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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
TNP ENTERPRISES, INC.
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(Name of Registrant as Specified in its Charter)
TNP ENTERPRISES, INC.
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rules 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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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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TNP ENTERPRISES, INC.
4100 INTERNATIONAL PLAZA, TOWER II
FORT WORTH, TEXAS 76109
(817) 731-0099
NOTICE OF ANNUAL MEETING OF HOLDERS OF COMMON STOCK
TO BE HELD ON APRIL 28, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Holders of TNP
Enterprises, Inc. Common Stock will be held on Friday, April 28, 1995, at 11:00
a.m., Central Time, at 4100 International Plaza, Tower II, 9th Floor, Fort
Worth, Texas 76109 for the following purposes:
1. To elect three Class 1 directors to hold office until the 1998 Annual
Meeting of Holders of Common Stock or their respective successors are
elected and qualified;
2. To approve the TNP Enterprises, Inc. Equity Incentive Plan attached as
Appendix A to the proxy statement following this notice;
3. To approve the TNP Enterprises, Inc. Nonemployee Director Stock Plan
attached as Appendix B to the proxy statement following this notice;
4. To ratify the appointment of KPMG Peat Marwick, Certified Public
Accountants, as independent auditors for 1995; and
5. To transact any other business that properly may come before the
annual meeting or any adjournments of the annual meeting.
The record date for determining shareholders entitled to notice of and
to vote at the annual meeting is the close of business on March 9, 1995.
Whether or not you expect to attend the annual meeting in person,
please complete, sign, and date the enclosed proxy card and return it promptly
in the postage-paid envelope provided so that your shares of common stock can
be represented and voted at the annual meeting. If you attend the annual
meeting, your proxy will be returned to you upon your request and you may vote
your shares in person.
By Order of the Board of Directors
M. D. Blanchard,
Secretary
Fort Worth, Texas
March 28, 1995
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TNP ENTERPRISES, INC.
4100 INTERNATIONAL PLAZA, TOWER II
FORT WORTH, TEXAS 76109
PROXY STATEMENT
FOR
ANNUAL MEETING OF HOLDERS OF COMMON STOCK
TO BE HELD ON APRIL 28, 1995
SOLICITATION AND REVOCABILITY OF PROXIES
On behalf of TNP Enterprises, Inc. ("TNPE"), TNPE's board of directors
solicits the enclosed proxy card to be voted at the Annual Meeting of Holders
of Common Stock scheduled for Friday, April 28, 1995, at 11:00 a.m., Central
Time, at 4100 International Plaza, Tower II, 9th Floor, Fort Worth, Texas 76109
(the "Annual Meeting"). SHARES REPRESENTED BY PROPERLY EXECUTED PROXIES
RETURNED TO TNPE ON THE ENCLOSED CARD WILL BE VOTED AT THE ANNUAL MEETING IN
ACCORDANCE WITH THE SHAREHOLDERS' DIRECTIONS MARKED ON THE PROXIES; IF NO
DIRECTIONS ARE INDICATED, THEN SHARES REPRESENTED BY PROXY WILL BE VOTED FOR
ELECTION OF ALL DIRECTOR NOMINEES AND FOR ALL PROPOSALS SET FORTH IN THE NOTICE
OF ANNUAL MEETING PRECEDING THIS PROXY STATEMENT.
The enclosed proxy card confers discretionary authority to vote with
respect to all of the following matters that may come before the Annual
Meeting: (1) matters that TNPE's board of directors does not know a reasonable
time before the Annual Meeting are to be presented at the Annual Meeting; (2)
approving minutes of the last annual meeting, subject to certain limitations;
(3) electing a substitute director nominee to replace a previous nominee that
is unable to serve; (4) shareholder proposals not discussed in this proxy
statement; and (5) matters incidental to the conduct of the Annual Meeting.
Management does not intend to present any business for a vote at the Annual
Meeting other than the matters set forth in the preceding Notice of Annual
Meeting, and it has no information that others will do so. If other matters
requiring a shareholder vote properly come before the Annual Meeting, then,
subject to limitations of applicable regulations under the Securities Exchange
Act of 1934, the persons appointed as proxies intend to vote all shares
represented by proxy in accordance with their best judgment.
Any shareholder who has executed and returned a proxy may revoke it at
any time before it is voted. A proxy can be revoked by submitting written
notice of revocation to TNPE's Secretary, by submitting a new proxy with a
later date, or by voting in person at the Annual Meeting after first
withdrawing any proxy previously given.
Proxies to be voted at the Annual Meeting are being solicited by mail
and through TNPE's transfer agent, Society National Bank by KeyCorp Shareholder
Services, Inc., Dallas, Texas. Officers, directors, and regular employees of
TNPE's wholly owned electric utility subsidiary, Texas-New Mexico Power Company
("TNMP"), may assist TNPE in getting proxies returned by telephone or oral
communication as part of their ordinary business duties. Brokerage houses and
other custodians, nominees, and fiduciaries will be requested to forward
solicitation material to beneficial owners of TNPE common stock.
TNPE will pay for preparing, printing, assembling, and mailing the
Notice of Annual Meeting, this proxy statement, the enclosed proxy card, and
any additional material, as well as for forwarding solicitation material to
beneficial owners of TNPE common stock.
The preceding Notice of Annual Meeting, this proxy statement, and the
enclosed proxy card are first being sent or given to holders of TNPE's common
stock on or about March 28, 1995.
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VOTING RIGHTS
The record date for determining shareholders entitled to notice of and
to vote at the Annual Meeting is the close of business on March 9, 1995. On
that date, 10,882,728 shares of TNPE common stock, no par value, were issued
and outstanding. Each share of TNPE common stock is entitled to one vote in
director elections and in any other matter that comes before the Annual
Meeting. Cumulative voting is not permitted. No other class of TNPE
securities is entitled to vote at the Annual Meeting. The presence, in person
or by proxy, of shareholders holding a majority of the outstanding shares of
TNPE's common stock is necessary to constitute a quorum at the Annual Meeting.
The affirmative vote of a plurality of shares of common stock represented at
the Annual Meeting and entitled to vote is required to elect directors. All
other matters to be voted on will be decided by the affirmative vote of a
majority of the shares of common stock represented at the meeting and entitled
to vote.
Abstentions and broker nonvotes are each counted in determining the
number of shares present at the Annual Meeting for purposes of a quorum. A
broker nonvote occurs if a registered broker-dealer holding customer securities
in the broker-dealer's name does not receive instructions from its customer on
how to vote the customer's securities. Applicable rules and regulations do not
permit the broker-dealer to vote on the customer's behalf on nonroutine matters
such as the proposals to approve the TNPE Equity Incentive Plan and the TNPE
Nonemployee Director Stock Plan (described after "Compensation of Directors and
Executive Officers"). Abstentions and broker nonvotes have no effect on
determining plurality, except to the extent that they affect the total votes
that any particular candidate receives. Abstentions have the effect of votes
against the proposals to approve the TNPE Equity Incentive Plans and the TNPE
Nonemployee Director Stock Plan, and broker nonvotes are not counted.
ELECTION OF DIRECTORS
TNPE's board of directors consists of nine members, divided into three
classes of three members each: Class 1, Class 2, and Class 3. Directors in
each class are elected to serve three-year terms. Only Class 1 positions will
be due for nomination and election at the Annual Meeting. Class 2 and Class 3
positions will be due for nomination and election at the 1996 and 1997 annual
meetings, respectively. However, directors of any class appointed after the
Annual Meeting to fill vacancies on the board will be due for nomination and
election at the 1996 annual meeting. TNPE currently also has one advisory
director, who attends and participates in, but does not vote in, board
meetings. Each nominee director who is elected or re-elected as a TNPE
director will be a member of TNMP's board of directors. In 1994, TNPE's and
TNMP's boards of directors held four and five meetings, respectively. The
boards acted by unanimous consent three times and four times, respectively.
The persons appointed as proxies intend to vote all shares represented
by proxy FOR election of R. Denny Alexander, Sidney M. Gutierrez, and Kevern R.
Joyce as Class 1 directors, unless shareholder directions on individual proxy
cards indicate otherwise. TNPE's board of directors (with nominee directors
abstaining) nominated Messrs. Alexander, Gutierrez, and Joyce, all of whom are
currently TNPE and TNMP directors, to stand for election or re-election to
TNPE's board of directors until their terms expire or their respective
successors are elected and qualified.
Certain information regarding each nominee and director is provided
below. The number of shares of TNPE common stock that each nominee and
director owns beneficially is presented in the table in "Security Ownership of
Management and Certain Beneficial Owners."
CLASS 1 DIRECTORS AND NOMINEES
R. DENNY ALEXANDER, age 49, has been a director of both TNPE and TNMP
since 1989. Mr. Alexander has owned and managed R. Denny Alexander & Company,
an investment management firm, since 1978. He has also served as Managing
Partner of OPNB Building Joint Venture, a real estate investment
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partnership, since 1978. Since 1982, Mr. Alexander has served as director of
Overton Bancshares, Inc., a bank holding company, and since 1984 as Chairman of
Overton Bank and Trust, National Association, a national bank.
SIDNEY M. GUTIERREZ, 43, joined TNPE's and TNMP's boards of directors
in November 1994. Since 1984, he was a NASA astronaut serving as Space Shuttle
Mission Commander and Chief of the Operations Development Branch and, since
1991, an Air Force officer serving in the rank of Colonel, in each case until
his retirement in 1994. Since 1994, Mr. Gutierrez has been Manager of the
Strategic Initiatives Department at Sandia National Laboratories' Sandia
Corporation, a prime contractor for the Department of Energy ("DOE"). He is
responsible for integrating DOE technologies with Department of Defense
requirements. He is a committee chairman on the Governor's Technical Excellence
Committee and a member of the Board of Governors of Goodwill Industries of New
Mexico.
KEVERN R. JOYCE, age 48, was appointed Chief Executive Officer,
President, and director of TNPE and TNMP in April 1994. From 1992 until he
joined TNPE and TNMP, Mr. Joyce served as Senior Vice President and Chief
Operating Officer, and from 1990 to 1992, he was Vice President - Rates and
Conservation, of Tucson Electric Power Company. Prior to joining Tucson
Electric Power Company, Mr. Joyce was Assistant Controller of Public Service
Company of New Hampshire, an electric utility.
If any nominee for Class 1 director becomes unavailable to serve as a
director, then the persons appointed as proxies intend to vote all shares of
TNPE common stock represented by proxy for a substitute to be nominated by
TNPE's board of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL CLASS 1 DIRECTOR
NOMINEES.
CLASS 2 DIRECTORS
JOHN A. FANNING, 55, has been a member of TNPE's and TNMP's boards of
directors since 1984. He has served as Executive Vice President of Snyder Oil
Corporation since March 1990, was President of its subsidiary, Snyder Oil
Company, Inc., from 1987 to 1990, and has served on the subsidiary's board of
directors since 1981.
DWIGHT R. SPURLOCK, 62, joined TNPE's and TNMP's boards of directors
in 1993. He was both companies' Interim President and Chief Executive Officer
from November 1993 to April 1994. Before his retirement in 1992, Mr. Spurlock
was TNMP's Sector Vice President - Operations from 1990, and its Vice President
- - Division Manager from 1979 to 1990. Mr. Spurlock has been a director of
Texas City National Bank since 1976.
As previously discussed, Class 2 consists of three members. Dr. T. S.
Mackey held the third Class 2 position until his death in February 1994.
TNPE's board of directors and its Personnel, Organization & Nominating
Committee are and have been seeking qualified candidates who are not members of
TNPE and TNMP management to fill the Class 2 vacancy. The board expects to
appoint a new Class 2 director in 1995, who will stand for election at the 1996
annual meeting.
CLASS 3 DIRECTORS
CASS O. EDWARDS, II, 68, has been a member of TNPE's and TNMP's boards
of directors since 1984, and 1975, respectively. Mr. Edwards has served as
Managing Partner of Edwards - Geren Limited, a ranching and farming company,
since 1952. He has been Chairman of Overton Bancshares, Inc., a bank holding
company, and a director of Overton Bank and Trust, National Association, since
1982. He also has been Chairman and President of Cassco Land Company, Inc., a
real estate development company, since 1954.
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HARRIS L. KEMPNER, JR., 55, has been a TNPE board member since 1984,
and a TNMP board member since 1980. He has been President of Kempner Capital
Management, an investment advisory firm, since 1981; a Trustee of H. Kempner
Trust Association, which engages in investments, since 1964; Chairman Emeritus
and Advisor to the board of United States National Bank, located in Galveston,
Texas, since 1992; a director of Balmorhea Ranches, a cattle operation,
Imperial Holly Corp., a sugar products company, and Cullen/Frost Bankers, Inc.,
a bank holding company, since 1982; a director of American Indemnity Company,
an insurance company, since 1987; and a director of American Indemnity
Financial, an insurance company, since 1990.
R. D. WOOFTER, 71, has been a TNPE board member and Chairman of the
Board since 1983, a TNMP board member since 1975, and Chairman of the TNMP
board since 1977. Mr. Woofter will be retiring from both companies' boards
effective April 28, 1995. TNMP's board of directors and its Personnel,
Organization & Nominating Committee are seeking qualified candidates who may or
may not be members of TNPE and TNMP management to fill the Class 3 vacancy
resulting from Mr. Woofter's retirement. The board expects to appoint a new
Class 3 director in 1995, who will stand for election at the 1996 annual
meeting.
ADVISORY DIRECTOR
DENNIS H. WITHERS, 49, has been an advisory director of TNPE's and
TNMP's boards of directors since December 1, 1994. He has been President of
Trinity Forge, Inc., a metal forging manufacturing company, since 1979, and a
director since 1972. He has been a director of Overton Bancshares, Inc., a
bank holding company, since 1985, and a director of Overton Bank and Trust,
National Association, since 1993.
BOARD COMMITTEES
TNPE's board of directors has three committees: an Audit Committee, a
Financial Committee, and a Personnel, Organization & Nominating Committee.
The Audit Committee
The Audit Committee recommends to the full board an accounting firm to
serve as independent auditors of TNPE and TNMP; determines and reviews internal
and external audit staff qualifications; meets and reviews with the independent
auditors and the internal audit manager corporate financial reporting and
accounting procedures and policies, financial reporting and accounting
adequacy, operating controls, and the scope of all independent and internal
audits; and makes appropriate recommendations to the full board of directors.
Current Audit Committee members are Messrs. Alexander, Edwards, and Woofter.
The Audit Committee met twice in 1994.
The Financial Committee
The Financial Committee reviews and approves securities offerings and
capital and other budgets, reviews strategic, financial, and other plans, and
reports and recommends in its discretion to the full board on internal
financial affairs. Current Financial Committee members are Messrs. Alexander,
Kempner, Spurlock, and Woofter. The Financial Committee held four meetings in
1994.
The Personnel, Organization & Nominating Committee
The Personnel, Organization & Nominating Committee evaluates and
recommends levels of executive compensation and benefits not generally
available to all employees, studies individual qualifications of, and
recommends to the full board, nominees for director positions that have become
vacant or are due for nomination and election, and considers director nominees
recommended by shareholders. TNPE's bylaws require generally that shareholder
nominations be delivered to the committee at least 30 but not more than
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60 days before the first anniversary of the notice to shareholders of the
preceding year's annual meeting, with certain exceptions. A shareholder
nomination must include the shareholder's name and address, the class and
number of TNPE shares that the shareholder owns beneficially and of record and
the date on which each was acquired, sufficient information about the nominee
to satisfy applicable requirements of Regulation 14A under the Securities
Exchange Act of 1934, and the nominee's consent.
The Personnel, Organization & Nominating Committee also recommends
director compensation and benefits. Committee members currently are Messrs.
Edwards, Fanning, and Woofter. The Personnel, Organization & Nominating
Committee held four meetings in 1994.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR COMPENSATION
Other than the Chairman of the Board, each member of TNPE's and TNMP's
boards of directors and the advisory director who is not a TNPE, TNMP, or
subsidiary officer has received a $4,500 annual retainer from each of TNPE and
TNMP. The Chairman received a $36,000 annual retainer from each company. The
Chairman has served as agent for the boards of both companies and has been a
member of all board committees. Each director, advisory director, and board
committee member also received $500 for each TNPE and TNMP board and committee
meeting that the director, advisory director, or committee member attended.
However, if meetings of both boards or any of their committees were held on the
same day, then the meeting fee was limited to $500 split evenly between TNPE
and TNMP.
Beginning in 1994, the board's Personnel, Organization & Nominating
Committee reviewed director compensation with assistance from an international
compensation consulting firm. This committee surveyed a group of similarly
sized companies concerning their director compensation practices. As a result
of the survey, the committee determined that TNPE's and TNMP's board
compensation was lower than the average board compensation of the survey group.
The committee believed it advisable to bring TNPE's and TNMP's director
compensation closer to the average survey group level so that TNPE and TNMP
could continue to attract and retain qualified candidates to serve as board
members. For this reason, the committee recommended and the full board
approved a net average increase in total annual director compensation, the
total package to consist of slightly less cash than was being paid previously
and, subject to shareholder approval of the TNPE Nonemployee Director Stock
Plan, shares of TNPE common stock. If this plan is approved at the Annual
Meeting, then directors will receive automatic awards of 525 shares of TNPE
common stock per year as a portion of their annual retainer. The proposed cash
portion of the retainer will be $8,000 for nonemployee directors. Based on the
January 31, 1995, New York Stock Exchange $15.50 closing price for one share of
TNPE common stock, the value of the proposed stock portion of the annual
retainer for nonemployee directors is $8,138. The Personnel, Organization &
Nominating Committee also recommended and the full board approved an increased
board and committee meeting fee of $750 cash, effective following the Annual
Meeting. See "Proposal to Approve the TNPE Nonemployee Director Stock
Plan--General."
EXECUTIVE COMPENSATION REPORT OF THE PERSONNEL, ORGANIZATION & NOMINATING
COMMITTEE
The Personnel, Organization & Nominating Committee of TNPE's board of
directors (referred to as the "Personnel Committee" in this report) reviewed
compensation practices and made recommendations to the full board on all
executive officers' compensation, with special attention to the Chief Executive
Officer.
Compensation Philosophy and Strategy
The principal objectives of the executive compensation program are to:
- -- attract and retain qualified executive officers with a market
competitive rate of base pay; and
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- -- provide incentive compensation that rewards executive officers for
corporate performance that benefits the shareholders.
Executive compensation consisted only of base salary before 1994.
During its recent search for a new President and Chief Executive Officer,
however, the Personnel Committee concluded that executive compensation in the
current market typically includes short-and long-term incentive compensation
opportunities. Based upon this conclusion and recognizing the executive
officers' significant accomplishments under the new Chief Executive Officer's
leadership in favorably resolving significant uncertainties affecting TNPE's
performance, preparing a foundation for financial recovery, and planning for
new strategic opportunities, the full board, with the Personnel Committee's
approval, awarded cash bonuses to all executive and other officers and to
certain key management personnel.
Further as a result of the Personnel Committee's conclusion concerning
market prevalence of incentive compensation, it recommended and the full board
approved the TNPE Equity Incentive Plan, subject to shareholder approval. See
"Proposal to Approve TNPE Equity Incentive Plan." The Personnel Committee also
believes that the compensation structure should include an incentive component
that aligns the interests of all employees with those of TNPE's shareholders.
Therefore, in addition to the TNPE Equity Incentive Plan, the Personnel
Committee also recommended and the full board approved the Management
Short-Term Incentive Plan (the "Management Cash Incentive Plan") and the
Broad-Based Short-Term Incentive Plan (the "All Employee Cash Incentive Plan")
described below. These plans authorize the Personnel Committee to make cash
incentive awards to eligible participants.
The Personnel Committee intends for the incentive compensation
packages, all of which depend on achieving pre-established goals, to replace
the more subjective bonus awards made in 1994. The Personnel Committee
believes that the shareholders have interests both in receiving dividends and
in capital growth and that the combination of awards best aligns the executive
officers' interests with those of TNPE's shareholders.
The Personnel Committee plans to continue using a compensation survey
group to establish executive salary ranges. The compensation survey group,
which consists of Edison Electric Institute Survey companies with revenues from
$300 to $600 million, changes slightly from year to year based on each group
member's current revenues and willingness to participate in the survey. In
1994, 14 companies participated in the group. Due to their revenue size, none
of these were included in the S&P Electric Companies Index used as a new peer
group elsewhere in this proxy statement to compare performance of TNPE's common
stock for the last five years. The Personnel Committee intends to continue
establishing executive base salary ranges with control points that approximate
the compensation survey group's average salary range. For information
concerning the members of the Edison Electric Institute Survey group, and the
five-year cumulative total return of TNPE's common stock relative to the S&P
Electric Companies Index, see "Compensation of Directors and Executive
Officers--Five-Year Comparison of Cumulative Total Return."
Although explicit performance criteria are not used to establish base
salary ranges, they will be used for earning, vesting, and paying both short-
and long-term incentive compensation currently proposed under all incentive
compensation plans. Criteria used to determine earnout, vesting, and payment
of proposed short-term stock awards to designated management participants are
earnings per share and factors developed to measure operations and maintenance
costs, system reliability, and safety. The board intends to use other factors
measuring customer and employee satisfaction, community relations, and
environmental effectiveness in the future. Criteria used to determine earnout,
vesting, and payment of proposed long-term stock awards to designated
management participants include improvement in TNPE's competitive position
relative to a group of its competitors and total shareholder return. The first
measure will be based on retail rate comparison. The second measure will
consist of matrices that compare TNPE's total shareholder return to that of
both the S&P 500 Index and the S&P Electric Companies Index. Weighting of
criteria used to determine vesting and payment of potential awards is expected
to change from year to year based on changing market conditions. The Personnel
Committee believes that, because
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of the executive officers' greater influence on corporate financial
performance, greater weighting of the financial measurements is more
appropriate for them than for nonmanagement employees. All criteria used for
incentive compensation proposed for 1995 are included in or compatible with
TNPE's strategic plan presented to the board earlier this year.
Employee Cash Incentive Plans
Management Cash Incentive Plan. The Management Cash Incentive Plan
authorizes the Personnel Committee to make cash incentive awards to eligible
participants. All TNPE and TNMP management employees are eligible to
participate in this plan. However, the board currently plans to make cash
awards under this plan only to certain executive officers, including those
named in the Summary Compensation Table above in "Compensation of Directors and
Executive Officers--Executive Compensation" who have not retired, and key
personnel designated by the board in its discretion. The amounts of the awards
are established at the beginning of each year and are within the Personnel
Committee's discretion. For 1995, potential cash awards to each eligible
participant are expected to equal percentages ranging from 7.5% to 18.75% of
salary, depending on each participant's salary grade.
All Employee Cash Incentive Plan. The All Employee Cash Incentive
Plan also authorizes the Personnel Committee to make cash incentive awards to
eligible participants. All full-time hourly and salaried employees of TNPE and
its subsidiaries are eligible and expected to participate in this plan,
including those named in the Summary Compensation Table in "Compensation of
Directors and Executive Officers--Executive Compensation" who have not retired.
The amounts of the awards are established at the beginning of each year and are
within the Personnel Committee's discretion. For 1995, potential cash awards
are expected to equal 4% of each participant's annual wages or salary.
General. With respect to both cash incentive plans, potential cash
awards may depend on pre-established corporate financial and operational goals
and individual goals being achieved for the year of the award. The portion of
a potential cash award related to a particular goal is not earned unless that
goal is achieved for the year in question. Whether awards have been earned is
determined at year-end, with awards earned being paid as soon as practicable
after that determination, subject to any applicable vesting restrictions.
Potential cash awards generally will be forfeited upon employment termination
for reasons other than retirement, death, or disability or involuntarily
without cause, unless the Personnel Committee determines otherwise.
Estimated Executive Compensation Under Proposed and Approved Employee
Incentive Plans. In addition to the total estimated benefits proposed to be
awarded in stock under the TNPE Equity Incentive Plan to Kevern R. Joyce, Jack
V. Chambers, Allan B. Davis, and Larry W. Dillon set forth in the New Plan
Benefits table below in "Proposal to Approve the TNPE Equity Incentive Plan,"
the total estimated amounts of cash incentive awards proposed to be paid in
1995 to these executives under the Management Cash Incentive Plan and the All
Employee Cash Incentive Plan are: Messrs. Joyce, $69,684; Chambers, $39,748;
Davis, $21,050; and Dillon, $21,050. The total dollar value of estimated
benefits proposed to be paid under all three plans (i) to executive officers of
TNPE and its subsidiaries other than those named above are: Manjit S. Cheema,
$74,921; Michael D. Blanchard, $60,809; W. Douglas Hobbs, $67,620; Ralph S.
Johnson, $67,620; and (ii) to Kristi D. Cheema are $35,373. Ms. Cheema is
TNMP's Director of Information Services. She and Manjit S. Cheema, Chief
Financial Officer, are married to each other. All of the foregoing estimates
are based upon the same assumptions as set forth under "1995 Contingent
Benefits" below in "Proposal to Approve the TNPE Equity Incentive Plan."
Internal Revenue Code Section 162(m). The Personnel Committee
currently anticipates that total amounts to be paid to executive officers under
all the incentive plans, together with base salary, will not exceed the
deductibility limits of Internal Revenue Code Section 162(m) (the "IRS Code").
However, the Personnel Committee intends for shareholder approval of the
Incentive Plan to qualify all amounts paid
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under this plan for federal income tax deductibility regardless of whether the
total amounts paid would otherwise exceed the deductibility limits.
Determination of Chief Executive Officer and Other Executive Compensation
General. The Personnel Committee places particular emphasis on
individual leadership and management performance in determining the Chief
Executive Officer's salary level. Principal performance factors of relatively
equal importance are (i) establishing and recommending to the board strategic
direction for TNPE and its subsidiaries, (ii) building and maintaining a sound
management team, (iii) providing leadership for achieving corporate goals and
objectives, and (iv) monitoring and evaluating corporate performance and
recommending to the board and executing as necessary actions to respond to
performance results.
Specific Considerations in 1994. Following an exhaustive national
search, Kevern R. Joyce was employed as President and Chief Executive Officer
effective April 12, 1994. In establishing Mr. Joyce's base salary, the
Personnel Committee weighed his previous broad experience at Tucson Electric
Power Company and Public Service Company of New Hampshire and the Personnel
Committees' perception of market competitive base salary. The Personnel
Committee used the services of an international executive search and consulting
firm in locating candidates for the position and determining an appropriate
base salary. Appropriate base salary for all executives, including the interim
and current Chief Executive Officer, is based on Personnel Committee
discretion.
Entering 1994, TNPE faced several challenges, including obtaining
adequate rate relief, resolving continuing uncertainties, and determining
appropriate strategies for its future. During the year, TNPE successfully
obtained the needed rate relief, resolved the uncertainties, and began the
ongoing process of making strategic decisions for its future. The Personnel
Committee carefully considered the impact each executive officer had on these
events in determining adjustments to base salaries within the approved ranges
and in authorizing bonuses. The President and Chief Executive Officer's bonus
was based not only upon the foregoing factors, but also upon his demonstrated
leadership in reorganizing TNPE's personnel and management structure,
establishing a sound management team, and guiding the management team in
establishing a new strategic plan. Appropriate bonuses were based on Personnel
Committee discretion.
Following James M. Tarpley's resignation in 1993 as Chief Executive
Officer and director, the board of directors named Dwight R. Spurlock as
Interim President and Chief Executive Officer. Mr. Spurlock's compensation was
established to be commensurate with the duties and requirements of the interim
position.
Peer Group Index
The Personnel Committee decided to change from the peer group index
used previously for performance comparison purposes to the S&P Electric
Companies Index. Among the reasons for the change is that the S&P Electric
Companies Index is both publicly available and representative of the electric
utility industry's performance. The Personnel Committee also believes that the
S&P Electric Companies Index provides a more meaningful comparison to
investors. The Personnel Committee is using the S&P Electric Companies Index
as a comparison group in establishing performance goal ranges for awards under
all proposed or approved TNPE incentive compensation plans. Finally, the peer
group used for the last several years has become more difficult to track and
less representative as a comparable peer group due to the bankruptcy, merger,
or reorganization of a number of the group's members.
8
<PAGE> 11
Conclusion
The Personnel Committee believes that its new compensation policies
will serve the best interests of TNPE and its subsidiaries and believes that
1994 executive compensation adequately reflects corporate and individual
performance in the current operating environment.
Personnel, Organization & Nominating Committee
Cass O. Edwards II
R. D. Woofter
John A. Fanning
The Executive Compensation Report of the Personnel, Organization &
Nominating Committee and the performance graphs that follow will not be deemed
incorporated by reference by any general statement incorporating this proxy
statement by reference into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that TNPE specifically
incorporates the information by reference.
FIVE YEAR COMPARISON OF CUMULATIVE TOTAL RETURN
During its efforts to establish appropriate incentive compensation
plans, the Personnel, Organization & Nominating Committee of TNPE's board of
directors reviewed the ongoing appropriateness of its then existing performance
graph. Following its review and for reasons stated in its report above, this
committee decided to use the S&P Electric Companies Index as its new peer
group. The first graph below shows TNPE's performance relative to the previous
peer group, the Edison Electric Institute Survey Group (the "EEI Group"), and
to the S&P 500 Index. The EEI Group includes Central Hudson Gas & Electric,
Central Louisiana Electric, Eastern Utilities, El Paso Electric, Idaho Power,
Iowa-Illinois Gas & Electric, Kentucky Energy, Minnesota Power, Nevada Power,
TNP Enterprises, Inc., Tucson Electric Power, and Washington Water Power.
These companies make up the majority of the compensation comparison group that
the Personnel, Organization & Nominating Committee has used for several years
in establishing Chief Executive Officer and other executive salary ranges. Due
to the size of the companies included in the new peer group, the committee
believes it is appropriate to continue using its current compensation survey
group for establishing compensation rather than using companies from the new
peer group. The second graph below shows TNPE's performance relative to the
newly selected peer group, the S&P Electric Companies Index, and to the S&P 500
Index. Both graphs span TNPE's last five years, assume that $100 is invested at
the close of trading on December 31, 1989, and are calculated assuming
quarterly reinvestment of dividends and quarterly weighting by market
capitalization.
9
<PAGE> 12
[GRAPH]
<TABLE>
<CAPTION>
DEC-89 DEC-90 DEC-91 DEC-92 DEC-93 DEC-94
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
TNP ENTERPRISES, INC. $100 $101 $108 $115 $109 $107
S&P 500(RM) $100 $97 $126 $136 $150 $152
PEER GROUP INDEX $100 $91 $110 $119 $134 $118
</TABLE>
[GRAPH]
<TABLE>
<CAPTION>
DEC-89 DEC-90 DEC-91 DEC-92 DEC-93 DEC-94
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
TNP ENTERPRISES, INC. $100 $101 $108 $115 $109 $107
S&P 500(RM) $100 $97 $126 $136 $150 $152
S&P (RM) ELECTRIC
COMPANIES INDEX $100 $103 $134 $141 $159 $138
</TABLE>
10
<PAGE> 13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Personnel, Organization & Nominating Committee recommends to the
full board appropriate executive compensation levels. Committee members are
Messrs. Cass O. Edwards, II, John A. Fanning, and R. D. Woofter.
Mr. Woofter, Chairman of the Board and formerly TNPE's and TNMP's
Chief Executive Officer and President, retired as a TNPE and TNMP officer in
1988. He will be retiring as Chairman of the Board of Directors after the
Annual Meeting.
Mr. Edwards, a Class 3 director whose term will expire in 1997, is a
director of Overton Bank and Trust, National Association, and Chairman of its
parent holding company, Overton Bancshares, Inc.
In addition, R. Denny Alexander, a Class 1 director nominee whose
term, if elected, will expire in 1998, is a director of Overton Bancshares,
Inc. and Chairman of Overton Bank and Trust, National Association, and Dennis
H. Withers, an advisory director, is a director of both Overton Bancshares,
Inc. and Overton Bank and Trust, National Association. TNPE and TNMP use
Overton Bank and Trust, National Association, for general banking and
short-term investments in the ordinary course of business. All such
transactions are conducted on substantially the same terms, including
collateral and interest rates, as those prevailing at the time for comparable
transactions between the bank and its other customers.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid to the Chief
Executive Officer, the Interim Chief Executive Officer, and each of the four
other most highly compensated executive officers of TNPE and its subsidiaries
for services rendered in all capacities to TNPE and its subsidiaries during
1994, 1993, and 1992.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------------
FISCAL OTHER ANNUAL ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) COMPENSATION (2)
- ------------------------- --------- ------ ------ ----------------- -------------------------
(a) (b) (c)
<S> <C> <C> <C> <C> <C> <C> <C>
Kevern R. Joyce, President & Chief 1994 $212,307 $75,000 $41,869 $-- $1,008 $ 1,008
Executive Officer (3) 1993 -- -- -- -- -- --
1992 -- -- -- -- -- --
DWIGHT R. Spurlock, Interim President & 1994 143,164 -- 20,239 -- -- --
Chief Executive Officer (3) 1993 77,801 -- -- -- -- --
1992 156,649 -- 24,885 8,728 704 9,432
D. R. Barnard, TNPE Vice President & 1994 165,470 -- -- 5,691 2,571 8,262
Chief Financial Officer, TNMP Senior 1993 147,857 -- -- -- 801 801
Vice President & Chief Financial 1992 155,993 -- -- 8,728 628 9,410
Officer (4)
Jack V. Chambers, TNMP Senior 1994 154,266 40,000 -- 4,837 458 5,295
Vice President & Chief Customer 1993 148,404 -- -- -- 801 801
Officer 1992 154,094 -- -- 8,728 704 9,432
Allan B. Davis, TNMP Vice President 1994 133,230 10,000 -- 4,295 1,830 6,125
& Regional Customer Officer 1993 120,224 -- -- -- 609 609
1992 116,031 -- -- 6,730 487 7,217
Larry W. Dillon, TNMP Vice President 1994 129,319 15,000 -- 4,029 244 4,273
& Regional Customer Officer 1993 114,697 -- 11,984 -- 542 542
1992 113,584 -- -- 6,734 514 7,248
</TABLE>
- ------------------------
11
<PAGE> 14
(1) Other Annual Compensation included in the table consists of allowances
or reimbursements for relocation expenses except that Mr. Joyce's
total includes $1,869 imputed income for personal use of a company
car. Certain of TNPE's and TNMP's executive officers other than those
for whom amounts are included in the table received personal benefits
in addition to salary and cash bonuses. However, the total amounts of
the personal benefits do not exceed the lesser of $50,000 or 10% of
the officers' total annual salary and bonus except as reported in the
table.
(2) All Other Compensation consists of (a) amounts that TNMP contributed
to the Thrift Plan (as defined below in "Compensation of Directors and
Executive Officers--Thrift Plan"), (b) premiums for group life
insurance, and (c) the sum of (a) and (b).
(3) Mr. Joyce joined TNPE and its subsidiaries effective April 12, 1994.
Mr. Spurlock served as Interim President and Chief Executive Officer
until Mr. Joyce's appointment; he then returned to retirement, which
he had taken effective December 31, 1992.
(4) Mr. Barnard retired effective December 31, 1994.
PENSION PLAN
The following table sets forth certain information concerning annual
benefits payable at normal retirement at age 65 to TNPE and TNMP employees
under TNMP's pension plan.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------------------------------
REMUNERATION (1) 15 20 25 30 35 40
---------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$125,000 $30,057 $40,076 $50,095 $60,114 $70,133 $78,258
150,000 36,432 48,576 60,720 72,864 85,008 94,758
175,000 42,807 57,076 71,345 85,614 99,883 111,258
200,000 49,182 65,576 81,970 98,364 114,758 127,758
250,000 61,932 82,576 103,220 123,864 144,508 160,758
300,000 74,682 99,576 124,470 149,364 174,258 193,758
350,000 87,432 116,576 145,720 174,864 204,008 226,758
400,000 100,182 133,576 166,970 200,364 233,758 259,758
450,000 112,932 159,576 188,220 225,864 263,508 292,758
500,000 125,682 167,576 209,470 251,364 293,258 325,758
</TABLE>
- ------------------------
(1) Benefits in other than the $125,000 row are shown without taking into
account IRS Code Section 415 limits or the $150,000 salary cap in
effect after 1993, resulting from IRS Code Section 401(a)-17-1 limits.
Consequently, a portion of the benefits would be paid from the
unfunded Excess Benefit Plan (as defined below).
Potentially all employees are eligible to participate in TNMP's
noncontributory defined benefit retirement plan (the "Pension Plan"). Because
TNMP's Pension Plan is a defined benefit plan, annual contributions to the
Pension Plan are computed on an actuarial basis and cannot be calculated
readily on a per person basis. Benefits for each eligible employee are based
on the employee's years of service computed through the month in which the
employee retires multiplied by a specified percentage of the employee's average
monthly compensation for each full calendar year of service completed after
1993. Average monthly compensation for executive officers named in the Summary
Compensation Table above in "Compensation of Directors and Executive
Officers--Executive Compensation" consists only of salary. Pension benefits are
not subject to deduction for Social Security benefits, but are subject to
reduction for retirement prior to age 62. TNMP made no contribution to the
Pension Plan for 1994.
12
<PAGE> 15
Highly compensated employees whose pensions are subject to reduction
below the amount that the Pension Plan otherwise would have provided as a
result of compliance with IRS Code Sections 415 and 401(a)-17-1, and who the
board of directors designate as eligible, may also participate in TNMP's
unfunded "Excess Benefit Plan." As of the date of this proxy statement, 10
active or retired employees have been designated as eligible to participate in
the Excess Benefit Plan, including the executive officers named in the Summary
Compensation Table located as described in the preceding paragraph. The two
retired employees are now receiving excess benefit payments. TNMP owns
policies insuring their lives. Policy proceeds are payable to TNMP to
reimburse it for its payments to the retirees under the Excess Benefit Plan.
As of December 31, 1994, TNMP's Chief Executive Officer, Interim Chief
Executive Officer, and four other most highly compensated executive officers
were credited with the years of service set forth in the following table.
Executive pension benefits are computed actuarially.
EXECUTIVE PENSION BENEFITS
<TABLE>
<CAPTION>
NAME YEARS OF CREDITED SERVICE
---------------------------- -------------------------
<S> <C>
Kevern R. Joyce 13 years, 9 months (1)
Dwight R. Spurlock 33 years, 7 months (2)
D. R. Barnard 33 years, 6 months (2)
Jack V. Chambers 15 years, 11 months
Allan B. Davis 29 years, 7 months
Larry W. Dillon 20 years, 0 months
</TABLE>
- ------------------------
(1) In accordance with TNPE's employment contract with Mr. Joyce, he was
credited with 13 years of service earned prior to joining TNPE and
TNMP.
(2) Messrs. Spurlock and Barnard retired effective December 31, 1992, and
1994, respectively.
THRIFT PLAN
TNMP maintains a deferred compensation plan under IRS Code Section
401(k) called the "Texas-New Mexico Power Company Thrift Plan for Employees"
(the "Thrift Plan"). All employees of TNPE and its subsidiaries are eligible
to participate in the Thrift Plan. Eligible employees may elect to contribute
up to 12% of their compensation, as defined in the Thrift Plan, subject to the
maximum amount allowed under the IRS Code. Participating employees may elect
to increase or decrease the amount of their contributions on a daily basis.
Contributions, if any, by TNMP for the benefit of participants are made in
amounts equal to 50% of the participant's contributions up to the lesser of 6%
of eligible pay, as defined in the Thrift Plan, subject to the maximum amount
allowed under the Internal Revenue Code. TNMP may make matching contributions
equal to between 50% and 100% of an employee's eligible contribution (6% of
eligible pay) if certain performance goals are met. A participant's vested
interest in the Thrift Plan is distributed upon the participant's retirement,
permanent and total disability, death, or termination of employment and in
certain other circumstances permitted by applicable law. The TNMP and
participant's contributions to the Thrift Plan are always 100% vested.
Participant contributions to the Thrift Plan and earnings on participant
contributions are generally tax deferred and, as such, are not subject to tax
until distributed, subject to restrictions imposed by the Internal Revenue
Code.
NCNB Texas National Bank serves as trustee of the Thrift Plan. Thrift
Plan participants are entitled to elect to have contributions to their
respective accounts invested in one or more money market, equity, and bond
funds permitted for Thrift Plan investments, as well as in shares of TNPE
common stock. Thrift Plan participants are entitled to (i) direct voting of
any TNPE common stock held in their accounts on all matters
13
<PAGE> 16
submitted to shareholders for a vote and (ii) dispose of any TNPE common stock
held in their accounts and make other permitted Thrift Plan investments.
EMPLOYMENT CONTRACTS
On March 28, 1994, TNPE contracted to employ Kevern R. Joyce as
President and Chief Executive Officer. In general, Mr. Joyce's employment
contract provides for an annual base salary of $300,000, adoption of an
incentive compensation plan, and a $40,000 relocation allowance. The contract
also waives all eligibility requirements for participating in TNMP's various
benefit plans, thus enabling Mr. Joyce to participate in those plans
immediately. Finally, the contract entitles Mr. Joyce to retire with 30 years
of total service credit if he remains with TNPE and its subsidiaries until age
65, in effect crediting Mr. Joyce with 13 years of prior service. Mr. Joyce's
retirement payments would be reduced by and to the extent of any retirement
payments that he receives from other employers or their successors.
Employment severance contracts between TNMP and its officers and other
key personnel have been in effect since 1988. The principal purpose of the
contracts is to encourage retention of management and other key personnel
required for the orderly conduct of TNMP's business during any threatened or
pending acquisition of TNPE or TNMP and during any ownership transition.
Certain TNMP officers and managers have three-year contracts; other key
personnel have two-year contracts. The contracts for certain officers and
managers, including the executive officers named in the Summary Compensation
Table in "Compensation of Directors and Executive Officers--Executive
Compensation" who did not retire, provide for lump sum compensation payments
equal to three times the officers' current annual salaries and other rights.
Other key personnel contracts provide for payments equal to their annual
salary. The lump sum payments for both officers and other key personnel become
effective only if their employment is terminated or they suffer other adverse
treatment following a "change in control" of TNPE or TNMP. A "change in
control" includes, among other things, certain substantial changes in the
corporate structure, ownership, assets, existence, or board of directors of
either entity. TNMP's board of directors has reviewed the contracts annually
and determined whether to extend them for an additional year, in effect
returning them to their original three- or two-year term each year. However,
some were last extended by TNMP's board of directors at its November 1993
meeting. The contracts of all executives named in the Summary Compensation
Table mentioned above were extended at the board's November 1994 meeting.
Effective November 9, 1993, to April 12, 1994, TNPE and TNMP
contracted to employ D. R. Spurlock as Interim President and Chief Executive
Officer. The contract provided for TNMP to pay Mr. Spurlock $30,000 per month
and to reimburse certain expenses he incurred during the interim period. Mr.
Spurlock received no benefits generally made available to other employees, such
as pension accrual and enhanced medical benefits. The contract terminated
effective April 12, 1994, when Kevern R. Joyce became TNPE's and TNMP's
President and Chief Executive Officer.
PROPOSAL TO APPROVE THE TNPE EQUITY INCENTIVE PLAN
GENERAL
On March 6, 1995, the board of directors, with the eligible employee
director abstaining, unanimously approved the TNPE Equity Incentive Plan
attached to this proxy statement as Appendix A (the "Incentive Plan"), subject
to approval by TNPE's shareholders. The board believes that implementing the
Incentive Plan will sustain and improve its participants' interests and efforts
on behalf of the shareholders' interests. The Incentive Plan is designed to
provide incentive compensation opportunities that are competitive both within
the utility industry and across general industry, which the board believes to
be important in an increasingly changing business environment.
In developing the Incentive Plan, the board sought to have available a
variety of stock and stock-based incentive awards that could be both
administered flexibly and capable of responding to the changing needs
14
<PAGE> 17
of TNPE and its subsidiaries over time. Changes are frequent in tax law,
accounting rules, securities regulations, and other laws and rules affecting
compensation and benefit plans. The board believes that maintaining the
alignment of interests between the shareholders and Incentive Plan participants
will require flexibility to develop meaningful programs on an ongoing basis.
The Incentive Plan grants a committee, designated by the board and comprised
solely of independent directors, the authority to determine appropriate terms
and restrictions for any particular awards as facts and circumstances warrant.
Consistent with the board's objectives and as described further below,
the Incentive Plan provides TNPE and its subsidiaries with the ability to award
stock and stock-based incentive compensation of several types. The particular
type of award to be made and the specific terms of each award are within the
discretion of the board committee charged with the duty of administering the
Incentive Plan. This committee's objective is to design and award incentive
packages encompassing specific goals for specific employees and considering
specific market conditions at the time of the award. For 1995, the committee
has tentatively approved both short- and long-term incentive stock award
packages for eligible participants under the Incentive Plan, subject to
shareholder approval of the Incentive Plan.
DESCRIPTION OF THE INCENTIVE PLAN
The following summary description of the Incentive Plan is qualified
by reference to Appendix A.
Purpose
The purpose of the Incentive Plan is to promote TNPE's success and
enhance its value by linking participants' personal interests to those of
TNPE's shareholders and by providing participants with an incentive for
outstanding performance. The Incentive Plan is also intended to provide TNPE
with flexibility to design compensation packages that attract, motivate, and
retain the services of participants on whose judgment, interest, and special
effort TNPE depends for success. See also "Compensation of Directors and
Executive Officers--Employment Contracts."
Administration
The Incentive Plan will be administered by a committee (the "Incentive
Plan Committee") of the board of directors having at least two members. Only
independent directors within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934 (exempting qualified employee benefit plans from insider
trading prohibitions) may serve as Incentive Plan Committee members. This
committee is permitted to establish and change rules for administering the
Incentive Plan. The Incentive Plan Committee is authorized to (i) designate
participants to whom awards will be made, (ii) determine award sizes, types,
terms, conditions, and methods of payment, whether dividend equivalents will be
included with awards, and participant rights upon termination of employment,
and (iii) amend terms of outstanding awards, subject to certain limitations. As
defined in the Incentive Plan, "dividend equivalents" are contingent rights to
dividends declared on securities underlying Incentive Plan awards. The
Incentive Plan Committee may also permit or require participants to defer cash
and stock award payouts. The Incentive Plan Committee expects to authorize
Incentive Plan awards that comply with IRS Code Section 162(m), (as discussed
further below) unless it determines that noncomplying awards will best serve
TNPE's interests with respect to a particular award or executive officer.
Award terms and conditions chosen by the Incentive Plan Committee will be
documented in an "Award Agreement." Except as provided to the contrary in the
Incentive Plan, all terms and conditions of Incentive Plan awards described in
this proxy statement generally are subject to Incentive Plan Committee
discretion. The Incentive Plan Committee is not permitted to replace
outstanding awards that it has cancelled with substitute awards. Incentive
Plan Committee decisions pursuant to the Incentive Plan, and all related full
board orders, will be final and binding on all interested persons.
15
<PAGE> 18
Shares Subject to Awards
The board of directors reserved 300,000 shares of TNPE common stock
for awards under the Incentive Plan. The Incentive Plan Committee may adjust
the number, class, and price of shares reserved for awards or subject to
outstanding awards to account for mergers, reorganizations, or similar changes
in TNPE's corporate structure or for stock dividends, splits, or changes in
TNPE's common stock. Common stock underlying lapsed awards will be available
for regrants, with certain exceptions.
Eligibility
All TNPE and TNMP employees are eligible to participate in the
Incentive Plan. However, the board currently plans for awards under the
Incentive Plan to be made only to executive officers and key employees
designated by the Incentive Plan Committee (currently 10 officers and 10 other
employees). The executive officer group includes those named in the Summary
Compensation Table in "Compensation of Directors and Executive
Officers--Executive Compensation" who have not retired. Nonemployee directors
are not eligible to participate in the Incentive Plan.
Awards
Stock Options. The Incentive Plan Committee is authorized to grant
incentive stock options, nonqualified stock options, or any combination of
these. The option price must at least equal the fair market value of one share
of TNPE common stock on the grant date. The Incentive Plan Committee
determines when each option will expire. However, no option will be
exercisable more than ten years after the grant date. Dividend equivalents are
not permitted on incentive stock options. Cashless option exercises under the
Federal Reserve Board's Regulation T may be permitted. The Incentive Plan
Committee has no current intention to award stock options and no form of option
Award Agreement has been written.
Restricted Stock. Out of the total shares reserved for Incentive Plan
awards, a maximum of 100,000 shares of restricted stock may be issued under the
Incentive Plan. Restricted stock awards are subject to transfer and other
restrictions as the Incentive Plan Committee determines. During the
restriction period, participants may exercise all voting rights of and may be
credited with all dividends and distributions declared on their restricted
stock. However, other than regular cash dividends, all dividends and
distributions are subject to the same restrictions as the underlying restricted
stock. With respect to TNPE's and its subsidiaries' Chief Executive Officer
and four other most highly compensated executive officers, vesting of
restricted stock will not be affected by termination of employment if the
restricted stock qualifies for tax deductibility under the performance-based
exception to IRS Code Section 162(m), with certain exceptions.
Performance Shares and Units. The Incentive Plan Committee is
authorized to award performance shares or units. The value of each performance
share or unit must equal the fair market value of one share of TNPE common
stock on the grant date. The Incentive Plan Committee establishes performance
goals. The amount that can be earned may vary depending on the pro rata
achievement of the performance goals and the amount of shares or units. The
period during which performance goals may be achieved must always exceed six
months. Payout of dividend equivalents will depend on the extent to which the
underlying performance shares or units are earned. Dividends declared on
earned performance shares or units that have not been distributed will be
subject to transfer and other restrictions like those applicable to dividends
and distributions declared on restricted stock. A participant whose employment
is terminated because of death, disability, or retirement or involuntarily
without cause during a performance measurement period will receive a payout of
the performance shares or units prorated as the Incentive Plan Committee
determines for the portion of the total performance period that the participant
was employed and adjusted for performance goals achieved. Upon termination for
any other reason, performance shares and units will be forfeited, subject to
certain exceptions and Incentive Plan Committee discretion.
16
<PAGE> 19
Other Stock-Based Awards. Other stock-based awards may be granted
under the Incentive Plan as the Incentive Plan Committee may determine.
Performance Measures
Performance goals to be achieved for a participant to earn and receive
payment of any performance-based award will be selected from the following:
- -- Earnings per share;
- -- Measurements of cost control effectiveness such as the ratio of
operations and maintenance costs to kilowatt hour sales;
- -- Measurements of community involvement and customer satisfaction;
- -- Measurements of anticipation and resolution of environmental issues;
- -- Measurements of reliability such as the equivalent forced outage rate,
minutes of outage per customer served, and number of customers
interrupted per customer served;
- -- Measurements of employee safety;
- -- Measurements of long-term rate competitiveness; and
- -- Total shareholder return compared to one or more groups as determined
by the Incentive Plan Committee.
The Incentive Plan Committee may establish a range of performance around any
predetermined goal; the range may have corresponding adjustments to the
performance payout within the range. However, awards held by TNPE's Chief
Executive Officer and four other most highly compensated executive officers
that are designed to qualify for tax deductibility under the performance-based
exception to IRS Code Section 162(m) may not be adjusted upward.
The general performance measures to be used for awards designed for
the purpose and to the executives mentioned in the previous paragraph designed
for the purpose and may not be changed without shareholder approval unless
future tax or securities laws permit otherwise.
Change in Control
If a change in control occurs, as defined in the employee severance
contracts described in "Compensation of Directors and Executive
Officers--Employment Contracts," then all outstanding options will become
exercisable immediately, and, with respect to awards made at least six months
previously, restrictions imposed on shares will lapse and performance goals for
restricted stock, performance shares and units, and other stock-based awards
will be deemed to have been achieved as of the effective date of the change.
The Incentive Plan Committee is authorized to make other appropriate changes to
outstanding awards before the change in control is effective.
Effective Period of Incentive Plan
Subject to shareholder approval, the Incentive Plan will be effective
January 1, 1995. The Incentive Plan is designed to remain in effect until all
shares of TNPE common stock reserved for awards under this plan have been
awarded. However, the board of directors is authorized to terminate this plan
at any time. In any case, no awards may be made under this plan after December
31, 2004. Termination of the Incentive Plan will not affect participant rights
under awards existing prior to termination.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Stock Options
Incentive Stock Options. No federal income tax consequences will
result to either TNPE or a participant upon the grant or exercise of an
incentive stock option (other than the possible application of alternative
minimum tax). Any disposition of shares acquired upon exercising the option
will constitute
17
<PAGE> 20
long-term capital gain to the participant if the participant holds the shares
for the later of (1) two years from the grant option date or (2) one year from
the option exercise date. The entire gain on sales made under these conditions
generally will receive long-term capital gain treatment. Under the IRS Code as
currently in effect, the maximum tax rate imposed on capital gains is 28%.
Otherwise, the difference between the option price and the stock's fair market
value when exercised will be taxed as ordinary income in the year of
disposition. Under the IRS Code, ordinary income is taxed at four rates
depending upon a taxpayer's income level: 15%, 28%, 31%, or 36%. In addition,
a 10% surtax applies to certain high-income taxpayers. The surtax is computed
by applying a 39.6% rate to taxable income over $256,500 for all individuals
except those married filing separately and $128,000 for all individuals married
filing separately. TNPE will receive a deduction equal to the ordinary income
that the participant recognizes. Any additional gain generally will be taxed
as capital gains with no tax implications to TNPE. Incentive stock options
having no more than $100,000 aggregate fair market value (determined as of each
option's grant date) may become exercisable for the first time in any one year.
Amounts exceeding $100,000 generally will be treated as nonqualified options.
Nonqualified Stock Options. No federal income tax consequences will
result to either TNPE or a participant upon a nonqualified stock option grant.
A participant generally will recognize ordinary income upon exercising a
nonqualified stock option to the extent that the fair market value of the
shares acquired exceed their option price. TNPE will receive a corresponding
deduction upon the participant's exercise of the option. Any gain realized
upon a subsequent disposition of the shares will be treated either as a short-
or long-term capital gain, depending on the participant's holding period.
Restricted Stock
A participant generally will not recognize income when a restricted
stock award is made. However, a participant may elect to recognize ordinary
income when a restricted stock award is made in an amount equal to the shares'
fair market value on the award date, less any participant payment for the
shares. Otherwise, the participant generally will recognize ordinary income
when the restrictions expire. TNPE will be entitled to a deduction equal to
the income amount recognized by the participant, either when the participant
elects to recognize income or when the restrictions expire, subject to the
requirements of IRS Code Section 162(m) (as discussed further below). The
participant will treat any dividends that the participant receives after making
an election as dividend income in the year of payment. The dividends will not
be deductible by TNPE. If no election is made, then dividends paid during the
restriction period will be ordinary income to the participant in the year
received and deductible by TNPE. If a participant who has made an election
subsequently forfeits the restricted stock, then the participant will be
entitled to treat any amount paid for the stock as a short- or long-term
capital loss, depending on the participant's holding period. TNPE will then be
required to recognize as ordinary income the amount of its original deduction
with respect to the stock.
Performance Shares and Units
The grant of performance shares or units generally is not expected to
result in income tax consequences for the participant or TNPE. Upon receiving
cash, shares, or other property at the end of a performance period, the
participant generally will recognize ordinary income equal to the fair market
value of the asset received. TNPE generally will be entitled to a deduction in
the same amount and at the same time that income is recognized by the
participant.
IRS Code Section 162(m)
IRS Code Section 162(m) limits TNPE's income tax deduction for
compensation paid to TNPE's Chief Executive Officer and four other most highly
compensated executive officers in any taxable year to $1,000,000 per
individual, subject to several exceptions. The Incentive Plan Committee
intends to grant Incentive Plan awards designed, in most cases, to qualify for
the Section 162(m)(4)(C) performance-based compensation exception. The
Incentive Plan Committee further intends for shareholder approval
18
<PAGE> 21
of the Incentive Plan to qualify all amounts paid under this plan for federal
income tax deductibility under this exception.
Awards to the executives mentioned in the previous paragraph that are
designed to comply with the Section 162(m) performance-based compensation
exception are subject to the following Incentive Plan maximum annual award
amount limitations: (i) 75,000 options and stock appreciation rights; (ii)
25,000 shares of restricted stock; (iii) 30,000 performance shares and units;
(iv) $450,000 cash payout with respect to performance shares and units and
other stock-based awards; and (v) 40,000 other stock-based award shares. While
grants of options and performance shares and units can be structured to qualify
for the performance-based compensation exception, restricted stock grants
cannot. Nonetheless, the board does not expect total compensation paid to the
affected executive officers, including Incentive Plan awards, to exceed the
deductibility limits of Section 162(m). However, the Incentive Plan Committee,
to the extent it deems advisable, may grant awards that do not qualify for the
IRS Code Section 162(m) performance-based exception. The board anticipates
that tax consequences resulting to TNPE and its subsidiaries from nonqualifying
compensation, if any, will not be materially adverse.
Tax Withholding
TNPE will deduct, withhold, or collect from a participant amounts
necessary to satisfy applicable federal, state, and local tax requirements, as
well as requirements of the Securities and Exchange Commission Rule 16b-3
employee benefit plan exemption from short-swing trading prohibitions.
TRANSFERABILITY OF INCENTIVE PLAN AWARDS AND UNDERLYING STOCK
In general, unearned and unvested Incentive Plan awards and stock
underlying awards may not be sold, transferred, pledged, assigned, or otherwise
alienated, other than by will or the laws of descent and distribution.
Certificates representing awards or stock underlying awards will bear
appropriate legends referring to any or all applicable restrictions on earning,
vesting, and transfer.
TNPE plans to register its issuance of all stock reserved for
Incentive Plan awards under applicable federal and state securities laws. If
the awarded stock was free from earnout, vesting, and transfer restrictions,
resales by participants who are not officers or substantial shareholders of
TNPE or its subsidiaries generally would not require further securities law
registration and the stock would be freely tradable on the open market.
However, the Incentive Plan Committee currently anticipates that Award
Agreements will prohibit transfers of long-term incentive stock awards, except
in certain limited circumstances, and make the stock subject to forfeiture, in
each case for three years after the stock is granted. Because the stock will
not be transferable for three years, TNPE does not intend to register
participant resales of the stock under applicable securities laws. In general,
participants who are not officers or substantial shareholders of TNPE and its
subsidiaries and who become fully vested in their stock awards at the end of
the three-year period will be free to sell their stock without restriction in
the open market under paragraph (k) of Securities and Exchange Commission Rule
144. Officers and substantial shareholders of TNPE and its subsidiaries
generally may sell TNPE common stock only in accordance with restrictive
provisions of the other paragraphs of Rule 144, pursuant to an effective
registration statement, or in transactions that are exempt from registration
under applicable securities laws.
The Incentive Plan Committee also currently intends that a
participant's ability to sell short-term award stock will be restricted for two
years after the award is earned. A participant may not sell or otherwise
transfer the stock until the end of the two-year period. Because the stock
will not be transferable for two years, TNPE does not intend to register
participant resales of the stock under the securities laws. All award
recipients generally will be able to sell their stock at the end of the
two-year period pursuant to Rule 144. However, the restrictions set forth
above with respect to officer and substantial shareholder sales under Rule 144
will apply to their sales for as long as they remain officers or substantial
shareholders or serve as directors of TNPE and its subsidiaries, as well as to
sales by all other short-term stock award recipients until they have held their
stock for at least three years. After three years, other recipients may sell
their stock without restriction in the open market pursuant to paragraph (k) of
Rule 144.
19
<PAGE> 22
TNPE has adopted an insider trading policy applicable to all employees
that places additional restrictions on all employee stock sales. In addition,
all employee sales are subject to securities law prohibitions on insider
trading and director, officer, and substantial shareholder sales are subject to
securities law short-swing trading prohibitions. Sales of substantial amounts
of TNPE common stock in the open market could adversely affect its price.
However, in the opinion of the board of directors, sales or availability for
sale of stock awarded pursuant to the Incentive Plan will not have a material
adverse affect, if any, on the market price of TNPE common stock.
Indemnification of Directors and Incentive Compensation Committee Members
The Incentive Plan requires TNPE to hold harmless and indemnify board
and Incentive Plan Committee members against losses, costs, liabilities,
expenses, TNPE-approved settlements, and judgments that they may incur in
connection with claims or proceedings involving actions or failures to act
under the Incentive Plan. These protections are (i) conditioned upon affected
board or committee members providing TNPE the opportunity to handle and defend
the claim or proceeding before doing so themselves and (ii) in addition to any
other available indemnification rights.
1995 CONTINGENT BENEFITS
The following table sets forth information concerning the estimated
dollar value and number of shares proposed to be awarded in 1995 under the
short- and long-term components of the Incentive Plan and under the Director
Plan as defined and described below. Information in the table is based on
participant salary ranges on the award date and assumes: shareholder approval
of these plans; achievement of all pre-established performance goals; one- to
three-year performance periods; and no changes in the management employees who
are expected to be designated for participation in the Incentive Plan. Actual
awards earned can range from 0% to 150% of the designated award level.
Information concerning the estimated dollar value of plan awards is based on
the $15.50 closing price of one share of TNPE common stock on the New York
Stock Exchange on January 31, 1995. The dollar value of all shares reserved
for award under the Incentive Plan is $4,650,000, based on the same price.
NEW PLAN BENEFITS (1)
<TABLE>
<CAPTION>
Equity Incentive Plan Nonemployee
------------------------------------------------------------------------ Director Plan
Dollar Value Number of Shares Total Total --------------------
---------------------- ----------------------- Dollar Number Dollar Number
Name and Position Short-Term Long-Term Short-Term Long-Term Value of Shares Value of Shares
- ----------------- ---------- --------- ---------- --------- ----- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kevern R. Joyce $19,100 $122,400 1,232 7,897 $141,500 9,129 $ -- --
Dwight R. Spurlock (2) -- -- -- -- -- -- 8,138 525
D. R. Barnard (3) -- -- -- -- -- -- -- --
Jack V. Chambers 10,450 73,200 674 4,723 83,650 5,397 -- --
Allan B. Davis 5,175 41,400 334 2,671 46,575 3,005 -- --
Larry W. Dillon 5,175 41,400 334 2,671 46,575 3,005 -- --
Executive Group 68,550 507,600 4,432 32,748 576,150 37,171 -- --
(10 persons)
Nonexecutive Director -- -- -- -- -- -- 59,963 3,675
Group (7 persons)
Nonexecutive Officer 21,425 214,300 1,382 13,826 235,725 15,208 -- --
Employee Group
(10 persons)
- ------------------------
</TABLE>
(1) All information included in the table is estimated and based on
achievement of goal levels and excludes cash awards made under other
employee incentive plans. See "Executive Compensation
Report--Management Cash Incentive Plan" and "--All Employee Cash
Incentive Plan."
(2) Mr. Spurlock, who is currently serving as a member of the board of
directors, resigned as Interim Chief Executive Officer and President
effective April 12, 1994.
(3) Mr. Barnard retired effective December 31, 1994.
20
<PAGE> 23
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE INCENTIVE
PLAN.
PROPOSAL TO APPROVE THE TNPE NONEMPLOYEE DIRECTOR STOCK PLAN
GENERAL
On March 6, 1995, TNPE's board of directors also unanimously approved
the TNPE Nonemployee Director Stock Plan attached to this proxy statement as
Appendix B (the "Director Plan"), subject to approval by TNPE's shareholders.
The Director Plan is designed to serve two primary purposes. The first is to
build a proprietary interest in TNPE's nonemployee directors to secure for
TNPE's shareholders benefits associated with stock ownership by those who
oversee TNPE's future growth and success. The second purpose is to enable TNPE
and TNMP to offer competitive compensation with which to attract nonemployee
directors of outstanding competence for service on their boards. TNMP
currently has seven nonemployee directors and may have eight nonemployee
directors in 1995. See "Election of Directors--Class 2 Directors" and "--Class
3 Directors."
DESCRIPTION OF THE DIRECTOR PLAN
The following summary description of the Director Plan is qualified by
reference to Appendix B.
In general, the Director Plan provides for automatic awards of 525
unrestricted shares of TNPE common stock (subject to adjustment in case of
corporate structural changes as further described below) to each director who
is not a TNMP employee. TNPE may impose restrictions on shares awarded
pursuant to the Director Plan in its discretion, including generally
restrictions required to comply with applicable federal and state securities
and tax laws and stock exchange rules.
The board reserved 30,000 shares of TNPE common stock for Director
Plan awards, subject to adjustment in case of mergers, recapitalizations, stock
dividends or splits, or similar corporate structural changes affecting TNPE's
common stock. The New Plan Benefits table in "Proposal to Approve the TNPE
Equity Incentive Plan--1995 Contingent Benefits" above sets forth information
concerning the estimated dollar value and number of shares proposed to be
awarded in 1995 under the Director Plan, assuming shareholder approval of this
plan. The dollar value of all shares reserved for awards under the Director
Plan is $465,000 based on the $15.50 closing price of one share of TNPE common
stock on the New York Stock Exchange on January 31, 1995.
The Director Plan will be administered by the Personnel, Organization
& Nominating Committee or a successor committee designated by the full board.
However, this committee will have no authority to determine Director Plan
eligibility or the number, value, or timing of awards. Director eligibility
and award number, value, and timing are all predetermined and fixed by the
Director Plan itself, subject only to permitted Director Plan amendments.
The board is authorized to amend the Director Plan no more than once
every six months except in connection with changes in the IRS Code, the
Employee Retirement Income Security Act of 1974, or rules adopted pursuant to
either of these laws. However, the Director Plan may not be amended to
increase the number of shares reserved for award in any case more than once
every six months or without shareholder approval. Shareholder approval is also
required for any amendment that would cause the Director Plan to lose its Rule
16b-3 exemption from director short-swing trading restrictions if adopted
without shareholder approval.
Generally, participants will recognize ordinary income when an
unrestricted stock award is received in an amount equal to the shares' fair
market value on the award date. TNPE will be entitled to a deduction equal to
the income recognized by the participants. Participants also will generally
recognize taxable gain
21
<PAGE> 24
or loss (subject to applicable limitations on the deductions of capital losses
by individuals) when they sell shares received under the Director Plan. The
amount of gain or loss generally will equal the difference between the amount
of ordinary income the participant recognizes upon receiving the stock award
and the amount the participant realizes from selling the shares. Under the IRS
Code, gains arising from the sale of stock owned for more than one year are
treated as long-term capital gains, while gains arising from the sale of stock
owned for any shorter period of time are treated as short-term capital gains.
Long-terms capital gains are currently taxed at a maximum rate of 28% and
short-term capital gains are currently taxed as ordinary income. For
information on ordinary income tax rates, see "Proposal to Approve the TNPE
Incentive Plan--Certain Federal Income Tax Consequences--Stock
Options--Incentive Stock Options."
TNPE plans to register all stock reserved for Director Plan awards and
director resales of award stock under applicable federal and state securities
laws. As the result of registration, recipients of Director Plan awards will
be able to sell their stock in the open market without restriction immediately
upon receiving the award. In addition, shareholder approval of the Director
Plan will qualify all awards (but not subsequent sales of award stock) made
under this plan for exemption from applicable short-swing trading prohibitions
pursuant to Securities and Exchange Commission Rule 16b-3 for employee benefit
plans. Otherwise, recipients of Director Plan awards are subject to TNPE's
insider trading policy and the insider and short-swing trading prohibitions of
the securities laws.
Subject to shareholder approval, the Director Plan will be effective
January 1, 1995. The Director Plan is designed to remain in effect until all
shares of TNPE common stock reserved for awards under this plan have been
awarded. However, the board of directors is authorized to terminate this plan
at any time. In any case, no shares may be awarded under this plan after
December 31, 2004.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE DIRECTOR
PLAN.
SELECTION OF AUDITORS
The board of directors has appointed KPMG Peat Marwick, Certified
Public Accountants, to continue to serve as independent auditors for the
current year, subject to shareholder approval. A representative of KPMG Peat
Marwick is expected to attend the Annual Meeting and will have an opportunity
to make a statement if the representative desires to do so and to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK, CERTIFIED PUBLIC ACCOUNTANTS, AS INDEPENDENT
AUDITORS FOR 1995.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of TNPE's common stock as of the Record Date, by (i) each
director, nominee for director, and advisory director, (ii) the Chief Executive
Officer, the Interim Chief Executive Officer, and the four other most highly
compensated executive officers, (iii) all directors and officers of TNPE as a
group, and (iv) persons known to management to benefically own more than 5% of
TNPE's common stock. Except as noted below, each person included in the table
has sole voting and investment power with respect to the shares that the person
beneficially owns. As of the Record Date, all employees of TNPE and its
subsidiaries as a group beneficially owned approximately 7% of TNPE's
outstanding common stock.
22
<PAGE> 25
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
----------------- ----------
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
------------------------ ------------------------ ------
<S> <C> <C>
R. D. Woofter 9,893 (1) *
R. Denny Alexander 500 *
Cass O. Edwards, II 7,282 *
John A. Fanning 400 *
Sidney M. Gutierrez 0 *
Kevern R. Joyce 4,406 *
Harris L. Kempner, Jr. 200 (2)
Dwight R. Spurlock 1,584 *
Dennis H. Withers 500 *
D. R. Barnard (3) 20,130 *
Jack V. Chambers 16,540 *
Allan B. Davis 4,708 *
Larry W. Dillon 4,384 *
All directors and officers
as a group (23 persons)(4) 104,603 *
First Union Corporation(5) 659,950 6.1%
</TABLE>
________________________
* Less than 1%.
(1) Excludes 66 shares that Mr. Woofter's wife owns, beneficial ownership
of which Mr. Woofter disclaims.
(2) Excludes 200 shares that Mr. Kempner's wife owns, beneficial ownership
of which Mr. Kempner disclaims.
(3) Mr. Barnard retired effective December 31, 1994.
(4) On December 8, and 22, 1994, W. Douglas Hobbs, Vice President of TNMP,
purchased 200 shares (400 shares total) of TNPE common stock on the
open market at $14.50 per share. These purchases inadvertently were
not reported on Form 4 until February 1995. Mr. Hobbs has timely
reported all other stock transactions and timely filed all other
required stock transaction reports.
(5) The address of First Union Corporation is One First Union Center,
Charlotte, North Carolina 28288. First Union Corporation has sole
voting power with respect to 624,950 shares, shared voting power with
respect to the remaining 35,000 shares, and sole dispositive power
with respect to all 659,950 shares. First Union Corporation is the
parent holding company of Evergreen Asset Management Group and Lieber
and Company, both of which are investment advisers registered under
the Investment Advisers Act of 1940. The subsidiary investment
advisers actually acquired the shares of TNPE common stock included in
the table of which First Union Corporation is deemed to have
beneficial ownership. The information included in the table and this
note is derived from First Union Corporation's report on Schedule 13G
dated February 13, 1995, filed with the Securities and Exchange
Commission. The report did not disclose the subsidiaries' addresses
or voting and dispositive power over the common stock that it covered.
SHAREHOLDER PROPOSALS
TNPE shareholders who intend to present a proposal for action at the
1996 annual meeting must notify TNPE's Secretary of their intention by notice
received at TNPE's principal executive offices at least 30 but not more than 60
days before the first anniversary of the Notice of Annual Meeting that precedes
this proxy statement, with certain exceptions. TNPE will be unable to include
in its 1996 proxy statement shareholder proposals not presented within this
period. The notice must provide the exact wording and purpose of the
shareholder proposal, describe the shareholder's reasons for supporting the
proposal, give the shareholder's name and address, provide the class and number
of shares of TNPE stock that the shareholder owns beneficially and of record
and the date on which each was acquired, and disclose any material interest
23
<PAGE> 26
that the shareholder has in the subject of the proposal. Shareholder proposals
must also satisfy applicable requirements of Regulation 14A under the
Securities Exchange Act of 1934.
ANNUAL REPORT
TNPE's 1994 Annual Report is being mailed to shareholders with this
proxy statement. The Annual Report should not be regarded as proxy soliciting
material. THE ANNUAL REPORT INCLUDES A COPY OF TNPE'S AND TNMP'S COMBINED
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, INCLUDING THE
FINANCIAL STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES REQUIRED TO BE FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION AND AN EXHIBITS INDEX, BUT NOT
INCLUDING EXHIBITS. TNPE WILL PROVIDE A COPY OF ANY EXHIBIT TO EACH
SHAREHOLDER TO WHOM THIS PROXY STATEMENT AND THE ENCLOSED PROXY CARD ARE SENT
ON THE SHAREHOLDERS' WRITTEN REQUEST AND PAYMENT OF TNPE'S REASONABLE EXPENSES
IN FURNISHING THE COPY.
Kevern R. Joyce,
President
Fort Worth, Texas
Dated: March 28, 1995
24
<PAGE> 27
APPENDIX A
TNP ENTERPRISES, INC. EQUITY INCENTIVE PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. TNP Enterprises, Inc., a Texas
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive compensation plan to be known as the "TNP Enterprises, Inc. Equity
Incentive Plan" (hereinafter referred to as the "Plan"), as set forth in this
document. The Plan permits the grant of Nonqualified Stock Options, Incentive
Stock Options, Restricted Stock, Performance Units, Performance Shares, and
Other Stock-Based Awards.
Subject to approval by the Company's shareholders, the Plan shall
become effective as of January 1, 1995 (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, and 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 largely is dependent.
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, 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 January 1, 2005.
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:
(a) "Award" means, individually or collectively, a grant under
this Plan of Nonqualified Stock Options, Incentive Stock
Options, Restricted Stock, Performance Units, Performance
Shares, or Other Stock-Based Awards.
(b) "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.
(c) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
(d) "Board" or "Board of Directors" means the Board of Directors
of the Company.
(e) "Cause" means the admission by or the conviction of the
Participant of an act of fraud, embezzlement, theft, or other
criminal act constituting a felony under laws involving moral
turpitude. The Board of Directors, by majority vote, shall
make the determination of whether Cause exists.
(f) "Change in Control" shall have the meaning ascribed to such
term in the Texas-New Mexico Power Company Executive Agreement
for Severance Compensation Upon Change in Control.
(g) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
A-1
<PAGE> 28
(h) "Committee" means the committee, as specified in Article 3,
appointed by the Board to administer the Plan.
(i) "Company" means TNP Enterprises, Inc., a Texas corporation,
and the Company's subsidiaries, as well as any successor
thereto as provided in Article 18 herein.
(j) "Director" means any individual who is a member of the Board
of Directors of the Company.
(k) "Disability" shall have the meaning ascribed to such term in
the Participants' governing long-term disability plan.
(l) "Dividend Equivalent" means a contingent right to be paid
dividends declared with respect to outstanding Awards,
pursuant to the terms of Sections 6.5 and 8.3 herein.
(m) "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.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor Act thereto.
(o) "Fair Market Value" means the Fair Market Value of the Shares
determined by such methods or procedures as shall be
established from time to time by the Committee; provided,
however, that so long as the Shares are traded in a public
market, Fair Market Value means the average of the high and
low prices of a Share in the principal market for the Shares
on the specified date (or, if no sales occurred on such date,
the last preceding date on which sales occurred).
(p) "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, or any successor
provision thereto.
(q) "Insider" shall mean an Employee who is, on the relevant date,
an officer, director, or ten percent (10%) Beneficial Owner of
any class of the Company's equity securities that is
registered pursuant to Section 12 of the Exchange Act, all as
defined under Section 16 of the Exchange Act.
(r) "Named Executive Officer" means a Participant who, as of the
date of vesting and/or payout of an Award, as applicable, is
one of the group of "covered employees," as defined in the
regulations promulgated under Code Section 162(m), or any
successor statute.
(s) "Nonqualified Stock Option" or "NQSO" means an option to
purchase Shares, granted under Article 6 herein, which is not
intended to be an Incentive Stock Option.
(t) "Option" means an Incentive Stock Option or a Nonqualified
Stock Option.
(u) "Option Price" means the price at which a Share may be
purchased by a Participant pursuant to an Option, as
determined by the Committee.
(v) "Other Stock-Based Award" means an Award granted pursuant to
Article 9 hereof.
(w) "Participant" means an Employee of the Company who has
outstanding an Award granted under the Plan.
(x) "Performance-Based Exception" means the performance-based
exception from the tax deductibility limitations of Code
Section 162(m).
(y) "Performance Unit" means an Award granted to an Employee, as
described in Article 8 herein.
(z) "Performance Share" means an Award granted to an Employee, as
described in Article 8 herein.
A-2
<PAGE> 29
(aa) "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 7
herein.
(ab) "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).
(ac) "Restricted Stock" means an Award granted to a Participant
pursuant to Article 7 herein.
(ad) "Retirement" shall have the meaning ascribed to such term in
the Participants' governing Company-sponsored Retirement plan.
(ae) "Shares" means Shares of common stock of the Company.
(af) "Subsidiary" means any corporation in which the Company owns
directly, or indirectly through subsidiaries, at least fifty
percent (50%) of the total combined voting power of all
classes of stock, or any other entity (including, but not
limited to, partnerships and joint ventures) in which the
Company owns at least fifty percent (50%) of the combined
equity thereof.
(ag) "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 (12th) business day following such date.
ARTICLE 3. ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Personnel,
Organization, and Nominating Committee of the Board or by any other Committee
appointed by the Board consisting of not less than two (2) 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.
3.2 AUTHORITY OF THE COMMITTEE. The Committee shall have full power
except as limited by law or by the Articles of Incorporation or Bylaws of the
Company, and subject to the provisions herein, to designate employees to be
Participants in the Plan; 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 determine whether, to what extent, and under what circumstances,
Awards granted to Participants may be settled or exercised in cash, Shares or
other property; 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 shareholders, Employees, Participants, and
their estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to adjustment as
provided in section 4.3 herein, the number of Shares hereby reserved for
issuance to Participants under the Plan shall be three hundred
A-3
<PAGE> 30
thousand (300,000); provided, however, that the maximum number of Shares of
Restricted Stock granted pursuant to Article 7 herein, shall be one hundred
thousand (100,000).
Unless and until the Committee determines that an Award to a Named
Executive Officer shall not be designed to comply with the Performance-Based
Exception, the following rules shall apply to grants of such Awards to any
Named Executive Officer under the Plan:
(a) The maximum annual aggregate number of Options/SARs that may
be granted shall be seventy-five thousand (75,000); and
(b) The maximum annual aggregate number of Restricted Shares that
may be granted shall be twenty-five thousand (25,000); and
(c) The maximum annual aggregate number of Performance Shares that
may be granted shall be thirty thousand (30,000); and
(d) The maximum annual aggregate cash payout with respect to
Awards granted pursuant to Articles 8 and 9 herein which may
be made to any Named Executive Officer shall be four hundred
fifty thousand dollars ($450,000); and
(e) The maximum annual aggregate number of Shares granted under
Article 9 herein shall be forty thousand (40,000).
4.2 LAPSED AWARDS. If any Award granted under this Plan is canceled,
terminates, expires, or lapses for any reason, any Shares subject to such Award
again shall 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 active 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 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. The Committee may grant ISOs, NQSOs, or a combination thereof.
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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 Award 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 Code provisions of
Section 422.
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 a
Nonqualified Stock Option, the Participant receiving the Option may be granted,
at no additional cost, under any terms and conditions set forth by the
Committee, 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 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 or Shares, in one lump sum, within
thirty (30) days following the exercise of the corresponding Option, subject to
such terms and conditions as the Committee deems appropriate.
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.
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), as specified by the Committee.
The Committee also may allow cashless exercises 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).
6.8 TERMINATION OF EMPLOYMENT. Each Participant's 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/or its Subsidiaries. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award Agreement
entered into with each Participant, need not be uniform among all Options
issued pursuant to this Article 6, and may reflect distinctions based on the
reasons for termination of employment.
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6.9 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, if
permissible under applicable law, by such Participant's guardian or legal
representative.
ARTICLE 7. RESTRICTED STOCK
7.1 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.
7.2 RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by an Award 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.
7.3 TRANSFERABILITY. Except as provided in this Article 7, 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 Award Agreement, or upon earlier satisfaction of any other conditions, as
specified by the Committee in its sole discretion and set forth in the Award
Agreement. 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.
7.4 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 restrictions.
7.5 CERTIFICATE LEGEND. In addition to any legends placed on
certificates pursuant to Section 7.4 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 TNP Enterprises, Inc. Equity
Incentive Plan, and in an Award Agreement. A copy of the Plan
and such Award Agreement may be obtained from TNP Enterprises,
Inc."
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.
7.6 REMOVAL OF RESTRICTIONS. Except as otherwise provided in this
Article 7, 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 7.5 removed from his or her Share certificate.
7.7 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.
7.8 DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of
Restriction, Participants holding Shares of Restricted Stock granted hereunder
may 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
other cash dividends
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and other distributions paid with respect to Shares of Restricted Stock may 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, 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.
7.9 TERMINATION OF EMPLOYMENT. Each 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/or its Subsidiaries. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award Agreement
entered into with each Participant, need not be uniform among all Shares of
Restricted Stock issued pursuant to the Plan, and may reflect distinctions
based on the reasons for termination of employment; provided, however, that
except in the cases of terminations connected with a Change in Control and
terminations by reason of death or Disability, the vesting of Shares of
Restricted Stock which qualify for the Performance-Based Exception and which
are held by Named Executive Officers shall occur at the time they otherwise
would have, but for the employment termination.
ARTICLE 8. PERFORMANCE UNITS AND PERFORMANCE SHARES
8.1 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.
8.2 AWARD AGREEMENT. Each Performance Share/Unit grant shall be
evidenced by an Award Agreement that shall specify the number of Performance
Shares/United granted, the value of each Performance Share/Unit granted, the
Performance Period, the performance measures, and such other provisions as the
Committee may determine.
8.3 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.
8.4 DIVIDEND EQUIVALENTS. Simultaneous with the grant of Performance
Units/Shares, the Participant receiving the Performance Units/Shares 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 of Performance Units/Shares and the date
the Performance Units/Shares are earned, subject to such terms and conditions
as the Committee deems appropriate.
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 may be contingent on the
achievement of performance goal(s) set by the Committee which, depending on the
extent to which they are met, will determine the number and/or value of
Dividend Equivalents that will be paid out to the Participants. Notwithstanding
the foregoing, the Company or Subsidiary performance measures to be used for
purposes of grants to Named Executive Officers shall be chosen from and subject
to the conditions specified in Article 10 hereof.
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Payout of Dividend Equivalents shall be made in cash or Shares or a
combination thereof, as determined by the Committee, in one (1) lump sum,
within thirty (30) days following the payout of Performance Units/Shares.
8.5 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 by the
Committee as a function of the extent to which the corresponding performance
goals have been achieved.
8.6 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/Shares at the close of the applicable Performance
Period. Such Shares may be granted subject to any restrictions deemed
appropriate by the Committee.
At the discretion of the Committee, Participants may 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 7.8 herein.) In addition, Participants may, at the discretion
of the Committee, be entitled to exercise their voting rights with respect to
such Shares.
8.7 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, RETIREMENT, OR
INVOLUNTARY TERMINATION WITHOUT CAUSE. In the event the employment of a
Participant is terminated by reason of death, Disability, Retirement, or
involuntary termination without Cause 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.
Payment of earned Performance Units/Shares shall be made at the same
time payments are made to Participants who did not terminate employment during
the applicable Performance Period.
8.8 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 8.7 herein, all Performance Units/Shares shall be forfeited by
the Participant to the Company. The Committee, however, in its sole discretion,
shall have the right to make payment of Awards for any Performance Periods
coincident with terminations pursuant to this Section 8.8.
8.9 NONTRANSFERABILITY. Except as provided in a Participant's Award
Agreement, 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 distribution. Further, a Participant's rights under the
Plan shall be exercisable during the Participant's lifetime only by the
Participant or the Participant's legal representative.
ARTICLE 9. OTHER STOCK-BASED AWARDS
Subject to the terms of the Plan, Other Stock-Based Awards may be
granted to eligible Employees at any time and from time to time and in such
amounts and upon such terms as the Committee deems appropriate.
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ARTICLE 10. PERFORMANCE MEASURES
Unless and until the Committee proposes for
shareholder vote and shareholders approve a change in the general
performance measures set forth in this Article 10, the attainment of
which may determine the degree of payout and/or vesting with respect
to Awards to Named Executive Officers which are designed to qualify
for the Performance-Based Exception, the performance measure(s) to be
used for purposes of such grants shall be chosen from among the
following alternatives:
- -- Earnings per share;
- -- Measurements of cost control effectiveness such as the ratio of
operations and maintenance costs to kilowatt hour sales;
- -- Measurements of community involvement and customer satisfaction;
- -- Measurements of anticipation and resolution of environmental issues;
- -- Measurements of reliability such as the equivalent forced outage rate,
minutes of outage per customer served, and number of customers
interrupted per customer served;
- -- Measurements of employee safety;
- -- Measurements of long-term rate competitiveness; and
- -- Total shareholder return compared to one or more groups as determined
by the Incentive Plan Committee.
The Committee shall have the discretion to adjust the determinations
of the degree of attainment of the preestablished performance goals; provided,
however, that Awards which are designed to qualify for the Performance-Based
Exception, and which are held by the Named Executive officers, may not be
adjusted upward. (The Committee shall retain the discretion to adjust such
Awards downward.)
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 the Committee determines it is advisable to grant Awards
which shall not qualify for the Performance-Based Exception, the Committee may
make such grants without satisfying the requirements of Code Section 162(m).
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.
ARTICLE 12. DEFERRALS
The Committee, in its sole discretion, may permit or require 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
the exercise of an Option or the lapse or waiver of restrictions with respect
to Restricted Stock, or the satisfaction of any requirements or goals with
respect to Performance Units/Shares or Other Stock-Based Awards hereunder. If
any such deferral election is required or permitted, the Committee shall, in
its sole discretion, establish rules and procedures for such payment deferrals.
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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, 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 vice-versa, (or between
Subsidiaries) shall not be deemed a termination of employment. Upon such a
transfer, the Committee may make such adjustments to outstanding Awards as it
deems appropriate to reflect the changed reporting relationships.
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, unless otherwise
specifically prohibited by applicable law or by the rules and regulations of
any governmental agencies or national securities exchanges:
(a) Any and all Options granted hereunder shall become immediately
exercisable;
(b) Any Period of Restriction 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 Other Stock-Based Awards 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 the full
portion of such target payout opportunity; provided, however,
that there shall not be an accelerated payout with respect to
Restricted Stock, Performance Units, Performance Shares, and
Other Stock-Based Awards which were granted less than six (6)
months prior to the effective date of the Change in Control;
and
(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.
ARTICLE 15. AMENDMENT, MODIFICATION, AND TERMINATION
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.
15.3 COMPLIANCE WITH CODE SECTION 162(M). At all times when Code
Section 162(m) is applicable, all Awards granted under this Plan shall comply
with the requirements of Code Section 162(m); provided, however, that in the
event the Committee determines that such compliance is not desired with respect
to any Award or Awards available for grant under the Plan, then compliance with
Code Section 162(m) will
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not be required. In addition, in the event changes are made to Code Section
162(m) to permit greater flexibility with respect to any Award or Awards
available under the Plan, the Committee may, subject to this Article 15, make
any adjustments it deems appropriate.
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 or as a result of any Award to a Participant under
this Plan.
16.2 SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options, upon the lapse of restrictions on Restricted Stock, or
upon any other taxable event arising 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. The Committee may establish such procedures as it deems
appropriate for the settling of withholding obligations with Shares, including,
without limitation, the establishment of such procedures as may be necessary to
comply with the requirements of Rule 16b-3, unless otherwise determined by the
Committee.
ARTICLE 17. INDEMNIFICATION
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. RESTRICTIONS ON SHARE TRANSFERABILITY
In addition to any restrictions imposed pursuant to the Plan, all
certificates for Shares delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange or market upon which such Shares are then listed or traded,
any applicable Federal or state securities laws, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
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ARTICLE 20. LEGAL CONSTRUCTION
20.1 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.
20.2 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.
20.3 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.
20.4 SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions or Rule
16b-3 or its successors under the 1934 Act. 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.
20.5 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 Texas.
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APPENDIX B
TNP ENTERPRISES, INC. NONEMPLOYEE DIRECTOR STOCK PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. TNP Enterprises, Inc. hereby
establishes a stock plan to be known as the "TNP Enterprises, Inc. Nonemployee
Director Stock Plan" (the "Plan"), as set forth in this document. The Plan
permits the grant of unrestricted Shares of common stock to Nonemployee
Directors, subject to the terms and provisions set forth herein.
Upon approval by the Board of Directors of the Company, subject to
ratification by an affirmative vote of a majority of the Shares of the
Company's common stock, the Plan shall become effective as of January 1, 1995
(the "Effective Date") and shall remain in effect as provided in Section 1.3
herein. Each amendment to the Plan shall become effective as of the date set
forth in such amendment.
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to build a
proprietary interest among the Company's Nonemployee Directors and thereby
secure for the Company's shareholders the benefits associated with stock
ownership by those who will oversee the Company's future growth and success.
The Plan also will provide the Company with a means to attract Nonemployee
Directors of outstanding competence.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective
Date and shall remain in effect, subject to the right of the Board of Directors
to terminate the Plan at any time pursuant to Article 7 herein, until all
Shares subject to it have been granted according to the Plan's provisions.
However, in no event may any Award be granted under the Plan on or after
January 1, 2005.
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:
(a) "Award" means, individually or collectively, a grant under
this Plan of Shares of the Company.
(b) "Board" or "Board of Directors" means the Board of Directors
of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Personnel, Organization, and Nominating
Committee of the Board of Directors of the Company or any
successor Committee thereto.
(e) "Company" means TNP Enterprises, Inc., a Texas Corporation,
its Subsidiaries, affiliates, or any successor thereto as
provided in Section 8.5 herein.
(f) "Director" means any member of the Board of Directors of the
Company who is not an Employee and any person holding, from
time to time, a position of advisory director as that term is
defined in the Company's bylaws.
(g) "Employee" means any full-time, nonunion, salaried employee of
the Company. For purposes of the Plan, an individual whose
only employment relationship with the Company is as a
Director, shall not be deemed an Employee.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor Act thereto.
(i) "Nonemployee Director" means any individual who is a member of
the Board of Directors of the Company, but who is not
otherwise an Employee of the Company.
(j) "Participant" means a Nonemployee Director who has been
granted an Award under the Plan.
(k) "Shares" means the shares of common stock of the Company.
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(l) "Subsidiary" means any corporation in which the Company owns
directly, or indirectly through subsidiaries, at least fifty
percent (50%) of the total combined voting power of all
classes of stock, or any other entity (including, but not
limited to, partnerships and joint ventures) in which the
Company owns at least fifty percent (50%) of the combined
equity thereof.
ARTICLE 3. ADMINISTRATION OF THE PLAN
3.1 THE COMMITTEE. The Plan will be administered by the Committee.
3.2 ADMINISTRATION BY THE COMMITTEE. The Committee will have the
full power, discretion, and authority to interpret and administer the Plan in a
manner which is consistent with the Plan's provisions. However, in no event
will the Committee have the discretion to determine Plan eligibility, or to
determine the number, value, or timing of Awards granted under the Plan. All
such determinations will be automatic pursuant to the provisions of the Plan.
The Plan may be amended to increase the number of Shares available
under the Plan; provided, however, that no such amendment will be made more
than once within any six-(6-) month period, and provided that no such
amendment will be made without the approval of the shareholders of the
Company's common stock to the extent such approval is required under Article 7
herein.
3.3 DECISIONS BINDING. All determinations and decisions made by
the Committee pursuant to provisions of the Plan, and all related orders or
resolutions of the Committee shall be final, conclusive, and binding on all
persons, including the Company, its shareholders, 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
4.2 herein, the total number of Shares available for grant under the Plan will
not exceed thirty thousand (30,000) Shares.
4.2 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, Share combination, or any other change in the corporate
structure of the Company affecting the Shares, the Committee may make such
adjustments to outstanding Awards as may be determined to be appropriate and
equitable by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights; provided, however, that no such adjustment will be made
if the adjustment would cause the Plan to fail to comply with the "formula
award" exception for grants of Awards to Nonemployee Directors pursuant to
Section 16 of the Exchange Act.
The Committee also will provide for such adjustments in the number of
Shares authorized pursuant to Section 4.1 of the Plan as the Committee in its
sole discretion may determine is appropriate to reflect any transaction or
event described in the preceding paragraph of this Section 4.2.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Persons eligible to participate in the Plan are
limited to Nonemployee Directors who are serving on the Board on the date of
each scheduled grant under the Plan.
5.2 ACTUAL PARTICIPATION. All eligible Nonemployee Directors shall
receive grants of Shares pursuant to Article 6 herein.
ARTICLE 6. STOCK AWARDS
6.1 ANNUAL GRANTS OF SHARES. An automatic award of five hundred
twenty-five (525) shares of stock will be made as of the annual election of the
Nonemployee Directors at the annual meeting of the shareholders. The Shares
awarded pursuant to this Section 6.1 will not be subject to any restriction
under the Plan (other than those permitted or required pursuant to Section 6.2
herein).
6.2 RESTRICTIONS ON SHARES. The Company may impose restrictions on
any Shares granted pursuant to the Plan as it may deem advisable including,
without limitation, restrictions intended to achieve compliance with the
Securities Act of 1933, as amended, with the requirements of any stock exchange
upon which such
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<PAGE> 41
Shares or Shares of the same class are then listed, and with any blue sky or
securities laws applicable to such Shares.
ARTICLE 7. AMENDMENT, MODIFICATION, AND TERMINATION OF THE PLAN
Subject to the terms set forth in this Section 7.1, the Board may
terminate, amend, modify, or supplement the Plan at any time and from time to
time; provided, however, that the Plan shall not be amended more than once
every six (6) months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or any rules
promulgated thereunder.
Requisite approval of shareholders of the Company's voting stock will
be required for any amendment to the Plan to the extent such approval is
necessary to ensure continued compliance of the Plan with the provisions of
Rule 16b-3 (or any successor rule) of the rules and regulations promulgated
under the Exchange Act, with the provisions of the Code, or with the provisions
of any national securities exchange or system on which the Shares are then
listed or reported, or by any regulatory body having jurisdiction with respect
thereto.
ARTICLE 8. MISCELLANEOUS
8.1 GENDER AND NUMBER. Except as where may otherwise be indicated
by the context, any masculine term used herein shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
8.2 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 provisions of the Plan, and the Plan shall be construed
and enforced as if the illegal or invalid provision had not been included.
8.3 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 the event of his or her death. Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Board, and will be effective only when filed by the Participant in writing with
the Board during his or her lifetime. In the absence of any such designation,
benefits remaining unpaid at the Participant's death shall be paid to the
Participant's estate.
8.4 NO RIGHT OF NOMINATION. Nothing in the Plan shall be deemed to
create any right on the part of the Participant to continued membership on the
Board of Directors of the Company nor shall any provisions of this Plan be
construed to create any obligation on the part of the Board to nominate any
Director for reelection by the Company's shareholders.
8.5 SUCCESSORS. All obligations of the Company under the Plan
shall be binding on any successor to the Company.
8.6 REQUIREMENTS OF LAW. The granting of Awards 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.
8.7 SECURITIES LAW COMPLIANCE. With respect to any Nonemployee
Directors subject to Section 16 of the Exchange Act, transactions under the
Plan are intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. To the extent any provision of the Plan or
action by the Board fails to so comply, it shall be deemed null and void to the
extent permitted by law and deemed advisable by the Board.
8.8 GOVERNING LAW. To the extent not preempted by any United
States Federal law, the Plan shall be construed in accordance with the laws of
the state of Texas.
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<PAGE> 42
FORM OF PROXY
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PROXY TNP ENTERPRISES, INC. PROXY
ANNUAL MEETING OF HOLDERS OF COMMON STOCK -- APRIL 28, 1995
THIS PROXY IS SOLICITED ON BEHALF OF TNP ENTERPRISES, INC. AND ITS BOARD OF
DIRECTORS.
The undersigned shareholder, revoking all prior proxies, hereby appoints
KEVERN R. JOYCE, MANJIT S. CHEEMA, and MICHAEL D. BLANCHARD, and any one or more
of them, as proxies, each with full power of substitution, and authorizes them
to represent and vote as directed below all shares of TNP Enterprises, Inc.
("TNPE") common stock that the undersigned has the power to vote, at TNPE's
Annual Meeting of Holders of Common Stock on Friday, April 28, 1995, in Fort
Worth, Texas, and at any adjournment of that meeting, on the proposals set forth
below and on the reverse side of this card.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED ON
THIS CARD BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THEN THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, AND 4.
1. ELECTION OF CLASS 1 NOMINEE DIRECTORS (with exceptions noted).
Nominees: R. Denny Alexander, Sidney M. Gutierrez, Kevern R. Joyce
<TABLE>
<S> <C>
/ / FOR ALL NOMINEES / / WITHHOLD AUTHORITY *INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
FOR ALL NOMINEES* NOMINEE LISTED, WRITE THE NOMINEE'S NAME ON THE LINE
- ------------------------------------------------------------ TO THE LEFT BELOW.
2. APPROVAL OF TNPE EQUITY INCENTIVE PLAN.
(Does Human Resources have your current
FOR / / AGAINST / / ABSTAIN / / address? If not, please provide.)
----------------------------------------------
3. APPROVAL OF TNPE NONEMPLOYEE DIRECTOR STOCK PLAN. ----------------------------------------------
----------------------------------------------
FOR / / AGAINST / / ABSTAIN / / (If you have written in the above space, please
mark the corresponding box on the reverse side
(Continued and to be voted and signed on reverse side.) of this card.)
</TABLE>
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- --------------------------------------------------------------------------------
(Continued from reverse side.)
4. RATIFICATION OF APPOINTMENT OF KPMG PEAT MARWICK as Independent Auditors for
1995.
FOR / / AGAINST / / ABSTAIN / /
5. In their discretion, the proxies are authorized to vote upon any other
business that properly comes before the 1995 annual meeting and adjournments
of that meeting, subject to limitations set forth in applicable regulations
under the Securities Exchange Act of 1934.
/ / CHANGE OF ADDRESS
_________________________________
Signature(s)
DATE:____________________________
_________________________________
Signature(s)
DATE:____________________________
INSTRUCTION: Please sign exactly
as the shareholder's name appears
on this proxy card. When shares
are held jointly by two persons,
both should sign. When signing as
attorney, executor, administrator,
trustee, guardian, officer,
partner, or similar fiduciary or
authority, please state the
capacity in which you are signing.
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PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED,
POSTAGE PREPAID ENVELOPE.
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