SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NORTHERN STATES POWER COMPANY
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
NSP [LOGO]
March 15, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Northern States Power Company on Wednesday, April 24, 1996, at 10:00 a.m., at
the Minneapolis Convention Center, 1301 Second Avenue South, 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, including the status of
NSP's combination with Wisconsin Energy Corporation. 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,
/s/ James J. Howard
James J. Howard
Chairman, President &
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 24, 1996, at 10:00 a.m., at the
Minneapolis Convention Center, 1301 Second Avenue South, Minneapolis, Minnesota
for the following purposes:
(1) To elect four directors to Class I until the Annual Meeting of
Shareholders in 1999, and one director to Class II until the
Annual Meeting of Shareholders in 1997.
(2) To ratify the appointment of Price Waterhouse, Certified
Public Accountants, as independent auditors of the Company for
1996; 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, 1996, will be
entitled to notice of, and to vote at, this Annual Meeting.
Minneapolis, Minnesota
March 15, 1996
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 15, 1996.
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.
Each outstanding share of NSP common stock is entitled to one vote and each
outstanding share of NSP preferred stock is entitled to one vote (other than NSP
preferred stock of the series designated "Cumulative Preferred Stock, $3.60
Series" (the "$3.60 Series Preferred Stock"), which is entitled to three votes
per share) upon each matter presented at the NSP Meeting. On the NSP Record
Date, there were 275,000 shares of $3.60 Series Preferred Stock outstanding.
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 votes entitled to be cast with respect to the shares held by such
shareholder multiplied by the number of directors of each class to be elected,
and may cast all votes for one nominee or distribute the votes among the
nominees. 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) will have no impact on the election of directors
except to the extent that the failure to vote for an individual results in
another individual receiving a larger number of votes. With respect to the
election of the nominated directors, the persons named as proxies reserve the
right to cumulate votes represented by proxies which they receive and to
distribute such votes among one or more of the nominees at their discretion.
First Trust N.A., the Trustee for the Company's Employee Stock Ownership Plan,
holds approximately 8.29% of the Company's common stock for the benefit of Plan
participants, none of whom has a total beneficial interest of more than .167% of
the Company's outstanding voting securities. Except as described below in
"Pending Combination with Wisconsin Energy Corporation," 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 1995 on or about March 5,
1996, to all shareholders of the Company of record on March 1, 1996.
PENDING COMBINATION WITH
WISCONSIN ENERGY CORPORATION
On April 28, 1995, the Board of Directors of the Company approved the execution
of an Agreement and Plan of Merger ("Merger Agreement") among the Company,
Wisconsin Energy Corporation, a Wisconsin corporation ("WEC"), Northern Power
Wisconsin Corp., a Wisconsin corporation and wholly-owned subsidiary of NSP and
WEC Sub Corp., a Wisconsin corporation and wholly-owned subsidiary of WEC. The
Merger Agreement, as amended and restated as of July 26, 1995, provides for a
strategic business combination involving the Company and WEC. The shareholders
of the Company approved the Merger Agreement at the Annual Meeting on September
13, 1995. As a result of the mergers contemplated by the Merger Agreement (the
"Mergers"), WEC (which will be renamed Primergy Corporation) will be the holding
company of both the Company (which, for regulatory reasons, will reincorporate
in Wisconsin) and the operating subsidiaries of WEC. Upon consummation of the
Mergers, NSP shareholders will receive 1.626 shares of Primergy common stock in
exchange for each share of NSP common stock they own and the holders of NSP
preferred stock will receive the same number of shares of preferred stock in the
reincorporated Wisconsin corporation with express terms that are identical to
the NSP preferred stock for which such shares will be exchanged. In addition, it
is expected that all outstanding stock-based awards of the Company, including
options and any SARs, will be converted using the same exchange rate that will
be used for common stock of the Company.
Concurrently with the execution of the Merger Agreement, the Board of Directors
of the Company also approved the NSP Stock Option Agreement, dated as of April
28, 1995 by and among NSP and WEC, whereby the Company granted WEC an
irrevocable option (the "Company Option") to purchase up to 13,387,772 shares
(19.9% of the outstanding number of shares of common stock of the Company on
that date), at a price of $44.075 per share. The Company Option may be exercised
by WEC, in whole or in part, at any time or from time to time after the Merger
Agreement becomes terminable by WEC under circumstances which could entitle WEC
to termination fees under certain sections of the Merger Agreement. The
conditions that would give rise to the exercise of the Company Option do not
exist as of the date of this document.
As of the date of this document, the Company anticipates that the Mergers will
be consummated by the beginning of 1997. However, some regulatory authorities
which must approve the Mergers have not established a timetable for their
decisions. Therefore, the timing of the approvals necessary to complete the
Mergers is not known at this time.
ELECTION OF DIRECTORS
GENERAL INFORMATION
The Company's Bylaws provide that the Board of Directors shall consist of at
least twelve, but no more than fifteen directors, as determined by the Board.
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 24, 1996 Annual Meeting, the following four individuals are the
nominees to be elected to the Board of Directors to serve in Class I until the
1999 Annual Meeting of Shareholders and until their successors are elected and
have qualified: W. John Driscoll, Dale L. Haakenstad, John E. Pearson and James
J. Howard. Each of these nominees is currently a director of the Company whose
term is scheduled to expire at this Annual Meeting. In addition, due to Mr.
Theisen's retirement in 1995, there currently are only three Class II directors.
In order to balance the number of directors in each class, as required by the
Company's Bylaws, G. M. Pieschel, who currently serves as a Class I director
whose term is scheduled to expire at this Annual Meeting, is the nominee to be
elected to serve in Class II until the 1997 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 I -- NOMINEES FOR TERMS EXPIRING IN 1999
W. John Driscoll Retired effective June 30, 1994 as Chairman of the Board, Rock Island Company, St. Paul, Minnesota,
Age 67 a private investment company, in which capacity he had served since May 15, 1993. Prior thereto,
Director Since 1974 President. Also director of Comshare Inc., The John Nuveen Company, The St. Paul Companies,
Inc. and Weyerhaeuser Company.
Dale L. Haakenstad Retired President and Chief Executive Officer, Western States Life Insurance Company, Fargo,
Age 68 North Dakota.
Director Since 1978
John E. Pearson Retired effective January 31, 1992 as Chairman, The NWNL Companies, Inc. and Northwestern National
Age 69 Life Insurance Company, a wholly-owned subsidiary of The NWNL Companies, Inc., in which capacity
Director Since 1983 he had served since July 1, 1991. Prior thereto, Chairman and Chief Executive Officer, The
NWNL Companies, Inc., and Northwestern National Life Insurance Company.
James J. Howard Chairman, President and Chief Executive Officer of the Company since December 1, 1994. Prior
Age 60 thereto, Chairman of the Board and Chief Executive Officer of the Company since July 1, 1990.
Director Since 1987 Also director of Ecolab Inc., Honeywell Inc., The ReliaStar Financial Corp. and Walgreen Company.
CLASS II -- NOMINEE FOR TERM EXPIRING IN 1997
G. M. Pieschel Chairman of the Board, Farmers and Merchants State Bank, Springfield, Minnesota, a commercial
Age 68 bank, since January 14, 1993. Prior thereto, Chief Executive Officer and President of Farmers
Director Since 1978 and Merchants State Bank.
THE FOLLOWING INFORMATION IS FURNISHED WITH RESPECT TO EACH DIRECTOR WHOSE TERM
OF OFFICE WILL CONTINUE:
CLASS II -- DIRECTORS WHOSE TERMS EXPIRE IN 1997
Richard M. Kovacevich Chairman, President and Chief Executive Officer, Norwest Corporation, Minneapolis, Minnesota,
Age 52 a holding company for banking institutions, since May 1, 1995. Prior thereto, President and
Director Since 1990 Chief Executive Officer until January 1, 1993 and President and Chief Operating Officer until
January 1, 1989. Also director of Fingerhut Companies, Inc., Norwest Corporation and ReliaStar
Financial Corp.
Douglas W. Leatherdale Chairman of the Board, President and Chief Executive Officer, The St. Paul Companies, Inc.,
Age 59 a worldwide property and liability insurance organization, since May 1, 1990. Also director
Director Since 1991 of The John Nuveen Company and United HealthCare Corporation.
A. Patricia Sampson Consultant, Dr. Sanders and Associates, a management and diversity consulting company, since
Age 47 January 1, 1995. Prior thereto, Chief Executive Officer, until December 31, 1994, and Executive
Director Since 1985 Director, until June 1, 1993, Greater Minneapolis Area Chapter of the American Red Cross.
CLASS III -- DIRECTORS WHOSE TERMS EXPIRE IN 1998
H. Lyman Bretting President and Chief Executive Officer, C.G. Bretting Manufacturing Company, Inc., Ashland,
Age 59 Wisconsin, a manufacturer of napkin and paper towel folding machines. Also director of M&I
Director Since 1990 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, South Dakota, a
Age 61 manufacturer of reinforced plastics, electronic equipment and sewn products. Also director
Director Since 1976 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, Minnesota Mining
Age 69 and Manufacturing Company (3M). Also director of Abbot Laboratories, Deluxe Corporation, Minnesota
Director Since 1983 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 1, 1992. Prior
Age 58 thereto, President, Mankato State University, Mankato, Minnesota, an educational institution.
Director Since 1980
</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 Board
organization, director selection and compensation, senior management
organization, performance and compensation, corporate structure, mergers and
acquisitions, human resource policies, corporate ethics and long-range
planning and strategy for the Company. Current members of the Committee are
W. John Driscoll (Chairman), David A. Christensen, Allen F. Jacobson, Douglas
W. Leatherdale, John E. Pearson and Margaret R. Preska. The Committee held 5
meetings during 1995.
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 AUDIT COMMITTEE has responsibilities for actions relating to internal and
external audit activities. In performing these functions, the Committee is
responsible for auditing activities by internal and external auditors;
financial reporting, internal controls and accounting policies and practices;
initiating and directing investigations into matters affecting protection and
recovery of assets of the Company; and oversight of the management of assets
of dedicated funds, including ERISA plans and nuclear decommissioning
funding. Current members of the Committee are G. M. Pieschel (Chairman), W.
John Driscoll, Dale L. Haakenstad, Douglas W. Leatherdale and A. Patricia
Sampson. The Committee held 3 meetings during 1995.
THE POWER SUPPLY COMMITTEE has responsibilities for oversight and
recommendations for all generation requirements for the Company, including
nuclear, hydro, coal and alternative sources of power supply; bulk power
supply planning; power supply permits and license compliance; major power
supply facility construction and construction budgets; nuclear plant safety,
reliability and operations. Current members of the Committee are David A.
Christensen (Chairman), H. Lyman Bretting, Dale L. Haakenstad, Allen F.
Jacobson, Richard M. Kovacevich and Margaret R. Preska. The Committee held 3
meetings during 1995.
THE FINANCE COMMITTEE has responsibilities for actions related to the
financial management of the Company. In performing these functions, the
Committee is responsible for corporate capital structure, capital budgets and
financial plans, dividend policy and dividend recommendations, insurance
coverages, banking relationships and investor relations. Current members of
the Committee are John E. Pearson (Chairman), H. Lyman Bretting, Richard M.
Kovacevich, G. M. Pieschel and A. Patricia Sampson. The Committee held 3
meetings during 1995.
DIRECTOR MEETINGS
There were 12 meetings of the Board of Directors in 1995. Each director attended
at least 96% of the total number of meetings of the Board and Committees on
which such director served during 1995.
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, 1996 for all directors and the executive officers of
the Company listed in the Summary Compensation Table. As of March 1, 1996, the
directors and executive officers as a group beneficially owned 332,195 shares,
less than 0.5 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 (LTIP) and the Employee Stock Ownership Plan for which they have
voting power but not investment power).
H. Lyman Bretting 1,416 John E. Pearson 1,433
David A. Christensen 500 G. M. Pieschel 723
W. John Driscoll 2,000 Margaret R. Preska 600
Dale L. Haakenstad 711 A. Patricia Sampson 387
James J. Howard* 113,922 Douglas D. Antony* 21,732
Allen F. Jacobson 712 Gary R. Johnson* 22,237
Richard M. Kovacevich 1,000 Edward J. McIntyre* 37,681
Douglas W. Leatherdale 300 Loren L. Taylor* 21,852
- --------------------------
* Shares shown for Messrs. Howard, Antony, Johnson, McIntyre and Taylor
include options to purchase common stock of the Company which are exercisable
within 60 days under the Company's LTIP: 81,099 option shares for Mr. Howard,
13,281 option shares for Mr. Antony, 19,245 option shares for Mr. Johnson,
27,004 option shares for Mr. McIntyre, and 15,402 option shares for Mr.
Taylor. These shares also include performance units payable under the
Company's LTIP in the form of stock which are exercisable within 60 days. The
number of shares which would have been payable upon exercise of performance
units on March 1, 1996 are: 1,997 for Mr. Howard, 214 for Mr. Antony, 320 for
Mr. Johnson, 637 for Mr. McIntyre and 240 for Mr. Taylor.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth cash and noncash compensation for each of the
last three fiscal years ended December 31, 1995, for services in all capacities
to the Company and its subsidiaries, to the Chief Executive Officer and the next
four highest compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------------------------------------------------
AWARDS PAYOUTS
------------------------------------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
NUMBER OF
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) ($)(2) ($)(3) AND SARS (#) ($)(4) ($)(5)
- --------------------------- ---- --------- ----------- ------ ------ ------------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JAMES J. HOWARD(6) 1995 565,000 400,000 8,476 328,830 15,522 0 5,930
Chairman, President & 1994 511,300 317,800 3,504 240,311 15,150 0 9,056
Chief Executive Officer 1993 511,300 231,931 0 129,075 12,782 23,925 11,324
EDWARD J. MCINTYRE 1995 222,000 102,000 3,165 75,369 5,123 0 3,274
Vice President & Chief 1994 205,600 102,700 2,465 61,680 5,117 0 6,438
Financial Officer 1993 205,600 71,395 7,339 35,595 4,508 7,461 5,081
LOREN L. TAYLOR 1995 200,000 93,000 2,008 67,900 4,615 0 10,763
President, NSP Electric 1994 174,583 55,000 1,046 40,942 3,455 0 3,166
1993 171,500 32,347 1,202 18,290 2,737 2,728 5,685
DOUGLAS D. ANTONY 1995 200,000 107,000 1,025 67,900 4,615 0 2,290
President, NSP Generation 1994 163,893 75,100 1,025 41,837 2,942 0 4,419
1993 146,300 61,329 6,517 17,210 2,493 2,087 3,490
GARY R. JOHNSON 1995 198,000 89,000 1,074 67,221 4,569 0 2,422
Vice President, General 1994 183,600 81,700 9,945 55,080 4,570 0 3,672
Counsel and Corporate 1993 183,600 53,424 1,315 28,380 3,648 4,525 5,831
Secretary
</TABLE>
- --------------------------
(1) This column consists of awards made to each named executive under the
Company's Executive Incentive Compensation Plan.
(2) This column consists of reimbursements for taxes on certain personal
benefits received by the named executives.
(3) Amounts shown in this column reflect the market value of the shares of
restricted stock awarded under the LTIP, except with respect to Mr.
Antony's additional award (discussed below) and are based on the
closing price of the Company's common stock on the date that the awards
were made. Restricted shares earned for 1995 under the Company's LTIP
were granted on January 24, 1996 based on the performance period ending
September 30, 1995. As of December 31, 1995, the named executives held
the following as a result of grants under the LTIP: Mr. Howard held
7,074 restricted shares at a market value of $347,510; Mr. McIntyre
held 1,847 restricted shares at a market value of $90,734; Mr. Antony
held 1,165 restricted shares at a market value of $57,231; Mr. Taylor
held 1,166 restricted shares at a market value of $57,280 and Mr.
Johnson held 1,606 restricted shares at a market value of $78,895. 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.
Mr. Antony received an additional 2,200 shares of restricted stock
during 1994, which as of December 31, 1995, had a market value of
$108,075. These additional shares vest with respect to 50% of the
shares if Mr. Antony has been continually employed by the Company on
October 26, 1996 and with respect to the remainder of the shares if he
has been continually employed with the Company on October 26, 1998.
The total number of restricted shares awarded during the years 1993,
1994 and 1995 are as follows: 8,338 shares for Mr. Howard, 2,200 shares
for Mr. McIntyre, 3,524 shares for Mr. Antony, 1,346 shares for Mr.
Taylor and 1,882 shares for Mr. Johnson.
(4) The Company had no LTIP payouts in 1995.
(5) This column consists of the following: $2,032.74 was contributed by the
Company for the Employee Stock Ownership Plan (ESOP) for each named
executive officer (the Company contribution on behalf of all ESOP
participants, including the named executive officers, was equal to
1.36% of their covered compensation); the value to each named executive
of the remainder of insurance premiums paid under the Officer Survivor
Benefit Plan by the Company: $1,843 for Mr. Howard, $183 for Mr.
McIntyre, $398 for Mr. Johnson, $0 for Mr. Taylor and $702 for Mr.
Antony; imputed income as a result of life insurance paid by the
Company on behalf of each named executive: $2,644 for Mr. Howard, $395
for Mr. McIntyre, $471 for Mr. Johnson, $476 for Mr. Taylor and $584
for Mr. Antony; Company matching 401(k) plan contribution of $700 to
each named executive; 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 was $743
for Mr. Howard, $1,996 for Mr. McIntyre, $853 for Mr. Johnson, $9,587
for Mr. Taylor and $304 for Mr. Anthony.
(6) Effective as of the completion of the Mergers, Mr. Howard has entered
into an employment agreement with Primergy Corporation pursuant to
which he will serve as the Chairman and Chief Executive Officer of
Primergy for a specified period and will thereafter serve only as
Chairman of the Board. Mr. Howard will receive an annual base salary,
short-term and long-term incentive compensation (including stock
options and restricted stock) and supplemental retirement benefits no
less than he received before the completion of the Mergers, as well as
life insurance providing a death benefit of three times his annual base
salary. Mr. Howard also will be entitled to retirement and welfare
benefits on the same basis as other executives, and certain fringe
benefits.
OPTIONS AND STOCK APPRECIATION RIGHTS (SARS)
The following table indicates for each of the named executives (i) the extent to
which the Company used stock options and SARs for executive compensation
purposes in 1995 and (ii) the potential value of such options and SARs as
determined pursuant to the SEC rules.
<TABLE>
<CAPTION>
OPTIONS AND SARS GRANTED IN 1995
- --------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ----------------------------------------------------------------------------- ------------------------------
(A) (B) (C) (D) (E) (F) (G)
% OF TOTAL
OPTIONS AND
OPTIONS/ SARS EXERCISE
SARS GRANTED TO OR BASE
GRANTED(1) EMPLOYEES PRICE EXPIRATION
NAME (#) IN 1995 ($/SH) DATE 5%($)(3) 10%($)(3)
- -------------- -------------- ------------- ---------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
J. Howard 15,522 options 5.60% 45.50 1/25/05 444,157 1,125,582
E. McIntyre 5,123 options 1.85% 45.50 1/25/05 146,593 371,496
G. Johnson 4,569 options 1.65% 45.50 1/25/05 132,057 334,658
L. Taylor 4,615 options 1.66% 45.50 1/25/05 130,741 331,322
D. Antony 4,615 options 1.66% 45.50 1/25/05 132,057 334,658
All Shareholders(2) N/A N/A N/A N/A 4,959,600,091 7,898,151,434
</TABLE>
- --------------------------
(1) Options were granted on January 26, 1995 and vested on January 24,
1996. No SARs were awarded for 1995.
(2) Potential realizable values during the ten year period commencing
January 26, 1995, are based on the market price ($45.50) and the
outstanding shares (66,922,144) of common stock of the Company on that
date.
(3) The hypothetical potential appreciation shown in columns (f) and (g)
for the named executives is required by the SEC rules. The amounts in
these columns do not represent either the historical or anticipated
future performance of the Company's common stock level of appreciation.
The following table indicates for each of the named executives the number and
value of exercisable and unexercisable options and SARs as of December 31, 1995.
<TABLE>
<CAPTION>
AGGREGATED OPTION AND SAR EXERCISES IN 1995
AND FY-END OPTION/SAR VALUE
- -----------------------------------------------------------------------------------------------------------------
(A) (B) (C) (D) (E)
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AND SARS AT 12/31/95 OPTIONS AND SARS AT
ACQUIRED ON REALIZED (#) -- EXERCISABLE (EX)/ 12/31/95 ($) -- EXERCISABLE (EX)/
NAME EXERCISE(#) VALUE($) UNEXERCISABLE (UNEX) UNEXERCISABLE (UNEX)*
- ---- ----------- -------- -------------------- ---------------------
<S> <C> <C> <C> <C>
J. Howard N/A N/A 67,573 (ex) 558,524 (ex)
15,522 (unex) 46,566 (unex)
E. McIntyre N/A N/A 22,518 (ex) 204,138 (ex)
5,123 (unex) 15,369 (unex)
G. Johnson N/A N/A 15,129 (ex) 112,816 (ex)
4,569 (unex) 13,707 (unex)
L. Taylor N/A N/A 11,128 (ex) 82,806 (ex)
4,615 (unex) 13,845 (unex)
D. Antony N/A N/A 8,880 (ex) 70,549 (ex)
4,615 (unex) 13,845 (unex)
</TABLE>
- --------------------------
* Share price on December 29, 1995 was $49.125. Company common stock was not
traded on December 31, 1995.
CORPORATE MANAGEMENT COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
CORPORATE MANAGEMENT COMMITTEE. The Committee is composed entirely of outside
directors of the Company and makes recommendations to the Board concerning total
compensation for executive officers of the Company. The Committee is the sole
administrator of the executive annual and long-term incentive plans with full
authority to establish and interpret the terms of the plans and to make payment
of the awards.
COMPENSATION STRATEGY. NSP's executive compensation goals for 1995 were: (i) to
provide a competitive compensation package that enables NSP to attract and
retain key executives and (ii) to align the executive's interests with those of
NSP's stockholders and with NSP's performance. The 1995 compensation of NSP's
executives was comprised primarily of base salary, annual incentive awards and
long-term incentive awards.
To achieve the compensation goal of providing a competitive compensation
package, the Committee seeks to set base salary and the target amounts of the
annual and long-term awards at the median of a combined group of major utilities
and industrial companies (herein, the "Peer Group"). For 1995, the Peer Group
consists of twelve industrial companies, with regional representation and
average revenues of $2.2 billion, and twelve utilities, all of which operate
nuclear facilities, with average revenues of $3.5 billion. The utilities
included in this group are also part of the Edison Electric Institute 100
utilities ("EEI 100") index used in the Total Shareholder Return Comparison in
this proxy statement, but all of the companies in such index are not included in
the Peer Group for purposes of compensation review. The twenty-four companies in
the Peer Group were selected primarily because they are viewed as representative
of the types of companies with which NSP competes in attracting and retaining
executive officers.
The annual and long-term portions of an executive's compensation are intended to
achieve NSP's goal of aligning an executive's interests with NSP's shareholders
and with NSP performance. These portions of an executive's compensation are
placed at risk and are limited to the accomplishment of specific results that
are designed to benefit NSP's shareholders and NSP, both in the long and short
term. As a result, during years of excellent performance, executives are
provided the opportunity to earn a highly-competitive level of compensation and,
conversely, in years of below-average performance, their compensation may be
below competitive levels. Generally, higher level executive officers have a
greater level of compensation placed at risk.
In 1993, a Federal tax law was passed which limits the deductibility of
executive compensation in excess of $1,000,000 unless certain exceptions are
met. This new law will not impact NSP with respect to executive compensation
paid in 1995. Following consummation of the merger with Wisconsin Energy
Corporation, it is expected that certain of Primergy's compensation plans will
qualify for the "performance based compensation" exception to this new law.
Therefore, it is not expected that the new law will limit the deductibility of
executive compensation following the Mergers. In the interim, however, the
Committee may authorize compensation which is not deductible in limited
circumstances where it seems appropriate to do so in the overall best interest
of the Company, and consistent with the Committee's other compensation policies
described below. The Committee continues to review the structure of its salary
and various compensation programs under this federal law.
BASE PAY. The level of base pay is not directly related to the Company's
financial performance. Instead, target levels for base pay are established for
each executive officer based on the median base pay level for that position
within the Peer Group. The target level of base pay is subject to some
adjustment (15% either way) to reflect individual and corporate performance. In
deciding whether to make base pay adjustments, the Corporate Management
Committee considers the base pay target level established for each officer, the
general contribution of each officer to overall corporate performance and the
achievement level of specific annual goals established for each officer. While
individual, business area and corporate goals are considered regarding base pay
adjustments, achievement of these goals is primarily rewarded through the
Company's annual and long-term incentive programs. Generally, in 1995 base pay
levels for executive officers, including Mr. Howard, were increased in
accordance with comparable market movement as reflected within the Peer Group
and solid individual and corporate performance results during 1994. 1995 base
pay amounts for the named executives are reflected in the salary column of the
Summary Compensation Table.
ANNUAL INCENTIVE. Annual incentive awards for the executive officers are made in
accordance with the Company's Executive Incentive Compensation Plan (the
"Plan"). Under the Plan, annual incentive awards are established with target
awards (expressed as a percentage of base pay) commensurate with annual
incentive awards for the position at the median level within the Peer Group. In
1995, target awards for executive officers ranged from 25% to 45% of their base
pay. Individuals can realize from 0% to 188% of their target awards dependent on
the performance of the Company, the individual and the individual's group in
certain predetermined areas. These areas are Company financial performance
(based on EPS), customer satisfaction, service reliability, price of product,
safety and individual performance. The awards given to the CEO, the
President-NSP Generation and the Vice-President-Nuclear Generation also are
dependent on performance specifically with respect to nuclear safety. The weight
accorded particular performance areas varies by executive. Generally, financial
performance accounts for 20%-25% of an executive's target incentive award. All
of the other areas account for between 10% and 30% of the target awards. Based
on NSP and individual performance, executives received from 125% to 175% of
their targeted incentive awards in 1995. The annual awards paid during 1995 are
reflected in the bonus column of the Summary Compensation Table.
Mr. Howard's annual incentive award payout for 1995 was $400,000, as shown in
the Summary Compensation Table. The determination of this amount was based on
the criteria set forth above for the other executive officers. In particular,
Mr. Howard's target incentive award was 45% of his base pay and was based 25% on
financial performance, 10% on safety, 10% on nuclear safety, 15% on customer
satisfaction, 15% on price of product, 15% on reliability and 10% on individual
performance.
LONG-TERM INCENTIVE. Long-term incentive awards for executive officers are
determined in accordance with the Executive Long-Term Incentive Award Stock Plan
(the "LTIP") and are generally set at target levels commensurate with the median
level for the respective positions within the Peer Group. The LTIP permits the
granting of non-qualified stock options and restricted common stock to key
employees. One of the goals of the LTIP is to align key employees' long-term
interests with those of NSP's shareholders through the use of stock ownership
and long-term financial performance goals.
The Corporate Management Committee made one grant of stock options during 1995
to each of the named executive officers. Option grants are positioned at a level
which generally equates to the average grant levels awarded to executives in
comparable positions in the Peer Group. The number of shares subject to option
was not affected by the number of shares previously awarded to such executives.
These options were not exercisable until one year after their grant, and will
remain exercisable for nine years. Stock options are granted with an exercise
price of 100% of the fair market value of the stock on the date of grant to
ensure that executives can only be rewarded for appreciation in the price of the
Company's stock when the Company's shareholders are similarly benefited.
Target awards of restricted stock (measured as a percentage of base pay) are
established for each executive at levels consistent with median levels for
comparable positions within the Peer Group. In 1995, target awards ranged from
25% to 55% of the executive's base pay. Restricted stock is actually granted,
however, only if the Company achieves a certain level of financial performance,
as measured by the Company's return on common equity ("ROE") for the three year
period then ending, as compared to the three year average ROE of the EEI 100
index (the same index used for purposes of comparing shareholder return.) No
restricted stock awards are made unless the Company's three year average ROE is
at least equal to the median of the EEI 100 index, thereby prohibiting
restricted stock awards when NSP performance does not surpass the median
performance of utilities in the index. If NSP's ROE is .5% or more above the
index median, 100% of the target will be granted. Partial payout of restricted
stock will be made for ROE levels between the median and .5% above. In 1995,
NSP's ROE was .22% above the median, resulting in a payout of 86% of the target.
The stock awards are restricted so that 50 percent of the shares awarded become
available one year following the grant and the remaining 50 percent becomes
available after two years. The restricted stock awards reinforce the tie to
shareholder returns, and the restrictions encourage the retention of qualified
executives.
In 1995, Mr. Howard received an option for 15,522 shares. For 1995, Mr. Howard
also received 6,385 shares of restricted stock (58% of his base pay). These
amounts were determined as described above for other executive officers. The
terms of the options and restricted stock are the same as for other executive
officers.
OTHER BENEFITS. Other benefits provided to executives generally are not tied to
the Company's financial performance. Rather, these benefits are primarily
designed to attract and retain executives. Among the benefits provided by the
Company to its executives are contributions to the Employee Stock Ownership Plan
(at 1.36% of the individual's covered compensation - the same rate applied to
all other ESOP participants), Company paid life insurance in an amount equal to
2 times base pay and benefits provided under the NSP Deferred Compensation Plan
and the NSP Excess Benefit Plan that make up for pension benefits that can not
be paid under the Company's qualified defined benefit pension plan due to
Internal Revenue Code limitations and the exclusion of certain elements of pay
from pension-covered earnings. The level of retirement benefits provided by
these plans in the aggregate is reflected in the Pension Plan Table.
Additionally, in connection with the Merger Agreement, a meeting was held on
April 28, 1995 of a committee composed of all of the directors other than
Messrs. Howard and Theisen (now retired) (the "Merger Committee"), which was
formed to review the transactions relating to the Mergers. In the course of such
review, the Merger Committee considered the implementation of new severance
benefits for executive officers, including the named executive officers of the
Company. In accordance with the advice of a highly qualified outside consultant,
the Merger Committee adopted the NSP Senior Executive Severance Policy for the
purpose, among other reasons, of ensuring the continued and proper management of
the business of the Company during the transition period before and after the
Mergers. The Severance Policy is described in more detail under the section
below entitled "Severance Plan."
CONCLUSION. The Committee believes that the Company's executive compensation
package effectively serves the interests of the Company and its shareholders.
The balance of base pay, and annual and long-term incentives provides increased
motivation to executives to contribute to and participate in the Company's
long-term success. The Committee is dedicated to ensuring that the Company's
total compensation package continues to meet the needs of the Company and shall
monitor and revise compensation policies as necessary.
W. JOHN DRISCOLL DOUGLAS W. LEATHERDALE
DAVID A. CHRISTENSEN JOHN E. PEARSON
ALLEN F. JACOBSON 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 Edison Electric
Institute 100 utilities index (EEI 100) over the same period (assuming the
investment of $100 in each vehicle on December 31, 1990 and reinvestment of all
dividends).
CUMULATIVE 5 YEAR VALUE
[GRAPH]
TOTAL RETURN
---------------------------------------------------------------
1990 1991 1992 1993 1994 1995
------- ------- ------- ------- ------- -------
NSP $100.00 $134.66 $143.73 $151.58 $164.55 $194.65
EEI 100 $100.00 $128.87 $138.69 $154.11 $136.28 $178.55
S&P 500 $100.00 $130.39 $140.31 $154.48 $156.49 $215.17
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 YEARS OF SERVICE
COMPENSATION -------------------------------------------------------------------------
(4 YEARS) 5 10 15 20 25 30
--------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 3,500 $ 7,000 $ 10,500 $ 14,500 $ 18,000 $ 21,500
100,000 7,500 15,500 23,000 30,500 38,500 46,000
150,000 11,500 23,500 35,000 47,000 58,500 70,500
200,000 16,000 31,500 47,500 63,500 79,000 95,000
250,000 20,000 40,000 59,500 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 84,000 112,500 140,500 168,500
400,000 32,000 64,500 96,500 128,500 161,000 193,000
450,000 36,000 72,500 108,500 145,000 181,000 217,500
500,000 40,500 80,500 121,000 161,500 201,500 242,000
550,000 44,500 89,000 133,000 177,500 222,000 266,500
600,000 48,500 97,000 145,500 194,000 242,500 291,000
650,000 52,500 105,000 157,500 210,500 263,000 315,500
700,000 56,500 113,500 170,000 226,500 283,500 340,000
750,000 60,500 121,500 182,000 243,000 303,500 364,500
800,000 65,000 129,500 194,500 259,500 324,000 389,000
850,000 69,000 138,000 206,500 275,500 344,500 413,500
900,000 73,000 146,000 219,000 292,000 365,000 438,000
950,000 77,000 154,000 231,000 308,500 385,500 462,500
</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 1995, each of the executive officers named in the Summary
Compensation Table had the following credited service: Mr. Howard, 8.92 years,
Mr. Antony, 26.5 years, Mr. Johnson, 17.08 years, Mr. McIntyre, 22.83 years and
Mr. Taylor, 22.58 years.
An employment agreement with Mr. Howard provides that 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 executive officers of the Company, including the named executives, are
participants under the NSP Senior Executive Severance Policy which provides for
payment of severance benefits to any participant whose employment is terminated
after April 28, 1995, the effective date of the Policy, and the second
anniversary of the date on which the Mergers are consummated in accordance with
the Merger Agreement (or April 28, 2005, if the Mergers are not consummated), if
the participant's employment is terminated: (i) by the employer, other than for
cause, disability or retirement; (ii) as a result of the sale of a business by
the employer if the purchaser of the business does not agree to employ the
participant on the same terms and conditions as were in effect before the sale,
including comparable severance protection; (iii) or by the participant within 90
days after a reduction in his or her salary, a material and adverse diminishment
of his or her duties and responsibilities or of the program of incentive
compensation and employee benefits covering the participant, or a relocation of
the participant by more than 50 miles.
The severance benefits under the Policy consist of: (i) a cash lump sum payment
of three years' salary and annual incentive compensation; (ii) a cash lump sum
payment of the actuarial equivalent of the additional retirement benefits the
participant would have earned if he or she had remained employed for three more
years; (iii) continued medical, dental and life insurance coverage for three
years; (iv) outplacement services at a cost of not more than $30,000 or the use
of office space and support for up to one year; (v) financial planning
counseling for two years; and (vi) transfer of title of the participant's
company car, if any, at no cost to the participant. If the foregoing benefits,
when taken together with any other payments to the participant, result in the
imposition of the excise tax on excess parachute payments, then the severance
benefits will be reduced only if the reduction results in a greater after-tax
payment to the participant.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
Subject to ratification by the shareholders, the Board of Directors has
appointed Price Waterhouse LLP as independent auditors of the Company for the
year 1996. Price Waterhouse has performed this function for the Company
commencing with the fiscal year 1995. 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 APPOINTMENT OF AUDITORS.
SHAREHOLDER PROPOSAL
Yvonne Ford, 6308 Barrie Road, Edina, MN 55435, beneficial owner of 249.32
shares of NSP common stock, and John W. Harmon, 1221 39th Avenue NE, Ste 2,
Columbia Heights, MN 55421, beneficial owner of 0.5020 shares of NSP common
stock, have given notice that they intend to present for action at the Annual
Meeting the following resolution:
Shareholder Resolution on Public Image
Whereas: Radiation, a byproduct of nuclear power, is a known carcinogen;
Whereas: A recent study by Doctors Ernest R. Sternglass and J. M. Gould,
which was based in scope and on methodology they deemed appropriate, suggests
that since NSP's nuclear plants were built women living near the reactors
have experienced large increases in deaths from breast cancer while deaths
among those living elsewhere have decreased;
Whereas: In our opinion, radioactive and toxic waste from the production and use
of nuclear fuel is more often than not stored near black, Indian and poor
communities. As a result these communities bear an unfair share of risks and
threats. In our opinion, the burden on these communities is 'environmental
racism' which is a vital moral issue;
Whereas: In our opinion, these negative health and environmental effects
reflect poorly on NSP's public image and can cause undesirable effects on
shareholder equity;
Therefore be it resolved that the shareholders recommend to the Board of
Directors that NSP stop producing radioactive waste.
THE NSP BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL. LAST YEAR THIS
PROPOSAL WAS DEFEATED BY MORE THAN 94% OF THE SHARES VOTED.
The NSP Board believes that many of the assertions and the implications put
forward by this shareholder proposal are incorrect. THERE IS ABSOLUTELY NO
SCIENTIFICALLY VERIFIABLE EVIDENCE WHICH SUGGESTS ANY CORRELATION WHATSOEVER
BETWEEN BREAST CANCER AND LIVING NEAR NUCLEAR POWER PLANTS IN THE UNITED STATES.
The Minnesota Department of Health (the "MDH") recently submitted a report to
the Minnesota Legislature which was designed to duplicate and expand on all the
research done by Dr. Sternglass and his associate. In its conclusion, the MDH
stated:
The major purpose of this analysis was to respond to the allegation
that breast cancer mortality rates in counties surrounding Minnesota's
nuclear power plants had shown large and dramatic increases during the
1980s compared to the early 1980s and the 1950s . . . THIS ANALYSIS
PROVIDES A CLEAR AND UNAMBIGUOUS CONCLUSION: BREAST CANCER MORTALITY
TRENDS OVER THE PERIOD 1950-1992 IN THE TEN COUNTIES NEAR NUCLEAR POWER
PLANTS SHOW NO DISCERNIBLE DIFFERENCE FROM STATEWIDE TRENDS. THERE WERE
ALSO NO DIFFERENCES FOUND IN THE RATE OF NEWLY-DIAGNOSED BREAST CANCER
DURING THE PERIOD 1988-1992 FOR WHICH [MINNESOTA CANCER SURVEILLANCE
SYSTEM] DATA ARE AVAILABLE.
This MDH report was consistent with a prior report of the National Cancer
Institute which "found no suggestion that nuclear facilities may be linked
causally with excess deaths from leukemia or from other cancers in populations
living nearby."
In addition, implementation of the proposal would cause NSP to cease entirely
the production of nuclear power and to close NSP's nuclear facilities. NSP
estimates that the present value of the costs of complying with the proposal and
shutting down NSP's nuclear facilities would exceed $2.5 billion. While NSP
would seek to recover these costs from customers, there is no guarantee that all
such costs would be recovered. Even if these costs were recovered, the
unnecessary imposition of an estimated $2.5 billion in costs on ratepayers would
likely cause NSP to lose its position as a low-cost supplier of electricity and
could seriously impair NSP's ability to compete against other electric suppliers
in the years ahead, substantially lessening shareholder value. ACCORDINGLY, THE
NSP BOARD AND MANAGEMENT AGAIN UNANIMOUSLY RECOMMEND THAT YOU VOTE AGAINST THIS
PROPOSAL.
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.
1997 SHAREHOLDER PROPOSALS
Any proposal by a shareholder for the annual shareholder meeting in 1997 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, 1996.
Proposals received by that date will be included in the 1997 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 By order of the Board of Directors
March 15, 1996 Gary R. Johnson
Secretary
[LOGO] 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
[LOGO]
NORTHERN
STATES
POWER
COMPANY
[SYMBOL] PRINTED ON RECYCLED PAPER
ANNUAL
MEETING
OF
SHAREHOLDERS
APRIL 24, 1996
MINNEAPOLIS CONVENTION CENTER
1301 SECOND AVENUE SOUTH,
MINNEAPOLIS, MINNESOTA
NSP [LOGO] ESOP VOTING
DIRECTIVE
NORTHERN STATES POWER COMPANY
414 NICOLLET MALL, MINNEAPOLIS, MINNESOTA 55401
The undersigned hereby instructs First Trust N.A. St. Paul, Minnesota, as
Trustee of the Northern States Power Company Employee Stock Ownership Trust to
vote the shares of common stock allocated to the Account of the undersigned in
said Trust, either directly or by designation of proxies, at the Annual Meeting
of Shareholders on Wednesday, April 24, 1996 at 10 a.m., and any adjournments
thereof, as follows. IF YOU WISH TO INDICATE YOUR VOTE, PLEASE MARK AN "X" IN
THE BOXES BELOW.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.
(IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY OF THE DIRECTORS, STRIKE OUT
THE APPROPRIATE NAME(S))
1. ELECTION OF FOUR DIRECTORS IN CLASS I.
W. John Driscoll Dale L. Haakenstad John E. Pearson James J. Howard
[ ] FOR [ ] WITHHOLD
2. ELECTION OF ONE DIRECTOR FOR CLASS II.
G. M. Pieschel
[ ] FOR [ ] WITHHOLD
3. RATIFICATION OF APPOINTMENT OF PRICE WATERHOUSE AS INDEPENDENT
ACCOUNTANTS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 4.
4. SHAREHOLDER RESOLUTION ON PUBLIC IMAGE.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. IN THEIR DISCRETION TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
THIS PROXY WILL BE VOTED AS INDICATED. IF NO INDICATION IS MADE, THE PROXY WILL
BE VOTED "FOR" THE ELECTION OF DIRECTORS, "FOR" PROPOSAL 3, AND "AGAINST"
PROPOSAL 4.
(TO BE SIGNED ON OTHER SIDE)
NSP [LOGO] ESOP VOTING
DIRECTIVE
NORTHERN STATES POWER COMPANY
414 NICOLLET MALL, MINNEAPOLIS, MINNESOTA 55401
THIS VOTING DIRECTIVE IS SOLICITED BY THE BOARD OF DIRECTORS
Please sign EXACTLY as your name appears on this form.
Signature ________________________________________ Date _________________, 1996
IMPORTANT: PLEASE MAIL PROMPTLY IN THE ENCLOSED ENVELOPE TO ASSURE THAT THE
VOTING RIGHTS REPRESENTED BY THE SHARES ALLOCATED TO YOUR ACCOUNT CAN BE
EXERCISED BY THE TRUSTEE.
IF YOU PLAN TO ATTEND THE MEETING, YOU MUST COMPLETE THE ENCLOSED FORM AND
RETURN IT TO NSP BY APRIL 17, 1996.
(CONTINUED AND TO BE VOTED ON OTHER SIDE)
NSP [LOGO] PROXY FORM
NORTHERN STATES POWER COMPANY
414 NICOLLET MALL, MINNEAPOLIS, MINNESOTA 55401
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 24, 1996, at 10 a.m., and any adjournments
thereof, as follows. IF YOU WISH TO INDICATE YOUR VOTE, PLEASE MARK AN "X" IN
THE BOXES BELOW.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.
(IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY OF THE DIRECTORS, STRIKE OUT
THE APPROPRIATE NAME(S))
1. ELECTION OF FOUR DIRECTORS IN CLASS I.
W. John Driscoll Dale L. Haakenstad John E. Pearson James J. Howard
[ ] FOR [ ] WITHHOLD
2. ELECTION OF ONE DIRECTOR FOR CLASS II.
G. M. Pieschel
[ ] FOR [ ] WITHHOLD
3. RATIFICATION OF APPOINTMENT OF PRICE WATERHOUSE AS INDEPENDENT
ACCOUNTANTS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 4.
4. SHAREHOLDER RESOLUTION ON PUBLIC IMAGE.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. IN THEIR DISCRETION TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
THIS PROXY WILL BE VOTED AS INDICATED. IF NO INDICATION IS MADE, THE PROXY WILL
BE VOTED "FOR" THE ELECTION OF DIRECTORS, "FOR" PROPOSAL 3, AND "AGAINST"
PROPOSAL 4.
(TO BE SIGNED ON OTHER SIDE)
NSP [LOGO] PROXY FORM
NORTHERN STATES POWER COMPANY
414 NICOLLET MALL, MINNEAPOLIS, MINNESOTA 55401
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Please sign EXACTLY as your name(s) appear(s) on this form. Attorneys,
executors, administrators, trustees, or guardians should so indicate when
signing. For joint accounts, one joint owner may sign.
Signature ________________________________________ Date _________________, 1996
Signature ________________________________________ Date _________________, 1996
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE REVIEW
THE ENCLOSED PROXY STATEMENT, COMPLETE THIS PROXY AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED. IF YOU PLAN TO ATTEND THE MEETING, YOU MUST COMPLETE THE
ENCLOSED FORM AND RETURN IT TO NSP BY APRIL 17, 1996.
(CONTINUED AND TO BE VOTED ON OTHER SIDE)
