<PAGE>
<PAGE>
NEVADA POWER COMPANY
- ----------------------------------------------------------------NP-----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 9, 1997
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Nevada Power Company will be held
at the Stardust Resort & Casino, Conference Center, 3000 Las Vegas Boulevard
South, Las Vegas, Nevada, on Friday, May 9, 1997, at 2:00 P.M. for the
following purposes:
1. To elect four directors to three-year terms and one director to a two-
year term.
2. To consider and vote upon a shareholder recommendation to the Board of
Directors concerning the Retirement Plan for Outside Directors.
3. To consider and act upon any other business that may properly be brought
before the meeting.
For easy access to the Annual Meeting room, entry from the Industrial
Road entrance is recommended. Please see accompanying map.
Guest rooms have been reserved at the Stardust Resort & Casino at a
special rate for those Nevada Power Company Shareholders who wish to stay any
day(s) between Thursday, May 8, and Saturday, May 10, 1997. To obtain this
special rate, reservations must be made by APRIL 18, 1997 by calling the
Stardust Resort & Casino at (800) 634-6757 or (702) 732-6111, asking for the
Convention Desk and identifying yourself with the GROUP CODE NVPOW97.
The close of business on March 13, 1997 has been fixed as the record
date for determining the shareholders entitled to receive notice of and to
vote at the Annual Meeting.
March 13, l997
Richard L. Hinckley
Richard L. Hinckley
Secretary
--------------------------------------------------------------
| EVEN IF YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE |
| SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT |
| PROMPTLY IN THE ACCOMPANYING ENVELOPE |
--------------------------------------------------------------
<PAGE>
<PAGE>
LOCATION OF 1997
ANNUAL MEETING OF SHAREHOLDERS
A map of the location of the 1997 Annual Meeting of Shareholders to be held
at the Stardust Resort & Casino, Conference Center, is included in this
space. The map shows the area of Las Vegas, Nevada including Sahara Avenue
to the North, Tropicana Avenue to the South, Interstate 15 to the West and
Paradise Road to the East, as well as the relative location of McCarran
Airport and the roads that immediately surround the Stardust Resort and
Casino.
<PAGE>
<PAGE>
NEVADA POWER COMPANY
6226 West Sahara Avenue
P.O. Box 230
Las Vegas, Nevada 89151
_______________________
PROXY STATEMENT
The enclosed proxy for the 1997 Annual Meeting of Shareholders is
solicited by the Board of Directors of Nevada Power Company (the "Company")
and it may be revoked by written notice to the Secretary of the Company at
any time prior to its use. All shares represented by valid proxies on the
enclosed form, timely received by the Company, will be voted at the meeting
or any adjourned session in the manner directed by the shareholder. If no
direction is made, the proxy will be voted "FOR" the nominees for Director
and "Yes" with respect to the shareholder recommendation.
As of the close of business on March 13, 1997, there were outstanding
and entitled to vote 49,189,692 shares of Common Stock. Only holders of
Common Stock of record at the close of business on March 13, 1997 will be
entitled to vote at the meeting.
Each share of the Company's Common Stock is entitled to one vote. The
total number of shares represented by individual proxies includes shares, if
any, owned by shareholders and credited to their accounts under the Company's
Stock Purchase and Dividend Reinvestment Plan. An affirmative vote of a
majority of the shares present and voting at the meeting is required for
approval of all items being submitted to the shareholders for their
consideration. An automated system administered by the Company tabulates the
votes. Broker non-votes are not counted for purposes of determining whether
a proposal has been approved. The first mailing of the proxy and proxy
statement to common shareholders will be on or about March 24, 1997.
The cost of soliciting proxies in the enclosed form is being borne by
the Company. In addition to solicitation by mail, arrangements have been
made with brokerage houses, nominees and other custodians and fiduciaries to
send proxy material to their principals and the Company will reimburse them
for their reasonable expenses in doing so. Proxies also may be solicited
personally or by telephone or telegraph by directors, officers, and a few
regular employees of the Company in addition to their usual duties, but they
will not be specially compensated for these services. The Company has
retained Beacon Hill Partners, Inc., 90 Broad Street, New York, New York
10004 to aid in the solicitation of proxies by similar methods, for which
Beacon Hill Partners, Inc. will receive a fee of $3,500, out-of-pocket
expenses limited to a total of $2,000 and brokerage forwarding charges.
1
<PAGE>
<PAGE>
ELECTION OF DIRECTORS
The Company's Restated Articles of Incorporation currently provide for a
classified board consisting of between three and twelve directors. At
present, the Board of Directors (sometimes referred to herein as the "Board")
consists of eleven members divided into three classes of four, three and four
directors, respectively. One class of directors is elected at each Annual
Meeting to serve a three-year term. Mrs. Cashman, the newest director, is
nominated for a two-year term to allow as equal a number of directors as
possible in each class. A brief biography of each nominee up for election at
the 1997 Annual Meeting is presented below. Management recommends that
shareholders vote "FOR" these nominees.
The proxies solicited by and on behalf of the Board of Directors of the
Company will be voted "FOR" the election of the nominees, unless authority to
do so is withheld as provided in the enclosed proxy. Although it is not
contemplated that any of the nominees will be unable to serve, in the event
any nominee should not be available as a candidate for director at the time
of the Annual Meeting, the persons named in the proxy will vote for a
substitute who will be designated by the present Board of Directors to fill
such vacancy.
The following table sets forth biographical information for the five
nominees for director and the other directors of the Company.
Principal Occupation and Year First
Employment for the Past Five Became Director
Name Age Years and Other Information /Term Expires
- --------------------- --- ---------------------------------- ---------------
Nominees for Director:
MARY KAYE CASHMAN 45 Chief Executive Officer and Vice 1997/1997
Chairman of the Board of Cashman
Equipment Company (one of the
oldest and largest Caterpillar
dealers in North America). Mrs.
Cashman has been involved with
Cashman Equipment Company since
1970, becoming a director in 1982
and CEO in 1995. She holds a
degree in nursing from the
University of Nevada, Las Vegas
and worked as a registered nurse
at University Medical Center from
1982-1987 and Sunrise Hospital
from 1988-1995. She serves on
the boards of the Nevada Test Site
Development Corporation; Mackay
School of Mines Advisory at the
University of Nevada, Reno; Bishop
Gorman High School Endowment
Foundation; and McCaw Elementary
School of Mines Foundation. She
is a member of the Nominating
Committee and Pension Fund
Committee.
2
<PAGE>
<PAGE>
Principal Occupation and Year First
Employment for the Past Five Became Director
Name Age Years and Other Information /Term Expires
- --------------------- --- ---------------------------------- ---------------
JOHN L. GOOLSBY 55 President and Chief Executive 1991/1997
Officer of The Howard Hughes
Corporation (real estate
investment and land development
companies). Mr. Goolsby became
affiliated with The Howard Hughes
Corporation in l980 and became
President in 1988. Mr. Goolsby is
a director of Bank of America
Nevada and America West Holdings
Corporation. Mr. Goolsby is a
graduate of the University of
Texas at Arlington and a Certified
Public Accountant. He is a member
of the Executive Committee,
Compensation Committee and Audit
Committee.
JERRY E. HERBST 59 Chief Executive Officer of 1990/1997
Terrible Herbst, Inc. (gas
station, car wash, convenience
store chain) and Herbst Supply
Co., Inc. (wholesale fuel
distribution), family-owned
businesses for which he has worked
since l959. Mr. Herbst is a
general partner of the Gold Coast
Hotel & Casino and a director of
Bank of America Nevada. Mr. Herbst
is a graduate of the University of
Southern California. He is
Chairman of the Nominating
Committee and a member of the
Compensation Committee.
3
<PAGE>
<PAGE>
Principal Occupation and Year First
Employment for the Past Five Became Director
Name Age Years and Other Information /Term Expires
- --------------------- --- ---------------------------------- ---------------
FRANK E. SCOTT 77 Chairman of the Board and Chief 1972/1997
Executive Officer of First Western
Financial Corporation (holding
company of a savings and loan
association) until his retirement
in 1988. Mr. Scott is Chairman of
the Board of Sports Media Network
and until recently, was Chairman
of the Board of American
Wollastonite Mining Corporation.
Previously he was also Chairman of
the Board and CEO of the Scott
Corporation, developer and
operator of the Union Plaza Hotel.
He is a member of the
Compensation Committee and Pension
Fund Committee.
JELINDO A. TIBERTI 77 Chairman of the Board of J. A. 1963/1997
Tiberti Construction Company, Inc.
Mr. Tiberti is a Registered
Professional Engineer. He is
Chairman of the Pension Fund
Committee and a member of the
Executive Committee and
Compensation Committee.
Other Directors:
FRED D. GIBSON, JR. 69 Chairman, President, Chief 1978/1998
Executive Officer and a director
of American Pacific Corporation
(manufacturer of chemicals and
pollution abatement equipment;
real estate development). Mr.
Gibson has been affiliated with
American Pacific Corporation and
its predecessor, Pacific
Engineering & Production Co.,
since l956. Mr. Gibson is a
graduate of the University of
Nevada and holds a degree in
Metallurgical Engineering. He is
Chairman of the Audit Committee
and a member of the Executive
Committee and Nominating
Committee.
4
<PAGE>
<PAGE>
Principal Occupation and Year First
Employment for the Past Five Became Director
Name Age Years and Other Information /Term Expires
- --------------------- --- ---------------------------------- ---------------
CONRAD L. RYAN 72 Elected President of the Company 1978/1998
in 1978, Chief Executive Officer
of the Company in l979 and
Chairman of the Board in l982. Mr.
Ryan retired from the Company and
from the positions of Chief
Executive Officer and Chairman of
the Board in l989. Mr. Ryan is a
graduate of the University of Utah
and is a Registered Professional
Engineer. He is a member of the
Executive Committee and Pension
Fund Committee.
ARTHUR M. SMITH 74 Prior to his retirement in 1984, 1959/1998
Chairman of the Board of First
Interstate Bank of Nevada, N.A.
Mr. Smith is a director of John
Deere Insurance Group and the W.
M. Keck Foundation. He is
Chairman of the Compensation
Committee and a member of the
Audit Committee and Pension Fund
Committee.
MARY LEE COLEMAN 60 President of Coleman Enterprises 1980/1999
(developer of shopping centers and
industrial parks). Mrs. Coleman
is a graduate of the University of
Southern California. She is a
member of the Audit Committee and
Pension Fund Committee.
5
<PAGE>
<PAGE>
Principal Occupation and Year First
Employment for the Past Five Became Director
Name Age Years and Other Information /Term Expires
- --------------------- --- ---------------------------------- ---------------
CHARLES A. LENZIE 59 Chairman of the Board, President 1983/1999
and Chief Executive Officer of the
Company. Mr. Lenzie joined the
Company in 1974 as Vice President-
Finance. He was elected Senior
Vice President-Finance and
Accounting Services in December
1979; President on February l,
l983 and Chairman of the Board and
Chief Executive Officer on May l,
l989. On August 10, 1995, Mr.
Lenzie also assumed the position
of President and Chief Operating
Officer. Mr. Lenzie is a director
of Bank of America Nevada and
Stewart Title Company of Nevada.
Mr. Lenzie is a graduate of the
University of Illinois and a
Certified Public Accountant. He
is Chairman of the Executive
Committee.
JOHN F. O'REILLY 51 Chairman/CEO of the law firm of 1995/1999
Keefer, O'Reilly, Ferrario and
Lubbers. Mr. O'Reilly is also
Chairman and Chief Executive
Officer of the O'Reilly Gaming
Group and is Chairman of the Las
Vegas Chamber of Commerce
Foundation. Mr. O'Reilly received
his Juris Doctorate and accounting
degrees from St. Louis University
and his MBA from the University of
Nevada, Las Vegas. He is a member
of the Audit Committee and
Nominating Committee.
6
<PAGE>
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Committees of the Board of Directors are the Executive Committee,
the Audit Committee, the Compensation Committee, the Nominating Committee and
the Pension Fund Committee. The major functions of these Committees are
described briefly below.
EXECUTIVE COMMITTEE
Except for certain powers which, under Nevada law, may only be exercised
by the full Board of Directors, the Executive Committee may exercise all
powers and authority of the Board of Directors in the management of the
business and affairs of the Company.
AUDIT COMMITTEE
The Audit Committee recommends to the Board of Directors the appointment
of the independent public accountants. The Audit Committee reviews and
considers the comments from the independent public accountants with respect
to internal accounting controls and the consideration given or corrective
action taken by management to weaknesses, if any, in internal controls. The
Audit Committee discusses matters of concern to the Committee, the
independent public accountants or management relating to the Company's
financial statements or other results of the audit. It also meets with the
Company's Director of Internal Audit regarding internal auditing matters and
controls.
COMPENSATION COMMITTEE
The Compensation Committee reviews and recommends to the Board
compensation for officers.
NOMINATING COMMITTEE
The Nominating Committee is empowered to consider and review the
qualifications of potential nominees for directors and to recommend to the
Board of Directors a slate of nominees for election as directors at the
Annual Meeting of Shareholders and, when vacancies occur, candidates for
election by the Board of Directors. The Committee will consider nominees
recommended by shareholders; written recommendations must be received by the
Secretary of the Company not less than thirty days nor more than sixty days
prior to the meeting at which directors are to be elected.
PENSION FUND COMMITTEE
The Pension Fund Committee oversees the investment of the assets of the
Company's Qualified Retirement Plan.
7
<PAGE>
<PAGE>
MEETINGS AND ATTENDANCE
During 1996, the Company's Board of Directors met 11 times, the
Executive Committee met 8 times, the Audit Committee and the Compensation
Committee each met twice while the Pension Fund Committee and the Nominating
Committee each met once.
During 1996, no director attended less than 75% of the aggregate
meetings of the Board of Directors and Committees on which he or she served.
DIRECTOR COMPENSATION
No director who receives a salary from the Company is paid any fees to
serve as a director or as a member of any committee of the Board of
Directors. Those directors not receiving salaries from the Company (the
"Outside Directors") are paid an annual fee of $20,000 plus $1,000 for each
directors' meeting attended; an annual fee of $10,000 for serving on the
Executive Committee; $1,000 per meeting attended for serving on the Audit
Committee, the Compensation Committee, the Nominating Committee, or the
Pension Fund Committee and an additional $400 per meeting for serving as
Committee Chairman. In addition, the Company provides a $20,000 term life
insurance benefit for each of the Outside Directors.
SECURITY OWNERSHIP OF MANAGEMENT
The following table presents certain information regarding the Company's
Common Stock beneficially owned by each director, the Chief Executive Officer
and the four other most highly compensated executive officers of the Company
for the year 1996, and all directors and executive officers of the Company as
a group as of December 31, 1996:
Amount and
Nature of
Beneficial Percent of
Name Ownership Class
---- ------------ ----------
Mary Kaye Cashman ........................ 7,921(1) .016%
Mary Lee Coleman ......................... 321,297(2) .659%
Fred D. Gibson, Jr. ...................... 7,217(3) .015%
John L. Goolsby........................... 2,384(4) .005%
Jerry E. Herbst........................... 5,100(5) .010%
Charles A. Lenzie ........................ 12,209(6)(16) .025%
John F. O'Reilly.......................... 1,000(7) .002%
Conrad L. Ryan ........................... 6,612(8) .014%
Frank E. Scott ........................... 6,363(5) .013%
Arthur M. Smith .......................... 1,200(9) .002%
Jelindo A. Tiberti ....................... 2,000(10) .004%
David G. Barneby ......................... 4,427(11)(16) .009%
Cynthia K. Gilliam ....................... 3,095(12)(16) .006%
Richard L. Hinckley ...................... 2,584(13)(16) .005%
Steven W. Rigazio......................... 6,633(14)(16) .013%
All Directors & Executive Officers as a
Group (16 individuals)(17).............. 393,039(15)(16) .806%
8
<PAGE>
<PAGE>
(1) 6,300 shares held in street name; balance held in shareholder's name.
(2) 158,402 shares held in shareholder's name; balance held in family trust.
(3) 4,600 shares held in street name; balance held in shareholder's name.
(4) 2,000 shares held in street name; balance held in shareholder's name.
(5) Held in shareholder's name.
(6) 7,395 shares held in street name; balance held in shareholder's name.
(7) Held in street name.
(8) 200 shares held in street name; balance held in shareholder's name.
(9) 1,000 shares held in street name; balance held in family trust.
(10) 1,250 shares held in street name; balance held in name of controlled
corporation.
(11) 1,136 shares held in street name; 1,712 shares held in shareholder's
name; balance held in trust.
(12) 1,478 shares held in street name; balance held in shareholder's name.
(13) 1,495 shares held in shareholder's name; balance held in custodial
trust.
(14) 1,394 shares held in shareholder's name; balance held in family trust.
(15) Includes 750 shares held in the name of controlled corporation; 26,359
shares held in street name; 171,002 shares held in trust and 194,928
shares held in shareholders' names.
(16) Of the shares shown, 2,330 shares beneficially owned by Mr. Lenzie,
1,712 shares beneficially owned by Mr. Barneby, 1,617 shares
beneficially owned by Mrs. Gilliam, 1,487 shares beneficially owned by
Mr. Hinckley, 1,394 shares beneficially owned by Mr. Rigazio, and 11,536
of the shares beneficially owned by all directors and executive officers
as a group are held in the Company's 401(k) Plan for the benefit of such
shareholders. These shares are fully vested. All shares of Company
Common Stock held in the Company's 401(k) Plan are subject to shared
voting power with the trustee of the 401(k) Plan.
(17) None of the directors or executive officers own any of the Company's
outstanding Cumulative Preferred Stock or Preference Stock.
The management of the Company does not know of any shareholder holding
more than 5% of the Company's Common Stock.
9
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the total compensation of the Chief
Executive Officer and the four other most highly compensated executive
officers of the Company for the year 1996, as well as the total compensation
paid to each such individual for the Company's two previous years.
SUMMARY COMPENSATION TABLE (5)
Annual Compensation
---------------------------------
Name and Principal Other Annual All Other
Position Year Salary(1) Bonus(2) Compensation(3) Compensation(4)
- ------------------- ---- --------- -------- -------------- --------------
Charles A. Lenzie 1996 $404,616 $143,500 $ 6,866 $4,500
Chairman of the 1995 405,991 -0- 7,252 4,500
Board, President 1994 372,750 109,030 7,666 4,500
and Chief Executive
Officer,Director
Steven W. Rigazio 1996 190,154 48,750 11,736 4,500
Vice President, 1995 184,000 8,000 10,571 4,500
Finance and Plan- 1994 166,121 31,978 8,646 4,500
ning, Treasurer,
Chief Financial
Officer
Cynthia K. Gilliam 1996 181,192 43,750 14,555 4,500
Vice President, 1995 179,000 8,000 8,310 4,500
Retail Customer 1994 162,125 31,868 11,116 4,500
Operations
David G. Barneby 1996 180,014 42,504 11,739 4,500
Vice President, 1995 174,318 8,000 8,143 4,500
Power Delivery 1994 153,632 30,342 9,559 4,327
Richard L. Hinckley 1996 159,616 41,250 9,481 3,609
Vice President, 1995 151,000 8,000 9,017 3,445
Secretary and 1994 139,163 27,485 8,458 3,395
General Counsel
(1) Includes lump sum payments, in 1996, of $7,000 for Mrs. Gilliam and
$10,000 for Mr. Barneby. Also includes lump sum payments, in 1995, of
$16,000 for Mr. Lenzie; $7,000 for Mr. Rigazio; $7,000 for Mrs. Gilliam;
$7,000 for Mr. Barneby and $6,000 for Mr. Hinckley.
(2) Amounts awarded under the Short-Term Incentive Plan for the respective
fiscal years.
10
<PAGE>
<PAGE>
(3) These amounts represent the personal use of Company automobiles and
reimbursement for payment of taxes thereon.
(4) These amounts represent the Company's contribution to the Company's
401(k) Plan.
(5) The number and value of the aggregate performance restricted shares
under the Company's Long-Term Incentive Plan as of December 31, 1996,
are 16,502 shares and $338,291 for Mr. Lenzie; 4,681 shares and $95,961
for Mr. Rigazio; 4,549 shares and $93,255 for Mrs. Gilliam; 4,352 shares
and $89,216 for Mr. Barneby; and 3,835 shares and $78,618 for Mr.
Hinckley, respectively.
LONG-TERM INCENTIVE PLAN - AWARDS IN LAST FISCAL YEAR
Performance Estimated Future Payouts under
or Other Period Non-Stock Price-Based Plans
Until Maturation ----------------------------------------
Name or Payout Threshold(#) Target(#) Maximum(#)
- ------------------- ---------------- ------------ ------------ ------------
Charles A. Lenzie.. Three Years 3,506 shares 7,011 shares 8,764 shares
Steven W. Rigazio.. Three Years 995 shares 1,989 shares 2,486 shares
Cynthia K. Gilliam. Three Years 967 shares 1,933 shares 2,416 shares
David G. Barneby... Three Years 955 shares 1,910 shares 2,388 shares
Richard L. Hinckley Three Years 815 shares 1,629 shares 2,036 shares
The Company's Long-Term Incentive Plan (the "LTIP") gives participants
the opportunity to earn awards based on the Company's performance over a
three-year performance period. The performance period for the 1996 LTIP
awards (the "Awards") began January 1, 1996 and ends December 31, 1998. The
Awards of LTIP incentive compensation units (the "Units") earned by the named
executive officers will be determined at the end of the three-year
performance period based on the ranking of the Company's total shareholder
return (i.e., stock price appreciation plus reinvested dividends) in
comparison to the Salomon Electric Utilities Index (the "Index"). Common
stock of the Company at the rate of one share per Unit earned will be paid to
LTIP participants at the end of the performance period. Participants would
earn a percentage of the Award based on the percentile rank of the Company's
total shareholder return in comparison to the Index, as follows:
Percentage of
Percentile Rank of Company Award Earned
-------------------------- ------------
Less than 40th....................... 0%
40th....................... 50%
50th....................... 75%
60th....................... 90%
75th....................... 100%
90th....................... 125%
11
<PAGE>
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
is responsible for establishing the philosophy for compensating the Company's
executives and ensuring that all aspects of the Executive Compensation
Program are administered consistent with the philosophy. During 1996, the
Committee met two times. This report describes the Committee's decisions
during 1996 in determining the compensation earned by the Chief Executive
Officer (the "CEO"), and all other officers as a group.
The Omnibus Budget Reconciliation Act of 1993 contained provisions on
the deductibility of executive compensation. All compensation paid to the
CEO and other proxy-named executives for 1996 is fully deductible. It is the
Committee's intention to maintain the complete deductibility in the future;
however, we reserve the right to deviate from this policy when and if we
determine it is in the best interests of the Company and its shareholders to
do so.
The Company has retained the services of Towers Perrin, a compensation
consulting firm, to assist the Committee in connection with the performance
of its various duties. Towers Perrin has been retained in this capacity
since 1990. Towers Perrin provides advice to the Committee with respect to
the reasonableness of compensation paid to the officers of the Company.
Overall Objectives
The primary objective of the Executive Compensation Program is to
motivate the officers to achieve the Company's goals of providing the
Company's shareholders with a competitive return on their investment while at
the same time providing its customers with high quality service at a
competitive price. The compensation philosophy, therefore, bases a
significant portion of each officer's total compensation on the achievement
of these goals.
Compensation Philosophy
The Executive Compensation Program is reviewed on an annual basis to
ensure its alignment with the Company's compensation philosophy. To retain
and attract an experienced results-oriented team, the Company's compensation
philosophy is to provide a total compensation opportunity between the median
and 75th percentile in comparison to both regulated and nonregulated
businesses. Each year, the Committee reviews data from the Edison Electric
Institute (the "EEI") Executive Compensation Survey of electric utilities and
Towers Perrin's annual management compensation survey. In the following
performance graph on page 14, the Company's total return to shareholders is
compared to that of the electric utilities comprising the Salomon Electric
Utilities Index and the S&P 500 Stock Index. The overwhelming majority of
the companies in the Salomon Electric Utilities Index participate in the EEI
survey database. The companies in the Towers Perrin survey parallel the type
and mix of companies comprising the S&P 500 Stock Index.
The Executive Compensation Program for the officers of the Company is
comprised of base salary, annual performance-related awards and a long-term
incentive plan. Annual base salary increases reflect the individual's
performance and contribution over several years. Annual incentive awards
vary directly with annual corporate performance for all officers. The
long-term incentive plan approved by the Company's shareholders in 1993
provides officers with the opportunity to earn shares of common stock based
12
<PAGE>
<PAGE>
on the Company's total return to shareholders compared to a peer group of
electric utilities.
The remainder of this report discusses the administration of the 1996
Executive Compensation Program with respect to the CEO and the other officers
as a group.
1996 Base Salary
The CEO received a salary increase of 5.1% in 1996. All other officers
received increases of between 1.6% and 13.8%. For 1996, the CEO's salary and
salaries for all other officers as a group were between the 50th and 75th
percentile of salaries for comparable positions within the electric utility
industry.
1996 Incentive Awards
Awards under the Company's Short-Term Incentive Plan for 1996 were based
on two corporate performance goals weighted as follows - corporate earnings,
60%; and customer satisfaction, 40%. Specific corporate performance goals
were established at the beginning of the year. Achievement of the corporate
performance goals were evaluated and taken into consideration in determining
1996 annual incentive awards for all officers.
The 1996 incentive award earned by the CEO was 35% of salary. The
incentive awards for all other officers were 25% of salary. These awards
reflected the company surpassing both the targeted earnings goal and the
targeted levels of customer satisfaction. Earnings were determined before the
impact of a portion of the fourth quarter 1996 write-off resulting from the
Public Service Commission of Nevada Order in the 1995 deferred energy case
(See Note 8 of Notes to Financial Statements in the Company's 1996 Annual
Report to shareholders).
No awards were earned in 1996 under the Company's Long-Term Incentive
Plan as total shareholder return performance relative to peer companies was
below the standing required to provide long-term awards.
Under the provisions of the Company's Long-Term Incentive Plan, the
officers of the Company were granted a total number of 16,101 stock units for
the 1996-1998 period. The CEO's grant of 7,011 stock units and the grant to
all other officers as a group was based on the Company's philosophy of
providing the opportunity to earn total compensation between the 50th and
75th percentile of regulated and nonregulated businesses. The actual number
of stock units earned by the CEO and all officers as a group will be
determined in 1999 based on the Company's total shareholders return as
compared to a peer group of electric utilities for the period 1996-1998 or
such other measure as the Committee deems appropriate.
COMPENSATION COMMITTEE
Arthur M. Smith
John L. Goolsby
Jerry E. Herbst
Frank E. Scott
Jelindo A. Tiberti
13
<PAGE>
<PAGE>
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
returns for the Company's common stock, the S&P 500 Stock Index, and the
Salomon Electric Utilities Index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
NEVADA POWER COMPANY COMMON STOCK (NPC),
S&P 500 STOCK INDEX (S&P 500) AND
SALOMON ELECTRIC UTILITIES INDEX (SALOMON)
Measurement Period
(Fiscal Year Covered) NPC S&P 500 Salomon
- --------------------- --- ------- -------
Measurement Pt. -12/31/91 $100 $100 $100
Fiscal Year Ended -12/31/92 $132 $108 $107
Fiscal Year Ended -12/31/93 $144 $118 $120
Fiscal Year Ended -12/31/94 $131 $120 $105
Fiscal Year Ended -12/31/95 $154 $165 $138
Fiscal Year Ended -12/31/96 $154 $203 $141
Assumes $100 invested on 12/31/91 in Nevada Power Company common stock,
S&P 500 Stock Index and Salomon Electric Utilities Index with dividend
reinvestment over the period.
RETIREMENT BENEFITS
The Company's Qualified Retirement Plan (the "Retirement Plan") for
salaried employees provides noncontributory benefits based upon both years of
service and the employee's highest consecutive 5-year average annual
compensation. Annual compensation includes salary and bonus amounts paid as
shown in the Summary Compensation Table. The credited years of service under
the Retirement Plan at December 31, 1996 for each of the individuals listed
in the Summary Compensation Table are as follows: Charles A. Lenzie, 21
years; Steven W. Rigazio, 11 years; Cynthia K. Gilliam, 21 years; David G.
Barneby, 29 years; and Richard L. Hinckley, 10 years. The Retirement Plan
includes an early retirement option under which a covered employee may
receive a reduced benefit upon early retirement between ages 55 and 62.
Benefits payable upon retirement after age 62 are unreduced. Benefits payable
under the Retirement Plan must be in compliance with applicable guidelines or
maximums prescribed in the Employees Retirement Income Security Act of 1974
as currently stated or as adjusted from time to time.
14
<PAGE>
<PAGE>
The following table sets forth, by example, maximum annual benefits upon
retirement on or after age 62 from the Retirement Plan. The amounts shown
below represent the application of the Retirement Plan formula to the highest
consecutive 5-year average annual earnings and years of service shown.
Maximum Annual Benefit for Specific
Highest Years of Credited Service at Retirement
Consecutive 5-Year ----------------------------------------------------------
Average Earnings 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
- ------------------ -------- -------- -------- -------- -------- --------
$150,000 ......... $38,500 $51,400 $64,200 $77,100 $89,900 $99,900
200,000 ......... 38,500 51,400 64,200 77,100 89,900 99,900
250,000 ......... 38,500 51,400 64,200 77,100 89,900 99,900
300,000 ......... 38,500 51,400 64,200 77,100 89,900 99,900
350,000 and over. 38,500 51,400 64,200 77,100 89,900 99,900
The Company has adopted a Supplemental Executive Retirement Plan (the
"SERP") in addition to the Retirement Plan. Participation is limited to such
officers as the Board of Directors may select. Presently, 26 active or
retired designated officers, managers and beneficiaries including the five
highest paid officers of the Company, participate in the SERP. Each selected
participant who retires on or after age 62 with 25 years of service will
receive a SERP retirement benefit equivalent to 60% of his/her highest
consecutive 3-year average annual earnings reduced by the Retirement Plan
benefit. Annual earnings include wages, salary, bonus earned and the value of
all other compensation amounts as shown in the Summary Compensation Table.
Reduced benefits apply to participants who retire with less than 25 years of
service or before age 62. Participants with more than 25 years of service at
retirement receive an additional benefit equal to 1.5% of their highest
consecutive 3-year average annual earnings for each year of service beyond 25
years. The credited years of service under the SERP at December 31, 1996 for
each of the individuals listed in the Summary Compensation Table are as
follows: Charles A. Lenzie, 22 years; Steven W. Rigazio, 12 years; Cynthia K.
Gilliam, 22 years; David G. Barneby, 30 years and Richard L. Hinckley, 11
years.
The following table sets forth, by example, maximum annual benefits upon
retirement on or after age 62 under the combined regular Retirement Plan and
the SERP. The amounts shown below represent the application of the SERP
formula to the highest consecutive 3-year average annual earnings and years
of service shown. The amounts shown do not include Social Security benefits
payable upon retirement.
Maximum Annual Benefit for Specific
Highest Years of Credited Service at Retirement
Consecutive 3-Year ----------------------------------------------------------
Average Earnings 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
- ------------------ -------- -------- -------- -------- -------- --------
$150,000 ......... $ 67,500 $ 78,750 $ 90,000 $101,250 $112,500 $123,750
200,000 ......... 90,000 105,000 120,000 135,000 150,000 165,000
250,000 ......... 112,500 131,250 150,000 168,750 187,500 206,250
300,000 ......... 135,000 157,500 180,000 202,500 225,000 247,500
350,000 ......... 157,500 183,750 210,000 236,250 262,500 288,750
400,000 ......... 180,000 210,000 240,000 270,000 300,000 330,000
450,000 ......... 202,500 236,250 270,000 303,750 337,500 371,250
500,000 ......... 225,000 262,500 300,000 337,500 375,000 412,500
15
<PAGE>
<PAGE>
RETIREMENT PLAN FOR OUTSIDE DIRECTORS
The Company has established a Retirement Plan for the Outside Directors
(the "RPOD"). The RPOD provides a maximum annual life benefit equivalent to
the annual fee being paid to the Outside Director at the date of retirement.
With respect to an Outside Director first elected after May 11, 1990, receipt
of the maximum annual life benefit under the RPOD is subject to (a) minimum
service for 5 years as an Outside Director and (b) retirement on or before
the first day of the month following such Outside Director's 72nd birthday.
The annual benefit received by an Outside Director elected after May 11,
1990, who has met the minimum 5-year service requirement, will be reduced by
$500 for each year such Outside Director retires after their 65th birthday
but prior to their 72nd birthday.
SEVERANCE ALLOWANCE PLAN
The Company has a Severance Allowance Plan (the "Severance Plan") for
eligible employees under which any regular full-time or part-time employee of
the Company will be eligible for severance benefits if terminated within
three years after a change in control of the Company. The following are
circumstances under which a change in control may occur: (a)the dissolution
or liquidation of the Company; (b)a reorganization, merger, or consolidation
with one or more corporations in which the Company is not the surviving
corporation; (c)the sale, exchange, or transfer of Company stock resulting in
any person or the person's affiliates owning more than 20 percent of the
outstanding shares; (d)the election to the Company's Board of Directors of
new members who were not originally nominated to the Board at the previous
two annual meetings if, as a result of this election, new members constitute
a majority of the Board, and (e)the sale of all or substantially all of the
Company's assets. These are the only business conditions under which the
severance plan becomes effective.
The severance benefit is payable in full at the time of the employee's
termination and equals the employee's monthly base salary, plus any bonus, in
effect during the month immediately preceding termination, times the total
number of months of severance benefits (the "severance benefit period") to
which the employee is entitled based upon the employee's years of service.
The severance benefit period for each employee shall be determined under the
following schedule:
Severance
Company Seniority Except Officers Benefit Period
---------------------------------- --------------
6 Months to 5 Years ............... 6 Months
6 Years to 10 Years ............... 9 Months
11 Years to 20 Years ............... 12 Months
21 Years and over ............... 18 Months
The severance benefit period for officers will be 24 months except for
the Chief Executive Officer whose severance benefit period is 36 months. In
addition, each eligible employee will receive continued medical and life
insurance benefits during such severance benefit period. No amounts paid or
payable under the Severance Plan shall reduce or offset any amounts payable
under other plans maintained by the Company, including any amounts payable
under the Company's Retirement Plan or 401(k) Plan; nor shall any amounts
paid or payable under any such plans reduce or offset any amounts payable
under the Severance Plan. No payments will be made under the Severance Plan,
16
<PAGE>
<PAGE>
if combined with any other compensation from the Company, the payments
constitute what is defined as "excess parachute payments" by the Internal
Revenue Code. Excess parachute payments are defined as those amounts over
three times an individual's annualized average total compensation at the
Company for each of the five years preceding the change-in-control.
SHAREHOLDER RECOMMENDATION
A shareholder, holding a total of 500 shares of the Company's Common
Stock, has submitted a recommendation to the Board of Directors for
consideration by the shareholders at the 1997 Annual Meeting. The name and
address of the shareholder will be furnished promptly by the Company to any
person, upon receipt of an oral or written request therefor. The
shareholder's recommendation is as follows:
"Should Nevada Power Company establish a retirement plan for outside
Directors ("RPOD") after only five years of service?"
SHAREHOLDER'S STATEMENT OF SUPPORT
"Outside directors should be a fully independent and impartial group.
The non-employee board members should not be unduly enriched because of their
limited service on the board and at the expense of the stockholders. The way
a company is governed, the rules and regulations that relate to shareholders
and management correspond closely to a company's long term performance.
There has been an avalanche of major companies to terminate outside
directors retirement programs in the last several years. The consulting firm
that Nevada Power used in 1996 stated that there will be many more companies
to terminate retirement programs on outside directors.
Nevada Power hired the attorney firm Best, Best & Krieger of Riverside
California to keep this resolution off the 1996 proxy and failed after
repeated attempts with the Securities and Exchange Commission.
Mr. Hinckley, Vice President Secretary and Chief Counsel for Nevada
Power wrote to the Securities & Exchange Commission saying that this (SIC)
not a proper subject for shareholders consideration.
At last years annual stockholders meeting a similar resolution was
approved by a significent (SIC) number of voting shares.
I urge your support - vote NO on this resolution."
BOARD OF DIRECTORS' RECOMMENDATION
The Board of Directors recommends a vote of "YES".
In 1990, the Board adopted a retirement plan for outside members of the
Board that provides for an annual pension in the amount of the annual board
fee at the time of retirement of the board member. There is one retired
board member receiving benefits under the plan. All presently sitting board
members are eligible at this time for the pension benefit with the exception
of Mr. O'Reilly and Mrs. Cashman, who joined the Board in 1995 and 1997
respectively. The five year period is a reasonable minimum service
requirement considering the duties performed and qualifications for board
members.
17
<PAGE>
<PAGE>
The 1996 Edison Electric Institute Executive Compensation Survey
reported that "the typical retirement plan provides that after five years of
board service, an outside director receives a pension benefit equal to 100%
of the annual retainer at the time of retirement."
The survey shows that 59% of the companies studied provide director's
retirement plans and that 69% provide a benefit of 100% of the annual
retainer at retirement.
The Board believes the present pension plan with the minimum service
requirement of five years is reasonable and appropriate in the overall
compensation package to board members. Nevada law and the Company's Articles
of Incorporation empower the Board of Directors to set the compensation of
the directors. The Board of Directors recommends a "YES" vote on the
shareholder recommendation.
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Deloitte & Touche LLP, as the
Company's independent public accountants for 1997 at the recommendation of
the Audit Committee. Representatives of Deloitte & Touche LLP, will be
present at the 1997 Annual Meeting. They will have an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholders are advised that any shareholder proposal intended for
consideration at the 1998 Annual Meeting must be received by the Company on
or before November 13, 1997 to be included in the proxy materials for the
1998 Annual Meeting. It is recommended that shareholders submitting
proposals direct them to the Secretary of the Company and utilize Certified
Mail-Return Receipt Requested.
ANNUAL REPORT
For further information with respect to the Company, reference is made
to the 1996 Annual Report of the Company, a copy of which has been mailed to
all shareholders of the Company.
OTHER MATTERS
The management knows of no matters to be presented at the meeting other
than those mentioned above. However, if any other matters do properly come
before the meeting, it is intended that the shares represented by proxies
will be voted with respect thereto in accordance with the judgment of the
persons voting thereon.
Richard L. Hinckley
Richard L. Hinckley
Secretary
Las Vegas, Nevada
March 13, l997
18
<PAGE>
<PAGE>
1996 ANNUAL MEETING MINUTES
Copies of the minutes of the Company's 1996 Annual Meeting of
Shareholders and/or the Company's 1996 Annual Report on Form 10-K, including
the financial statements and the schedules thereto filed with the Securities
and Exchange Commission for the Company's most recent fiscal year, will be
furnished upon written request to shareholders without charge. A copy may be
obtained by calling our toll free number, 1-800-344-9239, or by writing to
Shareholder Services, Nevada Power Company, P.O. Box 98669, Las Vegas, Nevada
89193-866.
19
<PAGE>
<PAGE>
March 13, l997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Nevada Power Company to be held at 2:00 P.M. on May 9, 1997, at the Stardust
Resort & Casino, Conference Center, 3000 Las Vegas Boulevard South, Las
Vegas, Nevada. Your Board of Directors looks forward to greeting personally
those shareholders able to attend.
At the meeting, in addition to electing four directors to three-year terms
and one director to a two-year term, you will be asked to consider and vote
upon a shareholder recommendation to the Board of Directors concerning the
Retirement Plan for Outside Directors.
Whether or not you plan to attend, it is important that your shares are
represented at the meeting. Accordingly, you are requested to promptly vote,
sign, date and mail the attached proxy in the envelope provided.
Thank you for your consideration and continued support.
Very truly yours,
NP
C. Lenzie
Charles A. Lenzie NEVADA
Chairman of the Board, President POWER COMPANY
and Chief Executive Officer
PLEASE DETACH HERE
- ----------------------------------------------------------------------------
The signing shareholder(s) hereby appoints Charles A. Lenzie, Conrad L. Ryan
and Arthur M. Smith, or any of them, with full power of substitution, the
attorneys and proxies of the signing shareholder(s) to vote all shares of
Common Stock of the Company which the signing shareholder(s) is entitled to
vote at the Annual Meeting of Nevada Power Company to be held on May 9,
1997, at 2:00 PM and at any and all adjournments of such meeting.
MANAGEMENT RECOMMENDS A "FOR" VOTE FOR ITEM 1 AND A "YES" VOTE FOR ITEM 2.
(1) ELECTION OF DIRECTORS FOR all nominees Withhold Authority____
to the terms listed below listed below____ for all nominees listed
(except as marked below
to the contrary)
(INSTRUCTION: To withhold authority to vote for any individual nominee
listed below, strike a line through the nominee's name.)
Two Year Term: Mary Kaye Cashman
Three Year Term:
John L. Goolsby Jerry E. Herbst Frank E. Scott Jelindo A. Tiberti
(2) SHAREHOLDER RECOMMENDATION: "Should Nevada Power Company establish a
retirement plan for outside Directors ("RPOD") after only five years of
service?"
Yes____ No____
_____________________________________
(Signature) (Date)
_____________________________________
(Signature) (Date)
(Please sign EXACTLY as your name(s)
appears on this ballot. Joint owners
must EACH sign.)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE SIGNING SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSAL 1 AND "YES" WITH RESPECT TO THE SHAREHOLDER RECOMMENDATION.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING.
<PAGE>
