[Logo]
March 17, 1994
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Northern States Power Company on Wednesday, April 27, 1994, at 10:00 a.m., at
The Historic State Theatre, 805 Hennepin Avenue, Minneapolis, Minnesota.
The Notice of Annual Meeting of Shareholders and Proxy Statement on the
following pages describe matters to be acted upon at the meeting. We will
also report on current operations and on our future plans. At the conclusion
of voting, you will have an opportunity to ask questions.
Whether you plan to attend the Annual Meeting, please sign, date and return
the enclosed proxy card promptly to assure that your proxy will be voted.
Your voice is important, regardless of the number of shares you hold.
If you plan to attend the Annual Meeting, please complete and return the
admission card and we will send you directions and parking instructions.
Our annual meetings have been very helpful in maintaining communications and
understanding between our Board of Directors and shareholders. We sincerely
hope you will be with us.
Sincerely,
James J. Howard
Chairman of the Board &
Chief Executive Officer
NORTHERN STATES POWER COMPANY
(A MINNESOTA CORPORATION)
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
The Annual Meeting of Shareholders of NORTHERN STATES POWER COMPANY, a
Minnesota corporation, will be held on Wednesday, April 27, 1994, at 10:00
a.m., at The Historic State Theatre, 805 Hennepin Avenue, Minneapolis,
Minnesota, for the following purposes:
(1) To elect four directors to Class II to serve for a term of three years;
(2) To ratify the appointment of Deloitte & Touche, Certified Public
Accountants, as independent auditors of the Company for 1994; and
(3) To transact such other business as may properly come before the meeting
or any adjournment thereof.
Shareholders of record at the close of business on March 1, 1994, will be
entitled to notice of, and to vote at, this Annual Meeting.
Minneapolis, Minnesota
March 17, 1994
By order of the Board of Directors
Gary R. Johnson
Secretary
REMEMBER TO SIGN AND RETURN YOUR PROXY
NORTHERN STATES POWER COMPANY
414 NICOLLET MALL
MINNEAPOLIS, MINNESOTA 55401
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of the
enclosed proxy by the Company's Board of Directors for use at the Annual
Meeting or any adjournment thereof. The proxy statement and the enclosed
proxy card were mailed on or about March 17, 1994.
When proxies are returned properly executed, the shares represented will be
voted according to shareholders' direction. A proxy may be revoked at any
time before it is exercised by giving written notice of the revocation to
Gary R. Johnson, Secretary, Northern States Power Company, 414 Nicollet Mall,
Minneapolis, Minnesota 55401, by filing another proxy with him, or by
attending the meeting and voting in person.
Owners of record at the close of business on March 1, 1994 of the Company's
common stock or cumulative preferred stock (or their legal representatives)
are entitled to vote at the Annual Meeting or any adjournment thereof. On
that date, the holders of shares of cumulative preferred stock of the $3.60
series (275,000 shares outstanding) are entitled to three votes per share,
and the holders of shares of common stock (66,893,377 shares outstanding) and
other cumulative preferred stock (2,125,000 shares outstanding) are entitled
to one vote per share.
Shareholders are entitled to vote cumulatively for the election of directors.
Each shareholder is entitled to a number of votes for such election equal to
the number of shares held by such shareholder multiplied by the number of
directors to be elected, and may cast all votes for one nominee or distribute
the votes among the nominees. On all other matters, shareholders are entitled
to vote as described in the preceding paragraph.
First Trust N.A., the Trustee for the Company's Employee Stock Ownership
Plan, holds approximately 8.07% of the Company's common stock for the benefit
of Plan participants, none of whom has a total beneficial interest of more
than 5% of the Company's outstanding voting securities. No other person holds
of record or, to the knowledge of management, owns beneficially more than 5%
of any class of the outstanding voting securities of the Company.
The cost of soliciting proxies will be borne by the Company. Officers and
other employees of the Company may solicit proxies by personal interview,
telephone and telegram, in addition to the use of the mails. The Company will
reimburse brokers and other custodians, nominees or fiduciaries for their
expenses in forwarding proxy material to principals and obtaining their
proxies.
The Company mailed its annual report for the year 1993 on or about March 7,
1994, to all shareholders of the Company of record on March 1, 1994.
ELECTION OF DIRECTORS
GENERAL INFORMATION
The Company's Bylaws provide that the Board of Directors shall consist of
twelve to fifteen directors. The Board of Directors is divided into three
classes as nearly equal in number as possible with staggered terms of office
so that one class of directors will be elected at each annual meeting for a
term of three years.
At the April 27, 1994 Annual Meeting the following four individuals are the
nominees to be elected to the Board of Directors to serve in Class II until
the 1997 Annual Meeting of Shareholders and until their successors are
elected and have qualified: Richard M. Kovacevich, Douglas W. Leatherdale, A.
Patricia Sampson and Edwin M. Theisen. Each of these individuals is currently
a director of the Company whose term is scheduled to expire at the Annual
Meeting.
All of the nominees have indicated a willingness to serve if elected.
However, should any of the nominees named above become unavailable, your
proxy will be voted for such person or persons as shall be recommended by a
proxy committee appointed by the Board.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ALL OF THE
NOMINEES NAMED BELOW.
THE FOLLOWING INFORMATION IS FURNISHED WITH RESPECT TO EACH NOMINEE:
<TABLE>
<CAPTION>
Principal Occupation and Business
Experience During the Past
Nominee Five Years and Other Directorships
<S> <C>
CLASS II -- NOMINEES FOR TERMS EXPIRING IN 1997
Richard M. Kovacevich President and Chief Executive Officer, Norwest Corporation,
Age 50 Minneapolis, Minnesota, a holding company for banking institutions,
Director Since 1990 since January 1, 1993 and President and Chief Operating Officer since
January 1, 1989. Also director of Fingerhut Companies, Inc., Norwest
Corporation, The NWNL Companies, Inc. and Visa U.S.A. Inc.
Douglas W. Leatherdale Chairman of the Board, President and Chief Executive Officer, The
Age 57 St. Paul Companies, Inc., a worldwide property and liability insurance
Director Since 1991 organization, since May 1, 1990 and President and Chief Operating
Officer since February 13, 1989. Also director of The John Nuveen
Company and United HealthCare Corporation.
A. Patricia Sampson Chief Executive Officer, Greater Minneapolis Area Chapter of the American
Age 45 Red Cross since June 1, 1993. Prior thereto, Executive Director.
Director Since 1985
Edwin M. Theisen President and Chief Operating Officer of the Company since July 1,
Age 63 1990. Prior thereto, President and Chief Executive Officer, Northern
Director Since 1990 States Power Company (Wisconsin), a wholly-owned subsidiary of the
Company. Also director of Firstar Bank of Minnesota, N.A.
</TABLE>
THE FOLLOWING INFORMATION IS FURNISHED WITH RESPECT TO EACH DIRECTOR WHOSE
TERM OF OFFICE WILL CONTINUE:
<TABLE>
<CAPTION>
Principal Occupation and Business
Experience During the Past
Director Five Years and Other Directorships
<S> <C>
CLASS III -- DIRECTORS WHOSE TERMS EXPIRE IN 1995
H. Lyman Bretting President and Chief Executive Officer, C.G. Bretting Manufacturing Company,
Age 57 Inc., Ashland, Wisconsin, a manufacturer of napkin and paper towel folding
Director Since 1990 machines. Also director of M&I National Bank of Ashland and Northern States
Power Company (Wisconsin), a wholly-owned subsidiary of the Company.
David A. Christensen President and Chief Executive Officer, Raven Industries, Inc., Sioux Falls,
Age 59 South Dakota, a manufacturer of reinforced plastics, electronic equipment
Director Since 1976 and sewn products. Also director of Norwest Bank South Dakota, N.A., Norwest
Corporation and Raven Industries, Inc.
Allen F. Jacobson Retired effective November 1, 1991 as Chairman and Chief Executive Officer,
Age 67 Minnesota Mining and Manufacturing Company (3M). Also director of Abbot
Director Since 1983 Laboratories, Alliant Techsystems, Deluxe Corporation, Minnesota Mining
and Manufacturing Company, Mobil Corporation, Potlatch Corporation,
Prudential Insurance Company of America, Sara Lee Corporation, Silicon
Graphics, Inc., U.S. West, Inc., and Valmont Industries, Inc.
Margaret R. Preska Distinguished Service Professor, Minnesota State Universities, since February
Age 56 1, 1992. Prior thereto, President, Mankato State University, Mankato,
Director Since 1980 Minnesota, an educational institution. Also director of Norwest Bank Minnesota
South Central, N.A.
CLASS I -- DIRECTORS WHOSE TERMS EXPIRE IN 1996
W. John Driscoll Chairman of the Board and Chief Executive Officer, Rock Island Company,
Age 64 St. Paul, Minnesota, a private investment company, since May 15, 1993. Prior
Director Since 1974 thereto Chairman of the Board and President. Also director of Comshare Inc.,
The John Nuveen Company, MIP Properties, Inc., The St. Paul Companies, Inc.
and Weyerhaeuser Company.
Dale L. Haakenstad Retired effective December 31, 1989 as President and Chief Executive Officer,
Age 66 Western States Life Insurance Company, Fargo, North Dakota. Prior thereto,
Director Since 1978 Chairman, President and Chief Executive Officer, Western States Life Insurance
Company.
James J. Howard Chairman of the Board and Chief Executive Officer of the Company since July
Age 58 1, 1990. Prior thereto, Chairman of the Board, President and Chief Executive
Director Since 1987 Officer since March 1, 1988. Also director of Ecolab Inc., Honeywell Inc.,
The NWNL Companies Inc. and Walgreen Company.
John E. Pearson Retired effective January 31, 1992 as Chairman, The NWNL Companies, Inc.
Age 67 and Northwestern National Life Insurance Company, a wholly-owned subsidiary
Director Since 1983 of The NWNL Companies, Inc., in which capacity he had served since July
1, 1991. Prior thereto, Chairman and Chief Executive Officer, The NWNL
Companies, Inc., and Northwestern National Life Insurance Company. Also
director of Norwest Corporation.
G. M. Pieschel Chairman of the Board, Farmers and Merchants State Bank, Springfield,
Age 66 Minnesota, a commercial bank, since January 14, 1993. Prior thereto, Chief
Director Since 1978 Executive Officer and President of Farmers and Merchants State Bank.
</TABLE>
The foregoing information concerning the nominees and continuing directors is
based on information furnished to the Company by each nominee and director
respectively.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
There are four committees of the Board of Directors whose duties and
responsibilities are described below.
THE CORPORATE MANAGEMENT COMMITTEE has responsibilities for senior management
organization and personnel, long-range planning and strategy, compensation of
directors, officers and other key employees and identifying and recommending
candidates for membership on the Board of Directors. Current members of the
Committee are W. John Driscoll (Chairman), David A. Christensen, Allen F.
Jacobson, John E. Pearson, G. M. Pieschel and Margaret R. Preska. The
Committee held 4 meetings during 1993.
Any shareholder may make recommendations to the Corporate Management
Committee for membership on the Board of Directors by sending a written
statement of the qualifications of the recommended individual to the
Secretary, Northern States Power Company, 414 Nicollet Mall, Minneapolis,
Minnesota, 55401.
THE FINANCE -- AUDIT COMMITTEE has responsibilities for internal auditing
functions, receiving and reviewing the reports of the independent auditors
and for the financing and accounting activities of the Company. Current
members of the Committee are John E. Pearson (Chairman), Richard M.
Kovacevich, Douglas W. Leatherdale and Margaret R. Preska. The Committee held
2 meetings during 1993.
THE POWER SUPPLY COMMITTEE has responsibilities for bulk power supply
planning, major facility construction, construction budgets, nuclear plant
safety, permits and license compliance. Current members of the Committee are
David A. Christensen (Chairman), H. Lyman Bretting, W. John Driscoll, Dale L.
Haakenstad, Allen F. Jacobson, Richard M. Kovacevich, Douglas W. Leatherdale
and A. Patricia Sampson. The Committee held 4 meetings during 1993.
THE ERISA COMPLIANCE COMMITTEE has responsibilities for review of the
performance of employee benefit plan fiduciary functions by the Company and
other plan fiduciaries. Current members are G. M. Pieschel (Chairman), H.
Lyman Bretting, Dale L. Haakenstad and A. Patricia Sampson. The Committee
held 2 meetings during 1993.
DIRECTOR MEETINGS
There were 9 meetings of the Board of Directors in 1993. Each director
attended at least 75% of the total number of meetings of the Board and
Committees on which such director served during 1993.
DIRECTOR COMPENSATION
Directors not employed by the Company receive a $20,000 annual retainer, or a
pro rata portion thereof if service is less than 12 months, and $1,200 for
attendance at each Board meeting and $1,000 for each Committee meeting
attended. A $2,500 annual retainer is paid to each elected Committee
Chairperson. Employees of the Company receive no separate compensation for
services as a director. In addition, directors have a deferred compensation
and retirement plan in which they can participate. The deferred compensation
plan provides for deferral of the director fees until after retirement from
the Board of Directors. The retirement plan continues payment of the
director's retainer, at the rate in effect for the calendar quarter
immediately preceding the director's retirement multiplied by 1.2. Benefits
continue for a period equal to the number of calendar quarters served on the
Board, up to 40 calendar quarters.
SHARE OWNERSHIP OF DIRECTORS, NOMINEES AND NAMED EXECUTIVE OFFICERS
Set forth in the following table is the beneficial ownership of common stock
of the Company as of March 1, 1994 for all directors, the Chief Executive
Officer and the next four highest compensated executive officers of the
Company. As of March 1, 1994, the directors and executive officers as a group
beneficially owned 93,096 shares, less than 0.14 percent, of the Company's
common stock (including shares allocated to the accounts of executive
officers in the Executive Long-Term Incentive Award Stock Plan (Long-Term
Incentive Plan) and the Employee Stock Ownership Plan for which they have
voting power but not investment power).
<TABLE>
<S> <C> <C> <C>
H. Lyman Bretting 1,276 John E. Pearson 1,274
David A. Christensen 500 G. M. Pieschel 643
W. John Driscoll 2,000 Margaret R. Preska 600
Dale L. Haakenstad 654 A. Patricia Sampson 352
James J. Howard* 20,127 Edwin M. Theisen* 11,958
Allen F. Jacobson 712 Vincent E. Beacom* 8,969
Richard M. Kovacevich 1,000 Leon R. Eliason* 5,085
Douglas W. Leatherdale 300 Edward J. McIntyre* 6,646
</TABLE>
*Shares shown for Messrs. Howard, Theisen, Beacom, Eliason and McIntyre do
not include options to purchase common stock of the Company which are
exercisable within 60 days under the Company's Long-Term Incentive Plan:
50,427 option shares for Mr. Howard, 25,529 option shares for Mr. Theisen,
4,460 option shares for Mr. Beacom, 10,771 option shares for Mr. Eliason and
16,764 option shares for Mr. McIntyre. These shares also do not include
performance units payable under such plan in the form of stock which are
exercisable within 60 days. The number of shares which would have been
payable upon exercise of the performance units on March 1, 1994 are: 2,039
for Mr. Howard, 954 for Mr. Theisen, 139 for Mr. Beacom, 394 for Mr. Eliason
and 652 for Mr. McIntyre.
As required by rules of the Securities and Exchange Commission (SEC), the
Company notes that the SEC did not receive a timely report of three sales of
Company common stock by Hazel R. O'Leary, former President -- NSP Gas of the
Company, which occurred after she left the Company.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth cash and noncash compensation for each of the
last three fiscal years ended December 31, 1993, to the Chief Executive
Officer and the next four highest compensated executive officers of the
Company for services in all capacities to the Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
(a) (b) (c) (d) (e)
Other Annual
Name and Principal Position Year Salary($) Bonus($)(1) Compensation($)(2)
<S> <C> <C> <C> <C>
James J. Howard 1993 511,300 231,931 0
Chairman & Chief 1992 485,000 0 2,934
Executive Officer 1991 460,000 252,192
Edwin M. Theisen 1993 324,400 129,452 1,271
President & Chief 1992 306,500 0 6,870
Operating Officer 1991 290,000 142,771
Vincent E. Beacom 1993 215,000 64,603 1,019
Vice President 1992 165,000 0 4,570
Minnesota Electric 1991 160,000 14,727
Leon R. Eliason 1993 205,900 80,110 817
President 1992 156,800 0 6,308
NSP Generation 1991 144,000 66,263
Edward J. McIntyre 1993 205,600 71,395 7,339
Vice President and 1992 199,000 0 5,037
Chief Financial Officer 1991 193,000 63,304
</TABLE>
(1) For 1993, this column consists of awards made to each named executive
under the Company's Executive Incentive Compensation Plan as follows:
$216,708 for Mr. Howard, $120,746 for Mr. Theisen, $58,883 for Mr. Beacom,
$74,713 for Mr. Eliason and $65,998 for Mr. McIntyre; plus the dollar value
of awards of dividend equivalents made under the Company's Long-Term
Incentive Plan based on the results of the performance period ending on
September 30, 1993: $15,223 for Mr. Howard, $8,706 for Mr. Theisen, $5,720
for Mr. Beacom and $5,397 each for Messrs. Eliason and McIntyre.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
Awards Payouts
(g)
(f) Number of Securities (h) (i)
Restricted Stock Underlying Options LTIP All Other
Awards ($)(3) and SARs (#) Payouts ($)(4) Compensation ($)(5)
<S> <C> <C> <C>
129,075 12,782 23,925 11,324
0 13,541 0 44,052
172,800 14,436 44,695
65,620 7,240 10,650 6,267
0 7,606 0 55,324
88,450 8,256 19,895
36,375 4,592 0 4,968
0 3,483 0 51,045
48,579 3,847 6,589
28,380 4,421 3,765 6,792
0 2,626 0 72,722
24,787 2,885 4,941
35,595 4,508 7,461 5,081
0 4,753 0 27,981
44,667 5,118 13,939
</TABLE>
(2) Pursuant to the transition provisions of the SEC disclosure requirements,
this column does not include information for fiscal years ended before
December 15, 1992 and consists of reimbursements for taxes on certain
personal benefits received by the named executives.
(3) Restricted shares earned for 1993 were granted on January 27, 1994 based
on the performance period ending September 30, 1993. No restricted shares
were granted during 1993 under the Company's Long-Term Incentive Plan based
on the performance period ending in 1992. As of December 31, 1993, Mr. Howard
held 2,340 restricted shares having a market value of $100,913; Mr. Theisen
held 1,198 restricted shares at a market value of $51,664; Mr. Beacom held
455 restricted shares at a market value of $19,622; Mr. Eliason held 303
restricted shares at a market value of $13,066; and Mr. McIntyre held 605
restricted shares at a market value of $26,155. The restricted stock awards
vest one year after the date of grant with respect to fifty (50%) of the
shares and two years after such date with respect to the remaining shares,
conditioned upon the continued employment of the recipient with the Company.
Non-preferential dividends are paid on the restricted shares. The total
number of restricted shares awarded during the years 1991, 1992 and 1993 are
as follows: 9,183 shares for Mr. Howard, 3,900 shares for Mr. Theisen, 1,295
shares for Mr. Beacom, 856 shares for Mr. Eliason and 2,155 shares for Mr.
McIntyre.
(4) This column consists of the increased dollar value earned on vested
dividend equivalents as a result of the achievement of performance objectives
in accordance with the Company's Long-Term Incentive Plan. Mr. Beacom
received no increased value for 1993 due to a previous exercise of his vested
dividend equivalents. No increased value was earned on vested dividend
equivalents during 1992 based on the performance period ending in 1992.
(5) Pursuant to the transition provisions of the SEC rules, this column does
not include information for fiscal years ended before December 15, 1992 and
consists of the following: $3,853 was contributed by the Company for the
Employee Stock Ownership Plan (ESOP) for Messrs. Howard, Theisen and
McIntyre, respectively, $3,482 for Mr. Beacom and $3,206 for Mr. Eliason.
(The Company contribution on behalf of all ESOP participants, including the
named executive officers, was equal to 1.68% of their covered compensation.);
the dollar value of insurance premiums paid on behalf of each named executive
officer in the amount of $7,471 for Mr. Howard, $2,414 for Mr. Theisen,
$1,486 for Mr. Beacom, $2,234 for Mr. Eliason and $743 for Mr. McIntyre.
(These figures show the value to the named executive of the remainder of the
insurance premiums paid by the Company, as permitted by SEC rules. Insurance
premium dollar amounts disclosed in 1992 were permissible under SEC rules,
but overly conservative in terms of any actual benefit to these executives.);
and earnings accrued under the Company Deferred Compensation Plan to the
extent such earnings exceeded the market rate of interest (as prescribed
pursuant to the SEC rules), which were $0 for Messrs. Howard, Theisen and
Beacom, respectively, $1,352 for Mr. Eliason and $485 for Mr. McIntyre.
OPTIONS AND STOCK APPRECIATION RIGHTS (SARs)
The following table indicates for each of the named executives (i) the extent
to which the Company used stock options and SARs for executive compensation
purposes in 1993 and (ii) the potential value of such options and SARs as
determined pursuant to the SEC rules.
OPTIONS AND SARS GRANTED IN 1993
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options and
Options/ SARs Exercise
SARs Granted to or Base
Granted(1) Employees Price Expiration
Name (#) in 1993 ($/Sh) Date 5%($)(3) 10%($)(3)
<S> <C> <C> <C> <C> <C> <C>
J. Howard 11,869 options 6.0% 43.50 1-27-03 324,698 822,849
0 SARs
E. Theisen 6,788 options 3.4% 43.50 1-27-03 185,706 470,616
0 SARs
V. Beacom 4,460 options 2.3% 43.50 1-27-03 122,006 309,186
0 SARs
L. Eliason 4,208 options 2.1% 43.50 1-27-03 115,113 291,719
0 SARs
E. McIntyre 4,208 options 2.1% 43.50 1-27-03 115,113 291,719
0 SARs
All
Shareholders(2) N/A N/A N/A N/A 1,716,361,364 4,331,769,159
</TABLE>
(1) Options were granted on January 27, 1993 and vested on January 27, 1994.
No SARs were granted in 1993 based on the performance period ending in 1992.
(2) Potential realizable values during the ten year period commencing January
27, 1993, are based on the market price ($43.50) and the outstanding shares
(62,629,497) of common stock of the Company on that date.
(3) The hypothetical potential appreciation shown in columns (f) and (g) for
the named executives is required by the SEC rules. The amounts in these
columns do not represent either the historical or anticipated future
performance of the Company's common stock level of appreciation.
The following table indicates for each of the named executives the number and
value of exercisable and unexercisable options and SARs as of December 31,
1993.
AGGREGATED OPTION AND SAR EXERCISES IN 1993
AND FY-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Unexercised Value of Unexercised In-the-Money
Shares Options and SARs at 12/31/93 Options and SARs at
Acquired on Realized (#) -- Exercisable (ex)/ 12/31/93 ($) -- Exercisable (ex)/
Name Exercise(#) Value($) Unexercisable (unex) Unexercisable (unex)*
<S> <C> <C> <C> <C>
J. Howard N/A N/A 39,641 (ex) 171,843 (ex)
11,869 (unex) 11,869 (unex)
E. Theisen N/A N/A 19,224 (ex) 98,018 (ex)
6,788 (unex) 6,788 (unex)
V. Beacom 8,334 83,467 210 (ex) 399 (ex)
4,460 (unex) 4,460 (unex)
L. Eliason N/A N/A 6,563 (ex) 34,181 (ex)
4,208 (unex) 4,208 (unex)
E. McIntyre N/A N/A 9,871 (ex) 60,834 (ex)
4,280 (unex) 4,280 (unex)
</TABLE>
*Share price on December 31, 1993 was $43.125.
OTHER LONG-TERM INCENTIVE AWARDS
The following table reflects the number of performance units granted to the
named executives during 1993 under the Long-Term Incentive Plan and the
performance-based formula of such Plan.
LONG-TERM INCENTIVE PLAN AWARDS GRANTED IN 1993
<TABLE>
<CAPTION>
Estimated Future Payouts
under Non-Stock Price-Based Plans
(a) (b) (c) (d) (e) (f)
Performance or
Other
Number of Shares, Period Until
Units or Maturation or
Name Other Rights (#)* Payout Threshold(#) Target(#) Maximum(#)
<S> <C> <C> <C> <C> <C>
J. Howard 11,869 1 year 5,935 11,869 11,869
E. Theisen 6,788 1 year 3,394 6,788 6,788
V. Beacom 4,460 1 year 2,230 4,460 4,460
L. Eliason 4,208 1 year 2,104 4,208 4,208
E. McIntyre 4,208 1 year 2,104 4,208 4,208
</TABLE>
*These performance units were granted on January 27, 1993 under the Long-Term
Incentive Plan which is explained in detail in the following Corporate
Management Committee Report on Executive Compensation. Each performance unit
is credited with dividend equivalents equal to the dividends paid on common
stock. The goals for the 1993 performance awards were defined in terms of the
Company's return on common equity (ROE) compared to the median ROE for the
Kidder, Peabody Electric Utility index over a three-year time period ending
September 30, 1993. For maximum payout, the target level for 1993 was 1%
above the median of the Kidder grouping. However, the Company's three-year
average ROE ending September 30, 1993 was at the Kidder grouping median
resulting in a 50% payout equal to the number of units shown in the threshold
column of this table for each named executive. The value of the 50% payout
for 1993 is reflected in column (d) of the Summary Compensation Table.
CORPORATE MANAGEMENT
COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
CORPORATE MANAGEMENT COMMITTEE. The Committee has responsibilities for the
compensation of all executive officers of the Company. The Committee makes
annual salary adjustment recommendations to the Board concerning the
executive officers of the Company. The annual and long-term incentive plans
for the executive officers are administered by the Committee. The Committee
has the sole authority to establish the terms and conditions of the incentive
plans and to approve any awards. The Committee is composed entirely of
outside directors of the Company.
COMPENSATION STRATEGY. With respect to the five named executives, as well as
the other executive officers, the Committee has established a strategy to
compare the Company's executive compensation to a blend of major industrial
companies and major utility companies with a total compensation target at the
50th percentile of the combined group. The comparison companies consist of
ten industrial companies with local representation and a median revenue size
of $2.7 billion and eleven utility companies, most of which operate nuclear
facilities, with a median revenue size of $2.6 billion. Eight of the eleven
utility companies included in this comparison group are also part of the
Kidder, Peabody Electric Utility index used for purposes of the shareholder
return comparison.
Total compensation takes into account all elements of compensation that the
executive receives including base pay, annual and long-term incentives and
benefits. The Company provides the level of total compensation necessary to
attract and retain high quality executives. Executive compensation is linked
to performance and to the interests of shareholders and customers. Executives
at higher levels in the Company have a greater percentage of their total cash
compensation contingent on the accomplishments of business objectives. The
Corporate Management Committee believes the compensation program for 1994 has
been designed to insure that compensation paid to named officers will qualify
for deductibility under section 162(m) of the Internal Revenue Code.
BASE PAY. Annually a market analysis using the comparison companies described
above is performed of executive officer positions to establish the
appropriate base salary range. In January of each year, the Committee
receives goals and performance standards on each of the executive officers
which describe achievements to be reached by each officer during the upcoming
year. The adjustment made to the base pay of each named executive during 1993
was determined based on the results of individual performance and the market
analysis conducted during 1992. Based on the current compensation levels of
the Company as compared to market, it is anticipated that there will be no
general base salary increases for executive officers in 1994.
ANNUAL INCENTIVE. Annual incentive awards for the named executives are
determined in accordance with the Company's Executive Incentive Compensation
Plan. The goal areas and measures under the Plan are: Financial Success, with
earnings per share (EPS) weighted at 30% and Company cost management weighted
at 20%; Customer Service (customer surveys, plant availability, system
reliability, employee safety results and rate performance) -- 30%; and
Individual Performance -- 20%. The goals for the Chairman & Chief Executive
Officer, President and Chief Operating Officer, President-NSP Generation and
Vice President-Nuclear Operations have an additional nuclear safety
component. The Plan has a minimum target and maximum financial (EPS) level.
The maximum financial level is approximately 150% of the EPS goal and is used
to circumvent any potential windfall to executives upon payout. The annual
incentive awards for the named executives are reflected in column (d) of the
Summary Compensation Table.
Long-Term Incentive. Long-term incentive awards for the named executives are
determined in accordance with the Executive Long-Term Incentive Award Stock
Plan. The Plan permits the granting of non-qualified stock options, stock
appreciation rights, restricted common stock and performance awards to key
employees of the Company and its subsidiaries. Total awards in any year may
not exceed .5% of the outstanding shares of common stock at the end of the
prior year. The Plan is designed to encourage and create ownership and
retention of the Company's stock by key employees. Through awards under the
Plan, the objective of aligning key employees' long-range interests with
those of shareholders may be met by providing key employees with the
opportunity to build, through the achievement of corporate goals, a
meaningful stake in the Company.
As with the other elements of the Company's executive compensation, a market
analysis based on the ten industrial and eleven utility companies described
above is performed to establish the appropriate long-term incentive value as
it relates to the total long-term incentive program and each component and
executive officer position thereunder. The Plan is designed to be competitive
with the market median. Each of the award programs under the Plan are
described below:
RESTRICTED STOCK. Restricted NSP common stock is awarded based on the
participant's position, salary and on the Company's Return on Shareholder
Equity (ROE) compared to the average of the Kidder, Peabody Electric Utility
index over a three-year rolling time period. In order for any award to be
made, the Company's three-year average ROE must be at least at the median of
the Kidder grouping. The program has a target level of 1% above the median of
the Kidder grouping, which results in a 100% payout. Payout is at 50% if the
median of the peer group is met. No restricted stock awards were made in 1993
based on the results of the performance period ending September 30, 1992.
Restricted stock earned as a result of the performance period ending
September 30, 1993 is shown in column (f) of the Summary Compensation Table.
STOCK OPTIONS. Non-qualified stock options are granted based on position and
salary. The option price is the market value of NSP common stock on the grant
date. The option exercise period is for nine years following the date of
vesting. Options cannot be exercised for one year after the date of grant.
Options may expire earlier if the participant's employment terminates. During
1993, stock option award size was based on the annual salary midpoint
multiplied by the grant size percentage divided by the average market price
on the date of grant. The grant size percentage was developed based on the
market analysis described above. Stock options for 1993 were awarded as shown
on the Summary Compensation Table.
PERFORMANCE UNITS. One unit known as a DESAR (Divided Equivalent Stock
Appreciation Right) is awarded for each option share. DESARs represent a
right to receive value based on the Company's common stock dividend that is
conditioned upon the achievement of performance objectives and the discretion
of the Committee. The extent to which DESARs vest is determined on the first
anniversary of their grant date based on the Company's three-year rolling
average ROE. A DESAR that vests has, on the date of vesting, a value equal to
the dividends paid on a share of common stock during the prior year. Unless
exercised, a vested DESAR continues to increase in value based on the
Company's common stock dividends for nine years. The portion of the
additional dividend value attributed to the DESAR each year depends on the
three-year rolling average ROE calculated for that year. Like the restricted
stock program, this program has a target level of 1% above the median of the
Kidder grouping, which results in a 100% payout. Payout is at 50% if the
median of the peer group is met. Upon exercise, DESARs are paid in the form
of shares of common stock, as determined by dividing the total value of the
DESARs to be exercised by the market value of one share of common stock.
The Company's three-year average ROE ending September 30, 1993 was at the
Kidder, Peabody grouping median resulting in partial payouts of performance
units. The value of DESARs earned for 1993 are reflected in column (d) of the
Summary Compensation Table. The increased value of vested DESARs resulting
from the Company's common stock dividends through December 31, 1993 is shown
in column (h) of the Summary Compensation Table for 1993.
STOCK APPRECIATION RIGHTS. Upon the vesting of DESARs, participants are also
granted stock appreciation rights known as CASARs (Capital Appreciation Stock
Appreciation Rights) as a result of having achieved the performance criterion
upon which the DESAR vesting was conditioned. The number of CASARs awarded is
based on the value of the participant's vested DESARs divided by the market
value of NSP common stock on the date of vesting, and on each subsequent
anniversary of vesting. As of any given date, a CASAR has a value equal to
the difference between the market value of one share of NSP common stock on
that date and the market value of NSP common stock on the effective date of
the CASAR grant. Upon exercise, CASARs are paid in the form of shares of
common stock, as determined by dividing the total value of the CASARs to be
exercised by the market value of one share of common stock. The executive
officers of the Company are restricted from exercising CASARs within six
months after the date they are granted. CASARs earned for 1993 are reflected
in column (g) of the Summary Compensation Table.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The 1993 compensation of Mr.
Howard was determined in accordance with the compensation strategy discussed
above pertaining to executive compensation. Mr. Howard's 1993 base pay
adjustment was determined by the Committee based on his individual
performance results and the annual market analysis, as discussed above for
all executive officers. Although the Committee considered many factors,
including the overall quality of management and leadership exhibited by Mr.
Howard during 1992, the following performance goals, in no priority order,
were particularly important to the Committee in determining the adjustment to
his base pay: (a) improvements in customer service reliability, particularly
the reductions of feeder outages and customer interruptions; (b) allocation
and management of capital resources and department operating expense budgets;
(c) safety innovations and the overall reduction in accident levels; (d)
diversity of the Company's work force and increased utilization of
women/minority businesses; (e) continued and enhanced Company leadership in
environmental performance; (f) the Company's leadership and participation in
community development activities; (g) the continued safety and performance of
the nuclear power plant operations; and, (h) the Company's adoption of Total
Quality Management as demonstrated by the leadership capability and
performance of the Company's management, by explicit performance standards to
measure continuous quality improvement, and by the establishment of
Company-wide quality principles. The annual and long-term incentive awards of
Mr. Howard are reflected in the Summary Compensation Table and were
determined in accordance with the plans described above.
W. JOHN DRISCOLL
DAVID A. CHRISTENSEN
ALLEN F. JACOBSON
JOHN E. PEARSON
G.M. PIESCHEL
MARGARET R. PRESKA
TOTAL SHAREHOLDER RETURN COMPARISON
The graph below compares the cumulative total shareholder return on the
Company's common stock for the last five fiscal years with the cumulative
total return of the Standard & Poor's 500 Stock Index and the Kidder, Peabody
Electric Utility index(1) over the same period (assuming the investment of
$100 in each vehicle on December 31, 1988 and reinvestment of all dividends).
Cumulative 5 Year Value
[INSERT TABLE]
<TABLE>
<CAPTION>
Total Return
1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
NSP $100.00 $128.95 $118.29 $158.98 $169.43 $178.65
Kidder $100.00 $129.94 $131.42 $169.59 $181.66 $201.99
S&P 500 $100.00 $131.69 $127.61 $166.49 $179.18 $197.26
</TABLE>
(1) The Company has selected the Kidder, Peabody Electric Utility (Kidder)
index as a replacement for the Salomon 100 Electric Utilities (Salomon) index
shown in the 1993 proxy statement due to Salomon's significant reduction in
the number of companies it uses for comparison purposes. The Kidder group of
100 companies represents substantially the same companies used by the former
Salomon grouping of 100 companies, except for Citizens Utilities, Kansas Gas
and Electric and Kansas Power and Light which were a part of the former
Salomon grouping and are not a part of the Kidder grouping, and Bangor Hydro
Electric, Upper Peninsula Energy and Western Resources -- formed by the
merger of Kansas Gas and Electric and Kansas Power and Light, which are a
part of the Kidder grouping, but were not a part of the Salomon grouping. The
Company will furnish a complete listing of the former Salomon and current
Kidder groupings upon written request to the Secretary of the Company at 414
Nicollet Mall, Minneapolis, Minnesota 55401.
PENSION PLAN TABLE
The following table illustrates the approximate retirement benefits payable
to employees retiring at the normal retirement age of 65 years:
<TABLE>
<CAPTION>
Estimated Annual Benefits for Years of Service Indicated
Average
Compensation Years of Service
(4 Years) 5 10 15 20 25 30
<S> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 3,500 $ 7,000 $ 11,000 $ 14,500 $ 18,000 $ 21,500
100,000 7,500 15,500 23,000 30,500 38,500 46,000
150,000 12,000 23,500 35,500 47,000 59,000 70,500
200,000 16,000 31,500 47,500 63,500 79,500 95,000
250,000 20,000 40,000 60,000 79,500 99,500 119,500
300,000 24,000 48,000 72,000 96,000 120,000 144,000
350,000 28,000 56,000 84,500 112,500 140,500 168,500
400,000 32,000 64,500 96,500 128,500 161,000 193,000
450,000 36,500 72,500 109,000 145,000 181,500 217,500
500,000 40,500 80,500 121,000 161,500 202,000 242,000
550,000 44,500 89,000 133,500 177,500 222,000 266,500
600,000 48,500 97,000 145,500 194,000 242,500 291,000
650,000 52,500 105,000 158,000 210,500 263,000 315,500
wage base: $57,600
</TABLE>
After an employee has reached 30 years of service, no additional years are
used in determining pension benefits. The annual compensation used to
calculate the average compensation shown in this table is based on the
participant's base salary for the year (as shown on the Summary Compensation
Table at column (c)) and bonus compensation paid in that same year (as shown
on the Summary Compensation Table at column (d); see figure for prior year).
The benefit amounts shown are amounts computed in the form of a straight-life
annuity. The amounts are not subject to offset for social security or
otherwise, except as provided in the employment agreement with Mr. Howard, as
described below.
At the end of 1993, each of the five named executive officers had the
following credited service: Mr. Howard, 6 years, 11 months; Mr. Theisen, 39
years, 3 months; Mr. Beacom, 28 years, 4 months; Mr. Eliason, 28 years, 1
month and Mr. McIntyre, 20 years, 10 months.
An employment agreement with Mr. Howard provides that if employment
terminates prior to age 60, he will receive payments from the Company
equivalent to benefits he would have earned under the Pension Plan without
regard to service and compensation limitations in a minimum annual amount of
$22,535. If employment continues past age 60, he and his spouse, if she
survives him, will receive combined benefits from the Pension Plan and
supplemental Company payments as though he had completed 30 years of service,
less the pension benefits earned from a former employer.
SEVERANCE PLAN
The Company's Severance Plan covers the full-time regular-benefit,
nonbargaining employees of the Company, including the named executives, and
participating subsidiaries. The Severance Plan provides severance benefits to
covered employees whose termination of employment is involuntary and
unrelated to unsatisfactory performance. Subject to a maximum of 24 months of
pay, a covered employee is eligible to receive monthly payments of two months
of base pay plus the greater of two weeks of base pay for each year of
service or one week of base pay for each $2,000 of base annual salary.
Covered employees are also eligible to receive incentive pay, group insurance
benefits and service and compensation credit under the Pension Plan for the
period they receive monthly severance benefits. Outplacement services are
also provided under the Plan.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
Subject to ratification by the shareholders, the Board of Directors has
appointed Deloitte & Touche as independent auditors of the Company for the
year 1994. Deloitte & Touche has performed this function for the Company for
each fiscal year beginning with the year 1947. Members of the firm will be
available at the Annual Meeting of Shareholders to answer questions and to
make a statement if they desire to do so.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR RATIFICATION
OF THE SELECTION OF AUDITORS.
QUORUM AND VOTE REQUIRED
The presence in person or by proxy, of the holders of a majority of the
voting power of the shares of common stock and cumulative preferred stock
issued, outstanding and entitled to vote at a meeting for the transaction of
business is required to constitute a quorum. The election of each director
shall be decided by plurality vote. As a result, any shares not voted for a
director (whether by withholding authority, broker non-vote or otherwise)
have no impact on the election of directors except to the extent the failure
to vote for an individual results in another individual receiving a larger
number of votes. The proposal for the ratification of the selection of
outside auditors requires the affirmative vote of the holders of a majority
of the total voting power present in person or by proxy and entitled to vote.
Abstentions from voting on the appointment of auditors are treated as votes
against, while broker non-votes are treated as shares not voted.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder for the annual shareholder meeting in April
1995 must be received by the Secretary of the Company at 414 Nicollet Mall,
Minneapolis, Minnesota 55401, not later than the close of business on
November 15, 1994. Proposals received by that date will be included in the
1995 Proxy Statement if the proposals are proper for consideration at an
annual meeting and are required for inclusion in the proxy statement by, and
conform to, the rules of the SEC.
For a proposal not included in the proxy statement to be properly brought
before an annual meeting by a shareholder, the Company's Bylaws provide that
the Secretary of the Company must have received written notice thereof not
less than 20 or more than 90 days prior to the meeting. The notice must
contain (i) a description of the proposed business and the reasons for
conducting such business at the annual meeting, (ii) the shareholder's name
and record address, (iii) the class and number of shares beneficially owned
by the shareholder, and (iv) any material interest of the shareholder in such
business.
OTHER BUSINESS
Management does not know of any business, other than that described herein,
that may be presented for action at the Annual Meeting of Shareholders. If
any other matters are properly presented at the meeting for action, the
persons named in the accompanying proxy will vote upon them in accordance
with their best judgment.
Minneapolis, Minnesota
March 17, 1994
By order of the Board of Directors
Gary R. Johnson
Secretary
NORTHERN
STATES
POWER
COMPANY
IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE DATE, SIGN AND PROMPTLY
RETURN THE ENCLOSED PROXY. AN ENVELOPE WHICH REQUIRES NO UNITED STATES
POSTAGE IS PROVIDED FOR THAT PURPOSE.
THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF FOLLOW-UP
REQUESTS.
NOTICE
OF
ANNUAL
MEETING
AND
PROXY
STATEMENT
ANNUAL
MEETING
OF
SHAREHOLDERS
APRIL 27, 1994
HISTORIC STATE THEATRE
805 HENNEPIN AVENUE
MINNEAPOLIS, MINNESOTA
NORTHERN
STATES
POWER
COMPANY
PRINTED ON RECYCLED PAPER
[Logo]
NORTHERN STATES POWER COMPANY
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned appoints Edward J. McIntyre, Chandra G. Houston and Gary R.
Johnson, or any of them, each with full power of substitution, to represent
and vote the shares of stock held by the undersigned at the Annual Meeting of
Shareholders on Wednesday, April 27, 1994, at 10 a.m., and any adjournments
thereof, as follows:
PLEASE USE AN X IF YOU WISH TO INDICATE YOUR VOTE IN BOXES BELOW.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THESE PROPOSALS
1. ELECTION OF FOUR DIRECTORS IN CLASS II.
Richard M. Kovacevich
Douglas W. Leatherdale
A. Patricia Sampson
Edwin M. Theisen
[ ] FOR [ ] WITHHOLD AUTHORITY
(IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY OF THE ABOVE, STRIKE OUT
THE APPROPRIATE NAME(S)).
2. APPROVAL OF APPOINTMENT OF DELOITTE & TOUCHE AS INDEPENDENT AUDITORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. IN THEIR DISCRETION TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
(Continued and to be signed on other side)
THIS PROXY WILL BE VOTED AS DIRECTED, IF NO OTHER DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED
"FOR" THE ELECTION OF DIRECTORS AS STATED IN THE PROXY STATEMENT AND "FOR"
PROPOSAL 2.
Dated ______________, 1994
(Please insert date of signing Proxy)
*___________________
____________________
Please sign EXACTLY as name appears hereon.
PROXY NUMBER
IMPORTANT
PLEASE MAIL PROMPTLY IN THE ENCLOSED ENVELOPE TO
ASSURE YOUR REPRESENTATION AT THE MEETING. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
*ATTORNEYS, EXECUTORS, ADMINISTRATORS, TRUSTEES,
OR GUARDIANS SHOULD SO INDICATE WHEN SIGNING.
FOR JOINT ACCOUNTS, ONE JOINT OWNER MAY SIGN.
