<PAGE> 1
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
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
PUBLIC SERVICE COMPANY OF COLORADO
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $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 transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
April 8, 1996
Dear Shareholder:
You are invited to attend the Annual Meeting of Shareholders (the
"Meeting") of Public Service Company of Colorado (the "Company"). The 1996
Meeting will be held:
DATE: May 14, 1996
TIME: 10:00 A.M., Denver time
PLACE: Adam's Mark Hotel, 1550 Court Place
Grand Ballroom - Lobby Level
Denver, Colorado
The attached Notice of Annual Meeting and Proxy Statement cover the formal
business of the Meeting. The Meeting will consider the election of Directors,
the approval of independent public accountants and, if presented, three
shareholder proposals and such other matters as may properly come before the
Annual Meeting. The accompanying Proxy Statement contains discussion of the
matters to be considered. At the Meeting, your management will report on the
operations of the Company and provide an update on the status of the proposed
merger with Southwestern Public Service Company. The Directors and officers of
the Company will respond to questions that shareholders may have.
The Board of Directors encourages you to promptly complete, date, sign and
return your Proxy Card. Return of the Proxy Card indicates your interest in
the Company's affairs. Any shareholder present at the Meeting may nevertheless
vote personally on all matters with respect to which such shareholder is
entitled to vote.
Sincerely yours,
Chairman of the Board
<PAGE> 3
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 14, 1996
TO THE SHAREHOLDERS OF THE COMPANY:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of Public Service Company of Colorado (the "Company") will be held
on the 14th day of May, 1996, at the Adam's Mark Hotel, Grand Ballroom, 1550
Court Place, Denver, Colorado, at 10:00 A.M., Denver time, for the purposes of
(1) electing a Board of Directors, (2) approving the appointment of Arthur
Andersen LLP as independent public accountants, (3) acting upon three
shareholder proposals, if presented at the Meeting, and (4) transacting such
other business as may properly come before the Meeting or any adjournment or
adjournments thereof. If elected, the Directors and Arthur Andersen LLP will
serve until the earlier of the effective time of the merger with Southwestern
Public Service Company or the 1997 Annual Meeting of Shareholders.
The holders of record of Common Stock at the close of business on March 15,
1996, will be entitled to vote at the Meeting and at any adjournments thereof.
Proxy soliciting material is being mailed to shareholders commencing on April
8, 1996.
By order of the Board of Directors.
Dated: April 8, 1996.
W. WAYNE BROWN
Corporate Secretary
The shareholders of the Company are urged to attend the Meeting, if
possible. Please complete, date and sign the enclosed form of proxy now and
mail it promptly in the self-addressed, postage paid envelope enclosed for that
purpose, even if you presently plan to attend the Meeting. Any shareholder
present at the Meeting may nevertheless vote personally on all matters with
respect to which such shareholder is entitled to vote.
<PAGE> 4
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
and on behalf of the Board of Directors of Public Service Company of Colorado,
a Colorado corporation (the "Company"), of proxies to be voted at the Annual
Meeting of Shareholders (the "Meeting") of the Company to be held on May 14,
1996, at the time and place and for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders and at any and all adjournments of the
Meeting.
A form of proxy for use at the Meeting is enclosed. Any shareholder
signing a proxy has the power to revoke the proxy at any time before the
authority granted therein is exercised.
The entire cost of the solicitation of proxies will be borne by the
Company. Solicitations will be made by the Company primarily by use of the
mails. Additional solicitation of proxies of brokers, banks, nominees and
institutional investors will be made pursuant to the special engagement of
Beacon Hill Partners, Inc., at a cost to the Company of approximately $3,500,
plus out-of-pocket expenses. If necessary to obtain reasonable representation
of shareholders at the Meeting, solicitations by the Company may also be made
by telephone, facsimile, or personal interview. The Company will request
brokers, banks, or other persons holding stock in their names or in the names
of their nominees to forward proxy material to the beneficial owners of such
stock or request authority for the execution of the proxies and will reimburse
such brokers or other persons for their expenses in so doing.
At March 15, 1996, the Company had outstanding 63,829,348 shares of Common
Stock, par value $5 per share, entitled to one vote per share. In lieu of
closing the stock transfer books of the Company, the Board of Directors fixed
March 15, 1996 as the record date for the determination of shareholders
entitled to vote at the Meeting and at any and all adjournments thereof.
Colorado Law and the Bylaws of the Company provide that a majority of the
shares entitled to vote shall constitute a quorum at a meeting of shareholders
of the Company. Abstentions and broker non-votes will be counted as shares
present for the purpose of establishing a quorum. If a quorum is present,
approval of each of the items discussed herein to be voted on at the Meeting
will require the affirmative vote of a majority of the shares represented at
the Meeting and entitled to vote on the matter. For purposes of determining
whether an item has been approved by shareholders, abstentions will have the
same effect as a vote against all items while broker non-votes will have the
same effect as a vote against items 1 and 2 and no effect on the outcome of
items 3, 4 and 5.
The Annual Report to shareholders for the year ended December 31, 1995,
which is not a part of this Proxy Statement, was mailed commencing on March 25,
1996, under separate cover to shareholders of record.
The Board of Directors urges shareholders to complete, date, sign and
return their proxies promptly.
<PAGE> 5
ELECTION OF DIRECTORS
ITEM 1 ON PROXY CARD
A board of fourteen Directors of the Company (the "Directors") is to be
elected at the Meeting. These Directors will hold office until the earlier of
the effective time of the merger with Southwestern Public Service Company or
the next annual meeting and until their successors shall be duly elected and
qualified.
The nominees below will be elected Directors of the Company if they each
receive the affirmative vote of a majority of the shares represented at the
Meeting and entitled to vote. The indication of a "withholding" of a vote on a
nominee will have the same effect as a vote against the particular nominee. The
Restated Articles of Incorporation of the Company do not permit cumulative
voting.
Shares represented by an executed proxy in the form enclosed will be voted
for the election of the following nominees as Directors of the Company, unless
otherwise directed:
<TABLE>
<S> <C> <C>
WAYNE H. BRUNETTI
Wayne H. Brunetti is president and chief executive officer of Public
Service Co. of Colorado. He joined the company in July 1994 as president
and chief operating officer. He became chief executive officer on January
1, 1996. He also serves as a director of e prime, president and a director
of Young Gas Storage Company, and a director of Natural Fuels Corp. Mr.
Brunetti is the former president and chief executive officer of Management
Systems International, a Florida management consulting firm that he
founded in 1991. Prior to that, he was executive vice president of Florida
Power & Light Company, where he had responsibility for more than half of
AGE 53 that company's operations. Mr. Brunetti currently serves on the Edison
DIRECTOR SINCE 1994 Electric Institute's Policy Committee of Communication, Marketing and
Corporate Services. He also serves as a board member of the Colorado
Association of Commerce and Industry and a member of The Rotary Club of
Denver. He holds a B.S. degree in Business Administration from the
University of Florida, and is a graduate of the Harvard Business School's
Program for Management Development.
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C> <C>
COLLIS P. CHANDLER, JR. (G)
Collis P. Chandler, Jr. is chairman and chief executive officer of The
Chandler Company and two of its subsidiaries, Chandler & Associates, Inc.
and Chandler-Simpson, Inc. Chandler & Associates, Inc. is engaged in the
AGE 69 oil and gas exploration and production business. Mr. Chandler has served
DIRECTOR SINCE 1985 the Chandler companies since 1955, when he founded Chandler-Simpson, Inc.
He received a B.S. in Mechanical Engineering from Purdue University in
1948 and is a Registered Professional Engineer in Colorado. Mr. Chandler
is a member of the National Petroleum Council and served as its chairman
from 1976 to 1979. In 1979, he received the Secretary of Energy's
Distinguished Service Medal for his service as chairman of the Council.
He is a director of the American Petroleum Institute, and in 1994 was the
recipient of its highest award, The Gold Medal for Distinguished
Achievement. Mr. Chandler is a former director of the Gas Research
Institute and a past chairman of the Natural Gas Supply Committee, a
Washington, D.C.-based committee of large and small producers of natural
gas. He is also a member of the executive committee and a former
president of the Rocky Mountain Oil & Gas Association. He is a past
president of the Purdue University Alumni Association and a former member
of the Purdue Foundation Board of Governors. Mr. Chandler is also a
member of the Rocky Mountain Association of Geologists, the American
Association of Professional Landsmen and the Society of Petroleum
Engineers.
DR. DORIS M. DRURY (A)(H)
Dr. Doris M. Drury is the John J. Sullivan Professor of Free Enterprise
Economics at Regis University, a position she has held since January 1990.
She was executive director of the MBA Program until July 1993, when Dr.
AGE 69 Drury became special assistant to the president of Regis University.
DIRECTOR SINCE 1975 Prior to her positions with Regis University, she was a professor of
economics at the University of Denver for 24 years. She is also president
of the Center for Business and Economic Forecasting, Inc. Dr. Drury is a
director of Equitable of Iowa Companies, Blue Cross/Blue Shield of
Colorado and Premier Bank. She served on the Colorado Bankers
Association's Project Consensus Task Force and on the Governor's
Management and Efficiency Study Committee. Dr. Drury was previously
chairperson of the Board of Directors of the Federal Reserve Bank of
Kansas City, Missouri, and chairperson of the Department of Economics and
Public Affairs Program and director of the Division of Research at the
University of Denver.
</TABLE>
3
<PAGE> 7
<TABLE>
<S> <C> <C>
THOMAS T. FARLEY (C)
Thomas T. Farley is a senior partner in the law firm of Petersen & Fonda,
P.C. in Pueblo, Colorado, which he joined in 1974. He received his LL.B.
from the University of Colorado and a B.S. in Economics from the
AGE 61 University of Santa Clara. He is now a member of the University of Santa
DIRECTOR SINCE 1983 Clara's Board of Regents. He is a past president of the governing boards
of Colorado State University, the University of Southern Colorado and Ft.
Lewis College, past chairman of the Colorado Wildlife Commission, and past
commissioner of the Colorado State Fair. He also served as Minority
Leader of the Colorado House of Representatives from 1967 to 1975. He is
a director of Health Systems International, Inc., a community director of
Norwest Pueblo and Norwest Sunset, and a member of Norwest Colorado's
statewide Community Relations Committee. He is also a trustee and
president of the Catholic Foundation of the Diocese of Pueblo, and trustee
of the Farley Foundation and the Great Outdoors Colorado Trust Fund.
GAYLE L. GREER (C)
Gayle L. Greer is senior vice president, division operations, for Time
Warner Communications. Prior to this appointment in February 1996 she
served as cable and group vice president for Time Warner Cable's National
AGE 54 Division. She held these positions from February 1996 to 1984. Prior to
DIRECTOR SINCE 1986 1984, she was manager, director and vice president of new market
development for Time Warner Cable. She has also served as executive
director of the Fort Wayne (Indiana) Urban League and deputy director of
the Houston Urban League. Ms. Greer received a B.S. in Political Science
and Sociology and a masters degree in Social Work from the University of
Houston. Ms. Greer is a director of Blue Cross/Blue Shield of Colorado,
Colorado Ocean Journey, the Metropolitan State College Foundation and the
Hope Center. She is a member of the Metro Denver Chamber of Commerce
Board of Directors and Executive Committee, the University of Colorado
School of Journalism and Telecommunications, member and co-founder of the
National Association of Minorities in Cable, and a board member of the
Women's Forum of Colorado.
</TABLE>
4
<PAGE> 8
<TABLE>
<S> <C> <C>
A. BARRY HIRSCHFELD (E)
A. Barry Hirschfeld is president of A. B. Hirschfeld Press, Inc., a
commercial printing company. He has held this position since 1984. He is
AGE 53 the third generation to head this family-owned business, which was founded
DIRECTOR SINCE 1988 in 1907. He received his M.B.A. from the University of Denver and a B.S. in
Business Administration from California State Polytechnic University. Mr.
Hirschfeld serves on the boards of directors of the Boettcher Foundation;
Mountain States Employers Council, where he is vice chair and chair elect;
the Rocky Mountain Multiple Sclerosis Center; the National Conference of
Christians and Jews; the Boy Scouts of America; the Cherry Creek Arts
Festival; and the National Jewish Center, where he serves as vice president
of the board. He also serves on the Advisory Board of the Harvard
University Divinity School Center for Values in Public Life. He is vice
president of the Mile Hi Stadium Club and a member of the KUSA 9Who Care
Board of Governors; the One Hundred Club of Denver; Colorado Concern, where
he serves on the executive committee; Denver Mayor Wellington Webb's
Advisory Committee; and the Allied Jewish Federation Endowment Committee.
Mr. Hirschfeld is past board chairman and life member of the Denver Metro
Convention and Visitors Bureau; past chairman of the Denver Art Museum;
past president of the Metro Denver Executive Club; past board vice
president of Graland Country Day School; past board member of the Allied
Jewish Federation; and past board member of the Scientific and Cultural
Facilities District Board for Colorado.
D. D. HOCK (B)
D. D. (Del) Hock serves as chairman of the board of Public Service Co. of
Colorado. A native Coloradan, he began his career with Public Service Co.
AGE 60 in 1962. In 1985, he was elected senior vice president of utility services
DIRECTOR SINCE 1985 and to the board of directors. Mr. Hock became president and chief
operating officer in 1986 and assumed the position of president and chief
executive officer in October 1988. In February 1989, he became chairman of
the board. He stepped down as president of the Company in July 1994, and
as chief executive officer in January 1996. Mr. Hock received his B.S.
degree in Accounting from the University of Colorado, Boulder. He
currently serves on the Mile High United Way Board of Trustees, the Denver
Area Council Boy Scouts of America Board of Trustees, the Committee for
Economic Development Board of Trustees, the University of Colorado
Foundation Board, the Economic Club of Colorado Board, the State Board of
Agriculture, and the Colorado Symphony Association Board of Trustees. He
also serves as a director of the Public Education & Business Coalition, the
Denver Metro Chamber Foundation, the Mountain States Employers Council and
Serv-Tech, Inc. He is on the boards of directors of the Edison Electric
Institute, Electric Power Research Institute, Western Energy Supply and
Transmission (WEST) Associates and the Association of Edison Illuminating
Companies. He also serves on the Western Regional Council Board of
Trustees. Mr. Hock is a member of the Colorado Forum, Colorado Society and
American Institute of Certified Public Accountants, the Western Stock Show
Association Board of Directors and The Rotary Club of Denver.
</TABLE>
5
<PAGE> 9
<TABLE>
<S> <C> <C>
GEORGE B. MCKINLEY (A)(G)
George B. McKinley is active in the banking, investment and ranching
businesses. Mr. McKinley is chairman and chief executive officer of First
AGE 68 National Banks in Evanston and Kemmerer, Wyoming. He assumed these
DIRECTOR SINCE 1976 positions for the Evanston bank in 1989, and for the Kemmerer bank in
1991. He is president and chief executive officer of First McKinley
Corporation, a bank holding company. He became both president and chief
executive officer in 1972. He also serves as a director of the Bankers
Bank of the West in Denver. Mr. McKinley served as president and chief
executive officer of C.C.B., Inc., and of the Central Bancorporation, Inc.
(Denver) until 1986. He is active in the American, Colorado and Wyoming
bankers associations, and served as a director of the Wyoming Bankers
Association and president of the Colorado Bankers Association.
WILL F. NICHOLSON, JR. (A)(G)
Will F. Nicholson, Jr. is chairman of Rocky Mountain Bank Card System, a
credit card company. In February 1995, he retired as chairman, chief
AGE 66 executive officer and president of Colorado National Bankshares, Inc., a
DIRECTOR SINCE 1981 bank holding company. He was elected president of Colorado National
Bankshares, Inc. in 1975 and chairman and chief executive officer in 1985.
Mr. Nicholson serves as a director of Boys and Girls Clubs of Metro
Denver; Columbia/HealthONE; the Colorado Golf Association; the National
Western Stock Show Association; Downtown Denver, Inc.; and the U.S.
Chamber of Commerce. He is chairman of Visa, U.S.A., Inc. and a director
of Visa International. Mr. Nicholson is a past director and chairman of
the Greater Denver Corporation and past chairman and a member of the board
of the Association of Bank Holding Companies.
J. MICHAEL POWERS (D)
J. Michael (Mic) Powers has been president of Powers Masonry Supply of
Cheyenne and Fort Collins and of Powers Products Co., a specialty
AGE 53 construction company in Cheyenne and Denver, since 1974. A native of
DIRECTOR SINCE 1978 Cheyenne, Wyoming, Mr. Powers is a director of the American National Bank
- Cheyenne. He is past chairman of Cheyenne LEADS, an economic development
organization, and has also served as president of the Cheyenne Chamber of
Commerce. Mr. Powers is a 1965 graduate of the University of Arizona.
</TABLE>
6
<PAGE> 10
<TABLE>
<S> <C> <C>
THOMAS E. RODRIGUEZ (C)
Thomas E. Rodriguez is a CPA in Colorado and has been president and
general manager of Thomas E. Rodriguez & Assoc., P.C., a certified public
accounting firm, since 1985. Mr. Rodriguez served as a director and
AGE 51 president of Rodriguez, Roach & Assoc., P.C. from 1982 to 1985. He is a
DIRECTOR SINCE 1986 director of Mercy Housing, Inc. and Accurate Machining, Inc. He is a
trustee of the Colorado Historical Foundation and the American Tax Policy
Institute in Washington, D.C., as well as president of the Colorado
Association of Hispanic CPAs and the Archdiocesan Finance Council of
Denver. Mr. Rodriguez has served since 1982 as an Appeals Court Judge for
the Selective Service System. Until 1993, he served as a director of the
Federal Reserve Bank in Kansas City, and in 1985 he was president of the
National Association of Hispanic CPAs. Mr. Rodriguez is past president of
the Latin Chamber of Commerce and past director of the Executive Committee
of the SBA in Washington, D. C., the Denver Chamber of Commerce and
Skyline Office Products. He has also served as chairman of the Leadership
Denver Selection Committee and was a member of the Colorado Hispanic
Advisory Council, the Minority Energy Task Force for Colorado, and the
Colorado Small Business Council. He received a B.S. in Business and
Accounting from Colorado State University.
RODNEY E. SLIFER (E)
Rodney E. Slifer is a partner in Slifer, Smith & Frampton/Vail Associates
Real Estate, LLC, a diversified real estate company. He has held this
position since June 1994. From June 1989 to June 1994, he was a partner
AGE 61 in Slifer, Smith & Frampton. He served as president of Slifer & Company
DIRECTOR SINCE 1988 from 1968 until 1989. He is currently a director of Alpine Banks of
Colorado, a position he has held since 1983. Mr. Slifer is vice president
and a board member of the Vail Valley Foundation and co-founder and
director of the Jerry Ford Invitational Golf Tournament. Mr. Slifer has
served as mayor and a member of the Town Council for the Town of Vail, a
board member of Colorado Open Lands, a member of the Urban Land Institute
and a board member of the University of Colorado Real Estate Council.
</TABLE>
7
<PAGE> 11
<TABLE>
<S> <C> <C>
W. THOMAS STEPHENS (F)(G)
W. Thomas Stephens is chairman, president and chief executive officer of
Manville Corporation, an international manufacturing and natural resources
company. Mr. Stephens began his career with Manville Corporation in 1963.
AGE 53 In October 1982, he was elected president of Manville Forest Products
DIRECTOR SINCE 1989 Corporation, a subsidiary of Manville Corporation. He was elected chief
financial officer and executive vice president of Manville Corporation in
1984, and president and chief executive officer in 1986. He has been a
member of the Manville Corporation Board since March 1986, and became its
chairman in June 1990. He also serves on the board of one of Manville's
subsidiaries, Riverwood International Corporation. Mr. Stephens serves as
a director of Ball Corporation, Stillwater Mining Company and The Denver
Art Museum. He is a member of The Business Roundtable, The Conference
Board, the Arkansas Academy of Industrial Engineering and the University
of Arkansas Advisory Council. Mr. Stephens received his B.S. and M.S.
degrees in Industrial Engineering from the University of Arkansas.
ROBERT G. TOINTON (A)(G)
Robert G. Tointon is president and chief executive officer of Phelps-
Tointon, Inc., a position he assumed in June 1989. Phelps-Tointon, Inc.
is a specialty construction contractor and manufacturer formed by Mr.
AGE 62 Tointon in June 1989 as a spin-off of certain assets of Phelps, Inc.,
DIRECTOR SINCE 1988 where he served as president since 1982. Phelps-Tointon, Inc. has four
operating divisions: Rocky Mountain Prestress, Southern Steel Company,
Phelps-Tointon Millwork and Armor Safe Technologies. Prior to 1982, Mr.
Tointon was president of Hensel Phelps Construction Company. Mr. Tointon
is a director of the Writer Corporation and a former director of Mountain
Bell and Bank One of Colorado. Mr. Tointon is a member of the Greeley
Rotary Club and the Colorado Forum.
</TABLE>
8
<PAGE> 12
NOTES
- ----------------------------------------------------
The age of each Director is as of December 31, 1995.
(a) Member of Executive Committee.
(b) Chairperson of Executive Committee.
(c) Member of Audit Committee.
(d) Chairperson of Audit Committee.
(e) Member of Pension Investment Committee.
(f) Chairperson of Pension Investment Committee.
(g) Member of Compensation Committee.
(h) Chairperson of Compensation Committee.
If, at the time of the Meeting, any of these nominees will be unable to
serve in the capacity for which he or she is nominated or will not be a
candidate, an event which the Board of Directors does not anticipate, it is the
intention of the persons designated as proxies to vote, in their discretion,
for other nominees.
The Company has a standing Executive Committee which exercises, subject to
limitations provided by law, all the authority of the Board of Directors in the
management of the Company between the meetings of the Board of Directors. The
Executive Committee did not meet during 1995.
The Company has a standing Audit Committee, which held seven meetings
during 1995. The functions of the Audit Committee are to select and recommend
to the Board of Directors a firm of independent public accountants to audit
annually the books and records of the Company and its consolidated subsidiary
companies; to review the scope of such audit; to receive and review the audit
reports and recommendations; to transmit such audit reports and
recommendations to the Board of Directors; to review the internal control
procedures of the Company and its consolidated subsidiary companies and
recommend to the Board of Directors any changes deemed necessary in such
procedures; and to perform such other functions as the Board of Directors from
time to time may delegate to the Audit Committee.
The Company has a standing Pension Investment Committee, which provides
investment oversight for the assets of the Company's Employees' Retirement Plan
and the Employees' Savings and Stock Ownership Plan. The Pension Investment
Committee appoints executives responsible for the management of pension plan
assets, and approves investment objectives and policy guidelines for them to
follow. The Pension Investment Committee receives regular reports on the
status of pension plan and savings plan assets and reports at least annually to
the Board of Directors. The Pension Investment Committee held two meetings in
1995.
The Company has a standing Compensation Committee, which reviews
performance of and recommends salaries and other forms of compensation for
executive officers. The Compensation Committee annually reviews the process of
establishing salaries and wages of Company employees; reviews the process of
management development and long-range planning for Company development; and
reviews and makes recommendations regarding fees and other compensation for
Directors. In addition, the Compensation Committee is responsible for the
oversight of the Omnibus Incentive Plan, the appointment of an executive
officer responsible for day-to-day management of such plan, and the approval of
the guidelines for the granting of awards under the Omnibus Incentive Plan.
The Compensation Committee met eight times during 1995.
9
<PAGE> 13
Thirteen meetings of the Board of Directors were held during 1995. All
incumbent Directors attended 75% or more of the aggregate of the meetings of
the Board and the committees on which they served in 1995. The Company does
not have a nominating committee, but the Executive Committee functions in that
capacity. Shareholders wishing to nominate candidate(s) for future
consideration by the Executive Committee may do so by writing to the Secretary
of the Company, at the address shown on the cover of this proxy, giving the
candidate's name, biographical data and qualifications, along with a statement
acknowledging their willingness to serve. Nominations must be received by
September 30 of the year preceding the annual meeting date.
10
<PAGE> 14
SECURITY OWNERSHIP OF MANAGEMENT AND DIRECTORS
as of January 31, 1996 (a)
<TABLE>
<CAPTION>
====================================================================================================
TITLE OF CLASS NAME OF BENEFICIAL OWNER AMOUNT AND NATURE OF % OF CLASS
(B) BENEFICIAL OWNERSHIP (D) (E)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock Wayne H. Brunetti 15,112(f)
- ----------------------------------------------------------------------------------------------------
Common Stock Collis P. Chandler, Jr. (1) 8,884
- ----------------------------------------------------------------------------------------------------
Common Stock Dr. Doris M. Drury 1,714
- ----------------------------------------------------------------------------------------------------
Common Stock Thomas T. Farley (2) 3,120
- ----------------------------------------------------------------------------------------------------
Common Stock Gayle L. Greer 934
- ----------------------------------------------------------------------------------------------------
Common Stock A. Barry Hirschfeld (3) 4,534
- ----------------------------------------------------------------------------------------------------
Common Stock Delwin D. Hock (4) 62,658(f)
- ----------------------------------------------------------------------------------------------------
Common Stock George B. McKinley 1,000
- ----------------------------------------------------------------------------------------------------
Common Stock Will F. Nicholson, Jr. (5) 2,125
- ----------------------------------------------------------------------------------------------------
Common Stock J. Michael Powers 5,100
- ----------------------------------------------------------------------------------------------------
Common Stock Thomas E. Rodriguez (6) 1,814
- ----------------------------------------------------------------------------------------------------
Common Stock Rodney E. Slifer 9,299
- ----------------------------------------------------------------------------------------------------
Common Stock W. Thomas Stephens 3,303
- ----------------------------------------------------------------------------------------------------
Common Stock Robert G. Tointon (7) 5,000
- ----------------------------------------------------------------------------------------------------
Common Stock Richard C. Kelly (8) 17,566(f)
- ----------------------------------------------------------------------------------------------------
Common Stock Patricia T. Smith 3,467(f)
- ----------------------------------------------------------------------------------------------------
Common Stock A. Clegg Crawford 8,170(f)
- ----------------------------------------------------------------------------------------------------
Common Stock Directors & Executive Officers 202,051(f)
as a Group (c)
====================================================================================================
</TABLE>
Notes
(a) As of January 31, 1996, the Company is not aware of any persons who
beneficially own more than 5% of the Company's Common Stock.
(b) Common Stock listed in the table represents the Company's Common Stock,
$5 par value.
(c) There are a total of 22 Executive Officers and Directors.
11
<PAGE> 15
(d) The common shares represented above include those shares, if any, held
under the Company's Employees' Savings and Stock Ownership Plan (the
"ESOP").
(e) On January 31, 1996, the percentage of shares beneficially owned by any
Director or named Executive Officer, or by all Directors and Executive
Officers as a group, does not exceed one percent of the class of
securities described above.
(f) The number of shares includes those which the following have the right to
acquire as of February 21, 1996 through the exercise of vested options
granted under the Omnibus Incentive Plan: Mr. Hock, 38,543 shares; Mr.
Brunetti, 10,566 shares; Mr. Kelly, 13,867 shares; Ms. Smith, 2,717
shares; Mr. Crawford, 6,960 shares; and all Executive Officers as a
group, 98,706 shares.
Unless otherwise specified, each Director and named Executive Officer has
sole voting and sole investment power with respect to the shares indicated.
(1) Mr. Chandler's wife owns 300 of these shares, ownership of which Mr.
Chandler disclaims. In addition, Mr. Chandler shares investment power
with Chandler-Simpson, Inc., of which he is President, with respect to
4,901 of these shares.
(2) Included in the total amount are 2,565 common shares held in a family
trust of which Mr. Farley is beneficiary. Mr. Farley has no voting power
but shares investment power with respect to these shares.
(3) Mr. Hirschfeld's wife owns 1,231 of these shares; Mr. Hirschfeld
disclaims ownership of these shares. Additionally, Mr. Hirschfeld is a
general partner in the Pinery West LLC which filed a Voluntary Petition
for Reorganization under Chapter 11 of the U.S. Bankruptcy Code on
December 26, 1995.
(4) Mr. Hock shares voting and investment power with his wife with respect to
20,247 of these shares.
(5) Mr. Nicholson's wife owns 500 of these shares; Mr. Nicholson disclaims
ownership of these shares.
(6) Mr. Rodriguez's wife is custodian and has sole investment and voting
power for their minor children with regard to 967 of these shares. Also,
Mr. Rodriguez's wife owns 347 of these shares; Mr. Rodriguez disclaims
ownership of these 1,314 shares.
(7) Mr. Tointon shares voting and investment power with respect to these
shares with Phelps-Tointon, Inc., of which he is President and Chief
Executive Officer.
(8) Mr. Kelly's wife owns 263 of these shares; Mr. Kelly disclaims ownership
of these shares.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Based solely upon a review of Forms 3, 4 and 5 and written representation
furnished to the Company, the Company believes that all Directors and Officers
filed in a timely manner their reports required under Section 16(a) of the
Securities Exchange Act of 1934, as amended.
12
<PAGE> 16
COMPENSATION OF EXECUTIVE OFFICERS
AND DIRECTORS
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of independent outside Directors. The Board has delegated to
the Committee the responsibility for establishing and administering the
Company's base salary system, executive annual and long-term incentive
compensation plans, and benefit programs.
A primary objective of the Committee regarding executive compensation is
to provide a total compensation package which, as a whole, will enable the
Company to attract, retain and motivate a high-quality executive management
team that will be focused on enhancing shareholder value.
A guiding principle used in the development and administration of the
Company's executive compensation plans is to align the interests of executive
management with those of shareholders and customers. One of the ways this is
achieved is by establishing plans that compensate executives on the basis of
corporate, business unit, and individual performance goals. The plans include
equity-based incentives so that the executives are motivated on an annual and
long-term basis to respond to business challenges and opportunities as owners,
not just as employees.
Each year, the Committee reviews the total executive compensation program
(which includes base salaries, annual and long-term incentives, benefits and
perquisites). This review is conducted with the assistance of independent
outside experts, including compensation consultants. In establishing
compensation policies and levels, the Committee considers all elements of total
compensation.
The Omnibus Budget Reconciliation Act passed by the U.S. Congress during
1993 included several provisions impacting executive compensation. One of the
provisions resulted in the enactment of Section 162(m) of the Internal Revenue
Code of 1986, as amended. This section generally limits the corporate deduction
for compensation paid during a year to any executive officer named in the proxy
statement to $1 million, unless the compensation is performance based. The
Committee, along with the Company's independent public accountants, legal
counsel, and compensation consultants, have conducted an in-depth review of the
potential impact of these provisions of the Act on the Company. Aggregate
compensation levels in 1995 did not exceed $1 million and are not expected to
in 1996 for any executive officer named in the proxy statement. Therefore, we
believe Section 162(m) will not impact the Company's tax deduction for 1995 or
1996 compensation.
BASE SALARIES
Base salaries for executives are reviewed by the Committee annually. In
determining appropriate base salary levels, the Committee considers factors
such as responsibilities, experience, individual
13
<PAGE> 17
performance, internal equity, and pay practices of other companies in the
utility industry. Formal weightings are not assigned to these factors. In
general, base salaries are targeted at or near the 50th percentile for the
utility industry. We believe this objective allows the Company to attract and
retain top quality executive talent, and the continuity of management enhances
the Company's ability to achieve strategic objectives designed to benefit
shareholders and customers. Overall, 1995 base salaries for all executives,
including Mr. Hock, were in line with the 50th percentile.
For compensation comparison purposes, data was collected from public and
private surveys composed of utility companies which are similar to the Company
in terms of sales volumes, lines of business, employment levels, customer mix,
and service areas. The primary survey group of over 100 utilities includes
almost all of the companies included in the S&P Electric Power Group, which is
depicted in the Cumulative Five-Year Total Return Graph, as well as other
utilities. We believe the S&P Electric Power Group is a representative cross
section of the survey companies used for compensation comparisons and is
appropriate for inclusion in the graph.
ANNUAL INCENTIVES
Executives have the opportunity to earn annual incentive awards under the
Omnibus Incentive Plan. The purpose of these awards is to promote the
achievement of Company financial and strategic objectives which are designed to
benefit shareholders and customers, focus executive attention on
pre-established goals, and recognize individual performance while fostering
team performance. The Committee believes that annual incentive awards serve to
communicate Company goals to the executives and motivate executives not only to
achieve but also potentially to exceed these goals. The Committee further
believes that having a significant portion of executive compensation at risk
fosters meeting these goals.
In 1995, target awards were set for 11 executive officers, including all
named Executive Officers. Target awards are expressed as a percentage of base
salary, which in 1995 was 40% for Mr. Hock and ranged from 25% to 35% for all
other named Executive Officers. The target award for Mr. Hock was below the
median level in the utility industry. Similarly, targets for the other named
Executive Officers were in line with or below median levels in the utility
industry.
Each executive earns the right to receive an award if pre-established
corporate goals (based on earnings per share) are met. In addition, the
Committee may adjust these awards based on its subjective assessment of
business unit and individual performance. This assessment focuses on factors
such as customer service, actual resource allocations relative to budget, other
strategic business unit factors, and individual performance; however, formal
weightings are not assigned to these factors. Achievement of 100 percent of
goals would result in the target amount, with achievement of between 80 and 120
percent of goals resulting in a lesser or greater award. Actual awards are
payable in cash or a combination of restricted stock (one-third) and cash
(two-thirds). The Committee believes paying bonuses partially in restricted
stock reinforces the Company's principal business objective of enhancing
shareholder value as it aligns the interests of executives with those of
shareholders. Actual annual incentive awards for 1995 for Mr. Hock and the
named Executive Officers were calculated
14
<PAGE> 18
based on corporate performance that was slightly above target earnings per
share which resulted in awards based on 104 percent of the target amount.
STOCK OPTIONS
Stock options were granted in 1995 to 11 executives, including Mr. Hock
and the named Executive Officers. The grants are made under the Omnibus
Incentive Plan and are designed to link the interests of executives to
improvement in long-term shareholder value. Award levels, when combined with
other long-term incentive awards, are targeted to deliver compensation at the
50th percentile in the utility industry.
Stock options vest ratably during the three-year period immediately
following the date of grant. If vested, they may be exercised any time during
the ten-year period following the date of grant. The stock option grants made
to Mr. Hock and the Executive Officers are based on the value of the stock on
the date of grant, competitive practices, and individual contributions. No
formal weightings have been established for these criteria.
DIVIDEND EQUIVALENTS
To further strengthen the tie between executive compensation and
shareholder value, the 11 executives who received stock options were granted a
target number of dividend equivalents under the Omnibus Incentive Plan. Payment
of the dividend equivalents is subject to the achievement of earnings per share
goals over a three-year performance period. The goals are established on an
annual basis and are the same as those used for annual incentive awards.
Attainment of 90 percent of the earnings per share goals represents the
threshold at which 50 percent of the awarded dividend equivalents can be
earned. Attainment of the target earnings per share goals (100%) will result in
the executive earning 100 percent of the dividend equivalents awarded for that
particular performance period. The maximum amount of dividend equivalents
(150%) will be earned if at least 110 percent of the earnings per share goals
are attained. Performance is assessed each year and, based on the schedule
described above, a percentage award is calculated. Payment of dividend
equivalents is dependent upon the average of the annual percentage awards
during the entire performance period. In determining the average for the
three-year period, any year in which the minimum performance (threshold) is not
achieved, the percentage award is included as zero. Although the Company's
achievement of 104 percent of the established goal in 1995 resulted in an
annual award, the actual percentage of dividend equivalents granted in 1995,
which will be paid, is dependent on performance during each year of the entire
1995 to 1997 performance period.
The dividend equivalent amounts to be paid in early 1996, which are
reported in the Summary Compensation Table, reflect performance during 1993,
1994, and 1995. Average performance during those years was slightly below
target and resulted in awards of approximately 90 percent of target.
15
<PAGE> 19
The number of dividend equivalents granted to Mr. Hock and the Executive
Officers was based on the number of unvested stock options from 1993, 1994, and
1995. Stock option and dividend equivalent grants for 1995 for the Chief
Executive Officer and the named Executive Officers as a group remained below
the 50th percentile.
COMPENSATION COMMITTEE MEMBERS
Dr. Doris M. Drury, Chairperson
Collis P. Chandler, Jr.
George B. McKinley
Will F. Nicholson, Jr.
W. Thomas Stephens
Robert G. Tointon
16
<PAGE> 20
<TABLE>
<CAPTION>
====================================================================================================================
SUMMARY COMPENSATION TABLE
====================================================================================================================
ANNUAL COMPENSATION LONG-TERM COMPENSATION ALL
NAME AND PRINCIPAL OTHER
POSITION COMPEN-
SATION
($) (D)
--------------------------------------------------------------------
YEAR AWARDS PAYOUTS
----------------------------------
SALARY BONUS ($) OTHER RESTRICTED SECURITIES LTIP
($) (A) ANNUAL STOCK UNDERLYING PAYOUTS
COMPEN- AWARDS OPTIONS/ ($)
SATION ($)(C) SAR'S (#)
($) (B)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Delwin D. Hock 1995 $446,352 $225,440 $ 0 26,500 $45,289 $22,318
Chairman of the Board, 1994 428,014 197,648 0 22,700 17,160 19,260
and Chief Executive 1993 425,012 53,035 26,265 14,578 21,376
Officer (e)
- --------------------------------------------------------------------------------------------------------------------
Wayne H. Brunetti 1995 330,838 150,448 74,992 14,700 0 6,917
President and Chief 1994 148,320 58,251 123,085 17,000 0 0
Operating Officer (e) 1993
- --------------------------------------------------------------------------------------------------------------------
Richard C. Kelly 1995 227,503 100,457 49,983 9,600 15,619 11,375
Sr. V.P. Finance, 1994 215,005 49,970 24,756 8,200 5,631 10,362
Treasurer 1993 211,674 27,108 13,292 5,200 11,113
and Chief Financial
Officer
- --------------------------------------------------------------------------------------------------------------------
Patricia T. Smith 1995 220,018 49,782 24,658 8,150 0 0
Sr. V.P. and General 1994 15,834 0 21,563 0 0 0
Counsel 1993
- --------------------------------------------------------------------------------------------------------------------
A. Clegg Crawford 1995 172,841 33,791 16,649 4,050 8,585 8,642
V.P. Engineering and 1994 167,000 27,165 13,335 4,200 3,175 4,755
Operations Support 1993 165,513 15,509 7,491 2,810 5,265
====================================================================================================================
</TABLE>
(a) The amounts shown in the "Bonus" column for 1995 represent the cash awards
earned under the Omnibus Incentive Plan for financial performance in 1995.
These awards were made in February 1996. In accordance with the plan
guidelines, the entire award amount can be paid in cash or two-thirds of the
award may be paid in cash and one-third in the form of restricted stock. At
the election of each executive officer, all or a portion of the award may be
deferred into the Executive Savings Plan ("ESP"). Mr. Hock's award was
$150,008 and 2,135 shares ($74,992) of restricted stock. However, Mr. Hock
elected to defer the value of the entire award into the ESP. Accordingly, both
the cash portion and the value of the restricted stock portion of Mr. Hock's
1995 award are reflected in the "Bonus" column. In addition, Mr. Hock and each
of the named Executive Officers received a bonus of $440 under the 1995
Employee Incentive Plan.
(b) Perquisites and other personal benefits do not exceed the lesser of either
$50,000 or 10% of the total annual salary and bonus reported for the named
Executive Officers.
17
<PAGE> 21
(c) The amounts shown in the "Restricted Stock Awards" column for 1995 reflect
the value of all restricted shares held as of year end as well as those
restricted stock awards made under the Omnibus Incentive Plan described in
footnote (a).
Aggregate restricted stock holdings as of the February 1996 grant
(including restricted stock held at year end which vested January 3, 1996) are
as follows: Mr. Hock held 824 ($29,149) shares of restricted stock; Mr.
Brunetti held 6,681 ($236,340) shares of restricted stock; Mr. Kelly held 2,655
($93,921) shares of restricted stock; Ms. Smith held 1,452 ($51,365) shares of
restricted stock; and Mr. Crawford held 1,148 ($40,611) shares of restricted
stock. The value of the shares reported in this paragraph were calculated
using the Company's 1995 year end stock price of $35.375.
Dividends are paid on restricted stock when and as paid on the Company's
Common Stock. Restrictions lapse two years from the date of grant.
(d) The amounts represented in the "All Other Compensation" column reflect the
total of the matching contributions made under the ESOP and the matching
contributions provided by the ESP. The ESP allows the named executives to
receive credits for Company contributions to which they would be entitled under
the ESOP if pre-tax deferral contributions were not limited by federal income
tax laws. In accordance with the provisions of the ESP for Mr. Kelly, the 1993
and 1994 amounts also include Company contributions for the years 1989, 1990
and 1991. In 1995, the value of contributions made under the ESOP to Hock,
Brunetti, Kelly, Smith and Crawford were $6,870, $3,125, $6,870, $0 and $6,870
respectively. The value of the contributions made under the ESP in 1995 to
Hock, Brunetti, Kelly, Smith and Crawford were $15,448, $3,792, $4,505, $0 and
$1,772 respectively.
(e) On December 19, 1995, the Company announced that D. D. Hock would step down
as Chief Executive Officer ("CEO"), effective January 1, 1996, but would remain
as chairman of the board. Wayne H. Brunetti was elected by the Board of
Directors to succeed Mr. Hock as CEO, effective January 1, 1996.
18
<PAGE> 22
<TABLE>
<CAPTION>
=====================================================================================================
OPTION/SAR GRANTS IN LAST FISCAL YEAR
=====================================================================================================
INDIVIDUAL GRANTS
NAME
---------------------------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/ OPTIONS/SARS EXERCISE
SARS GRANTED TO OR BASE GRANT DATE
GRANTED EMPLOYEES IN PRICE EXPIRATION PRESENT VALUE
(#)(A) FISCAL YEAR ($/SH) DATE ($)(B)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Delwin D. Hock 26,500 16.75% $30.25 2/21/05 $103,589
- -----------------------------------------------------------------------------------------------------
Wayne H. Brunetti 14,700 9.29% $30.25 2/21/05 $57,462
- -----------------------------------------------------------------------------------------------------
Richard C. Kelly 9,600 6.07% $30.25 2/21/05 $37,526
- -----------------------------------------------------------------------------------------------------
Patricia T. Smith 8,150 5.15% $30.25 2/21/05 $31,858
- -----------------------------------------------------------------------------------------------------
A. Clegg Crawford 4,050 2.56% $30.25 2/21/05 $15,831
=====================================================================================================
</TABLE>
(a) All options were granted to executive officers by the Compensation
Committee of the Board of Directors on February 21, 1995. The options vest and
may be exercisable only to the extent of 33 1/3% on the first anniversary date
of the grant and to the same extent on the second anniversary and third
anniversary. Such rights to exercise will be cumulative to the extent not
exercised. All options expire 10 years from the date of grant.
(b) These amounts represent a theoretical present valuation based on the Black
Scholes Option Pricing Model as adjusted for dividends. The values in the
column are estimated based on an option value of $3.91. The option value was
derived using the following assumptions:
1. the time to exercise is the option life of 10 years;
2. the risk free rate is 7.47%, the interest rate on 10-year treasury
strips as quoted in the Federal Reserve Statistical Release for
February 1995;
3. the option strike price is $30.25;
4. the stock price at grant date is $30.25;
5. the standard deviation of PSCo Common Stock, which is a measure of the
volatility of the stock, is 12.26%; and
6. future dividends are assumed to be increased $.04 annually, with the
increase being declared in the first quarter of each succeeding year.
The dividends are discounted at a rate of 11.00%.
Executives may not sell or assign these options, which have value only to the
extent of future stock price appreciation. These amounts or any of the
assumptions should not be used to predict future performance of stock price or
dividends.
19
<PAGE> 23
<TABLE>
<CAPTION>
=====================================================================================================
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
=====================================================================================================
NUMBER OF VALUE OF
SECURITIES UNEXERCISED IN-
UNDERLYING THE-MONEY
UNEXERCISED OPTIONS/SARS AT
OPTIONS/SARS AT FY- FY-END ($)
END (#) (A)
----------------------------------------
NAME SHARES ACQUIRED VALUE REALIZED EXERCISABLE/ EXERCISABLE/
ON EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delwin D. Hock 0 $0 17,285/ $118,696/
46,492 267,514
- -----------------------------------------------------------------------------------------------------
Wayne H. Brunetti 0 0 5,667/ $49,586/
26,033 174,502
- -----------------------------------------------------------------------------------------------------
Richard C. Kelly 0 0 6,200/ $42,559/
16,800 96,616
- -----------------------------------------------------------------------------------------------------
Patricia T. Smith 0 0 0/ $0/
8,150 41,769
- -----------------------------------------------------------------------------------------------------
A. Clegg Crawford 0 0 3,273/ $22,504/
7,787 45,399
=====================================================================================================
</TABLE>
(a) Option values were calculated with the closing stock price on December 31,
1995, of $35.375.
20
<PAGE> 24
<TABLE>
<CAPTION>
=====================================================================================================
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
=====================================================================================================
NAME NUMBER OF PERFORMANCE OR ESTIMATED FUTURE PAYOUTS UNDER NON-
SHARES, OTHER PERIOD STOCK PRICE-BASED PLANS
UNITS OR UNTIL MATURATION
OTHER RIGHTS OR PAYOUT
(A)(#)
---------------------------------------
THRESHOLD TARGET MAXIMUM ($
($ OR #) ($ OR #) OR #)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Delwin D. Hock 46,492 1/1/95
thru $47,422 $94,844 $142,266
12/31/97
- -----------------------------------------------------------------------------------------------------
Wayne H. Brunetti 26,033 1/1/95
thru $26,554 $53,107 $79,661
12/31/97
- -----------------------------------------------------------------------------------------------------
Richard C. Kelly 16,800 1/1/95
thru $17,136 $34,272 $51,408
12/31/97
- -----------------------------------------------------------------------------------------------------
Patricia T. Smith 8,150 1/1/95
thru $8,313 $16,626 $24,939
12/31/97
- -----------------------------------------------------------------------------------------------------
A. Clegg Crawford 7,787 1/1/95
thru $7,943 $15,885 $23,828
12/31/97
=====================================================================================================
</TABLE>
(a) Dividend equivalents are granted under the Omnibus Incentive Plan.
Dividend equivalents entitle the recipient to the cash amount equal to the
average of the dividends paid over the performance cycle at the current
dividend rate ([2.03 + 2.04 + 2.04]/3) multiplied by the number of units
granted. Dividend equivalents are earned, if at all, at the end of a
three-year performance period depending upon achievement of Earnings Per
Share goals over the performance period. The Target represents the amount
to be awarded if 100% attainment of the goal is achieved. Threshold
represents the amount to be awarded if 90% of the goal is achieved, and
Maximum represents the amount to be awarded if 110% of the goal is
attained. Additional dividend equivalents may be granted each year by the
Compensation Committee. Dividend equivalents vest at the target level
immediately upon a change in control.
21
<PAGE> 25
The following table shows the estimated pension benefits payable to a
covered participant at normal retirement age under the Employees' Retirement
Plan ("Retirement Plan") and the Supplemental Executive Retirement Plan
("SERP").
<TABLE>
<CAPTION>
=============================================================================================
PENSION PLAN TABLE
=============================================================================================
REMUNERATION YEARS OF SERVICE
15 20 25 OR MORE YEARS
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$100,000 $54,375 $65,000 $65,000
125,000 67,969 81,250 81,250
150,000 81,562 97,500 97,500
175,000 93,750 113,750 113,750
200,000 105,938 130,000 130,000
225,000 118,125 146,250 146,250
250,000 130,313 162,500 162,500
300,000 154,688 195,000 195,000
400,000 203,438 260,000 260,000
450,000 227,813 292,500 292,500
500,000 252,188 325,000 325,000
600,000 300,938 390,000 390,000
=============================================================================================
</TABLE>
The Retirement Plan portion of the amounts listed in the table is
calculated based on the following formula: 1.5% of average final compensation
multiplied by years of credited service.
Average final compensation is based on the highest average of three
consecutive years compensation. For the named Executive Officers, such covered
compensation is reflected in the Salary column of the Summary Compensation
Table. Federal regulations require that for the 1995 plan year no more than
$150,000 in compensation be considered for the calculation of retirement
benefits from the Retirement Plan, and the maximum amount paid from a qualified
defined benefit plan cannot exceed $120,000, as of January 1, 1996. Benefits
are calculated on a straight life annuity basis. The benefit amounts under the
Retirement Plan are not subject to any deduction for Social Security benefits
or other offset amounts.
22
<PAGE> 26
The number of years of service credited under the Retirement Plan as of
December 31, 1995, were 33 years for Mr. Hock, 1 year for Mr. Brunetti, 27
years for Mr. Kelly, 1 year for Ms. Smith, and 7 years for Mr. Crawford (see
"Employment Contracts and Change in Control Arrangements" for Mr. Brunetti, Ms.
Smith and Mr. Crawford). Mr. Crawford is not a member of the SERP. There is
no maximum number of years of credited service for calculation of benefits
under the Retirement Plan.
The SERP is a non-qualified supplemental pension plan for designated
executive officers that provides increased benefits including those that would
otherwise be denied because of certain Internal Revenue Code limitations on
qualified benefit plans. As of December 31, 1995, there were 9 executive
officers participating in the SERP, including the named Executive Officers
(with the exception of Mr. Crawford). Benefits under the SERP are calculated
such that, when added to the maximum benefits payable under the Retirement
Plan, benefits will equal 65% of the participant's base salary at the
participant's normal retirement date (age 65 or such earlier date as the
participant is eligible and elects to retire with full benefits under the
Retirement Plan). For executives who became participants in the SERP after
March 26, 1991, the SERP benefits accrue over a 20-year period. Benefits are
paid for 20 years with a 50% survivor benefit if death occurs sooner. The
benefit amounts under the SERP are not subject to any deduction for Social
Security benefits or other offset amounts.
COMPENSATION OF DIRECTORS
Each Director who is not an officer is currently paid a fee of $24,000 per
annum. Effective January 1, 1994, each non-officer Director is paid an
additional attendance fee of $500 for each Board and committee meeting that
such Director attends, with committee chairpersons receiving $750 per meeting
of their respective committees that they attend.
Effective January 26, 1988, the Company adopted a modified tenure policy
for Directors, as amended. The primary purpose of the policy is to assure the
continued availability to the Company of the varied experience of the Directors
after their retirement. Under the provisions of the policy, and in
consideration of the Directors' agreement to provide advice and counsel to the
Board as requested, all Directors retiring after January 26, 1988, will be paid
a monthly retainer equal to the base fee being paid to outside Directors at the
time of their retirement. This retainer will be paid for 10 years or life,
whichever is less. In addition, any outside Director who has served as a
Director for a minimum of 10 years and who does not seek re-election for
reasons other than physical or mental disability, the pressure of other duties,
or similar reasons, shall also be paid this retainer.
On January 1, 1994, the "Directors' Voluntary Deferral Plan" became
effective. This non-qualified plan allows Directors to defer receipt of
retention fees and/or meeting fees on a pre-tax basis. Messrs. McKinley,
Nicholson, Rodriguez, and Tointon have elected to participate.
23
<PAGE> 27
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
On August 22, 1995, the Company entered into severance agreements (the
"PSCo Severance Agreements") with certain key employees, including Messrs.
Hock, Brunetti and Kelly and Ms. Smith (each, an "Employee"), as amended. The
PSCo Severance Agreements provide that if the Employee's employment is
terminated by the Company for any reason other than cause, death or disability,
or by such Employee in the event of constructive discharge at any time during
the coverage period, the Company will pay the Employee a severance benefit
equal to three years' compensation and the Employee will continue to receive
welfare benefits and perquisites until the earlier of (i) three years after
termination or (ii) 24 months after a 13th-Month Trigger. The 13-month Trigger
permits the Employee to elect to terminate employment for any reason during the
30-day period following the one-year anniversary of a change in control (as
defined in the PSCo Severance Agreements) and receive a severance benefit equal
to two years' compensation. In addition, the Company will (i) pay such
Employee the present value of the benefits that would have accrued under the
qualified retirement plans in place and operational on the date of termination
as if such Employee had received credit for the three-year period of severance,
(ii) treat such Employee as if he or she had continued to accrue benefits under
the Company's SERP during the three-year period of severance and (iii) treat
such Employee as if he or she were employed by the Company during the
three-year period of severance for purposes of exercising stock options.
The Company has entered into an employment agreement with Mr. Hock for a
term ending January 31, 1997, as amended. Mr. Hock's agreement provides for a
base salary of not less than $428,000 plus an annual target bonus opportunity
of not less than 40% of base salary and an annual stock option award
opportunity of not less than 160% of base salary.
The Company has entered into an employment agreement with Mr. Brunetti for
a term ending July 17, 1997, as amended. Mr. Brunetti's agreement provides for
a single lump sum cash sign-on bonus in the gross amount of $25,000 in addition
to the issuance of 4,000 shares of restricted stock of the Company. The
agreement also provides for a base salary of not less than $325,000 plus an
annual target bonus opportunity of not less than 35% of base salary and an
annual stock option award opportunity of not less than 140% of base salary.
Upon the commencement of employment with the Company, Mr. Brunetti was also
issued stock options for 17,000 shares of stock of the Company. Mr. Brunetti's
agreement also provides that Mr. Brunetti will participate in the SERP and will
be entitled to full benefits upon retirement at age 65.
The Company has entered into an employment agreement with Ms. Smith for a
term ending December 4, 1997, as amended. The agreement provides for a single
lump sum cash sign-on bonus in the gross amount of $20,000 in addition to the
issuance of 750 shares of restricted stock of the Company. The agreement also
provides for a base salary of not less than $220,000 plus an annual target
bonus opportunity of not less than 30% of base salary and an annual stock
option award opportunity of not less than 115% of base salary. Ms. Smith's
agreement also provides that Ms. Smith will participate in the SERP and will be
entitled to full benefits upon retirement at age 65.
24
<PAGE> 28
Upon termination of Mr. Hock's, Mr. Brunetti's, or Ms. Smith's employment
after a Change in Control (as defined in their respective agreements), such
individual will receive the greater of the payments he or she would otherwise
be entitled to receive under their agreements, including tax-free reimbursement
of any excise taxes paid thereunder, or the payments provided for in his or her
respective severance agreements, as described above. Termination of employment
with the Company to become an employee of a corporation which owns 100% of the
Company will not be considered a termination of employment for purposes of
these agreements. If the Company terminates Mr. Hock's, Mr. Brunetti's, or Ms.
Smith's employment without cause, or such individual terminates his or her
employment for good reason (each as defined in the agreements), such individual
shall receive (i) his or her base salary for the remainder of the term of his
or her agreement, (ii) the greater of the target or actual annual bonus paid
for such year of termination for the remaining term of his or her agreement,
(iii) an immediate vesting of all outstanding incentive awards and the
economic equivalent of any long-term awards he or she would have received
during the remaining term of his or her agreement, (iv) additional credit under
the SERP for the remaining term of his or her agreement, (v) additional
contributions under the ESP that he or she would have received for the
remaining term of his or her agreement, (vi) continued welfare benefits for the
remaining term of his or her agreement, and (vii) a payment equal to the
present value of the benefits he or she would have received under all then
existing qualified retirement plans had he or she received credit for the
remaining term of his or her agreement.
The Company has entered into an agreement with Mr. Crawford pursuant to
which Mr. Crawford will receive severance benefits equal to 26 weeks pay if his
employment is terminated because his position is eliminated. Under the
agreement, if Mr. Crawford's termination of employment occurs after his
attainment of age 62, he will be entitled to benefit payments such that his
total benefit payment under the Retirement Plan and agreement equals 40% of his
monthly rate of salary at the time of termination. Such payments will be made
for a period of 20 years and are estimated to be $69,136 annually if Mr.
Crawford's termination of employment occurs at age 65. Upon Mr. Crawford's
death, his beneficiary will receive 50% of the benefit described above for a
period of 20 years, if his death occurs prior to the termination of employment,
or for the remainder of such 20-year period if his death is after such
termination of employment.
25
<PAGE> 29
The following line graph compares the yearly change in the cumulative
total shareholder return on the Company's Common Stock against the cumulative
total return of the S&P Electric Power and the S&P 500 indices for the
five-year period commencing December 31, 1990 ending December 31, 1995.
CUMULATIVE FIVE-YEAR TOTAL RETURN
ON A DIVIDEND REINVESTED BASIS
Total Return Graph represented here
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PSCO $100.00 $126.57 $144.47 $173.18 $170.07 $218.46
S&P ELECTRIC POWER $100.00 $130.18 $137.83 $155.22 $134.91 $176.86
S&P 500 $100.00 $130.47 $140.41 $154.57 $156.60 $215.45
</TABLE>
Assumes $100 invested December 31, 1990 in common stock of PSCo, and the S&P
Electric Power and S&P 500 indices.
26
<PAGE> 30
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, the following Directors served on the Compensation Committee:
Dr. Doris M. Drury, Collis P. Chandler, Jr., George B. McKinley, Will F.
Nicholson, Jr., W. Thomas Stephens and Robert G. Tointon. None of these
Directors are or have been an officer or employee of the Company or any of its
subsidiaries. Mr. Tointon and Mr. Chandler, however, were involved in
transactions with either the Company or a subsidiary of the Company. Set forth
below is a summary of those transactions.
During 1990, Fuel Resources Development Co. (Fuelco), a wholly-owned
subsidiary of the Company, entered into an agreement with The San Juan Basin
Consortium, Ltd. (of which Mr. Tointon and his affiliates were members) to
purchase various ownership interests in proven acreage and further develop 40
net gas wells and the related gas gathering and water disposal systems. During
1992, Fuelco received $95,793 from The San Juan Basin Consortium in settlement
of the final outstanding issues relating to the 1990 purchase of the San Juan
Basin properties. By the end of 1991, 47 gross wells (completing Fuelco's 40
net well obligation) had been drilled. The wells are in various stages of
production, dewatering or completion and the gathering and water disposal
facilities serving several groups of wells have been completed. Fuelco's
working interests in the properties range from 50% to 100% before, and 30% to
87% after, termination of the carried interest and payout.
Prior to 1990, The San Juan Basin Consortium had invested $9,700,000 in
this project. The working interest of the Consortium members ranged from 10%
to 48% before payout, and from 8% to 26% after payout. Expenses related to
such interests were carried by Fuelco during 1990 and 1991. Fuelco's obligation
for payment of expenses related to such carried interests were to terminate on
September 30, 1992, with respect to 33 gross wells. Due to a delay in
development of these projects, however, Mr. Tointon and his affiliates agreed
with Fuelco to extend the termination date as follows: (i) Fuelco continued to
pay all expenses for the carried interest of Mr. Tointon and such affiliates
through July 1, 1993, with respect to the wells and certain water disposal and
gathering facilities and (ii) thereafter, Fuelco agreed to pay certain
additional expenses with respect to these projects until completion. Such
expenses paid by Fuelco and attributed to the interests of Mr. Tointon and his
affiliates aggregated $407,687, $60,894 and $61,330 in 1993, 1994 and 1995
respectively. The terms and conditions of this transaction are substantially
similar to those which would have been effected with unrelated parties.
At the present time, Fuelco and Mr. Tointon are considering an offer from a
third party to purchase their interest in the San Juan Basin Consortium. A
final decision regarding this offer will be made upon completion of due
diligence.
In addition, the Company paid Rocky Mountain Prestress, which is an
operating division of Phelps-Tointon Inc., of which Mr. Tointon is CEO and
President, the sum of $256,572 for construction services during 1995. Such
services were provided upon terms and conditions substantially similar to those
which would have been effected with unrelated parties.
27
<PAGE> 31
During 1995, the Company received $76,683 from Chandler & Associates and
Chandler-Simpson, Inc. for natural gas transportation from certain of its wells
to Northwest Pipeline Corporation. Mr. Chandler is the controlling
shareholder, President and a Director of Chandler & Associates and
Chandler-Simpson, Inc. The terms and conditions of the transactions between
the companies with which Mr. Chandler is associated and the Company are
substantially similar to those which would have been effected with unrelated
parties.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
During 1995, Powers Products Co., of which Mr. Powers is President, sold
assets totaling $81,296 to Calcon Constructors, whom the Company has contracted
with for the renovation of its old Headquarters Office Building. The terms and
conditions of the transactions between the companies with which Mr. Powers is
associated and the Company are substantially similar to those which would have
been effected with unrelated parties.
During 1995, the Company paid A.B. Hirschfeld Press, Inc., of which Mr.
Hirschfeld is President, the sum of $196,202 for printing services. Such
services were provided upon terms and conditions substantially similar to those
which would have been effected with unrelated parties.
APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
ITEM 2 ON PROXY CARD
Subject to approval by the holders of Common Stock at the Meeting, the
Board of Directors has appointed Arthur Andersen LLP as the independent public
accountants to audit the accounts of the Company and its consolidated
subsidiaries for the 1996 calendar year. The firm audited the Company's
accounts in 1995. A representative of Arthur Andersen LLP is expected to be
present at the Meeting, will be provided the opportunity to make a statement if
such representative desires to do so, and is expected to be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
1996 CALENDAR YEAR.
UNLESS OTHERWISE DIRECTED, SHARES REPRESENTED BY AN EXECUTED PROXY IN THE
FORM ENCLOSED WILL BE VOTED FOR THIS RESOLUTION.
28
<PAGE> 32
SHAREHOLDER PROPOSALS
ITEM 3 ON PROXY CARD
Mr. John and/or Margaret Gilbert, 29 East 64th Street, New York, NY
10021-7043, who own or represent a total of 800 shares of Company common stock
and Mr. Allan Frank, 6882 East Center Avenue, Denver, CO 80224-1503, who owns
a total of 100 shares of Company common stock, have informed management that
they will propose the resolution as set forth below at the Annual Meeting. An
affirmative vote of the holders of a majority of the Company's common stock,
represented in person or by proxy and entitled to vote at the Meeting, is
necessary for approval.
"RESOLVED: That the stockholders of Public Service Company of Colorado,
assembled in annual meeting in person and by proxy, hereby request the Board of
Directors to take the steps necessary to provide for cumulative voting in the
election of directors, which means each stockholder shall be entitled to as
many votes as shall equal the number of shares he or she owns multiplied by the
number of directors to be elected, and he or she may cast all of such votes for
a single candidate, or any two or more of them as he or she may see fit.
REASONS: A California law provides that all state pension holdings and
state college funds, invested in shares must be voted in favor of cumulative
voting proposals, showing increasing recognition of the importance of this
democratic means of electing directors.
The National Bank Act provides for cumulative voting. In many cases
companies get around it by forming holding companies without cumulative voting.
Banking authorities have the right to question the capability of directors to
be on banking boards. In many cases authorities come in after and say the
director or directors were not qualified. We were delighted to see the SEC has
finally taken action to prevent bad directors from being on boards of public
companies. The SEC should have hearings to prevent such persons [from]
becoming directors before they harm investors.
We think cumulative voting is the answer to find new directors for various
committees. Some recommendations have been made to carry out the CERES 10
points. The 11th should be, in our opinion, having cumulative voting and
ending staggered boards.
Cumulative voting is even more important with all the utility mergers and
our recent one with Southwestern Public Service Company. Also, the many hugh
[sic] derivative losses might have been prevented with cumulative voting.
Many successful corporations have cumulative voting. Example, Pennzoil
defeated Texaco in that famous case. Ingersoll-Rand also having cumulative
voting won two awards. FORTUNE magazine ranked it second in its industry as
"America's Most Admired Corporations" and the WALL STREET TRANSCRIPT noted "on
almost any criteria used to evaluate management, Ingersoll-Rand excels." In
1994 and 1995 they raised their dividend.
29
<PAGE> 33
Lockheed-Martin, as well as VWR Corporation now have a provision that if
anyone has 40% of the shares cumulative voting applies, it applies at the
latter company.
In 1995 American Premier adopted cumulative voting. Allegheny Power System
tried to take away cumulative voting, as well as put in a stagger system, and
the stockholders defeated it, showing stockholders are interested in their
rights."
"IF YOU AGREE, PLEASE MARK YOUR PROXY FOR; IF DISAGREEING MARK AGAINST.
NOTE: PROXIES NOT MARKED WILL BE VOTED FOR THIS RESOLUTION."
RESPONSE OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS HAS CONSIDERED ITEM 3 AND RECOMMENDS A VOTE
"AGAINST" THIS RESOLUTION.
The Board of Directors is of the opinion that the use of cumulative voting
in the election of directors weakens the cohesiveness and effectiveness of a
board. Each director of the Company currently is elected by the holders of a
majority of the Company's outstanding shares, thereby permitting the directors
to administer the affairs of the corporation for the benefit of all
shareholders. Cumulative voting is directed toward, and can result in, the
election of one or more directors by a special-interest shareholder or group of
shareholders resulting in partisanship among directors. The shareholder or
special-interest group electing a director by cumulative voting may seek to
have that director represent the shareholder's or group's special interest
rather than the interests of the shareholders as a whole. This partisanship
among directors and voting on behalf of special interests could interfere with
the effectiveness of the Board and could be contrary to the interests of the
Company and its owners as a whole. The Board believes a cohesive group,
working together in a timely and decisive manner on all issues affecting the
Company, with accountability to all shareholders, is necessary in today's
environment to provide effective leadership and protection of your investment.
This proposal is a recommendation to the Board of Directors and would
require future shareholder approval of an amendment to the Company's Restated
Articles of Incorporation to implement.
PLEASE NOTE, AS SPECIFIED IN THE SHAREHOLDER PROPOSAL, UNLESS OTHERWISE
DIRECTED, SHARES REPRESENTED BY AN EXECUTED PROXY IN THE FORM ENCLOSED WILL BE
VOTED FOR THIS RESOLUTION.
ITEM 4 ON PROXY CARD
Mr. John E. Wiggins, 9265 West 81st Place, Arvada, CO 80005, who states he
owns a total of approximately 475 shares of Company common stock, has informed
management that he will propose the resolution set forth below at the Annual
Meeting. An affirmative vote of the holders of a majority
30
<PAGE> 34
of the Company's common stock, represented in person or by proxy and entitled
to vote at the Meeting, is necessary for approval.
RESOLVED: "In order to increase stockholder equity and simultaneously
reduce controllable expenses that the number of Directors be reduced to seven
(7)."
REASONS: "It is estimated the reduction in Directors would result in a
$225,000 reduction in compensation paid to Directors."
RESPONSE OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS HAS CONSIDERED ITEM 4 AND RECOMMENDS A VOTE
"AGAINST" THIS RESOLUTION.
A primary objective of the Board of Directors is to maintain a membership
mix of directors who are individually and collectively cognizant of their
responsibility to direct the Company. The directors are responsible for
establishing broad corporate policies and for the overall performance of the
Company. They also are expected to participate positively in deliberations of
the board itself, and those of the several separate board committees that
require in- depth analysis of important and complex issues. As the Company
faces increasing competition and strives to be successful in the ever changing
marketplace, the needs of the business are best served by drawing upon the
expertise and insights of directors with an extensive range of experiences. A
board that is too large cannot efficiently or effectively function, but a board
that is too small lacks adequate representation, input, experience and guidance
for the Company. While fourteen directors may not be the perfect number, the
Board believes a membership of seven directors is too small. We are convinced
that the benefits of these valuable contributions by the directors who would be
eliminated by this proposal far outweigh the estimated costs (equivalent to
.05% of total Operation, Maintenance, and Administrative and General costs) of
their membership on the board and its committees. In the Board's opinion, the
substantial reduction in the number of directors suggested by this proposal
would not serve the interests of the Company's owners, customers, and
employees.
This proposal is a recommendation to the Board of Directors and would
require future shareholder approval of an amendment to the Company's Restated
Articles of Incorporation to implement.
UNLESS OTHERWISE DIRECTED, SHARES REPRESENTED BY AN EXECUTED PROXY IN THE
FORM ENCLOSED WILL BE VOTED AGAINST THIS RESOLUTION.
ITEM 5 ON PROXY CARD
Ms. Georgia L. Wiggins, 9265 West 81st Place, Arvada, CO 80005, who states
she owns a total of approximately 281 shares of Company common stock, has
informed management that she will propose the resolution set forth below at the
Annual Meeting. An affirmative vote of the holders of a
31
<PAGE> 35
majority of the Company's common stock, represented in person or by proxy and
entitled to vote at the Meeting, is necessary for approval.
RESOLVED: "Individuals who have become Directors for two years and are
nominated for re-election for a third year must have an unencumbered cash
investment in company stock equal to the total compensation received from the
company in the previous calendar year."
REASONS: "The nominal investment in company stock, by various directors,
has been subject to comment at numerous annual meetings. It is believed that
the changes requested by this proposal will result in board members being more
aware of management activities regarding controlling expenses, company
profitability and possible conflicts of interest."
RESPONSE OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS HAS CONSIDERED ITEM 5 AND RECOMMENDS A VOTE
"AGAINST" THIS RESOLUTION.
The Board believes that the establishment of a mandatory, arbitrary level
of stock ownership is unwarranted. Each director is well aware of the
fiduciary duty owed to the shareholders of the Company, including awareness of
the activities enumerated above. The Board believes the selection of directors
however, should be based primarily on the business experience, management skill
and sound judgment which each contributes to the board rather than on the
number of shares owned or any individual's wealth accumulation. As detailed
elsewhere in this document, all of the Company's current directors hold
significant investment interests in the Company. While the Board of Directors
strongly favors direct stock ownership by its members, such investing is
ultimately a personal decision and should not be dictated or mandated with
regard to a "minimum" amount of such investment.
UNLESS OTHERWISE DIRECTED, SHARES REPRESENTED BY AN EXECUTED PROXY IN THE
FORM ENCLOSED WILL BE VOTED AGAINST THIS RESOLUTION.
TRANSACTION OF OTHER BUSINESS
The Board of Directors does not intend to bring before the Meeting any matters
other than (1) the election of Directors and (2) the approval of the
appointment of the Company's independent public accountants, however,
management has knowledge of three shareholder proposals that may be brought
before such Meeting. Additionally, if any other matter properly comes before
the Meeting, it is the intention of the persons named in the form of proxy to
vote the proxies in accordance with their judgment on such matter.
32
<PAGE> 36
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Shareholder proposals intended to be presented at the 1997 Annual Meeting
must be received by the Company no later than December 12, 1996, in order to be
eligible for inclusion in the Company's proxy statement and form of proxy
relating to that meeting.
By order of the Board of Directors.
Dated: April 8, 1996.
W. WAYNE BROWN
Corporate Secretary
ALL SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE ENCLOSED
FORM OF PROXY AND RETURN IT IN THE SELF-ADDRESSED, POSTAGE PAID ENVELOPE,
WHETHER OR NOT THEY PLAN TO ATTEND THE MEETING.
33
<PAGE> 37
To Participants in the Employee's Savings and Stock Ownership Plan of Public
Service Company of Colorado and Participating Subsidiary Companies:
As a participant in the Savings Plan, with shares of the Company's Common
Stock allocated to your account on March 15, 1996, you may instruct the Trustee
how to vote such shares at the Annual Meeting of Shareholders to be held May
14, 1996. The Proxy Statement of the Board of Directors is enclosed.
Fractional shares shall be combined and voted by the Trustee to the extent
possible to reflect the instructions of participants creditied with such
shares. Your instructions to the Trustee will be held in strictest confidence
and will not be divulged to any person, including officers or employees of the
Company.
1. ELECTION OF DIRECTORS
W. Brunetti, C. Chandler, Jr., D. Drury, T. Farley, G. Greer, G. McKinley,
W. Nicholson, Jr., J. Powers, T. Rodriguez, R. Slifer, B. Hirchfeld, W.
Stephens, D. Hock and R. Tointon.
2. To approve the appointment of Arthur Andersen LLP as independent public
accountants.
3. To act upon a shareholder proposal regarding cumumlative voting, if
presented.
4. To act upon a shareholder proposal regarding a reduction of the size of the
Board of Directors, if presented.
5. To act upon a shareholder proposal regarding a minimum stock investment
requirement for Directors, if presented.
6. To consider and act upon any business as may properly come before the
meeting or any adjournment or adjournments thereof.
Please fold and detach card at perforation before mailing
- --------------------------------------------------------------------------------
ADDRESS CHANGE OR COMMENTS
----------------------------------------
----------------------------------------
----------------------------------------
PLEASE DATE AND SIGN exactly as name appears on
this card indicating, where proper, offical
position or representative capactity. For
joint accounts, each joint owner should sign.
----------------------------------------
----------------------------------------
SIGNATURE(S) DATE
<PAGE> 38
<TABLE>
<S> <C>
Please fold and detach card at perforation before mailing
- ------------------------------------------------------------------------------------------------------------------------------------
To Vanguard Fiduciary Trust Company
Trustee of the Employee Savings and Stock Ownership Plan of Public Service Company of Colarado and Participating Subsidiary
Companies.
[X] Please mark your votes as in this example.
This proxy, when properly executed, will be voted in the manner herein. If no direction is made, this Proxy will be voted FOR Items
1, 2, and 3 and AGAINST Items 4 and 5. See reverse for additional information.
1. Election of Directors FOR [ ] WITHHELD [ ]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
The Board recommends a vote FOR Item 2.
2. The approval of the appointment of Arthur Andersen LLP. FOR [ ] AGAINST [ ] ABSTAIN [ ]
The Board recommends a vote AGAINST Item 3.
3. Shareholder proposal regarding cumulative voting. FOR [ ] AGAINST [ ] ABSTAIN [ ]
The Board recommends a vote AGAINST Item 4.
4. Shareholder proposal regarding Board size. FOR [ ] AGAINST [ ] ABSTAIN [ ]
The Board recommends a vote AGAINST Item 5.
5. Shareholder proposal regarding stock investment requirement. FOR [ ] AGAINST [ ] ABSTAIN [ ]
Mark here for address change and note on reverse side. [ ]
The shareholder hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and the Proxy Statement attached hereto
and the 1995 Annual Report sent under separate cover.
</TABLE>
<PAGE> 39
PROXY
PUBLIC SERVICE COMPANY OF COLORADO
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 14, 1996
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned, a holder of Common Stock of Public Service Company of
Colorado (the "Company") hereby appoints Dr. Doris M. Drury, D.D. Hock, George
B. McKinley, Will F. Nicholson, Jr., and Robert G. Tointon, or any one or more
of them, the proxies and attorneys of the undersigned, with power of
substitution (the action of a majority of them or their substitutes present and
acting to be in any event controlling), to attend the Annual Meeting of
Shareholders of the Company on May 14, 1996 and any adjournment or adjournments
thereof, and thereat to vote all the shares of the Common Stock of the Company
which the undersigned would be entitled to vote if personally present at such
Meeting.
<TABLE>
<S> <C> <C>
1. Election of Directors:
W. Brunetti, C. Chandler, Jr., D. Drury, T. Farley, G. Greer, G. McKinley,
W. Nicholson, Jr., J. Powers, T. Rodriguez, R. Slifer, B. Hirschfeld, W.
Stephens, D. Hock and R. Tointon.
ADDRESS CHANGE OR COMMENTS
2. To approve the appointment of Arthur Andersen LLP as independent certified
public accountants. ----------------------------------------
3. To act upon a shareholder proposal regarding cumulative voting for
Directors, if presented. ----------------------------------------
4. To act upon a shareholder proposal regarding a reduction of the size of the
Board of Directors, if presented. ----------------------------------------
5. To act upon a shareholder proposal regarding a minimum stock investment
requirement for Directors, if presented. ----------------------------------------
6. To consider and act upon any business as may properly come before the
meeting or any adjournment or adjournments thereof. ----------------------------------------
</TABLE>
<PAGE> 40
- --------------------------------------------------------------------------------
[X] Please mark your
votes as in this
example.
This proxy when properly executed will be voted in the manner therein, if no
direction is made, this proxy will be voted FOR Items 1, 2 and 3 and AGAINST
Items 4 and 5. See reverse for additional information.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Item 2.
- --------------------------------------------------------------------------------
1. Election of Directors (see reverse)
FOR WITHHELD
[ ] [ ]
For, except vote withheld from the following nominee(s):
_______________________________________________________
2. The approval of the appointment of Aurthur Andersen LLP.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote AGAINST Items 3, 4, and 5.
- --------------------------------------------------------------------------------
3. Shareholder proposal regarding cumulative voting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Shareholder proposal regarding Board size.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. Shareholder proposal regarding stock investment requirement.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
- --------------------------------------------------------------------------------
Mark here for address change and note on reverse side. [ ]
Mark here if you plan to attend meeting. [ ]
The shareholder hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the Proxy Statement attached thereto and the 1995 Annual
Report sent under separate cover.
SIGNATURE(S) _______________________________________ DATE ______________________
NOTE: PLEASE DATE AND SIGN exactly as name appears on this card indicating,
where proper, official positon or representation capacity. For joint
accounts, each joint owner should sign.
- --------------------------------------------------------------------------------
