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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
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(Name of Registrant as Specified In Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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 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:
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[LOGO OF SIERRA PACIFIC RESOURCES(TM)]
Michael R. Niggli
Chairman of the Board
and Chief Executive Officer April 14, 2000
To Our Stockholders:
On behalf of the Board of Directors, I am pleased to invite you to attend the
2000 Annual Meeting of the Stockholders of Sierra Pacific Resources, which will
be held at 10:00 a.m., Pacific Daylight Time, on Monday, June 19, 2000, 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 1999 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 provided before and
after 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/ Michael R. Niggli
<PAGE>
SIERRA PACIFIC RESOURCES
6100 Neil Road
Reno, Nevada 89511
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 19, 2000
__________
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Sierra
Pacific Resources will be held at the Reno Hilton Hotel, 2500 East Second
Street, Reno, Nevada, on Monday, June 19, 2000, at 10:00 a.m., Pacific Daylight
Time, for the following purposes:
(1) To elect four members of the Board of Directors to serve until the
Annual Meeting in 2003, or until their successors are elected and
qualified.
(2) To consider approving the amendment to the Executive Long-Term
Incentive Plan;
(3) To consider approving the amendment to the 1992 Non-Employee Director
Stock Plan;
(4) To consider approving the amendment to Restatement No. 1 of the
Employee Stock Purchase Plan;
(5) 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
24, 2000, 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 14, 2000
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
<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 Monday, June 19, 2000. 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 $4,000. The approximate date on which this proxy
statement and the enclosed proxy will first be sent to stockholders is April 14,
2000.
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 24, 2000 (the "record date") will be
entitled to vote at the meeting. There were 78,419,949 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 will have the practical effect of a vote against a
proposal.
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
All Directors elected at the meeting will serve a three-year term ending at
the Annual Meeting in 2003, or until their successors are elected and qualified.
The shares represented by the enclosed proxy will be voted to elect the four
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.
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<TABLE>
<CAPTION>
Name of Director Principal Occupation Director
And Nominee Age During Last 5 Years Since
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<S> <C> <C> <C>
NOMINEES FOR ELECTION FOR A TERM OF THREE YEARS EXPIRING IN 2003
Edward P. Bliss 66 Consultant, Scudder Kemper Investment Co.; Retired Partner, 1990
Loomis, Sayles & Co., Inc., an investment counsel firm in
Boston, Massachusetts. He is also a director of Seaboard Oil
Company of Midland, Texas.
Mary Lee Coleman 62 President, Coleman Enterprises. She also serves on the Board 1980*
of First Dental Health Inc.
Theodore J. Day 50 Senior Partner, Hale Day Gallagher Co., a real estate 1987
brokerage and investment company.
Jerry E. Herbst 61 Chief Executive Officer of Terrible Herbst, Inc. He is a 1990*
partner of Coast Resorts.
</TABLE>
<TABLE>
<CAPTION>
Principal Occupation Director
Name of Director Age During Last 5 Years Since
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<S> <C> <C> <C>
DIRECTORS WHOSE TERM EXPIRES IN 2001
James R. Donnelley 64 Vice Chairman of the Board of R.R. Donnelley & Sons Company 1987
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.
John L. Goolsby 57 Retired President/Chief Executive Officer of Howard Hughes 1991*
Corporation (real estate investment and land development
companies). He also serves as a Director of America West
Holdings Corporation.
Malyn K. Malquist 47 President and Chief Operating Officer since July 1999. 1998
Previously Chairman, Chief Executive Officer of the Company
before the merger with Nevada Power Company.
John F. O'Reilly 53 Chairman and Chief Executive Officer of the law firm of 1995*
Keefer, O'Reilly, Ferrario & Lubbers, a full service law firm.
Also Chairman of the Board, NTS Development Company.
</TABLE>
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<TABLE>
<CAPTION>
Principal Occupation Director
Name of Director Age During Last 5 Years Since
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<S> <C> <C> <C>
DIRECTORS WHOSE TERM EXPIRES IN 2002
Krestine M. Corbin 62 President and Chief Executive Officer of Sierra Machinery 1989
Incorporated since 1984 and a director of that company since
1980. She also serves on the Twelfth Federal Reserve Bank
District Board.
Fred D. Gibson, Jr. 72 Retired Chairman, President and Chief Executive Officer of 1978*
American Pacific Corporation. He also serves as a Director of
Cashman Equipment and American Pacific Corporation.
James L. Murphy 71 Certified public accountant and retired partner of and 1992
consultant to Grant Thornton, L.L.P., an international
accounting and management consulting firm. He is owner,
independent trustee and general manager of several real estate
development projects and numerous rental properties. He is
also a retired Colonel of the United States Air Force Reserve.
Michael R. Niggli 50 Chairman and Chief Executive Officer of the Company since July 1998*
1999. Previously Chairman and Chief Executive Officer of
Nevada Power Company since 1999. He joined the Company in
1998.
Dennis E. Wheeler 57 Chairman, President and Chief Executive Officer of Coeur 1990
d'Alene Mines Corporation since 1986.
</TABLE>
All Directors of Sierra Pacific Resources are Directors of its wholly owned
subsidiaries, Sierra Pacific Power Company and Nevada Power Company. Of the
other wholly owned subsidiaries, Messrs. Malquist and Murphy are Directors of
Lands of Sierra, Inc.; Messrs. Day and Niggli are Directors of Tuscarora Gas
Pipeline Company; Mr. Malquist is a Director of Sierra Gas Holdings Company,
Sierra Water Development Company, Tuscarora Gas Operating Company, Pinon Pine
Corp., Pinon Pine Investment Co., and GPSF-B; and Mr. Niggli is a director of
Sierra Pacific Energy Company and Nevada Electric Investment Company ("NEICO").
* Served as a Director of Nevada Power Company prior to its merger with
Sierra Pacific Resources in July 1999.
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PROPOSAL NUMBER TWO
AMENDMENT TO THE EXECUTIVE LONG-TERM INCENTIVE PLAN
The Board of Directors has approved and recommends that the stockholders
approve an amendment to the Executive Long-Term Incentive Plan (the "Executive
Plan") to increase the number of shares of Common Stock available for grant
under the Executive Plan by 1,000,000 shares, for a total of 1,750,000 shares
subject to award thereunder.
On July 28, 1999, the Company completed the merger with Nevada Power
Company. Following the merger, a number of officers and key employees who had
previously held positions with Nevada Power Company, and many of whom had
participated in Nevada Power's long-term incentive plan, became eligible to
participate in the Company's Executive Plan. In order to make that participation
possible, it is necessary to increase the number of shares available for
issuance under the Executive Plan.
Accordingly, on July 13, 1999, the Board of Directors adopted a resolution
amending the Executive Plan, subject to stockholder approval, to increase the
number of shares authorized for issuance thereunder by 1,000,000. If the
proposed amendment is approved, there will be 1,750,000 shares available for
issuance under the Executive Plan. The Executive Plan, as amended, is attached
as Annex A.
The affirmative vote of the holders of a majority of the issued and
outstanding shares of the Company's Common Stock represented at the Annual
Meeting is required to approve the adoption of the amendment to the Executive
Plan. The Board of Directors recommends that the stockholders vote FOR the
approval of the amendment to the Executive Plan.
Summary of Material Provisions of the Executive Plan
The following is a summary of the material provisions of the Executive Plan
as amended by Proposal No. 2, which is qualified in its entirety by reference to
the Executive Plan, as amended.
Purpose. The purpose of the Executive Plan is to promote the success and
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enhance the value of the Company by linking participants' personal interests
with those of the Company's stockholders by providing participants with an
incentive for outstanding performance.
Administration of the Plan. The Executive Plan is administered by the
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Human Resources Committee of the Company's Board of Directors (which consists
exclusively of outside Directors) or by such other committee consisting of not
less than two (2) non-employee Directors appointed by the Board of Directors
(the "Committee"). The Committee will be comprised solely of Directors qualified
to administer the Executive Plan pursuant to Rule 16b-3(c)(2) of the Securities
Exchange Act of 1934 (the "Exchange Act").
Shares Subject to the Plan. The Executive Plan authorizes the grant of up
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to 1,750,000 shares(including the 1,000,000 shares requested in this proposal)
of the Company's Common Stock, of which no more than 466,667 shares can be
issued pursuant to Restricted Stock grants and no more than 583,333 shares can
be issued pursuant to Bonus Stock grants.
If any corporate transaction occurs which causes a change in the Company's
capitalization, the Committee shall make such adjustments to the number and
class of Shares delivered, and the number and class and/or price of Shares
subject to outstanding awards granted under the Executive Plan as appropriate
and equitable to prevent dilution or enlargements of participants' rights.
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Eligibility and Participation. Employees eligible to participate in the
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Executive Plan include officers and key employees of the Company and its
subsidiaries, as determined by the Committee, including Employees who are
members of the Board, but excluding Directors who are not Employees. To meet
the requirements of Section 162(m) of the Internal Revenue Code, there are
several generally more restrictive Executive Plan provisions which apply only to
"Executive Officers," as defined in the Executive Plan. At this time, the
approximate number of Employees eligible to participate under the Executive Plan
is 13.
Amendment and Termination of the Plan. In no event may any award under the
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Executive Plan be granted on or after January 1, 2004. The Board may amend,
modify or terminate the Executive Plan at any time; provided that no amendment
requiring shareholder approval for the Executive Plan to continue to comply with
Rule 16b-3 under the Exchange Act shall be effective unless approved by
stockholders, and no amendment, termination or modification shall materially and
adversely affect any outstanding award without the consent of the participant.
Awards under the Executive Plan.
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Stock Options. The Committee may grant incentive stock options ("ISOs"),
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nonqualified stock options ("NQSOs"), or a combination thereof under the
Executive Plan. The option price for each such grant of Options shall be at
least equal to 100% of the fair market value of a share of the Company's stock
on the date the option is granted. Options shall expire at such times as the
Committee determines at the time of grant; provided, however, that no option is
exercisable later than the tenth (10th) anniversary of its grant. Simultaneous
with the grant of an Option, a participant may receive dividend equivalents,
which entitle him to a contingent right to receive the value of the dividend
paid with respect to the number of shares held under option from the date of
grant to the date of exercise. The value of such dividend equivalent shall
accrue, and shall be paid, in cash, only in the event the fair market value of
the option share exceeds the option price on the exercise date.
Options granted under the Executive Plan are exercisable at such times and
subject to such restrictions and conditions as the Committee shall approve;
provided that no Option may be exercisable prior to six (6) months following its
grant. The Option exercise price is payable in cash, in shares of Common Stock
of the Company having a fair market value equal to the exercise price, or in a
combination of cash and shares. The Committee may allow, along with other means
of exercise, cashless exercise as permitted under the Federal Reserve Board's
Regulation T, subject to applicable securities laws.
Options may only be transferred under the laws of descent and distribution,
and during his or her lifetime shall be exercisable only by the participant or
his or her legal representative. Each Option Award Agreement shall specify the
participant's rights in the event of termination of employment.
Stock Appreciation Rights ("SARs"). SARs granted under the Executive Plan
----------------------------------
may be in the form of Freestanding SARs, Tandem SARs or a combination thereof.
The maximum number of stock options or SARs which may be granted to any one
participant under the Plan is 150,000. The grant price of a Freestanding SAR
shall be equal to the fair market value of a share of Common Stock on the date
of grant. The grant price of a Tandem SAR shall be equal to the option price of
the related Option. No SAR granted under the Executive Plan may be exercisable
prior to six (6) months following its grant. The term of any SAR granted under
the Executive Plan shall be determined by the Committee, provided that such term
may not exceed ten (10) years.
Freestanding SARs may be exercised upon such terms and conditions as are
imposed by the Committee. A Tandem SAR may be exercised only with respect to
the shares of Common Stock of the Company for which its related Option is
exercisable. Tandem SARs granted in connection with an ISO shall expire no
later than the expiration of the ISO, the value of the payout for such SARs may
be no more than one hundred percent (100%) of the difference between the ISO
Option Price and the fair market
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value of the shares subject to such ISO at exercise, and may be exercised only
when the fair market value of the shares subject to the ISO exceeds the ISO
Option Price.
Upon exercise, a participant will receive the difference between the fair
market value of a share of Common Stock on the date of exercise and the grant
price multiplied by the number of shares with respect to which the SAR is
exercised. Payment due upon exercise may be in cash, in shares having a fair
market value of the SAR being exercised, or in a combination of cash and shares,
as determined by the Committee. The Committee may impose such restrictions on
the exercise of SARs as may be required to satisfy the requirements of Section
16 of the Exchange Act.
SARS may only be transferred under the laws of descent and distribution,
and during his or her lifetime shall be exercisable only by the participant or
his or her legal representative. Each SAR Award Agreement shall specify the
participant's rights in the event of termination of employment.
Restricted Stock. Restricted Stock may be granted in such amounts and
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subject to such terms and conditions as determined by the Committee. The
Committee shall impose such conditions and/or restrictions on any shares of
Restricted Stock as it deems advisable.
Restricted Stock may not be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated until the end of the applicable restriction
period or upon earlier satisfaction of such other conditions specified by the
Committee; provided, however, that in no event may Restricted Stock granted
under the Executive Plan vest prior to six (6) months following the date of its
grant.
Participants holding Restricted Stock may exercise full voting rights with
respect to those shares during the restriction period, and shall be credited
with regular cash dividends paid with respect to such shares. Dividends or
distributions credited during the restriction period shall be subject to the
same restrictions on transferability and forfeitability as the shares of
Restricted Stock with respect to which they were paid. All dividends credited
shall be paid within forty-five (45) days following the full vesting of the
shares of Restricted Stock to which such dividends or other restrictions relate.
The Committee shall establish vesting period procedures applicable in the event
that any dividend constitutes a "derivative security" or an "equity security"
pursuant to Rule 16(a) of the Exchange Act.
All rights with respect to Restricted Stock shall be available only during
a participant's lifetime, and each SAR Award Agreement shall specify the
participant's right to receive unvested Restricted Shares in the event of
termination of employment.
Performance Shares and Performance Units. Performance Share and
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Performance Unit awards may be granted in the amounts and subject to such terms
and conditions as determined by the Committee. The Committee sets performance
goals which, depending on the extent to which they are met during the
performance periods established by the Committee, will determine the number
and/or value of Performance Units/Shares that will be paid out to participants.
Performance periods shall, in all cases, exceed six (6) months in length.
Participants receive payment of the value of Performance Shares Units
earned in cash and/or shares of Common Stock which have an aggregate fair market
value equal to the value of the earned Performance Shares after the end of the
applicable performance period, in such combination as the Committee determines.
Such shares may be granted subject to any restrictions deemed appropriate by the
Committee. Prior to the beginning of each performance period, participants may
elect to defer receipt of payout on such terms as the Committee deems
appropriate. Participants are entitled to receive dividends declared with
respect to Shares earned in connection with Performance Unit/Share grants earned
but not yet distributed, subject to the same restrictions as are applicable to
dividends earned with respect to Restricted Stock, described above. At the
discretion of the Committee, participants may be entitled to exercise voting
rights with respect to such shares.
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For purposes of grants to Named Executive Officers, performance measures
are chosen from among alternatives selected by the Committee, which are tied to
increasing long-term shareholder value. The maximum payout to any Named
Executive Officer with respect to Performance Units and/or Performance shares
granted in any one (1) fiscal year is one million dollars ($1,000,000).
In the event a participant's employment is terminated by reason of death,
disability, or retirement during a performance period, the participant shall
receive a prorated payout of the Performance Units and Performance Shares at the
same time as payments are made to participants who did not terminate employment.
In the event employment is terminated for any other reason, all Performance
Units and Performance Shares shall be forfeited.
Performance Units and Performance Shares may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution. A participant's rights under the
Executive Plan shall be exercisable only by the participant during his or her
lifetime.
Bonus Stock. The Committee may grant other awards which may include,
-----------
without limitation, the grant of shares based on certain conditions, the payment
of cash based on performance criteria, and the payment of shares in lieu of cash
under other Company incentive bonus programs, in such manner and at such times
as the Committee determines.
Change in Control. As of the effective date of a Change in Control, as
-----------------
defined in the Executive Plan, (i) any option or SAR outstanding shall become
immediately exercisable; (ii) any restriction periods and restrictions imposed
on Restricted Stock shall lapse; (iii) the target payout opportunity attainable
under outstanding Restricted Stock, Performance Units, Performance Shares and
Bonus Stock shall be deemed to have been fully earned for the entire performance
period(s); (iv) vesting of all Awards denominated in shares shall be
accelerated; and (v) a pro rata portion of all targeted cash payout
opportunities associated with cash-based awards shall be paid. There shall not,
however, be any accelerated payout with respect to awards of Restricted Stock,
Performance Units, Performance Shares and/or Bonus Stock granted less than six
(6) months prior to the Change in Control. Subject to the terms of the
Executive Plan, the Committee may, in its discretion, make any other
modifications to any Awards as it deems appropriate before the effective date of
such transaction.
Federal Income Tax Consequences. The following brief description of the
-------------------------------
tax consequences of awards under the Executive Plan is based upon present
Federal tax laws and does not purport to be a complete description of the
Federal tax consequences of the Executive Plan. This description does not
address state, municipal or Foreign tax laws, and does not address the
circumstances of special classes or individual circumstances of participants,
including, without limitation, Foreign persons.
There are generally no Federal tax consequences either to the optionee or
to the Company upon the grant of an option. On exercise of an ISO, the optionee
will not recognize any income and the Company will not be entitled to a
deduction for tax purposes, although such exercise may give rise to liability
for the optionee under the alternative minimum tax provisions of the Code.
Generally, if the optionee disposes of shares acquired upon exercise of an ISO
within two years of the date of grant or a year of the date of exercise, the
optionee will recognize ordinary income and the Company will be entitled to a
deduction for tax purposes in an amount equal to the lesser of (1) the excess of
the fair market value of the shares of Common Stock on the date of exercise over
the option exercise price, or (2) the optionee's actual gain on sale. Otherwise
the Company will not be entitled to any deduction for tax purposes upon
disposition of such shares, and the entire gain for the optionee upon
disposition of such shares will be treated as long-term capital gain or loss for
the optionee, but will have no tax consequences for the Company.
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<PAGE>
The grant of a SAR or performance share award will not result in income for
the grantee or a tax deduction for the Company. Upon the settlement of such a
right or award, the grantee will recognize ordinary income equal to the fair
market value of any shares of Common Stock and/or any cash received and the
Company will be entitled to a tax deduction in the same amount. An award of
Restricted Shares will not result in income for the grantee or in a tax
deduction for the Company until such time as the shares are no longer subject to
forfeiture (unless the grantee elects otherwise). At that time, the grantee
generally will recognize ordinary income equal to the fair market value of the
shares less any amount paid for such shares and the Company will be entitled to
a tax deduction in the same amount. Dividends paid on Restricted Shares will be
treated as compensation for Federal tax purposes until such time as the shares
are no longer subject to forfeiture.
Under current Federal income tax law, participants will realize ordinary
income, as discussed above, in the year of receipt. The Company will receive a
deduction for the amount constituting ordinary income to the participant, as
discussed above, provided that the Executive Plan satisfies the requirements of
Section 162(m) of the Internal Revenue Code (the "code"), which limits the
deductibility of compensation paid to certain corporate executives which is not
"performance-based." It is the Company's intention that the Executive Plan be
drafted and administered in a manner that maximizes the deductibility of
compensation for the Company under Code Section 162(m).
PROPOSAL NUMBER THREE
AMENDMENT TO 1992 NON-EMPLOYEE DIRECTOR STOCK PLAN
The Board of Directors has approved and recommends that the stockholders
approve an amendment to the 1992 Non-Employee Director Stock Plan (the "Non-
Employee Director Plan") to increase the number of shares of Common Stock
available for grant under the Non-Employee Director Plan by 100,000 shares, for
a total of 150,000 shares subject to award thereunder.
On July 28, 1999, the Company completed the merger with Nevada Power
Company and added seven directors who had previously been directors of Nevada
Power Company. In order to make the Non-Employee Director Plan available to
these new directors as well as the continuing directors of the Company, it is
necessary to increase the number of shares available for issuance under the Non-
Employee Director Plan.
Accordingly, on July 13, 1999, the Board of Directors adopted a resolution
amending the Non-Employee Director Plan, subject to stockholder approval, to
increase the number of shares authorized for issuance thereunder by 100,000. If
the amendment is approved, there will be 150,000 shares available for issuance
under the Non-Employee Director Plan. The Non-Employee Director Plan, as
amended, is attached as Annex B.
The affirmative vote of the holders of a majority of the issued and
outstanding shares of the Company's Common Stock represented at the Annual
Meeting is required to approve the adoption of the amendment to the Non-Employee
Director Plan. The Board of Directors recommends that the stockholders vote FOR
the approval of the amendment to the Non-Employee Director Plan.
Summary of Material Provisions of the Non-Employee Director Plan
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The following is a summary of the material provisions of the Non-Employee
Director Plan as amended by Proposal No. 3, which is qualified in its entirety
by reference to the Non-Employee Director Plan, as amended.
Purpose. The purpose of the Non-Employee Director Plan is to provide
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ownership of the Company's Common Stock to non-employee members of the Board of
Directors in order to improve the
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Company's ability to attract and retain highly qualified individuals to serve as
directors of the Company, to provide competitive compensation for service on the
Board of Directors, and to strengthen the commonality of interest between
directors and stockholders.
Shares. The Non-Employee Director Plan authorizes the issuance of up to
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150,000 shares of Common Stock. The Common Stock issued under the Non-Employee
Director Plan shall consist of authorized unissued shares.
Administration. A Committee of three or more persons who are not eligible
--------------
to participate in the Non-Employee Director Plan administers the Non-Employee
Director Plan. The Committee has full power and authority to determine all
questions of fact that may arise under the Non-Employee Director Plan, to
interpret the Non-Employee Director Plan and to make all other determinations
necessary or advisable for the administration of the Non-Employee Director Plan,
and to prescribe, amend, and rescind rules and regulations relating to the Non-
Employee Director Plan. All interpretations, determinations and actions by the
Committee will be final, conclusive and binding upon all parties.
Participation. All Non-Employee Directors must participate in the Non-
-------------
Employee Director Plan. If any Non-Employee Director owns shares of Common
Stock representing more than five percent of the total combined voting power of
all classes of stock of the Company, he or she shall be ineligible to receive a
Stock Payment. As of April 1, 2000, there are 11 Non-Employee Directors
eligible to participate in the Non-Employee Director Plan.
Determination of Annual Retainers and Stock Payments. The Board of
----------------------------------------------------
Directors determines the Annual Retainer for all Non-Employee Directors.
Immediately following the date of the Annual Meeting of stockholders, each Non-
Employee Director receives a Stock Payment as a portion of the Annual Retainer.
The number of shares to be issued to each Non-Employee Director as a Stock
Payment is determined by dividing the applicable Market Price into the amount of
the Annual Retainer in excess of $10,000. The cash portion of the Annual
Retainer is paid to Non-Employee Directors at such times and in such manner as
determined by the Board of Directors.
Election to Increase Amount of Stock Payment. In lieu of receiving the
--------------------------------------------
cash portion of his or her Annual Retainer, a Non-Employee Director may make an
election to reduce such Annual Retainer by a specified dollar amount and have
such amount applied to purchase additional shares of Common Stock.
Election to Defer Receipt of Stock Payment. In lieu of receiving the Stock
------------------------------------------
Payment, a Non-Employee Director may make an election to defer such receipt
until he or she ceases to be a Non-Employee Director. With respect to such
deferred shares, the Non-Employee Director is not a shareholder, has no vote and
does not receive cash dividends.
Adjustments for Changes in Capitalization. If any corporate transaction
-----------------------------------------
occurs which causes a change in the Company's capitalization, the maximum number
of shares/or kind of shares that may be issued under the Non-Employee Director
Plan may be appropriately adjusted by the Committee.
Amendment and Termination. The Board of Directors will have the power to
-------------------------
amend, suspend or terminate the Non-Employee Director Plan at any time.
However, no amendment to the Non-Employee Director Plan shall, without the
approval of the stockholders, change the class of persons eligible to receive a
Stock Payment under the Non-Employee Director Plan, materially increase the
benefits accruing to Non-Employee Directors under the Non-Employee Director
Plan, or increase the number of shares of Common Stock which may be issued under
the Non-Employee Director Plan.
Federal Income Tax Consequences. The following brief description of the
-------------------------------
tax consequences of awards under the Non-Employee Director Plan is based upon
present Federal tax laws and does not purport to be a complete description of
the Federal tax consequences of the Non-Employee Director Plan.
-9-
<PAGE>
This description does not address state, municipal or Foreign tax laws, and does
not address the circumstances of special classes or individual circumstances of
participants, including, without limitation, Foreign persons.
A Non-Employee Director who receives shares of Common Stock will recognize
ordinary compensation income in the amount of the fair market value of such
shares as of the date of receipt and any cash received in lieu of fractional
shares. In addition, the Company will be entitled to a deduction for the amount
included in the income of a Non-Employee Director.
PROPOSAL NUMBER FOUR - AMENDMENT TO
RESTATEMENT NO. 1 TO THE EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has approved and recommends that the stockholders
approve an amendment to Restatement No. 1 to the Employee Stock Purchase Plan
(the "Employee Stock Plan") to increase the number of shares of Common Stock
available for sale under the Employee Stock Plan by 700,000 shares, for a total
of 900,162 shares subject to sale thereunder.
On July 28, 1999, the Company completed the merger with Nevada Power
Company. As a result of the merger, the employees of Nevada Power Company became
eligible to participate in the Company's Employee Stock Plan. In order to make
this participation possible and to continue to be able to offer shares to
employees of Sierra Pacific Power Company and other subsidiaries of the Company,
it is necessary to increase the number of shares available for issuance under
the Employee Stock Plan.
Accordingly, on July 13, 1999, the Board of Directors adopted a resolution
approving an amendment to the Employee Stock Plan, subject to stockholder
approval, to increase the number of shares authorized for sale thereunder by
700,000. If the amendment is approved, there will be 900,162 shares available
for sale under the Employee Stock Plan. Restatement No. 1 to the Employee Stock
Plan, as amended, is attached as Annex C.
The affirmative vote of the holders of a majority of the issued and
outstanding shares of the Company's Common Stock represented at the Annual
Meeting is required to approve the amendment to the Employee Stock Plan. The
Board of Directors recommends that the stockholders vote FOR the approval of the
amendment to the Employee Stock Plan.
Summary of Material Provisions of the Employee Stock Plan
- ---------------------------------------------------------
The following is a summary of the material provisions of the Employee Stock
Plan as amended by Proposal No. 4, which is qualified in its entirety by
reference to the Employee Stock Plan, as amended.
Purpose. The purpose of the Employee Stock Plan is to provide eligible
-------
employees of the Company and any subsidiary thereof with the opportunity to
become stockholders of the Company.
Shares. There are 900,162 shares of Common Stock available for sale under
------
the Employee Stock Plan. The Common Stock sold under the Employee Stock Plan
shall consist of either authorized unissued shares or shares heretofore or
hereafter reacquired by the Company.
Eligibility. After six months service with the Company, all employees
-----------
whose customary employment is in excess of 20 hours per week and more than five
months per year are eligible to participate in the Employee Stock Plan.
However, no employee may participate in the Employee Stock Plan who owns five
percent or more of the total combined stock of the Company. On April 1, 2000,
there are approximately 3,350 employees eligible to participate in the Employee
Stock Plan.
-10-
<PAGE>
Payment Periods. The six-month periods, June 1 to November 30 and December
---------------
1 to May 31, are the Payment Periods during which payroll deductions will be
accumulated under the Employee Stock Plan. The first day of each Payment Period
is the Offering Commencement Date and the last day of each Payment Period is the
Offering Exercise Date.
Granting Stock Options. Twice each year on the Offering Commencement Date,
----------------------
the Company will grant to each eligible employee an option to purchase on the
Offering Exercise Date at the Option Price such number of full shares as such
employee's payroll deductions permit. The Option Price for each Payment Period
is the lesser of (1) 90% of the closing price of such shares on the Offering
Commencement Date or (2) 100% of the closing price of such shares on the
Offering Exercise Date.
Changes in Capitalization. In the event of an increase or decrease in the
-------------------------
number of outstanding shares of Common Stock of the Company through stock split-
ups, reclassifications, stock dividends, changes in par value and the like, an
appropriate adjustment will be made in the number of shares and Option Price per
share.
Administration. The Employee Stock Plan is administered by a Committee
--------------
appointed by the Board of Directors. Determinations made by the Committee and
approved by the Board of Directors with respect to any matter or provision
contained in the Employee Stock Plan shall be final, conclusive and binding upon
all parties.
Amendment and Termination. The Board of Directors reserves the right to
-------------------------
amend, suspend or terminate the Employee Stock Plan at any time. The Employee
Stock Plan shall terminate when all of the unissued shares of stock reserved for
the purposes of the Employee Stock Plan have been purchased. No amendment to
the Employee Stock Plan shall, without the approval of the stockholders,
increase the total number of shares which may be offered under the Employee
Stock Plan, materially alter the requirement for participation in the Employee
Stock Plan, or materially increase the benefits accruing to participants in the
Employee Stock Plan.
Federal Income Tax Consequences. The Employee Stock Plan is intended to
-------------------------------
qualify as an "employee stock purchase plan" within the meaning of Section 423
of the Code. Section 423 provides that no federal income tax is paid by the
employee, and the Company is not entitled to a deduction, at either the
beginning or end of an offering period. The federal income tax consequences
upon disposition of the shares acquired pursuant to an offering under the
Employee Stock Plan depend on when such disposition occurs.
If the disposition occurs after the expiration of both (1) two years from
the offering commencement date and (2) one year from the purchase date, and the
fair market value of the stock on the date of disposition is higher than the
price paid for the stock, the employee will generally recognize compensation
taxable as ordinary income equal to the lesser of (a) the excess of the fair
market value of the stock on the offering commencement date over the option
price, and (b) the excess of the fair market value of the stock at the time of
disposition over the price paid for it.
If the disposition occurs before the expiration of either of the above two
dates, the employee will recognize the excess of the fair market value of the
stock on the date of the purchase over the option price as compensation taxable
as ordinary income even though there may have been no gain on the disposition of
the stock. To the extent of reported ordinary income in such case, the Company
will be allowed a tax deduction in an equal amount. Any gain recognized in
excess of the amount reported as ordinary income will be reported as long-term
or short-term capital gain, depending on how long after the purchase date the
disposition occurs.
-11-
<PAGE>
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 Plan to require
that a minimum of $20,000 of the annual retainer be paid in Company Stock. Under
other provisions of the Non-Employee Director Plan, several non-employee
Directors elected to receive more Company Stock than the required minimum. This
requirement, adopted by an amendment to the Plan in 1996, increased the minimum
amount of the annual retainer Directors must take in Company Stock to 66-2/3%.
It also insures that all Directors will have a minimum of $100,000 worth of
Company Stock after five years of service. This Plan amendment along with the
elimination of the Director Retirement Plan (described below) in 1996 insures
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. Directors 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.
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.
In connection with the merger with Nevada Power, which was consummated on July
28, 1999, the retirement plan for outside directors of Nevada Power Company was
terminated for all continuing directors. The actuarial value of the vested
benefit for such directors as of the date of merger will be converted to phantom
stock at its fair market value on that date and held in an account on the same
basis and on the same terms and conditions as exists for continuing directors of
the Company.
BOARD AND COMMITTEE MEETINGS
The Board of Directors maintains the following standing committees: Audit,
Corporate and Civic Responsibility, Human Resources, and Planning and Finance.
The Board also establishes ad hoc committees for specific projects when
required.
The Audit Committee was established in July 1992 to review and confer with
the Company's independent auditors and to review the Company's internal auditing
program and procedures and its financial statements to ensure that its
operations and financial reporting are in compliance with applicable laws,
regulations and Company policies. The Directors presently serving on the Audit
Committee are Mr. Murphy (Chair), Mses. Coleman and Corbin, and Messrs. Bliss,
Gibson, and Goolsby. The Audit Committee met five times in 1999.
The Corporate and Civic Responsibility Committee was formed in July 1999
and, among other things, assumed the duties of the previous Environmental
Committee, which was established in 1992. Among its other duties, this Committee
oversees the Company's environmental policy and performance and provides
guidance to executive management on environmental issues as well as overseeing
all other aspects of corporate compliance with applicable law, corporate giving,
and legislative and governmental affairs. The Directors presently serving on the
Corporate and Civic Responsibility Committee are Mr. Gibson (Chair), Ms. Corbin,
and Messrs. Day, O'Reilly and Murphy. The Corporate and Civic
-12-
<PAGE>
Responsibility Committee met two times in 1999. The former Environmental
Committee met one time in 1999.
The Human Resources Committee was formed in July 1999 and assumed the
duties of the former Compensation and Organization Committee, which was formed
in 1991. 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. The Committee also oversees the Company's pension and
401K benefit programs and oversees the appointment and discharge and monitors
plan money managers. It also reviews and discharges the fiduciary duties
delegated to the Committee under the Company's benefit plans. The Directors
presently serving on the Human Resources Committee are Mr. Donnelley (Chair),
Ms. Coleman, and Messrs. Day, Herbst and Wheeler. The Human Resources Committee
met three times in 1999. The former Compensation and Organization Committee met
two times in 1999.
The Planning and Finance Committee was formed in October 1992 to assume the
duties and responsibilities of the previously separate Finance and Planning
Committees. This Committee reviews and recommends to the Board the long-range
goals of the parent and subsidiary Companies, corporate budgeting and the type
and amount of financing necessary to meet these goals, objectives, and budgets.
It also reviews and monitors risk management policy and implementation. The
Directors presently serving on the Planning and Finance Committee are Mr.
Goolsby (Chair), Messrs. Bliss, Donnelley, Herbst, O'Reilly and Wheeler. The
Planning and Finance Committee met seven times in 1999.
There were eight regularly scheduled and six special meetings of the Board
of Directors held in 1999. The aggregate meeting attendance of all members of
the Board was 95% for Board and Committee meetings.
SUMMARY COMPENSATION TABLE
The following table sets forth information about the compensation of each
Chief Executive Officer that served in that position during 1999, 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 Compen- Stock Options/ LTIP All Other
Principal Salary Bonus Sation Awards SARS Payouts Compen-sation
Position Year ($) ($) ($) ($) (#) ($) ($)
(a) (b) (c) (d) (2) (e) (3) (f) (g)(4) (h)(5) (i) (6)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles A. Lenzie (1) 1999 133,365 59,375 52,742 0 0 426,972 5,650
Chairman, Chief 1998 461,145 285,500 9,628 0 0 112,489 4,800
Executive Officer, 1997 420,904 89,250 6,866 0 0 128,882 4,750
Director, Nevada
Power Company
Michael R. Niggli (1) 1999 400,000 255,130 1,183 0 123,000 410,306 8,934
Chairman and Chief 1998 353,846 216,000 11,161 0 0 115,399 79,743
Executive Officer
</TABLE>
-13-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Malyn K. Malquist (1) 1999 352,692 199,875 14,337 0 298,792 0 22,021
President and Chief 1998 292,960 180,900 16,486 0 61,000 85,184 15,805
Operating Officer 1997 212,803 92,198 2,052 0 14,000 101,192 15,279
Steven W. Ragazio 1999 262,075 81,700 60,654 0 36,260 127,712 6,811
Senior Vice 1998 219,462 30,750 13,712 0 0 29,304 4,800
President, Energy 1997 202,269 48,750 11,736 0 0 36,594 4,800
Delivery
Mark A. Ruelle 1999 196,654 86,658 7,389 0 61,292 0 8,565
Senior Vice 1998 192,116 72,843 12.342 0 9,000 50,108 8,974
President, Chief 1997 143,308 65,269 3,808 0 8,384 0 77,329
Financial Officer and
Treasurer
William E. Peterson 1999 200,000 83,053 20,727 0 80,168 0 11,974
Senior Vice 1998 199,385 71,503 18,918 0 9,000 85,184 29,939
President, General 1997 201,757 78,184 17,142 0 10,000 101,192 29,488
Counsel and
Corporate Secretary
Gloria T. Banks- 1999 185,769 57,564 41,358 0 18,220 101,582 7,371
Weddle 1998 177,222 54,000 0 0 0 29,960 4,514
Vice President, 1997 164,539 25,500 0 0 0 0 3,067
Corporate Services
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
(1) Mr. Lenzie resigned from his position of Chairman, President and Chief
Executive Officer of Nevada Power Company on March 31, 1999, and Mr. Niggli
was named Chairman, President and Chief Executive Officer. Mr. Malquist
was Chairman, President and Chief Executive Officer of Sierra Pacific
Resources until the July 28, 1999, merger, at which time Mr. Malquist was
named President and Chief Operating Officer and Mr. Niggli was appointed
Chairman of the Board and Chief Executive Officer.
(2) The amounts presented for 1999, and those for SPR executives in 1998 and
1997, represent incentive pay received pursuant to SPR's "pay for
performance" team incentive plan approved by shareholders in May, 1994.
(3) For the executives listed, with the exceptions noted below, these amounts
include Personal Time Off payouts. For Mr. Lenzie, Mr. Rigazio and Ms.
Banks-Weddle, the Personal Time Off payouts were $8,160, $17,881, $5,596
respectively. Also included for these executives is the amount of those
perquisites, which in the aggregate, exceeded the lesser of $50,000 or 10%
of their salary and bonus. Due to a change in policies after the merger,
the NVP executives were either given their company vehicle, or allowed to
purchase it at a bargain price. The fair market value and the related tax
gross-up, less any amount paid by the executive, if applicable, was
included as compensation for their automobiles, $44,582, $42,774, $35,762
respectively.
(4) As a result of the July 28, 1999, merger with Nevada Power Company, all SPR
nonqualifying stock options outstanding as of that date were converted at a
ratio of 1.44:1. For the pre-merger SPR executives, the 1999 option
amounts include the number of new shares issued during the year, as well as
the total number of shares that were converted for that employee. For 1998
and 1997, the amounts are the same as those presented in prior years and do
not reflect the conversion.
(5) The Long-term incentive payouts for the SPR executives, for the three-year
period January 1, 1997, to December 31, 1999, were not approved for payment
by the SPR Board of Directors; therefore, zero amounts are shown in 1999
for the pre-merger SPR executives. Nevada Power executives received a lump
sum payout of all their performance shares as a result of the July 28,
1999, merger.
(6) Amounts for All Other Compensation include the following for 1999:
-14-
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Charles Michael R. Malyn K. Steven W. Mark A. William Gloria T.
Description A Niggli Malquist Rigazio Ruelle E. Banks-
Lenzie Peterson Weddle
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Company $5,650 $6,639 $ 6,000 $6,659 $6,000 $6,000 $7,204
contributions to
the 401K deferred
Compensation plan
Company $14,225 $2,000 $4,126
contributions to
the nonqualified
deferred
compensation plan
Imputed income on $ 528 $ 152 $ 176 $ 643 $ 166
group term life
insurance
premiums paid by
SPR
Insurance premiums $2,294 $ 1,268 $ 389 $1,205
paid for executive
term life polices
- -------------------------------------------------------------------------------------------------------
</TABLE>
-15-
<PAGE>
OWNERSHIP OF STOCK BY DIRECTORS, NOMINEES
FOR DIRECTORS, EXECUTIVE OFFICERS AND
CERTAIN BENEFICIAL OWNERS
Voting Stock
The following table indicates the shares owned by Franklin Resources, Inc.,
the only person known to Sierra Pacific Resources to be the beneficial owner of
more than 5 percent of any class of its voting stock as of March 15, 2000:
<TABLE>
<CAPTION>
Name and Address Shares Percent
Title of Class of Benefical Owner Beneficially Owned of Class
<S> <C> <C> <C>
Common Stock Franklin Resources, Inc. 4,825,550 6.2%
</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.
<TABLE>
<CAPTION>
Shares
Beneficially Percent of Total Shares
Owned as of March 15, Outstanding as of
Name of Director or Nominee 2000 March 15, 2000
- -------------------------------------- ------------------------ -----------------------------------
<S> <C> <C>
Edward P. Bliss 22,988
Mary L. Coleman 262,656
Krestine M. Corbin 16,454
Theodore J. Day 31,429
James R. Donnelley 30,129 No director or nominee
Fred D. Gibson 7,708 for director owns in excess
John L. Goolsby 7,965 of one percent.
Jerry E. Herbst 5,100
Malyn K. Malquist 158,479
James L. Murphy 18,285
Michael R. Niggli 43,867
John F. O'Reilly 4,000
Dennis E. Wheeler 13,635
------------------------
622,695
========================
</TABLE>
-16-
<PAGE>
<TABLE>
<CAPTION>
Shares
Beneficially Percent of Total Shares
Owned as of Outstanding as of
Executive Officers March 15, 2000 March 15, 2000
- --------------------------------------- ------------------------ -----------------------------------
<S> <C> <C>
Charles A. Lenzie/(1)/ 9,475
Malyn K. Malquist 158,479
Michael R. Niggli 43,867
Steven W. Rigazio 20,553 No executive officer owns
Mark A. Ruelle 35,444 in excess of one percent.
William E. Peterson 55,993
Gloria T. Banks-Weddle 6,839
------------------------
330,650
========================
All directors and executive officers
as a group (a) (b) (c) 876,275
========================
- ---------------------------------------
</TABLE>
(1) Mr. Lenzie resigned from his position of Chairman, President and Chief
Executive Officer of Nevada Power Company on March 31, 1999, and Mr. Niggli
was named Chairman, President and Chief Executive Officer. Mr. Malquist
was Chairman, President and Chief Executive Officer of Sierra Pacific
Resources until the July 28, 1999, merger, at which time Mr. Malquist was
named President and Chief Operating Officer and Mr. Niggli was appointed
Chairman of the Board and Chief Executive Officer.
(a) Includes shares acquired through participation in the Employee Stock
Purchase Plan and/or 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. Niggli, Malquist, Rigazio, Peterson, Ruelle, Banks-Weddle and
directors and executive officers as a group are 34,797, 151,365, 3,433,
50,668, 32,799, 3,433, and 369,503 shares, respectively.Performance shares
granted were not earned and therefore not received in 2000.
(c) Included in the shares beneficially owned by the Directors are 71,737
shares of "phantom stock" representing the actuarial value of the
Directors' vested benefits in the terminated Retirement Plan for Outside
Directors. The "phantom stock" is held in an account to be paid at the
time of the Director's departure from the Board.
-17-
<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 1999. Pursuant to Securities and
Exchange Commission (the "SEC") rules, the table also shows the present value of
the grant at the date of grant.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Individual Grants (1)
- --------------------------------------------------------------------------------------
Percent of
Number of Total
Securities Options/SARs Exercise Grant
underlying Granted to of Base Date
Options/ Employees Price Expiration Present
Name SARs in Fiscal ($/Sh) Date Value
(a) Granted Year (d) (e) (f) (2)
(b) (c)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Charles A. Lenzie 0 0 0 0 0
Michael R. Niggli
08/01/1999 Grant 123,000 14.77% $26.00 08/01/2009 $ 628,530
Employee Total 123,000 14.77% $26.00 $ 628,530
Malyn K. Malquist
08/01/1999 Grant 87,840 10.55% $26.00 08/01/2009 $ 448,862
01/01/1999 Grant 87,840 10.55% $24.22 01/01/2009 $ 355,752
01/01/1998 Grant 87,840 10.55% $24.93 01/01/2008 $ 275,110
01/01/1997 Grant 20,160 2.42% $19.97 01/01/2007 $ 49,157
01/01/1996 Grant 5,045 0.61% $16.23 01/01/2006 $ 7,459
01/01/1995 Grant 6,092 0.73% $13.02 01/01/2005
01/01/1994 Grant 3,975 0.48% $14.24 01/01/2004
Employee Total 298,792 35.89% $1,136,340
Steven W. Rigazio
08/01/1999 Grant 23,300 2.80% $26.00 08/01/2009 $ 119,063
01/01/1999 Grant 12,960 1.56% $24.22 01/01/2009 $ 52,488
Employee Total 36,260 4.36% $ 171,551
Mark A. Ruelle
08/01/1999 Grant 23,300 2.80% $26.00 08/01/2009 $ 119,063
01/01/1999 Grant 12,960 1.56% $24.22 01/01/2009 $ 52,488
01/01/1998 Grant 12,960 1.56% $24.93 01/01/2008 $ 40,590
01/01/1997 Grant 12,072 1.45% $19.97 01/01/2007 $ 29,436
Employee Total 61,292 7.37% $ 241,577
- ---------------------------------------------------------------------------------------------------------
</TABLE>
-18-
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
William E. Peterson
08/01/1999 Grant 23,300 2.80% $26.00 08/01/2009 $ 119,063
01/01/1999 Grant 12,960 1.56% $24.22 01/01/2009 $ 52,488
01/01/1998 Grant 12,960 1.56% $24.93 01/01/2008 $ 40,590
01/01/1997 Grant 14,400 1.73% $19.97 01/01/2007 $ 35,112
01/10/1996 Grant 5,045 0.61% $16.23 01/01/2006 $ 7,459
01/01/1995 Grant 6,092 0.73% $13.02 01/01/2005
01/01/1994 Grant 5,411 0.65% $14.24 01/01/2004
Employee Total 80,168 9.64% $ 254,712
Gloria T. Banks-
Weddle
08/01/1999 Grant 10,300 1.24% $26.00 08/01/2009 $ 52,633
01/01/1999 Grant 7,920 0.95% $24.22 01/01/2009 $ 32,076
Employee Total 18,200 2.19% $ 84,709
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) Under the SPR Executive Long-Term Incentive Plan, the 1999 grants of
nonqualifying stock options were made on January 1. One third of these
grants vest annually commencing one year after the date of the grant. An
additional grant of nonqualifying stock options was made on July 28, 1999,
following the merger with Nevada Power Company. One third of these grants
vest annually commencing January 1, 2001.
(2) The 1.44:1 conversion of all outstanding shares effectively resulted in the
repricing of each grant and a change in the number of outstanding shares
for each employee. According to SEC regulations, these repriced options
are listed above as grants issued during the year. The vesting periods and
expiration dates of the grants were not changed.
(3) The total number of nonqualifying stock options granted to all employees in
1999 was 832,983. 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 (17.77%), average risk
free rate of return (5.94%), average projected dividend yield (4.30%), the
stock option term (10 years), and an adjustment for risk of forfeiture
during the vesting period (3 years at 3%). No adjustment was made for non-
transferability.
-19-
<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, 1999.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Number of Dollar
Securities Value of
Underlying Unexercised
Unexercised in-the-Money
Options/SARS at Options/SARS at
Shares Fiscal Year- Fiscal Year-End
Acquired on Value End Exercisable/
Name Exercise Realized Exercisable/ Unexercisable
(a) (b) (C) Unexercisable (e)
(d)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles A. Lenzie 0 0 0/ 0 0/ 0
Michael R. Niggli 0 0 0/123,000 0/ 0
Malyn K. Malquist 0 0 54,593/244,000 $36,384/$ 7,400
Steven W. Rigazio 0 0 0/ 36,260 0/ 0
Mark A. Ruelle 0 0 12,369/ 48,924 0/ 0
William E. Peterson 0 0 27,232/ 52,939 $40,798/$ 7,400
Gloria T. Banks-Weddle 0 0 0/ 18,220 0/ 0
- --------------------------------------------------------------------------------------------------
</TABLE>
(e) Pre-tax gain. Value of in-the-money options based on December 31,
1999 closing trading price of $17.31 less the option exercise price.
-20-
<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 SPR. Goals are established for total shareholder return (TSR)
compared against the Standard & Poor's 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 1999.
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
Number of Other Period
Shares, Units Until
or Other Maturation or Threshold Target Maximum
Name Rights Payout $ $ $
(a) (b) (c) (d) (1) (e) (2) (f) (3)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Charles A. Lenzie 0 0 0 0 0
Michael R. Niggli 6,480 3 years $78,473 $156,946 $274,655
Malyn K. Malquist 6,480 3 years $78,473 $156,946 $274,655
Steven W. Ragazio 1,872 3 years $22,670 $ 45,340 $ 79,345
Mark A. Ruelle 1,872 3 years $22,670 $ 45,340 $ 79,345
William E. Peterson 1,872 3 years $22,670 $ 45,340 $ 79,345
Gloria T. 1,152 3 years $13,951 $ 27,901 $ 48,828
Banks-Weddle
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) The threshold represents the level of performance or target 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 performance or target 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 performance indicative of exceptional 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 the grant.
-21-
<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>
Highest Average Annual Benefits for Years of Service Indicated
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. Niggli,
Malquist, Rigazio, Ruelle, Peterson, and Ms. Banks Weddle are 1.9, 5.7, 15.5,
2.8, 6.5, and 20.5, respectively. Pursuant to the employment contracts for
Messrs. Niggli and Malquist, for purposes of computing pension benefits, Messrs.
Niggli and Malquist received 26 and 20 years, respectively, of credited service
from which shall be deducted all pension benefits received from prior employment
with different companies. In addition, the Company has entered into an
agreement with Mr. Peterson crediting him with four years of service for prior
years service with his previous employer, most of which was dedicated to
performing legal services for SPR and SPPC, and an additional one-half year
credit for each year of service with the Company for the first ten years of his
employment.
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.
-22-
<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,
1994, and ending December 31, 1999.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG SIERRA PACIFIC RESOURCES, THE S & P 500 INDEX
AND THE DOW JONES UTILITIES INDEX
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SIERRA PACIFIC RESOURCES $ 100 $ 131.46 $ 169.47 $ 230.15 $ 241.56 $ 114.85
- -----------------------------------------------------------------------------------------------------------------------
STANDARD & POORS 500 $ 100 $ 137.58 $ 169.17 $ 225.61 $ 290.09 $ 351.13
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
-23-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------
DOW JONES UTILITIES $ 100 $ 131.98 $ 143.99 $ 177.11 $ 210.54 $ 197.86
- -----------------------------------------------------------------------------------------------------------------------
*$100 invested on 12/31/94 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
REPORT OF THE HUMAN RESOURCES 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. The Company's
merger partner, Nevada Power, maintained a similar program for its executives.
To review, the guiding principles of the pay-for-performance plan are:
. To encourage executive involvement in creating long-term shareholder
value by emphasizing the executive's ownership of Company Stock.
. To tie cash awards to specific goals set for the Company, the
executive's business unit, and the individual.
. To make improved customer satisfaction, as measured by outside surveys,
a specific element of the performance 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.
Long-term performance share grant incentives are based on meeting or
exceeding financial performance, operational and/or customer satisfaction goals
established by the Board at the beginning of each cycle. In 1999, long-term
grants comprised 10% to 15% of an executive's position rate. These stock
grants, which include dividend equivalents provided goals are met, cover a
period of three years commencing on January 1, 1999. They are earned by meeting
requirements for annual growth in earnings per share and total shareholder
return in comparison with the S&P utilities index, as measured over the three-
year period of the award.
The 1999 plan also included non-qualified stock option grants that ranged
(at face value) from 30% to 50% (for the CEO) of position salary rates. These
vest over three years at the rate of 33-1/3% 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.
In connection with the merger with Nevada Power Company, the Company
commissioned Towers Perrin to undertake a complete review of the Company's
executive compensation strategy and levels of compensation for executives in the
merged company. Towers Perrin recommended and the Company adopted a plan
consistent with the existing long-term plan approved by shareholders that
established pay levels which are more closely aligned to general industry
standards. Executive pay level increases warranted as a result of changes in
position or expanded responsibilities were mostly put at risk in either stock
options or other stock grants contingent on performance. This pay-for-
performance plan (1) increases the Company's competitiveness by enhancing the
ability to attract, retain, and motivate top talent, (2) increases compensation
opportunities with limited increases in fixed costs, (3) fosters a pay-for-
performance attitude, and (4) increases stock ownership and aligns executive
interests with those of shareholders. The plan sets base salaries for
executives at a 50/50 blend of median levels for comparably sized companies in
utility and general industries, with additional "at risk" compensation, which
-24-
<PAGE>
is awarded on condition that goals designed to increase shareholder value are
satisfied or exceeded. The at-risk portion was based on competitive data for
comparable positions and is set at the 50/th/ percentile of general industry
companies with annual revenues of $1-$3 billion. The expectation is that total
cash compensation will exceed the competitive market in good performance years
and fall below market if performance is below average.
The annual cash incentive plan contemplates a payment in cash or stock
based on achieving pre-established goals based on revenue growth, cost
reductions, customer satisfaction, and/or earnings improvement. Mid-term awards
in restricted stock are based on achievement of goals tied to performance over a
period ranging from one to three years and includes factors such as execution
and achievement of strategies tied to long-term value, such as market
performance and overall operational efficiencies. Effective January 1, 2000,
the long-term program provides for an opportunity to earn amounts ranging from
27% to 141% (CEO) of bonus pay in performance shares and options, paid 60% in
options exercisable at market value (NYSE) on the date of grant, which grants
vest 33-1/3% per year, and 40% in performance shares subject to achieving pre-
established goals designed to increase shareholder value. Long-term awards of
stock options are ultimately based on recognition that long-term shareholder
value is the ultimate indication of the degree of success.
Due to the mid-year merger of the Company with Nevada Power and the desire
to place all executives on the same plan as soon as possible, annual cash awards
were made effective on the date of the merger and prorated for the year based on
achievement of pre-established targets as of the merger date. These targets
included meeting or improving budget commitments on capital and O&M expenses,
and customer satisfaction. The same targets and measurements were employed for
the remainder of the year for both Nevada Power and Sierra Pacific Power.
Customer satisfaction is measured by Market Strategies, Inc., an independent
market research firm on a scale of 1 to 10 (10 being the highest score
possible). Targets were based on the percent of responses of 9 to 10 in each of
the companies' three major market segments, residential, commercial and
major/industrial. Overall, the Company scored 104% of targeted financial
performance and 100% of the targeted customer satisfaction goal, resulting in an
overall payout of 100.7% of overall target.
1997 long-term performance grant opportunities which could have been
awarded at the end of 1999 were based on achieving targets for annual growth in
earnings per share over the prior three years and total shareholder return as
compared to the Dow Jones Utility Average. The Company failed to achieve the
minimal levels required of both targets and the executives failed to earn any
payout whatsoever. 1998 grant opportunities could be earned over a period of
six to 24 months. Targets are based on timeliness of merger close and
achievement of merger savings. No payouts have been earned to date. Under the
change of control provisions of the pre-existing Nevada Power Long-Term
Executive Plan, which was terminated on the effective date of the merger, all
grants vested 100% at target. As a result, the former Nevada Power executives
were paid 100% of their long-term awards at 100% of target. Although from a
total shareholder return perspective the Company had a very disappointing year,
the Company did achieve a number of significant accomplishments, including
superior electric system reliability despite numerous range fires in Northern
Nevada and one major flood in southern Nevada, further improvement in recordable
employee accidents, further cost reductions, and maintaining a very high
electric plant availability rating. The Company also achieved significant
increased revenues for electric transmission, distribution, and the Tuscarora
Gas Pipeline. The Company also consummated the merger with Nevada Power,
obtained a favorable merger order, continued and continues to capture merger
savings ahead of schedule, and negotiated the acquisition of Portland General
Electric, which, on consummation, will nearly double the Company's electric
customer base and revenues.
CHIEF EXECUTIVE OFFICER COMPENSATION
-25-
<PAGE>
Under the Company's compensation plan, CEO compensation is based on the
same guiding principles established for the executive group as a whole.
Mr. Malquist
- ------------
Mr. Malquist was elected Chairman, President and CEO in the first quarter
of 1998 at a salary of $280,000 per year, which was 80% of the market median for
comparably sized companies. Because of Mr. Malquist's good performance in 1998,
the Board raised his salary effective January 1, 1999, to $355,000, which was
the market median. During the first half of 1999, Mr. Malquist demonstrated
good performance in achieving the operational and financial targets and goals
established by the Board in the context of ongoing deregulation activities in
Nevada and California, and in the midst of integrating the operations of Sierra
Pacific Power and Nevada Power. It was under his leadership that the Company
obtained a favorable order from the Public Utilities Commission of Nevada
("PUCN") regarding the merger and achieved the operational efficiencies
discussed above. Consistent with the Company's annual and long-term plans
applicable to the executive group as a whole, the Board granted Mr. Malquist the
mid-year and year-end annual incentive awards on the same basis and at the same
percentage as was awarded to all the other executive officers as a group. For
the reasons explained above in connection with performance shares for the
executive group as a whole, Mr. Malquist did not earn and was not awarded any
performance shares. The Towers Perrin study commissioned by the Company
indicated that the market level compensation for Mr. Malquist's position as
President and COO of the merged company was $380,000, and his salary for year
2000 was fixed at that rate, with market level target annual cash and long-term
share payouts or options at 67% and 107% of base pay, respectively. Thus, in
August 1999, Mr. Malquist was granted 87,800 options exercisable at the then-
existing market price of $26.00 per share, which options will vest at the rate
of 33-1/3% per year beginning January 1, 2000. He was also granted an
opportunity to earn 6,700 performance shares over the three-year period
commencing January 1, 2000, based on the same performance targets and goals
established for the executive group as a whole. In connection with the merger
agreement approved by shareholders, Mr. Malquist also has an employment contract
which grants him certain monetary rights and other benefits on the occurrence of
certain events. Mr. Malquist's employment contract is described in the section
on Transactions with Management below.
Mr. Niggli
- ----------
Mr. Niggli was elected Chairman and Chief Executive Officer of the Company
as of the effective date of the merger between the Company and Nevada Power.
Under the terms of Mr. Niggli's employment contract which was part of the merger
agreement approved by shareholders, Mr. Niggli's base salary with Nevada Power
of $400,000 remained in effect to the end of the year. Under the terms of the
Nevada Power short- and long-term incentive plans, which were terminated on
consummation of the merger, Mr. Niggli was granted his annual incentive award
based on achievement of pre-established financial targets as of the date of
merger close pro-rated for the year, and 100% of all long-term performance
grants which became fully vested as a result of the change of control of Nevada
Power, which occurred as a result of the merger.
Effective on the merger date, Mr. Niggli became a participant in the
Company's existing annual incentive award and was provided an opportunity to
earn annual incentive awards based on the same financial targets as had been
established for Mr. Malquist and the executive group as a whole. Based on the
targets discussed above, Mr. Niggli earned a cash incentive award at his market
level percentage as determined by Towers Perrin of 67% of base pay at the same
percentage target payout of 100.4% as applied to the executive group as a whole,
pro-rated to the end of the year. In addition, it was under his leadership that
integration of the two merged companies was accomplished, a rapid and smooth
transition achieved, and an agreement to acquire Portland General Electric
Company was consummated, which will nearly double the Company's electric
customer base and revenues. The Towers Perrin study described above indicated
that market level long-term compensation for Mr. Niggli's position in comparably
sized
-26-
<PAGE>
companies was 141% of base pay. Thus, in August 1999, Mr. Niggli was granted
104,000 options at the then-current market price of $26.00, which options will
vest at the rate of 33-1/3% per year commencing January 1, 2000. He was also
granted 13,200 performance shares to be earned over the three-year period
commencing January 1, 2000, based on achieving the same financial targets as
were established for Mr. Malquist and the executive group as a whole.
The Towers Perrin study indicated that market level base pay for Mr.
Niggli's position in comparably sized companies is $560,000. In light of the
fact that Mr. Niggli is relatively new to the position, the Board determined to
raise his base pay for the year 2000 to $500,000, or approximately 90% of market
rate. As with Mr. Malquist, Mr. Niggli has an employment contract which was
part of the merger agreement approved by shareholders. Mr. Niggli's contract
grants him certain rights and benefits on the occurrence of certain events. Mr.
Niggli's contract is described in the section on Transactions with Management
set forth below.
Members of the Human Resources Committee
Mary Lee Coleman Theodore J. Day
James R. Donnelley, Chair Jerry E. Herbst
Dennis E. Wheeler
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT
The Company entered into an agreement with 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 sale
of the property resulted in Hale Day Gallagher Co. receiving a standard
brokerage commission of 5% of the selling price. Mr. T.J. Day, a senior partner
of Hale Day Gallagher Co. and a Director of the Company, did not participate in
any discussions or voting to retain the firm, had no relationship with, or
interest in, the transaction, will receive no part of the commission, and
obtained 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 of 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, has
performed work for the Company since 1976 and continues to do so from time to
time.
Susan Oldham, a former employee of Sierra Pacific Power Company
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 resources area for the Company on a contract basis.
In 1999, Sierra Pacific Power Company purchased all of the stock, assets
and liabilities of the Silver Lake Water Company, of which 50% of the stock was
owned by the Lear Family Trust and 50% of the stock was owned by Moya Olsen
Lear. Mr. Murphy, a Director of Sierra Pacific Power Company, and Mr. Dayton, a
former director of Sierra Pacific Power Company and a director at the time of
purchase, are trustees of the Lear Trust. Neither Mr. Murphy nor Mr. Dayton
participated in any of the Company's
-27-
<PAGE>
discussions or deliberations to purchase the Silver Lake Water Company and
neither received any benefit, either directly or indirectly, from the
transaction.
CHANGE IN CONTROL AGREEMENTS
The Company has entered into severance agreements with Jeffrey L.
Ceccarelli, Matt H. Davis, Steven C. Oldham, William E. Peterson, Douglas R.
Ponn, Mark A. Ruelle, Mary O. Simmons, and Mary Jane Willier (Reed). 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 SPR for reasons other than cause (as defined in
the agreements), death or disability, or (b) by the executive for good reason
(as defined by 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 acquirer)), 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 3 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 entered into
Employment Agreements with Messrs. Niggli and Malquist. The Board of 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, Meager &
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.
Nevada Power Company
On March 13, 1998, Gloria Banks Weddle, David G. Barneby, and Steven W.
Rigazio entered into employment agreements with Nevada Power Company, a wholly
owned subsidiary of the company, for a three-year term which would automatically
be extended in the event of a Change in Control to the third anniversary of the
Change in Control (or the consummation of the Change in Control, if later). The
extended term is subject to further extension on the occurrence of a further
Change in Control event. The announcement of the execution of the Merger
Agreement constituted a Change in Control under the employment agreements, and
the consummation of the Merger constituted an additional change in control
event. If during the term of the employment agreement Nevada Power terminates
the employment of an executive officer for reasons other than cause (as defined
in each employment agreement), death or disability, or the executive officer
terminates his or her employment for good reason (as defined in each employment
agreement), the executive officer will receive, in addition to all compensation
earned through the date of termination and coverage and benefits under all
benefit and incentive compensation plans to which the executive officer is
entitled pursuant to the terms thereof, a severance payment equal to two times
the sum of his or her annual base salary and target annual bonus. In addition,
the executive officer will continue to receive health benefits (i.e., medical
insurance, etc.) and life benefits which will be offset by any benefits payable
to the executive officer during the applicable benefit continuation period from
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<PAGE>
another employer. Under the employment agreements, the executive officer will
receive additional amounts sufficient to hold the executive harmless for any
excise tax that might be imposed by state or local law in connection with
receiving any compensation or benefits pursuant to the employment agreement or
otherwise that is considered contingent on a Change in Control.
The annual incentive plans, 1993 Long-Term Incentive Plan and the
Supplemental Executive Retirement Plan of Nevada Power, contained provisions
relating to Change in Control. Under the annual incentive plans, after a Change
in Control, eligible participants, whether or not the participants are
terminated, including executive officers and participants who terminated prior
to the Change in Control by reason of normal or early retirement or death, had a
right to an immediate cash payment of their annual awards, on a pro-rated basis,
based on annual base salary and on the assumption that established targets at
100% achievement level for the year had been met. Under the 1993 Long-Term
Incentive Plan, after a Change in Control, incentive compensation unit awards
for outstanding performance periods were paid to participating executive
officers in cash in the amount of the fair market value of Nevada Power Common
Stock at the time of merger close for each incentive compensation unit. Under
the Supplemental Executive Retirement Plan, the accrued benefit of each
executive officer participating therein became fully vested on the occurrence of
a Change in Control. The consummation of the Merger constituted a "Change in
Control" under all the plans described above.
David G. Barneby
On June 19, 1999, Nevada Power, a wholly owned subsidiary of the Company,
entered into a retention agreement effective on the date of the merger with
David G. Barneby, Vice President, Generation, which provides him with benefits
which he would have been entitled to receive had he voluntarily terminated his
original May 13, 1998, employment agreement with the Company. The agreement
provides, in addition to base pay and any incentive pay or long-term pay accrued
during the period of his employment, an additional $600,890 in cash, payable in
substantially equal quarterly installments commencing on October 1, 1999, and
ending on July 31, 2002. If employment is terminated during the term or if the
employee dies during the term, any remaining and unpaid installment shall be
paid to the employee or to his heirs. If the employee is terminated or retires,
then the employee shall, in addition, receive the economic equivalent to an
enhancement of his retirement allowing for payment in cash of the present value
of the average early retirement benefit calculated on the basis of the greater
of actual age or age 55, and an additional five years of age or years of service
or a combination thereof to maximize retiree medical benefits. The employee is
also entitled to 24 months of employee health and life benefits in amounts
substantially equivalent to those in effect immediately prior to termination.
In the event any payments or benefits or distributions thereof under the
contract or any other agreements, policies or plans of the Company would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
by reason of being considered contingent on a change of control, then employee
is entitled to receive an additional payment equal to such excise tax.
EMPLOYMENT AGREEMENTS
Sierra Pacific Resources has entered into Employment Agreements with
Messrs. Niggli and Malquist. Messrs. Niggli and Malquist are sometimes
hereinafter individually referred to as the "Executive." The Employment
Agreements became effective on July 28, 1999, and have a term of three years,
which term would automatically be extended in the event of a Change in Control
(as defined in the Agreements) to the third anniversary of the Change in Control
(or the consummation of the Change in Control, if later). The extended term is
subject to further extension on the occurrence of an additional Change in
Control event.
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<PAGE>
Pursuant to the Employment Agreements, Mr. Niggli will serve as
Chairman and Chief Executive Officer of Sierra Pacific Resources, and Mr.
Malquist will serve as President and Chief Operating Officer of Sierra Pacific
Resources and Chief Executive Officer of Nevada Power Company and Sierra Pacific
Power Company.
Each Executive's Employment Agreement provides that he will receive
annual base salary commensurate with his position and level of responsibility,
as determined by the Sierra Pacific Board (or compensation committee thereof),
but not less than the Executive's annual base salary as in effect immediately
prior to the Merger. Base salary may not be decreased. Each Employment
Agreement also provides that the Executive will be eligible to participate in
any annual incentive and long-term cash incentive plans applicable to executive
and management employees that are authorized by the Sierra Pacific Board (or
compensation committee thereof), with such participation, subject to achievement
of applicable performance measures, to be at annual target payout or grant
levels, respectively, of not less than a percentage of the Executive's annual
base salary equal to the corresponding target percentage of annual base salary
in effect for the Executive under the Nevada Power or Sierra Pacific plans in
which the Executive participated immediately prior to the Merger; provided,
however, that the target percentages for one Executive shall in no event be less
than the target percentages for the other Executive. The Executives also are
entitled to participate in all employee benefit plans in which senior executives
of Sierra Pacific are entitled to participate, in certain fringe benefits and in
the supplemental retirement plans in which they participated immediately prior
to the Merger.
If during the term of the Employment Agreement Sierra Pacific
terminates the employment of the Executive for reasons other than cause (as
defined in each Employment Agreement), death or disability or the Executive
terminates his employment for good reason (as defined in each Employment
Agreement), the Executive will receive, in addition to all compensation earned
through the date of termination and coverage and benefits under all benefit and
incentive compensation plans to which he is entitled pursuant to the terms
thereof, a severance payment equal to three times the sum of his annual base
salary and target annual bonus. In addition, the Executive will continue to
receive health benefits (i.e., medical insurance, etc.) and life benefits on the
same terms and conditions as prior to his termination for 36 months following
his termination (the "Continuation Period").
The Executive has no duty to mitigate, but the health and life
benefits listed above will be offset by any benefits payable to the Executive
during the Continuation Period from another employer. Under the Employment
Agreements, Sierra Pacific will pay any additional amounts sufficient to hold
the Executive harmless for any excise tax that might be imposed as a result of
the Executive being subject to the federal excise tax on "excess parachute
payments" or similar taxes imposed by state or local law in connection with
receiving any compensation or benefits pursuant to his Employment Agreement or
otherwise that is considered contingent on a change in control. If the
Executive dies, is terminated due to permanent disability, is terminated for
cause, or terminates for other than good reason, in each case during the term of
the Employment Agreement, Sierra Pacific will pay to the Executive or the
Executive's beneficiaries or estate, as the case may be, all compensation earned
through the date of termination and benefits payable under applicable benefit
and incentive compensation plans.
A Change in Control for purposes of the Employment Agreements occurs
(i) if Sierra Pacific merges or consolidates, or sells all or substantially all
of its assets, and less than 65% of the voting power of the surviving
corporation is owned by those stockholders who were stockholders of Sierra
Pacific immediately prior to such merger or sale; (ii) any person acquires 20%
or more of Sierra Pacific's voting stock; (iii) Sierra Pacific enters into an
agreement or Sierra Pacific or any person announces an intent to take action,
the consummation of which would otherwise result in a Change in Control, or the
Board of Directors of Sierra Pacific adopts a resolution to the effect that a
Change in Control has occurred; (iv) within a two-year period, a majority of the
directors of Sierra Pacific at the beginning of such period cease to be
directors; or (v) the stockholders of Sierra Pacific approve a complete
liquidation or dissolution of Sierra Pacific.
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INDEPENDENT PUBLIC ACCOUNTANTS
No selection or recommendation has been made for the independent public
accountants for the 2000 audit. This selection will be made by the Audit
Committee.
The Company's financial statements, and the financial statements of
subsidiary companies for the year ended December 31, 1999, were audited by
Deloitte & Touche, LLP. A representative of Deloitte and Touche, LLP, 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
Deloitte & Touche, LLP, during 1999. 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 were provided by Deloitte & Touche, LLP, 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 2001 Annual
Meeting of Stockholders must be received on or before December 14, 2000, 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.
ANNUAL REPORT
In order to exercise prudent judgment, stockholders are invited to examine
the financial statements contained in the Company's Annual Report for 1999, a
copy of which has been mailed to all stockholders of record through the close of
business on March 24, 2000.
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Annex A
Sierra Pacific Resources
Executive Long-Term Incentive Plan,
as Amended
Article 1. Establishment, Purpose, and Duration
1.1 Establishment of the Plan. Sierra Pacific Resources, a Nevada
-------------------------
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive compensation plan to be known as the Sierra Pacific Resources
Executive Long-Term Incentive Plan (hereinafter referred to as the "Plan"), as
set forth in this document. The Plan permits the grant of Nonqualified Stock
Options (NQSO), Incentive Stock Options (ISO), Stock Appreciation Rights (SARs),
Restricted Stock, Performance Units, Performance Shares, and Bonus Stock.
Subject to ratification by an affirmative vote of a majority of the issued
and outstanding shares of the Company's common stock represented at the annual
meeting, the Plan shall become effective as of January 1, 1994 (the "Effective
Date") and shall remain in effect as provided in Section 1.3 herein.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
-------------------
success and enhance the value of the Company by linking the personal interests
of Participants to those of Company shareholders, stakeholders, customers, and
employees by providing Participants with an incentive for outstanding
performance.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants upon whose
judgment, interest, and special effort the successful conduct of its operation
is largely dependent.
The Plan is further intended to provide pay systems that support the
Company's business strategy, and which are competitive with similarly sized
utilities, and to emphasize pay-for-performance by tying reward opportunities to
carefully determined and articulated performance goals at corporate, business
unit, and individual levels.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date,
--------------------
as described in Section 1.1 herein, and shall remain in effect, subject to the
right of the Board of Directors to terminate the Plan at any time pursuant to
Article 15 herein or until all Shares subject to it shall have been purchased or
acquired according to the Plan's provisions. However, in no event may an Award
be granted under the Plan on or after December 31, 2003.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings set
forth below and, when the meaning is intended, the initial letter of the word is
capitalized:
2.1 "Award" means, individually or collectively, a grant under this Plan
of NQSO's ISO's, SARs, Restricted Stock, Performance Units, Performance Shares,
or Bonus Stock.
2.2 "Award Agreement" means an agreement entered into by each Participant
and the Company, setting forth the terms and provisions applicable to Awards
granted to Participants under this Plan.
2.3 "Board" or "Board of Directors" means the Board of Directors of the
Company.
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2.4 "Bonus Stock" means and Award granted to a Participant pursuant to
Article 10 herein.
2.5 "Cause" means: (i) willful misconduct on the part of a Participant
that is detrimental to the Company, or (ii) the conviction of a Participant for
the commission of a felony or crime involving moral turpitude. "Cause" under
either (i) or (ii) shall be determined in good faith by the Committee.
2.6 "Change in Control" of the Company shall be deemed to have occurred as
of the first day that any one or more of the following conditions shall have
been satisfied:
(a) The dissolution or liquidation of the Company;
(b) A reorganization, merger, or consolidation of the Company with one or
more corporation as a result of which the Company is not the surviving
corporation,
(c) The sale, exchange, transfer, or other disposition of shares of the
stock of the Company (or shares of the stock of any person that is a
shareholder of the Company) in one or more transactions, related or
unrelated, to one or more Persons if, as result of such transactions,
any Person or any Person and its affiliates own more than twenty
percent (20%) of the voting power of the outstanding stock of the
Company; or
(d) The sale of all or substantially all the assets of the Company.
2.7 "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
2.8 "Committee" means the committee, as specified in Article 3, appointed
by the Board to administer the Plan with respect to grants of Awards.
2.9 "Company" means Sierra Pacific Resources, a Nevada corporation, or any
successor thereto as provided in Article 18 herein.
2.10 "Director" means any individual who is a member of the Board of
Directors of the Company.
2.11 "Disability" shall have the meaning ascribed to such term in the
Long-Term Disability Income Plan of the Company.
2.12 "Dividend Equivalent" means a contingent right to be paid dividends
declared with respect to outstanding Option grants, pursuant to the terms of
Section 6.5 herein.
2.13 "Eligible Employee" means those employees who are eligible to
participate in the Plan, as set forth in Section 5.1 herein.
2.14 "Employee" means any full-time, nonunion employee of the Company or
of the Company's Subsidiaries. Directors who are not otherwise employed by the
Company shall not be considered Employees under this Plan.
2.15 "Exchange Act" means the Securities Exchange Act of 1934, as marked
from time to time, or any successor Act thereto.
2.16 "Fair Market Value" shall mean the closing sale price on the
principal securities exchange on which the Shares may then be traded or, if
there is no such sale on the relevant date, then on the last previous day on
which a sale was reported.
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2.17 "Freestanding SAR" means a SAR that is granted independently of any
Options.
2.18 "Incentive Stock Option" or "ISO" means an option to purchase Shares,
granted under Article 6 herein, which is designated as an Incentive Stock Option
and is intended to meet the requirements of Section 422 of the Code.
2.19 "Insider" shall mean an Employee who is, on the relevant date, an
officer, director, or ten percent (10%) beneficial owner of the Company, as
defined under Section 16 of the Exchange Act.
2.20 "Named Executive Officer" means an Participant who, as of the date of
vesting and/or payout of an Award is one of the group of "covered employees," as
defined in the Regulations promulgated under Code Section 162(m), or any
successor statute.
2.21 "Nonqualified Stock Option" or "NQDO" means an option to purchase
Shares, granted under Article 6 herein, which is not intended to be an incentive
Stock Option.
2.22 "Option" means an Incentive Stock Option or a Nonqualified Stock
Option.
2.23 "Option Price" means the price at which a Share may be purchased by a
Participant pursuant to an Option, as determined by the Committee.
2.24 "Participant" means an Employee of the Company who has outstanding an
Award granted under the Plan.
2.25 "Performance Unit" means an Award granted to Employee, as described
in Article 9 herein.
2.26 "Performance Share" means an Award granted to an Employee, as
described in Article 9 herein.
2.27 "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is limited in some way (based on the passage of time,
the achievement of performance goals, or upon the occurrence of other events as
determined by the Committee, at its discretion), and the Shares are subject to a
substantial risk of forfeiture, as provided in Article 8 herein.
2.28 "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d).
2.29 "Restricted Stock" means an Award granted to a Participant pursuant
to Article 8 herein.
2.30 "Retirement" shall have the meaning ascribed to such term in the
Retirement Plan for Employees of Sierra Pacific Power Company.
2.31 "Shares" means the shares of common stock of the Company.
2.32 "Stock Appreciation Right" or "SAR" means an Award, granted alone or
in connection with a related Option, designated as an SAR, pursuant to the terms
of Article 7 herein.
2.33 "Subsidiary" means any wholly-owned corporation, partnership,
venture, or other entity in which the Company holds one hundred percent (100%)
voting control.
2.34 "Tandem SAR" means a SAR that is granted in connection with a related
Option, the exercise of which shall require forfeiture of the right to purchase
a Share under the related Option (and when a Share is purchased under the
Option, the Tandem SAR shall be similarly canceled).
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2.35 "Window Period" means the period beginning on the third business day
following the date of public release of the Company's quarterly sales and
earnings information, and ending on the twelfth business day following such
date.
Article 3. Administration
3.1 The Committee. The Plan shall be administered by the Compensation and
-------------
Organization Committee of the Board, or by any other Committee appointed by the
Board consisting of not less than two (2) nonemployee Directors. The members of
the Committee shall be appointed from time to time by, and shall serve at the
discretion of, the Board of Directors.
The Committee shall be comprised solely of Directors who are eligible to
administer the Plan pursuant to Rule 16b-3(c)(2) under the Exchange Act.
However, if for any reason the Committee does not qualify to administer the
Plan, as contemplated by Rule 16b-3(c)(2) of the Exchange Act, the Board of
Directors may appoint a new Committee so as to comply with Rule 16b-3(c)(2).
3.2 Authority of the Committee. The Committee shall have full power
--------------------------
except as limited by law, the Articles of Incorporation, Bylaws of the Company,
subject to such other restricting limitations or directions as may be imposed by
the Board and subject to the provisions herein, to determine the size and types
of Awards; to determine the terms and conditions of such Awards in a manner
consistent with the Plan; to construe and interpret the Plan and any agreement
or instrument entered into under the Plan; to establish, amend, or waive rules
and regulations for the Plan's administration; and (subject to the provisions of
Article 15 herein) to amend the terms and conditions of any outstanding Award to
the extent such terms and conditions are within the discretion of the Committee
as provided in the Plan. Further, the Committee shall make all other
determinations which may be necessary or advisable for the administration of the
Plan. As permitted by law, the Committee may delegate its authorities as
identified hereunder.
3.3 Decisions Binding. All determinations and decisions made by the
-----------------
Committee pursuant to the provisions of the Plan and all related orders or
resolutions of the Board shall be final, conclusive, and binding on all persons,
including the Company, its stockholders, Employees, Participants, and their
estates and beneficiaries.
Article 4. Shares Subject to the Plan
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3
----------------
herein, the total number of Shares available for grant under the Plan shall be
one million seven hundred fifty thousand (1,750,000). No more than two hundred
fifty thousand (466,667) of such Shares may be issued pursuant to grants of
Restricted Stock, and no more than two hundred thousand (583,333) of such Shares
may be issued pursuant to grants of Bonus Stock. These Shares may be either
authorized but unissued or reacquired Shares.
The following rules will apply for purposes of the determination of the
number of Shares available for grant under the Plan:
(a) While an Award is outstanding, it shall be counted against the
authorized pool of Shares, regardless of its vested status.
(b) The grant of an Option or Restricted Stock shall reduce the Shares
available for grant under the Plan by the number of Shares subject to
such Award.
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<PAGE>
(c) The grant of a Tandem SAR shall reduce the number of Shares available
for grant by the number of Shares subject to the related Option (i.e.,
there is no double counting of Options and their related Tandem SARs).
(d) The grant of a Freestanding SAR shall reduce the number of Shares
available for grant by the number of Freestanding SARs granted.
(e) The Committee shall in each case determine the appropriate number of
Shares to deduct from the authorized pool in connection with the grant
of Performance Units and/or Performance Shares.
(f) The grant of Bonus Stock shall reduce the number of Shares available
for grant by the number of Shares subject to the Bonus Stock Award.
(g) To the extent that an Award is settled in cash rather than in Shares,
the authorized Share pool shall be credited with the appropriate
number of Shares represented by the cash settlement of the Award, as
determined at the sole discretion of the Committee (subject to the
limitation set forth in Section 4.2 herein).
4.2 Lapsed Awards. If any Award granted under this Plan is canceled,
-------------
terminates, expires, or lapses for any reason (with the exception of the
termination of a Tandem SAR upon exercise of the related Option, or the
termination of a related Option upon exercise of the corresponding Tandem SAR),
any Shares subject to such Award shall again be available for the grant of an
Award under the Plan. However, in the event that prior to the Award's
cancellation, termination, expiration, or lapse, the holder of the Award at any
time received one or more "benefits of ownership" pursuant to such Award (as
defined by the Securities and Exchange Commission, pursuant to any rule or
interpretation promulgated under Section 16 of the Exchange Act), the Shares
subject to such Award shall not be made available for regrant under the Plan.
4.3 Adjustments in Authorized Shares. In the event of any merger,
--------------------------------
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, Share combination, or other change in the corporate
structure of the Company affecting the Shares, such adjustment shall be made in
the number and class of Shares which may be delivered under the Plan, and in the
number and class of and/or price of Shares subject to outstanding Awards granted
under the Plan, as may be determined to be appropriate and equitable by the
Committee, in its sole discretion, to prevent dilution or enlargement of rights;
and provided that the number of Shares subject to any Award shall always be a
whole number.
Article 5. Eligibility and Participation
5.1 Eligibility. Persons eligible to participate in this Plan include all
-----------
Officers and Key Employees of the Company and its Subsidiaries, as determined by
the Committee, including Employees who are members of the Board, but excluding
Directors who are not Employees.
5.2 Actual Participation. Subject to the provisions of the Plan, the
--------------------
Committee may, from time to time, select from all eligible Employees, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award.
Article 6. Stock Options
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
----------------
Options may be granted to eligible Employees at any time and from time to time
as shall be determined by the Committee. The Committee shall have discretion in
determining the number of Shares subject to Options granted to each Participant;
provided, however, that the maximum number of shares subject to Options which
may
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<PAGE>
be granted to any single Participant during the term of the Plan is one
hundred fifty thousand (150,000). The Committee may grant ISOs, NQSOs, or a
combination thereof.
6.2 Award Agreement. Each Option grant shall be evidenced by an Award
---------------
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Option Agreement also shall specify whether the
Option is intended to be an ISO within the meaning of Section 422 of the Code,
or a NQSO whose grant is intended not to fall under the provisions of Section
422 of the Code.
6.3 Option Price. The Option Price for each grant of an Option under this
------------
Section 6.3 shall be at least equal to one hundred percent (100%) of the Fair
Market Value of a Share on the date the Option is granted.
6.4 Duration of Options. Each Option shall expire at such time as the
-------------------
Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary date of its
grant.
6.5 Dividend Equivalents. Simultaneous with the grant of an Option, the
--------------------
Participant receiving the Option may be granted, at no additional cost, Dividend
Equivalents. Each Dividend Equivalent shall entitle the Participant to receive
a contingent right to be paid an amount equal to the dividends declared on a
Share on all record dates occurring during the period between the grant date of
an Option and the date the Option is exercised.
The underlying value of each Dividend Equivalent shall accrue as a book
entry in the name of each Participant holding the Dividend Equivalent. Payout
of the accrued value of a Dividend Equivalent shall occur only in the event that
the Option issued in tandem with the Dividend Equivalent is "in the money"
(i.e., the Fair Market Value of Shares underlying the Option as of the exercise
date exceeds the Option Price) as of the exercise date. Payout of Dividend
Equivalents shall be made in cash, in one lump sum, within thirty (30) days
following the exercise of the corresponding Option.
6.6 Exercise of Options. Options granted under the Plan shall be
-------------------
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant. However, in no event may an Option granted
under this Plan become exercisable prior to six (6) months following the date of
its grant.
6.7 Payment. Options shall be exercised by the delivery of a written
-------
notice of exercise to the Company, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment for
the Shares.
The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent, or (b) by tendering
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price (provided that the Shares which are
tendered must have been held by the Participant for at least six (6) months
prior to their tender to satisfy the Option Price), or (c) by a combination of
(a) and (b).
The Committee also may allow cashless exercise as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law restrictions,
or by any other means which the Committee determines to be consistent with the
Plan's purpose and applicable law.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s).
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6.8 Restrictions on Share Transferability. The Committee may impose such
-------------------------------------
restrictions on any Shares acquired pursuant to the exercise of an Option under
the Plan as it may deem advisable, including, without limitation, restrictions
under applicable Federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded, and
under any blue sky or state securities laws applicable to such Shares.
6.9 Termination of Employment. Each Option Award Agreement shall set
-------------------------
forth the extent to which the Participant shall have the right to exercise the
Option following termination of the Participant's employment with the Company
and its Subsidiaries. Such provisions shall be determined in the sole
discretion of the Committee, shall be included in the Award Agreement entered
into with Participants, need not be uniform among all Options issued pursuant to
the Plan, and may reflect distinctions based on the reasons for termination of
employment.
6.10 Nontransferability of Options. No Option granted under the Plan may
-----------------------------
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, all
Options granted to a Participant under the Plan shall be exercisable during his
or her lifetime only by such Participant or his or her legal representative.
Article 7. Stock Appreciation Rights
7.1 Grant of SARs. Subject to the terms and conditions of the Plan, a SAR
-------------
may be granted to an Employee at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SAR.
The Committee shall have complete discretion in determining the number of
SARs granted to each Participant (subject to Article 4 herein) and, consistent
with the provisions of the Plan, in determining the terms and conditions
pertaining to such SARs; provided, however, that the maximum number of SARs
which may be granted to any single Participant during the term of the Plan is
one hundred fifty thousand (150,000).
The grant price of a Freestanding SAR shall equal the Fair Market Value of
a Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option. In no event shall any SAR granted
hereunder become exercisable within the first six (6) months of its grant.
7.2 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part
-----------------------
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (ii) the value
of the payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.
7.3 Exercise of Freestanding SARs. Freestanding SARs may be exercised
-----------------------------
upon whatever terms and conditions the Committee, in its sole discretion,
imposes upon them.
7.4 SAR Agreement. Each SAR grant shall be evidenced by an Award
-------------
Agreement that shall specify the grant price, the term of the SAR, and such
other provisions as the Committee shall determine.
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7.5 Term of SARs. The term of a SAR granted under the Plan shall be
------------
determined by the Committee, in its sole discretion; provided, however, that
such term shall not exceed ten (10) years.
7.6 Payment of SAR Amount. Upon exercise of a SAR, a participant shall be
---------------------
entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The difference between the Fair Market Value of a Share on the date of
exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof.
7.7 Rule 16b-3 Requirements. Notwithstanding any other provision of the
-----------------------
Plan, the Committee may impose such conditions on exercise of a SAR (including,
without limitation, the right of the Committee to limit the time of exercise to
specified periods) as may be required to satisfy the requirements of Section 16
(or any successor rule) of the Exchange Act.
For example, if the Participant is an Insider, the ability of the
Participant to exercise SARs for cash may be limited to Window Periods.
However, if the Committee determines that the Participant is not an Insider, or
if the securities laws change to permit greater freedom of exercise of SARs,
then the Committee may permit exercise at any point in time, to the extent the
SARs are otherwise exercisable under the Plan.
7.8 Termination of Employment. Each SAR Award Agreement shall set forth
-------------------------
the extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant's employment with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement entered into with
Participants, need not be uniform among all SARs issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
7.9 Nontransferability of SARs. No SAR granted under the Plan may be
--------------------------
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, all
SARs granted to a Participant under the Plan shall be exercisable during his or
her lifetime only by such Participant or his or her legal representative.
Article 8. Restricted Stock
8.1 Grant of Restricted Stock. Subject to the terms and provisions of the
-------------------------
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to eligible Employees in such amounts as the Committee shall
determine.
8.2 Restricted Stock Agreement. Each Restricted Stock grant shall be
--------------------------
evidenced by a Restricted Stock Agreement that shall specify the Period of
Restriction, or Periods, the number of Restricted Stock Shares granted, and such
other provisions as the Committee shall determine.
8.3 Transferability. Except as provided in this Article 8, the Shares of
---------------
Restricted Stock granted herein may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated until the end of the applicable Period of
Restriction established by the Committee and specified in the Restricted Stock
Agreement, or upon earlier satisfaction of any other conditions, as specified by
the Committee in its sole discretion and set forth in the Restricted Stock
Agreement. However, in no event may any Restricted Stock granted under the Plan
become vested in a Participant prior to six (6) months
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<PAGE>
following the date of its grant. All rights with respect to the Restricted Stock
granted to a Participant under the Plan shall be available during his or her
lifetime only to such Participant.
8.4 Other Restrictions. The Committee shall impose such other conditions
------------------
and/or restrictions on any Shares of Restricted Stock granted pursuant to the
Plan as it may deem advisable including, without limitation, a requirement that
Participants pay a stipulated purchase price for each Share of Restricted Stock,
restrictions based upon the achievement of specific performance goals (Company-
wide, divisional, and/or individual), and/or restrictions under applicable
Federal or state securities laws; and may legend the certificates representing
Restricted Stock to give appropriate notice of such restriction.
8.5 Certificate Legend. In addition to any legends placed on certificates
------------------
pursuant to Section 8.4 herein, each certificate representing Shares of
Restricted Stock granted pursuant to the Plan may bear the following legend:
"The sale or other transfer of the Shares of stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to certain restrictions on transfer as set forth in the Sierra
Pacific Resources Executive Long-Term Incentive Plan, and in a Restricted
Stock Agreement. A copy of the Plan and such Restricted Stock Agreement
may be obtained from Sierra Pacific Resources."
The Company shall have the right to retain the certificates representing
Shares of Restricted Stock in the Company's possession until such time as all
conditions and/or restrictions applicable to such Shares have been satisfied.
8.6 Removal of Restrictions. Except as otherwise provided in this Article
-----------------------
8, Shares of Restricted Stock covered by each Restricted Stock grant made under
the Plan shall become freely transferable by the Participant after the last day
of the Period of Restriction. Once the Shares are released from the
restrictions, the Participant shall be entitled to have the legend required by
Section 8.5 removed from his or her Share certificate.
8.7 Voting Rights. During the Period of Restriction, Participants holding
-------------
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares.
8.8 Dividends and Other Distributions. During the Period of Restriction,
---------------------------------
Participants holding Shares of Restricted Stock granted hereunder shall be
credited with all regular cash dividends paid with respect to all shares while
they are so held. Except as provided in the succeeding sentence, all cash
dividends and other distributions paid with respect to Shares of Restricted
Stock shall be credited to Participants subject to the same restrictions on
transferability and forfeitability as the Shares of Restricted Stock with
respect to which they were paid. If any such dividends or distributions are
paid in Shares, the Shares shall be subject to the same restrictions on
transferability and forfeitability as the Shares of Restricted Stock with
respect to which they were paid. Subject to the succeeding paragraph, and to
the restrictions on vesting and the forfeiture provisions, all dividends
credited to a Participant shall be paid to the Participant within forty-five
(45) days following the full vesting of the Shares of Restricted Stock with
respect to which such dividends were earned.
In the event that any dividend constitutes a "derivative security" or an
"equity security" pursuant to rule 16(a) under the Exchange Act, such dividend
shall be subject to a vesting period equal to the longer of: (i) the remaining
vesting period of the Shares of Restricted Stock with respect to which the
dividend is paid; or (ii) six (6) months. The Committee shall establish
procedures for the application of this provision.
8.9 Termination of Employment. Each Restricted Stock Award Agreement
-------------------------
shall set forth the extent to which the Participant shall have the right to
receive unvested Restricted Shares following termination of the Participant's
employment with the Company and its Subsidiaries. Such provisions shall
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be determined in the sole discretion of the Committee, shall be included in the
Award Agreement entered into with Participants, need not be uniform among all
Shares of Restricted Stock issued pursuant to the Plan, or among Participants,
and may reflect distinctions based on the reasons for termination of employment.
Article 9. Performance Units and Performance Shares
9.1 Grant of Performance Units/Shares. Subject to the terms of the Plan,
---------------------------------
Performance Units and Performance Shares may be granted to eligible Employees at
any time and from time to time, as shall be determined by the Committee. The
Committee shall have complete discretion in determining the number of
Performance Units and Performance Shares granted to each Participant; provided,
however, that unless and until the Committee determines that a grant of
Performance Shares and/or Performance Shares Units shall not be designed to
qualify for the "performance-based" exemption under Code Section 162(m), the
maximum payout to any Named Executive Officer with respect to Performance Units
and/or Performance Shares granted in any one (1) fiscal year of the Company
shall be one million dollars ($1,000,000).
9.2 Value of Performance Units/Shares. Each Performance Unit shall have
---------------------------------
an initial value that is established by the Committee at the time of grant.
Each Performance Share shall have an initial value equal to the Fair Market
Value of a Share on the date of grant. The Committee shall set performance
goals in its discretion which, depending on the extent to which they are met,
will determine the number and/or value of Performance Units/Shares that will be
paid out to the Participants. The time period during which the performance
goals must be met shall be called a "Performance Period." Performance Periods
shall, in all cases, exceed six (6) months in length.
Unless and until the Committee proposes for shareholder vote a change in
the general performance measures, the attainment of which shall determine the
number and/or value of Performance Units and/or Performance Shares granted under
the Plan, the performance measure(s) to be used for purposes of grants to Named
Executive Officers shall be selected from among the following activities:
(a) Total shareholder return (measured as the sum of Share appreciation
and dividends declared) in relation to the Dow Jones Utilities Index.
(b) Return on invested capital in relation to target objectives.
(c) share Earnings/Earnings Growth in relation to target objectives.
(d) Cash Flow/Cash flow Growth in relation to target objectives.
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Performance Units and/or Performance Shares which shall not qualify for
the "performance-based" exemption under Code Section 162(m), the Committee may
make such grants without satisfying the requirements of Code Section 162(m).
9.3 Earning of Performance Units/Shares. After the applicable Performance
-----------------------------------
Period has ended, the holder of Performance Units/Shares shall be entitled to
receive payout on the number and value of Performance Units/Shares earned by the
Participant over the Performance Period, to be determined as a function of the
extent to which the corresponding performance goals have been achieved.
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9.4 Form and Timing of Payment of Performance Units/Shares. Payment of
------------------------------------------------------
earned Performance Units/Shares shall be made in a single lump sum, within
seventy-five (75) calendar days following the close of the applicable
Performance Period. The Committee, in its sole discretion, may pay earned
Performance Units/Shares in the form of cash or in Shares (or in a combination
thereof), which have an aggregate Fair Market Value equal to the value of the
earned Performance Units/Shared at the close of the applicable Performance
Period. Such Shares may be granted subject to any restrictions deemed
appropriate by the Committee.
Prior to the beginning of each performance Period, participants may elect
to defer the receipt of Performance Unit/Share payout upon such terms as the
Committee deems appropriate.
Participants shall be entitled to receive any dividends declared with
respect to Shares which have been earned in connection with grants of
Performance Units and/or Performance Shares which have been earned, but not yet
distributed to Participants (such dividends shall be subject to the same
accrual, forfeiture, and payout restrictions as apply to dividends earned with
respect to Shares of Restricted Stock, as set forth in Section 8.8 herein). In
addition, Participants may, at the discretion of the Committee, be entitled to
exercise their voting rights with respect to such Shares.
9.5 Termination of Employment Due to Death, Disability, or Retirements.
------------------------------------------------------------------
In the event the employment of a Participant is terminated by reason of Death,
Disability, or Retirement during a Performance Period, the Participant shall
receive a prorated payout of the Performance Units/Shares. The prorated payout
shall be determined by the Committee, in its sole discretion, and shall be based
upon the length of time that the Participant held the Performance Units/Shares
during the Performance Period, and shall further be adjusted based on the
achievement of the preestablished performance goals.
9.6 Termination of Employment for Other Reasons. In the event that a
-------------------------------------------
Participant's employment terminates for any reason other than those reasons set
forth in Section 9.5 herein, all Performance Units/Shares shall be forfeited by
the Participant to the Company.
9.7 Nontransferability. Performance Units/Shares may not be sold,
------------------
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and lifetime only by the participant or
the Participant's legal representative.
Article 10. Bonus Stock
The Committee shall have the right to grant other Awards which may include,
without limitations, the grant of Shares based on certain conditions, the
payment of cash based on performance criteria established by the Committee, and
the payment of Shares in lieu of cash under other Company incentive bonus
programs. Payment under or settlement of any such Awards shall be made in such
manner and at such times as the Committee may determine.
Article 11. Beneficiary Designation
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant's lifetime. In
the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.
The spouse of a married participant domiciled in a community property
jurisdiction shall join in any designation of beneficiary or beneficiaries other
than the spouse.
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Article 12. Deferrals
The Committee may permit a Participant to defer such Participant's receipt
of the payment of cash or the delivery of Shares that would otherwise be due to
such Participant by virtue of (1) the exercise of an Option or SAR, (2) the
lapse or waiver of restrictions with respect to Restricted Stock, or (3) the
satisfaction of any requirements or goals with respect to Performance
Units/Shares, or Bonus Stock. If any such deferral election is required or
permitted, the Committee shall, in its sole discretion, establish rules and
procedures for such payment deferrals.
Article 13. Rights of Employees
13.1 Employment. Nothing in the Plan shall interfere with or limit in any
----------
way the right of the Company to terminate any Participant's employment at any
time, for any reason or no reason in the Company's sole discretion, nor confer
upon any Participant any right to continue in the employ of the Company.
For purposes of the Plan, transfer of employment of a Participant between
the Company and any one of its Subsidiaries (or between Subsidiaries) shall not
be deemed a termination of employment.
13.2. Participation. No Employee shall have the right to be selected to
-------------
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
Article 14. Change in Control
Upon the occurrence of a Change in Control, as defined in Section 2.6
unless otherwise specifically prohibited by the terms of Section 19 herein:
(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable;
(b) Any restriction periods and restrictions imposed on Restricted
Shares shall lapse;
(c) The target payout opportunity attainable under all outstanding
Awards of Restricted Stock, Performance Units, Performance
Shares, and Bonus Stock shall be deemed to have been fully
earned for the entire Performance Period(s) as of the effective
date of the Change in Control. The vesting of all Awards
denominated in Shares shall be accelerated as of the effective
date of the Change in Control, and there shall be paid out in
cash to Participants within thirty (30) days following the
effective date of the Change in Control a pro rata portion of
all targeted cash payout opportunities associated with
outstanding cash-based Awards, based on the number of complete
and partial calendar months within the Performance Period which
had elapsed as of such effective date; provided, however, that
there shall not be an accelerated payout with respect to Awards
of Restricted Stock, Performance Units, Performance Shares, or
Bonus Stock which were granted less than six (6) months prior to
the effective date of the Change in Control;
(d) Subject to Article 15 herein, the Committee shall have the
authority to make any modifications to the Awards as determined
by the Committee to be appropriate before the effective date of
the Change in Control, but not after.
Article 15. Amendment, Modification, and Termination
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15.1 Amendment, Modification, and Termination. The Board may at any time
----------------------------------------
and from time to time, alter, amend, suspend or terminate the Plan in whole or
in part; provided, that no amendment which requires shareholder approval in
order for the Plan to continue to comply with Rule 16b-3 under the Exchange Act,
including any successor to such Rule, shall be effective unless such amendment
shall be approved by the requisite vote of shareholders of the Company entitled
to vote thereon.
The Committee shall not have the authority to cancel outstanding Awards and
issue substitute Awards in replacement thereof.
15.2. Awards Previously Granted. No Termination, amendment, or
-------------------------
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant holding such Award.
Article 16. Withholding
16.1 Tax Withholding. The company shall have the power and the right to
---------------
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any taxable event arising out of or as a result of this Plan.
16.2 Share Withholding. With respect to withholding required upon the
-----------------
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
or upon any other taxable event arising out of or as a result of Awards granted
hereunder, Participants may elect, subject to the approval of the Committee, to
satisfy the withholding requirement, in whole or in part, by having the Company
withhold Shares having a Fair Market Value on the date the tax is to be
determined equal to the minimum statutory total tax which could be imposed on
the transaction. All elections shall be irrevocable, made in writing, signed by
the Participant, and elections by Insiders shall additionally comply with the
applicable requirement set forth in (a) or (b) of this Section 16.2.
(a) Awards Having Exercise Timing Within Participants Discretion.
------------------------------------------------------------
The Insider must either:
(i) Deliver written notice of the stock withholding election to the
Committee at least six (6) months prior to the date specified by
the Insider on which the exercise of the Award is to occur; or
(ii) Make the stock withholding election in connection with an
exercise of an Award which occurs during a Window Period.
(b) Awards Having a Fixed Exercise/Payout Schedule Which is Outside
---------------------------------------------------------------
Insider's Control. The Insider must either:
-----------------
(i) Deliver written notice of the stock withholding election to the
Committee at least six (6) months prior to the date on which the
taxable event (e.g., exercise or payout) relating to the Award
is scheduled to occur; or
(ii) Make the stock withholding election during a Window Period which
occurs prior to the scheduled taxable event relating to the
Award (for this purpose, an election may be made prior to such a
Window Period, provided that it becomes effective during a
Window Period occurring prior to the applicable taxable event).
Article 17. Indemnification
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Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit, or proceeding against him or her, provided he
or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive
of any other rights of indemnification to which such persons may be entitled
under the Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
Article 18. Successors
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
Article 19. Legal Construction
19.1 Gender and Number. Except where otherwise indicated by the context,
-----------------
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
19.2 Severability. In the event any provision of the Plan shall be held
------------
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
19.3 Requirements of Law. The granting of Awards and the issuance of
-------------------
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
Notwithstanding any other provision set forth in the Plan, if required by
the then-current Section 16 of the Exchange Act, any "derivative security" or
"equity security" offered pursuant to the Plan to any Insider may not be sold or
transferred within the minimum time limits specified or required in such rule.
The terms "equity security" and "derivative security" shall have the meanings
ascribed to them in the then-current Rule 16(a) under the Exchange Act.
19.4 Securities Law Compliance. With respect to Insiders, transactions
-------------------------
under this Plan are intended to comply with all applicable conditions of the
Federal securities laws. To the extent any provision of the plan or action by
the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.
19.5 Governing Law. To the extent not preempted by Federal law, the Plan,
-------------
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of Nevada.
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Annex B
Sierra Pacific Resources
1992 Non-Employee Director Stock Plan, as Amended
1. Purpose of the Plan
-------------------
The purpose of the 1992 Non-Employee Director Stock Plan is to provide
ownership of the Company's Stock to non-employee members of the Board of
Directors in order to improve the Company's ability to attract and retain
highly-qualified individuals to serve as directors of the Company; to provide
competitive compensation for Board service and to strengthen the commonality of
interest between directors and shareholders.
2. Definitions
-----------
When used herein, the following terms shall have the respective meanings
set forth below:
(a) "Annual Retainer" means the annual retainer payable to all Non-employee
Directors (exclusive of any per meeting fees or expenses reimbursements).
(b) "Annual Meeting of Stockholders" means the annual meeting of
stockholders of the Company or any Participating Company at which directors of
the Company or the Participating Company, as the case may be, are elected.
(c) "Board" means the Board of Directors of the Company.
(d) "Committee" means a committee whose members meet the requirements of
Section 4(a) hereof, appointed from time to time by the Board to administer the
Plan.
(e) "Common Stock" means the common stock, $1.00 par value, of the Company.
(f) "Company" means Sierra Pacific Resources, a Nevada corporation, and any
successor corporation.
(g) "Employees" means any officer or employee of the Company or of any
Subsidiary (whether or not such Subsidiary participates in the Plan).
(h) "Non-employee Director" or "Participant" means any person who is
elected or appointed to the Board of Directors of any Participating Company and
who is not an Employee.
(i) "Participating Company" means the Company and any Subsidiary of the
Company whose participation in the Plan has been approved by both the Company's
and such subsidiary's board of directors.
(j) "Plan" means the Company's 1992 Non-employee Director Stock Plan as set
forth herein, as it may be amended from time to time.
(k) "Plan Year" means the period commencing on the effective date of the
Plan and ending the next following December 31 and thereafter the calendar year.
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(l) "Stock Payment" means the fixed portion of the Annual Retainer to be
paid to Non-employee Directors in shares of Common Stock rather than cash for
services rendered as a director of a Participating Company as provided in
Section 6 hereof including that portion of the Stock Payment resulting from the
election specified in Section 7 hereof.
(m) "Subsidiary" means any corporation that is a "subsidiary corporation"
of the Company, as that term is defined in Section 424(f) of the Internal
Revenue Code of 1986.
3. Shares of Common Stock Subject to the Plan
------------------------------------------
Subject to adjustment as provided in Section 10 below, the maximum
aggregate number of shares of Common Stock that may be issued under the Plan is
150,000 shares. The Common Stock to be issued under the Plan will be made
available from authorized but unissued shares of Common Stock, and the Company
shall set aside and reserve for issuance under the Plan said number of shares.
4. Administration of the Plan
--------------------------
(a) The Plan will be administered by the Committee, which will consist of
three or more persons who are not eligible to participate in the Plan. Members
of the Committee need not be members of the Board. The Company shall pay all
costs of administration of the Plan.
(b) Subject to the express provisions of the Plan, the Committee has and
may exercise such powers and authority of the Board as may be necessary or
appropriate for the Committee to carry out its functions under the Plan.
Without limiting the generality of the foregoing, the Committee shall have full
power and authority (i) to determine all questions of fact that may arise under
the Plan, (ii) to interpret the Plan and to make all other determinations
necessary or advisable for the administration of the Plan, and (iii) to
prescribe, amend, and rescind rules and regulations relating to the Plan,
including, without limitation, any rules which the Committee determines are
necessary or appropriate to ensure that the Company, each Participating Company
and the Plan will be able to comply with all applicable provisions of any
federal, state or local law, including securities laws. All interpretations,
determinations, and actions by the Committee will be final, conclusive, and
binding upon all parties. Any action of the Committee with respect to the
administration of the Plan shall be taken pursuant to a majority vote at a
meeting of the Committee (at which members may participate by telephone) or by
the unanimous written consent of its members.
(c) Neither the Company, nor any other Participating Company, nor any
representatives, employees or agents of any Participating Company, nor any
member of the Board or the Committee will be liable for any damages resulting
from any action or determination made by the Board or the Committee with respect
to the Plan or any transaction arising under the Plan or any omission in
connection with the Plan in the absence of willful misconduct or gross
negligence.
5. Participation in the Plan
-------------------------
(a) All Non-employee Directors shall participate in the Plan, subject to
the conditions and limitations of the Plan, so long as they remain eligible to
participate in the Plan.
(b) No Non-employee Director shall be eligible for a Stock Payment if, at
the time said Stock Payment will otherwise be made, such Non-employee Director
owns (or is deemed to own) directly or indirectly, shares of Common Stock
representing more than five percent of the total combined voting power of all
classes of stock of the Company. The compensation, if any, of such directors
shall be determined by the Board.
6. Determination of Annual Retainers and Stock Payments
----------------------------------------------------
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(a) The Board shall determine the Annual Retainer for all Non-employee
Directors of the Company and all Participating Companies.
(b) Each director of one or more Participating Companies who is a Non-
employee Director immediately following the date of the Annual Meeting of
Stockholders of one or more Participating Companies shall receive a Stock
Payment as a portion of the Annual Retainer payable to such director as provided
in the Plan for serving in such capacities. The number of shares to be issued
to each Participant as a Stock Payment shall be determined by dividing the
applicable Market Price into the amount of the Annual Retainer payable to such
Participant in excess of $10,000; provided, however, that no fractional shares
-------- -------
shall be issued (cash shall be paid in lieu thereof). The "Market Price" of
Common Stock issued by the Company under the Plan shall be the average daily
high and low sale prices of the Common Stock on the composite tape for stocks
listed on the New York Stock Exchange for all trading days during the calendar
month preceding the date of the applicable Annual Meeting of Stockholders of the
Company. Such Market Price shall be used to determine the number of shares of
Common Stock to be issued to Non-employee Directors of all Participating
Companies for the current year. Certificates evidencing the shares of Common
Stock constituting Stock Payments shall be registered in the respective names of
the Participants and shall be issued, together with a cash payment for any
fractional share, to each Participant as soon as practicable following the
respective Annual Meeting of Stockholders. The cash portion of the Annual
Retainer shall be paid to Non-employee Directors at such times and in such
manner as may be determined by the Board.
(c) No Non-employee Director shall be required to forfeit or otherwise
return to the Company any shares of Common Stock issued to him or her as a Stock
Payment pursuant to the Plan (including any shares of Common Stock received as a
result of an election under Section 7) notwithstanding any change in status of
such Non-employee Director which renders him or her ineligible to continue as a
Participant in the Plan. Any person who is a Non-employee Director immediately
following the date of the respective Participating Company's Annual Meeting of
Stockholders shall be entitled to receive a Stock Payment as a portion of the
applicable Annual Retainer notwithstanding any change in status of such Non-
employee Director which renders such director ineligible to continue
participation in the Plan prior to delivery of certificates evidencing shares of
Common stock.
7. Election to Increase Amount of Stock Payment
--------------------------------------------
In lieu of receiving the cash portion of his or her Annual Retainer, a
Participant may make a written election to reduce such Annual Retainer by a
specified dollar amount and have such amount applied to purchase additional
shares of Common Stock of the Company. The election shall be made on a form
provided by the Committee and must be returned to Committee prior to the earlier
of (i) six months prior to the Annual Meeting of Stockholders of the Company or
the Participating Company, as the case may be, or (ii) the first day of the Plan
Year to which the election relates. The election form shall state the amount by
which the Participant desires to reduce the cash portion of his or her Annual
Retainer, which amount shall be advanced by the Participating Company to the
date that the Stock Payment is to be made under this Plan and shall be applied
toward the purchase of Common Stock on the same date that the Stock Payment is
determined; provided, however, that no fractional shares may be purchased. As
-------- -------
such, any funds withheld but not able to be applied to the purchase of whole
shares shall be paid to the Participant in cash. No Participant shall be
allowed to change or revoke any election for the relevant year, but may change
his or her election for any subsequent Plan Year.
8. Election to Defer Receipt of Stock Payment
------------------------------------------
(a) In lieu of receiving the Stock Payment following the date of the Annual
Meeting of stockholders, a Participant may make a written election to defer such
receipt until he ceases to be a Non-Employee Director of the Company or any
Subsidiary or until such other date as shall be specified on the election form
and approved by the Committee. The election shall be made on a form provided by
the
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Committee and must be returned to the Committee prior to the earlier of (i) six
months prior to the Annual Meeting or Stockholders of the Company or the
Participating Company, as the case may be, or (ii) the first day of the Plan
Year to which the election relates. No Participant shall be allowed to change or
revoke any election for the relevant year, but may change his or her election
for any subsequent Plan Year.
(b) A Participant who has elected to defer the receipt of the Stock
Payment shall be an unsecured creditor of the Company with respect to the amount
of the deferral and not a shareholder of the Company with respect to the shares
of Common Stock which have been deferred. A Participant who has elected to defer
the receipt of the Stock Payment shall not be entitled to cash dividends or the
right to vote such shares. However, the Company shall pay to such Participant as
additional compensation and not as a dividend the amount of any cash dividends
which would have been paid to such Participant had he or she then been the owner
of the shares of Common Stock which have been deferred.
(c) A Participant may file with the Committee a written designation of a
beneficiary or beneficiaries (subject to such limitations as to the classes and
number of beneficiaries and contingent beneficiaries and such other limitations
as the Committee from time to time may prescribe) to receive, in the event of
the death of such Participant, undelivered shares of Common Stock. A
Participant may from time to time revoke or change any such designation of
beneficiary. Any designation or beneficiary under the Plan shall be
controlling; provided, however, that if the Committee shall be in doubt as to
-------- -------
the right of such beneficiary to receive any such shares, the same may be
delivered to the legal representatives of the Participant, in which case the
Company, the Committee and the members thereof shall not be under any further
liability to anyone.
9. Stockholder Rights
------------------
Non-employee Directors shall not be deemed for any purpose to be or have
rights as stockholders of the Company with respect to any shares of Common Stock
except as and when such shares are issued and then only from the date of the
certificate therefor. No adjustment shall be made for dividends or
distributions or other rights for which the record date precedes the date of
such stock certificate.
10. Adjustment For Changes in Capitalization
----------------------------------------
If the outstanding shares of Common Stock of the Company are increased,
decreased, or exchanged for a different number or kind of shares or other
securities, or if additional shares or new or different shares or other
securities are distributed with respect to such shares of Common Stock or other
securities, through merger, consolidation, sale of all or substantially all of
the property of the Company, reorganization or recapitalization,
reclassification, stock dividend, stock split, reverse stock split, combination
of shares, rights offering, distribution of assets or other distribution with
respect to such shares of Common Stock or other securities or other change in
the corporate structure or shares of Common Stock, the maximum number of shares
and/or the kind of shares that may be issued under the Plan may be appropriately
adjusted by the Committee. Any determination by the Committee as to any such
adjustment will be final, binding, and conclusive. The maximum number of shares
issuable under the Plan as a result of any such adjustment shall be rounded down
to the nearest whole share.
11. Continuation of Director or Other Status
----------------------------------------
Nothing in the Plan or in any instrument executed pursuant to the Plan or
any action taken pursuant to the Plan shall be construed as creating or
constituting evidence of any agreement or understanding, express or implied,
that the Company or any other Participating Company, as the case may be, will
retain a Non-employee Director as a director or in any other capacity for any
period of time or at a particular retainer or other rate of compensation, as
conferring upon any Participant any legal or other right to continue as a
director or in any other capacity, or as limiting, interfering with or otherwise
affecting the right of a Participating Company to terminate a Participant in his
or her capacity as a director or
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<PAGE>
otherwise at any time for any reason, with or without cause, and without regard
to the effect that such termination might have upon him or her as a Participant
under the Plan.
12. Compliance With Government Regulations
--------------------------------------
Neither the Plan nor the Company shall be obligated to issue any shares of
Common Stock pursuant to the Plan at any time unless and until all applicable
requirements imposed by any federal and state securities and other laws, rules,
and regulations, by any regulatory agencies, or by any stock exchanges upon
which the Common Stock may be listed have been fully met. As a condition
precedent to any issuance of shares of Common Stock and delivery of certificates
evidencing such shares pursuant to the Plan, the Board or the Committee may
require a Participant to take any such action and to make any such covenants,
agreements and representations as the Board or the Committee, as the case may
be, in its discretion deems necessary or advisable to ensure compliance with
such requirements. The Company shall in no event be obligated to register the
shares of Common Stock issued or issuable under the Plan pursuant to the
Securities Act of 1933, as now or hereafter amended, or to qualify or register
such shares under any securities laws of any state upon their issuance under the
Plan or at any time thereafter, or to take any other action in order to cause
the issuance and delivery of such shares under the Plan or any subsequent offer,
sale or other transfer of such shares to comply with any such law, regulation or
requirement. Participants are responsible for complying with all applicable
federal and state securities and other laws, rules and regulations in connection
with any offer, sale or other transfer of the shares of Common Stock issued
under the Plan or any interest therein including, without limitation, compliance
with the registration requirements of the Securities Act of 1933, as amended
(unless an exemption therefrom is available), or with the provisions of Rule 144
promulgated thereunder, if available, or any successor provisions.
13. Nontransferability of Rights
----------------------------
No Participant shall have the right to assign the right to receive any
Stock Payment or any other right or interest under the Plan, contingent or
otherwise, or to cause or permit any encumbrance, pledge or charge of any nature
to be imposed on any such Stock Payment (prior to the issuance of stock
certificates evidencing such Stock Payment) or any such right or interest.
14. Amendment of Termination of Plan
--------------------------------
(a) The Board will have the power, in its discretion, to amend, suspend or
terminate the Plan at any time. No such amendment will, without approval of the
stockholders of the company:
(i) Change the class of persons eligible to receive Stock Payment
under the Plan or otherwise modify the requirements as to eligibility for
participation in the Plan;
(ii) Materially increase the benefits accruing to Participants under
the Plan; or
(iii) Increase the number of shares of Common Stock which may be
issued under the Plan (except for adjustments as provided in Section 10
hereof).
(b) No amendment, suspension or termination of the Plan will, without the
consent of the Participant, alter, terminate, impair, or adversely affect any
right or obligations under any Stock Payment previously granted under the Plan
to such Participant, unless such amendment, suspension or termination is
required by applicable law.
(c) Notwithstanding the foregoing, the Board may, without further action
by the stockholders of the Company, amend the Plan or modify Stock Payments
under the Plan (i) in response to changes in
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<PAGE>
securities or other laws, or rules, regulations or regulatory interpretations
thereof, applicable to the Plan, or (ii) to comply with stock exchange rules or
requirements.
(d) Notwithstanding the foregoing, any provision of the Plan that either
states the amount and price of securities to be issued under the Plan and
specifies the price and timing of such issuances, or set forth a formula that
determines the amount, price and timing of such issuances, shall not be amended
more than once every six months, other than to comport with changes in the
Internal Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder.
15. Governing Law
-------------
The laws of the State of Nevada shall govern and control the
interpretation and application of the terms of the Plan.
16. Effective Date and Duration of the Plan
---------------------------------------
This Plan will become effective upon (a) adoption by the Board, and
(b) approval by the affirmative votes of the holders of the majority of the
stock of the Company present, or represented, and entitled to vote at a duly
held meeting of the stockholders of the Company; provided, however, that no
-------- -------
shares of Common Stock shall be issued or issuable under the Plan unless and
until the Company receives a satisfactory opinion from counsel addressing such
matters as the Board or the President of the Company may deem necessary or
desirable. Unless previously terminated by the Board, the Plan will terminate
on December 31, 2001.
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<PAGE>
Annex C
Sierra Pacific Resources
Employee Stock Purchase Plan
Restatement No. 1,
as Amended
1. Purpose
-------
Sierra Pacific Resources (the "Company") established the Sierra Pacific
Resources Employee Stock Purchase Plan (the "Plan"), which was effective
originally on June 14, 1984 and has been restated in its entirety for the
purpose of providing eligible employees of the Company and any subsidiary
thereof with the opportunity to become stockholders of the Company. It is the
intention of the Company that the Plan qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"). The provisions of the Plan shall be construed in a manner consistent
with Section 423 of the Code. The Plan is a continuation of an employee stock
purchase plan previously maintained by Sierra Pacific Power Company, which
corporation became a wholly-owned subsidiary of Sierra Pacific Resources on May
31, 1984.
2. Definitions
-----------
(a) Regular Base Pay means regular straight time earnings, but excludes
----------------
payments for overtime, shift premiums, incentive compensation, bonuses and other
special payments. However, in the case of an Employee paid on a salary or
commission basis, Regular Base Pay will also include an amount equal to the
average of his commissions in his payroll period during the six (6) months
preceding the current Payment Period, as that term is defined in Paragraph 4.
(b) Board means the Board of Directors of Sierra Pacific Resources (the
-----
"Company").
(c) Committee means the Employee Stock Purchase Plan Committee appointed
---------
by the Board to administer the Plan in accordance with Paragraph 20.
(d) Employee means any person (including directors who are also employees
--------
or officers) who is customarily employed for more than 20 hours per week and
more than five (5) months in a calendar year by one or more Employers.
(e) Employer means the Company and each of its Subsidiaries that has
--------
elected, by action of its board of directors, to participate in the Plan and
whose participation in the Plan has been approved by the Board.
(f) Offering means each offering of rights to purchase Shares to eligible
--------
Employees pursuant to this Plan.
(g) Subsidiary means any corporation that is a "subsidiary corporation" of
----------
the Company, as that term is defined in Section 424(f) of the Code.
3. Shares of Common Stock
----------------------
The maximum number of shares of the Common Stock, $1.00 par value, of the
Company (the "Shares") which are available for sale under the Plan during the
term of the Plan includes 200,162 Shares that were available as of June 14, 1984
when the Plan was originally adopted by the Company as a continuation of a stock
purchase plan previously maintained by Sierra Pacific Power Company, a wholly-
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<PAGE>
owned Subsidiary of the Company; 700,000 Shares made available pursuant to this
restated Plan, totaling 900,162 Shares in the aggregate available for sale under
the Plan, subject to adjustment upon changes in capitalization of the Company as
provided in Paragraph 7. Either authorized, unissued Shares or Shares heretofore
or hereafter reacquired by the Company may be made subject to options under this
Plan.
4. Eligibility
-----------
(a) All Employees of the Company, regardless of their position or rate of
pay, may participate in the Plan except Employees who, at the beginning date of
the Payment Period, had not completed six (6) months service with the Company or
a Subsidiary thereof.
(b) Any provision of the Plan to the contrary notwithstanding, no Employee
shall be granted an option to purchase Shares under the Plan
(i) if, immediately after the grant, such Employee would own stock,
and/or hold outstanding options to purchase stock, possessing 5%
or more of the total combined voting power or value of all
classes of stock of the Company or of any Subsidiary; or
(ii) which permits the Employee's rights to purchase stock under all
employee stock purchase plans of the Company and its Subsidiaries
to accrue at a rate which exceeds $25,000 of the fair market
value of the stock (determined at the time such option is
granted) for each calendar year in which such option is
outstanding at any time.
For purposes of this paragraph, the rules of Section 424(d) of the Code shall
apply in determining the stock ownership of an individual, and stock which an
individual may purchase under outstanding options shall be treated as stock
owned by such individual.
5. Payment Periods
---------------
The six-month periods, June 1 to November 30 and December 1 to May 31,
shall be the "Payment Periods" during which payroll deductions will be
accumulated under the Plan. Each Payment Period includes all pay days falling
within it; provided, however, that the Payment Period which otherwise would have
commenced December 1, 1991 shall not commence, and no options shall be granted
for such Payment period, until the first day of the calendar month following the
date on which all governmental or other filings made necessary by the amendment
and restatement of this Plan by the Company become effective. The first day of
each Payment Period shall be the "Offering Commencement Date" and the last day
of each Payment Period shall be the "Offering Exercise Date."
6. Granting Stock Options
----------------------
(a) Twice each year, on the Offering Commencement Date, the Company will
grant to each eligible Employee who is then a participant in the Plan an option
to purchase on the Offering Exercise Date of such Payment Period at the "Option
Price" hereinafter set forth such number of full Shares reserved for the purpose
of the Plan as his accumulated payroll deductions on the Offering Exercise Date
will pay for at such Option Price; provided and on condition that such Employee
remains eligible to participate in the Plan throughout such Payment Period.
(b) The "Option Price" per Share for each Payment Period shall be the
lesser of: (1) 90% of the closing price for such stock as shown on the composite
tape on the Offering Commencement Date, or on the last preceding day such
quotations are available; or (2) 100% of the closing price for such Shares
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<PAGE>
as shown on the composite tape on the Offering Exercise Date or on the last
preceding day such quotations are available, but in no event will the Option
Price be less than the par value of such Shares.
(c) No offering shall be for longer than twenty-seven (27) months.
7. Changes in Capitalization; Merger or Consolidation
--------------------------------------------------
In the event of an increase or decrease in the number of outstanding shares
of Common Stock of the Company through stock split-ups, reclassifications, stock
dividends, changes in par value and the like, an appropriate adjustment shall be
made in the number of shares and Option Price per Share provided for under
Paragraph 6 of the Plan, either by a proportionate increase in the number of
shares and a proportionate decrease in the Option Price per Share, or by a
proportionate decrease in the number of Shares and a proportionate increase in
the Option Price per Share, as may be required to enable an eligible Employee
who is then a participant in the Plan and by whom an option is exercised on the
last day of any then current Payment Period to acquire such number of full
Shares as his accumulated payroll deductions on such date will pay for at the
adjusted Option Price.
8. Exercise of Option
------------------
Each eligible Employee who continues to be a participant in the Plan on the
Offering Exercise Date shall be deemed to have exercised his option on such
Offering Exercise Date pursuant to the terms of Paragraph 6(b) of the Plan. In
the event the Option Price is determined pursuant to Paragraph 6(b)(1), a
participant shall be deemed to have purchased from the Company such number of
full Shares reserved for the purpose of the Plan as his accumulated payroll
deductions on such date will pay for at such Option Price.
9. Purchase of Stock in Open Market
--------------------------------
In the event that on the Offering Exercise Date, the Option Price is
calculated pursuant to Paragraph 6(b)(2), then in lieu of issuing to
participants Shares reserved for the purpose of the Plan the Company is
authorized to and will purchase for the account of each participant in the open
market promptly thereafter such number of full Shares as his accumulated payroll
deductions will pay for at such Option Price. The Company will pay the
brokerage commissions on such open market purchases.
10. Unused Payroll Deductions
-------------------------
Only full Shares may be purchased under the Plan. Any balance remaining in
an Employee's accumulated payroll deduction account after exercise of an Option
will be reported to the participant and will be carried forward to the next
Payment Period unless the participant elects to withdraw from the Plan.
11. Authorization for Entering Plan
-------------------------------
(a) An Employee may participate in the Plan effective at the beginning of
the next succeeding Payment Period by filling out, signing and delivering to the
Company Payroll Accounting office an Authorization:
(i) stating the amount to be deducted regularly from his pay;
(ii) authorizing the purchase of Shares for him in each Payment
Period; and
(iii) specifying the exact name in which Shares purchased for him is
to be issued as provided under Paragraph 13 hereof.
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<PAGE>
Such Authorization must be received by the Payroll Accounting office at
least ten (10) days before the offering Commencement Date of such next
succeeding Payment Period.
Unless an Employee files a new Authorization or withdraws from the Plan,
his deductions and purchases under the Authorization he has on file under the
Plan will continue as long as the Plan remains in effect.
The Company will accumulate and hold for the Employee's account the amounts
deducted from his pay but shall not be obligated to segregate such payroll
deductions and no interest will be paid thereon.
(b) An Employee may authorize payroll deductions in any even dollar amount
up to but not more than 15% of his Regular Base Pay.
(c) Deductions may be increased or decreased only at the beginning of a
Payment Period. A new Authorization will be required and must be received by
the Payroll Accounting office at least ten (10) days before the beginning date
of the Payment Period.
12. Withdrawal from the Plan
------------------------
An Employee may withdraw from the Plan, in whole but not in part, at any
time prior to the Offering Exercise Date by forwarding a Withdrawal Notice to
the Committee, in which event the Committee will promptly refund the entire
balance of his deductions not theretofore used by him to purchase stock under
the Plan, without interest, and no further payroll deductions will be made from
such Employee's Regular Base Pay.
An Employee who withdraws from the Plan is like an employee who has never
entered the Plan. To re-enter, he must file a new Authorization which cannot,
however, become effective before the beginning of the next Payment Period
following his filing such Authorization. However, an officer or director of the
Company or any Subsidiary who is subject to Section 16(b) of the Securities
Exchange Act of 1934 (the "Act") and who withdraws from the Plan pursuant to
this Paragraph 12, may not participate in the Plan for at least six months from
the date of such withdrawal.
13. Issuance of Stock Certificates
------------------------------
Certificates for Shares acquired pursuant to the Plan shall be issued to
participants and delivered as soon as practicable after such issue. However,
for the Payment Period ended November 30, 1991, no stock will be issued to
participants until all governmental and other filings made necessary by the
adoption of this amendment and restatement of the Plan by Sierra Pacific
Resources shall have become effective.
Stock purchased under the Plan will be issued only in the name of the
Employee, or if his Authorization so specified, in the name of the Employee and
another person of legal age as joint tenants.
14. Transfer or Assignment of Employee's Rights
-------------------------------------------
An Employee's rights under the Plan and the payroll deductions credited to
him belong to him alone and may not be pledged, transferred or assigned to or
availed of by any other person, other than by will or the laws of descent and
distribution, or a designation of beneficiary as provided in Paragraph 22 of the
Plan. Any attempted assignment, transfer, pledge, or other disposition thereof
shall be without effect, except that the Company or any Subsidiary thereof may
treat such act as an election to withdraw from the Plan by such Employee in
accordance with Paragraph 12.
15. Termination of Employee's Rights
--------------------------------
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<PAGE>
An Employee's rights under the Plan will terminate when he ceases to be an
Employee because of retirement, resignation, layoff, discharge, death, or for
any other reason. A Withdrawal Notice will be considered as having been
received from the Employee on the day his employment ceases, and all payroll
deductions not used to purchase stock will be refunded to the participant.
If an Employee's payroll deductions are interrupted by any legal process, a
Withdrawal Notice will be considered as having been received from him on the day
the interruption occurs.
Upon termination of the participant's employment because of death, the
participant's beneficiary as provided herein shall have the right to elect, by
written notice given to the Committee or other person designated by the
Committee prior to the expiration of the period of thirty (30) days commencing
with the date of the death of the participant, either (i) to withdraw all of the
payroll deductions credited to the participant's account under the Plan, without
interest, or (ii) to exercise the participant's option for the purchase of
Shares on the Offering Exercise Date next following the date of the
participant's death for the purchase of the number of full Shares which the
accumulated payroll deductions in the participant's account at the date of the
participant's death will purchase at the applicable option price, and any excess
in such account (in lieu of fractional Shares) will be returned to said
beneficiary, without interest. In the event that no such written notice of
election shall be duly received by the Committee or person designated by the
Committee, the beneficiary shall automatically be deemed to have elected to
withdraw the payroll deductions credited to the participant's account at the
date of the participant's death and the same will be paid promptly to said
beneficiary, without interest.
16. Termination and Amendments to Plan
----------------------------------
The Plan may be terminated at any time by the Company's Board of Directors,
without notice. The Plan will terminate in any case when all or substantially
all of the unissued shares of stock reserved for the purposes of the Plan have
been purchased. If at any time Shares of stock reserved for the purposes of the
Plan remain available for purchase but not in sufficient number to satisfy all
then unfilled purchase requirements, the available shares shall be apportioned
among participants in proportion to their options and the Plan shall terminate.
Upon such termination or any other termination of the Plan, all payroll
deductions not used to purchase stock will be refunded to the participants,
without interest.
The Board of Directors also reserves the right to amend the Plan from time
to time, in any respect, in order to meet changes in legal requirements of for
any other reason. However, no amendment to the Plan shall, without the approval
of the shareholders of the Company, increase the total number of Shares which
may be offered under the Plan, materially alter the requirement for
participation in the Plan, or materially increase the benefits accruing to
participants in the Plan. In no event may the Plan be amended more frequently
than once each six (6) months, other than to comport with changes in the Code or
such other applicable law.
17. Limitations on Sale of Shares Purchased under the Plan
------------------------------------------------------
The Plan is intended to provide an opportunity to purchase Shares for
investment and not for resale. The Company does not, however, intend to
restrict or influence any Employee, other than Employees who are subject to
Section 16(b) of the Act in the conduct of his own business affairs. However,
Employees of the Company or any Subsidiary who are subject to Section 16(b) of
the Act may not dispose of Shares acquired pursuant to the Plan within six
months of the date of acquisition thereof. Notwithstanding the foregoing, an
Employee not subject to Section 16(b) of the Act may sell Shares purchased under
the Plan at any time; provided, however, that because of certain federal tax
requirements, each Employee will agree by entering the Plan, to promptly give
the Company notice of any such Shares disposed of within eighteen months of its
purchase showing the number of such Shares disposed of and the date purchased by
him. An Employee who is subject to Section 16(b) of the Act may
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<PAGE>
be liable for the short-swing profit tax associated with the sale of Shares
acquired under the Plan if transacted within six months of such acquisition.
Each Employee shall agree by participation in the Plan that all restrictions on
transfer of Shares acquired pursuant to the Plan may be indicated on
certificates issued to Employees to whom such restrictions apply.
18. Company's Contribution to Plan
------------------------------
The Company's contribution toward the Plan will consist of making its
Shares reserved for the purposes of the Plan available for the purchase by
Employees at less than the market price and of bearing all costs of
administering and carrying out the Plan including brokerage commissions on stock
purchased for participants in the open market.
19. Certain Reservations
--------------------
It is intended that the Plan comply with applicable requirements of
pertinent federal and other laws, and that it conform with limitations imposed
by the Company's stockholders.
20. Administration of the Plan
--------------------------
The Plan shall be administered by the Employee Stock Purchase Plan
Committee (the "Committee") appointed by the Board consisting of at least three
members of which two may be members of the Board. The interpretation and
construction of any provisions of the Plan and the adoption of rules and
regulations for administering the Plan shall be made by the Committee, subject,
however, at all times to the final jurisdiction which shall rest in the Board.
Determinations made by the Committee and approved by the Board with respect to
any matter or provision contained in the Plan shall be final, conclusive and
binding upon the Company, each Subsidiary, and upon all participants, their
heirs or legal representatives. Any rule or regulation adopted by the Committee
shall remain in full force and effect unless and until altered, amended, or
repealed by the Board.
21. Optionees not Stockholders
--------------------------
Neither the granting of an option to an Employee nor the deductions from
his pay shall constitute such Employee a stockholder of the shares covered by an
option until such Shares have been purchased by such Employee.
22. Designation of Beneficiary
--------------------------
A participant may file a written designation of a beneficiary who is to
receive any cash held in his payroll deduction account in the case of such
participant's death. Such designation of beneficiary may be changed by a
participant at any time by written notice to the Committee. Upon the death of a
participant and upon receipt by the Committee of proof of the identity and
existence at the time of the participant's death of a beneficiary validly
designated under the Plan, the Company shall deliver either such cash allocable
to a participant as of his date of death or Shares, pursuant to Paragraph 15, to
his designated beneficiary. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such cash to the
spouse of such participant, or, in the event the participant was not married at
the time of his death, then to his estate. No beneficiary shall, prior to the
death of the participant by whom the beneficiary has been designated, acquire
any interest in the cash credited to the participant under the Plan.
23. Notices
-------
All notices or other communications by a participant to the Company under
or in connection with
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<PAGE>
the Plan shall be deemed to have been duly given when received by the Committee.
24. Approval of Stockholders
------------------------
The Plan became effective as of the original date it was adopted by the
Board, and was approved by the stockholders within twelve (12) months after said
original adoption date and has been restated, effective as of the date such
restatement was adopted by the Board, subject to the approval of the
stockholders of the Company at their next meeting within twelve (12) months
after said date of adoption. Should an Offering Exercise Date occur before such
stockholder approval is obtained, the Committee shall take such action(s) as it
deems necessary to comply with applicable law or to preserve desired treatment
thereunder.
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<PAGE>
SIERRA PACIFIC RESOURCES
This Proxy is Solicited on behalf of the Board of Directors.
The undersigned hereby appoints Michael R. Niggli, Malyn K. Malquist, and James
L. Murphy or any of them, 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 June
19, 2000, 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 P. Bliss Mary Lee Coleman Theodore J. Day Jerry E. Herbst
(INSTRUCTION: To withhold authority to vote for any individual nominee write
the nominee's name on the space provided below.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
2. AMENDMENT TO THE EXECUTIVE LONG-TERM INCENTIVE PLAN. [_] [_] [_]
3. AMENDMENT TO 1992 NON-EMPLOYEE DIRECTOR STOCK PLAN. [_] [_] [_]
4. AMENDMENT TO RESTATEMENT NO. 1 TO THE EMPLOYEE STOCK
PURCHASE PLAN. [_] [_] [_]
5. WITH DISCRETIONARY AUTHORITY TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
</TABLE>
(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
STOCKHOLDER. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED,
SUCH SHARES WILL BE VOTED "FOR" ALL NOMINEES IN ITEM 1 AND "FOR" ITEMS 2, 3,
AND 4.
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: _______________ , 2000 -----------------------------------------
Please mark, sign, date and Signature if held jointly
return the proxy card using
the enclosed envelope.
