SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
[_]/ / Preliminary Proxy Statement
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[X]/X/ Definitive Proxy Statement
[_]/ / Definitive Additional Materials
[_]/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PUGET SOUND POWER AND LIGHT COMPANYPuget Sound Energy, Inc.
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(Name of Registrant as Specified In Its Charter)
Merrill Corporation
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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or Item 22(a)(2) of Schedule 14A.
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PUGET SOUND POWER & LIGHT COMPANY
Notice ofENERGY, INC.
NOTICE OF ANNUAL MEETING
[LOGO]
MAY 16, 2000
MEYDENBAUER CENTER, BELLEVUE, WASHINGTON
To Puget Sound Energy Shareholders:
On May 16, 2000, Puget Sound Energy, Inc. will hold its 2000 Annual Meeting
of Shareholders
To Be Held May 14, 1996
To the Holders of Common Stock of
Puget Sound Power & Light Company:
The Annual Meeting of Shareholders of Puget Sound Power & Light Company will be
held at 10 a.m. on May 14, 1996 at the Meydenbauer Center, located at 11100 N.E. 6th Street,
Bellevue, Washington forWashington. The meeting will begin at 10:00 a.m. At the purpose of acting uponannual
meeting, the following
matters:shareholders will
1. To electElect three Directors to serve until the expiration of three-year terms
and until their successors are elected and qualified.directors.
2. To consider and vote on any and allConsider other matters that may properly come
beforepresented at the meeting and any adjournment thereof.
Only shareholders of recordmeeting.
You are entitled to vote if you were a shareholder at the close of business
on March 11, 1996 will be
entitled to attend and vote at the meeting.15, 2000.
If your shares are registered in the name of a brokerage firm or trustee and
you plan to attend the meeting in person, please obtain from the firm or trusteebring a letter, account
statement or other evidence of your beneficial ownership of those shares to facilitate your admittance to the meeting. If you
are a participantparticipate in the Company's Stock Purchase and Dividend Reinvestment Plan, please note that the enclosed
proxy covers all shares in your account,shares, including any shares which may be held in suchyou hold under the plan.
March 27, 199630, 2000
Bellevue, Washington
By Order of the Board of Directors
/s/ James W. Eldredge
James W. Eldredge, Corporate SecretaryCORPORATE SECRETARY
TABLE OF-------------------
CONTENTS
Proxy Statement......................................................ANNUAL MEETING INFORMATION............ 1
Annual Report........................................................WHO IS ENTITLED TO VOTE?............ 1
Election of Directors................................................WHAT AM I VOTING ON?................ 1
Security Ownership of Directors and Executive Officers...............WHAT IS A QUORUM?................... 1
HOW MANY VOTES DO I HAVE?........... 1
HOW MANY VOTES ARE REQUIRED TO ELECT
A DIRECTOR?....................... 1
CAN BROKERS VOTE ON THE ELECTION OF
DIRECTORS?........................ 1
HOW WILL MY PROXY BE VOTED?......... 1
WHO COUNTS THE VOTES?............... 2
WHAT IF OTHER MATTERS ARISE AT THE
MEETING AND I DO NOT ATTEND?...... 2
ELECTION OF DIRECTORS................. 2
HOW MANY DIRECTORS DOES PUGET SOUND
ENERGY HAVE?...................... 2
HOW MANY DIRECTORS ARE ELECTED EACH
YEAR?............................. 2
WHO ARE THE NOMINEES?............... 2
WHO ARE THE OTHER DIRECTORS?........ 3
STRUCTURE AND COMPENSATION OF BOARD OF
DIRECTORS........................... 4
Board of Directors Meetings......... 4
Audit Committee..................... 4
Director Affairs Committee.......... 4
Compensation and Committee Meetings............................Retirement
Committee......................... 5
Strategic Opportunities Committee... 5
Director Compensation............... 5
SECURITY OWNERSHIP OF DIRECTORS AND
EXECUTIVE OFFICERS.................. 6
Beneficial Ownership Table.......... 6
EXECUTIVE COMPENSATION................ 7
Compensation and Retirement
Committee Report......................... 6Report.................. 7
Stock Price Performance Graph........................................10Graph....... 10
Summary Compensation Table...........................................11
Aggregated SAR Exercises in 1995 and FiscalTable.......... 11
Year-End SAR Values......13Option/Stock Appreciation
Right Values...................... 14
Long-Term Incentive Plan Awards in
1995..............................141999.............................. 14
Retirement Benefits Statement........................................15
Employment Contracts, Termination of Employment
and Change-in-Control Arrangements...................................16Statement....... 15
EMPLOYMENT CONTRACTS, TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS........................ 15
Certain Transactions................ 18
ADDITIONAL INFORMATION ABOUT THE
MEETING AND SHAREHOLDER PROPOSALS... 18
Independent Public Accountants.......................................18
Voting Rights and Proxy..............................................18Accountants...... 18
Shareholder Proposals................................................18Proposals............... 18
Solicitation of Proxies..............................................19
Map to Annual MeetingProxies............. 18
-------------------
YOUR VOTE IS IMPORTANT
The Company has approximately 60,000 shareholders of record. Many shareholders
ownPUGET SOUND ENERGY HAS APPROXIMATELY 55,000 SHAREHOLDERS OF RECORD. MANY
SHAREHOLDERS OWN 100 shares or less. Each shareholder, regardless of the number of shares
owned, is requested to complete, date, sign and return promptly the enclosed
proxy form, using the accompanying addressed envelope.SHARES OR LESS. REGARDLESS OF THE NUMBER OF SHARES YOU OWN,
PLEASE COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY FORM, USING THE ENVELOPE
WE HAVE PROVIDED.
PROXY STATEMENT
The following information is furnished in connection with the solicitation of
proxies forANNUAL MEETING INFORMATION
This proxy statement relates to the Annual Meeting of Shareholders (the "Annual Meeting") of Puget
Sound Power & Light Company ("Puget" or the "Company")Energy, Inc. to be held at 1010:00 a.m. on May 14, 199616, 2000 at the Meydenbauer
Center, which is located at 11100 N.E. 6th6(th) Street, Bellevue, Washington. The approximate mailing date of theWe
will mail this proxy material isstatement and our Annual Report for 1999 to shareholders on
March 27, 1996.30, 2000.
The mailing address of the Company's principal executive offices is Puget
Sound Power & Light Company,Energy, Inc., P.O. Box 97034, Bellevue, Washington 98009-9734.
Management isWHO IS ENTITLED TO VOTE?
Only holders of common stock may vote at the Annual Meeting. We had
approximately 85 million shares of common stock outstanding on March 15, 2000,
the record date for the Annual Meeting.
WHAT AM I VOTING ON?
You are being asked to elect three directors. We are not aware of any matter
to be presented for action at the Annual Meeting other than the election of
directors.
WHAT IS A QUORUM?
The holders of a majority of the shares of the common stock, present in
person or represented by proxy at the Annual Meeting, constitute a quorum for
the transaction of business. There must be a quorum for the meeting to be held.
HOW MANY VOTES DO I HAVE?
You are entitled to one vote for each share of common stock you held on the
record date. In electing directors, however, you have the right to cumulate your
votes. This means that you can multiply the number of votes you have by the
number of directors to be elected, and then cast all your votes for one
candidate or distribute them among any two or more candidates.
HOW MANY VOTES ARE REQUIRED TO ELECT A DIRECTOR?
If a quorum is present at the Annual Meeting, the three Directors.
ANNUAL REPORT
The Company'snominees for
election as directors who receive the greatest number of votes cast by the
shares present in person or represented by proxy at the Annual ReportMeeting will be
elected directors.
CAN BROKERS VOTE ON THE ELECTION OF DIRECTORS?
Because brokers have discretion to vote shares they hold on behalf of
beneficial owners in the election of directors, if they do not receive
instructions, they will vote the shares as they see fit.
HOW WILL MY PROXY BE VOTED?
If we receive a proper proxy, your shares will be voted as you direct. If
you submit a proper proxy but do not provide any direction, your shares will be
voted for 1995, including audited financial statements,all management proposals. You may revoke a proxy card at any time
before it is being mailedvoted by delivering a written notice to shareholders onthe Corporate Secretary or
about March 27, 1996.by signing and delivering another proxy card that is dated later than the first
one but prior to the May 16, 2000 meeting. If you attend the Annual Meeting in
person, you may revoke the proxy by giving notice of revocation to an inspector
of election at the Annual Meeting or by voting at the Annual Meeting.
WHO COUNTS THE VOTES?
ChaseMellon Shareholder Services, L.L.C. will tabulate the votes and will
act as inspector of election. No one will disclose the identity or vote of any
shareholder unless legally required to do so.
WHAT IF OTHER MATTERS ARISE AT THE MEETING AND I DO NOT ATTEND?
If any other matters are properly presented at the Annual Meeting, the
persons named in the proxy will vote in accordance with their judgment.
ELECTION OF DIRECTORS
HOW MANY DIRECTORS DOES PUGET SOUND ENERGY HAVE?
The number of Directorsdirectors is determined by resolution of the Board of Directors, subject to revisionbut may be
changed by the shareholders. The Board of Directors has by
resolution, fixed the number of
Directorsdirectors at ten.eleven.
HOW MANY DIRECTORS ARE ELECTED EACH YEAR?
The terms of the Directorsdirectors are classifieddivided into three classes so that each year approximately one-third
of the Directorsdirectors are elected each year for a three-year term. These three groups of Directors are identified
herein as Class I, Class II and Class III Directors. At the Annual Meeting,
three Class II Directors will be elected to serve for a term of three years
expiring on the date of the Annual Meeting of Shareholders in 1999.
Proxies will be voted for the following named nominees. In the event any nominee
is not available to serve as a Director at the date of the Annual Meeting (which
is not now anticipated), the persons named in the enclosed proxy shall have full
discretion and authority to vote or refrain from voting for any other nominee in
accordance with their judgment. Directors are
elected to hold office until their successors are elected and qualified, or
until resignation or removal in the manner provided in our Bylaws. At the BylawsAnnual
Meeting, the shareholders will elect three Class III directors to serve for a
term of three years expiring on the date of the Company.
The names of nominees for Director of2003 Annual Meeting.
WHO ARE THE NOMINEES?
Proxies will be voted on the Company are set forth below.
CLASS II NOMINEES
TERMS EXPIRE 1999
JOHN D. DURBIN
Mr. Durbin served as President and Chief Executive Officer of Hostar
International, Inc. (equipment for hotels) from 1988 until his retirement in
June 1995, and has been a General Partner of John Durbin & Associates
(industrial real estate) since 1969. His prior positions include Chairman and
President of CEC Equipment Company (construction equipment) from 1982following nominees. If any nominee becomes
unavailable to 1987
and Chairman of Spokane Truck Sales, Inc. (trucks) from 1983 to 1987. Mr.
Durbin, age 60, has been a Director of the Company since 1984 and also servesserve as a director, of John Fluke Manufacturing Company, Inc.
DANIEL J. EVANS
Mr. Evans has been Chairman of Daniel J. Evans Associates (consulting) since
1989. His prior positions include United States Senator, State of Washington,
from 1983 to 1989 and Chairman, Pacific Northwest Power and Conservation
Planning Council from 1981 to 1983. Mr. Evans, age 70, has been a Director of
the Company since 1990 and also serves as a director of Attachmate, Inc.,
Burlington Northern Santa Fe Inc., Flow International Corporation, Tera Computer
Company and Washington Mutual Savings Bank.
NANCY L. JACOB
Ms. Jacob is Chairman and Chief Executive Officer of CTC Consulting, Inc.
(financial services). Her prior positions include Managing Director, Capital
Trust Company (financial advisor) from 1990 to 1994, Professor of Finance and
Business Economics atpersons named in the University of Washington (educational institution)
from 1981 to 1992 and Dean of the School and Graduate School of Business
Administration from 1981 to 1988. Ms. Jacob, age 53, has been a Director of the
Company since 1980 and also serves as a trustee of College Retirement Equities
Fundenclosed proxy can
vote for or against any other nominee in New York.
The names of the Class I and Classaccordance with their judgment.
CLASS III Directors of the Company who are not
standing for election and whose terms of office will continue after the Annual
Meeting are listed as follows:
CLASS I DIRECTORSNOMINEES STANDING FOR ELECTION
TERMS EXPIRE 19982003
DOUGLAS P. BEIGHLE
Mr. Beighle has beenserved as Senior Vice President of The Boeing Company (aerospace
manufacturing and sales) since 1986. He served The Boeing Company as Vice
President from 1980 to 1986.1986 until his retirement on May 1, 1997.
Mr. Beighle, age 63,67, has been a Director of the Company since 1981 and also
serves as a director of Washington Mutual, Savings
Bank.Inc., Active Voice Corporation and
Simpson Investment Company (privately held).
TOMIO MORIGUCHI
Mr. Moriguchi has been a Director of the Company since 1988. Mr. Moriguchi,
age 63, has served as Chairman and Chief Executive Officer of Uwajimaya, Inc.
(food and merchandise distributor), Seattle, Washington, since December 1994.
Previously, he served as President of Uwajimaya, Inc. from 1965 through
December 1994. He also serves as President, Town and Country Travel, Inc.,
Seattle, Washington and President and Chairman of the Board of North American
Post Publishing Company, Seattle, Washington.
CRAIG W. COLE
Mr. Cole has been President and Chief Executive Officer of Brown & Cole
Stores (retail grocery) in Bellingham, Washington since 1989. Mr. Cole, age 50,
is also Chairman of the Board of Associated
2
Grocers, Inc. and serves on the boards of the Washington Food Industry and the
Food Marketing Institute. Mr. Cole has served as a Director of the Company since
December 1999.
WHO ARE THE OTHER DIRECTORS?
The directors who are not standing for reelection at this time are
CHARLES W. BINGHAM
Mr. Bingham served as Executive Vice President of Weyerhaeuser Company
(forest products industry) from 1981 until his retirement in July 1995 and
Senior Vice President from 1972 to 1981. Mr. Bingham, age 66, has been a
director of the Company since 1978. Mr. Bingham's term expires in 2002.
PHYLLIS J. CAMPBELL
Ms. Campbell has been President and Chief Executive Officer of U.S. Bank, of Washington (financial
institution) since 1993 and is an Executive Vice President
of U.S. Bancorp.1993. She also served as Area President of U.S. Bank, of
Washington for Seattle-King County from 1992 to 1993, Executive Vice President
and Manager from 1989 to 1992, and in various banking capacities since 1973.
Ms. Campbell, age 44,48, has been a Director of the Company since 1993 and also
serves as a director of U.S. Bank of Washington and SAFECO Corporation, and is a Regent of Washington State
University and Chairman of the Greater Seattle Chamber of
Commerce.
WILLIAM S. WEAVERUniversity. Ms. Campbell's term expires in 2001.
DONALD J. COVEY
Mr. WeaverCovey has been Executive Vice President and Chief Financial Officera Director of the Company since 1991. For more than five years prior1982. Mr. Covey, age 71,
served as Chairman of the Board of Directors of UNICO Properties, Inc. (property
management), Seattle, Washington, from 1990 until his retirement in
December 1994. Prior to joining the Company,that he wasserved UNICO as Chief Executive Officer from
1983 to 1992 and President from 1975 to 1990. Mr. Covey's term expires in 2001.
ROBERT L. DRYDEN
Mr. Dryden has been President, Chief Executive Officer and a partner in the law firmdirector of
Perkins Coie. Mr. Weaver, age 52,ConneXt, Inc.(a wholly-owned subsidiary of PSE) since April 1999. He also served
as Executive Vice President, Airplane Production, Boeing Commercial Airplane
Group, Seattle, Washington, from 1990 until May 1998. He has been a Director of
the Company since 1991. R. KIRK WILSON
Mr. WilsonDryden, age 66, also serves as a director of U.S.
Bancorp. Mr. Dryden's term expires in 2002.
JOHN D. DURBIN
Mr. Durbin has been President and Chief Executive Officer of Thrifty Foods,a newly formed
unregulated subsidiary of PSE since February 2000. Prior to that, he was
Executive Director of Emerge Corporation and was a principal in Olympic Capital
Partners, Inc. (retail grocery)(investment banking), Seattle, Washington, from 1996 to 1999. He
served as President and Chief Executive Officer of Hostar International, Inc.
from 1988 until his retirement in June 1995, and has been a General Partner of
John Durbin & Associates since 1969. Mr. Wilson,Durbin, age 57,64, has been a Director of
the Company since 1976.
CLASS III DIRECTORS
TERMS EXPIRE 1997
CHARLES W. BINGHAM
Mr. Bingham served1984 and also serves as Executive Vice Presidenta director of Weyerhaeuser Company (forest
products industry) from 1981 until his retirement in July 1995. Mr. Bingham, age
62, has been a DirectorConneXt, Inc. (a
subsidiary of the Company since 1978.Company) and UTILX Corporation. Mr. Durbin's term expires in
2002.
3
JOHN W. ELLIS
Mr. Ellis has been Chairman Emeritus of The Baseball Club of Seattle since
1999. Previously, he was Chairman of the Board and Chief Executive Officer of
The Baseball Club of Seattle since 1992.from 1992 to 1999. He served as Chairman of the
Board of the Company from 1987 to 1993 and as Chief Executive Officer from 1976
to 1992. Mr. Ellis, age 67,71, has been a Director of the Company since 1969 and
also serves as a director of SAFECO Corporation, Washington Mutual, Savings Bank,Inc., UTILX
Corporation and Associated Electric & Gas Insurance Services, Ltd. RICHARD R. SONSTELIE
Mr. SonstelieEllis is
also Chairman of the Board of Trustees of Seattle University. Mr. Ellis will be
appointed to fill a vacancy for a term that expires in 2001.
SALLY G. NARODICK
Ms. Narodick, age 54, has been Chief Executive Officer and President of the CompanyApex
Learning, Inc., a venture-backed internet learning company, since 1992. His prior positions with the Company include1998.
Previously she served as a Consultant on Strategic Planning for Educational
Technology software for IBM Corporation and was Chairman and Chief OperatingExecutive
Officer of Edmark Corporation from 1991October 1989 to 1992, Chief Financial Officer from 1987 to 1991September 1996. She also
serves as a director of Penford Corporation, Click2Learn.com and Executive Vice
President from 1985 to 1987. Mr. Sonstelie, age 51,Apex
Learning, Inc. Ms. Narodick has been a Director of the Company since 19871989.
Ms. Narodick's term expires in 2002.
WILLIAM S. WEAVER
Mr. Weaver has been President and Chief Executive Officer of the Company
since January 13, 1998. He has also servesserved as Vice Chairman and Chairman of
Unregulated Subsidiaries from February 10, 1997 to January 13, 1998. Prior to
that he served as Executive Vice President and Chief Financial Officer of PSE
beginning in 1991. Before joining PSE, he was a partner in the law firm of
Perkins Coie LLP. Mr. Weaver, age 56, has been a director of Utech Venture Capital
Corporation and Edison Electric Institute.
3
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as of February 14, 1996, concerning
the shares of the Company's Common Stock beneficially owned by each Director and
nominee, the executive officers named in the Summary Compensation Table and
Directors and executive officers of the Company as a group. No Director or
executive officer owns more than 1% of the outstanding shares of Common Stock.
Number of
Name of Beneficial Owner Shares
------------------------ ---------
John D. Durbin 2,213
Daniel J. Evans 1,000
Nancy L. Jacob 1,122
Douglas P. Beighle 2,948
Phyllis J. Campbell 1,000
William S. Weaver 2,168(1)
R. Kirk Wilson 15,093
Charles W. Bingham 4,072
John W. Ellis 24,981(1)
Richard R. Sonstelie 9,300(1)
Gary B. Swofford 4,872(1)
Sheila M. Vortman 2,393(1)
Jerry L. Henry 4,256(1)
All Directors and executive officers
as a group (18 persons) 63,962
(1) Includes shares credited under the Company's Investment Plan for Employees
through February 14, 1996.
4
since
1991. Mr. Weaver's term expires in 2001.
STRUCTURE AND COMPENSATION OF BOARD OF DIRECTORS
AND COMMITTEE MEETINGS
The BoardPSE board of Directorsdirectors has established threefour standing committees, which meet outsidein
addition to regular board of regular Board of Directors meetings, to assist in the discharge of
the Directors' responsibilities relating to audit, nominating and compensation
issues.directors meetings. The names of these committees,
their current membershipmemberships and a brief statement of their principal
responsibilities are presented below.
BOARD OF DIRECTORS MEETINGS
Nine BoardThe board of Directors meetings were helddirectors met eight times during 1995.1999. Each Directordirector attended
at least 82%78% of these meetings and the meetings of the Board of Directors and committees of the
Board on which the Directorhe or she
served. Directors attended, on average, 96% of all board and committee meetings
during 1999.
AUDIT COMMITTEE
The Audit Committee currently includes
Douglas P. Beighle (Chairperson), Charles W. Bingham, John D. Durbin,Donald J. Covey,
Daniel J. Evans and R. Kirk Wilson.Tomio Moriguchi currently serve on the audit committee. The
Audit
Committee is responsible for reviewingaudit committee reviews the annual report of the independent auditors, evaluating theevaluates
our external and internal audit functions, and recommendingrecommends to the Boardfull board of
Directorsdirectors the retention of independent auditors and oversees other auditing
matters. Four Audit Committee meetings were heldThe audit committee met five times during 1995.1999.
DIRECTOR AFFAIRS COMMITTEE
The Director Affairs Committee currently includes Charles W. Bingham
(Chairperson), John D. Durbin and Daniel J. Evans.Evans (Chairperson, until the expiration of his term on May 16,
2000), Phyllis J. Campbell and Donald J. Covey currently serve on the director
affairs committee. The Director Affairs
Committee acts anddirector affairs committee makes recommendations with respect to identification andthe
Board regarding selection of director candidates, for Directors, Directordirector
4
tenure, and committee assignments and Director compensation matters.director compensation. Shareholders may
proposenominate candidates for consideration as nomineeselection to the Boardboard of Directors; such proposals should be
directed in writing todirectors by notifying the
Company's Corporate Secretary prior to each annual
meeting. Directorcorporate secretary. The committee seeks director candidates are considered on the basis ofwith recognized
achievements, and their ability to bring skills and experience tothat will enhance the deliberationsboard of the Board of Directors. One Director Affairs Committee meeting
was helddirectors.
The director affairs committee met twice during 1995.1999.
COMPENSATION AND RETIREMENT COMMITTEE
The Compensation and Retirement Committee currently includes Nancy L. JacobSally G. Narodick (Chairperson), Douglas P. Beighle, Phyllis J. Campbell,
Robert L. Dryden and R. Kirk Wilson. The
CompensationJohn D. Durbin currently serve on the compensation and
Retirement Committeeretirement committee, which acts and makes recommendations to the Boardboard of
Directorsdirectors with respect to executive compensation, the Retirement Plan
for EmployeesCompany's retirement plans
and other similarbenefit plans for employees. The compensation and retirement committee
met five times during 1999.
STRATEGIC OPPORTUNITIES COMMITTEE
Douglas P. Beighle, Phyllis J. Campbell, Robert L. Dryden, John D. Durbin
and Sally G. Narodick currently serve on the strategic opportunities committee,
which acts and makes recommendations to the board of directors with respect to
new business development matters. Seven Compensation and Retirement
Committee meetings were heldThe strategic opportunities committee met two
times during 1995.1999.
DIRECTOR COMPENSATION
DirectorsPSE pays directors who are not Company officers are paidPSE employees a quarterly retainer of $3,750$6,250
plus $800 for each Board of Directors meetingboard and committee meeting attended.
The Chairpersonsthe director attends. At least
40% of quarterly retainer payments are made in common stock. Directors can elect
to receive 100% of their retainer payments in common stock, or to defer receipt
of shares under the PSE Directors' Stock Plan. Directors can also elect to defer
cash compensation under the PSE Deferred Compensation Plan for Non-Employee
Directors. We also pay the chairpersons of the Audit, Director Affairs and Compensation and Retirement
Committees receiveboard committees additional
quarterly retainers of $500 each. Directors who
are alsoWe do not pay any compensation to Mr. Weaver
for his services on the Board.
5
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
BENEFICIAL OWNERSHIP TABLE
The following table shows the number of shares of common stock beneficially
owned on March 15, 2000 by each director and nominee, by each executive officer
named in the Summary Compensation Table and by the directors and executive
officers as a group. No director or executive officer owns more than 1% of the
Company dooutstanding shares of common stock. We are not receiveaware of any compensationperson who
beneficially owns 5% or more of the common stock.
NUMBER OF NUMBER OF
BENEFICIALLY SHARE INTERESTS
NAME OWNED SHARES HELD
- ---- ------------ ---------------
Douglas P. Beighle........................................ 4,022 855(1)
Charles W. Bingham........................................ 4,052 411(1)
Phyllis J. Campbell....................................... 1,000 1,106(1)
Craig W. Cole............................................. 200 69(1)
Donald J. Covey........................................... 5,898 3,044(1)
Robert L. Dryden.......................................... 4,440 2,103(1)
John D. Durbin............................................ 2,999 2,680(1)(3)
John W. Ellis............................................. 34,081(2) 885(1)
Daniel J. Evans........................................... 1,000 1,596(1)
Tomio Moriguchi........................................... 775 3,883(1)(3)
Sally G. Narodick......................................... 258 2,709(1)
William S. Weaver......................................... 30,079(2) 13,459(3)
Richard L. Hawley......................................... 11,544(2) 4,146(3)
Timothy J. Hogan.......................................... 7,567(2) 19,553(3)(4)
Stephen A. McKeon......................................... 13,937(2) 4,722(3)
Joseph Quintana........................................... 458 0
Gary B. Swofford.......................................... 9,523(2) 9,030(3)
All Directors and executive officers...................... 152,871 75,296
- ---------
(1) Shares represent stock units under the Puget Sound Energy Directors' Stock
Plan.
(2) Includes shares owned in the Puget Sound Energy Investment Plan for
duties
performed as Directors.
The CompanyEmployees through March 15, 2000.
(3) Represents vested and Mr. Ellis entered into a consulting agreement that commenced
October 1993 and will end September 30, 1998. Underunvested stock units under the terms of this agreement,
Mr. Ellis provides consulting and other servicesPSE Deferred
Compensation Plan.
(4) Includes 15,667 shares subject to unexercised stock options granted by WECo
prior to the Company, including
representingMerger, which were converted into options to purchase common
stock at the Merger exchange ratio of .86 to 1.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors and officers and holders of more than 10% of the common stock to
report their stock holdings and transactions to the Securities and Exchange
Commission. Based on a review of Section 16 forms filed by its reporting persons
during 1999, the Company believes that its reporting persons complied with all
applicable Section 16 requirements, except Mr. McKeon. Mr. McKeon did not report
shares purchased in various industry- and community-related committees
and activities. For these services, Mr. Ellis is paid $2,000 per monththe Investment Plan for Employees on a Form 4 for
August 1999; the term ofpurchase was subsequently reported on the agreement. In addition, the Company provides administrative support
for Mr. Ellis' services performed under the consulting agreement.
5Form 4 in
November 1999 which was timely filed.
6
EXECUTIVE COMPENSATION
COMPENSATION AND RETIREMENT COMMITTEE REPORT
The Boardboard of Directorsdirectors delegates responsibility for executive compensation
to the Compensationcompensation and Retirement Committee (the "Committee").retirement committee. The Committee'scommittee's members are all nonemployee Directors,Sally
G. Narodick (Chairperson), Douglas P. Beighle, Phyllis J. Campbell, Robert L.
Dryden and John D. Durbin, none of whom participateis an employee of PSE or participates in
the compensation programs described here for executives. Mr. Dryden has served
as an executive officer of ConneXt, Inc., a wholly owned subsidiary of PSE,
since April 1999, and Mr. Durbin has served as an executive officer of a newly
formed non-regulated subsidiary of PSE since February 2000. The Committeecommittee
establishes compensation for the President and Chief Executive Officer and
reviews and approves the President and Chief Executive Officer's recommendedrecommendations
regarding compensation action forof the other executive officers. The following is the Committee's report on executive compensation for
1995.
In determining executive compensation, the Committee is guided by competitivecommittee considers the pay
practices in similar-sizedcomparable companies withinin the electric and combination gas and
electric utility industry
and by its beliefindustries. The committee believes that executive compensation
should:
. Attractpackages should do the following:
- attract and retain outstanding executives by providing compensation
opportunities consistent with those offered by the electric and
combination gas and electric utility industryindustries for similar positions.
. Placepositions;
- place a significant portion of each executive's total pay at risk to
motivate executives to achieve Company and individual performance goals.
. Tiegoals;
and
- tie incentive compensation to performance, in the short term, to favorable operating results including performance for customers of the Company and in the long term, by aligningalign the
interests of executive officers with the long-term interests of the
Company's shareholders.
Overall, the Committee makesIn making compensation decisions, in the context of the
competitiveness of the entire compensation package as compared tocommittee reviews appropriate market
compensation indices. The Committee's principal source of total compensation marketthis data is a selection of
comparable companies from the Edison Electric Institute's ("EEI") comprehensive,
industry-wide annual survey of management pay. TheMany of these companies included inare part
of the EEI survey are
substantially the same as those included in the EEI 100Edison Electric Institute's ("EEI") Combination Gas & Electric
Investor-Owned Utilities Index of Investor-owned
Electrics usedpresented in the Stock Price Performance Graph.Graph on
page 10.
The Committee has adopted an executivecommittee's compensation philosophy that encompassespolicies encompass a mix of base salaryBASE SALARY and
annualANNUAL and long-term incentiveLONG-TERM INCENTIVE COMPENSATION programs. The committee designs the
total package is designed to provide participants with appropriate incentives forto achieve
current performance combined with incentives for achievinggoals as well as the Company's long-
termlong-term objective of enhancing
shareholder value. Long-term incentives are designed to comprise the largest
portion of each executive's incentive pay. Total Cash Compensation is targeted
at the 50(th) percentile of total compensation for the comparator group if
annual performance goals are achieved. If performance goals are achieved at the
highest level, total cash compensation will be leveraged to reach the 60(th)
percentile or higher.
BASE SALARY
Generally, base salaries for Company executives are designed to be belowadministered on a subjective
individual basis by the committee using as a guideline median salary levels for positions of a
select group of electric and combination gas and electric companies that are
most similar responsibility in similar-sizedscope and size to PSE. The select group of comparator companies
within the EEI survey. Lower base salaries are combined with above-median annual
and long-term incentive compensation targets so that total compensation
opportunities will be competitive with the median total compensation level for
similar positions in similar-sized companies within the EEI survey.
In making individual salary decisions, the Committee makes a subjective
evaluation of the individual's contributions and impact on Company performance
as well as achievement of individual goals and the competitiveness of the
individual's base salary. Because of cost restraints, base salaries of the named
executives had not been increased since September 1993 unless there had been a
significant change in job responsibilities. Effective May 1, 1995,
6
base salaries for the named executives were increased but continue to be below
median salaries for comparable positions within the EEI survey. Total salary
plus targeted annual and long-term incentive compensation for the named
executive officers for 1995 averaged 92% of the medians for positions of similar
responsibility and job complexity in similar-sized companies withinis chosen from the EEI survey.
ANNUAL INCENTIVE COMPENSATION
All executive officers participatedparticipate in the Company's annual 1995 Pay at Risk Plan. The intent of this Plan wasThis plan
is designed to provide financial incentives to executives for achieving desired
annual operating results. Awards were based on combined
performance in these areas: (1) earnings per share; (2) department and
individual goals; and (3)For 1999, the Company's market Competitive-ness as measured by
its ability to maintain load. The weighting of these three performance
categoriestargeted
7
opportunity for awards from this plan varied by executive officer.officer: Mr. Sonstelie's awardWeaver's
target was 100% weighted
on45% of base salary; Messrs. Hawley, McKeon and Swofford were 35% and
Messrs. Hogan and Quintana were 30%.
The primary measure for the named executive officers was earnings per share results;share.
For Messrs. Weaver, Hawley and Swofford and Ms. Vortman's
awards were based on 80% earnings per share and 20% market competitiveness
results; and Mr. Henry'sMcKeon, 100% of the award was based on EPS
performance. For Messrs. Hogan and Swofford, 50% earnings per share, 20% market
competitiveness and 30% department goal results.
The annual incentive awards approved byof the Committee wereaward was based on an
evaluationEPS
and 50% was based on the weather-adjusted earnings contribution of the specified performance areas togetherbusiness
units they each lead. For Mr. Quintana, 50% of the award was based on EPS, with
a subjective
evaluationthe remaining 50% divided among five other specific goals. EPS results were
achieved at the outstanding funding level. For Messrs. Hogan and Swofford the
applicable weather-adjusted business unit earnings contribution did not achieve
minimum funding levels. Two of individual performance. Individual target awards ranged from 20%
to 35%the five additional goals that comprise 50% of
salary for the named executives; the plan provided forMr. Quintana's award did achieve funding which
could range from zero to 1.5 times target. 1995 awards to executives were
approximately 100% of target.status.
LONG-TERM INCENTIVE COMPENSATION
As a result of the study reported in theThe 1995 Proxy, a new Long-Term Incentive Compensation Plan, (the "1995 Plan") designed to implement the Committee's desire
to link compensation to the growth of shareholder value was approved by shareholders in
1995.1995, links compensation to the relative total shareholder return. Under this
Plan, awards ofplan, the committee awarded contingent grants of Pugetcommon stock were made to executives and
key employees. ThesePSE will pay 1999 awards will be payablein stock at the end of a four-year
period ending December 31, 2002, based on the stock performance. The measure of
performance is Puget'sPSE's cumulative four-year total
shareholder return relative to the EEI 100 Index of Investor-owned Electrics used in the Stock Price
Performance Graph.Combination Gas & Electric Investor-Owned
Utilities Index. The number of shares delivered at the end of the four-year
cycle will range from zero to 160%175% of the contingent grant. If total shareholder
return at the end of the four-year cycle results in the delivery of Puget stock
to the participant, one-half of the shares will be restricted for an additional
two-year period. The purpose of this further restriction is to encourage greater
levels of stock ownership by Company executives and key employees. Dividend equivalents
will beare accrued during the performance period and paid out in cash at the end of the performance period in
relationwhen and to the
number of underlyingextent the related performance shares earned (or at the end of the
restricted period for the portion of the grant paid in restricted stock).are paid. The grants made in 1995 to the named executives are shown on the Long-Term Incentive Plan
Awards Inin 1999 table on page 14 shows the awards made in 1999 to the named
executive officers for the four-year performance cycle ending December 31, 2002.
The Summary Compensation Table on page 11 shows the payout of awards for the
four-year cycle ended December 31, 1999. During their service as executive
officers of subsidiaries of the Company, Mr. Dryden and Mr. Durbin will not
participate in any decisions regarding awards under the 1995 table.
7
UnderLong-Term Incentive
Compensation Plan.
As part of its long-term incentive program, the Company's priorcommittee has also
established stock ownership guidelines to be achieved over a five-year period
commencing in 1998 for officers and key managers that range from 50% of base
salary to two times base salary for the named executive officers.
Before 1995, participants in PSE's Long Term Incentive Program for Senior
Executives (the
"Long Term Incentive Program") participantsManagement could be allocatedreceive Performance Share Units ("PSUs") and Stock Appreciation Rights, ("SARs"),
both of which are payable only in cash. While no awards have been made underThe Summary Compensation Table shows the
Long Term Incentive Plan
sincelast payout of PSUs for the participating named executives, which was for the
four-year performance period ended on December 31, 1994, awards previously made will continue under their
original terms which are based on Company performance.1997. The last PSU and Year-End Option/SAR
grants were made in 1994. PSUs were granted biannually andValues table shows the year-end values of all outstanding SARs were granted
annually.
Each PSU grant has a four-year term. A PSU's value is equal toheld by the
Company's
stock price at the end of the PSU's term plus the per share dividend paid during
the term. The number of PSUs on which values are paid can range from zero to
160% of those granted. This number is based on the Company's four-year, total
shareholder return compared to the returns reported in the EEI 100 Index of
Investor-owned Electrics. The PSUs granted in 1992 matured at year end 1995.
Because the threshold funding target was not met, payouts were not made toparticipating named executive officers under the 1992-1995 PSU grant.
Each SAR grant has a 10-year term and vests 20% per year beginning one year
after date of grant. A SARs value is equal to the Company's stock price gain
over the base price, which is the closing market value on the date of grant,
plus the incremental value of per share dividend increases during the holding
period. SAR grants were last made in 1994 and are shown on the Summary
Compensation Table.officers.
CHIEF EXECUTIVE OFFICER COMPENSATION
In February 1999, Mr. Sonstelie's base pay was increased to $400,000 per year effective May 1,
1995. In October 1995 Mr. Sonstelie entered into a four-year employment
agreement providing for a minimum annualWeaver's base salary of $400,000 and certain
severance and other benefits. See "Employment Contracts, Termination of
Employment and Change-in-Control Arrangements." His base pay remainsas Chief Executive Officer was
determined to be below the
median of similar-sizedfor CEOs in comparable companies in the EEI
survey. He received ansurvey, and was increased from $550,000 per year to the market median salary of
$575,000.
During 1999, Mr. Weaver's leadership and focus on company wide strategic and
operating goals resulted in continued, significant improvement in financial
results with a net increase in EPS of 11% over the prior year. This level of
achievement resulted in Mr. Weaver's 1999 target annual incentive award pursuant topayment being
paid at twice the Pay at Risk Plan which was 100%target of target.
Because the PSU cycle that matured in 1995 did not fund, Mr. Sonstelie did not
receive payment45% of PSUs in 1995.base salary. As a result, Mr. Sonstelie'sWeaver's total
cash compensation (salary plus annual and long-term incentive compensation) in 1995 fell well
belowfor 1999 was above the median50(th) percentile for chief executive
officers of similar-sizedcomparable companies in the EEI survey.
Mr. Sonstelie continued to provide vision and leadership tosurvey, which is in keeping with the
Company in
meetingcommittee's philosophy for total cash compensation at the challenges of an increasingly competitive industry environment,
emphasizing the attainment of highly focused short- and long-term strategic
objectives. Under his leadership, these ambitious objectives resulted in several
major initiatives designed to improve the Company's competitive posture and
enhance long-term shareholder value. The most significant of these initiatives
was the approval by the Boards of Directors of Puget Power and Washington Energy
Company of a definitive agreement to merge the two organizations into one
company, subject to shareholder and regulatory approvals (the "Merger").
Mr. Sonstelie's leadership and initiative in managing the organization has
positioned it for the future while continuing to emphasize the importance of
short-term financial performance. Improved 199560(th) percentile or
higher when results wereare achieved through
focus on managing costs and revenues without increasing general rates to
customers.at this outstanding level.
8
ADDITIONAL INFORMATION
Section 162(m) of the Internal Revenue Code of 1986 as amended, generally disallows a
tax deduction to public companies for compensation over $1 million paid to thea
company's chief executive officer and four other most highly compensated
executive officers, unless that compensation is deferred or is considered
performance based. The compensation disclosed in this Proxy Statement does not
exceed the $1 million limit, and executive compensation for 1996performance-based. Our policy is also
expected to qualify for deductibility. The Company currently intends to structure the performance-based portion of its executive officer compensation to
achieve maximum deductibility under Section 162(m) with minimal sacrifices in
flexibility and corporate objectives.
COMPENSATION AND RETIREMENT COMMITTEE
Nancy L. Jacob,Sally G. Narodick, Chairperson
Douglas P. Beighle
Phyllis J. Campbell
R. Kirk WilsonRobert L. Dryden
John D. Durbin
9
STOCK PRICE PERFORMANCE GRAPH
Set forthThe chart below is a comparison ofcompares the five-year cumulative total shareholder return
(share price appreciation plus reinvested dividends) on the Company's
Common Stock againstour common stock to the
cumulative total return of the Standard and& Poor's 500 Stock Index and the EEI
100 Index ofCombination Gas & Electric Investor-owned Electrics.
COMPARISON OFUtilities Index.
FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG PUGET POWER, S&P 500 INDEX AND EEI 100 INDEX
PERFORMANCE GRAPH APPEARS HEREEDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Measurement Period PUGET SOUND ENERGY S&P EEI
(Fiscal Year Covered) POWER 500 INDEX 100EEI GAS & ELECTRIC INDEX
- ------------------- ---------- --------- ----------
Measurement Pt- 12/31/90 $100 $100 $100
FYE 12/31/91 $142 $130 $129
FYE 12/31/92 $153 $140 $139
FYE 12/31/93 $150 $155 $154
FYE 12/31/94 $133 $157 $136
FYE 12/31/95 $167 $215 $1791994 100.00 100.00 100.00
1995 125.30 137.60 127.40
1996 139.50 169.20 126.60
1997 187.70 225.60 163.60
1998 185.20 290.10 190.10
1999 139.80 351.10 154.50
(1)FIVE-YEAR CUMULATIVE TOTAL RETURN
This comparison assumes $100 was invested on December 31, 1990,1994 in (a) Puget Common Stock,our
common stock, (b) the S&P 500 Stock Index, and (c) the EEI 100 Index
ofCombination Gas &
Electric Investor-owned Electrics.Utilities Index. The graph then observes, in each case,
stock price growth and dividends paid (assuming dividend reinvestment)dividends were reinvested) over the
following
five years.
The Board of Directors and its Compensationcompensation and Retirement Committeeretirement committee
recognize that many factors influence the market price of stock, is influenced by many factors, one of which is
Companycompany performance. The stock price contribution to the total
return performancereturns shown on the graph isdo not necessarily indicative ofpredict
future price performance.
10
SUMMARY COMPENSATION TABLE
The following information is furnished for the years ended December 31,
1995,
1994,1999, 1998 and 19931997 with respect to the Company's President and Chief Executive
Officer and each of the four otherfive most highly compensated executive officers of the
Company during 19951999, each of whose salary and bonus exceeded $100,000. Annual
compensation includes amounts deferred at the officer's election.
Annual Compensation Long-Term Compensation
---------------------------------------- ------------------------------
Awards Payouts
---------------------ANNUAL COMPENSATION LONG-TERM
------------------------------------- COMPENSATION
OTHER ANNUAL ------------ ALL OTHER
NAME AND PRINCIPAL COMPENSATION LTIP PAYOUTS COMPENSATION
POSITION IN 1999(1) YEAR SALARY ($) BONUS ($) ($)(2) ($)(6) ($)
------------------- -------- Restricted Shares
Name and Other Annual Stock Underlying LTIP All Other
Principal Position Year Salary ($) Bonus ($) Compensation ($)/(1)/ Award ($) SARs (#) Payouts ($) Compensation ($)
- ---------------------------------------------------------------------------------------------------------------------------------------------- --------- ------------ ------------ ------------
R. Sonstelie 1995 388,817 140,000 -- 0 15,736/(2)/W. Weaver........................... 1999 $570,208 $517,500 $ 38,933(3) $ 44,198(8)
President and 1994 370,0081998 532,971 0 36,000 -- 13,731109,933(4) 35,456
Chief Executive Officer 1993 320,419 66,000 18,000 193,081 11,879
W. Weaver 1995 256,275 80,000 $199,996/(3)/ --1997 299,598 0 12,309/(4)/
Executive208,046(5) 128,549
R. Hawley........................... 1999 316,167 224,000 20,964(3) 53,462(9)
Vice President 1994 230,006and 1998 225,000 0 9,000 -- 10,535
and21,987(4) 81,985
Chief Financial Officer
1993 189,352 23,000 7,300 --/(5)/ 6,923
G. Swofford 1995 163,138 40,000 -- --/(6)/ 44,812/(7)/
SeniorT. Hogan............................ 1999 191,888 57,900 14,488(3) 14,546(10)
Vice President 1994 144,0051998 184,309 0 6,000 -- 4,770
Customer26,384(4) 13,458
System Operations 1993 116,455 16,500 18,701 3,200 --/(5)/ 3,8671997 161,144 27,100 $31,360 84,329(7) 24,249
S. Vortman 1995 133,138 35,000 -- --/(6)/ 6,535/(8)/
SeniorMcKeon........................... 1999 316,167 224,000 25,142(3) 22,588(11)
Vice President 1994 120,537/(9)/ 0 3,500 -- 5,021
Corporate and Regulatory 1993 94,201 10,000 16,337 -- --/(5)/ --
Relations
J. Henry 1995 109,697 19,425 -- --/(6)/ 41,251/(10)/1998 283,941 25,800 43,516(4) 21,038
General Counsel 1997 140,320 22,750 29,154
G. Swofford......................... 1999 238,960 87,500 19,841(3) 17,300(12)
Vice President 1994 106,303and Chief 1998 189,429 0 -- -- --
Engineering and 1993 97,755 8,600 15,968 -- --/(5)/ --
Operation Services54,967(4) 13,337
Operating Officer--Delivery 1997 181,333 13,875 132,719(5) 130,851
J. Quintana......................... 1999 192,125 70,200 45,432(3) 16,812(13)
Vice President 1998 121,957 27,000 9,894(4) 9,415
External Relations
11
SUMMARY COMPENSATION TABLE FOOTNOTES
/(1)/- ---------
(1) Mr. Weaver became President and Chief Executive Officer of PSE in
January 1998. Mr. McKeon became an executive officer of the Company in
June 1997. Mr. Hawley became an executive officer of PSE in March 1998.
Mr. Hogan became an executive officer of PSE in February 1997. The table
includes the following amounts paid to Mr. Hogan in 1997 by the Washington
Energy Company prior to its merger with PSE: Salary $11,334; Bonus,
$13,600, and LTIP payouts, $84,329. Mr. Quintana was an executive officer
of the Company from March 1998 until December 1999.
(2) Except as noted in the table, the aggregate amount of perquisites or
personal benefits was less than the required reporting threshold (the
lesser of $50,000 and 10% of annual salary and bonus for the named
executive officer). AmountsThe amount shown for Messrs. Swofford and Henry and Ms.
Vortman include $15,750Mr. Hogan includes $27,200 for a
one-time-only vehicle allowance which was
also received by all other executives, associated with management's
decision to no longer providethe Company's policy of not
providing executives with Company-purchased automobiles.
/(2)/(3) The amounts for 1999 represent payment of LTIP awards for the four-year
performance cycle ended on December 31, 1999, which consist of
(a) unrestricted shares and restricted shares, valued as of the
December 31, 1999 closing price of $19.38, plus (b) a total dividend amount
of $7.36 per share during the four-year performance period multiplied by
the total number of restricted and unrestricted shares, except that the
amount for Mr. Quintana represents a cash payment for the pro-rata portion
of Mr. Quintana's four outstanding target LTIP awards (based on the portion
of each award cycle elapsed as of December 31, 1999) in connection with the
11
termination of his employment. The number and value of restricted and
unrestricted shares for each of the named executive officers, other than
Mr. Quintana, are as follows:
UNRESTRICTED SHARES RESTRICTED SHARES
------------------- -------------------
NAME NUMBER VALUE NUMBER VALUE
---- -------- -------- -------- --------
W. Weaver............................................ 728 $14,109 728 $14,109
R. Hawley............................................ 392 7,597 392 7,597
T. Hogan............................................. 271 5,250 271 5,250
S. McKeon............................................ 470 9,111 470 9,111
G. Swofford.......................................... 371 7,190 371 7,190
(4) The amounts for 1998 represent payment of LTIP awards for the four-year
performance cycle ended on December 31, 1998, which consist of
(a) unrestricted shares and restricted shares, valued as of the
December 31, 1998 closing price of $27.875, plus (b) a total dividend
amount of $7.36 per share during the four-year performance period
multiplied by the total number of restricted and unrestricted shares. The
number and value of restricted and unrestricted shares for each of the
named executive officers are as follows:
UNRESTRICTED SHARES RESTRICTED SHARES
------------------- -------------------
NAME NUMBER VALUE NUMBER VALUE
---- -------- -------- -------- --------
W. Weaver............................................ 1,560 $43,485 1,560 $43,485
R. Hawley............................................ 312 8,697 312 8,697
T. Hogan............................................. 374 10,425 374 10,425
S. McKeon............................................ 617 17,199 617 17,199
J. Quintana.......................................... 140 3,914 140 3,914
G. Swofford.......................................... 780 21,743 780 21,743
(5) The amounts for 1997 represent payment of a performance share unit award
for the four-year cycle ended on December 31, 1997. The PSU award entitled
the holder to receive a cash payment equal to (a) the average market price
of one share of common stock during the month of December of the last year
of the four-year cycle, plus (b) the aggregate dividends with respect to
one share of common stock from January 1 of the year in which the PSU award
is made until the last day of the last month of the four-year cycle. The
number of PSUs on which values were paid was based on PSE's four-year
average total shareholder return relative to the companies in the EEI 100
Index of Investor-Owned Electrics.
(6) The aggregate number and value of all outstanding restricted stock held by
each of the named executive officers as of December 31, 1999, based on the
closing price of the PSE stock on that date of $19.38, are as follows: W.
Weaver, 2,288 shares, $44,341; R. Hawley, 704 shares, $13,644; T. Hogan,
644.9 shares, $12,498; S. McKeon, 1,087.12 shares, $21,068; G. Swofford,
1,151 shares, $22,306; and J. Quintana, 0.
(7) The amount for 1997 represents payment of performance shares granted by the
Washington Energy Company prior to its merger with PSE, whose vesting was
accelerated upon consummation of the merger.
(8) Represents $3,049$9,600 match under Investment Plan for Employees; $20,510 match
under the Investment Plan make-up; and $14,088 imputed income on life
insurance.
(9) Represents $9,208 match under Investment Plan for Employees; $9,778$11,443 match
under the Investment Plan makeup; and $2,909 of imputed income on
life insurance.
/(3)/ On June 30, 1995, Mr. Weaver was granted 8,743 phantom shares. The
aggregate value of the phantom shares was $199,996, based on a stock
price at June 30, 1995 of $22.875. The phantom shares vest, subject to
continued employment, equally over four years beginning on July 1, 1996,
and are valued and paid out in cash as to the vested portion on each such
date. The value of each phantom share is the market price on the vesting
date, plus the aggregate dividends paid on each such share during the
period the phantom share is held. At December 29, 1995, all 8,743 phantom
shares were outstanding with an aggregate value of $211,319 (based on a
stock price of $23.25 per share at December 29, 1995 and accumulated
dividends from June 30, 1995 to December 29, 1995 of $.92 per share).
/(4)/ Represents $5,082 match under the Investment Plan for employees; $3,375
match under the Investment Plan makeup; and $3,852 of imputed income on
life insurance.
/(5)/ Messrs. Weaver, Swofford and Henry and Ms. Vortman were not eligible
participants at the time Performance Share Units ("PSUs") were
awarded for the cycle ended December 31, 1993.
/(6)/ Messrs. Swofford and Henry and Ms. Vortman were not eligible participants
at the time PSUs were awarded for the cycle ended December 31, 1995.
/(7)/ Represents $2,541 match under the Investment Plan for Employees; $2,843
match under the Investment Plan makeup; $24 ofmake-up; $3,775 imputed income on life insurance;
and $39,404$29,036 pursuant to Mr. Hawley's employment agreement to compensate for
a one-time payment in connection with the
restructuring of the Company's paid sick and vacation leave accrual
policyLTIP payouts below $50,000.
12
(10) Represents $5,699 match under Investment Plan for all nonunion employees.
/(8)/ Represents $2,541Employees; $7,423 match
under the Investment Plan make-up; and $1,424 imputed income on life
insurance.
(11) Represents $9,167 match under Investment Plan for Employees; $1,853$11,351 match
under the Investment Plan makeup;make-up; and $2,141 of$2,070 imputed income on life
insurance.
/(9)/ Ms. Vortman became Senior Vice President Corporate and Regulatory
Relations in May, 1994.
/(10)/(12) Represents $2,432$5,930 match under Investment Plan for Employees; $10,007 match
under the Investment Plan make-up; and $1,363 imputed income on life
insurance.
(13) Represents $5,367 match under Investment Plan for Employees; $1,188$8,048 match
under the Investment Plan makeup; $5 ofmake-up; and $3,397 imputed income on life
insurance;
and $37,626 for a one-time payment in connection with the restructuring
of the Company's paid sick and vacation leave accrual policy for all
nonunion employees.
12insurance.
13
AGGREGATED SAR EXERCISES IN 1995 AND FISCAL YEAR-END SAROPTION/STOCK APPRECIATION RIGHTS VALUES
The following information is furnished fortable shows the year ended December 31, 1995 with
respect tonumber of outstanding unexercised options and
SARs held by the Company's Chief Executive Officer and each of the four other most
highly compensatedparticipating named executive officers at the end of the Company with respect to unexercised
SARs outstanding at year-end.1999. No
options or SARs were granted or exercised in 1995.1999.
NUMBER OF SHARES UNDERLYING VALUE OF UNEXCERCISED
Underlying Unexercised In-The-Money SARs
SARs at Fiscal Year-EndUNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS/SARS AT FISCAL OPTIONS/SARS AT
NAME YEAR-END (#) at Fiscal Year-EndEXERCISABLE FISCAL YEAR-END ($) --------------------------- -----------------------------
Name Exercisable/Unexercisable Exerciseable/Unexercisable(1)EXERCISABLE (1)
- ---- --------------------------- --------------------------------------------------------------- -----------------------------------
W. Weaver............................ 18,700 $ 0
R. SONSTELIE 25,340 / 34,060 $30,420 / $38,993
PRESIDENT AND CHIEF EXECUTIVE OFFICER
W. WEAVER
EXECUTIVE VICE PRESIDENT AND 7,720 / 14,580 $ 4,500 / $18,000
CHIEF FINANCIAL OFFICER
G. SWOFFORD 3,120 / 6,080 $ 3,000 / $12,000
SENIOR VICE PRESIDENT
CUSTOMER OPERATIONS
S. VORTMAN 700 / 2,800 $ 1,750 / $7,000
SENIOR VICE PRESIDENT
CORPORATE AND REGULATORY RELATIONS
J. HENRYHawley............................ -- --
VICE PRESIDENT
ENGINEERING AND OPERATION SERVICEST. Hogan............................. 15,667 $25,807
S. McKeon............................ -- --
G. Swofford.......................... 5,600 $ 0
J. Quintana.......................... -- --
- ---------
(1) The amount is the aggregate ofAmounts are the number of options/SARs multiplied by the difference between
the closing price of the Common Stock on the New York
Stock Exchangecommon stock on December 29, 199531, 1999 of $23.25$19.38 per
share, minus the exercise or base price for that SAR, plus the incrementaloption/SAR. There is no
guarantee that these options/SARs will have this value of per share dividend
increases up to December 31, 1995.
13
when and if they are
exercised.
LONG-TERM INCENTIVE PLAN AWARDS IN 19951999
The following information is furnished for the year ended December 31, 1995 with
respecttable presents grants we made to the Company's Chief Executive Officer and each of the four other most
highly compensatednamed executive officers
of the Company with respect to grants
under the Company'sour 1995 Long-Term Incentive ProgramCompensation Plan during 1995.1999.
Number Estimated Future Share Payouts
of Period UntilESTIMATED FUTURE SHARE PAYOUTS
NUMBER OF PERIOD UNTIL -------------------------------
Shares Maturation or Threshold Target Maximum
NameSHARES MATURATION OR THRESHOLD TARGET MAXIMUM
NAME (#)(1) PayoutPAYOUT (#) (#) (#)
- --------------------------------------------------------------------------------------------------------------- --------- ------------- --------- -------- --------
W. Weaver................................. 35,080 4 years 0 35,080 61,390
R. SONSTELIE 13,200Hawley................................. 14,190 4 YEARSyears 0 13,200 21,120
PRESIDENT AND CHIEF EXECUTIVE OFFICER
W. WEAVER 6,00014,190 24,833
T. Hogan.................................. 4,820 4 YEARSyears 0 6,000 9,600
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER4,820 8,435
S. McKeon................................. 14,190 4 years 0 14,190 24,833
G. SWOFFORD 3,000Swofford............................... 8,680 4 YEARSyears 0 3,000 4,800
SENIOR VICE PRESIDENT
CUSTOMER OPERATIONS
S. VORTMAN 2,5008,680 15,190
J. Quintana(2)............................ 4,880 4 YEARSyears 0 2,500 4,000
SENIOR VICE PRESIDENT
CORPORATE AND REGULATORY RELATIONS
J. HENRY 1,200 4 YEARS 0 1,200 1,920
VICE PRESIDENT
ENGINEERING AND OPERATION SERVICES4,880 8,540
- ---------
(1) Awards are contingent grants of Puget Common Stock.common stock. The number of shares delivered
at the end of the four-year cycle will range from zero to 160%175% of the
contingent grant. This numberThe actual payout depends on the company'sour four-year total
shareholder return compared to the returns reported in the EEI 100 IndexCombination
Gas & Electric Investor-owned Utilities Index. To receive 100% of Investor-owned Electrics. If total shareholder returnthe grant,
we must perform at the end55(th) percentile among EEI's Gas & Electric
companies. To receive 175% of the four-year cycle resultsgrant, we must perform at or above the
85(th) percentile ranking. Dividend equivalents are accrued during the
performance period and paid out in the delivery of Puget Common Stockcash when and to the participant, one-halfextent the
performance shares are paid.
(2) Mr. Quintana's 1999 LTIP award was cancelled in exchange for the payment of
a prorata portion of the shares will be restricted for an additional
two-year period.award in connection with the termination of his
employment. See footnote (3) to the Summary Compensation Table.
14
RETIREMENT BENEFITS STATEMENT
EstimatedThe table below presents estimated retirement benefits for the named
executive officers, are shown in the
table below, assuming retirement on January 1, 19962000 at age 6562 after
selected periods of service. The benefit levels shown aretable lists the estimated aggregate value
resulting from the Company'svalues
under our funded pension plan, its Supplemental Executive Retirement Plan,
for Officers (the "SERP"),Washington Natural Gas Nonqualified Retirement Plan benefits, the SERP
pension-type rollover accounts in the Deferred Compensation Plan make-
up and the Cash
Balance Restoration Matching Account within the Deferred Compensation Plan.
Social Security benefits.
Estimated Annual Benefit Upon Retirement at Age 65benefits will not be deducted from the amounts shown in the
table.
ESTIMATED ANNUAL BENEFIT UPON RETIREMENT AT AGE 62
YEARS OF CREDITED SERVICE
FINAL AVERAGE ---------------------------------------------------------------------
COMPENSATION 5 10 15+*
- ------------ -------- ---------- ------------------ --------
$100,000 $ 20,000 $ 40,000 $ 60,000$100,000....................................... $16,667 $33,333 $50,000
200,000....................................... 33,333 66,667 100,000
300,000....................................... 50,000 100,000 150,000
400,000....................................... 66,667 133,333 200,000
40,000 80,000 120,000
300,000 60,000 120,000 180,000
400,000 80,000 160,000 240,000
500,000500,000....................................... 83,333 166,667 250,000
600,000....................................... 100,000 200,000 300,000
* All persons with 15 or more years of credited service receive the
maximum benefits payable under the plan for their salary level.
The named executive officers have the following years of credited service as
of December 31, 1995: R. Sonstelie, 21.5;1999: W. Weaver, 4.5;31.5; R. Hawley, 1.75; T. Hogan, 23.33; S.
McKeon, 2.58; G. Swofford, 28.42; S.
Vortman, 14.67;32.42; and J. Henry, 27.25.Quintana, 1.7. Under their employment
agreements, if Mr. Hawley and Mr. McKeon complete five years of service they
will be treated as if they have completed 15 years of credited service. Under
Mr. Quintana's termination agreement, he will be treated as if he has
5.25 years of credited service.
Estimated aggregate benefits are based on 60%the following formula: 3 1/3%
times years of credited service times average annual compensation (salary plus
bonus) for the highest three calendar years in the last five complete calendar
years prior to retirement, except that Mr. Weaver's benefits are based on the
average of his highest 24 consecutive five years precedingmonths of compensation and Mr. Hawley's
and Mr. McKeon's benefits are based on the retirement date.annual average of their highest 36
consecutive months of salary paid or payable plus the average of their highest
three annual bonuses paid or payable. Also, $50,000 of Mr. Hawley's LTIP-related
payouts are treated as salary. See the section called "Employment Contracts,
Termination of Employment and Change-in-Control Arrangements" below.
The five-yearthree-year averages (24-consecutive-month average for Mr. Weaver;
21-consecutive-month average for Mr. Hawley; 31-consecutive-month average for
Mr. McKeon; and 20.8-month average for Mr. Quintana as of December 31, 1995 are as follows1999) for
the named executive officers: R.
Sonstelie, $393,245; W. Weaver, $230,464; G. Swofford, $141,468; S. Vortman,
$106,405;officers were: $551,589 for Mr. Weaver; $333,238 for
Mr. Hawley; $190,487 for Mr. Hogan; $305,410 for Mr. McKeon; $222,865 for
Mr. Swofford; and J. Henry, $107,906.
The Company has entered into an agreement with$199,657 for Mr. Weaver regarding certain
benefits payable upon retirement. If Mr. Weaver continues in employment with the
Company until age 65, it is estimated that the special agreement will not
provide him any additional benefits beyond those set out in the Retirement
Benefits table. However, if Mr. Weaver continues in employment with the Company
through July 1, 1996, then terminates employment at any time thereafter, but
before becoming SERP eligible (in general, age 55 with 5 years of credited
service), he would, commencing at age 62, receive his normal retirement benefit
under the Company's funded pension plan, plus, under the agreement, an
additional annual benefit of approximately 29% of his final average annual
earnings. Earnings used in calculating his benefit under the Company's funded
pension plan and under the special agreement will be limited to the amount
established by Section 401(a)(17) of the Internal Revenue Code of 1986, as
amended, which is currently $150,000 per year. If Mr. Weaver terminates
employment prior to July 1, 1996, he would not receive any benefit under the
Company's funded pension plan, but would, commencing at age 62, receive an
annual benefit of approximately $22,500 if service terminates prior to July 1,
1996.
15
Quintana.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
EMPLOYMENT AGREEMENT
The CompanyAGREEMENTS
In October 1996 PSE entered into a four-year employmentan agreement (the "Employment
Agreement") with Richard R. Sonstelie on October 18, 1995. The Employment
Agreement provides that Mr. Sonstelie will continue to serve as the Company's
President and Chief Executive Officer until consummation of the proposed Merger,
and thereafter will serve as the Company's Chairman of the Board (assuming his
election to the Company's Board of Directors by the Company's shareholders) and
Chief Executive Officer of the Company.
During his term of employment, Mr. SonstelieWeaver under which he
will receive a minimumthe following payments and benefits if his employment terminates
for any reason sooner than his normal retirement date, which, in accordance with
PSE's policy, is when Mr. Weaver reaches the age of 62.
a. annual base salary and accrued benefits earned through termination,
plus a pro rata share of $400,000. He will also be eligible to participate in the Company's
annual and long-termany incentive compensation programs (which may include a pay-
at-risk plan, stock-based awards, stock options, stock appreciation rights and
other forms of compensation), and its retirement, investment and deferred
compensation plans, and will also be entitled to paid vacation, medical, life
and disability insurance benefits, and other perquisites.
If the Company terminates Mr. Sonstelie's employment (except termination "for
cause," as defined in the Employment Agreement) or if Mr. Sonstelie dies or is
unable to perform his duties as a result of a physical or mental disability
prior to the end of the Employment Agreement's four-year term, Mr. Sonstelie
will be entitled to receive (a) all compensation and benefits earnedaccrued through the date
of termination, and (b) a continuationregardless of his salary for the balance ofwhether such four-year term. In addition, if Mr. Sonstelie's employment terminates due to a
material adverse change in the terms of his employment following a Change in
Control (as defined below) of the Company during the Employment Agreement's
four-year termamounts are vested or within the three-year period (the "Extended Benefit Period")
following a notice of termination of the Employment Agreement (except notices of
termination for cause or of termination due to death or incapacity), Mr.
Sonstelie will be entitled to receive, during the Extended Benefit Period, (a)
his annual base salary earned through termination and accrued benefits; (b)
within 30 days of termination,payable on
that date;
15
b. an amount equal to the sum of histhree times annual base salary at the rate applicable on the date of termination plus any additional
compensation awardedand bonus;
c. continued participation for the year most recently ended, multiplied by the number
ofthree years (pro-rated for partial years) remaining between the date of termination
and the end of the Extended Benefit Period; (c) full benefits under the
Company'sin employee benefit plans programs and policies; (d) in addition to the
regularor
provision for substantially similar benefits;
d. a cash payment of benefits under the Company'sat normal retirement plans or programs
(which shall not be affected by termination),date of the actuarial equivalent
of the additional retirement compensation Mr. Sonsteliehe would have earned had
employment continued through the Extended Benefit Period; (e) in return for a
waiver of the right to exercise any option,three more years;
e. a payment equal to the difference between the exercise priceprices of allany
outstanding options if any, held by Mr. Sonstelieor similar rights (whether or not then fully
exercisable) and the higher of (i)(a) the averagemarket price of the high and low sales prices of the Company Common Stockcommon stock on
the NYSE for the 20
days precedingdate of termination and (ii)(b) the highest price per share actually paid for Common Stock in
connection with any Changechange in Controlcontrol;
f. a payment equal to the value of the Company;target number of shares payable
upon full vesting of all outstanding performance awards, whether or not such
awards were then fully vested or payable; and
(f)g. a cash payment equal to any additionalexcise taxes payable by Mr. Sonstelie in connection withhim due to
excess parachute payments.payments, plus the tax expense to him resulting from this
payment.
In addition, Mr. Weaver's agreement provides that his benefits under the
SERP will be based on his average compensation for his highest consecutive
24 months of service.
Effective March 16,
"Change1998, PSE entered into an employment agreement with
Mr. Hawley to secure his services as Vice President and Chief Financial Officer.
The agreement has a term of five years. Mr. Hawley will receive a minimum annual
base salary of $300,000. He also will participate in Control" includesPSE's Pay at Risk Plan,
with a target award of at least 35% of base salary, and in PSE's 1995 Long-Term
Incentive Compensation Plan, with a target of at least 40% of base salary and
grants of 1,200 performance units for the 1995-1998 cycle, 2,800 performance
units for the 1996-1999 cycle, 4,400 performance units for the 1997-2000 cycle
and 6,400 performance units for the 1998-2001 cycle, and a cash payment equal to
the difference between $50,000 and any lesser settlement value for such awards.
In addition, Mr. Hawley's agreement provides that if he completes five years
of service to the Company, then his benefits under the SERP will be calculated
as if he had completed 15 years of service to the Company. His agreement also
provides that his benefits under the SERP will be based on the sum of (a) the
acquisition by any personannual average of (i) powerhis highest 36 consecutive months of salary paid or payable
and (b) the average of his highest three annual bonuses paid or payable. Under
his agreement, the $50,000 minimum annual award to exercise a controlling influence overwhich Mr. Hawley is entitled
with respect to the Company's management or policies or
(ii) ownership or power1995 Long-Term Incentive Compensation Plan will be treated
as salary for purposes of calculating his SERP benefits.
If PSE terminates Mr. Hawley's employment without cause prior to vote 25% or morethe end of
the Company's outstanding voting
securitiesterm of the agreement, Mr. Hawley will receive:
a. annual base salary and accrued benefits earned through termination,
plus a pro rata share of any incentive compensation accrued through the date
of termination, regardless of whether such amounts are vested or (b)payable on
that date, and
b. continuation of his base salary for two years, plus $50,000 per
year.
If Mr. Hawley's employment terminates for any reason within three years
after a change in the majoritycontrol, Mr. Hawley will receive, in lieu of the benefits
described above, substantially the same type of payments and benefits as
described above for Mr. Weaver.
Mr. Hogan entered into an agreement effective as of August 17, 1995 with the
Washington Energy Company Board during the six-
year period subsequentthat PSE has assumed. Under that agreement, as amended
on June 30, 1999, if prior to the
acquisition by any person16
earlier of ownershipJune 30, 2002 or powera change of control of PSE Mr. Hogan terminates his
employment for good reason or PSE terminates his employment without cause, he
would receive the same type of payments and benefits as described above for
Mr. Weaver.
In October 1996 PSE entered into an agreement with Mr. Swofford under which
he will be paid a retention incentive benefit based on continued employment for
an extended period following the merger of PSE and the Washington Energy Company
in February 1997, equal to vote 10% or morethree times his annual base salary in 1996, plus the
bonus paid in 1996. The incentive benefit vests in three equal installments
after one year, three years and five years of continued employment after the
merger. The vested portion of the outstanding voting securitiesincentive benefit will be paid in equal
monthly installments over a three-year period beginning on the date his
employment terminates.
In 1999 PSE entered into-change of control agreements with Mr. Swofford and
Mr. Hogan that provided for the same type of payments and benefits described
above for Mr. Weaver in the event that their employment is terminated by the
Company without cause or by the approvalemployee for good reason within two years
following a change of control of PSE, except that the payments in sections
(c) and (d) are based on two rather than three years.
Effective June 2, 1997, PSE entered into an employment agreement with
Mr. McKeon to secure his services as Vice President and General Counsel. The
agreement has an initial term of three years and will be extended for two more
one-year periods unless Mr. McKeon or we give written notice of termination not
less than six months before the applicable anniversary date. Mr. McKeon will
receive a minimum annual base salary of $260,000. He also will participate in
PSE's Pay at Risk Plan, with a target award of at least 35% of base salary, and
in PSE's 1995 Long-Term Incentive Compensation Plan, with a target of at least
35% of base salary and grants of 2,375 performance units for the 1995-1998
cycle, 3,358 performance units for the 1996-1999 cycle and 5,240 performance
units for the 1997-2000 cycle.
Mr. McKeon's agreement provides that if he completes five years of service
to the Company, then his benefits under the SERP will be calculated as if he had
completed 15 years of service to the Company. His agreement also provides that
his benefits under the SERP will be based on the sum of (a) the annual average
of his highest 36 consecutive months of salary paid or payable and (b) the
average of his highest three annual bonuses paid or payable. If PSE terminates
his employment without cause prior to the end of the majorityterm of the Company's directorsagreement,
Mr. McKeon would receive his annual base salary and accrued benefits earned
through termination, plus a pro rata share of any incentive compensation accrued
through the date of termination, regardless of whether such amounts are vested
or payable on that date, and continuation of his base salary for two years. If
Mr. McKeon's employment terminates for any reason within three years after a
change in office prior to such
acquisition.control, he would receive substantially the same type of payments and
benefits as described above for Mr. Weaver.
PSE entered into a severance agreement with Mr. Quintana as of December 31,
1999. The Merger does not constituteagreement supersedes an employment agreement between Mr. Quintana and
PSE dated as of March 20, 1998. The severance agreement provides that
Mr. Quintana will receive a Changelump-sum severance payment of $151,685 and a payment
of $45,432 in Control for purposessettlement of the pro rata portion of his four outstanding LTIP
awards. The agreement also provides that Mr. Sonstelie's Employment Agreement.
PursuantQuintana's benefits under the SERP
will be calculated as if he had completed 5.25 years of service to the Employment Agreement, the Company agrees to indemnify Mr.
Sonstelie to the fullest extent allowed by law; provided, however, that he shall
not be entitled to indemnification for liabilities, obligations, claims or
expenses resulting from his acts of dishonesty, the receipt of benefits to which
he was not entitled, the refusal to comply with a lawful directive of the
Company Board or any willful misconduct. Mr. Sonstelie is bound by
confidentiality, noncompetition and nonsolicitation provisions.Company.
1995 LONG-TERM INCENTIVE COMPENSATION PLAN
Under the Company'sPSE 1995 Long-Term Incentive Compensation Plan, in the event of a
salechange of substantially all the assets or a liquidationcontrol of the Company or a
merger or consolidation of the Company as a result of which shareholders of the
Company receive cash, securities or other property in exchange for their shares
of common stock,PSE, each stock award that is at the time outstanding will
automatically accelerate so that each such award shall, immediately prior to
such corporate transaction,and become
17
100% vested, except that such award will not
so accelerate except under certain circumstances where such award is assumed or
replaced in connection with the corporate transaction. The Merger will not cause
an acceleration of vesting under this plan.vested. The plan administrator shall have
the discretion, exercisablemay, at any time before a sale, merger, consolidation,
reorganization, liquidation or change in control of the Company, as defined by
the plan administrator, tocorporate
transaction, take such further action as it determines to be
necessary or advisable, andensure fair and equitable to holders, with respect totreatment of
awards.
LONG TERM INCENTIVE PROGRAM FOR SENIOR MANAGEMENT
Under the Company's Long Term Incentive Program for Senior Management, upon
dissolution or liquidationSTOCK APPRECIATION RIGHTS
Upon a change of the Company, or merger or consolidationcontrol of the
Company as a result of which shareholders of the Company receive cash, stock or
other property in exchange for their shares of Common Stock,PSE, all stock
appreciation rightsSARs will terminate, but eachterminate. Each holder will have the right
immediately prior to such transaction tomay
exercise his or her stock appreciation
rights,SARs immediately prior to the transaction, whether or not
the stock appreciation rightsSARs have vested.
All
performance share units will be deemed to have matured onCERTAIN TRANSACTIONS
Mr. Dryden, a director of the preceding December
31. The numberCompany, has served as Chief Executive Officer
of performance share units will be proportionately reduced to
reflect the reductionConneXt, Inc., a wholly owned subsidiary of PSE, since April 1999. His
aggregate compensation for such service in the period from the grant of performance share units
until their maturity. The Merger will not cause an acceleration of vesting under
this plan.
17
1999 was $294,776.
ADDITIONAL INFORMATION ABOUT THE MEETING AND SHAREHOLDER PROPOSALS
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Coopers & Lybrand L.L.P.PricewaterhouseCoopers LLP has examinedaudited the financial statements
of the Company since 1933, and the Company intends to continue the service of this
firm for the fiscal year ending December 31, 1996.1933. Representatives of the firm will be present atattend the Annual
Meeting, with the opportunity to make a statement and to answer appropriate
shareholder questions.
VOTING RIGHTS AND PROXY
Common Stock is the only class of stock entitled to vote at the Annual Meeting
for the election of Directors. Approximately 63.6 million shares of Common Stock
were outstanding on March 11, 1996, the record date for the Annual Meeting. The
holders of a majority of the shares of the Company's Common Stock, present in
person or by proxy at the Annual Meeting, constitute a quorum for the
transaction of business. Each holder of Common Stock generally is entitled to
one vote for each share held on the record date on each item to be voted on at
an Annual Meeting of Shareholders. In electing Directors, however, every holder
of Common Stock has the right of cumulative voting, namely, the right to
multiply the number of votes represented by shares held of record by the number
of Directors to be elected, and then cast all such votes for one candidate or
distribute them among any two or more candidates. Under Washington law and the
Company's Articles of Incorporation, if a quorum is present at the Annual
Meeting, the three nominees for election as Directors who receive the greatest
number of votes cast for the election of Directors at the Annual Meeting by the
shares present in person or represented by proxy at the Annual Meeting and
entitled to vote shall be elected Directors. In the election of directors, any
actions other than a vote for a nominee will have the practical effect of voting
against the nominee.
Unless your proxy is mutilated or otherwise received in such form or at such
time as to render it not votable, the shares represented by your proxy will be
voted as directed and, if no direction is indicated, will be voted for all
management proposals as set forth in this Proxy Statement. A proxy may be
revoked by the shareholder at any time before it is voted. A proxy, when
executed and not so revoked, will be voted and, if it contains any
specifications, will be voted in accordance with the specifications so made. The
Company acts as tabulator for the proxies of the shareholders of record, brokers
and banks. The identity and vote of all shareholders shall not be disclosed to
any third party except as necessary to meet applicable legal requirements. If
any other matters should properly come before the Annual Meeting, it is the
intention of the persons named in the accompanying proxy to vote thereon in
accordance with their judgment on such matters.
SHAREHOLDER PROPOSALS
Any shareholderShareholders who intend to have a proposal intendedconsidered for inclusion in the Companyour
proxy materialmaterials for the 19972001 Annual Meeting of Shareholders must be receivedsubmit the
proposal at theour principal executive office of the Company notno later than November 27, 1996.
18
30, 2000. In
accordance with the Company's Bylaws, shareholders who intend to present a
proposal at the 2001 Annual Meeting without inclusion of the proposal in our
proxy materials must provide written notice of such proposal, in the manner
required by the Company's Bylaws, no later than January 8, 2001.
SOLICITATION OF PROXIES
ProxiesThe Board of Directors is soliciting the proxies in the form enclosed are solicited by and on behalf of the Company.
Richard R. Sonstelie, President and Chief Executive Officer,enclosed.
William S. Weaver and James W. Eldredge, Corporate Secretary, and each or either of them, are named
as proxies. ProxiesWe may be solicitedsolicit your proxy by mail, personal interview, telephone and
fax. It is
anticipatedWe will request that banks, brokerage houses and other custodians, nominees
or fiduciaries will be requested to forward soliciting materials to their principals and to obtain
authorization for the execution of proxies andproxies. We will be
reimbursedreimburse them for their
expenses incurred in connection therewith. Proxies may also
be solicited byforwarding and collecting proxies. Our officers, Directors,directors,
employees and other agents of the Companymay solicit proxies without compensation, therefor, except for
reimbursement of expenses. AllPuget Sound Energy will pay all costs of solicitation
of proxies will be borne by the Company.proxies.
March 27, 199630, 2000
Bellevue, Washington
By Order of the Board of Directors
/s/ Richard R. Sonstelie
Richard R. Sonstelie
President and Chief Executive Officer
19William S. Weaver
PRESIDENT AND CHIEF EXECUTIVE OFFICER
18
MAP TO MEYDENBAUER CENTER
11100 NE 6th Street Bellevue, WA 98004
[MAP APPEARS HERE]
PARKING
COMPLIMENTARY PARKING IS AVAILABLE IN THE MEYDENBAUER
CENTER PARKING GARAGE. THE GARAGE ENTRANCE IS LOCATED
ON 112TH AVE. NE. PLEASE TELL THE ATTENDANT YOU ARE
ATTENDING THE PUGET POWER ANNUAL MEETING.
[RECYCLED LOGO]
Printed on recycled paper.
PUGET
POWER[LOGO]
[LOGO OF PUGET POWER]
P.O. Box 96010
Bellevue, WA 98009-9610
BELOW IS YOUR PROXY FORM. PLEASE READ THE ENCLOSED INFORMATION CAREFULLY. VOTE,
SIGN AND DATE YOUR PROXY FORM AND RETURN IT IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
- --------------------------------------------------------------------------------
[LOGO OF PUGET POWER]
P.O. Box 96010, Bellevue, WA 98009-9610
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TheThis undersigned hereby appoints RICHARD R. SONSTELIEWILLIAM S. WEAVER and JAMES W.
ELDREDGE, and each or either of them, 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 PUGET SOUND POWER & LIGHT COMPANYENERGY, INC.
held of record by the undersigned on March 11, 1996,15, 2000, at the Annual Meeting of
Shareholders to be held on May 14, 1996,16, 2000, or any adjournment thereof.
1. ELECTION OF DIRECTORS [_] FOR all nominees listed [_] WITHHOLD AUTHORITY
below (except as(Continued, and to be marked, to to vote for all
the contrary below) nominees listed below
JOHN D. DURBIN DANIEL J. EVANS NANCY L. JACOB
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided.)
- -------------------------------------------------------------------------------
(This Proxy Card continuesdated and MUST be signed, on the reverseother side)
- -------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
- --------------------------------------------------------------------------------
(Continued from the reverse)
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. PROXY CARDS PROPERLY EXECUTED AND RETURNED WITHOUT
DIRECTION WILL BE VOTED FOR PROPOSAL 1. In their discretion, the Proxies are
authorized to vote upon such other business as may properly come before the
meeting and any adjournment thereof. Please sign exactly as name appears below.
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.
SIGNATURE/DATE SIGNATURE IF HELD JOINTLY/DATE
- ------------------------------ --------------------------------------------
PLEASE COMPLETE, SIGN,
DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
- ---------------------------------------------------------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED "FOR" THE PROPOSALS Please mark
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. your votes as /X/
indicated in
this example
FOR all nominees
listed below WITHHOLD AUTHORITY
(except as marked to to vote for all
the contrary below) nominees listed below
1. Election of Directors / / / /
DOUGLAS P. BEIGHLE TOMIO MORIGUCHI CRAIG W. COLE
(INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name in this
space).
- ------------------------------------------------------ This proxy when properly executed will be voted in
the manner directed herein by the undersigned
shareholder. PROXY CARDS PROPERLY EXECUTED AND
RETURNED WITHOUT DIRECTION WILL BE VOTED FOR PROPOSAL
1. In their discretion, the Proxies are authorized to
vote upon such other business as may properly come
before the meeting and any adjournment thereof.
Please sign exactly as name appears below. 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.
Signature(s) Dated , 2000
----------------------------------------------- ------------------
PLEASE COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE
- ---------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE