<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
TNP ENTERPRISES, INC.
.............................................................................
(Name of Registrant as Specified In Its Charter)
..............................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
.......................................................................
2) Aggregate number of securities to which transaction applies:
.......................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: _/
.......................................................................
4) Proposed maximum aggregate value of transaction:
.......................................................................
_/ Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount Previously Paid:
......................................................
2) Form, Schedule or Registration Statement No.:
......................................................
3) Filing Party:
......................................................
4) Date Filed: 3-24-94
......................................................
Notes: ENTIRE EXECUTIVE COMPENSATION PORTION OF PROXY MATERIAL PREVIOUSLY FAXED
ON 2-16-94 TO JIM BUDGE AT SEC. AND RECEIVED A NO COMMENT REPLY.
<PAGE>
TNP ENTERPRISES, INC.
4100 International Plaza
Fort Worth, Texas 76109
(817) 731-0099
NOTICE OF ANNUAL MEETING OF HOLDERS OF COMMON STOCK
TO BE HELD ON APRIL 28, 1994
To the Holders of Common Stock of
TNP ENTERPRISES, INC.:
Notice is hereby given that the Annual Meeting (the "Meeting") of the Holders
of Common Stock of TNP Enterprises, Inc. will be held on Thursday, April 28,
1994, at 11:00 a.m., Central Time, at 4100 International Plaza, Fort Worth,
Texas 76109.
The Meeting will be held for the following purposes:
1. To elect three persons as Class 3 directors with terms continuing
until the Annual Meeting of the Holders of Common Stock in 1997, and until
their respective successors shall be duly elected and qualified.
2. To ratify the appointment of the independent auditors for the current
year.
3. To transact such other business as may come before the Meeting or at
any and all adjournments thereof.
The Board of Directors has fixed the close of business on March 9, 1994, as
the record date for determination of the holders of Common Stock entitled to
receive notice of and to vote at the Meeting.
By Order of the Board of Directors
M. D. Blanchard
Secretary
Fort Worth, Texas
March 25, 1994
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE FILL IN, DATE, SIGN AND
MAIL PROMPTLY THE ENCLOSED PROXY CARD IN THE RETURN ENVELOPE FURNISHED FOR SUCH
PURPOSE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN
PERSON. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED.
<PAGE>
TNP ENTERPRISES, INC.
4100 International Plaza
Fort Worth, Texas 76109
PROXY STATEMENT
FOR
ANNUAL MEETING OF HOLDERS OF COMMON STOCK
THE MEETING
PROXY SOLICITATION
The Board of Directors of TNP Enterprises, Inc. (the "Company") is furnishing
this proxy statement (the "Proxy Statement") in connection with its
solicitation by mail of proxies for use at the Annual Meeting of Holders of
Common Stock, no par value (the "Common Stock"), to be held on Thursday, April
28, 1994, at 11:00 a.m., Central Time, at 4100 International Plaza, Fort Worth,
Texas 76109 (the "Meeting"). A proxy in the enclosed form which is properly
executed and returned by the shareholder and not revoked prior to the Meeting
will be voted at such Meeting. A shareholder signing a proxy may revoke it at
any time before it is exercised by submitting a new proxy with a later date, by
notifying the Secretary of the Company in writing of revocation, or by voting
in person at the Meeting after first withdrawing any proxy previously given.
Shares represented by proxy at the Meeting will be voted in accordance with
specifications made by the shareholder on the proxy card. Each share of Common
Stock of the Company entitles the holder thereof to one vote. Cumulative voting
rights do not exist.
The number of shares of the class of stock entitled to vote at the Meeting
and the number of votes of such class are as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF
CLASS OUTSTANDING VOTES
----- ---------------- ----------
<S> <C> <C>
Common, no par value............................ 10,700,158 10,700,158
</TABLE>
The record date for determination of shareholders entitled to vote at the
Meeting is March 9, 1994. This Proxy Statement and form of proxy are first
being sent to shareholders on or about March 25, 1994.
SHAREHOLDER PROPOSALS
The Bylaws of the Company set forth specific procedures to be followed for
shareholder proposals. In general, a notice of a shareholder proposal is
required to be received at the executive offices of the Company, in proper
written form pursuant to the Company's Bylaws and the Rules of the Securities
and Exchange Commission, not less than 30 nor more than 60 days prior to the
first anniversary of the date of the notice of the preceding year's annual
meeting.
ELECTION OF DIRECTORS
THE NOMINEES AND CONTINUING DIRECTORS
The Board of Directors of the Company is divided into three Classes (Class 1,
Class 2, and Class 3). At each Annual Meeting of Holders of Common Stock, the
directors constituting one class are elected for a three-year term. The Bylaws
of the Company provide that the number of directors shall be made up of nine
(9) members and shall be divided into three classes, each class to be as nearly
equal in number as is possible.
<PAGE>
At the 1994 Annual Meeting of Holders of Common Stock, the shareholders will
elect three persons as Class 3 directors, with terms continuing until the
Annual Meeting of Holders of Common Stock in 1997. All directors elected will
serve until their respective successors shall be duly elected and qualified, or
until the earlier of death, resignation or removal. All three nominees for the
Class 3 directors currently serve on the Board of Directors of the Company. The
three nominees have consented to be named in the Proxy Statement and to serve
if elected. The nominees, if elected directors of the Company, will also be
elected to the Board of Directors of the Company's major subsidiary, Texas-New
Mexico Power Company (the "Utility"), an electric utility company, at the
Utility's Annual Meeting.
Shares of Common Stock represented by the accompanying proxy will be voted
for the election of the three nominees first listed below unless the proxy card
is marked so as to withhold authority to vote for the election of one or more
nominees. If any nominee is unable to serve or for good cause will not serve as
a director, the proxy will be voted for the person nominated by the Board of
Directors as a replacement for the nominee.
DIRECTORSHIP VACANCIES AND REPLACEMENT UNDERTAKING OF THE BOARD OF DIRECTORS
Mr. J. M. Tarpley, 59 years of age, a member of the Board of Directors of the
Company since 1988, and a member of the Board of Directors of the Utility since
1985, resigned as President, Chief Executive Officer, and Director from the
Company and the Utility effective as of November 9, 1993.
The Board of Directors of the Company has appointed a committee to search
for, and recommend to the Board, a person to serve as President and Chief
Executive Officer of the Company. The vacancy created by the resignation of the
former President and Chief Executive Officer is expected to be filled for the
unexpired term by the Board's appointment of the person selected by the Board
to be the President and Chief Executive Officer.
Following the resignation of a previous director, effective as of February
25, 1993, an advisory director was appointed as of April 1, 1993. However, at
its regular February 1994 meeting, the Board of Directors was advised that the
advisory director had decided not to stand for election by the Shareholders at
the upcoming Annual Meeting. This unexpected event has resulted in the
continuing vacancy associated with the February 25, 1993 resignation.
A third vacancy on the Board was created by the untimely death of Dr. T. S.
Mackey on February 25, 1994. Dr. Mackey held the now vacant Class 2 position.
The Company's Board of Directors and its Personnel, Organization & Nominating
Committee continue efforts to select replacement directors to fill the
vacancies. The selection task is to obtain the services of the best available
qualified persons. Members of management of the Company and the Utility are not
being considered for the vacant positions on the Board, except to the extent
one may be considered for the positions of President and Chief Executive
Officer. At such time as the Board is able to evaluate and select persons
qualified to act as directors, the Board will make appointments to fill the
vacant positions in each Class, with such appointees expected to stand for
election to the appropriate term for each Class at the 1995 Annual Meeting of
Holders of Common Stock.
The enclosed proxies for the 1994 Annual Meeting will only be voted with
respect to the nominees for the Class 3 positions as set forth in this Proxy
Statement. The Board of Directors presently has no plans, arrangements,
commitments or understandings with respect to increasing or decreasing the size
of the Board or any class of its directors.
2
<PAGE>
INFORMATION REGARDING NOMINEES AND CONTINUING DIRECTORS
Set forth below is certain information concerning the nominees, Messrs.
Edwards, Kempner and Woofter, and the three directors not currently standing
for election whose terms of office will continue until succeeding years:
NOMINEES FOR CLASS 3 DIRECTORS (TERMS EXPIRE IN 1997)
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION AND BUSINESS
OF THE EXPERIENCE DURING PAST FIVE YEARS;
NAME/AGE COMPANY SINCE AND OTHER DIRECTORSHIPS
-------- ------------- ----------------------------------
<S> <C> <C>
Cass O. Edwards, II, 67. 1984 Managing Partner, Edwards-Geren Limited (ranching
and farming)
Chairman, Overton Bancshares, Inc., since 1982
Chairman and President, Cassco Land Company, Inc.
Director of: Overton Bank and Trust, National
Association
Harris L. Kempner, Jr.,
54 .................... 1984 President, Kempner Capital Management, since 1981
(investment advisor)
Trustee, H. Kempner Trust Association
Chairman Emeritus and Advisor to the Board of
United States National Bank, since 1992
Director of: Balmorhea Ranches; Imperial Holly
Corp.; Cullen/Frost Bankers, Inc., since 1982;
American Indemnity Company, since 1987; American
Indemnity Financial, since 1990
R. D. Woofter, 70....... 1983 Chairman of the Board of the Company, since July
2, 1988
Chairman of the Board of the Utility, since July
2, 1988
Continuing Directors Not Currently Standing for Election
CLASS 2 DIRECTORS (TERMS EXPIRE IN 1996)
John A. Fanning, 54..... 1984 Executive Vice President, Snyder Oil Corporation,
since March 1990 (oil and gas producer)
President, Snyder Oil Company, Inc., December 1987
to March 1990
Director of: Snyder Oil Company, Inc., since 1981
D. R. Spurlock, 61...... 1993 Interim President and Chief Executive Officer of
the Company and the Utility, since November 9,
1993
Sector Vice President--Operations of the Utility,
September 1990 through 1992 (Retired)
Vice President--Division Manager of the Utility,
August 1979 to September 1990
Director of: Texas City National Bank, since 1976
OPEN POSITION (SEE DISCUSSION ABOVE UNDER "DIRECTORSHIP VACANCIES AND
REPLACEMENT UNDERTAKING OF THE BOARD OF DIRECTORS")
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION AND BUSINESS
OF THE EXPERIENCE DURING PAST FIVE YEARS;
NAME/AGE COMPANY SINCE AND OTHER DIRECTORSHIPS
-------- ------------- ----------------------------------
CLASS 1 DIRECTORS (TERMS EXPIRE IN 1995)
<S> <C> <C>
R. Denny Alexander, 48 . 1989 Owner, R. Denny Alexander & Company, since 1978
(investment management)
Managing Partner, OPNB Building Joint Venture,
since 1978 (real estate investment)
Chairman, Overton Bank and Trust, National
Association, since May 1984
Director of: Overton Bancshares, Inc., since 1982
</TABLE>
OPEN POSITION (SEE DISCUSSION ABOVE UNDER "DIRECTORSHIP VACANCIES AND
REPLACEMENT UNDERTAKING OF THE BOARD OF DIRECTORS")
OPEN POSITION (SEE DISCUSSION ABOVE UNDER "DIRECTORSHIP VACANCIES AND
REPLACEMENT UNDERTAKING OF THE BOARD OF DIRECTORS")
ORGANIZATION OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company annually elects from its members an
Audit Committee, Financial Committee, and Personnel, Organization & Nominating
Committee.
The Audit Committee. Committee members are Messrs. Alexander, Edwards,
Fanning, and Woofter. This Committee held two meetings in 1993. The Audit
Committee has the responsibility of recommending the accounting firm to be
selected by the Board; determining and reviewing internal and external auditing
staff qualifications; meeting and reviewing with the independent auditors, and
the manager-internal audit, concerning matters relating to corporate financial
reporting and accounting procedures and policies, adequacy of financial
reporting and accounting, and operating controls and the scope of the
respective audits of all the audit staff; and making appropriate
recommendations to the Board of Directors.
The Financial Committee. Committee members are Messrs. Alexander, Fanning,
Kempner, Spurlock, and Woofter. This Committee held four meetings in 1993. The
Financial Committee reviews and approves the Company's security offerings,
budgeting and financial planning.
The Personnel, Organization & Nominating Committee. Committee members are
Messrs. Edwards and Woofter. Prior to his death, Dr. Mackey was a member of
this Committee. This Committee held three meetings in 1993. The Personnel,
Organization & Nominating Committee recommends levels of executive compensation
and executive benefits not generally available to all employees. This Committee
also studies qualifications of individuals and makes recommendations to the
Board of Directors for nominees for director positions of the Company and
reviews and recommends directors' compensation and benefits.
This Committee would also consider any nominees for the Board of Directors of
the Company recommended by shareholders. The Bylaws of the Company set forth
the specific nominating procedure to be followed by shareholders. In general,
the Bylaws require nominations to be presented to the Personnel, Organization &
Nominating Committee, in the case of an annual meeting no less than 30 days,
nor more than 60 days, prior to the anniversary date of the notice of the
preceding year's Annual Meeting of Holders of Common Stock. The shareholder
letter presenting a nomination is directed to include the name, address, and
consent of the nominee, as well as sufficient information to satisfy the
requirements of the Company's Bylaws and Regulation 14A under the Securities
Exchange Act of 1934 as such rules concern the nomination of directors.
1993 Board Meetings and Attendance. The Board of Directors of the Company
held five Board meetings in 1993. The Board of Directors of the Utility held
nine meetings in 1993.
4
<PAGE>
Except for the Chairman, each member of the Board of Directors who is not
also an officer of the Company or its subsidiaries receives an annual retainer
fee of $4,500 from each of the Company and the Utility. The Chairman of the
Board of Directors receives an annual retainer fee of $36,000 from each of the
Company and the Utility. The Chairman acts as agent for the Board of Directors
and is a member of all Committees of the Board. Each director also receives
$500 for attending each meeting of the Board of Directors of either the Company
or the Utility, or Board committees of either entity of which he is a member.
In the event that meetings of Boards of both entities or their Committees are
held on the same day, the meeting fee is limited to $500 and is allocated
evenly between the Company and the Utility.
SECURITY OWNERSHIP OF MANAGEMENT
DIRECTOR, NOMINEE AND MANAGEMENT SHAREHOLDING
The following table sets forth information with respect to the beneficial
ownership of the common stock of the Company by its directors, nominees for
directors, each executive officer named in the Summary Compensation Table
appearing later in this Proxy Statement, and all directors and officers as a
group, as of January 31, 1994.
<TABLE>
<CAPTION>
NAME OF SHARES
INDIVIDUAL OR GROUP POSITION WITH COMPANY BENEFICIALLY OWNED
------------------- --------------------- ------------------
<S> <C> <C>
R. D. Woofter Chairman of the Board 9,893 (1)
R. Denny Alexander Director 500
Cass O. Edwards, II Director 6,736
John A. Fanning Director 400
Harris L. Kempner, Director 200 (2)
Jr.
Thomas S. Mackey Director 1,386
(deceased as of 2-
25-94)
D. R. Spurlock Director; Interim President and 1,584
CEO of Company and Utility since
11-9-93
J. M. Tarpley President, Chief Executive 11,347 (3)
Officer and Director of Company
and Utility until resignation on
11-9-93
D. R. Barnard Sector Vice President and Chief 18,491
Financial Officer of Utility and
Vice President and Chief
Financial Officer of Company
J. V. Chambers Sector Vice President--Revenue 13,964
Production of Utility
A. B. Davis Vice President--Chief Engineer of 4,002
Utility
R. J. Wright Vice President--Corporate 10,201
Services/ Generation of Utility
Directors and 96,370*
officers as a group
(16 persons) (4)
</TABLE>
- --------
*Less than one (1) percent of outstanding shares of Common Stock.
(1) Does not include 66 shares owned by the wife of Mr. Woofter as her sole and
separate property. Mr. Woofter disclaims any beneficial interest in all
such shares.
5
<PAGE>
(2) Does not include 200 shares owned by the wife of Mr. Kempner as her sole
and separate property. Mr. Kempner disclaims any beneficial interest in all
such shares.
(3) Subsequent to January 31, 1994, Mr. Tarpley disposed of all shares.
(4) Of the nine executive officers of subsidiaries, four are also executive
officers of the Company. All shares held by such officers and directors are
shares of the Company.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Personnel, Organization & Nominating Committee is responsible for
recommending to the Board the appropriate levels of executive compensation. The
members of the Committee are Messrs. Edwards and Woofter. Prior to his death,
Dr. Mackey was a member of this Committee. Mr. Woofter, the Chairman of the
Board and formerly the Chief Executive Officer and President of the Company and
the Utility, retired as an officer of the Company and the Utility in 1988. Mr.
Edwards is a director of Overton Bank and Trust, National Association, with
which the Company maintains a banking relationship in the ordinary course of
business. To the Company's knowledge, there were no other inter-relationships
involving members of the Committee requiring disclosure in this Proxy
Statement.
The report of the Personnel, Organization & Nominating Committee on executive
compensation and the performance graph that follow shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates the information by reference, and shall not otherwise
be deemed filed under such Acts.
REPORT OF THE PERSONNEL, ORGANIZATION & NOMINATING
COMMITTEE ON EXECUTIVE COMPENSATION
This report is presented by the Personnel, Organization & Nominating
Committee (the "Committee") of the Board of Directors of both the Company and
the Utility. The Committee has responsibility for reviewing compensation
practices and making recommendations to the Board of all executive officers'
compensation, with special attention to the Chief Executive Officer ("CEO").
COMPENSATION PHILOSOPHY AND STRATEGY
The principal objectives of the Company's executive compensation program are
to:
. attract and retain executive officers by delivering a market competitive
rate of base pay; and
. provide salary increases to executive officers based on their individual
effort and performance.
The compensation program for executives is comprised of base salary only. The
Company has not offered any restricted stock awards, stock options, or other
long-term incentive compensation programs. Market competitive rates and salary
ranges are determined by analyzing compensation data from electric utilities of
similar revenue size. The compensation comparison group originally selected
consists of 19 utilities in the Edison Electric Institute ("EEI") group of
companies with revenues between $300 million and $600 million and which
participated in EEI's annual compensation survey. Except for a nuclear
generating company, all companies in this compensation comparison group which
had publicly traded common equity were selected for the performance peer group.
The companies participating in the EEI compensation survey have been used for
several years by the Board of Directors for establishing the salary ranges for
the executive officers. The compensation survey group changes slightly from
year to year based on each company's decision to participate in the survey and
its current revenues. In 1993, the compensation survey group consisted of 19
companies, approximately one-half of which were the companies in the
performance peer group, except for
6
<PAGE>
one which did not participate in the EEI compensation survey and another which
moved into a higher revenue group. The Committee's intent is to establish
control points of executive salary ranges which are, over time, approximately
equal to median salary levels for this group of companies.
Performance criteria reviewed by the Committee include earnings levels,
return on equity, and cost containment efforts. Performance of the Company and
its subsidiaries by reference to established criteria is not explicitly used to
establish the salary ranges, but the Committee does consider such performance
in a subjective manner in determining each executive's appropriate salary level
within the established salary range. An executive's position in the range
reflects individual performance over a period of time in that position, as well
as the individual's experience. The goals and objectives expected to be met are
set forth in the annual operational plans.
Because the executive compensation is within certain prescribed limits, the
Committee has been advised that the terms of the Omnibus Budget Reconciliation
Act of 1993 limiting the deductibility of executive compensation will not
impact the Company's ability to deduct its executives' compensation and,
therefore, believes no action is necessary to address this new legislation.
Determination of CEO Compensation
The Committee places particular emphasis on individual leadership and
management performance in its determination of the salary level for the CEO.
The principal performance factors of relatively equal importance are (i)
establishing and recommending to the Board strategic direction for the Company
(including its subsidiaries); (ii) building and maintaining a sound management
team; (iii) providing leadership for achieving the Company's goals and
objectives; and (iv) monitoring and evaluating Company (including its
subsidiaries) performance and recommending to the Board and executing necessary
actions to respond to performance results.
1993 CEO and Other Executive Compensation
Pursuant to an agreement with the Company and its subsidiaries, the general
terms of which are discussed below under the heading Utility's Employment
Contracts, James M. Tarpley, the then current CEO, resigned as an officer and
director of each such company, effective as of November 9, 1993. The Committee
believes that the compensation being paid to the CEO at the time of his
resignation was appropriate for the level of knowledge, effort, and experience
displayed. The Board has established a search committee to locate and retain a
new CEO who the Board believes will best accomplish the principal performance
factors set forth above.
During the search period, the Board of Directors has named Dwight R. Spurlock
as Interim President and CEO. In establishing the compensation payable to Mr.
Spurlock, the Board of Directors considered the following factors, giving
approximately equal weight to each factor:
(1) the interim nature of the position;
(2) Mr. Spurlock's prior knowledge of Company policies and procedures;
(3) the immediate availability of Mr. Spurlock to provide stability and
leadership during the interim period;
(4) the necessity to offer a competitive salary and partially compensate
the interim person for the benefits such as medical insurance,
retirement accruals, Thrift Plan participation, and other benefits
normally provided by the Company that would be unavailable for the
interim position.
The Committee evaluated the salaries of the executive officers at its regular
November, 1993 meeting and recommended to the Board of Directors an increase of
3% for all executive officers, exclusive of the Interim President and CEO. The
increase was effective January 10, 1994. After the increase, the comparative
level of the named executives' salaries remains consistent with the general
compensation philosophy and strategy.
7
<PAGE>
Conclusion
The Committee believes that its stated compensation policy continues to serve
the Company's best interests and believes that its decisions regarding 1993
executive compensation adequately reflect Company and individual performance
and the current operating environment.
PERSONNEL, ORGANIZATION &
NOMINATING COMMITTEE
Cass O. Edwards, II R. D. Woofter
Thomas S. Mackey (deceased as of February 25, 1994)
Performance Graph
The following performance graph compares the performance of the Company's
Common Stock to the S & P 500 Index and to the selected EEI Industry Group for
the Company's last five fiscal years. This group of companies makes up the
majority of the compensation comparison group which has been used by the
Personnel, Organization & Nominating Committee for several years in the process
of determining the salaries of the Company's CEO and executive officers. The
graph assumes the reinvestment of dividends and that the value of the
investment in the Company's Common Stock and each index was $100 at January 1,
1988. The peer group consists of Central Hudson Gas & Electric, Central
Louisiana Electric, Eastern Utilities, El Paso Electric, Idaho Power, Iowa-
Illinois Gas & Electric, Kentucky Utilities, Minnesota Power, Nevada Power, TNP
Enterprises, Inc., Tucson Electric Power and Washington Water Power, and is the
same as previously used.
8
<PAGE>
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE-YEAR CUMULATIVE SHAREHOLDER RETURNS
AMONG [TNP ENTERPRISES], S&P 500 INDEX AND PEER GROUP
<CAPTION>
Measurement Period [TNP S&P PEER GROUP INDEX
(Fiscal Year Covered) ENTERPRISES] 500 INDEX (W/TNP)
- ------------------- ------------ --------- ----------------
<S> <C> <C> <C>
Measurement Pt-
1988 $100.00 $100.00 $100.00
1989 $116.69 $131.59 $106.64
1990 $117.73 $127.49 $ 97.17
1991 $125.61 $166.17 $117.82
1992 $134.20 $178.81 $127.90
1993 $127.69 $196.75 $143.54
</TABLE>
9
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding cash compensation paid
for services rendered to the Company and its subsidiaries to the former CEO,
the Interim President and CEO, and each of the four most highly compensated
executive officers of the Company and its subsidiaries whose cash compensation
exceeded $100,000, for each of the last three fiscal years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION ALL OTHER
-------------------------------- COMPENSATION (3)
FISCAL OTHER ANNUAL
NAME & PRINCIPAL YEAR SALARY(1) COMPENSATION(2) (a) (b) (c)
POSITION ------ --------- --------------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
J. M. Tarpley (resigned
11-9-93)............... 1993 $284,419 $ -0- $2,581 $ 2,581
President and Chief 1992 309,776 7,526 2,514 10,040
Executive Officer of the 1991 295,257 7,306 2,295 9,601
Company and the Utility
D. R. Spurlock.......... 1993 77,801 -0- -0- -0-
(effective 11-9-93 named 1992 156,649 $24,885 8,728 704 9,432
Interim President and
Chief 1991 148,089 25,125 8,475 682 9,157
Executive Officer of the
Company and the Utility)
(prior to retirement
effective
12-31-92--Sector Vice
President--Operations of
the Utility)
D. R. Barnard........... 1993 147,857 -0- 801 801
Vice President and Chief 1992 155,993 8,728 682 9,410
Financial Officer of the 1991 145,177 8,475 682 9,157
Company and Sector Vice
President and Chief
Financial Officer of the
Utility
J. V. Chambers.......... 1993 148,404 -0- 801 801
Sector Vice President-- 1992 154,094 8,728 704 9,432
Revenue Production of 1991 147,370 8,475 682 9,157
the Utility
A. B. Davis............. 1993 120,224 -0- 609 609
Vice President-Chief
Engineer 1992 116,031 6,730 487 7,217
of the Utility 1991 100,370 5,778 440 6,218
R. J. Wright............ 1993 127,921 -0- 662 662
Vice President--
Corporate 1992 127,058 7,545 582 8,127
Services/Generation 1991 119,306 7,071 538 7,609
of the Utility
</TABLE>
- --------
(1) Salaries for the officer group are reviewed annually with any changes in
salary generally effective as of the date of the meeting of the directors
held in conjunction with the Annual Meeting of the Holders of Common Stock.
Because employee salaries are paid bi-weekly, the actual compensation for
1992 included an extra pay period.
(2) Housing and transportation allowance.
(3) All Other Compensation consists of the following:
(a) Amounts contributed by Utility to Thrift Plan (401K Plan).
(b) Premiums for Group Life.
(c) Total "All Other Compensation", (a)+(b)=(c).
10
<PAGE>
UTILITY'S PENSION PLAN
The following table sets forth annual benefits payable to employees of the
Company and the Utility under the Utility's Pension Plan at the normal
retirement age of 65.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE AT RETIREMENT
-----------------------------------------------------
REMUNERATION 15 20 25 30 35 40
- ------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$125,000.................. $ 30,147 $ 40,196 $ 50,245 $ 60,294 $ 70,343 $ 78,468
*150,000.................. 36,522 48,696 60,870 73,044 85,218 94,968
*175,000.................. 42,897 57,196 71,495 85,794 100,093 111,468
*200,000.................. 49,272 65,696 82,120 98,544 114,968 127,968
*225,000.................. 55,647 74,196 92,745 111,294 129,843 144,468
*250,000.................. 62,022 82,696 103,370 124,044 144,718 160,968
*300,000.................. 74,772 99,696 124,620 149,544 174,468 193,968
*400,000.................. 100,272 133,696 167,120 200,544 233,968 259,968
*450,000.................. 113,022 150,696 188,370 226,044 263,718 292,968
*500,000.................. 125,772 167,696 209,620 251,544 293,468 325,968
</TABLE>
- --------
*Benefits at these levels are shown without taking into account Internal
Revenue Service (IRS) Code Section 415 limits or the $150,000 salary cap in
effect following 1993, resulting from the IRS Code Section 401a 717 limits
and, therefore, a portion of these benefits would be paid from the unfunded
Excess Benefit Plan.
The Utility maintains for the benefit of all eligible employees a non-
contributory defined benefit retirement plan (the "Pension Plan") under which
contributions are actuarially determined each year. All employees who have one
year of service with the Utility and who are 21 years of age are eligible. As a
defined benefit plan, the Utility's Pension Plan contributions, which are
computed on an actuarial basis, cannot be readily calculated on a per person
basis by Plan actuaries. Benefits for each eligible employee are based on the
employee's number of years of service computed through the month in which he or
she retires multiplied by a specified percentage of the employee's average
monthly compensation for each full calendar year completed after 1993. The
average monthly compensation for the named executive officers consists only of
amounts included beneath the Salary column of the Summary Compensation Table.
Pension benefits are not subject to deduction for Social Security benefits.
Pension benefits are subject to reduction for retirement prior to age 62. For
1993, the Utility made no contribution to the Pension Plan.
The Utility also maintains an unfunded Excess Benefit Plan to compensate
certain highly compensated employees. Such highly compensated employees must
first have their pensions subject to being reduced below the amount which would
have been provided by the Pension Plan because of compliance with Sections 415
and 401a 717 of the Internal Revenue Code of 1986, as amended, and must be
designated as eligible by the Board of Directors for participation in the
Excess Benefit Plan. There are three participants currently designated by the
Board of Directors. A Letter of Credit is purchased each year which will
provide sufficient funds to the Trust to make payments to all persons who are
covered by the Excess Benefit Plan if a "change in control" were to occur as
that term is defined in certain employment contracts which are discussed
hereafter. The Utility owns life insurance policies on the lives of two
employees currently eligible to receive payments under such plan upon their
retirement and one retiree who is currently receiving benefits under the Excess
Benefit Plan. The proceeds of the policies are payable to the Utility to
compensate the Utility for its payments to the eligible employees pursuant to
the terms of the Excess Benefit Plan.
11
<PAGE>
As of December 31, 1993, the years of credited service for calculation of the
retirement benefits for the named executive officers of the Company and the
Utility were as follows:
<TABLE>
<CAPTION>
YEARS OF
NAME CREDITED SERVICE
---- ----------------
<S> <C>
Mr. Tarpley.................................. 35 years, 6 months
Mr. Spurlock................................. Retired as of 12-31-92 with
33 years, 7 months
Mr. Barnard.................................. 32 years, 6 months
Mr. Chambers................................. 14 years, 11 months
Mr. Davis.................................... 28 years, 7 months
Mr. Wright................................... 14 years, 10 months
</TABLE>
UTILITY'S EMPLOYMENT CONTRACTS
Employment contracts between the Utility and its officers and its other key
personnel have been in effect since 1988. Such employment contracts were last
reviewed, modified, and approved in form and substance by the Board of
Directors of the Utility at the November, 1993 Board meeting. The principal
purpose of the contracts is to encourage retention of management and other key
personnel required for the orderly conduct of the business of the Utility
during any threatened or pending acquisition of the Company or the Utility and
during any transition of ownership. The terms of the contracts, from date of
execution, are three years as to certain officers and managers of the Utility
and two years as to the other key personnel. Upon the expiration of each
contract, the Utility, at its option, may extend the contract for additional
three or two year periods, as appropriate. The contracts for certain officers
and managers, including the named executive officers, provide for lump sum
compensation payments equal to three times their current annual salary, and
other rights. The contracts for the other key personnel provide for payments
equal to their annual salary. The lump sum payments for both the officers and
other key personnel only become effective in the event of termination of
employment or other adverse treatment of such persons following a "change in
control" of the Company or the Utility, which event is defined to include,
among other things, substantial changes in the corporate structure or ownership
of either entity or in the Board of Directors of either entity.
Pursuant to an agreement between J. M. Tarpley and the Company and its
subsidiaries, including the Utility, Mr. Tarpley resigned his positions as
officer and member of the Boards of Directors of all such companies, including
his positions as President, Chief Executive Officer and a member of the Boards
of the Company and the Utility. The agreement provides for November 9, 1993, as
the effective time of resignation of such officer and director positions and,
effective January 1, 1994, a contract of employment between Mr. Tarpley and the
Utility. The agreement also sets forth other covenants and arrangements between
the parties safeguarding confidential and proprietary information of the
Company and its subsidiaries and prohibiting areas of participation by Mr.
Tarpley in opposition to the Company and the Utility. Upon attaining age 62
(August 23, 1996), Mr. Tarpley will retire as an employee and have all rights
of a retired employee of the Utility. As an employee and in consideration of
the safeguarding and restricting covenants of Mr. Tarpley, his annual
compensation until retirement, or his earlier death, will aggregate $284,000
per year. Mr. Tarpley has the rights as an employee to participate in the
benefit plans and programs of the Utility, including such rights as a retired
employee after age 62.
Effective as of November 9, 1993, the Utility entered into an agreement with
D. R. Spurlock to serve as President and Chief Executive Officer on an interim
basis. The agreement provides for the Utility to pay Mr. Spurlock $30,000 per
month, and to reimburse him for certain expenses incurred during the interim
period. Mr. Spurlock does not receive any benefits generally made available to
employees, such as pension accrual and enhanced medical benefits. The agreement
is terminable by either party upon twenty-four hour written notice.
12
<PAGE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Relationships and Transactions with Certain Directors. Mr. R. Denny
Alexander, a Class 1 director whose term expires in 1995, is Chairman of the
Board and director of Overton Bank and Trust, National Association. Mr. Cass O.
Edwards, II, a Class 3 nominee whose term will expire in 1997, is a director of
Overton Bank and Trust, National Association.
The Company and the Utility maintain banking relations with Overton Bank and
Trust, National Association. These banking relations are in the ordinary course
of business for general banking and short-term investments, and all banking
transactions are made on substantially the same terms, including collateral and
interest rates, as those prevailing at the time for comparable transactions
between such bank and other persons.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
A proposal will be presented to the Meeting to select the firm of KPMG Peat
Marwick as independent auditors for the current year. KPMG Peat Marwick has
audited the Company's and subsidiaries' books and records for the year ended
December 31, 1993. Although the submission of this proposal to a vote of the
shareholders is not legally required, in the event of a negative vote of a
majority of the shares voted on the proposal by the Company's shareholders,
management would select a different firm of auditors for approval by the Board
of Directors.
The members of KPMG Peat Marwick do not have any direct or indirect financial
interest in the Company or its subsidiaries and have not had any previous
connection with the Company or its subsidiaries in the capacity of promoters,
underwriters, voting trustees, Directors, officers or employees.
A representative of KPMG Peat Marwick is expected to attend the Meeting and
will have the opportunity to make a statement and respond to appropriate
questions from shareholders.
EXPENSES
The Board of Directors is making this solicitation by mail through use of the
Utility's officers, directors, and regular employees as a part of their
ordinary business duties and through use of the Company's transfer agent and
registrar, Society National Bank, Dallas, Texas. Following the initial
solicitation by mail, further solicitation of proxies may be made by telephone
or oral communication with some shareholders of the Company. The costs normally
expended for a solicitation of directors in the absence of an election contest
are not stated herein. Any further solicitation will be made by the Utility's
employees at the Company's expense. The Company will pay the cost of soliciting
proxies, including the reimbursement of banks, brokers, nominees, etc., for
their expenses in forwarding proxy material to beneficial owners.
OTHER BUSINESS
The Board of Directors is not aware of any matters other than those indicated
which are to be presented for action at the Meeting. If other matters are
properly presented at the Meeting, the enclosed proxy will be voted by the
persons named as proxies in accordance with their best judgment.
ANNUAL REPORT
Shareholders are being provided with this Proxy Statement a copy of the
Company's Consolidated Annual Report for 1993.
13
<PAGE>
P R O X Y
TNP ENTERPRISES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints D. R. SPURLOCK, D. R. BARNARD and M. D.
BLANCHARD, as proxies, each with full power of substitution, and hereby autho-
rizes them to represent and vote as designated below all shares of common stock
of TNP Enterprises, Inc. (the "Company") which the undersigned has the power to
vote at the Annual Meeting of Holders of Common Stock to be held on Thursday,
April 28, 1994, and at any adjournment thereof.
Election of Class 3 Directors, Nominees:
Cass O. Edwards, II, Harris L. Kempner, Jr., and R. D. Woofter, until their
respective successors shall have been duly elected and qualified.
(change of address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(If you have written in the above space, please mark the corresponding box on
the reverse side of this card)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED COMMON STOCK SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
SEE REVERSE
SIDE
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
SHARES IN YOUR NAME REINVESTMENT SHARES
1. Election of Class 3 Directors (see reverse).
FOR WITHHELD
[_] [_]
(INSTRUCTION: To withhold authority to vote for any nominee listed, write the
nominee's name in the space provided below.)
- -------------------------
2. RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK as Independent Auditors
of the Company for the current year.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. In their discretion, the proxies are authorized to vote upon any other
business which may properly come before the Meeting.
[_] (change of address)
SIGNATURE(S) ________________________ DATE ____________________________________
SIGNATURE(S) ________________________ DATE ____________________________________
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS ABOVE. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE, GUARDIAN OR OFFICER OF A CORPORATION, STATE THE
CAPACITY IN WHICH YOU ARE SIGNING.
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
<PAGE>
TNP ENTERPRISES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY The undersigned hereby appoints D. R. SPURLOCK, D. R. BARNARD and
M. D. BLANCHARD, as proxies, each with full power of substitution, and
hereby authorizes them to represent and vote as designated below all
shares of common stock of TNP Enterprises, Inc. (the "Company") which
the undersigned has the power to vote at the Annual Meeting of Holders
of Common Stock to be held on Thursday, April 28, 1994, and at any
adjournment thereof.
1. ELECTION OF CLASS 3 DIRECTORS: Cass O. Edwards, II, Harris L. Kempner, Jr.,
and R. D. Woofter, until their respective
successors shall have been duly elected and
qualified.
[_] FOR All Nominees Listed Above [_] WITHHOLD AUTHORITY To Vote
(Except As Marked For All Nominees Listed Above
To The Contrary Below)
(INSTRUCTION: To withhold authority to vote for any nominee listed, write the
nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK as Independent Auditors
of the Company for the current year.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon any other
business which may properly come before the Meeting.
(Continued and to be signed on reverse side.)
(Continued from reverse side.)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED COMMON STOCK SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, guardian, or of-
ficer of a corporation,
state the capacity in
which you are signing.
- ----------------------------------------------------
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
Signature if held jointly
DATED: ___________________________________________________________________, 1994
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
