,900 * 11,584
W. Whitley Hawkins 6,040 47,200 * 3,397
C. M. Heiner5 120,137 145,500 .33 % 8,020
Robert E. Kadlec8 21,457 47,200 * 0
Marilyn S. Kite 200 12,800 * 0
Dixie L. Leavitt7 33,524 41,600 * 27,901
Gary G. Michael 2,800 37,600 * 10,600
Gary L. Nordloh 5, 6, 7 85,515 114,750 .25 % 9,401
Scott S. Parker 840 12,800 * 3,634
S. E. Parks5, 6, 7 70,953 100,108 .21 % 1,415
D. N. Rose5, 6 92,941 143,854 .29 % 9,898
Harris H. Simmons 2,200 43,200 * 12,500
All directors and 844,577 1,303,585 2.6 % 166,296
executive officers (17 individuals
including those listed above)
___________
1Shares that can be acquired by exercising stock options within 60
days of March 1, 2000.
2Unless otherwise listed, the percentage of shares owned is less
than .10%. (The percentages do not include phantom stock units.) The
percentages of beneficial ownership have been calculated in accordance
with Rule 13d-3(d)(1) under the Securities Exchange Act of 1934.
3Phantom stock units are held through the various deferred
compensation plans available to the Company's directors and officers.
Although these plans only permit such units to be paid in the form of
cash, investment in such units represent the same investment in the
performance of the Company's common stock as does investment in actual
shares of common stock.
4Mr. Cash is the Chairman of the Board of Trustees of the Questar
Corporation Educational Foundation, the Questar Corporation Arts
Foundation, and the Questar Corporation Native American Scholarship
Foundation, three nonprofit corporations that own an aggregate of
135,313 shares of the Company's common stock. As Chairman, Mr. Cash has
voting power for such shares, but disclaims any beneficial ownership of
the shares. The shares are not included in the total set opposite his
name.
5The Company's executive officers have shares held for their
accounts in the Company's Employee Investment Plan. The number of
shares opposite each of their names includes shares of stock through
such plan as of January 31, 2000 as follows: Mr. Cash, 73,214 shares;
Mr. Rose, 40,361 shares; Mr. Nordloh, 20,176 shares; Mr. Heiner, 52,127
shares; and Mr. Parks, 17,307 shares.
6The Company's executive officers acquired restricted shares of
the Company's common stock in partial payment of bonuses earned under
the Annual Management Incentive Plans. Mr. Nordloh also acquired
restricted shares of the Company's common stock under employee
compensation plans adopted by the Market Resources segment. The number
of shares opposite each of their names includes the following shares of
restricted stock beneficially owned as of March 1, 2000: Mr. Cash, 2,276
shares; Mr. Rose, 875 shares; Mr. Nordloh, 3,377 shares; and Mr. Parks,
279 shares. The officers receive dividends on such shares and have
voting powers for such shares, but cannot dispose of them until they
vest.
7Of the total shares reported for Mr. Cash, 31,900 shares are
owned by his family's private foundation and 4,746 shares are in family
trusts for which Mr. Cash shares voting and investment control. Mr.
Leavitt owns his shares of record jointly with his wife. Some of Mr.
Nordloh's record shares are owned by family trusts. Some of Mr. Parks'
record shares are owned jointly with his spouse.
8Mr. Kadlec's wife beneficially owns 400 shares of common stock.
Mr. Kadlec has voting control and investment control over such shares.
Such shares are included in the shares listed opposite his name.
SECURITY OWNERSHIP, PRINCIPAL HOLDERS
The following table sets forth information, as of December 31,
1999, with respect to each person known by the Company to beneficially
own at least 5 percent of its common stock.
Name and Address of Shares and Nature of
Beneficial Owner Beneficial Ownership Percent of Class
Capital Research and 6,235,000 7.7
Management Company Investment Advisor1
333 South Hope Street
Los Angeles, California 90071
First Security Bank, N.A. 5,903,818 7.3
79 South Main Street Trustee for Company
Salt Lake City, Utah 84111 Employee Benefit Plans
and Bank2
The Prudential Insurance 4,401,702 5.4
Company of America Insurance Company
751 Broad Street Investment Advisor3
Newark, New Jersey 07102-3777
_____________
1In the Schedule 13G dated February 10, 2000, Capital indicated
that it had sole power to dispose of 6,235,000 shares but had no power,
sole or shared, to vote any shares.
2Of this total, First Security beneficially owns 5,756,527 shares
in its role as trustee of the Employee Investment Plan sponsored by the
Company. Participating employees control the voting of such shares.
3In its Schedule 13G dated January 31, 2000, Prudential indicated
that it had sole power to vote and dispose of 38,800 shares and shared
power to vote and dispose of 4,362,902 shares.
EXECUTIVE COMPENSATION
The following Summary Compensation Table lists compensation earned
by Mr. Cash and the other four most highly compensated executive
officers during 1997, 1998, and 1999.
Summary Compensation Table
Annual Compensation Long-Term Compensation All Other
Restricted Options Compensation
Name and Principal Position Year Base Salary($) Bonus ($)1 Stock Awards ($)2 (#) ($)3
>
R. D. Cash 1999 500,000 23,400 23,400 140,000 30,010
Chairman, President, and 1998 490,000 24,356 24,344 130,000 63,573
Chief Executive Officer 1997 436,000 94,717 90,844 70,000 81,521
D. N. Rose 1999 302,417 0 0 75,000 18,654
President and Chief 1998 291,783 29,770 29,750 64,000 38,403
Executive Officer 1997 273,517 55,118 52,582 46,000 54,891
Regulated Services Companies
G. L. Nordloh 1999 295,000 57,961 48,105 75,000 17,912
President and Chief 1998 295,000 19,739 5,797 64,000 38,361
Executive Officer 1997 258,500 50,783 42,194 53,000 50,001
Market Resources Companies
C. M. Heiner 1999 245,800 64,363 0 42,000 18,193
President and Chief 1998 244,600 106,511 0 42,000 28,720
Executive Officer 1997 237,000 37,642 25,222 38,000 36,481
Questar InfoComm, Inc.
S. E. Parks 1999 185,417 5,108 2,355 34,000 14,148
Vice President, Treasurer, 1998 171,550 12,377 4,165 34,000 21,383
and Chief Financial Officer 1997 152,833 18,348 18,297 26,000 20,204
____________
1Amounts listed under this heading for 1999 include cash payments
awarded under the 1999 Annual Management Incentive Plans (AMIPs), cash
payments awarded under the 1999 general employee compensation plans
adopted by Market Resources (Market Resources Plans) and Questar
InfoComm, and a special cash payment awarded to Mr. Parks.
2Amounts under this heading for 1999 include the value (as of the
grant date) of any shares of restricted stock granted in 2000, in lieu
of cash, as partial payment of bonuses earned under the 1999 AMIPs and
the value of any shares of restricted stock granted in connection with
the 1999 Market Resources Plans. All shares of restricted stock vest in
two annual, equal installments on the first business day in February of
the first and second years following the grant date. Dividends are paid
on the restricted shares at the same rate dividends are paid on other
outstanding shares of the Company's common stock. As of December 31,
1999, the amounts were:
Mr. Cash, 3,556 shares worth $53,340
Mr. Rose, 2,980 shares worth $44,700
Mr. Nordloh, 1,327 shares worth $19,905
Mr. Heiner, 590 shares worth $8,850
Mr. Parks, 673 shares worth $10,095
3The 1999 figures include:
Employee Investment Plan, Deferred Share Plan,
Contributions ($) Contributions ($) Unused Vacation
($)
Mr. Cash 7,880 22,130
Mr. Rose 7,880 10,774
Mr. Nordloh 7,880 10,032
Mr. Heiner 7,880 10,313
Mr. Parks 7,880 2,662 3,606
The following table lists information concerning the stock options
that were granted to the Company's named executive officers during 1999
under the Company's Long-Term Stock Incentive Plan. No stock
appreciation rights (SARs) were granted during 1999; none have been
granted under the Plan.
Option/Grants in Last Fiscal Year
% of Total
Options Options Granted Exercise or
Granted to Employees in Base Price Expiration Grant Date
Name (#)1 Last Fiscal Year ($/Share) Date Value ($)2
R. D. Cash 140,000 17.4 17.00 2/9/2009 442,400
D. N. Rose 75,000 9.3 17.00 2/9/2009 237,000
G. L. Nordloh 75,000 9.3 17.00 2/9/2009 237,000
C. M. Heiner 42,000 5.2 17.00 2/9/2009 132,720
S. E. Parks 34,000 4.2 17.00 2/9/2009 107,440
____________
1These stock options vest in four annual, equal installments, with
the first installment exercisable as of August 9, 1999. Participants
can use cash or previously-owned shares as consideration for option
shares. Options expire when a participant terminates his employment,
unless termination is caused by an approved retirement, death, or
disability. Options can be exercised 12 months following a
participant's death or disability. Options may be exercised after
retirement for terms specified in advance by the Committee.
2 When calculating the present value of options as of the date
granted (February 9, 1999), the Company used the Black-Scholes option
pricing model. The Company assumed a volatility of 20.6 percent, a
risk-free interest rate of 5.11 percent, a dividend yield of 3.88
percent, and an average life of 7.20 years. The real value of the
options in this table depends upon the actual performance of the
Company's stock during the applicable period. There can be no assurance
that the values shown in this table will be achieved.
The following table lists information concerning the stock options
that were exercised by the named executive officers during 1999 and the
total options and their value held by each at year-end 1999.
Option Exercises in Last Fiscal Year
and Fiscal Year-end Option Values
Shares Number of Unexercised Value of Unexercised,
Acquired or Value Options at Year-End In-the-Money Options
Exercised1 Realized2 (#) At Year-End ($)1
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
R. D. Cash 6,778 46,967 384,332 187,500 138,195 0
D. N. Rose 19,000 117,563 143,854 99,750 0 0
G. L. Nordloh 0 0 114,750 101,250 0 0
C. M. Heiner 0 0 145,500 62,000 49,875 0
S. E. Parks 0 0 100,108 49,000 26,250 0
____________
1The "value" is calculated by subtracting the fair market value of
the shares purchased on the date of exercise minus the option price.
The current value of the shares may be higher or lower than the
aggregate value reported in the table.
Retirement Plans
The Company maintains a noncontributory retirement plan that is
funded actuarially and does not involve specific contributions for any
one individual. The following table lists the estimated annual benefits
payable on a straight line annuity basis under the Company's Retirement
Plan as of December 31, 1999, and, if necessary, the Company's
Supplemental Executive Retirement Plan (SERP). The benefits shown are
based on earnings and years of service for an employee reaching normal
retirement age of 65 in 1999, do not include Social Security benefits,
and reflect a 50 percent surviving spouse benefit. Benefits under the
Retirement Plan are not reduced or offset by Social Security benefits,
although participants who retire prior to age 62 do receive a temporary
supplement until reaching age 62.
Pension Plan Table
Highest Consecutive
Three-Year Average Years of Service
Annual Compensation 15 20 25 30 35
$200,000 54,025 72,033 90,041 95,041 100,041
250,000 68,275 91,033 113,791 120,041 126,291
300,000 82,525 110,033 137,541 145,041 152,541
350,000 96,775 129,033 161,291 170,041 178,791
400,000 111,025 148,033 185,041 195,041 205,041
450,000 125,275 167,033 208,791 220,041 231,291
500,000 139,525 186,033 232,541 245,041 257,541
550,000 153,775 205,033 256,291 270,041 283,791
600,000 168,025 224,033 280,041 295,041 310,041
650,000 182,275 243,033 303,791 320,041 336,291
700,000 196,525 262,033 327,541 345,041 362,541
The Company's Retirement Plan has a "step rate/excess" benefit
formula. The formula provides for a basic benefit that is calculated by
multiplying the employee's final average earnings by a specified basic
benefit factor and by subsequently multiplying such sum by the
employee's years of service (to a maximum of 25). This basic benefit is
increased for each year of service in excess of 25 and is reduced for
retirement prior to age 62. Employees also receive a permanent
supplemental benefit which is calculated by multiplying the difference
between the employee's final average earnings and his "covered
compensation" by a supplemental factor that varies by age. (The term
"covered compensation" refers to the 35-year average Social Security
wage base tied to year of an employee's birth.) Employees who retire
prior to age 62 also receive a temporary supplement that is tied to
years of service until they are eligible to receive Social Security
benefits at age 62.
Federal tax laws impose limits on the amount of a participant's
annual compensation that can be used when calculating benefits under
qualified plans and on the amount of benefits that can be paid to a
participant from such plans. The SERP, a nonqualified plan, was adopted
in 1987 to compensate officers who are affected by these limits. It
provides retirement benefits equal to the difference between the
benefits payable under the qualified Retirement Plan and the benefits
that would be payable absent such limits. The SERP also permits
participants to make advance elections to receive lump-sum payments.
All of the officers listed in the table earn annual compensation in
excess of the current cap of $170,000 (increased from $160,000 as of
January 1, 2000), and all of them have vested benefits under the SERP.
Information concerning each named executive officer's
compensation, final average earnings, and years of service as of
December 31, 1999 is shown below:
1999
Retirement Benefit Final
Compensation Average Earnings Years of Service
R. D. Cash $621,039 $654,244 24
D. N. Rose 384,833 393,177 31
G. L. Nordloh 369,091 389,205 15.4
C. M. Heiner 383,333 341,845 29
S. E. Parks 216,031 203,622 25.4
Each officer's 1999 compensation for purpose of the Company's retirement
plans is different than shown on the table because the former includes
cash payments when made, not when earned; the value of restricted stock
when distributed, not granted; and excludes salary reductions for
pre-tax parking.
Executive Severance Compensation Plan
The Company has an Executive Severance Compensation Plan that
covers the Company's executive officers and all other officers of the
Company and its affiliated companies. Under this plan, participants,
following a change in control of the Company, are eligible to receive
compensation equal to up to two years' salary and miscellaneous benefits
upon a termination of their employment (as defined in the plan).
The dollar amounts payable to the Company's executive officers
(based on current salaries paid by the Company and its affiliates) in
the event of a change in control of the Company are as follows:
$1,000,000 to Mr. Cash; $607,800 to Mr. Rose: $636,000 to Mr. Nordloh;
$516,000 to Mr. Heiner; and $397,000 to Mr. Parks. The Company's
executive officers would also receive certain supplemental retirement
benefits, welfare plan benefits, and cash bonuses.
Under the plan, a "change in control" is defined to include any
change in control required to be reported under Item 6(e) of Schedule A
of Regulation 14A of the Securities Exchange Act of 1934, as amended. A
change in control is also deemed to occur once any acquiring person
becomes the beneficial owner, directly or indirectly, of securities
representing 15 percent or more of the Company's outstanding shares of
common stock.
CUMULATIVE TOTAL SHAREHOLDER RETURN
The following graph compares the cumulative total return of the
Company's common stock with the cumulative total returns of a group of
diversified natural gas companies published by Value Line, Inc., a peer
group of nine diversified natural gas companies selected by the Company,
and of the S&P Composite-500 Stock Index. The Company believes
performance of the nine peer company group to be a better benchmark of
performance due to the higher concentration of commodity price exposure,
relative size, and business mix of such companies. (The nine peer
companies are Columbia Energy Group, Consolidated Natural Gas, Energen,
Equitable Resources, Kinder Morgan, MCN Energy, National Fuel Gas,
ONEOK, and Southwestern Energy.)
[The graph has three lines connecting the points in the following table.]
1994 1995 1996 1997 1998 1999
Questar $100.00 $126.53 $143.66 $180.10 $161.66 $129.84
Nine Peers 100.00 137.50 178.13 219.54 195.92 223.34
S&P 500 100.00 138.16 169.47 226.03 290.22 349.28
The chart assumes $100 is invested at the close of trading on December
31, 1994 in the Company's common stock, the equities of peer companies,
and the S&P 500 Index. It also assumes all dividends are reinvested.
For 1999, the Company had a negative return of 19.7 compared to a return
of 20.3 percent for the S&P Index and a return of 11.4 percent for the
Questar peer group. For the five-year period, the Company had a
compound annual return of 5.4 percent compared to returns of 28.4
percent for the S&P 500 Index and 16.7 percent for the Questar peer
group.
[The graph has three lines connecting the points in the following table.]
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Questar 100.0 100.00 123.65 158.79 206.38 178.55 225.92 256.49 321.57 288.64 231.83
Nine Peers 100.0 93.33 83.43 97.49 111.04 96.59 132.71 171.98 214.22 187.50 208.82
S&P 500 100.0 96.83 126.41 136.25 150.00 152.40 209.56 258.28 344.48 442.30 532.00
This chart assumes $100 is invested at the close of business on
December 31, 1989. For the ten-year period of time the Company had a
compound annual return of 8.8 percent compared to returns of 18.20
percent for the S&P 500 Index, and 7.6 percent for the peer group
companies.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Management Performance Committee (Committee) is a Committee of
outside directors that is chaired by Gary G. Michael. Other members
include Patrick J. Early, U. Edwin Garrison, W. Whitley Hawkins, Robert
E. Kadlec, and Scott S. Parker. This Committee reviews and approves all
elements of the total compensation program for officers of the Company
and administers the Company's Long-Term Stock Incentive Plan. The
Committee monitors the Company's executive compensation programs to
verify that they are aligned with the Company's business strategies and
financial goals. The Committee believes that such programs motivate the
Company's officers to acquire and retain appropriate levels of stock
ownership and are competitive with programs offered by the Company's
peers. The Committee believes that the total compensation earned by the
Company's officers in 1999 achieves these objectives and is fair and
reasonable.
Each year, the Committee reviews the performance of the Company on
a consolidated basis and the performance of the Company's major lines of
business and compares such performance to specified groups of peer
companies.
The Committee also assesses the individual performance of
officers, particularly the performance of R. D. Cash and a group that
includes the other named executive officers listed in the Summary
Compensation Table. The Committee periodically directs outside
consultants to perform an in-depth audit and analysis of the total
compensation paid to the Company's officers.
The Company's total compensation program for officers includes
base salaries, annual bonuses, and stock options. The total program is
designed to attract, motivate, reward and retain the broad-based
management talent required to achieve corporate objectives and increase
shareholder value. Each of these components of the total program is
discussed in greater detail below.
Base Salaries
The Committee reviews base salaries for the Company's officers on
an annual basis. Such salaries are generally pegged at or near the 50th
percentile or market average of survey data. The increases historically
awarded to Mr. Cash and other officers are based on an assessment of
each officer's comparison with survey data, responsibilities, experience
and performance. The salaries earned by the named executive officers
during 1999 are listed in the table shown on page 11.
Annual Bonuses
All Company officers, but particularly the five highest paid
officers, have a significant portion of their total compensation at
risk. Annual bonuses are directly linked to key financial and operating
objectives for the major business units and for the Company on a
consolidated basis. Each year, the Committee reviews and approves
annual specified performance objectives. Performance objectives are both
financial (e.g., net income, return on equity) and efficiency objectives
(e.g., customer service rating, safety performance, finding costs,
operating and maintenance costs). The performance objectives are set
after the Committee reviews actual results for the prior year and
budgeted results for the year in question and are generally higher than
actual results for the prior year and expectations for the current year.
An overall performance factor is multiplied by each officer's
target bonus to determine his earned bonus. Each officer's target bonus
is a percentage of his base salary in effect at the time the target
bonus is approved. The Committee determines the allocation of each
officer's target bonus between business unit results and consolidated
results. As a general rule, one-half of each officer's earned bonus is
paid in cash; the remainder is paid in shares of restricted stock that
vest in two annual, equal installments.
Stock Options
Annual grants of stock options are awarded to the Company's
officers and key employees as part of their "risk-based" compensation.
As a general rule, the Committee uses the prior year's grant as the
basis for determining each subsequent year's grant, but does change the
size of grants when participants are promoted to new positions or when
surveys indicate that stock options should be adjusted. The Committee
increased the size of options granted to the Company's highest ranking
officers in 1999 as the second year of a two-year program to increase
the options closer to the levels recommended by the consultant. These
grants are awarded pursuant to the terms of an omnibus Long-Term Stock
Incentive Plan, which allows the Committee broad flexibility to use a
wide range of stock-based performance awards.
Stock options, from the Committee's perspective, focus attention
on managing the Company from a long-term investor's perspective and
encourage officers to have a significant, personal investment in the
Company through stock ownership. Stock options awarded to officers and
key employees become valuable only as the Company's performance is
reflected in increased stock prices. Stock options constitute the
Company's only long-term incentive compensation program. Officers are
encouraged to retain their stock for long-term investment, rather than
sell option shares after purchasing them.
The Committee has stock ownership guidelines for officers.
(Phantom stock units attributable to an officer's deferred compensation
are included.) All of the officers named in the Summary Compensation
Table satisfy these guidelines, which constitute a multiple of their
base salaries.
Information concerning the stock options granted to the Company's
highest ranking executive officers in 1999 is included in the table
labeled "Option/Grants in Last Fiscal Year." The table labeled "Option
Exercises" provides information concerning the value realized by the
individual members of the group when exercising stock options in 1999
and the year-end value of their remaining stock options.
Specific Compensation Decisions
The Company's consolidated 1999 performance is a result of several
different factors, including nonperforming assets and failure to obtain
regulatory approval of certain costs. The Company's stock price, in
common with the stock prices of other integrated energy companies, has
also been negatively affected. The Committee, after considering 1999
performance results, accepted Mr. Cash's recommendation that his base
salary of $500,000 be frozen for a second consecutive year. The
Committee, in an effort to sharpen the attention given to improving the
Company's stock price, granted options to Mr. Cash and all other
participants that were 150 percent of the initial recommendations on a
one-time basis. This means that Mr. Cash was given an option to
purchase 210,000 shares (150 percent of his 1999 option of 140,000
shares) at a price at $15.00 per share, which was the closing price of
the stock on the option grant date. The 2000 stock options vest in four
equal annual installments beginning August 8, 2000.
Miscellaneous
The Committee supports the Company's historic philosophy that
officers are not fundamentally different than employees, but are paid
more due to the nature of their responsibilities, their experience, and
the greater demands on their time. Consequently, the Committee supports
the Company's traditional practice of limiting the perquisites granted
to officers. Company officers do not have first class travel
privileges, cars, country club memberships, supplemental welfare benefit
plans, executive dining room service, or personal use of the Company's
airplane.
Federal tax law precludes the Company from deducting compensation
paid in excess of $1 million per year to any named executive officer.
Performance-based compensation, however, is not subject to this
deductibility limit. The Company's Long-Term Stock Incentive Plan
qualifies for performance-based compensation. Consequently, the Company
can continue to take a deduction for any ordinary income recognized by
officers when exercising nonqualified stock options. As is shown on the
Summary Compensation Table, the annual compensation earned by Mr. Cash,
the Company's highest paid officer, is significantly below the $1
million limit.
Management Performance Committee
Gary G. Michael, Chairman
Patrick J. Early
U. Edwin Garrison
W. Whitley Hawkins
Robert E. Kadlec
Scott S. Parker
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP, independent auditors, has audited
the accounts of the Company for a number of years, including 1999, and
is expected to continue doing so. Representatives of Ernst & Young LLP
are expected to be present at the Annual Meeting, will have an
opportunity to make a statement if they desire, and will be available to
respond to questions.
ANNUAL REPORT AND FORM 10-K REPORT
An annual report for the year ending December 31, 1999, containing
financial and other information about the Company, has been recently
mailed to all stockholders of record.
The Company will send, without charge, a copy of its 1999 Annual
Report on Form 10-K (excluding exhibits), as filed with the Securities
and Exchange Commission, to any stockholder upon written request.
Requests should be sent to Connie C. Holbrook, Vice President, General
Counsel, and Corporate Secretary, P. O. Box 45433, Salt Lake City, Utah
84145-0433.
SECTION 16(a) COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934
and regulations promulgated by the Securities and Exchange Commission,
the Company's directors, certain officers, and persons that own more
than 10 percent of the Company's stock, are required to file reports of
ownership and changes in ownership with the Commission and the New York
Stock Exchange and to furnish the Company with copies of all such
reports they file.
Based solely on its review of copies of such reports received or
written representations for certain reporting persons, the Company
believes that all filing requirements were satisfied.
OTHER MATTERS
Pursuant to the Company's Bylaws, business must be properly
brought before an annual meeting in order to be considered by
stockholders. The Bylaws specify the procedure for stockholders to
follow in order to bring business before an annual meeting. A
stockholder who wants to nominate a person for election as a director
must deliver a written notice, by certified mail, to the Company's
Secretary. Such notice must be received at least 90 days prior to the
date of the meeting. The notice must set forth (1) the name, address,
and stock ownership of the person making the nominations; (2) the name,
age, business address, residential address, and principal occupation or
employment of each nominee, (3) the number of shares of the Company's
stock owned by each nominee; (4) a description of all arrangements and
understandings between the stockholder and nominee pursuant to which the
nomination is made; and (5) such other information concerning the
nominee as would be required, under the rules of the Securities and
Exchange Commission, in a proxy statement soliciting proxies for the
election of the nominee. The notice must also include the signed
consent of the nominee to serve as a director if elected.
The Company's Bylaws also require that any stockholder who is
entitled to vote at the annual meeting and who wants to submit a
proposal at such meeting without having it considered through the proxy
materials, must deliver a written notice of the proposal, by certified
mail, to the Company's Secretary. Such notice must be received at least
90 days prior to the date of such meeting. The notice must set forth
(1) a brief description of the proposal; (2) the stockholder's name,
address, and stock ownership; and (3) any material interest of the
stockholder in the proposal.
If the written notice is not received by the date specified in the
Bylaws, the named proxies will have discretionary voting to deal with
the nomination or proposal. A copy of the Company Bylaws specifying the
requirements will be furnished to any stockholder upon written request
to the Secretary.
By Order of the
Board of Directors
/S/Connie C. Holbrook
Connie C. Holbrook
Vice President, General Counsel
and Secretary
QUESTAR CORPORATION SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
180 East 100 South FOR THE ANNUAL MEETING, MAY 16, 2000
P. O. Box 45433
Salt Lake City, Utah 84145-0433
PROXY The undersigned stockholder of QUESTAR CORPORATION does hereby
constitute and appoint R. D. CASH and U. EDWIN GARRISON, or either of
them, the true and lawful attorney-in-fact and proxy with all the powers
that the undersigned would possess, if personally present, to vote the
stock of the undersigned at the Annual Meeting of Stockholders of the
Company to be held at The Oxford Hotel, 1600 Seventeenth Street, Denver,
Colorado, on Tuesday, May 16, 2000, at 10:00 a.m., local time, and at
any adjournments thereof, upon the matters described in the Notice of
Annual Meeting and Proxy Statement, dated April 3, 2000, receipt of
which is hereby acknowledged, and upon any other business that may come
before the meeting or any adjournments or postponements.
Dated: , 2000
(Signature)
(Signature)
Please date and sign exactly as
name appears hereon. When signing
as Attorney, Executor, Administrator,
Trustee, Guardian, etc., give full
title. If stock is held jointly, each
joint owner should sign. If stock is
owned by a corporation, please sign
full corporate by duly authorized
officer.
(Please turn over)
This proxy, when properly executed will be voted in the manner
directed by the stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR ALL NOMINEES.
The Board recommends a vote FOR the election of directors.
To elect three directors of the Company.
Nominees: W. Whitley Hawkins, Robert E. Kadlec, and Harris H. Simmons
[ ] VOTE FOR all nominees listed above, except as marked to the
contrary above (if any). To withhold your vote for any
individual nominee, strike a line through his name in the
list above.
[ ] VOTE WITHHELD from all nominees.
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting, or any adjournments or
postponements of such meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE.
Please mark if your address has changed and correct your address on
the reverse side. [ ]