<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PUBLIC SERVICE COMPANY OF NEW MEXICO
- --------------------------------------------------------------------------------
(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), 14a-6(i)(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>
[LOGO]
PUBLIC SERVICE COMPANY OF NEW MEXICO
ALVARADO SQUARE
ALBUQUERQUE, NEW MEXICO 87158
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 1995
---------------------
To the Holders of Common Stock of
PUBLIC SERVICE COMPANY OF NEW MEXICO
Notice is hereby given that the Annual Meeting of Stockholders of PUBLIC
SERVICE COMPANY OF NEW MEXICO ("PNM") will be held in the auditorium of the UNM
Continuing Education Conference Center at 1634 University Boulevard, N.E., in
the City of Albuquerque, New Mexico, on April 25, 1995, at 9:30 a.m., Mountain
Daylight Time, for the following purposes:
1. To elect three directors of PNM to hold office in accordance with the
Restated Articles of Incorporation of PNM until the Annual Meeting of
Stockholders in 1998, or until their successors shall be duly elected and
qualified.
2. To consider and vote upon the approval of the selection by the Board of
Directors of PNM of Arthur Andersen LLP as independent auditors to audit
the consolidated financial statements of PNM and subsidiaries for the
fiscal year ending December 31, 1995.
3. To consider and act upon such other matters as may properly come before
the meeting.
Only holders of PNM Common Stock of record at the close of business on March
6, 1995 will be entitled to notice of and to vote on all matters to come before
the meeting and any adjournment thereof.
By Order of the Board of Directors
Patrick T. Ortiz
CORPORATE SECRETARY
March 22, 1995
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON,
PLEASE MARK, EXECUTE, DATE AND RETURN THE ACCOMPANYING PROXY CARD AS SOON AS
POSSIBLE, USING THE ENCLOSED SELF-ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE.
<PAGE>
------------------------
PROXY STATEMENT
---------------------
(PNM LOGO)
PUBLIC SERVICE COMPANY OF NEW MEXICO
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 1995
A proxy in the accompanying form is solicited on behalf of the Board of
Directors of PUBLIC SERVICE COMPANY OF NEW MEXICO ("PNM") for use at the 1995
Annual Meeting of Holders of the Common Stock of PNM, to be held on April 25,
1995 in the auditorium of the UNM Continuing Education Conference Center at 1634
University Boulevard, N.E., in Albuquerque, New Mexico, at 9:30 a.m., Mountain
Daylight Time, and at any adjournments thereof, for the purposes set forth in
the accompanying notice. Stockholders may revoke their proxy by attendance at
the meeting and by voting their shares in person or by executing a later proxy
changing the vote on the earlier proxy. A proxy, when executed and not so
revoked, will be voted in accordance with the instructions thereon. In the
absence of specific instructions, proxies will be voted by those named in the
proxy FOR the election of directors nominated, FOR the approval of the selection
of Arthur Andersen LLP as independent auditors of PNM and subsidiaries, and on
all other matters in accordance with their best judgment.
This Proxy Statement is first being mailed to the holders of PNM Common
Stock on or about March 22, 1995, in connection with the solicitation of proxies
by PNM's Board of Directors for use at the Annual Meeting.
In addition to soliciting proxies through the mail, certain employees of PNM
may solicit proxies in person and by telephone. PNM has retained Beacon Hill
Partners, Inc. to assist in the solicitation of proxies, primarily from brokers,
banks and other nominees, for an estimated fee of $2,500. The cost of soliciting
proxies will be borne by PNM. PNM will, upon request, reimburse brokers, banks,
nominees, custodians and other record holders for their out-of-pocket expenses
of forwarding proxy materials to the beneficial owners of the shares.
VOTING INFORMATION
Only holders of PNM Common Stock of record at the close of business on March
6, 1995 will be entitled to vote at the Annual Meeting. At such date, there were
41,774,083 shares of PNM Common Stock outstanding. Each such share of PNM Common
Stock is entitled to one vote on each of the matters properly brought before the
Annual Meeting.
In order to elect directors and approve the selection of auditors, a quorum
must be present or represented at the meeting and the affirmative vote of the
holders of a majority of the shares of PNM Common Stock present and entitled to
vote at the Annual Meeting is required.
1
<PAGE>
Under PNM's By-laws, the presence at the meeting, either in person or by
properly executed proxy, of the holders of a majority of the outstanding shares
of PNM Common Stock is necessary to constitute a quorum to conduct business at
the Annual Meeting.
The aggregate number of votes entitled to be cast by all stockholders
present in person or represented by proxy at the meeting, whether those
stockholders vote FOR, AGAINST, or ABSTAIN from voting, will generally be
counted for purposes of determining the minimum number of affirmative votes
required for approval of those matters requiring only the affirmative vote of a
majority of the shares present at the meeting, and the total number of votes
cast FOR each of these matters will be counted for purposes of determining
whether sufficient affirmative votes have been cast. An abstention from voting
on a matter by a stockholder present in person or represented by proxy at the
meeting has the same legal effect as a vote AGAINST the matter even though the
stockholder or interested parties analyzing the results of the voting may
interpret such a vote differently. Shares not voted by brokers and other
entities holding shares on behalf of beneficial owners will not be counted in
calculating voting results on those matters for which the broker or other entity
has not voted.
PNM is not aware of any arrangements, the operation of which might at a
subsequent date result in a change in control of PNM.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following persons are the only persons known to PNM, as of March 8,
1995, to be the beneficial owners of more than 5% of PNM's voting securities:
<TABLE>
<CAPTION>
NAME & ADDRESS OF NATURE OF BENEFICIAL NUMBER PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF SHARES OF CLASS
- ------------------ -------------------------------- -------------------------- --------------- ---------
<S> <C> <C> <C> <C>
Common Stock The Prudential Insurance Company Sole Voting & Dispositive 8,700(1)
of America Power
Prudential Plaza Shared Voting & 2,125,430(1)
Newark, NJ 07102-3777 Dispositive Power
TOTAL 2,134,130(1) 5.1%
Common Stock Mellon Bank Corporation Sole Voting Power 3,367,000(2)
One Mellon Bank Center Shared Voting Power 323,239(2)
Pittsburgh, PA 15258 Sole Dispositive Power 4,006,000(2)
Shared Dispositive Power 83,000(2)
TOTAL 4,399,239(2) 10.53%
<FN>
- ------------------------
(1) As reported on Amendment No. 4 to Schedule 13G dated February 2, 1995 and
filed with the Securities and Exchange Commission by The Prudential
Insurance Company of America. PNM makes no representation as to the
accuracy or completeness of such information.
(2) As reported on Amendment No. 2 to Schedule 13G dated March 8, 1995 filed
with the Securities and Exchange Commission by Mellon Bank Corporation. PNM
makes no representation as to the accuracy or completeness of such
information.
</TABLE>
2
<PAGE>
ELECTION OF DIRECTORS
Three directors will be elected at the Annual Meeting to hold office for the
ensuing three years in accordance with PNM's Restated Articles of Incorporation
providing for staggered terms of directors of three years each. The three
directors elected at this meeting will hold office until the Annual Meeting of
Stockholders of PNM in 1998, or until their successors have been elected and
qualified. It is intended that votes will be cast pursuant to proxies for the
following nominees:
<TABLE>
<CAPTION>
NAME ADDRESS
- ---------------------------------------- -------------------------------
<S> <C>
John T. Ackerman........................ Albuquerque, New Mexico
Joyce A. Godwin......................... Albuquerque, New Mexico
Manuel Lujan, Jr........................ Albuquerque, New Mexico
</TABLE>
If at the time of the meeting any of the nominees named herein should be
unable to serve in this capacity, a circumstance not now anticipated by
management, it is intended that the proxies will vote for such substitute
nominees as may be designated by PNM's Board of Directors. Proxies cannot be
voted for a greater number of persons than three, the number of nominees named
above.
A vacancy on the Board of Directors, created on December 8, 1993 by the
resignation of a director, was filled on April 5, 1994 by the appointment of
Manuel Lujan, Jr. Mr. Lujan's term expires with the 1995 Annual Meeting. Mr.
Lujan is a nominee for election to the Board of Directors at such meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES.
Each of the directors of PNM and each of the nominees for election at the
Annual Meeting has advised PNM that, as of February 1, 1995, he or she
beneficially owned directly or indirectly equity securities of PNM as set forth
below:
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK OWNED
BENEFICIALLY AS
OF
NAME, AGE, ADDRESS AND PRINCIPAL OCCUPATION AND BUSINESS FEBRUARY 1, 1995
WHEN TERM OF OFFICE WILL EXPIRE EXPERIENCE DURING PAST FIVE YEARS (H)(I)(J)
- ------------------------------------------ -------------------------------------------------- -----------------
<S> <C> <C>
(a)(b) John T. Ackerman (53) Chairman of the Board since August 1993 10,933
Albuquerque, New Mexico Chairman, President and Chief Executive Officer of
(a director since June 1990); PNM (May 1991 to August 1993)
1998 Annual Meeting
President and Chief Executive Officer of PNM (June
1990 to May 1991)
President and Chief Operating Officer, Gas
Operations of PNM (February 1985 to June 1990)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK OWNED
BENEFICIALLY AS
OF
NAME, AGE, ADDRESS AND PRINCIPAL OCCUPATION AND BUSINESS FEBRUARY 1, 1995
WHEN TERM OF OFFICE WILL EXPIRE EXPERIENCE DURING PAST FIVE YEARS (H)(I)(J)
- ------------------------------------------ -------------------------------------------------- -----------------
<S> <C> <C>
(a)(b)(d)(f)(g) Joyce A. Godwin (51) Retired since December 1993 2,434
Albuquerque, New Mexico Vice President and Secretary, Presbyterian
(a director since May 1989); Healthcare Services, Albuquerque, New Mexico, a
1998 Annual Meeting company which owns, leases or manages 13
hospitals and related health care concerns in
New Mexico and Colorado (1979 to December 1993)
Chairman and President, Southwest Business
Ventures, Inc., a holding company for
Presbyterian Healthcare Services' for-profit
ventures (1986 to December 1993)
(a)(c)(g) Manuel Lujan, Jr. (66) Insurance Agent, Manuel Lujan 3,000
Albuquerque, New Mexico Insurance, Inc., a local, independent insurance
(a director since April 1994); agency, since 1948
1998 Annual Meeting Consultant on U.S. governmental matters, focusing
on Western U.S. issues, since 1993
U.S. Secretary of the Interior (1989-1993)
Director, SODAK Gaming, Inc.
(b)(c)(d) Robert G. Armstrong (48) President, Armstrong Energy 2,824
Roswell, New Mexico Corporation, Roswell, New Mexico (oil and gas
(a director since May 1991); exploration and production)
1997 Annual Meeting Director, Sunwest Bank of Roswell, N.A.
(c)(g) Reynaldo U. Ortiz (48) Chief Executive Officer, Jones Education 1,224
Denver, Colorado Networks, Inc. (a cable television programming
(a director since April 1992); company) since March 1994
1997 Annual Meeting
Senior Vice President, Jones Financial Group, Inc.
(a cable-multiple system operator)
(January-March 1994)
Vice President, Corporate Public Policy, U S WEST,
Inc. (a telecommunications company) (1991-1994)
President, U S WEST New Vector, Inc. (1990-1991)
(a subsidiary of U S WEST, Inc.)
President, U S WEST International (1988-1990) (a
subsidiary of U S WEST, Inc.)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK OWNED
BENEFICIALLY AS
OF
NAME, AGE, ADDRESS AND PRINCIPAL OCCUPATION AND BUSINESS FEBRUARY 1, 1995
WHEN TERM OF OFFICE WILL EXPIRE EXPERIENCE DURING PAST FIVE YEARS (H)(I)(J)
- ------------------------------------------ -------------------------------------------------- -----------------
<S> <C> <C>
(b)(d)(e)(f) Paul F. Roth (62) Retired since October 1992 2,624
Sanibel, Florida President, Greater Dallas Chamber of Commerce,
(a director since May 1991); Dallas, Texas (September 1991 - September 1992)
1997 Annual Meeting
President, Texas Division of Southwestern Bell
Telephone Company, Dallas, Texas (November 1988
to March 1991)
(c)(f)(g) Laurence H. Lattman (71) Retired since July 1993 1,500
Albuquerque, New Mexico President, New Mexico Institute of Mining and
(a director since May 1993); Technology (1983-July 1993)
1996 Annual Meeting
(e) Benjamin F. Montoya (59) President and Chief Executive Officer of 1,000
Albuquerque, New Mexico PNM since August 1993
(a director since October 1993); Senior Vice President and General Manager, Gas
1996 Annual Meeting Supply Business Unit, Pacific Gas and Electric
Company (1991 to August 1993)
Vice President, Sacramento Valley Region, Pacific
Gas and Electric Company (1990-1991)
Manager, Sacramento Division, Sacramento Valley
Region, Distribution Business Unit, Pacific Gas
and Electric Company (1989-1990)
(b)(d)(e) Robert M. Price (64) Retired in 1990 1,200
Edina, Minnesota Chairman and Chief Executive Officer, Control Data
(a director since July 1992); Corporation, a computer manufacturing company
1996 Annual Meeting (prior to 1990)
Director, Rohr Industries, Inc.
Director, Premark International, Inc.
Director, International Multifoods Corp.
<FN>
- ------------------------
(a) A nominee for election at the Annual Meeting.
(b) A member of the Executive Committee.
(c) A member of the Audit Committee.
(d) A member of the Management Development and Compensation Committee.
(e) A member of the Finance Committee.
(f) A member of the Nominating Committee.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
(g) A member of the Corporate and Public Responsibility Committee.
(h) As used herein, beneficial ownership means the sole or shared power to
vote, or to direct the voting of, a security and/or investment power with
respect to a security.
(i) As of February 1, 1995, directors and executive officers of PNM as a group
owned beneficially 34,693 shares of PNM Common Stock, or less than 1% of
the total number of shares outstanding. Such number of shares does not
include 917 shares of PNM Common Stock owned by the spouse of an executive
officer, as to which shares beneficial ownership is disclaimed. Included in
the shares shown above for Mr. Ackerman as well as in the 34,693 shares for
directors and executive officers as a group are shares currently allocated
to executive officers and held in trust under the terms of the Employee
Stock Ownership Plan ("ESOP"), in which the participant has voting rights.
The Board of Directors has voted to take the steps necessary to terminate
the ESOP as of March 1, 1993. Upon termination, which is awaiting Internal
Revenue Service action, the shares will be distributed to the participants.
(j) Included in the shares shown above for Mr. Armstrong, Ms. Godwin, Mr.
Lattman, Mr. Lujan, Mr. Ortiz and Mr. Roth are shares held under the
Director Restricted Stock Retainer Plan, in which the directors have voting
rights. (See "COMPENSATION OF DIRECTORS").
</TABLE>
PNM is advised that none of its directors or nominees for director owns
beneficially any shares of PNM Cumulative Preferred Stock, the only other class
of equity securities of PNM presently outstanding, or any shares in its
subsidiary companies.
See "STOCK OWNERSHIP OF CERTAIN EXECUTIVE OFFICERS" and "CERTAIN LEGAL
PROCEEDINGS" for certain information relating to executive officers.
BOARD AND COMMITTEE MEETINGS
During 1994, the Board held nine meetings. The following standing committees
of the Board held the number of meetings indicated: Audit, five; Corporate and
Public Responsibility, eight; Executive, three; Finance, five; Management
Development and Compensation, seven; and Nominating, six. None of the directors
attended fewer than 75% of the aggregate of all meetings held by the Board and
by all committees of the Board on which he or she served.
BOARD AND COMMITTEE POLICIES
In January 1991, the Board modified existing Board service policies and
adopted a new policy to provide for an orderly rotation of the membership of the
Board. This policy was clarified in an amendment adopted in December 1993. The
Board has also adopted certain policies with regard to committee appointments.
The following is a summary of these policies.
RETIREMENT POLICIES. Upon attaining the age of 72 years, a director will
submit a written resignation to the Board for acceptance by the Board at such
time as the Board in its discretion deems advisable. A director who is an
employee of PNM will, on the date of such person's retirement as an employee of
PNM, submit a resignation to the Board for acceptance by the Board at such time
as the Board in its discretion deems advisable. The retirement policy does not
apply to any member of the Board with service as chief executive officer of PNM.
6
<PAGE>
MAXIMUM TERM OF OFFICE. Under the Board policies, no person who is
presently serving or who hereafter serves as a director of PNM shall be
nominated to serve more than four times. It is the intent of this policy that
each member of the Board will normally serve for a period of no more than twelve
years, plus a portion of an unexpired term, if any, if the director was
initially appointed to serve out an unexpired term of a director who resigned,
retired or died in office. Terms of office served prior to adoption of the
policies will be counted in determining whether the four-term limitation has
been reached. The maximum term of office policy does not apply to any member of
the Board with service as chief executive officer of PNM.
In adopting the four-term limitation, the Board made it clear that the
policy is not to be construed to mean that renomination for a second, third or
fourth term will be routine. An evaluation process will be implemented by the
Nominating Committee of the Board to determine that each renomination is in the
best interest of PNM.
COMMITTEE APPOINTMENT POLICIES. Under the policies pertaining to committee
appointments, members of the Management Development and Compensation Committee
and the Audit Committee must be non-employee directors only, and the Chairman of
the Nominating Committee must be a non-employee director.
COMMITTEES OF THE BOARD
The members of the standing committees of the Board are shown in the
foregoing table. The responsibilities of the committees are as follows:
THE AUDIT COMMITTEE consists of three outside members of the Board of
Directors. It reviews the financial statements of PNM and meets with and
receives reports and other communications from its internal and outside
independent auditors. The Committee represents the Board of Directors in
accounting and auditing related activities of PNM. It has the responsibility to
make recommendations to the Board with respect to appointment of the independent
public accountants, to approve the scope of the annual audit and to monitor and
review the effectiveness of PNM's management of the accounting functions.
THE CORPORATE AND PUBLIC RESPONSIBILITY COMMITTEE reviews and monitors
policies and their implementation that deal with PNM's responsibility to the
communities in which it does business and determines the standards which govern
business transactions. These policies include, but are not limited to,
environmental, affirmative action, charitable contributions, political action
committee, and communications to various constituencies.
THE EXECUTIVE COMMITTEE consists of the Chairman of the Board of Directors
and the Chairs of the standing committees. It exercises the power of the Board
of Directors in the management of the business affairs and property of PNM
during intervals between the meetings of the Board of Directors.
THE FINANCE COMMITTEE consists of a majority of outside directors. It
reviews and recommends to the Board the capital structure and financial strategy
for PNM, including dividend policy. It has overview of PNM's financial
performance, investment procedures and policies, pension fund performance and
funding level, and risk management strategies and policies. The Committee
specifically has responsibility for the review and approval of all single
capital expenditures in excess of $1 million and reviews capital expenditures in
excess of $100,000 and the quarterly capital appropriation reports.
7
<PAGE>
THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE consists entirely of
outside directors. It reviews the compensation policies and benefit programs of
PNM and how they relate to the attainment of goals. The Committee recommends to
the Board the compensation philosophy and guidelines for the entire executive
and managerial group, including members of the Board of Directors, giving
emphasis to rewarding long term results and maximizing shareholder value. The
Committee conducts an annual performance evaluation of the chief executive
officer and is also charged with assuring management continuity through annual
review and approval of a management development and succession program.
THE NOMINATING COMMITTEE currently consists entirely of outside directors.
It has the responsibility to make recommendations to the Board with respect to
nominees to be designated by the Board for election as directors, as well as
recommendations concerning the effectiveness, structure, size and composition of
the Board, including committee assignments and candidates for election as
Chairman of the Board. The Nominating Committee expects normally to be able to
identify from its own resources the names of qualified nominees, but it will
accept from security holders recommendations of individuals to be considered as
nominees. Security holder recommendations for the 1996 Annual Meeting, together
with a description of the proposed nominee's qualifications, relevant
biographical information, and the proposed nominee's signed consent to serve,
should be submitted in writing to the Secretary of PNM and received by that
office on or before October 1, 1995. The determination of nominees recommended
by the Nominating Committee to the Board is within the sole discretion of the
Committee, and the final selection of the Board's nominees is within the sole
discretion of the Board of Directors.
CERTAIN LEGAL PROCEEDINGS
Bellamah Community Development ("BCD"), a general partnership that engaged
in real estate operations in the southwestern United States, is the debtor in a
proceeding in the United States Bankruptcy Court for the District of New Mexico
that commenced on June 1, 1989 under Chapter 11 of the Bankruptcy Code and
converted to a Chapter 7 proceeding by order entered on January 29, 1990. The
general partners of BCD include Meadows Resources, Inc., a wholly-owned
subsidiary of PNM. Certain former executive officers of PNM had served on the
management committee of BCD. In addition, Mr. Max H. Maerki, Senior Vice
President and Chief Financial Officer of PNM, had served as an executive officer
of Meadows and as vice chairman of the executive committee of BCD.
SELECTION OF AUDITORS
Action is to be taken with respect to the approval of the selection, by the
Board of Directors, of the firm of Arthur Andersen LLP as independent auditors
to audit the consolidated financial statements of PNM and subsidiaries for the
fiscal year ending December 31, 1995. The firm has been the independent auditors
of PNM since 1993. Arthur Andersen LLP has no financial interest in PNM or any
of its subsidiaries. A representative of Arthur Andersen LLP will be present at
the Annual Meeting of Stockholders to answer appropriate questions and to make
any statement the representative might desire.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE SELECTION
OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS.
8
<PAGE>
REPORT OF THE
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE*
THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE PHILOSOPHY
Two basic principles guide PNM's compensation program. First, senior
management's compensation program should reflect both individual performance and
the achievement of PNM's goals. Second, the program should be as competitive,
relative to the utility industry, as possible in order to attract, motivate, and
retain key management members. New Mexico compensation trends are also
considered in determining competitiveness of the program.
COMPENSATION ELEMENTS
The senior management compensation program, which is designed to meet the
philosophy of the Management Development and Compensation Committee (the
"Committee"), has three components: base salary, management benefits, and
incentive plans.
BASE SALARIES. In 1994, base salaries, the fixed component of pay, were
conservatively tied to the average level of base salaries among gas and electric
utilities which are included in compensation surveys sponsored by the Edison
Electric Institute and the American Gas Association. The Committee believes that
direct competitors for executive talent comprise a larger group than the group
of companies included in the peer group established to compare shareholder
returns. For incumbent members of senior management, base salaries were
unchanged in 1994 in keeping with the provisions of PNM's Performance Stock
Plan.
MANAGEMENT BENEFITS. The benefits provided for senior management are based
upon benefits provided to all employees. The benefits focus on retirement, life
insurance, health care, severance and retention.
INCENTIVE PLANS. The Committee believes that the third component of the
compensation program, incentive plans, is critically important to PNM's
compensation philosophy and in achieving PNM's goals. The Committee believes
this third element should have both a short-term and long-term focus. The
short-term element should consist of "at risk" pay or rewards paid out in cash
while the long-term element should be equity or stock-based compensation.
Currently, management is in the process of implementing a results-based
reward program. The Committee expects this program to be in place by the end of
the first quarter of 1995. The program would introduce an "at risk" cash
compensation element to PNM's existing compensation program.
The long-term focus is addressed through implementation of the Performance
Stock Plan. The Performance Stock Plan is a stock option incentive plan which
provides grants in two different ways. The first, initial grants, are granted in
lieu of base salary merit increases. The second provides for grants based on a
formula, where achievement of equally weighted goals determines if the options
will be granted. These goals are approved by the Board of Directors. The grants
are then adjusted based on PNM's total return to shareholders compared to the
industry peer group discussed in the "Stock
- ------------------------
*The Report of the Management Development and Compensation Committee shall not
be deemed to be incorporated into any filing by PNM under the Securities Act
of 1933 or the Securities Exchange Act of 1934.
9
<PAGE>
Performance" section of the Proxy Statement. Individual awards are based on the
participant's position with PNM. Previous years' grants are not considered in
determining the number of awards granted.
In 1994, there were two goals: one based on earnings per share and one based
on customer satisfaction. PNM achieved both of these goals. Therefore, 250,794
options, with an exercise price of $13.00, were granted effective December 31,
1994 to the executive officer participants.
In December 1994, the Board approved management's proposal for a one-time
cash bonus to be paid to employees. The bonus was based on PNM's 1994
performance. Bonuses to all PNM officers, in the aggregate amount of $200,000,
will not be paid until PNM resumes paying a dividend. When the dividend is
resumed, the amounts to be paid to executive officers will be determined. Mr.
Montoya, President and CEO, elected, and the Board agreed, that he will not
receive any portion of this bonus amount.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR 1994
In July 1993, the Board offered Mr. Montoya the position of President and
CEO. Data provided by an executive compensation consultant and an executive
search firm were considered in determining Mr. Montoya's compensation. Mr.
Montoya's 1994 base compensation remained unchanged from the amount originally
set when he was hired.
In 1994, Mr. Montoya received an initial grant under the Performance Stock
Plan of 8,306 stock options and he also earned 86,332 stock options based on the
attainment of PNM's earnings per share and customer satisfaction goals. The
exercise prices for these options are $11.50 and $13.00, respectively.
CERTAIN TAX MATTERS
PNM has no policy with respect to qualifying compensation paid to officers
for deductibility under Section 162(m) of the Internal Revenue Code because
PNM's compensation levels do not approach the limits as defined by the Code and
it is not anticipated that the compensation of PNM's management will approach
those limits in the foreseeable future.
COMMITTEE PROCESS
The executive compensation program is administered by the Committee. The
Committee consists of independent directors who are not PNM employees and who
qualify as disinterested persons for the purposes of SEC Rule 16b-3 adopted
under the Securities Exchange Act of 1934.
The Committee is accountable for all compensation matters for PNM's senior
management. The Committee has retained an independent executive compensation
consulting firm whose recommendations are considered by the Committee in making
decisions regarding the appropriateness of the executive compensation program.
Management Development and Compensation Committee
Paul F. Roth, Chair
Robert G. Armstrong
Joyce A. Godwin
Robert M. Price
10
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid during each of the last three fiscal years for the current chief executive
officer and each of the four most highly compensated executive officers serving
at the end of the year, based on salary and bonus earned during 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
--------------
AWARDS
ANNUAL COMPENSATION --------------
------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
(AS OF DECEMBER 31, 1994) YEAR ($) ($)(A) ($)(B) (#) ($)
- ---------------------------------- --------- ----------- --------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
B. F. Montoya 1994 $ 317,967 0 -- 94,638 $ 37,528(d)
President and CEO 1993 164,578(c) 0 -- 0 $ 6,924(d)
M. P. Bourque 1994 126,537 -- -- 30,748 0
Senior Vice President, 1993 126,528 0 -- 7,889 0
Energy Services 1992 126,169 0 -- 0 0
M. H. Maerki 1994 172,243(e) -- -- 30,748 0
Senior Vice President 1993 162,240 0 -- 7,889 0
and Chief Financial 1992 161,028 0 -- 0 0
Officer
P. T. Ortiz 1994 126,384 -- -- 30,748 0
Senior Vice President, 1993 126,384 0 -- 7,889 0
General Counsel 1992 125,203 0 -- 0 0
and Secretary
J. E. Sterba 1994 126,903(e) -- -- 0 0
Senior Vice President, 1993 124,501 0 -- 0 0
Bulk Power Services 1992 130,105 0 -- 0 0
<FN>
- ------------------------
(a) A deferred bonus fund of $200,000 was established in December 1994, based
on PNM's 1994 performance, from which lump sum awards to all officers of
PNM, excluding the President and CEO, will be paid at such time as PNM pays
a dividend to its shareholders. The amount of the individual awards will be
determined by the President and CEO at that time. Amounts ultimately
payable to each of the above-named executive officers are currently
unknown.
(b) The dollar value of perquisites and other personal benefits for each of the
named executive officers was less than the established reporting
thresholds.
(c) Mr. Montoya became an employee of PNM in August 1993.
(d) These amounts represent relocation, home sale and interim living expenses
paid to Mr. Montoya in 1993 and 1994.
(e) These amounts include vacation sales during 1994, and do not reflect an
increase in base salaries.
</TABLE>
11
<PAGE>
OPTION GRANTS IN 1994 FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS/SARS
OPTIONS/SARS GRANTED TO EXERCISE OR GRANT DATE
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME (#)(A) FISCAL YEAR ($/SH) DATE ($)(B)
- --------------------------------------- ------------- ----------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
B. F. Montoya.......................... 8,306 1.0% $ 11.50 06/30/2004 $ 23,402
86,332 10.7% $ 13.00 12/31/2004 $ 275,399
M. P. Bourque.......................... 30,748 3.8% $ 13.00 12/31/2004 $ 98,086
M. H. Maerki........................... 30,748 3.8% $ 13.00 12/31/2004 $ 98,086
P. T. Ortiz............................ 30,748 3.8% $ 13.00 12/31/2004 $ 98,086
J. E. Sterba........................... 0 0 0 0 0
<FN>
- ------------------------
(a) These nonqualified options are exercisable following vesting on June 30,
1996. These options may also become fully exercisable upon the occurrence
of certain other events such as a change in control (as defined in the
Performance Stock Plan) of PNM.
(b) These amounts represent a theoretical present valuation based on the
Black-Scholes Option Pricing Model. The actual value, if any, an executive
officer may realize ultimately depends on the market value of PNM's Common
Stock at a future date. This valuation is provided pursuant to Securities
and Exchange Commission disclosure rules. There is no assurance that the
value realized will be at or near the value estimated by the Black-Scholes
model. Assumptions used to calculate this value are: price volatility,
24.35%; risk-free rate of return, 7.83%; dividend yield, 3%; and time to
exercise, four years. These amounts or any of the assumptions should not be
used to predict future performance of stock price or dividends. PNM has not
declared common dividends since January 1989. The inclusion of a dividend
yield assumption for the sole purpose of calculations using the
Black-Scholes Option Pricing Model is not to be construed as a projection
of the resumption of dividend payments.
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND DECEMBER 31, 1994 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1994 DECEMBER 31, 1994(A)
----------------------- -----------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------------------------------ ----------------------- -----------------------
<S> <C> <C>
B. F. Montoya................................... 0/94,638 $0/$12,459
M. P. Bourque................................... 0/38,637 $0/$0
M. H. Maerki.................................... 0/38,637 $0/$0
P. T. Ortiz..................................... 0/38,637 $0/$0
J. E. Sterba.................................... 0/0 $0/$0
<FN>
- ------------------------
(a) Computed by reference to the New York Stock Exchange composite transaction
closing price of PNM's Common Stock on December 31, 1994 of $13.00 per
share.
</TABLE>
12
<PAGE>
STOCK OWNERSHIP OF CERTAIN EXECUTIVE OFFICERS
Each of the executive officers named in the above table (except Mr. Montoya,
whose stock ownership is reported above under "ELECTION OF DIRECTORS") has
advised PNM that, as of February 1, 1995, he or she beneficially owned directly
or indirectly Common Stock of PNM as set forth below:
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
OWNED BENEFICIALLY AS OF
FEBRUARY 1, 1995
NAME (A)(B)(C)
- ----------------------------------------------------------- -------------------------
<S> <C>
M. P. Bourque.............................................. 365
M. H. Maerki............................................... 504
P. T. Ortiz................................................ 507
J. E. Sterba............................................... 1,847
<FN>
- ------------------------
(a) As used herein, beneficial ownership means the sole or shared power to
vote, or to direct the voting of, a security and/or investment power with
respect to a security.
(b) Includes shares currently allotted to such executive officers and held in
trust under the terms of the ESOP. See footnote (i) to the table under
"ELECTION OF DIRECTORS".
(c) All such amounts are less than one percent of the outstanding Common Stock
of PNM.
</TABLE>
PNM is advised that none of its executive officers owns beneficially any
shares of PNM Cumulative Preferred Stock, the only other class of equity
securities of PNM presently outstanding, or any shares in its subsidiary
companies.
STOCK PERFORMANCE*
The following graph compares the yearly percentage change in the cumulative
total shareholder return on PNM's Common Stock during the five fiscal years
ended December 31, 1994, with the cumulative total return on the S&P 500 Stock
Index and the cumulative total return on an index of peer companies selected by
PNM. Companies in the peer group are combined electric and gas utilities each of
which has an investment in a nuclear power generating station. The peer group
companies are as follows: Baltimore Gas & Electric, Central Hudson Gas and
Electric, CMS Energy Corp., Commonwealth Energy System, Consolidated Edison
Company of New York, Delmarva Power & Light Company, IES Industries, Inc.,
Iowa-Illinois Gas & Electric Company, Long Island Lighting Company, New York
State Electric & Gas Corp., Niagara Mohawk Power Corp., Northern States Power
Company, Pacific Gas and Electric Company, PECO Energy Company, Public Service
Enterprises Group, Rochester Gas & Electric Corp., San Diego Gas & Electric
Company, SCANA Corporation, Wisconsin Energy Corp., WPS Resources Corp., and WPL
Holdings, Inc.
- ------------------------
*The "STOCK PERFORMANCE" section of this Proxy Statement shall not be deemed to
be incorporated by reference into any filing by PNM under either the
Securities Act of 1933 or the Securities Exchange Act of 1934.
13
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN(1)
AMONG PUBLIC SERVICE COMPANY OF NEW MEXICO,
A PEER GROUP AND THE S&P 500 STOCK INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Public Svc Co N Mex 100 57 67 85 77 88
PEER GROUP 100 99 127 140 156 132
S&P 500 100 97 126 136 150 152
</TABLE>
<TABLE>
<S> <C>
<FN>
- ------------------------
(1) This illustration assumes $100 invested on December 31, 1989 in PNM Common
Stock, the S&P 500 Stock Index and the combination gas and electric company
peer group. Each mark on the axis displaying the years 1989 through 1994
represents December 31 of that year. Total Return includes reinvestment of
all dividends. The historical shareholder return shown above may not be
indicative of future performance.
</TABLE>
RETIREMENT PLAN AND RELATED MATTERS. PNM and its subsidiaries have a
non-contributory defined benefit plan (the "Retirement Plan") covering employees
who have at least one year of service and have attained the age of 21. During
1994 and 1995, PNM made contributions to the Retirement Plan for plan year 1994
in the amount of $7,090,847. The amount of any contribution with respect to any
one person cannot be determined. Directors who are not employees do not
participate in the Retirement Plan.
14
<PAGE>
The following table illustrates the annual benefits that would be provided
under the Retirement Plan to employees who retire at the indicated compensation
and year of service levels and who elect to receive the benefits, which are
calculated on a straight-life annuity basis, over their remaining lives.
Benefits shown are maximum annual benefits payable at age 65 to participants who
retire at age 65.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE OF HIGHEST CREDITED YEARS OF SERVICE
ANNUAL BASE SALARY FOR -----------------------------------------------------------------------------------
3 CONSECUTIVE YEARS(A) 5(B) 10 15 20 25 30 32 1/2(C)
- -------------------------- --------- --------- --------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 50,000.................. $ 5,000 $ 10,000 $ 15,000 $ 20,000 $ 25,000 $ 30,000 $ 32,500
100,000.................. 10,000 20,000 30,000 40,000 50,000 60,000 65,000
150,000.................. 15,000 30,000 45,000 60,000 75,000 90,000 97,500
200,000.................. 20,000 40,000 60,000 80,000 100,000 120,000 130,000
250,000.................. 25,000 50,000 75,000 100,000 125,000 150,000 162,500
300,000.................. 30,000 60,000 90,000 120,000 150,000 180,000 195,000
350,000.................. 35,000 70,000 105,000 140,000 175,000 210,000 227,500
400,000.................. 40,000 80,000 120,000 160,000 200,000 240,000 260,000
450,000.................. 45,000 90,000 135,000 180,000 225,000 270,000 292,500
500,000.................. 50,000 100,000 150,000 200,000 250,000 300,000 325,000
<FN>
- ------------------------
(a) For these purposes, compensation consists of base salaries and includes any
amount voluntarily deferred under the Master Employee Savings Plan. It
generally does not include bonuses, payments for accrued vacations, or
overtime pay.
(b) Although years of service begin accumulating from the date of employment,
vesting occurs after five years of service.
(c) The maximum number of years generally taken into account for purposes of
calculating benefits under the Retirement Plan. Under limited
circumstances, an additional 3% retirement benefit could be earned by an
employee working beyond age 62.
</TABLE>
The amounts shown in the table above are not subject to any deduction for
Social Security benefits or other offset amounts.
Credited years of service which can be used to calculate benefits as shown
in the above table have been accumulated by executive officers under the
Retirement Plan, the Accelerated Management Performance Plan discussed below and
the supplemental employee retirement agreements discussed below. Credited years
of service so computed as of December 31, 1994 are as follows: Mr. Montoya, 1.42
years; Ms. Bourque, 8 years; Mr. Maerki, 22.36 years; Mr. Ortiz, 3.25 years; and
Mr. Sterba, 19.76 years. The executive officers' remuneration which would be
used to calculate benefits is determined by reference to the Retirement Plan and
the supplemental employee retirement agreement discussed below. Such amounts as
of December 31, 1994 are as follows: Mr. Montoya, $320,004; Ms. Bourque,
$134,932; Mr. Maerki, $170,312; Mr. Ortiz, $134,456; and Mr. Sterba, $124,832.
In January 1981, the Board of Directors approved an executive retirement
program for a group of management employees. The program was intended to
attract, motivate and retain key management employees. Messrs. Maerki and Sterba
and certain other key management employees are eligible to participate in one or
more of the plans in the program. Under the program, as originally adopted, key
15
<PAGE>
management employees had the opportunity to earn additional credit for years of
service toward retirement (the "Accelerated Management Performance Plan"). The
Accelerated Management Performance Plan, as amended and restated, phased out the
accumulation of additional credits by January 1, 1990. In addition, the amended
and restated plan includes a provision allowing key management employees to
receive a reduced benefit from the plan upon attaining early retirement without
having attained the maximum credits for years of service. Monthly benefits
received pursuant to the Accelerated Management Performance Plan are offset by
monthly benefits received pursuant to the Retirement Plan.
As approved by the Board in 1989, a supplemental employee retirement
agreement was entered into with Mr. Maerki. Under the agreement with Mr. Maerki,
his retirement benefits would be computed as if he had been in the continuous
employment of PNM since February 15, 1974.
The Board of Directors has approved the establishment of an irrevocable
grantor trust under provisions of the Internal Revenue Code generally in
connection with the management benefit plans discussed in the preceding two
paragraphs and the supplemental retirement agreements with certain former
executive officers. Under the terms of the trust, PNM may, but is not obligated
to, provide funds to the trust, which has been established with an independent
trustee, to aid in meeting its obligations under such plans. Funds in the amount
of approximately $12.7 million were provided to the trust in 1989. No additional
funds have been provided to the trust.
The Retirement Plan was amended in 1993. The amendment affected the officers
and managers who participated in the Performance Stock Plan and were ineligible
for base salary merit increases. The retirement benefit calculation was adjusted
so that such persons would not be penalized for participating in the Performance
Stock Plan.
Federal tax legislation enacted in 1993 imposed a $150,000 limitation on
compensation that can be considered in determining retirement benefits under
qualified retirement plans. A PNM plan adopted in 1993 provides nonqualified
deferred compensation benefits to executives to the extent their retirement
benefits under the Retirement Plan, the Accelerated Management Performance Plan
and supplemental employee retirement agreements are limited as a result of the
$150,000 compensation limitation imposed by the 1993 tax legislation.
COMPENSATION OF DIRECTORS
Shareholders approved the "Director Restricted Stock Retainer Plan" at the
May 1992 Annual Meeting. Subsequent to that Annual Meeting, each non-employee
director received a restricted stock grant of 924 shares (fair market value of
$12,012). Portions of that stock vested in 1993 and 1994 in accordance with the
terms of the plan. Mr. Robert M. Price, Dr. Laurence H. Lattman, and Mr. Manuel
Lujan, Jr. were not directors at the date of grant and did not receive the 1992
restricted stock grant. The Director Restricted Stock Retainer Plan was amended
to provide for a cash retainer to be paid in lieu of restricted stock in the
event PNM is unable to grant restricted stock because of regulatory, legal or
contractual restrictions on issuing or repurchasing stock for the plan and to
allow directors the election, upon specified prior notice, to receive cash
instead of restricted stock. A trust was established for the purpose of
purchasing and holding restricted stock grants pending the lapse of
restrictions. The trustee of such trust is an independent third party.
Directors who were not full-time employees received $350 in 1994 for each
meeting of the Board or a committee thereof attended. Any director who is an
employee of PNM or one of its subsidiaries
16
<PAGE>
receives no compensation for services as director. In December 1993, the Board
of Directors restructured the duties and compensation of the position of
Chairman of the Board, increasing the duties and establishing the level of
compensation. The Chairman now receives an annual retainer that is four times
the amount paid to other non-employee directors, of which one-fourth is paid on
terms identical to the retainer paid to other non-employee directors, and is
paid meeting fees for attending Board and Executive Committee meetings. The
meeting fees for the Chairman are three times the meeting fees paid to
non-employee directors.
Effective January 1, 1995, the fees for attendance at Board meetings and
committee meetings were increased to $600 and $450, respectively, per meeting.
The Chair of each committee, excluding the Executive Committee, receives an
additional $200 per committee meeting. Directors are also reimbursed for
expenses incurred in connection with service as a director.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
An Executive Retention Plan (the "Retention Plan") was adopted by the Board
of Directors effective January 1, 1992. The Retention Plan covers executive
officers and other key employees designated by the Board. Mr. Montoya has been
provided with substantially similar benefits by agreement with PNM. The
Retention Plan provides certain severance benefits should the employee's
employment with PNM be terminated subsequent to a change in control of PNM or as
the result of a sale or other disposition of all or substantially all the assets
of a major operating unit, if such termination is for death, by PNM for reasons
other than cause, or by the employee due to constructive termination. The
severance benefits include: (i) lump sum severance equal to 2.5 times current
base salary for executive officers; (ii) reimbursement of all legal fees and
expenses incurred as a result of termination of employment; and (iii) certain
insurance benefits which are substantially similar to those received by the
employee immediately prior to termination of employment. The Retention Plan was
effective for an initial term through December 31, 1992, and is subject to
automatic extension for additional one year terms unless revoked by the Board by
the October 1 date immediately preceding the commencement of the next successive
one year term. The plan was reaffirmed in 1994. The Retention Plan is also
subject to automatic extension, or revival if it has been revoked, in the event
of a change in control during certain time periods.
PNM also has a non-union severance pay plan that covers any non-union
employee who is terminated due to the elimination of his or her position (an
"impacted employee"), including executive officers. Benefits include severance
pay in the amount of two months of base salary plus one additional week of base
salary for each year of service, which may be enhanced if the participant signs
a release agreement with PNM. Under a program adopted in 1993, an impacted
employee would have the option to remain with PNM for an additional year but
would give up the option to receive enhanced benefits. Also in 1993, the Board
approved an amendment to the non-union severance pay plan. The amendment
provides a benefit for impacted executives under which an executive would
receive a lump sum distribution in lieu of the option that other employees have
to remain with PNM for an additional year and reimbursement for placement
assistance expenses incurred during the year after impaction up to 5% of base
salary. Under the amendment, certain employees, including one executive officer,
who are members of the team of employees involved in PNM's asset restructuring
effort described below, would receive executive severance benefits if they are
impacted because of the
17
<PAGE>
sale, or withdrawal from sale, of assets for which they are responsible. If an
employee is eligible to receive benefits under the Retention Plan, benefits are
not available to that employee under the severance pay plan.
Mr. Montoya became President and CEO of PNM in August 1993. Under the terms
of employment agreements entered into between PNM and Mr. Montoya, Mr. Montoya
will be eligible to receive supplemental retirement benefits if he completes
five years of service with PNM. He will also receive severance benefits
substantially equal to the level of benefits provided to other members of senior
management (discussed above) in the event he is terminated by the Board.
Reference is made to the first footnote in the "OPTION GRANTS IN 1994 FISCAL
YEAR" table. The options referred to in the table may become exercisable upon
certain events such as change in control (as defined in the Performance Stock
Plan) of PNM.
RELATED TRANSACTION
On January 11, 1993, PNM announced specific actions which were determined to
be necessary in order to accelerate PNM's preparation for the new challenges in
the competitive electric energy market. As part of this announcement, PNM stated
its intention to attempt to sell its interest in Palo Verde Nuclear Generating
Station ("PVNGS") Unit 3. PNM also announced its intention to dispose of the
Sangre de Cristo Water Company and PNM's natural gas gathering and natural gas
processing assets. Mr. J. E. Sterba was assigned to head the asset restructuring
effort.
The Board approved an incentive plan for a team of employees involved in the
asset restructuring, and Mr. Sterba is one of the participants in the plan. Mr.
Sterba is eligible for incentive payments under the plan upon certain asset
dispositions.
On February 12, 1994, an agreement was executed with Williams Gas Processing
- - Blanco, Inc., for the sale of substantially all of the natural gas gathering
and processing assets of PNM and two subsidiaries for a cash selling price of
$155 million, subject to certain adjustments. Subject to a number of conditions
and approvals, including New Mexico Public Utility Commission ("NMPUC")
approval, the sale of the gas assets is expected to close by the end of the
second quarter of 1995. However, PNM cannot predict the ultimate timing or
outcome of the NMPUC action. In addition, on February 28, 1994, PNM reached
agreement with the City of Santa Fe for the sale of the utility assets of PNM's
water division, the Sangre de Cristo Water Company, and operation of the water
system by a subsidiary of PNM for up to four years following the sale. The
purchase price, as currently adjusted, is approximately $56 million. Closing of
the sale of the water utility is anticipated in the second quarter of 1995,
subject to a number of conditions, including NMPUC approval. Certain other
assets of Sangre de Cristo Water Company may also be sold. Although the specific
amount of the incentive payments is presently unknown, PNM currently estimates
the aggregate of the incentive payments to Mr. Sterba resulting from completing
such asset sales would be approximately $171,000.
OTHER BUSINESS
The management of PNM knows of no other business which is likely to be
brought before the meeting. If other matters not now known to management come
before the Annual Meeting, the persons named in the accompanying proxy expect to
vote in accordance with their judgment on such matters.
18
<PAGE>
REQUESTS FOR REPORTS
A COPY OF THE 1994 FORM 10-K IS INCLUDED AS PART OF PNM'S ANNUAL REPORT TO
SHAREHOLDERS MAILED ON MARCH 22, 1995. ADDITIONAL COPIES OF THE REPORT ARE
AVAILABLE UPON WRITTEN REQUEST TO PATRICK T. ORTIZ, SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY, ALVARADO SQUARE, ALBUQUERQUE, NEW MEXICO 87158.
DEADLINE FOR PROPOSALS BY STOCKHOLDERS
In order to be considered for inclusion in PNM's Proxy Statement for the
1996 Annual Meeting of Stockholders, proposals from stockholders must be
received by PNM at Alvarado Square, Mail Stop 2828, Albuquerque, New Mexico
87158, on or before November 23, 1995.
By Order of the Board of Directors
Patrick T. Ortiz
CORPORATE SECRETARY
19
<PAGE>
PUBLIC SERVICE COMPANY OF NEW MEXICO
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned does hereby constitute and appoint R.G. Armstrong,
R.U. Ortiz and P.F. Roth, and each or any of them, the true and lawful
attorney-in-fact and proxy for the undersigned, with full power of
substitution, to represent and vote the common stock of the
undersigned at the Annual Meeting of Stockholders of Public Service
P Company of New Mexico to be held in the auditorium of the
UNM Continuing Education Conference Center at 1634 University
Boulevard, N.E., Albuquerque, New Mexico, at 9:30 a.m., Mountain
Daylight Time, on April 25, 1995, and at any adjournments thereof, on
all matters coming before said meeting.
R
A VOTE FOR THE FOLLOWING PROPOSALS IS RECOMMENDED BY THE BOARD OF
DIRECTORS.
O
1. Election of Directors (John T. 2. Selection of Arthur Andersen LLP
Ackerman, Joyce A. Godwin and as independent auditors for the
Manuel Lujan, Jr.). current year.
X
Mark one: FOR all nominees
listed above. / / FOR / / AGAINST / / ABSTAIN
FOR all nominees 3. In their discretion, the proxies
listed above except are authorized to vote upon
Y . such other matters as may
WITHHOLD AUTHORITY to properly come before this
vote for all nominees listed meeting, or any adjournment or
above. adjournments thereof.
(Please turn over)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE COMMON STOCKHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND
2.
PLEASE DATE AND SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC., GIVE FULL
TITLE. IF STOCK IS HELD JOINTLY, EACH JOINT OWNER SHOULD SIGN. IF
P STOCK IS OWNED BY A CORPORATION, PLEASE SIGN FULL CORPORATE NAME BY
DULY AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP
NAME BY AUTHORIZED PERSON.
R
Signature
O
Signature
X
Dated: , 1995
Y
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD
PROMPTLY, USING THE ENCLOSED
ENVELOPE
