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:
[X] Preliminary proxy statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] 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, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
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Schedule 14A.
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(1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
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[ ] Fee paid previously with preliminary materials.
[ ] 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
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statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(4) Date filed:
[LOGO] NSP
May 19, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Northern States Power Company on Wednesday, June 25, 1997, 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, 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 SIGN 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, June 25, 1997, at 10:00 a.m., at The
Historic State Theatre, 805 Hennepin Avenue, Minneapolis, Minnesota for the
following purposes:
(1) To vote on a proposal to amend the Bylaws to decrease the minimum
number of directors from 12 to 7;
(2) To elect four directors to Class II until the Annual Meeting of
Shareholders in 2000;
(3) To ratify the appointment of Price Waterhouse, Certified Public
Accountants, as independent auditors of the Company for 1997;
(4) To vote on a shareholder proposal entitled, "Shareholder Resolution on
Public Image," if properly presented at the meeting;
(5) To vote on a shareholder proposal entitled, "Shareholder Resolution on
Conversion of Prairie Island Nuclear Plant to Natural Gas Plant," if
properly presented at the meeting; and
(6) 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 May 1, 1997, will be entitled
to notice of, and to vote at, this Annual Meeting.
Minneapolis, Minnesota By order of the Board of Directors
May 19, 1997 Gary R. Johnson
SECRETARY
PLEASE 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 May 19, 1997.
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 May 1, 1997 of each outstanding
share of NSP common stock are entitled to one vote and each outstanding share of
NSP preferred stock are 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 _______
shares of common stock, 275,000 shares of $3.60 Series Preferred Stock and
______ shares of other NSP 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 --% of the Company's common stock for the benefit of Plan
participants, none of whom has a total beneficial interest of more than --% 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 1996 on or about April 11,
1997, to all shareholders of the Company of record on April 7, 1997.
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. Upon completion of the merger contemplated by the Merger Agreement,
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
merger, 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.
PROPOSED AMENDMENT OF BYLAWS
TO DECREASE THE MINIMUM
NUMBER OF DIRECTORS
The Board of Directors has unanimously approved, subject to shareholder
approval, the amendment of Section 1 of Article 2 of the Company's Bylaws (the
"Bylaws") to provide that the size of the Board of Directors shall not be less
than seven nor more than fifteen persons, with the exact number of directors to
be determined from time to time by the Board.
The Company's Bylaws currently provide for an authorized number of directors of
not less than twelve and not more than fifteen. Due to the anticipated
retirement of three directors during 1997, the number of incumbent directors
would be reduced to nine, which is three below the minimum number authorized by
the Company's Bylaws.
Under the terms of the Merger Agreement with WEC, in addition to James J.
Howard, NSP shall designate five (5) other members to the Primergy Board of
Directors. In connection therewith, the NSP Board of Directors believes that it
would be preferable to begin to reduce the size of the NSP Board to allow an
easier transition to the Primergy board in the event of the merger with WEC.
Further, if the merger with WEC is not consummated, the Board of Directors
believes that it would be preferable to take a longer period of time to identify
and screen candidates for election to the Board and therefore, at least for the
near term, to not replace the three directors following the anticipated
retirements.
In order to reduce the number of directors in the event of the consummation of
the merger or otherwise, it is necessary to reduce the minimum authorized number
of directors by amending the Bylaws. This change would provide the Board with
more flexibility with respect to whether and when a vacancy should be filled in
the event a director resigns or retires.
For these reasons, the Board of Directors recommends that Section 1 of Article 2
of the Bylaws of the Company be amended so as to read as follows:
"ARTICLE 2.
BOARD OF DIRECTORS
Section 1. The business and affairs of the Company shall be managed by, or under
the direction of, a Board composed of seven (7) directors, which may be
increased to such greater number, not exceeding fifteen (15), as may be
determined by the Board of Directors or by shareholders in accordance with the
provisions of this Article. The number of directors shall be determined by the
Board of Directors, and if the Board fails to make such determination, then the
number may be determined by the shareholders at any annual or special meeting of
shareholders."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO
AMEND THE BYLAWS TO DECREASE THE MINIMUM NUMBER OF DIRECTORS REQUIRED TO MANAGE
THE BUSINESS OF THE COMPANY.
No reduction in the authorized number of directors will be made unless the
proposed Bylaw amendment is approved by the shareholders. The affirmative vote
of the holders of a majority of the outstanding common and preferred shares
present and entitled to vote at the meeting is required for approval of the
proposed amendment. As a result, abstentions on this proposal, which will be
counted, and broker non-votes which will not be counted, will be the equivalent
of a "no" vote.
ELECTION OF DIRECTORS
GENERAL INFORMATION
The Company's Bylaws currently 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 Annual Meeting, the following four individuals are the nominees to be
elected to the Board of Directors to serve in Class II until the Annual Meeting
of Shareholders in the year 2000 and until their successors are elected and have
qualified: Richard M. Kovacevich, Douglas W. Leatherdale, G.M. Pieschel and A.
Patricia Sampson. Each of these nominees is currently a director of the Company
whose term is scheduled to expire at this Annual Meeting.
All of the nominees have indicated a willingness to serve. Should any of the
nominees become unavailable prior to this Annual Meeting, your proxy will be
voted for such person or persons as shall be recommended by a proxy committee
appointed by the Board.
The nominees named above are expected to serve the full three-year term, except
for Mr. Pieschel, who, in accordance with the Company's retirement policy for
directors, is expected to retire during 1997. The Company's current policy is
for a director to retire upon the later to occur of age 70 or the completion or
termination of the proposed merger with WEC. Accordingly, under the current
policy, it is expected that in addition to Mr. Pieschel, Messrs. Jacobson and
Pearson will also retire during 1997.
If the proposed amendment to the Bylaws is adopted and these individuals retire,
the Board expects to reduce the number of directors to nine for the near term.
If the proposed Bylaw amendment is not adopted and these individuals retire, the
Board will elect new directors to serve the balance of the respective terms of
Messrs. Jacobson, Pearson and Pieschel.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ALL OF THE
NOMINEES NAMED BELOW.
CLASS II -- NOMINEES FOR TERMS EXPIRING IN 2000
[PHOTO]
DIRECTOR SINCE 1990
RICHARD M. KOVACEVICH, age 53, is the Chairman and Chief Executive Officer of
Norwest Corporation, in Minneapolis, a holding company for banking institutions.
Mr. Kovacevich joined Norwest Corporation as Vice Chairman of the Board and
Chief Operating Officer of the Banking Group in March 1986, became President and
Chief Operating Officer of the Norwest Corporation on January 1, 1989, became
President and Chief Executive Officer of Norwest Corporation on January 1, 1993
and assumed the additional position of Chairman on May 1, 1995.
Before joining Norwest Corporation, Mr. Kovacevich was group executive and a
member of the policy committee of Citicorp in New York. Previously, he was in
charge of Citibank USA, including its nationwide MasterCard and Visa division
and its New York City banking division.
Mr. Kovacevich holds a bachelors and a masters degree in industrial engineering
and a masters of business administration degree, all from Stanford University.
He also serves as a director of Dayton Hudson Corporation, PETsMART, Inc.,
ReliaStar Financial Corp. and The Bankers Roundtable. He also is a member of the
Federal Reserve Advisory Council, vice chairman of the board of the Greater
Minneapolis Metropolitan Housing Corporation, director and vice president of the
Walker Art Center, director and member of the executive committee of the
Minnesota Business Partnership, Inc., and member of the Advisory Council of
Stanford University Graduate School of Business.
[PHOTO]
DIRECTOR SINCE 1991
DOUGLAS LEATHERDALE, age 60, is Chairman, President and Chief Executive Officer
of The St. Paul Companies, Inc., a worldwide property and liability insurance
organization, having served in such capacity since 1990. Mr. Leatherdale joined
The St. Paul Companies in 1972 and has held numerous executive positions with
the Company, including President and Chief Executive Officer, Executive Vice
President and Senior Vice President of Finance. Before joining The St. Paul
Companies, Mr. Leatherdale was employed by the Lutheran Church of America in
Minneapolis where he served as Associate Executive Secretary on the Board of
Pensions. Prior to his four years at the Lutheran Church of America, he served
as Investment Analyst Officer at Great West Life Assurance Company in Winnipeg.
A native of Canada, Mr. Leatherdale attended United College in Winnipeg and
later completed additional studies at Harvard Business School and the University
of California-Berkeley.
Mr. Leatherdale also serves as a director of The John Nuveen Company and United
HealthCare Corporation. He is also vice chairman of the board of directors and a
trustee of Carleton College. He is a member of the Twin City Society of Security
Analysts and the Financial Executive Institute.
[PHOTO]
DIRECTOR SINCE 1978
G.M. PIESCHEL, age 70, is Chairman of the Board of Farmers & Merchants State
Bank of Springfield, Minnesota. He also holds the position of Chairman of Ochs
Brick & Tile Co., a family-owned business in Springfield. Mr. Pieschel served as
Chief Executive Officer and President of Farmers & Merchants State Bank of
Springfield from 1973 until 1993.
He received a bachelors degree and law degree from Georgetown University,
Washington, D.C., and attended the graduate school of banking at the University
of Wisconsin.
Mr. Pieschel has been active in both the American Banker's Association and
Minnesota Banker's Association (MBA), having served as President of the MBA, a
director of both organizations and on numerous councils of both organizations.
Active in the community, he has headed Springfield Industries, Inc., an
industrial development corporation, Springfield Community Hospital, Springfield
Area Health Care Foundation, Springfield Civic and Commerce Association, and the
Springfield United Fund, as well as local social and religious organizations.
He also is a director, treasurer and executive committee member of Advantage
Minnesota, a non-profit corporation marketing Minnesota for economic development
and jobs.
[PHOTO]
DIRECTOR SINCE 1985
A. PATRICIA SAMPSON, age 48, currently operates The Sampson Group, Inc., a
management development and strategic planning consulting business and continues
to serve as a consultant with Dr. Sanders and Associates, a management and
diversity consulting company. Prior to her current endeavors, Ms. Sampson served
as Chief Executive Officer of the Greater Minneapolis Area Chapter of the
American Red Cross from July 1993 until January 1, 1995. She also previously
served successively as Executive Director from October 1986 until July 1993,
Assistant Executive Director-Services (April 1985), and Assistant Manager (July
1984) of the Greater Minneapolis Area Chapter. Prior to the above, she served as
the Director of Service to Military Families and Veterans and Director of
Disaster Services for the St. Paul Area Chapter of the American Red Cross.
Mrs. Sampson received a masters degree from the University of Pennsylvania and a
bachelors degree from Youngstown State University.
She is a director on the Minnesota Women's Economic Roundtable and the Utility
Women's Conference Board. She is active in Christian education. She previously
served on the boards of the Greater Minneapolis Area United Way and the
Minneapolis Urban League.
CLASS III -- DIRECTORS WHOSE TERMS EXPIRE IN 1998
[PHOTO]
DIRECTOR SINCE 1990
H. LYMAN BRETTING, age 60, is President and Chief Executive Officer of C.G.
Bretting Manufacturing Co. in Ashland, Wisconsin. Mr. Bretting joined C.G.
Bretting Manufacturing Co., a family owned business, in 1958 and shifted the
scope of the business from repairing and manufacturing mining equipment to
manufacturing automated paper tissue, towel and napkin folding equipment.
In 1989, he was named "Wisconsin Small Business Person of the Year" and also the
nation's "Small Business Person of the Year" by President George Bush.
A graduate of the University of Notre Dame in South Bend, Indiana, Mr. Bretting
is involved in numerous community activities. He is also chairman of the board
and director of M&I National Bank of Ashland, and a director of NSP-Wisconsin, a
subsidiary of the Company, and president and director of the Ashland Foundation.
[PHOTO]
DIRECTOR SINCE 1976
DAVID CHRISTENSEN, age 62, is President, Chief Executive Officer and a director
of Raven Industries, Inc. of Sioux Falls, South Dakota, a diversified
manufacturer that supplies plastics, electronics and special apparel products to
various markets. He has been associated with Raven Industries since 1962. Before
joining Raven Industries, he worked at John Morrell & Co. and served in the U.S.
Army Corps of Engineers.
He received his bachelors degree in industrial engineering from South Dakota
State University, which later honored him with its distinguished engineer,
distinguished service, and distinguished alumni awards. He also was honored in
1993 as South Dakotan of the Year by the University of South Dakota and South
Dakota Sales and Marketing Executive of the Year.
Mr. Christensen also serves as a director of Norwest Corporation, Minneapolis;
Norwest Bank, South Dakota, N.A.; Beta Raven, Inc., St. Louis, Missouri;
Aerostar International, Inc., Sioux Falls, South Dakota; and Glassite, Inc.,
Dunnell, Minnesota.
A strong advocate for his community and state, he has served in many volunteer
activities. He is a past director of the South Dakota Symphony and Sioux Falls
Downtown Development Corp., as well as a past chairman of the Sioux Empire
United Way.
[PHOTO]
DIRECTOR SINCE 1983
ALLEN JACOBSON, age 70, retired in 1991 as Chairman of the Board and Chief
Executive Officer of Minnesota Mining and Manufacturing Company (3M). Mr.
Jacobson began his career at 3M in 1947 as a product engineer in the tape
laboratory. Following several technical and management assignments, he became
division Vice President of the Industrial Tape Division and later Executive Vice
President and General Manager of 3M Canada Ltd.
He also served as Vice President of European Operations, Vice President of 3M's
Tape and Allied Products Group and Executive Vice President of its Industrial
and Consumer Sector before being elected to the 3M board of directors in 1983
and becoming President of U.S. Operations in 1984. In 1986, he was named
Chairman of the Board and Chief Executive Officer, and served in such capacity
until his retirement.
A native of Omaha, Nebraska, Mr. Jacobson attended Creighton University and the
University of Omaha and earned a bachelors degree from Iowa State University at
Ames.
Mr. Jacobson is a member of the National Academy of Engineering. He also serves
as a director of Abbott Laboratories, Deluxe Corporation, 3M, Mobil Corporation,
Potlatch Corp., Prudential Insurance Co. of America, Sara Lee Corporation,
Silicon Graphics Inc., U.S. West, Inc. and Valmont Industries, Inc.
[PHOTO]
DIRECTOR SINCE 1980
DR. MARGARET R. PRESKA, age 59, is Distinguished Service Professor for the
Minnesota State Universities since February 1992, and serves as a Scholar in
Residence at Winona State University. She was President of Mankato State
University from 1979 until 1992. She had served as its Vice President for
Academic Affairs and Equal Opportunity Officer from 1975 until 1979 . She
previously was academic dean, instructor, assistant and associate professor of
history and government at LaVerne College in LaVerne, California.
Dr. Preska earned a bachelor of science degree at SUNY at Brockport, where she
graduated SUMMA CUM LAUDE. She earned a masters at The Pennsylvania State
University, a Ph.D. at Claremont Graduate University, and further studied at
Manchester College of Oxford University.
She is an advisory board member of Norwest Bank Minnesota South Central, N.A. in
Mankato and a member of Women Directors and Officers in Public Utilities. She is
a charter member of the board of directors of Executive Sports, Inc., a division
of Golden Bear International. She is affiliated with several organizations,
including: the Retired Presidents Association of the American Association of
State Colleges and Universities, American Council on Education, the St. Paul/
Minneapolis Committee on Foreign Relations, YWCA, Rotary Minnesota Women's
Economic Roundtable and the National Identification Program.
CLASS I -- DIRECTORS WHOSE TERMS EXPIRE IN 1999
[PHOTO]
DIRECTOR SINCE 1974
W. JOHN DRISCOLL, age 68, was associated with the Rock Island Co. in St. Paul, a
private investment company, from 1973 until his retirement as Chairman and Chief
Executive Officer in 1994. From 1978 to 1986, Mr. Driscoll was Chairman and a
director of First National Bank in Palm Beach, Florida. In 1967, he was a
co-founder of the Minnesota North Stars National Hockey League team and served
as its Chairman until 1978. Earlier, he was General Manager of the Rock Island
Corp., a retail lumber, wood millwork and particle board manufacturer and
distributor, and worked in sales and sales management for the Weyerhaeuser Co.,
a wood products firm.
He earned a bachelors degree at Yale University. He served in the Marine Corps
from 1951 to 1954, which included a tour of duty in Korea.
Mr. Driscoll also serves as a director of Comshare, Inc., The John Nuveen
Company, The St. Paul Companies, Inc., and Weyerhaeuser Co.
Also active in the community, he is a former chairman of the Northwest Area
Foundation; former chairman and a life trustee of the Minneapolis Society of
Fine Arts; a former chairman and honorary trustee of Macalester College, St.
Paul; and a trustee and former president of the Minnesota Landscape Arboretum
Foundation.
[PHOTO]
DIRECTOR SINCE 1978
DALE HAAKENSTAD, age 69, retired in 1989 as President and Chief Executive
Officer at Western States Life Insurance. He began his career there in 1949,
became Executive Vice President and Actuary in 1963, President in 1968, Chairman
and Chief Executive Officer in 1981 and, in 1986, President and Chief Executive
Officer.
Mr. Haakenstad attended North Dakota State University at Fargo and earned a
bachelors degree from the University of Michigan.
Mr. Haakenstad serves the Red River Valley community as trustee and committee
chairman of the North Dakota State University Development Foundation. He is also
a director of the Pelican Group of Lakes Improvement District. His professional
associations include the American Council of Life Insurance, Society of
Actuaries and American Academy of Actuaries.
[PHOTO]
DIRECTOR SINCE 1987
JAMES J. HOWARD, age 61, is Chairman, President and Chief Executive Officer of
NSP and has served in such capacity since December 1, 1994. From 1990 until
December 1, 1994, he served as Chairman and CEO. Jim Howard joined NSP as Chief
Executive Officer on February 1, 1987, following a career in telecommunications.
The Board of Directors elected him Chairman effective March 1, 1988.
Before moving to NSP, Mr. Howard was President and Chief Operating Officer of
Ameritech, the Chicago-based parent of the Bell companies that serve Illinois,
Indiana, Michigan, Ohio and Wisconsin. He joined Pennsylvania Bell in 1957 after
earning a bachelors degree from the University of Pittsburgh. In 1969, he
accepted a Sloan Fellowship to the Massachusetts Institute of Technology, where
he received a masters degree.
Mr. Howard is also a director of the Federal Reserve Bank of Minneapolis;
Honeywell, Inc., Minneapolis; the Jeremiah Program; Capital City Partnership;
Minnesota Center for Corporate Responsibility; the Danny Thompson Memorial
Leukemia Foundation; Walgreen Co., Deerfield, Illinois; Ecolab, St. Paul; and
ReliaStar Financial Corp., Minneapolis.
Mr. Howard serves the community as a director of the Minnesota Business
Partnership and the United Way of Minneapolis Area.
He is also a member of the Board of Trustees of the University of St. Thomas,
St. Paul and the Board of Visitors of the University of Pittsburgh, Joseph M.
Katz Graduate School of Business.
Mr. Howard is former chairman and a board member of the Edison Electric
Institute and chairman of the Nuclear Energy Institute.
[PHOTO]
DIRECTOR SINCE 1983
JOHN E. PEARSON, age 70, is a retired Chairman of Northwestern National Life
Insurance Co. and NWNL Cos., Inc. in Minneapolis. Mr. Pearson was associated
with Northwestern National Life Insurance Company continuously since 1953, when
he joined the company in the group sales area, until his retirement in January
1992.
He was elected Vice President in 1966 and Senior Vice President for Marketing in
1971. He became President and was elected to the NWNL Board of Directors in
1975. In 1977, he was named Chief Executive Officer. He was elected Chairman as
well as President and Chief Executive Officer in 1981 and became Chairman and
Chief Executive in 1983. In 1989, Northwestern National Life Insurance Company
became a wholly-owned subsidiary of The NWNL Companies, Inc. Mr. Pearson was
Chairman and Chief Executive Officer of The NWNL Companies, Inc., as well as of
Northwestern National Life.
Mr. Pearson is a director of the Minneapolis Foundation and a regent of St. Olaf
College. He is a former director of the American Council of Life Insurers and
the Health Insurance Association of America, and former chairman of the United
Way of the Minneapolis Area, Greater Minneapolis Metropolitan Housing
Corporation and the Minnesota Private College Council Fund.
He attended Gustavus Adolphus College in St. Peter, Minnesota, and Northwestern
University in Evanston, Illinois, and received a bachelors degree in business
administration from the University of Minnesota.
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 responsibility 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 3 meetings during 1996.
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 responsibility for overseeing internal and external
audit activities. In performing these functions, the Committee reviews auditing
activities by internal and external auditors; financial reporting, internal
controls and accounting policies and practices; 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 1996.
THE POWER SUPPLY COMMITTEE has responsibility 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 1996.
THE FINANCE COMMITTEE has responsibility for oversight and recommendations
regarding the financial management of the Company. In performing these
functions, the Committee oversees 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 1996.
DIRECTOR MEETINGS
There were 8 meetings of the Board of Directors in 1996. Each director attended
at least 78.5% of the total number of meetings of the Board and Committees on
which such director served during 1996.
DIRECTOR COMPENSATION
Employees of the Company receive no separate compensation for service as a
director. 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. 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.
In addition, to more closely align directors' interests with those of NSP's
shareholders, a Stock Equivalent Plan for Non-employee Directors was established
in 1996. Under that Plan, directors receive an annual award of stock equivalent
units with each unit having a value equal to one share of Common Stock of the
Company. Stock equivalent units do not entitle a director to vote and are only
payable in cash upon a director's termination in service. The stock equivalent
units fluctuate in value as the value of Common Stock of the Company fluctuates.
Additional stock equivalent units are accumulated upon the payment of and at the
same value as dividends declared on Common Stock of the Company. On April 25,
1996, non-employee directors received an award of 107 stock equivalent units
totaling approximately $5,000 in cash value. Additional stock equivalent units
were accumulated during 1996 as dividends were paid on Common Stock of the
Company. The number of stock equivalents for each non-employee director is
listed in the Share Ownership chart which follows.
SHARE OWNERSHIP OF DIRECTORS, NOMINEES AND NAMED EXECUTIVE OFFICERS
The following table lists the beneficial ownership of NSP Common Stock owned as
of March 1, 1997, by (i) the Company's directors and nominees, (ii) the
executive officers named in the Summary Compensation Table that follows and
(iii) all the directors and executive officers of the Company as a group. None
of these individuals own any shares of NSP Preferred Stock.
<TABLE>
<CAPTION>
ACQUIRABLE
STOCK WITHIN RESTRICTED
NAME OF BENEFICIAL OWNER COMMON STOCK EQUIVALENTS(1) 60 DAYS(2) STOCK TOTAL
- ------------------------ ------------ -------------- ---------- ----- -----
<S> <C> <C> <C> <C> <C>
H. Lyman Bretting 1,416 112 -- -- 1,528
David A. Christensen 500 112 -- -- 612
W. John Driscoll 2,000 112 -- -- 2,112
Dale L. Haakenstad 741 112 -- -- 853
James J. Howard 25,426 -- 98,360 13,710 137,497
Allen F. Jacobson 712 112 -- -- 824
Richard M. Kovacevich 1,000 112 -- -- 1,112
Douglas W. Leatherdale 300 112 -- -- 412
John E. Pearson 1,519 112 -- -- 1631
G. M. Pieschel 767 112 -- -- 879
Margaret R. Preska 600 112 -- -- 712
A. Patricia Sampson 410 112 -- -- 522
Douglas D. Antony(3) 5,162 -- 17,927 2,785 25,874
Gary R. Johnson 1,684 -- 23,971 2,768 28,423
Edward J. McIntyre 9,147 -- 32,610 3,114 44,871
Loren L. Taylor 5,490 -- 20,070 2,785 28,346
Directors and executive
officers as a group 85,033 1,232 285,539 36,769 401,341
</TABLE>
(1) Represents stock units awarded under the Stock Equivalent Plan for
Non-employee Directors as of March 1, 1997.
(2) Represents exercisable options and performance units under the Executive
Long-Term Incentive Award Stock Plan as of March 1, 1997. Options to
purchase Common Stock of the Company which are exercisable within the next
60 days are 96,363 option shares for Mr. Howard, 17,713 option shares for
Mr. Antony, 23,656 option shares for Mr. Johnson, 31,972 option shares for
Mr. McIntyre and 19,834 option shares for Mr. Taylor. The number of shares
that would have been payable upon the exercise of performance units on
March 1, 1997 are: 1,997 for Mr. Howard, 214.007 for Mr. Antony, 315.128
for Mr. Johnson, 637.793 for Mr. McIntyre and 236.495 for Mr. Taylor.
(3) Mr. Antony has resigned from the Company effective February 3, 1997.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth cash and noncash compensation for each of the
last three fiscal years ended December 31, 1996, 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.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
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) 1996 622,000 401,000 7,610 478,940 15,264 0 20,056
Chairman, President & 1995 565,000 400,000 8,476 328,830 15,522 0 5,930
Chief Executive Officer 1994 511,300 317,800 3,504 240,311 15,150 0 9,056
EDWARD J. MCINTYRE 1996 241,000 105,000 985 108,450 4,968 0 4,378
Vice President & Chief 1995 222,000 102,000 3,165 75,369 5,123 0 3,274
Financial Officer 1994 205,600 102,700 2,465 61,680 5,117 0 6,438
LOREN L. TAYLOR 1996 215,000 84,000 1,312 96,750 4,432 0 5,201
President, NSP Electric 1995 200,000 93,000 2,008 67,900 4,615 0 10,763
1994 174,583 55,000 1,046 40,942 3,455 0 3,166
DOUGLAS D. ANTONY(7) 1996 215,000 111,000 900 96,750 4,432 0 6,504
President, 1995 200,000 107,000 1,025 67,900 4,615 0 2,290
NSP Generation 1994 163,893 75,100 1,025 41,837 2,942 0 4,419
GARY R. JOHNSON 1996 214,000 86,000 1,074 96,300 4,411 0 7,124
Vice President, General 1995 198,000 89,000 1,074 67,221 4,569 0 2,422
Counsel and 1994 183,600 81,700 9,945 55,080 4,570 0 3,672
Corporate 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 1996 under the Company's LTIP were granted on
January 22, 1997 based on the performance period ending September 30, 1996.
As of December 31, 1996, the named executives held the following as a
result of grants under the LTIP: Mr. Howard held 9,543 restricted shares at
a market value of $437,785; Mr. McIntyre held 2,266 restricted shares at a
market value of $103,952; Mr. Antony held 1,877 restricted shares at a
market value of $86,107; Mr. Taylor held 1,866 restricted shares at a
market value of $85,636 and Mr. Johnson held 2,022 restricted shares at a
market value of $92,759. 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. Regular 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, 1996, had a market value of $56,626. These
additional shares vested with respect to 50% of the shares since Mr. Antony
had been continually employed by the Company on October 26, 1996. The
remainder of the shares were forfeited on February 3, 1997 due to Mr.
Antony's resignation from the Company prior to October 26, 1998, the date
on which the remainder would have vested.
The total number of restricted shares awarded during the years 1994, 1995
and 1996 are as follows: 14,540 shares for Mr. Howard, 3,613 shares for Mr.
McIntyre, 4,817 shares for Mr. Antony, 2,637 shares for Mr. Taylor and
3,146 shares for Mr. Johnson.
(4) The Company had no LTIP payouts in 1996.
(5) This column consists of the following: $1,812.89 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 1.20% 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: $14,233 for Mr. Howard, $617 for Mr. McIntyre, $3,093
for Mr. Johnson, $0 for Mr. Taylor and $3,112 for Mr. Antony (these figures
show an increase over prior years for all of the named executive officers,
except Mr. Taylor, due to a change in the methodology used by Mullin
Consulting, Inc. for determining the actuarial estimate of the annual value
of each named executive's interest in the Officer Survivor Benefit Plan
life insurance policy); imputed income as a result of life insurance paid
by the Company on behalf of each named executive: $3,110 for Mr. Howard,
$453 for Mr. McIntyre, $548 for Mr. Johnson, $0 for Mr. Taylor and $679 for
Mr. Antony; Company matching 401(k) plan contribution of $900 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 $0 for Mr. Howard, $595
for Mr. McIntyre, $770 for Mr. Johnson, $2,488 for Mr. Taylor and $0 for
Mr. Antony.
(6) Effective as of the completion of the Mergers, Mr. Howard has entered into
an employment agreement with Primergy Corporation pursuant to which he will
serve as the Chairman and Chief Executive Officer of Primergy for a
specified period and will thereafter serve only as Chairman of the Board.
Mr. Howard will receive an annual base salary, short-term and long-term
incentive compensation (including stock options and restricted stock) and
supplemental retirement benefits no less than he received before the
completion of the Mergers, as well as life insurance providing a death
benefit of three times his annual base salary. Mr. Howard also will be
entitled to retirement and welfare benefits on the same basis as other
executives, and certain fringe benefits.
(7) Mr. Antony has resigned from the Company effective February 3, 1997.
OPTIONS AND STOCK APPRECIATION RIGHTS (SARS)
The following table indicates for each of the named executives (i) the extent to
which the Company used stock options and SARs for executive compensation
purposes in 1996 and (ii) the potential value of such options and SARs as
determined pursuant to the SEC rules.
<TABLE>
<CAPTION>
OPTIONS AND SARS GRANTED IN 1996
- ---------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ------------------------------------------------------------------------- -----------------------
(a) (b) (c) (d) (e) (f) (g)
% OF TOTAL
OPTIONS AND
OPTIONS/ SARS EXERCISE
SARS GRANTED TO OR BASE
GRANTED(1) EMPLOYEES PRICE EXPIRATION
NAME (#) IN 1996 ($/Sh) DATE 5%($)(2) 10%($)(2)
- ----------- -------------- ----------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
J. Howard 15,264 options 5.80% 50.9375 1/24/06 488,972 1,239,151
E. McIntyre 4,968 options 1.89% 50.9375 1/24/06 159,147 403,308
G. Johnson 4,411 options 1.68% 50.9375 1/24/06 141,303 358,091
L. Taylor 4,432 options 1.68% 50.9375 1/24/06 141,976 359,795
D. Antony 4,432 options 1.68% 50.9375 1/24/06 141,976 359,795
</TABLE>
(1) Options were granted on January 24, 1996 and vested on January 24, 1997. No
SARs were awarded for 1996.
(2) 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, 1996.
<TABLE>
<CAPTION>
AGGREGATED OPTION AND SAR EXERCISES IN 1996
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 12/31/96 OPTIONS AND SARS AT
ACQUIRED ON REALIZED (#) -- EXERCISABLE (EX)/ 12/31/96 ($) -- EXERCISABLE (EX)/
NAME EXERCISE(#) VALUE($) UNEXERCISABLE (UNEX) UNEXERCISABLE (UNEX)*
- ----------- ----------- -------- ---------------------------- ---------------------------------
<S> <C> <C> <C> <C>
J. Howard N/A N/A 83,095 (ex) 451,498 (ex)
15,264 (unex) -- (unex)
E. McIntyre N/A N/A 27,641 (ex) 148,186 (ex)
4,968 (unex) -- (unex)
G. Johnson N/A N/A 19,698 (ex) 74,951 (ex)
4,411 (unex) -- (unex)
L. Taylor N/A N/A 15,743 (ex) 55,545 (ex)
4,432 (unex) -- (unex)
D. Antony N/A N/A 13,495 (ex) 49,839 (ex)
4,432 (unex) -- (unex)
</TABLE>
- ---------------------------
*Share price on December 31, 1996 was $45.875. Unexercisable options were
granted on January 24, 1996 at a price of $50.9375. No SARs were granted in
1996.
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 1996 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 1996 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 (the "Peer Group"). For 1996, the Peer Group consisted
of twelve industrial companies, with regional representation and average
revenues of $2.3 billion, and twelve utilities, all of which operate nuclear
facilities, with average revenues of $3.6 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. Compensation increases that reflected market levels of compensation and the
regular operation of the Company's incentive plans, fully described below,
caused Mr. Howard's 1996 compensation to become partially taxable under this
law. 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 Federal law. Therefore, it is
not expected that this law will limit the deductibility of executive
compensation following the merger. 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 1996 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 1995. The 1996
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 comparable positions at the median level within the Peer
Group. In 1996, 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% to 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 120% to 173%
of their targeted incentive awards in 1996. The annual awards paid during 1996
are reflected in the bonus column of the Summary Compensation Table.
Mr. Howard's annual incentive award payout for 1996 was $401,000, 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 "Long-Term Plan") and are generally set at target levels commensurate with
the median level for comparable positions within the Peer Group. The Long-Term
Plan permits the granting of non-qualified stock options and restricted common
stock to key employees. One of the goals of the Long-Term Plan 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 1996
to each of the named executive officers. Option grants are positioned at a level
which generally equate 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 1996, actual awards ranged from
32% to 77% 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 0.5% 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 0.5% above. For the
1996 performance period, NSP's ROE was 1.07% of the median, resulting in a
payout of 129% of the target award. The stock awards are restricted so that 50%
of the shares awarded become available one year following the grant and the
remaining 50% 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 1996, Mr. Howard received an option for 15,264 shares. For 1996, Mr. Howard
also received 10,096 shares of restricted stock (77% 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 1.20% 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.
Executive officers, including the named executive officers, may receive
severance benefits in accordance with the NSP Senior Executive Severance Policy,
which is described in more detail under the section below entitled "Severance
Arrangements."
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, the Edison Electric Institute
100 utilities index (EEI 100), and the Edison Electric Institute Combination Gas
and Electric index (EEI G&E) over the same period (assuming the investment of
$100 in each vehicle on December 31, 1991 and reinvestment of all dividends).
CUMULATIVE 5 YEAR VALUE
[PLOT POINTS GRAPH OMITTED]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NSP.............................. $100.00 $106.73 $112.56 $122.20 $144.55 $142.94
EEI 100.......................... $100.00 $107.59 $119.58 $105.74 $138.55 $140.22
EEI Combination Gas & Electric... $100.00 $110.24 $123.10 $107.25 $136.60 $135.74
S&P 500.......................... $100.00 $107.50 $118.14 $119.68 $164.56 $202.57
</TABLE>
The Company has elected to add the EEI G&E index to this return comparison so
that the Company's performance can be analyzed against other companies which
operate both electric and gas services, as does the Company. The EEI G&E index
consists of 40 companies, which are all included in the EEI 100 index of
companies. The remainder of the companies in the EEI 100 index offer electric
operations only, but provide a broader measure of industry performance.
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 $ 14,000 $ 18,000 $ 21,500
100,000 7,500 15,500 23,000 30,500 38,000 46,000
150,000 11,500 23,500 35,000 47,000 58,500 70,500
200,000 16,000 31,500 47,500 63,000 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 96,500 128,500 160,500 193,000
450,000 36,000 72,500 108,500 145,000 181,000 217,500
500,000 40,500 80,500 121,000 161,000 201,500 242,000
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 52,500 105,000 157,500 210,000 263,000 315,500
700,000 56,500 113,500 170,000 226,500 283,000 340,000
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 77,000 154,000 231,000 308,000 385,500 462,500
1,000,000 81,000 162,500 243,500 324,500 405,500 487,000
wage base: $62,700
</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 1996, each of the executive officers named in the Summary
Compensation Table had the following credited service: Mr. Howard, 9.92 years,
Mr. Antony, 27.5 years, Mr. Johnson, 18.08 years, Mr. McIntyre, 23.83 years and
Mr. Taylor, 23.58 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 ARRANGEMENTS
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 merger is consummated in accordance with
the Merger Agreement (or April 28, 2005, if the merger is 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.
Upon his resignation and in exchange for his agreement to a three year
non-competition period, Mr. Antony received benefits generally comparable to the
severance benefits payable under the NSP Senior Executive Severance Policy
described above. The Company has valued the benefits received by Mr. Antony at
$1,263,907.
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 1997. 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 PROPOSALS
Yvonne Ford, 6308 Barrie Road, Edina, MN 55435, beneficial owner of shares of
NSP common stock, and John W. Harmon, 1221 39th Avenue NE, Ste 2, Columbia
Heights, MN 55421, beneficial owner of 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 85% 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.
Marlys Weber, 4657 Colfax Avenue South, Minneapolis, MN 55409, beneficial owner
of ______ shares of NSP common stock, and Bruce Drew, 4425 Abbott Avenue South,
Minneapolis, MN 55410, beneficial owner of ______ 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 Conversion of Prairie Island
Nuclear Plant to Natural Gas Plant
Whereas: The Prairie Island plant occupies a vital location in the power grid of
NSP, and is important to the local and state economy as well as to NSP's
shareholders;
Whereas: The continued operation and repair of steam generators at the Prairie
Island Nuclear plant has resulted in high maintenance and facility costs to NSP;
Whereas: The inventory of spent nuclear fuel continues to increase through
nuclear power operation, and as a result, continues to cause storage issues with
the local community as well as the state of Minnesota;
Whereas: NSP has successfully converted the Pathfinder plant in South Dakota
from a nuclear power facility to a natural gas power facility;
Whereas: Electricity produced from natural gas can be more cost effective with
lower maintenance and waste costs than electricity produced with nuclear
reactors;
Therefore be it resolved that the shareholders recommend that the Board of
Directors commission a study of the economic feasibility of converting the
Prairie Island Nuclear Power Plant to a natural gas power plant, and make
available to shareholders such a study with recommendations of Board actions
before the next annual meeting.
THE NSP BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE AGAINST THIS
PROPOSAL.
No formal study is needed to conclude that the conversion of the Prairie Island
Nuclear Generating Plant to a natural gas plant would not be economically
feasible for your Company.
The Company estimates that it would incur in excess of $500 million in capital
costs to convert the Prairie Island plant facilities to a natural gas facility.
During the conversion process, the cost of replacement power could be as high as
$200 million per year. Following the conversion, the Company estimates that it
would incur more than $100 million annually to supply fuel to a converted
facility -- that's more than 3 times the current annual cost of fuel to Prairie
Island. Other costs likely would be incurred due to the advancement of
decommissioning of the nuclear portions of the plant, the acceleration of
depreciation expenses and ongoing spent fuel management expenses.
The Company has successfully converted its Pathfinder Plant to a fossil fuel
plant. The Pathfinder Plant had previously operated as a nuclear plant from 1964
until 1967, after which it was converted to an oil and gas-fired plant. However,
there are great differences between the Pathfinder facility and Prairie Island.
First of all, Pathfinder was converted at the end of its useful life; therefore,
the economic feasibility was much more favorable for conversion of that plant
than for a premature Prairie Island conversion. Second, Pathfinder was a small
facility with a maximum capacity output of 90 megawatts; thus, it was much more
cost effective to replace that plant's small capacity output with natural gas.
Since conversion, Pathfinder has been used as a "peaking" facility to supply
extra capacity when needed. Pathfinder operates annually at less than 1 percent
of the total available hours to produce this peak capacity. Prairie Island, on
the other hand, is a "baseload" facility, fundamental to NSP's total energy
output. Prairie Island operates in excess of 90% of available hours on an annual
basis, with a total output of 1100 megawatts. The replacement of Prairie
Island's baseload capacity would require approximately 67 MILLION mcf of natural
gas per year -- that's more than 15-20% of the total annual gas usage in the
state of Minnesota, as compared to an annual 50 THOUSAND mcf of natural gas used
at the Pathfinder plant per year.
The Prairie Island Nuclear Generating facility is indeed vital to the total
energy output at your Company. In 1996, Prairie Island supplied 24% of the
Company's total energy (versus only .003% for the Pathfinder plant). And, while
storage of nuclear spent fuel from our nuclear operations remains an issue, your
Company continues to lead the way to finding a permanent solution and to look
for interim alternatives until a permanent solution is found. The costs of
maintaining Prairie Island, including its steam generators, have been diligently
managed to avoid large expenses over the plant's life. Further, even with those
maintenance costs, Prairie Island has proven to be one of the lowest cost
producers in the U.S., as confirmed by the September 1996 Utility Data
Institute's report on the 1995 Production Costs Operating Steam-Electric Plants.
While it is technically feasible to convert a nuclear facility into a natural
gas facility and while it generally may be more cost effective to construct a
NEW gas facility than it is to construct a NEW nuclear plant, your Company's
management believes that it is not more cost effective to change an existing,
well-managed nuclear facility, like Prairie Island, to a natural gas plant.
Information compiled by the Utility Data Institute supports this position,
showing that based on 1995 data, combined fuel, maintenance and operational
expenses for a U.S. nuclear plant were only $19.23 per megawatt hour (MWhr), as
compared to $26.80 per MWhr for a gas plant. (September 1996 Utility Data
Institute's report on the 1995 Production Costs Operating Steam-Electric
Plants). What's more, Prairie Island's production costs are well below that
national average, with production expenses during 1996 totaling only $13.60 per
MWhr.
The bottom line is if we burden the Prairie Island plant with the additional
costs of a conversion to natural gas, the plant will no longer be cost
competitive. As described above, the premature conversion of Prairie Island
would unnecessarily increase costs by hundreds of millions of dollars annually.
A premature conversion of Prairie Island would likely cause NSP to lose its
position as a low-cost supplier of electricity and could seriously impair the
Company's ability to compete against other electric suppliers in the years
ahead, substantially lessening shareholder value. Therefore, based on what is
presently known about the costs to the Company to convert Prairie Island, a
commissioned study is not necessary to conclude that such a conversion would not
be economically feasible for this Company.
AGAIN, THE NSP BOARD AND MANAGEMENT URGE YOU TO VOTE "NO" ON 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 and the two
shareholder proposals each 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.
1998 SHAREHOLDER PROPOSALS
Any proposal by a shareholder for the annual shareholder meeting in 1998 must be
received by the Secretary of the Company at 414 Nicollet Mall, Minneapolis,
Minnesota 55401, not later than the close of business on .
Proposals received by that date will be included in the 1998 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
May 19, 1997 Gary R. Johnson
SECRETARY
[LOGO] NSP NORTHERN STATES POWER COMPANY PROXY FORM
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 ______________, 1997
Signature _________________________________________ Date ______________, 1997
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 SIGN THE FORM
BELOW AND RETURN IT TO NSP BY JUNE 13, 1997.
(CONTINUED AND TO BE VOTED ON OTHER SIDE)
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[LOGO] NSP 1997 ANNUAL MEETING GUIDELINES
In the interest of an orderly and constructive meeting, the following guidelines
will apply for NSP's Annual Meeting of Shareholders on Wednesday, June 25, 1997
at 10:00 a.m. at The Historic State Theatre, 805 Hennepin Avenue, Minneapolis,
Minnesota.
1. To gain entrance to the meeting, you must present an admission ticket or
evidence of ownership of NSP stock. To obtain an admission ticket, complete
the request form below and return it to NSP by June 13, 1997.
2. You will be required to pass through a metal detector similar to those at
airports. Briefcases, purses and parcels will be examined. The use of
cameras or sound recording equipment is prohibited, except those employed
by the Company to provide a record of the proceedings.
3. The business of the meeting is set forth in the Proxy Statement and will be
published on an Agenda that you will receive at the meeting. Whether or not
you plan to attend the meeting, please sign, date and return the proxy form
in the envelope provided. If you wish to change your vote or have not voted
by proxy, a ballot will be distributed to you at the meeting.
4. Time has been reserved at the end of the meeting for shareholder questions
that relate to the business of the Company. If you want to speak, please go
to the nearest microphone, state your name and confirm that you are a
shareholder before asking your question. Please direct all questions to the
Chairman. Questions from the floor are limited to three minutes to provide
an opportunity for as many shareholders as possible.
5. Although personal grievances and claims are not appropriate subjects for
the meeting, you may submit any grievance or claim in writing to any usher
or Company representative, and the Company will respond as soon as possible
after the meeting.
6. The Chairman in his sole discretion shall have authority to conduct the
meeting and rule on any questions or procedures that may arise.
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[LOGO] NSP
NORTHERN STATES POWER COMPANY ANNUAL MEETING ADMISSION AND
414 NICOLLET MALL, MINNEAPOLIS, MINNESOTA 55401 PARKING TICKET REQUEST FORM
IMPORTANT: You must sign this request form and return it to NSP by June 13, 1997
if you plan to attend the 1997 Annual Meeting. We will send you the Admission
Ticket for the Meeting and a Parking Ticket with directions and parking
instructions.
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IMPORTANT: THIS FORM WILL BE USED AS THE RETURN-MAILER FOR YOUR
ADMISSION AND PARKING TICKETS.
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I (We) will attend NSP's Annual Meeting, and have read and understand the
Meeting Guidelines and security procedures.
Signature _________________________________________ Date ______________, 1997
Signature _________________________________________ Date ______________, 1997
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[LOGO] NSP NORTHERN STATES POWER COMPANY PROXY FORM
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, June 25, 1997, 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.
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YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2, AND 3.
1. TO VOTE ON A PROPOSAL TO AMEND THE BYLAWS TO DECREASE THE MINIMUM NUMBER OF
DIRECTORS FROM 12 TO 7. [ ] FOR [ ] AGAINST [ ] ABSTAIN
2. ELECTION OF FOUR DIRECTORS IN CLASS II. (If you wish to withhold authority
to vote for any of the Directors, strike out the appropriate name(s)):
Richard M. Kovacevich Douglas W. Leatherdale G.M. Pieschel
A. Patricia Sampson [ ] FOR [ ] WITHHOLD
3. RATIFICATION OF APPOINTMENT OF PRICE WATERHOUSE AS INDEPENDENT ACCOUNTANTS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSALS 4 AND 5.
4. SHAREHOLDER RESOLUTION ON PUBLIC IMAGE.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. SHAREHOLDER RESOLUTION ON CONVERSION OF PRAIRIE ISLAND NUCLEAR PLANT TO
NATURAL GAS PLANT. [ ] FOR [ ] AGAINST [ ] ABSTAIN
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6. 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" PROPOSALS 1, 2, AND 3, AND "AGAINST" PROPOSALS 4 AND 5.
(To be signed on other side)
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[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 _____________, 1997
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 SIGN THE FORM BELOW AND RETURN IT TO
NSP BY JUNE 13, 1997.
(CONTINUED AND TO BE VOTED ON OTHER SIDE)
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[LOGO]
1997 ANNUAL MEETING GUIDELINES
In the interest of an orderly and constructive meeting, the following guidelines
will apply for NSP's Annual Meeting of Shareholders on Wednesday, June 25, 1997
at 10:00 a.m. at The Historic State Theatre, 805 Hennepin Avenue, Minneapolis,
Minnesota.
1. To gain entrance to the meeting, you must present an admission ticket or
evidence of ownership of NSP stock. To obtain an admission ticket, complete
the request form below and return it to NSP by June 13, 1997.
2. You will be required to pass through a metal detector similar to those at
airports. Briefcases, purses and parcels will be examined. The use of cameras
or sound recording equipment is prohibited, except those employed by the
Company to provide a record of the proceedings.
3. The business of the meeting is set forth in the Proxy Statement and will be
published on an Agenda that you will receive at the meeting. Whether or not
you plan to attend the meeting, please sign, date and return the proxy form
in the envelope provided. If you wish to change your vote or have not voted
by proxy, a ballot will be distributed to you at the meeting.
4. Time has been reserved at the end of the meeting for shareholder questions
that relate to the business of the Company. If you want to speak, please go
to the nearest microphone, state your name and confirm that you are a
shareholder before asking your question. Please direct all questions to the
Chairman. Questions from the floor are limited to three minutes to provide an
opportunity for as many shareholders as possible.
5. Although personal grievances and claims are not appropriate subjects for the
meeting, you may submit any grievance or claim in writing to any usher or
Company representative, and the Company will respond as soon as possible
after the meeting.
6. The Chairman in his sole discretion shall have authority to conduct the
meeting and rule on any questions or procedures that may arise.
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[LOGO]
NORTHERN STATES POWER COMPANY ANNUAL MEETING ADMISSION AND
414 NICOLLET MALL, MINNEAPOLIS, MINNESOTA 55401 PARKING TICKET REQUEST FORM
IMPORTANT: Because of limited seating capacity at the Annual Meeting, employees
are urged to forego attending so that other shareholder groups may attend.
However, if you want to attend the meeting, the time away from your work would
be personal time. In keeping with Company policy you must obtain your
supervisor's permission to take a Vacation or MAT day. To request an Admission
Ticket and Parking Ticket, please print your name and address below. The form
needs to be signed by you and also by your supervisor as indicated. Return the
completed form to NSP by June 13, 1997 if you plan to attend the 1997 Annual
Meeting. We will send you the Admission Ticket for the Meeting and a Parking
Ticket with directions and parking instructions.
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IMPORTANT: THIS FORM WILL BE USED AS THE RETURN-MAILER FOR YOUR
ADMISSION AND PARKING TICKETS.
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I (We) will attend NSP's Annual Meeting, and have read and understand the
Meeting Guidelines and security procedures.
Signature of ESOP Participant______________________________ Date _______, 1997
Signature of Supervisor____________________________________ Date _______, 1997
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[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, June 25, 1997, 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.
1. TO VOTE ON A PROPOSAL TO AMEND THE BYLAWS TO DECREASE THE MINIMUM NUMBER OF
DIRECTORS FROM 12 TO 7.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. ELECTION OF FOUR DIRECTORS IN CLASS II. (If you wish to withhold authority
to vote for any of the Directors, strike out the appropriate name(s)):
Richard M. Kovacevich Douglas W. Leatherdale
G.M. Pieschel A. Patricia Sampson
[ ] FOR [ ] WITHHOLD
3. RATIFICATION OF APPOINTMENT OF PRICE WATERHOUSE AS INDEPENDENT ACCOUNTANTS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSALS 4 AND 5.
4. SHAREHOLDER RESOLUTION ON PUBLIC IMAGE.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. SHAREHOLDER RESOLUTION ON CONVERSION OF PRAIRIE ISLAND NUCLEAR PLANT TO
NATURAL GAS PLANT.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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6. 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" PROPOSALS 1, 2, AND 3, AND "AGAINST" PROPOSALS 4 AND 5.
(TO BE SIGNED ON OTHER SIDE)
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