<PAGE>
================================================================================
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 [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SIERRA PACIFIC RESOURCES
- - --------------------------------------------------------------------------------
(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.
[_] 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 transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] 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 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:
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Notes:
<PAGE>
[LETTERHEAD OF PACIFIC RESOURCES]
WALTER M. HIGGINS
Chairman of the Board, President
and Chief Executive Officer April 11, 1997
To Our Stockholders:
On behalf of the Board of Directors, I am pleased to invite you to attend
the 1997 Annual Meeting of the Stockholders of Sierra Pacific Resources, which
will be held at 10:00 a.m., local time, on Friday, May 16, 1997, at the Reno
Hilton Hotel, 2500 East Second Street, Reno, Nevada. The formal notice of the
Annual Meeting is set forth on the next page.
The matters to be acted upon at the meeting are described in the attached
Proxy Solicitation Statement. During the meeting, you and other stockholders
will have the opportunity to ask questions and comment on the Company's
operations. Directors, officers, and other employees of the Company will be
made available to visit with you before and after the formal meeting to answer
whatever questions you may have. In addition to the matters set forth herein,
we will also discuss 1996 financial results and our strategic plan for meeting
the challenges and seizing the opportunities made available from the profound
changes taking place in our industry. Refreshments will be available at the
conclusion of the meeting.
Your views and opinions are very important to the Company. Whether or not
you are able to be present at the Annual Meeting, we would appreciate it if you
would please review the enclosed Annual Report and Proxy Solicitation Statement.
Regardless of the number of shares you own, please execute your proxy card and
promptly return it to us in the postpaid envelope.
We greatly appreciate the interest expressed by our stockholders, and we
are pleased that in the past so many of you have voted your shares either in
person or by proxy. We hope that you will continue to do so and urge you to
return your proxy card as soon as possible.
Sincerely,
/s/ Walter M. Higgins
<PAGE>
SIERRA PACIFIC RESOURCES
6100 NEIL ROAD
RENO, NEVADA 89511
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 1997
-----------------
NOTICE IS HEREBY GIVEN THAT THE ANNUAL MEETING OF STOCKHOLDERS OF SIERRA
PACIFIC RESOURCES WILL BE HELD AT THE RENO HILTON HOTEL, 2500 E. SECOND, RENO,
NEVADA, ON FRIDAY, MAY 16, 1997, AT 10:00 A.M., PACIFIC DAYLIGHT TIME, FOR THE
FOLLOWING PURPOSES:
(1) TO ELECT THREE MEMBERS OF THE BOARD OF DIRECTORS TO SERVE UNTIL THE
ANNUAL MEETING IN 2000, OR UNTIL THEIR SUCCESSORS ARE ELECTED AND
QUALIFIED.
(2) TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING, AND ANY OR ALL ADJOURNMENTS THEREOF;
ALL AS SET FORTH IN THE PROXY STATEMENT ACCOMPANYING THIS NOTICE.
ONLY HOLDERS OF RECORD OF COMMON STOCK AT THE CLOSE OF BUSINESS ON MARCH
14, 1997, WILL BE ENTITLED TO VOTE AT THE MEETING, AND ANY OR ALL ADJOURNMENTS
THEREOF. THE TRANSFER BOOKS WILL NOT BE CLOSED.
YOUR CONTINUED INTEREST AS A STOCKHOLDER IN THE AFFAIRS OF YOUR COMPANY,
ITS GROWTH AND DEVELOPMENT IS GREATLY APPRECIATED BY THE DIRECTORS, OFFICERS AND
EMPLOYEES WHO SERVE YOU.
BY ORDER OF THE BOARD OF DIRECTORS
WILLIAM E. PETERSON
SECRETARY
DATED: APRIL 11, 1997
IF YOU ARE A HOLDER OF COMMON STOCK OF THE COMPANY AND DO NOT EXPECT TO ATTEND
THE ANNUAL MEETING OF STOCKHOLDERS, IT WILL BE HELPFUL TO US IF YOU WILL READ
THE ACCOMPANYING PROXY STATEMENT, THEN MARK, SIGN, DATE AND RETURN THE ENCLOSED
PROXY IN THE ENVELOPE PROVIDED, AS EARLY AS POSSIBLE.
WE THANK YOU FOR YOUR COOPERATION.
MAILING ADDRESS:
P. O. BOX 30150
RENO, NEVADA 89520
<PAGE>
SIERRA PACIFIC RESOURCES
6100 NEIL ROAD
RENO, NEVADA 89511
PROXY STATEMENT
----------------
GENERAL
This proxy statement is furnished to the holders of Common Stock of Sierra
Pacific Resources (hereinafter referred to as the "Company") in connection with
the solicitation of proxies to be voted at the Annual Meeting of Stockholders to
be held on Friday, May 16, 1997. The enclosed proxy is solicited on behalf of
the Board of Directors of the Company. Every properly signed proxy will be
voted.
A person giving the enclosed proxy has the power to revoke it at any time
before it is exercised at the meeting, by written notice to the Secretary of the
Company, by sending a later dated proxy, or by revoking it in person at the
meeting.
The Company will bear the cost of solicitation of proxies by management,
including charges and expenses of brokerage firms and others for forwarding
solicitation material to beneficial owners of Common Stock. In addition to the
use of mail, proxies may be solicited by personal interview, by telephone, by
telegraph or electronic wireless medium, or by certain employees without
compensation. Beacon Hill Partners, Inc., will assist in the solicitation of
proxies at an estimated cost of $4,500. The approximate date on which this
proxy statement and the enclosed proxy will first be sent to stockholders is
April 11, 1997.
STOCK OUTSTANDING AND VOTING RIGHTS
Only holders of Common Stock of record on the stock transfer books of the
Company at the close of business on March 14, 1997 (the "record date") will be
entitled to vote at the meeting. There were 30,819,098 shares of Common Stock
outstanding on the record date. Each share of Common Stock is entitled to one
vote and a fraction of a share is entitled to the appropriate fraction of a
share vote. Under the Company's By-Laws, a majority of the shares issued and
outstanding and entitled to vote will constitute a quorum, and a majority of the
voting power of shares represented at the meeting will be sufficient to elect
Directors. Abstentions and broker non-votes will be counted for purposes of
determining a quorum and the number of shares which will constitute a majority
of the voting power represented at the meeting. Since a majority of the voting
power represented at the meeting is required to approve most proposals, and to
elect directors, abstentions and non-votes will have the practical effect of a
vote against a proposal.
ELECTION OF DIRECTORS
All Directors elected at the meeting will serve a three-year term ending at
the Annual Meeting in 2000, or until their successors are elected and qualified.
The shares represented by the enclosed proxy will be voted to elect the three
Nominees unless such authority has been withheld. If any Nominee becomes
unavailable for any reason, which is not anticipated, the shares represented by
the enclosed proxy may be voted for such other persons as may be selected by the
Board of Directors of the Company.
The following information is furnished with respect to each Nominee for
election as a Director and for each Director whose term of office will continue
after the meeting.
-1-
<PAGE>
<TABLE>
<CAPTION>
NAME OF DIRECTOR PRINCIPAL OCCUPATION DIRECTOR SINCE
AND NOMINEE AGE DURING LAST 5 YEARS
- - ---------------------------------------------------------------------------------
<S> <C> <C> <C>
NOMINEES FOR ELECTION FOR A
TERM OF THREE YEARS
EXPIRING IN 2000
Edward P. Bliss 64 Partner, Loomis, Sayles & 1990
Co., Inc., an investment
counsel of Boston,
Massachusetts. He is
also a director of
Seaboard Oil Company of
Midland, Texas.
Theodore J. Day 47 Senior Partner, Hale Day 1987
Gallagher Co., a real
estate brokerage and
investment company.
Walter M. Higgins 52 Chairman of the Board, 1993
President and Chief
Executive Officer of the
Company since January 5,
1994. Also President and
Chief Executive Officer
of Sierra Pacific Power
Company since February
1994. President and
Chief Operating Officer
of the Company from
November 1, 1993 to
January 4, 1994.
President and Chief
Operating Officer of
Louisville Gas and
Electric Company from
1991 to November 1993.
He is also a director of
Aegis Insurance Services,
Inc.
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR SINCE
NAME OF DIRECTOR AGE DURING LAST 5 YEARS
- - ---------------------------------------------------------------------------------
<S> <C> <C> <C>
DIRECTORS WHOSE TERM
EXPIRES IN 1999
Krestine M. Corbin 59 President and Chief 1989
Executive Officer of
Sierra Machinery
Incorporated since 1984
and a director of that
Company since 1980. She
also serves on the
Twelfth Federal Reserve
Bank District Board.
Harold P. Dayton 74 Retired since 1985; 1984
formerly President of
Dayton's Furniture, Inc.
Mr. Dayton has been a
director of Sierra
Pacific Power Company
since 1967.
James R. Donnelley 61 Vice Chairman of the 1987
Board of R.R. Donnelley &
Sons Company since July
1990. He has been a
director of that company
since 1976. He is also a
director of Pacific
Magazines & Printing
Limited and Chairman of
the Board of National
Merit Scholarship
Corporation.
Dennis E. Wheeler 54 Chairman of the Board, 1990
President and Chief
Executive Officer of
Coeur d' Alene Mines
Corporation since 1986.
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR SINCE
NAME OF DIRECTOR AGE DURING LAST 5 YEARS
- - ---------------------------------------------------------------------------------
<S> <C> <C> <C>
DIRECTORS WHOSE TERM
EXPIRES IN 1998
Richard N. Fulstone 69 President and General 1986
Manager of R. N. Fulstone
Company since 1957 and
President and General
Manager of F. M.
Fulstone, Inc. since 1982
(both companies engage in
farming, cattle ranching
and investments).
James L. Murphy 67 Certified public 1992
accountant and retired
partner of and consultant
to Grant Thornton,
L.L.P., an international
accounting and management
consulting firm. He is
the owner, independent
trustee and general
partner of several real
estate development
projects and numerous
rental properties. He is
also a retired Colonel of
the United States Air
Force Reserve. He has
been a Director of Sierra
Pacific Power Company
since 1990.
Robert B. Whittington 70 Retired newspaper 1985
executive; former
President, Gannett West
Newspaper Group and
Director, Gannett Co.,
Inc.; former publisher,
Reno Evening Gazette and
Nevada State Journal. In
accordance with Board
policy that no Director
stand for election after
age 70, Mr. Whittington
has announced his
intention to retire at
the expiration of his
term in 1998.
</TABLE>
All Directors of Sierra Pacific Resources are Directors of its wholly-owned
subsidiary, Sierra Pacific Power Company. Of the other wholly-owned
subsidiaries, Messrs. Higgins and Murphy are Directors of Lands of Sierra, Inc.;
Messrs. Dayton and Higgins are Directors of Sierra Gas Holdings Company; Messrs.
Day and Higgins are Directors of Tuscarora Gas Pipeline Company; and Messrs.
Higgins and Fulstone are Directors of Sierra Water Development Company. Mr.
Higgins is also a Director of Sierra Energy Company, Tuscarora Gas Operating
Company, Pinon Pine Corp., and Pinon Pine Investment Co. In addition, Dr.
Ronald K. Remington, President of Great Basin College, is a Director of Sierra
Pacific Power Company.
DIRECTOR'S COMPENSATION
Each non-employee Director is paid an annual retainer of $30,000. In keeping
with the Board's policy to tie management and director compensation to overall
Company performance and to increase Director share ownership, on February 12,
1996, the Board amended the Non-Employee Director Stock Plan ("Plan") to require
that, effective at the annual meeting in 1996, a minimum of $20,000 of the
annual retainer be paid in Company Stock. Under other provisions of the Plan,
several non-employee Directors elected to receive more Company Stock than the
required minimum. The 1996 Plan amendment increased the minimum amount of the
annual retainer Directors must take in Company Stock to 66-2/3% and insures that
all Directors will have a minimum of $100,000 worth of Company Stock after five
years of service. This Compensation Plan amendment along with the elimination
of the director Retirement Plan in 1996, described below, insures, in accordance
with Board policy, that all Directors will always maintain a very substantial
shareholder investment in the Company. Non-employee Directors of the Company,
its subsidiaries, and members of Board committees are paid $1200 for each Board
or Committee meeting attended, not to exceed two meeting fees per day regardless
of the number of meetings attended. They also receive a full meeting fee or
partial meeting fee (depending on distance) for travel to attend meetings away
from the Director's home. In consideration for their additional responsibility
and time commitments, non-employee Directors serving as Committee Chairpersons
are also paid an additional $1,000 quarterly.
-3-
<PAGE>
The Company's Retirement Plan for Outside Directors, adopted March 6, 1987,
was terminated on June 25, 1996. The actuarial value of the vested benefit as of
May 20, 1996, for each Director, was converted into "phantom stock" of the
Company at its fair market value on May 20, 1996. The "phantom stock" is held
in an account to be paid at the time of the Director's departure from the Board.
All "phantom stock" earns dividends at the same rate as listed stock from the
date of conversion and is deemed reinvested in additional shares of such stock.
BOARD AND COMMITTEE MEETINGS
The Board of Directors maintains the following standing committees: Audit,
Compensation and Organization, and Planning and Finance. The Company's wholly-
owned subsidiary, Sierra Pacific Power Company, maintains a Pension Committee,
which oversees the pension and benefits program for all affiliates, and an
Environmental Committee. The Board also establishes ad hoc committees for
specific projects when required.
The Audit Committee was established in 1972 to review and confer with the
Company's independent auditors and to review the Company's internal auditing
program and procedures to ensure that its operations are in compliance with
applicable laws, regulations and Company policies. The Directors presently
serving on the Audit Committee are Ms. Corbin (Chair), Mr. Dayton, Mr. Bliss,
Mr. Murphy and Mr. Wheeler. The Audit Committee met three times in 1996.
The Compensation and Organization Committee was formed in 1991 to assume the
duties and responsibilities of the previous Personnel & Organization Committee.
Among its other duties, this Committee considers nominations to the Board of
Directors as recommended by stockholders or others. To be considered,
nominations must be submitted in writing to the Committee in care of the
Secretary of the Company. This Committee also reviews Director and executive
performance, recommends appointments to Board Committees and reviews and
recommends to the Board any changes in directors' fees or compensation
adjustments for all officers and executives of the Company. Directors presently
serving on the Compensation and Organization Committee are Mr. Day, Mr. Dayton,
Mr. Donnelley, Mr. Fulstone, and Mr. Whittington (Chair). The Committee met
seven times in 1996.
The Planning and Finance Committee was formed in October, 1992 to assume the
duties and responsibilities of the previously separated Finance and Planning
Committees. This Committee reviews and recommends to the Board the long-range
goals of the parent and subsidiary Companies. The Committee reviews and
recommends to the Board the type and amount of financing and the selection of
underwriters or bankers. Ms. Corbin, Mr. Donnelley, Mr. Fulstone, Mr. Murphy,
and Mr. Wheeler (Chair) presently serve on this Committee. The Planning and
Finance Committee met three times in 1996, including two sessions with the full
Board.
The Environmental Committee was formed in 1992 to assist the Board of
Directors in overseeing the Company's environmental policy and performance and
to provide guidance to executive management on environmental issues. Mr.
Dayton, Mr. Fulstone, and Dr. Remington (Chair) presently serve on this
Committee. The Committee met two times in 1996.
The Pension Committee was formed to oversee the Company's pension and other
health, welfare and benefit programs; to appoint, discharge and monitor plan
money managers; and to review and discharge the fiduciary duties delegated to
the Committee under the Company's health, welfare and benefit plans. Mr. Bliss,
Mr. Day, Mr. Murphy (Chair), and Mr. Whittington presently serve on this
Committee. The Committee met three times in 1996.
There were four regularly scheduled and six special meetings of the Board of
Directors held during 1996. The aggregate meeting attendance of all members of
the Board was 95% for Board and Committee meetings.
-4-
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth information about the compensation of the
Chief Executive Officer and each of the four most highly compensated officers
for services in all capacities to the Company and its subsidiaries.
<TABLE>
<CAPTION>
Long-Term Compensation
--------------------------------------
Annual Compensation Awards Payouts
--------------------------------- ------------------------- ----------
Securities
Other Under-
Annual Restricted lying
Name and Incentive Compen- Stock Options/ LTIP All Other
Principal Salary Pay sation Awards SARS Payouts Compensation
Position Year ($) ($) ($) ($) (#) ($) ($)
(a) (b) (c) (d)(3) (e)(4) (f) (g) (h)(5) (i)(6)
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Walter M. Higgins 1996 334,231 219,869 1,657 0 9,594 181,193 35,054
Chairman, President and 1995 314,423 184,064 3,166 0 11,960 0 21,600
Chief Executive Officer 1994 298,846 212,949 12,855 0 10,463 0 67,639
Malyn K. Malquist (1) 1996 194,077 95,335 24,132 0 3,504 51,770 9,380
Senior Vice President, 1995 185,769 77,903 24,501 0 4,231 0 13,219
Distribution Services 1994 139,049 65,904 4,500 0 2,761 0 14,275
Business Group & Principal
Operations Officer, Sierra
Pacific Power Company;
Acting Chief Financial
Officer and Treasurer
William E. Peterson 1996 191,923 85,445 3,417 0 3,504 70,508 20,982
Senior Vice President, 1995 190,000 77,903 6,157 0 4,231 0 14,876
General Counsel and 1994 190,000 89,384 9,660 0 3,758 0 12,568
Corporate Secretary
Gerald W. Canning 1996 147,692 46,232 1,423 0 2,066 38,602 14,350
Vice President, Electric 1995 139,769 46,510 5,600 0 2,570 0 9,252
Production & Fuels, Sierra 1994 130,975 53,603 314 0 2,059 0 8,278
Pacific Power Company
Victor H. Pena (2) 1996 133,639 39,775 5,677 0 1,694 20,877 6,770
Vice President, Business 1995 126,347 37,685 1.366 0 2,026 0 14,923
Development 1994 69,692 28,478 8,207 0 1,114 0 46,163
</TABLE>
(1) Mr. Malquist became Senior Vice President, Distribution Services Business
Group & Principal Operations Officer for Sierra Pacific Power Company in
August 1996. He was hired in April 1994.
(2) Mr. Pena was hired in May 1994. He is also Vice President, Technology,
Information Services, and Business Development for Sierra Pacific Power
Company.
(3) Amounts represent incentive pay received pursuant to SPR's "pay for
performance" team incentive plan.
(4) In accordance with the terms of his employment arrangement, the Company
discharged the annual installment due on Mr. Malquist's loan resulting in
other annual compensation of $23,000 to Mr. Malquist in 1996 and 1995. See
Certain Relationships and Related Transactions.
(5) LTIP Payouts relate to performance share payouts pursuant to the Executive
Long-Term Incentive Plan approved by shareholders in 1994 for the three-year
period January 1, 1994-December 31, 1996. Awards are based on attainment of
predetermined financial goals for annual growth in earnings per share and
overall shareholder return as compared to the Dow Jones Utility Index.
-5-
<PAGE>
(6) Amount of All Other Compensation includes the following for 1996:
. Company contributions under both the 401(k) Deferred Compensation Plan for all
administrative employees and the Executive Officers and directors, pursuant to
which the Company matches 50% of each Executive Officer's deferral up to 6% of
salary. In 1996, the Company matching amount was $4,500 for Mr. Higgins,
$4,500 for Mr. Malquist, $4,500 for Mr. Peterson, $4,464 for Mr. Canning, and
$4,500 for Mr. Pena.
. The Company, in 1996, amended its Non-Qualified Deferred Compensation Plan for
its executive staff. Company contributions for Messrs. Higgins, Malquist,
Peterson, Canning, and Pena were $21,062, $3,659, $11,041, $3,900, and $1,184,
respectively. The additional income on earnings contributed by Messrs.
Higgins, Malquist, Peterson, Canning, and Pena, which was in excess of 120% of
the federal rate, was $107, $63, $207, $319, and $18, respectively.
. Insurance premiums paid for split dollar life policies and the Company's
contribution and income earned from the Company's contribution toward
Executive Term Life Policies which replaced the split dollar life policies in
1996 for Messrs. Higgins, Malquist, Peterson, Canning, and Pena were $6,006
and $3,379; $660 and $448; $992 and $4,242; $708 and $4,959; and $714 and
$354, respectively.
. The Company, in 1996, instituted a Wellness Program designed to increase
awareness of personal health and fitness. All employees were encouraged to
participate in a medical screening and, as an incentive, $50 was paid by the
Company. Mr. Malquist received $50 for participation in the screening.
OWNERSHIP OF STOCK BY DIRECTORS, NOMINEES
FOR DIRECTORS, EXECUTIVE OFFICERS AND
CERTAIN BENEFICIAL OWNERS
Voting Stock
The following table indicates the shares owned by Weiss Asset Management
Company, the only person known to Sierra Pacific Resources to be owner of more
than 5 percent of any class of its voting stock as of March 14, 1997:
<TABLE>
<CAPTION>
Name and Address Shares
of Beneficial Beneficially Percent
Title of Class Owner Owned of Class
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Weiss Asset 1,635,000 5.31%
Management
660 Madison
Avenue
New York, New
York 10022-8405
</TABLE>
The table below sets forth the shares of Sierra Pacific Resources Common
Stock beneficially owned by each director, nominee for director, the Chief
Executive Officer, and the four other most highly compensated executive
officers. No director, nominee for director or executive officer owns, nor do
the directors and executive officers as a group own, in excess of one percent of
the outstanding Common Stock of the Company. Unless otherwise indicated, all
persons named in the table have sole voting and investment power with respect to
the shares shown.
-6-
<PAGE>
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT OF TOTAL SHARES
OWNED AS OF OUTSTANDING AS OF
NAME OF DIRECTOR OR NOMINEE MARCH 14, 1997 MARCH 14, 1997
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Edward P. Bliss 11,557
Krestine M. Corbin 8,484
Theodore J. Day 18,054
Harold P. Dayton, Jr. 10,659
James R. Donnelley 15,496 No director or nominee
Richard N. Fulstone 12,833 for director owns in excess
Walter M. Higgins 17,386 of one percent.
James L. Murphy 8,331
Dennis E. Wheeler 7,342
Robert B. Whittington 11,047
-------
121,189
=======
<CAPTION>
SHARES
BENEFICIALLY PERCENT OF TOTAL SHARES
OWNED AS OF OUTSTANDING AS OF
EXECUTIVE OFFICERS MARCH 14, 1997 MARCH 14, 1997
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Walter M. Higgins 17,386
Malyn K. Malquist 6,656
William E. Peterson 6,208 No executive officer owns
Gerald W. Canning 8,008 in excess of one percent.
Victor H. Pena 2,544
-------
40,802
=======
All directors and executive
officers as a group (a) (b) (c) 156,834
=======
</TABLE>
- - --------------------------------
(a) Includes shares acquired through participation in the Employee Stock
Purchase Plan and 401(k) Plan.
(b) The number of shares beneficially owned includes shares which the Executive
Officers currently have the right to acquire pursuant to stock options
granted and performance shares earned under the Executive Long-Term
Incentive Plan.
Shares beneficially owned pursuant to stock options granted to Messrs.
Higgins, Malquist, Peterson, Canning, and Pena, and all directors and
executive officers as a group are 12,979, 4,048, 4,646, 2,676, 1,816, and
30,249 shares, respectively.
Shares beneficially owned as a result of performance shares earned by
Messrs. Higgins, Malquist, Peterson, Canning, Pena, and all officers as a
group are 3,400, 1,090, 1,435, 839, 400, and 9,139, respectively.
(c) Included in the shares beneficially owned by the Directors are 62,777
shares of "phantom stock" representing the actuarial value of the
Directors' vested benefits in the terminated Retirement Plan for Outside
Directors discussed in the Section titled "Director Compensation."
-7-
<PAGE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The following table shows all grants of options to the named executive
officers of Sierra Pacific Resources in 1996. Pursuant to Securities and
Exchange Commission (the "SEC") rules, the table also shows the present value of
the grant at the date of grant. The exercise price of all options is the market
value of the stock as listed on the New York Stock Exchange at the time the
options are granted.
<TABLE>
<CAPTION>
Individual Grants (1)
- - -----------------------------------------------------------------------------------------
Percent of Total
Number of Options/SARS
Securities Granted to Exercise Grant
underlying Employees of Base Date
Options/SARS in Fiscal Price Expiration Present
Name Granted Year ($/Sh) Date Value
(a) (b) (c) (d) (e) (f)(2)
- - -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Walter M. Higgins 9,594 34.7 23.375 1/1/06 23,985
Malyn K. Malquist 3,504 12.7 23.375 1/1/06 8,760
William E. Peterson 3,504 12.7 23.375 1/1/06 8,760
Gerald W. Canning 2,066 7.5 23.375 1/1/06 5,165
Victor H. Pena 1,694 6.1 23.375 1/1/06 4,235
- - -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Under the Executive Long-Term Incentive Plan, the grants of non-qualifying
stock options were made on January 1, 1996. Twenty percent of these grants
vest annually commencing one year after the date of the grant.
(2) The hypothetical grant date present values are calculated under a modified
Black-Scholes Model. The Black-Scholes Model is a mathematical formula used
to value options traded on stock exchanges. The assumptions used in
determining the option grant date present value listed above include the
stock's expected volatility (11.4%), risk free rate of return (6.5%),
projected dividend yield (5.3%), the stock option term (10 years), and an
adjustment for non-transferability or risk of forfeiture during the vesting
period (five years at 3%).
-8-
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table provides information as to the value of the options held
by the named executive officers at year-end measured in terms of the closing
price of Sierra Pacific Resources Common Stock on December 31, 1996.
<TABLE>
<CAPTION>
Number of Securities Dollar
Underlying Unexercised Value of Unexercised
Options/SARS at Fiscal in-the-Money Options/SARS
Year-End at Fiscal Year-End
Shares Acquired on Exercisable/ Exercisable/
Name Exercise Value Realized Unexercisable Unexercisable
(a) (b) (C) (d) (e)
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Walter M. Higgins 0 0 6,577 / 25,440 58,448 / 199,040
Malyn K. Malquist 0 0 1,950 / 8,546 17,573 / 66,349
William E. Peterson 0 0 2,349 / 9,144 20,863 / 71,284
Gerald W. Canning 0 0 1,338 / 5,357 11,935 / 41,857
Victor H. Pena 0 0 850 / 3,984 7,728 / 30,828
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(e) Pre-tax gain. Value of in-the-money options based on December 31, 1996,
closing trading price of $28.750 less the option exercise price.
-9-
<PAGE>
LONG-TERM INCENTIVE PLANS - AWARDS
IN LAST FISCAL YEAR
The Executive Long-Term Incentive Plan (LTIP) provides for the granting of
stock options (both non-qualified and qualified), stock appreciation rights
(SARs), restricted stock performance units, performance shares and bonus stock
to participating employees as an incentive for outstanding performance.
Incentive compensation is based on the achievement of pre-established financial
goals for the Company. In 1996, goals were established for total shareholder
return (TSR) compared against the Dow Jones Utility Index and annual growth in
earnings per share (EPS).
The following table provides information as to the performance shares granted
to the named executive officers of Sierra Pacific Resources in 1996.
Nonqualifying stock options granted to the named executives as part of the LTIP
are shown in the table "Option/SAR Grants in Last Fiscal Year."
<TABLE>
<CAPTION>
Estimated Future Payouts
Under Non-Stock
Price-Based Plans
Performance or Other --------------------------------------------
Number of Shares, Period Until Maturation Threshold Target Maximum
Name Units or Other Rights or Payout $ $ $
(a) (b) (c) (d)(1) (e)(2) (f)(3)
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Walter M. Higgins 2,952 3 years 34,501 69,003 120,755
Malyn K. Malquist 1,168 3 years 13,651 27,302 47,778
William E. Peterson 1,168 3 years 13,651 27,302 47,778
Gerald W. Canning 689 3 years 8,053 16,105 28,184
Victor H. Pena 565 3 years 6,603 13,207 25,112
- - -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The threshold represents the level of TSR and EPS achieved during the cycle
which represents minimum acceptable performance and which, if attained,
results in payment of 50% of the target award. Performance below the
minimum acceptable level results in no award earned.
(2) The target represents the level of TSR and EPS achieved during the cycle
which indicates excellent performance and which, if attained, results in
payment of 100% of the target award.
(3) The maximum represents the maximum payout possible under the plan and a
level of TSR and EPS indicative of outstanding performance which, if
attained, results in a payment of 175% of the target award.
All levels of awards are made with reference to the price of each performance
share at the time of grant.
-10-
<PAGE>
PENSION PLANS
The following table shows annual benefits payable on retirement at normal
retirement age 65 to elected officers under the Company's defined benefit plans
based on various levels of remuneration and years of service which may exist at
the time of retirement.
<TABLE>
<CAPTION>
Annual Benefits for Years of Service Indicated
Highest Average Five- ----------------------------------------------------
Years Remuneration 15 Years 20 Years 25 Years 30 Years 35 Years
- - --------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 60,000 $ 27,000 $ 31,500 $ 36,000 $ 36,000 $ 36,000
$120,000 $ 54,000 $ 63,000 $ 72,000 $ 72,000 $ 72,000
$180,000 $ 81,000 $ 94,500 $108,000 $108,000 $108,000
$240,000 $108,000 $126,000 $144,000 $144,000 $144,000
$300,000 $135,000 $157,500 $180,000 $180,000 $180,000
$360,000 $162,000 $189,000 $216,000 $216,000 $216,000
$420,000 $189,000 $220,500 $252,000 $252,000 $252,000
$480,000 $216,000 $252,000 $288,000 $288,000 $288,000
$540,000 $243,000 $283,500 $324,000 $324,000 $324,000
$600,000 $270,000 $315,000 $360,000 $360,000 $360,000
$660,000 $297,000 $346,500 $396,000 $396,000 $396,000
$720,000 $324,000 $378,000 $432,000 $432,000 $432,000
</TABLE>
The Company's noncontributory Retirement Plan provides retirement benefits
to eligible employees upon retirement at a specified age. Annual benefits
payable are determined by a formula based on years of service and final average
earnings consisting of base salary and incentive compensation. Remuneration for
the named executives is the amount shown under "Salary" and "Incentive Pay" in
the Summary Compensation Table. Pension costs of the Retirement Plan to which
the Company contributes 100% of the funding are not and cannot be readily
allocated to individual employees and are not subject to Social Security or
other offsets.
Years of credited service under the qualified plan for Messrs. Higgins,
Malquist, Peterson, Canning, and Pena are 3.1, 2.7, 3.6, 27.1, and 1.6,
respectively.
A Supplemental Executive Retirement Plan (SERP) and an Excess Plan are also
offered to the named executive officers. The SERP is intended to ensure the
payment of a competitive level of retirement income to attract, retain and
motivate selected executives. The Excess Plan is intended to provide benefits
to executive officers whose pension benefits under the Company's Retirement Plan
are limited by law to certain maximum amounts.
In addition, the Company has entered into an arrangement with Mr. Peterson
crediting him with four years of service for prior years of service with his
previous employer, most of which was dedicated to performing legal services for
the Company, and an additional one-half year credit for each year of service
with the Company for the first ten years of his employment. The Company also
entered into an agreement with Mr. Pena when he accepted employment with SPR
after several years with Louisville Gas & Electric Company, crediting him with
three years of service.
-11-
<PAGE>
PERFORMANCE GRAPH
The line graph below compares the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock against the
cumulative total return of the Standard & Poors (S&P) Composite-500 Index and
the Dow Jones Utilities Index for a five-year period commencing December 31,
1991, and ending December 31, 1996.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG SIERRA PACIFIC RESOURCES, THE S & P 500 INDEX
AND THE DOW JONES UTILITIES INDEX
<TABLE>
<CAPTION>
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SIERRA PACIFIC RESOURCES $100 $ 91 $ 97 $ 94 $124 $159
- - ----------------------------------------------------------------------------------------------------------------------
STANDARD & POORS 500 $100 $108 $118 $120 $165 $203
- - ----------------------------------------------------------------------------------------------------------------------
DOW JONES UTILITIES $100 $104 $114 $ 97 $128 $139
- - ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* $100 invested on 12/31/91 in stock or index, including reinvestment of
dividends. Fiscal year ending December 31.
-12-
<PAGE>
REPORT OF THE COMPENSATION AND ORGANIZATION
COMMITTEE ON EXECUTIVE COMPENSATION
To the Stockholders:
In 1994, Sierra Pacific Resources directors and shareholders approved a
compensation plan designed to tie executive pay to the Company's overall
performance as well as to their own achievements as individuals. This "pay for
performance" plan has brought about improved results in every year since its
inception, and continues to be an unqualified success. This year, the Board
reinforced the purposes and goals of this Plan by adopting a policy requiring
that the Chief Executive Officer, Senior Vice Presidents, Vice Presidents and
other officers own, respectively, within five years of their assuming office, an
aggregate of three, two, and one times their base pay in Company Stock. Any
officer failing to acquire the required minimum within the period prescribed
must take all incentive pay awards in Company Stock until the required minimum
is attained.
The guiding principles of the pay-for-performance plan are:
. To tie cash awards to specific goals set for the corporation, the
business unit, and the individual.
. To encourage executive involvement in creating long-term shareholder
values by emphasizing the executive's ownership of Company Stock.
. To make improved customer satisfaction, as measured by outside
surveys, a specific element of the pay program.
. To tie compensation to both annual and long-term strategic plans.
. To be able to attract and retain executives of the high caliber vital
to long-term Company success.
. To relate base pay to industry standards but to require superior
performance in order to receive payouts above those standards.
To reach these goals, the program at the outset sets base salaries for
executives generally below industry medians. The "at risk" portion of annual
cash compensation is targeted at 25% to 35% of base pay (except for the chief
executive officer), based on meeting or surpassing pre-determined company-wide
goals for financial performance, customer satisfaction, and capital spending.
These account for 75% of the annual cash incentive; individual performance,
judged by the chief executive officer, affects 25%. No awards can be made
unless corporate earnings meet dividend requirements. The expectation is that
total cash compensation will exceed the competitive market in good performance
years and fall below the industry if performance is below average.
Long-term performance share grant incentives are awarded at 10% to 15% of
an executive's position rate (industry standard pay). These stock grants, which
include dividend equivalents, are made for a three-year period. They are earned
by meeting requirements for annual growth in earnings per share and total
shareholder return in comparison with the Dow Jones Utility Index, as measured
over the three-year period of the grant. The first awards under this program
were made this year, as described below.
The plan also includes non-qualified stock option grants that range (at
face value) from 30% to 45% of position salary rates. These vest over five
years at the rate of 20% a year. The exercise price for options is the fair
market value (list price on the New York Stock Exchange) on the date of the
grant.
For the third consecutive year, overall performance exceeded the overall
goal set by the Directors. Customer satisfaction is broken down into three
broad categories: industrial, commercial, and residential and is measured by an
independent market research firm on a scale of 1 to 10, with 10 being the
highest score possible. Residential and commercial customer satisfaction
reached the highest measured levels ever. Industrial customer satisfaction was
below the overall goal established by the Committee, although ratings for
customer loyalty and overall customer satisfaction at the 8 to 10 level reached
all-time highs. The capital spending performance goal established by the Board
was more than met. Even after taking into consideration a $13 million refund to
our Nevada customers, overall financial performance for the Company was the best
ever. For the third consecutive year,
-13-
<PAGE>
customer satisfaction combined with excellent financial results resulted in
overall performance in excess of 100% of the 1996 goal.
December 31, 1996, marked the end of the first three-year measurement
period (1994-1996) for the award of performance shares under the Company's long-
term incentive program. Overall earnings per share grew an average of 9.5% per
year (12.5% in 1996) over the three-year period, and total shareholder return
over the same period put Sierra in the 81/st/ percentile in the Dow Jones
Utility Average. Based on the terms of the plan approved by shareholders in
1994 and the specific three-year goals established by the Committee in 1994,
management earned 175% of the shares made available for grant in 1994, which is
the maximum amount possible under the terms and conditions of the Plan.
The officers and executives achieved these remarkable results while the
Company was continuing the significant organizational restructuring and
downsizing resulting from the successful voluntary early retirement and
voluntary severance program was set up in anticipation of the merger with The
Washington Water Power Company (WWP), which did not occur. Even though our
customer base has continued to grow at a steady, rapid rate, the Company has
fewer Management, Professional and Administrative (MPA) employees in 1996 than
it has had at any time in its recent history (the MPA employee base was reduced
by one-third by year end 1995).
In addition, during the first half of 1996, management spent an enormous
amount of time preparing for the proposed merger with WWP. When the merger was
called off by WWP in June 1996, management reacted immediately and achieved some
major accomplishments in the last half of the year, including commercialization
of the Pinon Pine Project, implementation of innovative new gas and electric
tariffs, consummation of several long-term contracts with customers responsible
for a significant portion of the Company's electric load, and implementation of
a three-year gas and electric rate plan in Nevada providing significant benefits
to customers and shareholders alike. Other significant achievements over the
year included reaching an all-time high in the price of our stock, completion of
the second phase of the Chalk Bluff Water Treatment Plant, a very successful and
profitable first year of operation for the Tuscarora Gas Pipeline, and the
inauguration of an innovative new energy services company.
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation package of the Company's chief executive officer, Walter
M. Higgins, is computed on the same guiding principles as the other executives.
Mr. Higgins, who became chief executive officer in January 1994, receives a base
salary, an annual incentive opportunity, and long-term incentive compensation
opportunity.
After the end of Mr. Higgins' first full year on the job in 1994, the
Committee ordered a survey of CEO salaries by a firm different from the one that
helped set up the compensation plan. That firm surveyed 104 electric utility
companies and reported that Mr. Higgins' base salary fell below the median
(adjusted for company size) among the comparison group. In 1995, the Committee
raised Mr. Higgins' base salary from $300,000 to $315,000 (5%), still below the
industry average for a chief executive officer. In 1996, the Committee raised
Mr. Higgins' salary to $335,000. At the end of 1996, the Committee commissioned
a study on the Company's executive compensation program by Towers Perrin, a
national compensation and benefits consulting firm. The study disclosed that
Mr. Higgins' base salary continued to fall below the national median for chief
executive officers of similarly sized companies.
Mr. Higgins' target annual incentive is 45% of position rate. Superior
performance can raise that to 67.5% of base while substandard performance can
result in no award. His annual incentive award is based 80% on achieving
corporate goals and 20% on meeting individual goals.
In 1996, Mr. Higgins received 2,952 performance shares that can be earned,
as with other participants, over a three-year period ending in 1999 if the
Company meets goals for growth in earnings per share and for total shareholder
return.
-14-
<PAGE>
For most of the same reasons cited for the executive group as a whole, the
Committee found Mr. Higgins performed at an exceptional level in 1996 and, once
again, well above the Board's expectations.
In 1996, the Company exceeded its record-setting 1995 net income level. As
stated above, in 1996, the Company also recorded its best customer satisfaction
scores in the residential and commercial sectors, and reached all-time highs for
customer loyalty and scores above 8 on a scale of 10 in the industrial sector.
At the beginning of the year, the Committee established thirteen specific
goals and objectives to measure Mr. Higgins' individual performance. By year-
end, Mr. Higgins had completely satisfied or substantially completed eleven of
these goals. The goals included achieving all 1996 financial and customer
satisfaction commitments; completing the merger with The Washington Water Power
Company; completing the Alturas and Pinon Pine projects on time and on budget;
completing operating agreements with Washoe County for water system deliveries
and presenting a single provider decision to the Washoe County Commission;
presenting an alternative strategic plan to the Board; managing the retail
wheeling issue through the Nevada interim legislative committee and the Nevada
Public Service Commission; continuing to enhance acceptance and support for the
merger and Sierra's leadership; spreading total quality management to at least
two additional areas of the Company; completing the redesign of the Retail
Operations group; developing and presenting to the Board of Altus (the proposed
merged company) a strategic plan for the new company; continuing to improve the
Company's relationship with the Nevada Public Service Commission and the
California Public Utilities Commission; developing a positive relationship with
all of the commissions regulating Altus; disposing of the Lake Tahoe properties
of Lands of Sierra; increasing effective utilization of the Company's
headquarters building; developing telecommunications opportunities; and, as
always, react, reconsider, and resolve unforeseen conditions. While the merger
was not completed, which also obviated the goal of developing and presenting the
strategic plan for the merged company, the Committee believed that Mr. Higgins
did all that was possible to bring about the merger and could not be held
responsible for Washington Water Power's decision to withdraw from the merger.
The Committee also found that Mr. Higgins' leadership abilities and motivational
skills contributed in a very significant way to the Company's extraordinary
performance in 1996, including the stock price reaching an all-time high, and to
all the major accomplishments that have been described in the Committee's report
on executive compensation.
MEMBERS OF THE COMPENSATION AND ORGANIZATION COMMITTEE
Theodore J. Day Richard N. Fulstone
Harold P. Dayton, Jr. Robert B. Whittington, Chair
James R. Donnelley
SEVERANCE ARRANGEMENTS
Severance allowance plans (adopted in 1986) exist for all employees of the
Company and its subsidiaries which provide for severance pay, payable in a lump
sum or by purchase of an annuity, if within three years after a change in
control of the Company, there is a termination of employment by the Company
related to such change in control, or a termination of employment by the
employee for good reason, in each case as described in the plans. In these
circumstances, employees, including the currently employed officers named in the
compensation table above, are entitled to a severance allowance not to exceed an
amount equal to 24 months of the employee's base salary and any bonus and the
continuation for up to 24 months of participation in the Company's group medical
and life insurance plans. Change in control is defined in the plan as, among
other things, a dissolution or liquidation, a reorganization, merger or
consolidation in which the Company is not the surviving corporation, the sale of
all or substantially all the assets of the Company (not the sale of a work unit)
or the acquisition by any person or entity of 20% or more of the voting power of
the Company. In addition, several change-in-control contracts have been entered
into between the Company and several of its executives, including those listed
on the Summary Compensation Table, which are described in the section titled
Certain Relationships and Related Transactions. Benefits under the change of
control contracts are in lieu of, and not in addition to, any benefits available
under the severance allowance plans.
-15-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT
The Company has entered into severance agreements with certain key
executives, including the individuals named in the Summary Compensation Table.
These agreements provide that, upon termination of the executive's employment
within twenty-four months following a change in control of the Company (as
defined in the agreements) either (a) by the Company for reasons other than
cause (as defined in the agreements), death or disability, or (b) by the
executive for good reason (as defined in the agreement, including a diminution
of responsibilities, compensation, or benefits (unless, with respect to
reduction in salary or benefits, such reduction is applicable to all senior
executives of the Company and the acquiror), the executive will receive certain
payments and benefits. These severance payments and benefits include (i) a lump
sum payment equal to three times the sum of the executive's base salary and
target bonus, (ii) a lump sum payment equal to the present value of the benefits
the executive would have received had he continued to participate in the
Company's retirement plans for an additional three years (or, in the case of the
Company's Supplemental Executive Retirement Plan only, the greater of three
years or the period from the date of termination until the executive's early
retirement date, as defined in such plan), and (iii) continuation of life,
disability, accident, and health insurance benefits for a period of thirty-six
(36) months immediately following termination of employment. The agreements
also provide that if any compensation paid, or benefit provided, to the
executive, whether or not pursuant to the change-in-control agreements, would be
subject to the federal excise tax on "excess parachute payments," payments and
benefits provided pursuant to the agreement will be cut back to the largest
amount that would not be subject to such excise tax, if such cutback results in
a higher after-tax payment to the executive. The Directors entered into these
agreements in order to attract and retain excellent management, and to encourage
and reinforce continued attention to the executives' assigned duties without
distraction under circumstances arising from the possibility of a change in
control of the Company. In entering into these agreements, the Board was
advised by Towers Perrin, the national compensation and benefits consulting firm
described above, and Skadden, Arps, Slate, Meagher & Flom, an independent
outside law firm, to insure that the agreements entered into were in line with
existing industry standards and provided benefits to management consistent with
those standards.
CERTAIN BUSINESS RELATIONSHIPS
The Company has entered into an agreement with a partner of Hale Day
Gallagher Co., a real estate brokerage and investment company, to act as broker
for the sale of a property owned by Lands of Sierra, Inc., a subsidiary of the
Company. The eventual sale of the property will result in Hale Day Gallagher
Co. receiving a standard brokerage commission not to exceed 5% of the selling
price. Mr. T.J. Day, a partner of Hale Day Gallagher Co. and a Director of the
Company, has no relationship with or interest in the transaction, will receive
no part of the commission, and will receive no direct or indirect benefit from
the transaction.
Mr. Peterson, formerly a partner with the law firm of Woodburn and Wedge,
became Senior Vice President and General Counsel for Sierra Pacific Resources in
1993. Woodburn and Wedge, which has performed legal services for Sierra Pacific
Power Company since 1920 and for Sierra Pacific Resources and all its
subsidiaries from their inception, continues to perform legal work for the
Company. Mr. Peterson's spouse, an equity partner in the firm since 1982, was
moved to inactive status in the firm as of January 1, 1997.
Susan Oldham, a former employee of SPPC specializing in water resources
law, planning and policy, accepted the Company's voluntary severance offering in
December 1995. Ms. Oldham is the spouse of Steven C. Oldham, Vice President,
Transmission Business Group and Strategic Development for Sierra Pacific Power
Company. Ms. Oldham, a licensed attorney in Nevada and California, has
continued to perform specialized legal services in the water resource area for
the Company on a contract basis.
-16-
<PAGE>
INDEBTEDNESS OF MANAGEMENT
In April 1994, Mr. Malquist, Senior Vice President and Chief Financial
Officer, received a $92,000 interest-free loan related to his employment
arrangement with the Company. The loan is payable in four equal annual
installments. Any installment due on any anniversary date on which Mr. Malquist
is employed by the Company will be discharged by the Company in consideration
for services rendered during the previous year.
INDEPENDENT PUBLIC ACCOUNTANTS
Evolving best practice among leading corporations includes periodic
competitive review and selection of independent auditors. Accordingly, in 1996,
the Company decided to competitively bid its auditing services. The Company
solicited and reviewed requests for proposal from a majority of the big six
national accounting firms, including Coopers & Lybrand, the Company's former
auditors. At the conclusion of the process, on November 18, 1996, the Company
selected Deloitte & Touche, LLP, as the Company's independent auditors for the
years ending 1996 and 1997.
During the two most recent fiscal years through November 18, 1996, the
Company has not consulted with Deloitte & Touche on items which concerned the
application of accounting principles generally, or to a specified transaction or
group of transactions, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's financial statements.
A representative of Deloitte & Touche will be present at the Annual Meeting
to answer questions from stockholders and will have an opportunity to make a
statement if desired.
The Audit Committee has approved each professional service provided by
Coopers & Lybrand and Deloitte & Touche during 1996. Additionally, the Audit
Committee considered the possible effect the performances of such services might
have on the independence of the Company's independent accountants and concluded
that the services performed have not impaired their independence. All
professional services in 1996 were provided by Coopers & Lybrand and Deloitte &
Touche at customary rates and terms.
DISCRETIONARY AUTHORITY
The Company has no knowledge of any matters to be presented for action by
the stockholders at the meeting other than as set forth herein. However, the
enclosed proxy gives discretionary authority to the persons named therein to act
in accordance with their best judgment in the event that any additional matters
should be presented.
DEADLINE FOR STOCKHOLDERS PROPOSALS
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received on or before December 5, 1997, for
inclusion in the proxy materials relating to that meeting. Any such proposals
should be sent to William E. Peterson, Secretary, Sierra Pacific Resources, P.O.
Box 30150, Reno, NV 89520-3150.
-17-
<PAGE>
ANNUAL REPORT
In order to exercise prudent judgment, Stockholders are invited to examine
the financial statements contained in the Company's Annual Report for 1996, a
copy of which has been mailed to all stockholders of record through the close of
business on March 14, 1997.
-18-
<PAGE>
SIERRA PACIFIC RESOURCES
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Harold P. Dayton, Jr. and Walter M. Higgins or
either of them, each with full power of substitution, proxies to vote all
shares of Common Stock of Sierra Pacific Resources which the undersigned may be
entitled to vote at the Annual Meeting of the Stockholders to be held on May
16, 1997 and at any and all adjournments thereof:
1. TO ELECT THE MEMBERS OF THE BOARD OF DIRECTORS.
For all nominees listed below Withhold authority to vote
(except as written to the contrary below) [_] for all nominees [_]
Edward R. Bliss Theodore J. Day Walter M. Higgins
(INSTRUCTION: To withhold authority to vote for any individual nominee write
the nominee's name on the space provided below.)
- - --------------------------------------------------------------------------------
2. WITH DISCRETIONARY AUTHORITY TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROP-
ERLY COME BEFORE THE MEETING.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
- - -------------------------------------------------------------------------------
(CONTINUED FROM OTHER SIDE)
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE STOCK-
HOLDER. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED, SUCH
SHARES WILL BE VOTED "FOR" ALL NOMINEES IN ITEM 1.
Please sign below exactly as your name
appears on this card, including the
title "Executor", "Trustee", etc., if
the same is indicated. When stock is
held by a corporation, this proxy should
be executed by an authorized officer
thereof.
-----------------------------------------
Signature
Dated: _______________ , 1997 -----------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD USING THE ENCLOSED ENVELOPE.
