CASCADE NATURAL GAS CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 27, 2000
------------------------
TO THE HOLDERS OF COMMON STOCK OF
CASCADE NATURAL GAS CORPORATION:
The Annual Meeting of Shareholders of Cascade Natural Gas Corporation will
take place at the offices of the Company located at 230 Fairview Avenue North,
Seattle, Washington 98109, on Thursday, January 27, 2000, at 1:30 p.m. for the
following purposes:
1. Elect directors to hold office until the next Annual Meeting and until
their successors are elected and qualified;
2. Transact other business as may properly come before the meeting or any
adjournments of the meeting.
The close of business on November 24, 1999 has been fixed as the record date
for the determination of Shareholders entitled to notice of and to vote at the
Annual Meeting or any adjournments of the meeting.
Holders of the Common Stock of the Company are entitled to vote upon all the
matters set forth in this notice.
By Order of the Board of Directors
LARRY C. ROSOK
CORPORATE SECRETARY
Seattle, Washington
December 3, 1999
IMPORTANT
TO ASSURE THAT A QUORUM IS PRESENT AT THE MEETING, PLEASE COMPLETE, SIGN AND
RETURN THE ENCLOSED PROXY PROMPTLY, USING THE ACCOMPANYING POSTAGE PREPAID AND
ADDRESSED ENVELOPE.
CASCADE NATURAL GAS CORPORATION
222 FAIRVIEW AVENUE NORTH, SEATTLE, WA 98109
------------------------
PROXY STATEMENT
---------------------
TO THE SHAREHOLDERS OF CASCADE NATURAL GAS CORPORATION
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of the Company of proxies to be voted at the Annual Meeting
of Shareholders ("Annual Meeting") to be held on Thursday, January 27, 2000, for
the purposes set forth in the accompanying Notice of Annual Meeting, and will be
mailed on or about December 15, 1999.
A form of proxy is enclosed for use at the meeting. A Shareholder giving a
proxy has the power to revoke it at any time before it is exercised. A proxy may
be revoked by delivering written notice of revocation to Larry C. Rosok,
Corporate Secretary, Cascade Natural Gas Corporation, 222 Fairview Avenue North,
Seattle, Washington 98109, or by filing a duly executed proxy card bearing a
later date. The powers of the proxy holders will be suspended if the person
executing the proxy is present at the meeting and elects to vote in person.
The persons named in the accompanying proxy card will vote as instructed on
the proxy card or, if no instructions are marked on the proxy card, as set forth
below with respect to the election of directors, and in their discretion as to
other items of business which may come before the meeting.
On November 24, 1999, the Company had 11,045,095 outstanding shares of $1
par value Common Stock ("Common Stock"). Each holder of record of Common Stock
("Shareholder") at the close of business on November 24, 1999, is entitled to
one vote for each share then held and to cumulate votes in the election of
directors. A majority of the shares entitled to vote, represented in person or
by proxy, will constitute a quorum at the meeting.
ELECTION OF DIRECTORS
Nine directors will be elected at the Annual Meeting, each to hold office
until the next Annual Meeting or until his or her successor is elected and
qualified. The nominees elected will be those receiving the largest number of
votes cast by all shares entitled to vote in the election, up to the number of
directors to be elected. All of the nominees listed below presently are serving
as directors and were elected at the 1999 Annual Meeting by over 98% of the
shares present and voting at the meeting. In the event any of the nominees
becomes unable to serve, the proxy holders may vote for substitute nominees in
their discretion. No circumstances are presently known which would cause any
nominee to become unavailable.
The right to cumulate votes in an election of directors entitles a
Shareholder to as many votes as he or she has shares, multiplied by the number
of directors to be elected (in this case, nine). The Shareholder's total number
of votes may then be allocated among the nominees in any way he or she decides,
including casting all the votes for one nominee. If a Shareholder wishes to
cumulate his or her votes, the proxy card should be marked in any way that the
Shareholder desires in order to (i) indicate clearly that the Shareholder is
exercising the right to cumulate votes and (ii) specify how the votes are to be
allocated among the nominees for director. For example, a Shareholder may write
next to the name of each nominee for whom the Shareholder desires to cast votes,
the number of votes to be cast for such nominee. The exercise of cumulative
voting rights is not subject to any conditions.
Unless the Shareholder instructs otherwise on the proxy card, proxies will
be voted in such a manner as to elect all or as many of the nominees listed as
possible. If either of the "For All Nominees Listed
1
Above" or "Exception" boxes is marked or no instructions are given, the named
proxies will have discretionary authority to cumulate votes if they so choose
and to allocate votes among the nominees as they deem appropriate (except for
any nominee specifically excepted by the Shareholder), including not casting any
votes for one or more nominees.
The age, principal occupation, business experience and other information
furnished by each nominee and the year in which he or she first became a
director is set forth below.
CARL BURNHAM, JR. Director since 1990
Attorney at Law
Yturri Rose LLP
Mr. Burnham, 60, is an attorney and, since 1967, has been a partner of
Yturri Rose LLP of Ontario, Oregon, one of the Company's Oregon counsel.
MELVIN C. CLAPP Director since 1981
Retired
Mr. Clapp, 66, was Chairman and Chief Executive Officer of the Company from
December 1988 until he retired February 1, 1995. From August 1981 to
December 1988 he was Executive Vice President. Mr. Clapp joined the Company in
1956 and held positions in district management until moving to the general
office in 1969.
THOMAS E. CRONIN Director since 1996
President
Whitman College
Dr. Cronin, 59, has served as President of Whitman College since the summer
of 1993. Prior to that, he held the McHugh Professorship of American
Institutions and Leadership at the Colorado College in Colorado Springs. In
1991, he served as acting President of the Colorado College. He is the author or
co-author of ten books on American Government.
DAVID A. EDERER Director since 1991
Partner
Ederer Investment Company
Mr. Ederer, 56, has been the managing partner since 1974 in Ederer
Investment Company, which invests in privately owned West Coast companies. Since
1978 he has been the owner or part owner and officer of several privately owned
manufacturing and property management companies.
HOWARD L. HUBBARD Director since 1981
Retired
Mr. Hubbard, 68, was President and a director of Washington Federal Savings
Bank in Hillsboro, Oregon from April 1982 until he retired in December 1991.
From 1975 to 1982 Mr. Hubbard was President and a director of Equitable
Savings & Loan Association, Portland, Oregon.
W. BRIAN MATSUYAMA Director since 1988
Chairman, President and Chief Executive Officer
Cascade Natural Gas Corporation
Mr. Matsuyama, 53, Chairman and Chief Executive Officer since February 1,
1995, was also appointed President on October 1, 1998, an office he previously
held from 1988 to 1995. From 1987 to 1988, he was Vice President and General
Counsel of the Company. Prior to 1987, he was a member of the law firm of Jones
Grey & Bayley, P.S., Seattle, Washington, with his principal client
representation being on behalf of the Company.
2
LARRY L. PINNT Director since 1995
Retired
Mr. Pinnt, 64, was Chief Financial Officer of US WEST Communications, Inc.
from 1979 until he retired in September 1989. Mr. Pinnt currently serves on the
Board of Trustees of the following publicly held mutual fund trusts: SAFECO
Common Stock Trust, SAFECO Tax-Exempt Bond Trust, SAFECO Money Market Trust,
SAFECO Resource Series Trust, and SAFECO Institutional Series Trust.
BROOKS G. RAGEN Director since 1984
Chairman
Manzanita Capital Inc. Financial Services
Mr. Ragen, 66, is Chairman of Manzanita Capital Inc., a financial services
firm. He was a Director of Ragen MacKenzie Incorporated, an investment banking
firm headquartered in Seattle, Washington from 1986 to 1998. From 1988 until
1996 he served as Chairman and Chief Executive Officer of Ragen MacKenzie
Incorporated. From 1987 to 1988 he was President of Cable, Howse & Ragen, the
predecessor to Ragen MacKenzie Incorporated and was Managing Partner of Cable,
Howse & Ragen from 1982 to 1987.
MARY A. WILLIAMS Director since 1983
Retired
Mrs. Williams, 65, has been retired since 1996. From 1983 to 1996 she was a
consultant. She was a Vice President of Seattle Trust & Savings Bank from 1977
to 1983.
BOARD AND COMMITTEE MEETINGS
The Board of Directors met five times during the fiscal year ended
September 30, 1999. The Executive Committee of the Board met three times during
the fiscal year ended September 30, 1999. Each Director standing for election
attended all of the meetings of the Board and committees on which he or she
served during fiscal 1999.
The Board has established an Executive Committee, an Audit Committee, a
Nominating and Compensation Committee, a Long Range Planning Committee and a
Pension Committee, whose members are as follows:
NOMINATING
EXECUTIVE AUDIT COMPENSATION PENSION LONG RANGE PLANNING
- --------- --------------------- -------------------- ------------------ -----------------------
W. Brian Matsuyama, Ch. Mary A. Williams, Ch. Brooks G. Ragen, Ch. M. C. Clapp, Ch. W. Brian Matsuyama, Ch.
M. C. Clapp Thomas E. Cronin Carl Burnham, Jr. Thomas E. Cronin Carl Burnham, Jr.
David A. Ederer Larry L. Pinnt David A. Ederer Howard L. Hubbard M. C. Clapp
Brooks G. Ragen Brooks G. Ragen Mary A. Williams Larry L. Pinnt Howard L. Hubbard
Mary A. Williams Brooks G. Ragen
The Audit Committee, which met four times during the fiscal year ended
September 30, 1999, recommends the engagement of the Company's independent
accountants, reviews with the independent accountants the plan for and results
of the auditing engagement, reviews the scope and results of the Company's
procedures for internal auditing, and reviews the adequacy of the Company's
system of internal accounting controls.
The Nominating and Compensation Committee, which held two meetings during
the fiscal year ended September 30, 1999, is responsible for recommending
candidates for seats on the Board of Directors, as well as recommending
compensation for officers and directors. The Committee will consider nominees
for director recommended by Shareholders for the 2001 Annual Meeting if the
nominations are received at the Company's executive offices by August 17, 2000;
provided that such nominations are accompanied by a description of the nominee's
qualifications, relevant biographical information and the nominee's consent to
be nominated and to serve if elected.
3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership, as of November 24, 1999, of the Company's Common Stock by (a) each
director, the Chief Executive Officer and the other four most highly paid
executive officers of the Company and (b) all current directors and executive
officers as a group. None of such persons owned any of the Company's outstanding
preferred shares at that date. The Company is not aware of any beneficial owner
of 5% or more of the Common Stock. Except as otherwise indicated in the table,
the Company believes the beneficial owners of the shares listed below have sole
investment and voting power with respect to the shares.
SHARES PERCENTAGE
BENEFICIALLY OF COMMON
DIRECTORS AND EXECUTIVE OFFICERS OWNED(1) STOCK
- -------------------------------- ------------ ----------
Larry E. Anderson...................................... 1,874 *
Carl Burnham, Jr....................................... 8,156 *
Melvin C. Clapp........................................ 19,037 *
Thomas E. Cronin....................................... 2,067 *
David A. Ederer........................................ 30,491(2) *
Howard L. Hubbard...................................... 26,500 *
W. Brian Matsuyama..................................... 16,031 *
King C. Oberg.......................................... 969 *
Larry L. Pinnt......................................... 5,480 *
Brooks G. Ragen........................................ 6,186(2) *
Jon T. Stoltz.......................................... 3,523 *
J. D. Wessling......................................... 2,040 *
Mary A. Williams....................................... 8,598 *
All directors and executive officers as a group
(15 persons)......................................... 130,952 1.19%
- ------------------------
* Less than one percent.
(1) The amounts include shares held in the Company's Employee Retirement Savings
Plan and Trust (the 401K Plan). The share numbers are shown in the following
table:
SHARES HELD
NAME IN 401K PLAN
- ---- ------------
W. Brian Matsuyama...................................... 5,221
Jon T. Stoltz........................................... 3,016
J.D. Wessling........................................... 2,040
King C. Oberg........................................... 969
Larry E. Anderson....................................... 1,874
(2) Includes shares awarded under the 1991 Director Stock Award Plan to
Messrs. Ederer and Ragen of 3,074 and 941 shares, respectively, including
reinvested dividends, as to which receipt has been deferred until they are
no longer directors.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, holders of more
than 10 percent of the Common Stock and directors and certain officers of the
Company are required to file reports ("Section 16(a) Statements") of beneficial
ownership of Common Stock and changes in such ownership with the Securities and
Exchange Commission. The Company is required to identify in its proxy statements
those persons who, to the Company's knowledge, were required to file
Section 16(a) Statements and did not do so on a timely basis. Based solely on a
review of copies of Section 16(a) Statements furnished to the
4
Company during and with respect to its most recent fiscal year and on written
representations from reporting persons, the Company believes that each person
who at any time during the most recent fiscal year was a reporting person filed
all required Section 16(a) Statements on a timely basis.
REPORT OF THE NOMINATING AND COMPENSATION COMMITTEE
TO THE SHAREHOLDERS
The Nominating and Compensation Committee of the Board of Directors is
responsible for reviewing the compensation levels for all officers of the
Company and making recommendations to the Board concerning officer salary
levels. The Committee is composed of four independent non-employee directors.
The Committee's review includes an assessment of the overall stewardship of
the Company and the officers' ability to achieve a reasonable net income under a
variety of conditions. In arriving at its recommendations regarding officer
compensation levels, the Committee applies policies and principles which are
essentially subjective in nature, rather than embodying specific criteria. Such
policies and principles may be summarized as follows: Officer compensation
should be comparable with compensation paid to officers of like companies, and
particularly those with which the Company must compete in attracting and
retaining skilled and competent individuals. Officers should also be compensated
for their contributions to the performance of the Company. In evaluating
performance, the Committee considers net income and factors affecting net
income. In a regulated energy business, factors such as weather, interest rates
and regulatory requirements have a significant influence on net income but are
generally outside the control of management. The Committee also considers
progress toward achieving corporate goals.
At the outset of fiscal 1999, the Company's officers (including W. Brian
Matsuyama, Chairman, President, and CEO) voluntarily declined increases in base
salary as a way of demonstrating their commitment to achieving the Company's
financial goals. The Committee approved and the Board granted incentive stock
options to officers of the Company in January 1999. These options directly align
the interests of key employees with those of shareholders in increasing
shareholder value. In arriving at the specific grant to Mr. Matsuyama, the
Committee considered his contributions to the direction and performance of the
Company and overall effectiveness in areas critical to the Company's success,
such as factors enhancing shareholder value, affecting net income, dealing with
the demands of rapid growth, and attaining corporate goals. Grants to other
named executives for fiscal 1999 were also based on the considerations described
above.
The Committee recommended and the Board approved an incentive compensation
program for fiscal 1999 that applied to officers and certain other employees. It
provided for cash payments to participating employees, based on their base
salaries, upon achievement of certain target levels of pre-tax earnings.
The Committee anticipates recommending expanded use of stock options and/or
other forms of incentive compensation for officers and other employees in the
future as part of a program to better align employee and shareholder interests.
Due to the Company's compensation structure, the Committee has not deemed it
necessary thus far to adopt a policy regarding the deductibility of certain
executive compensation under federal tax laws.
Brooks G. Ragen, Chairman
Carl Burnham, Jr.
David A. Ederer
Mary A. Williams
5
STOCK PERFORMANCE GRAPH
The following graph compares the total cumulative returns to investors in
the Company's Common Stock, the Edward Jones Natural Gas Distribution Index, the
Standard & Poors 500 Utility Index and the Standard & Poors 500 Index for the
period from October 1, 1994 through September 30, 1999. The graph assumes that
$10,000 was invested on September 30, 1994, in the Common Stock and in each of
the above-mentioned indices and that all dividends were reinvested. The total
returns for the 31 companies (of which the Company is one) included in the
Edward Jones Natural Gas Distribution Index have been weighted by their
respective market capitalizations.
CASCADE NATURAL GAS CORPORATION, EDWARD JONES NATURAL GAS DISTRIBUTION INDEX,
S&P 500 UTILITY INDEX, AND S&P 500 INDEX, (DIVIDENDS REINVESTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
STOCK PERFORMANCE CASCADE EDWARD JONES S&P 500 UTILITY INDEX S&P 500 INDEX
NATURAL NATURAL GAS
GAS CORPORATION DISTRIBUTION INDEX
9/94 $10,000 $10,000 $10,000 $10,000
9/95 $10,985 $11,336 $12,758 $12,971
9/96 $12,764 $13,728 $13,715 $15,605
9/97 $13,849 $16,212 $15,690 $21,909
9/98 $14,486 $18,239 $20,397 $23,903
9/99 $16,630 $19,479 $20,152 $30,547
6
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth the compensation
paid to the Chief Executive Officer and each of the other four most highly
compensated executive officers of the Company for the periods indicated.
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
YEARS OF FISCAL --------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SERVICE YEAR SALARY(A) BONUS(B) OPTIONS(#) COMPENSATION(C)
- --------------------------- -------- -------- --------- --------- ------------ ---------------
W. Brian Matsuyama............ 12 1999 $219,020 $8,688.23 16,000 $ 7506
Chairman, President and 1998 212,370 7,401
Chief Executive Officer 1997 206,670 6,565
Jon T. Stoltz................. 25 1999 $149,762 $5,699.46 4,000 $3,734
Senior Vice President 1998 120,960 0
Regulatory & Consumer 1997 117,720 0
Affairs
J.D. Wessling................. 5 1999 $140,411 $5,451.36 4,000 $6,267
Senior Vice President 1998 113,790 5,121
Finance & Chief 1997 109,140 4,513
Financial Officer
King C. Oberg................. 10 1999 $117,547 $4,563.68 4,000 $3,518
Vice President 1998 110,490 3,315
Gas Supply 1997 107,520 2,960
Larry E. Anderson............. 25 1999 $117,698 $4,569.56 4,000 $ 900
Vice President Operations 1998 109,620 900
1997 106,020 825
- ------------------------
(a) In November 1998, the Company discontinued a program of providing company
cars to officers and other executives. Affected officers and employees
received salary increases that partially offset the loss of the benefit
represented by the discontinued program. All affected employees supported
the discontinuance as a measure to achieve earnings targets. The change
resulted in a net savings of $75,000 Company-wide in fiscal 1999.
Officers voluntarily declined to participate in normal base salary increases
in fiscal 1999 as a way to demonstrate their commitment to achieving the
Company's financial goals. Comparisons of fiscal 1999 and fiscal 1998 salary
levels are affected by increases granted in the middle of fiscal 1998.
Mr. Wessling received a salary increase in April, 1999 in conjunction with a
promotion. Mr. Stoltz received a salary increase in April, 1999 in
conjunction with assuming increased responsibilities.
(b) An incentive compensation program was established for fiscal 1999 that
provided for cash payments to participating employees, based on their base
salaries, upon achievement of certain target levels of pre-tax earnings.
Twenty percent of earnings exceeding the target went into the bonus pool for
incentive compensation. The program resulted in payment of 3.88% of eligible
pay to participating employees.
(c) Amounts in this column represent the Company's matching contribution to the
401(k) Plan.
7
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the number of shares of the Company's Common
Stock subject to stock options granted in 1999 to the executive officers listed
in the Summary Compensation Table.
INDIVIDUAL GRANTS(1)
---------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR ($/SHARE) DATE VALUE(2)
- ---- ---------- ------------ --------- ---------- ----------
W. Brian Matsuyama....... 16,000 42 16.50 1/28/04 $38,880
Jon T. Stoltz............ 4,000 10.5 16.50 1/28/04 $ 9,720
J.D. Wessling............ 4,000 10.5 16.50 1/28/04 $ 9,720
King C. Oberg............ 4,000 10.5 16.50 1/28/04 $ 9,720
Larry E. Anderson........ 4,000 10.5 16.50 1/28/04 $ 9,720
- ------------------------
(1) The options become exercisable in 33 1/3% increments over three years as
long as the officer is still employed by the Company with certain exceptions
in the case of death, disability or retirement.
(2) In accordance with SEC rules, the Company chose the Black-Scholes option
pricing model to estimate the present value of the options on the grant
date. The Company's use of this model should not be construed as an
endorsement of its accuracy in valuing options. All stock option valuation
models require certain assumptions to be made. The following assumptions
were made for the purposes of calculating the present value of the options
listed above: volatility at 21%, dividend yield at 4.52%, an expected time
of exercise of 4 years following the grant date and a risk-free interest
rate of 4.60%. The ultimate value of the options in this table depends upon
the actual performance of the Common Stock underlying these options during
the applicable period.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES(A)
NUMBER OF SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT FISCAL
YEAR-END(#) YEAR-END(B)
---------------- -----------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ---- ---------------- -----------------
W. Brian Matsuyama............................ 0 0
16,000 $22,000
Jon T. Stoltz................................. 0 0
4,000 $ 5,500
J.D. Wessling................................. 0 0
4,000 $ 5,500
King C. Oberg................................. 0 0
4,000 $ 5,500
Larry E. Anderson............................. 0 0
4,000 $ 5,500
- ------------------------
(a) The named executive officers did not exercise any options during fiscal
1999.
(b) Calculated based on the difference between the closing sale price of the
Common Stock, $17.875, reported on the New York Stock Exchange on
September 30, 1999, and the aggregate exercise price of the unexercised
options.
8
RETIREMENT PLAN
Effective January 1, 1962, the Company adopted a noncontributory retirement
plan for its employees. To be eligible for participation in the plan, an
employee must have one year of service and be at least 21 years of age. Each
participant's benefits are fully vested after 5 years of employment. The level
of benefits is determined by a formula, described below, related to average
monthly earnings over certain time periods and to years of service. Covered
earnings are straight salary or hourly compensation, plus 75% of commissions or,
for hourly employees, plus 30% of overtime pay. With respect to the executive
officers named in the summary compensation table above, covered compensation
levels are slightly less than, but at least 90% of, the amounts shown under
"Salary" in such table. Benefits are not subject to reduction for Social
Security or any other benefits. Accruals to the plan are computed on an
actuarial basis and aggregated $1,949,000 for all participants for the fiscal
year ended September 30, 1999.
The amount of the monthly past service benefit under the plan is equal to
1.5% of the participant's average monthly earnings for the five-year period
ended December 31, 1994 (December 31, 1998 for employees subject to collective
bargaining), multiplied by the participant's years of service before 1995. The
benefit for each year of future service after 1994 (1998 for employees subject
to collective bargaining) is 2% of monthly compensation in lieu of the previous
1.5%. The Company from time to time has updated the average monthly earnings
used to compute the benefit, and the plan may be similarly amended in the
future.
EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME PLAN
Effective July 1, 1983, the Company adopted a plan to provide executive
officers, including those listed in the summary compensation table above, with
retirement, death and disability benefits supplementing the coverage payable
under the Company's retirement plan. This plan was established to enable the
Company to attract and retain highly competent persons in key executive
positions. The supplemental plan is designed so that each participant will
receive retirement plan payments, primary Social Security benefits and
supplemental plan payments each year equal, in the aggregate, to 70% of the
participant's highest annual salary during any of the five years preceding the
participant's retirement. Accruals for the plan are computed on an actuarial
basis and totaled $109,000 for the 1999 fiscal year.
The plan also contains provisions for early retirement and total and
permanent disability. The Board of Directors may approve early retirement under
the plan without the normally required reduction in the amount of the
supplemental benefit. Participants whose age and number of years of service,
when added together, equal at least 90 are automatically eligible for early
retirement benefits without reduction.
If a participant dies before receiving 120 monthly payments from the plan,
the participant's designated beneficiaries will receive the remaining balance of
the 120 payments. The monthly payment is the amount the participant was
receiving or was entitled to receive before death, or, if the participant was
employed by the Company at death and the result would be larger, a monthly
amount ranging from $4,000 to $12,000, depending on the officer. This monthly
death benefit is reduced by any monthly benefit payable to the participant's
surviving spouse. The surviving spouse is entitled to a monthly benefit for life
equal to one-half the benefit to which the participant was entitled before
death.
The plan determines vesting based on years of participation that are
measured from the date an employee becomes a participant, and provides for
partial vesting on a stepped basis, with full vesting based on age and years of
employment. An executive becomes fully vested when he or she reaches age 55 and
has completed five years of participation under the plan or seventeen years of
employment with the Company, upon death, or upon a change in control of the
Company (as defined). The plan also provides for severance benefits that would
otherwise be payable under the employment agreements (described below) following
a change in control of the Company.
9
The following table illustrates the estimated combined annual benefits that
would be received under the Company's Retirement Plan and the Executive
Supplemental Retirement Income Plan for the executives named in the summary
compensation table above, assuming that annual salaries increase at the annual
rate of 5% until retirement and that they retire at age 65. Amounts shown have
been reduced by the estimated amount of Social Security benefits.
PRESENT ESTIMATED COMBINED
NAME AGE ANNUAL BENEFIT
- ---- -------- ------------------
W. Brian Matsuyama................................. 53 $261,000
Jon T. Stoltz...................................... 53 $172,000
J. D. Wessling..................................... 56 $136,000
King C. Oberg...................................... 58 $ 96,000
Larry E. Anderson.................................. 51 $143,000
EMPLOYMENT AGREEMENTS
The Company has employment agreements with seven of the Company's executive
officers, including the persons named in the summary compensation table above.
The purpose of the agreements is to assure that key management personnel will
continue to function effectively and without distraction if uncertainties
regarding the future control of the Company should arise. Upon a change in
control of the Company or during the pendency of certain offers for a change in
control, as these terms are defined in the agreements, each such officer is
entitled to receive the severance benefits described below if the Company
terminates the officer's employment other than for cause as defined in the
agreements. In addition, for a period of three years after a change in control
of the Company, the officer shall be entitled to receive severance benefits if
the Company terminates the officer's employment other than for cause or if the
officer terminates his or her employment with good reason. The payments on
severance are equal to three times the officer's base salary and incentive
compensation at the time the change in control occurs, but are reduced to the
extent required to avoid subjecting the payments to penalty taxes on excess
parachute payments. In addition, the employee is entitled to continue to
participate in health, life, and disability plans in which the officer could
participate when employment terminated. The entitlement to severance payments
terminates upon the vesting of the officer's benefits under the Executive
Supplemental Retirement Income Plan. Severance payments will be made under the
Executive Supplemental Retirement Income Plan, rather than under the employment
agreements.
Each agreement is automatically extended one year on December 31 of each
year unless by 30 days' notice prior to year-end either party elects not to
extend the term. The term of the agreements is extended automatically for a
period of three years upon a change in control of the Company. Notwithstanding
the foregoing, each agreement terminates if the employment of the officer who is
a party is terminated before a change in control occurs and while there is no
offer pending for a change in control.
SUPPLEMENTAL BENEFIT TRUST
Although not obligated to do so, the Company has established a trust to fund
some of the benefits which may be payable under the Executive Supplemental
Retirement Income Plan. The trust also funds severance benefits which may be
payable under the above described employment agreements with certain executives.
The Company is obligated to pay any benefits not paid out of the trust. In
the event of certain events, including a change in control, as defined, the
Company may be obligated to fund the trust with additional amounts for some or
all of the following purposes: to permit payment of benefits from the
supplemental plan and the employment agreements due in the following 12 months;
to fund separate subtrusts for legal expenses (including certain legal expenses
incurred to enforce the Company's obligation to make required contributions to
the trust); and to permit payment of insurance premiums and policy loan
interest.
10
DIRECTOR COMPENSATION
For the fiscal year ended September 30, 1999, the Company paid each
non-employee director an annual stipend of $5,000 as well as a fee of $500 for
each Board or Committee meeting attended, except that the Committee fee was $250
if the meeting was held on the same day as a Board meeting. Employee directors
receive no additional compensation for serving as directors. Each non-employee
director was also entitled to receive 300 shares of the Company's Common Stock
for service in fiscal 1999 pursuant to the 1991 Director Stock Award Plan.
Pursuant to the plan, each non-employee director may elect to defer receipt of
his or her shares until he or she is no longer a member of the Board of
Directors; Mr. Ederer so elected for 1999. Pursuant to a policy adopted by the
Board of Directors in 1995, each non-employee director is to use his or her
annual stipend to purchase the Company's Common Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1999, Messrs. Burnham, Ederer and Ragen and Mrs. Williams
served on the Nominating and Compensation Committee.
Carl Burnham, Jr., a director, is a partner in the law firm of Yturri Rose
LLP, one of the Company's Oregon counsel, which firm received $1,807 in 1999 for
legal services to the Company.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected the firm of Deloitte & Touche LLP as its principal
independent public accountants for the current year. Deloitte & Touche LLP and
its predecessor Touche Ross & Co. has served as the Company's principal
independent accountant since 1953. It is anticipated that representatives of
Deloitte & Touche LLP will be present at the annual meeting. They will be
afforded an opportunity to make a statement if they desire to do so and will be
available to respond to questions from the Shareholders.
SOLICITATION OF PROXIES
The solicitation of proxies will be principally by use of the mails. In
following up the original mail solicitation, the Company will arrange with
banks, brokerage houses, and other custodians, nominees and fiduciaries, to
forward copies of the proxy, proxy statement and annual report to persons for
whom they hold stock of the Company and to request authority for the execution
of proxies. In such cases, the Company will reimburse such banks, brokerage
houses, custodians, nominees and fiduciaries for their expenses incurred in
connection therewith. The entire cost of soliciting proxies will be borne by the
Company. The Company may also use its regular employees to solicit proxies from
Shareholders either personally or by telephone or letter without additional
compensation.
ANNUAL REPORT
The Company's annual report for the fiscal year ended September 30, 1999 is
enclosed. The report presents information for fiscal years 1999, 1998 and 1997.
SHAREHOLDER PROPOSALS
Proposals of Shareholders must be received by the Company by August 17,
2000, in order to be included in the Company's proxy statement and form of proxy
relating to the 2001 Annual Meeting of Shareholders. Such proposals must also
comply with the requirements of the Securities and Exchange Commission relating
to proposals of security holders.
11
RIDER 13-A
For any proposal that is not submitted for inclusion in next year's proxy
materials, but instead is sought to be presented directly at the 2001 Annual
Meeting, the persons named as proxies for that meeting will have discretionary
authority to vote on any such matter if the Company: (1) receives notice of the
proposal before the close of business on November 1, 2000, and advises
shareholders in the 2001 proxy materials about the nature of the matter and how
the proxies intend to vote on such matter; or (2) has not received notice of the
proposal by the close of business on November 1, 2000. Notices of intention to
present proposals at the 2001 Annual Meeting should be forwarded to the
Corporate Secretary at the address listed above.
OTHER MATTERS
The Company does not know of any matters to come before the meeting, other
than those set forth in this proxy statement. If any further business is
presented to the meeting, the holders of the proxies solicited hereby will vote
on behalf of the Shareholders they represent in their discretion.
By Order of the Board of Directors
LARRY C. ROSOK
CORPORATE SECRETARY
Seattle, Washington
December 3, 1999
CASCADE NATURAL GAS CORPORATION
222 Fairview Avenue North
Seattle, Washington 98109
12
W.B. MATSUYAMA
CHAIRMAN, PRESIDENT & CEO
CASCADE NATURAL GAS CORPORATION
Dear Shareholders:
It is my pleasure to invite you to the Annual Meeting of Shareholders of
Cascade Natural Gas Corporation. The meeting will be held at 1:30 p.m. on
Thursday, January 27, 2000 at the offices of the Corporation, 230 Fairview
Avenue North, Seattle, Washington. Limited parking is available at our 222
Fairview Avenue North building, next door to the meeting location.
A map is printed on the reverse side of this form to assist you in locating
our office and the available parking areas.
The Notice of the meeting and the Proxy Statement on the following pages cover
the formal business of the meeting, which includes election of Directors, and
any other business to properly come before the meeting.
It is important that your shares are represented at this meeting, whether or
not you attend the meeting in person, and regardless of the number of shares
you own. To be sure your shares are represented, we urge you to complete and
mail the attached proxy card as soon as possible.
Sincerely,
/s/ W. Brian Matsuyama
December 3, 1999 ---------------------------------
W. Brian Matsuyama
DETACH PROXY CARD HERE
- -------------------------------------------------------------------------------
_____
_____
1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below for all nominees listed below
Nominees: C. Burnham, Jr., M. C. Clapp, T. E. Cronin, D.A. Ederer, H. L. Hubbard, W. B. Matsuyama,
L. L. Pinnt, B. G. Ragen, and M. A. Williams
*(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX
AND STRIKE A LINE THROUGH THAT NOMINEE'S NAME.)
2. Transaction of such other business as may properly come before the meeting or any adjournments
thereof.
CHANGE OF ADDRESS AND
OR COMMENTS MARK HERE
Please Read Other Side Before Signing.
Sign exactly as name appears hereon.
Attorneys-in-fact, executors, trustees,
guardians, corporate officers, etc.
should give full title. If shares are
held jointly, each holder should sign.
Dated _________________________________
_______________________________________
Signature
_______________________________________
Signature
PLEASE DETACH HERE
YOU MUST DETACH THIS PORTION OF THE PROXY CARD
BEFORE RETURNING IT IN THE ENCLOSED ENVELOPE
[MAP]
CASCADE NATURAL GAS CORPORATION
222 FAIRVIEW AVENUE NORTH, SEATTLE, WASHINGTON 98109
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Larry C. Rosok and W. Brian Matsuyama, and
each or any of them proxies for the undersigned, with power of substitution,
to vote with the same force and effect as the undersigned at the Annual
Meeting of the Common Shareholders of Cascade Natural Gas Corporation, 230
Fairview Avenue North, Seattle, Washington, of Thursday, January 27, 2000, and
at any adjournments thereof, upon the matters more fully set forth in the
accompanying Notice of Annual Meeting.
THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN
THE MANNER DIRECTED ON THE OTHER SIDE BY THE UNDERSIGNED SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS. If
any other business properly comes before the meeting, the proxies named above
will have discretionary authority to vote thereon in accordance with their
best judgment.
CASCADE NATURAL GAS CORPORATION
P.O. BOX 11297
NEW YORK, N.Y. 10203-0297