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
SOUTHWESTERN PUBLIC SERVICE COMPANY
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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[LOGO OF SOUTHWESTERN PUBLIC SERVICE COMPANY APPEARS HERE]
SOUTHWESTERN PUBLIC SERVICE COMPANY
NOTICE OF 1997 ANNUAL MEETING
OF SHAREHOLDERS
and
PROXY STATEMENT
January 8, 1997
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[LOGO OF SOUTHWESTERN PUBLIC SERVICE COMPANY APPEARS HERE]
SOUTHWESTERN PUBLIC SERVICE COMPANY
Notice of Annual Meeting of Shareholders
To the holders of common shares:
Notice is given that a meeting of the holders of common shares, $1 par
value (the "Common Stock"), of Southwestern Public Service Company (the
"Company") will be held at the office of the Company, SPS Tower, Tyler at
Sixth, Amarillo, Texas, on January 8, 1997, at 11:00 a.m., local time, for
these purposes:
1. To elect four persons as Class I directors with terms
continuing until the Annual Meeting of Shareholders in 2000 and until
their respective successors are duly elected and qualified.
2. To transact any other business which may properly come before
the meeting or any adjournment or adjournments thereof.
Holders of record of the Common Stock of the Company at the close of
business on November 20, 1996, are entitled to notice of and to vote at the
Annual Meeting of Shareholders or at any adjournment or adjournments thereof.
By order of the Board of Directors,
Robert D. Dickerson
Secretary
Dated: December 2, 1996
SHAREHOLDERS ARE URGED TO SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE
ENVELOPE PROVIDED WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING IN PERSON.
NO POSTAGE IS REQUIRED.
PROXY STATEMENT
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[LOGO OF SOUTHWESTERN PUBLIC SERVICE COMPANY APPEARS HERE]
SOUTHWESTERN PUBLIC SERVICE COMPANY
Annual Meeting of Shareholders -- January 8, 1997
SPS Tower, Tyler at Sixth
Amarillo, Texas 79101
INTRODUCTION
This proxy statement is furnished in connection with a solicitation by
the Board of Directors of Southwestern Public Service Company (the "Company") of
proxies to be voted at the Annual Meeting of Shareholders of the Company on
January 8, 1997, at 11:00 a.m., local time, at the office of the Company set
forth above, and at any adjournment or adjournments thereof, for the purposes
stated in the accompanying Notice of Annual Meeting of Shareholders. A
shareholder may revoke a proxy at any time before it is voted by submitting a
new proxy of a later date or by attending the meeting and voting in person.
This proxy statement and the enclosed form of proxy are being mailed on
or about December 2, 1996, to holders of record of common shares, $1 par value,
of the Company (the "Common Stock") at the close of business on November 20,
1996 (the "Record Date"). Only holders of record on the Record Date will be
entitled to vote at the meeting. The outstanding voting shares of the Company on
the Record Date consisted of 40,917,908 shares of the Common Stock, each of
which is entitled to one vote.
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes
(Class I, Class II, and Class III). At each Annual Meeting of Shareholders, the
directors constituting one class are elected for three-year terms. The Restated
Articles of Incorporation of the Company (the "Articles") provide that the
number of directors shall not be less than 9 or more than 15 and shall be
divided into three classes as nearly equal in number as the then whole
authorized number of directors permits. The Bylaws of the Company provide that
the number of directors shall be established by resolution of the Board of
Directors of the Company within the limitations stated in the Articles.
At the 1997 Annual Meeting of Shareholders (the "Meeting"), the holders
of the Common Stock will elect four persons as Class I directors with terms
continuing until the Annual Meeting of Shareholders in 2000 and until their
respective successors are duly elected and qualified. The Board of Directors has
nominated J. C. Chambers, Giles M. Forbess, Shirley Bird Perry, and David M.
Wilks, who are presently directors of the Company, for election as Class I
directors.
All of the Common Stock represented by valid proxies received from
shareholders will be voted FOR the nominees for directors named above, unless
authority to do so is withheld. Each nominee for director has agreed to his or
her nomination and to serve if elected. If any of the nominees is unable to
serve, the proxies will be voted to elect any other person for the office of
director as the Board of Directors recommends in the place of that nominee.
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1
PROXY STATEMENT
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A majority of the shares of the Common Stock entitled to vote,
represented in person or by proxy, shall constitute a quorum entitled to
transact business at the Meeting. Directors will be elected by a majority of the
votes of the shareholders comprising a quorum at the Meeting. Abstentions are
counted to determine the presence or absence of a quorum; however, in the
election of directors, abstentions are treated as shares not voted. Since the
election of directors is considered a "discretionary" item upon which brokerage
firms may vote in their discretion on behalf of their clients if those clients
have not furnished voting instructions within ten days of the Meeting, there are
no "broker non-votes" to be considered at the Meeting.
The Board of Directors recommends a vote FOR the nominees.
Information Concerning Nominees and Continuing Directors
Certain information is set forth below concerning the nominees (Messrs.
Chambers, Forbess, and Wilks and Mrs. Perry) and the eight directors whose
terms of office will continue after the Meeting.
CLASS I DIRECTORS
(Terms Expire in 2000)
First Principal Occupation
Became and Business Experience;
Name and Age Director Other Directorships
- ---------------------- -------- ---------------------------------------------
J. C. Chambers--65 1978 Agent, Massachusetts Mutual Life Insurance
Company, Lubbock, Texas, 1957 to present
(1);
Director, State National Bank of West Texas,
Lubbock, Texas.
Giles M. Forbess--61 1991 President, Benton Oil Company (petroleum
marketer), Lubbock, Texas, 1970 to present;
President, Petroleum Transport, Inc.
(trucking), Lubbock, Texas, 1970 to
present;
Director, State National Bank of West Texas,
Lubbock, Texas.
Shirley Bird Perry--60 1993 Vice Chancellor for Development and External
Relations, The University of Texas System,
Austin, Texas, 1992 to present; Vice
President for Development and University
Relations, The University of Texas at
Austin, 1983 to 1992;
Advisory Director, Texas Commerce Bank--
Austin, National Association, Austin,
Texas.
David M. Wilks--49 1995 President and Chief Operating Officer of the
Company, 1995 to present; Senior Vice
President, 1991 to 1995.
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2
PROXY STATEMENT
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CLASS II DIRECTORS
(Terms Expire in 1998)
First Principal Occupation
Became and Business Experience;
Name and Age Director Other Directorships
- --------------------- -------- ---------------------------------------------
Gene H. Bishop--66 1988 Retired Chairman of the Board and Chief
Executive Officer, Life Partners Group,
Inc. (life insurance holding company),
Englewood, Colorado, 1994 to present;
Chairman of the Board and Chief Executive
Officer, 1991 to 1994;
Director, Drew Industries Incorporated,
White Plains, New York;
Director, First USA, Inc., Dallas, Texas;
Director, First USA Paymentech, Inc.,
Dallas, Texas;
Trustee, Liberte Investors, Dallas, Texas;
Director, Southwest Airlines Company, Dallas,
Texas.
C. Coney Burgess--59 1994 President, Burgess-Herring Ranch Company
(agriculture), Amarillo, Texas, 1974 to
present;
President, Chain-C, Inc. (agriculture),
Amarillo, Texas, 1968 to present;
Chairman of the Board, Herring Bancorp, Inc.
(bank holding company), Vernon, Texas,
1991 to present;
President, Monarch Trust Company, Amarillo,
Texas, 1972 to present;
Director, First Bank and Trust, Clarendon,
Texas;
Director, Herring National Bank, Vernon,
Texas.
J. Howard Mock--55 1992 Chairman of the Board and Chief Executive
Officer, Jaynes Corporation (general
contractors), Albuquerque, New Mexico,
1988 to present;
Chairman of the Board, Banes General
Contractors, El Paso, Texas, 1989 to
present;
Advisory Director, Norwest Banks New Mexico,
N.A., Albuquerque, New Mexico.
Gary W. Wolf--58 1986 Senior Partner, Cahill Gordon & Reindel
(attorneys), New York, New York, 1970 to
present (2).
Director, New Jersey Resources Corporation,
Wall, New Jersey.
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PROXY STATEMENT
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CLASS III DIRECTORS
(Terms Expire in 1999)
First Principal Occupation
Became and Business Experience;
Name and Age Director Other Directorships
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Danny H. Conklin--61 1988 Petroleum Geologist and Partner, Philcon
Development Co. (oil and gas production and
exploration), Amarillo, Texas, 1960 to
present;
Director, Boatmen's First National Bank of
Amarillo, Amarillo, Texas;
Director, Parallel Petroleum Corporation,
Midland, Texas.
Bill D. Helton--58 1990 Chairman of the Board and Chief Executive
Officer of the Company, 1991 to present;
Director, Boatmen's First National Bank of
Amarillo, Amarillo, Texas.
R. R. Hemminghaus--60 1994 Chairman, Chief Executive Officer, and
President, Diamond Shamrock, Inc. (regional
refiner and marketer of petroleum
products), San Antonio, Texas, 1987 to
present;
Deputy Chairman and Director, Federal
Reserve Bank of Dallas, Dallas, Texas;
Director, Luby's Cafeterias, Inc., San
Antonio, Texas.
Don Maddox--55 1983 Director, Maddox Law Firm, P.C. (attorneys),
Hobbs, New Mexico, 1982 to present.
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(1) At August 31, 1996, the Company had in force $10,100,000 aggregate face
amount of insurance policies on the lives of certain executives and
participants in the Company's Supplemental Retirement Income Plan (the
"Supplemental Plan") for which the Company paid $163,153 in premiums. Mr.
Chambers, a director of the Company and an agent of the insurer, received
commissions during the fiscal year ended August 31, 1996, in the amount of
$7,328 in connection therewith. Mr. Chambers will also receive commissions
during the 1997 fiscal year on these policies.
(2) Cahill Gordon & Reindel represents the Company as legal counsel with
respect to various matters.
Meetings and Committees of the Board of Directors
The Board of Directors has an Audit Committee and a Compensation
Committee. The Board of Directors has no nominating committee.
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PROXY STATEMENT
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The Audit Committee consists of Messrs. Chambers (chairman), Burgess,
Conklin, and Maddox and Mrs. Perry, none of whom is an officer of the Company.
This committee held four meetings during the 1996 fiscal year. It recommends to
the Board of Directors the appointment of the Company's independent public
accountants to audit the books and accounts of the Company. In this connection,
it reviews the nonaudit-related services rendered and to be rendered by the
independent public accountants and the fees paid and to be paid for the
services, the auditing arrangements and the scope of the independent public
accountants' audits of the books, the results of the audits, and any problems
identified by the independent public accountants regarding internal controls.
It also meets with a representative of the Company's internal audit department
to review that department's examinations and reports on the Company's internal
controls and other activities.
The Compensation Committee consists of Messrs. Forbess (chairman),
Bishop, Hemminghaus, and Mock, none of whom is an officer of the Company. This
committee held five meetings during the 1996 fiscal year. Its functions are to
review and make recommendations to the Board of Directors on all matters
relating to the compensation of the directors and executive officers of the
Company and to administer and make recommendations to the Board of Directors
regarding the Company's EPS Performance Unit Plan (the "EPS Plan"), Incentive
Compensation Plan (the "Incentive Plan"), and 1989 Stock Incentive Plan (the
"1989 Plan").
During the 1996 fiscal year, the Board of Directors held eight meetings.
Except for Mr. Bishop, none of the directors attended fewer than 75 percent of
the meetings of the Board of Directors and its committees on which they served.
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PROXY STATEMENT
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Ownership of Equity Securities by Directors and Executive Officers
The following tabulation shows as of September 30, 1996, the number of
shares of each class of the Company's equity securities beneficially owned by
each director, each executive officer named in the Summary Compensation Table,
and the directors and executive officers of the Company as a group. None of the
individual or collective holdings listed below exceeds 1 percent of the Common
Stock.
Amount and Nature of Securities
Name Title of Security Beneficially Owned (1)
------------------ ----------------- -------------------------------
Gene H. Bishop Common Stock 15,751(2)
Doyle R. Bunch II Common Stock 10,767(3)
C. Coney Burgess Common Stock 1,664(4)
J. C. Chambers Common Stock 1,897
Danny H. Conklin Common Stock 5,067(5)
Giles M. Forbess Common Stock 1,450
Henry H. Hamilton Common Stock 13,798(6)
Bill D. Helton Common Stock 22,752(7)
R. R. Hemminghaus Common Stock 868
Kenneth L. Ladd, Jr. Common Stock 7,504(8)
Don Maddox Common Stock 24,816(9)
J. Howard Mock Common Stock 1,815(10)
Shirley Bird Perry Common Stock 1,292
David M. Wilks Common Stock 11,714(11)
Gary W. Wolf Common Stock 2,352
All of the above and
other executive
officers as a group
(21 persons) Common Stock 176,398(12)
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(1) A director or executive officer is considered to beneficially own the
Common Stock if the director or executive officer, directly or indirectly,
has or shares the power to vote or dispose of, or direct the voting or the
disposition of, the Common Stock or has the right to acquire such power
with respect to the Common Stock within 60 days. The number of shares does
not include fractional shares resulting from participation in the Company's
Dividend Reinvestment and Cash Payment Plans or the Employee Investment
Plan (the "EIP") or fractional share equivalents resulting from
participation in the Company's Directors' Deferred Compensation Plan (the
"Directors' Deferred Plan").
(2) Includes 4,751 share equivalents held pursuant to the Directors' Deferred
Plan, over which Mr. Bishop has no voting or investment power.
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PROXY STATEMENT
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(3) Includes 4,577 shares held for the benefit of Mr. Bunch in the EIP, over
which Mr. Bunch has sole voting power but no investment power. Includes
1,944 restricted share equivalents held pursuant to the 1989 Plan, over
which Mr. Bunch has no voting or investment power. Also includes 526 shares
that may be acquired within 60 days of September 30, 1996, pursuant to the
exercise of options granted under the 1989 Plan.
(4) Shares held by Herring Bancorp, Inc., of which Mr. Burgess is the majority
shareholder.
(5) Includes 100 shares owned by Mr. Conklin's wife, 467 shares held by Philcon
Development Co. Retirement Plan and Trust, and 500 shares held in a trust
of which Mr. Conklin is trustee and his sons are beneficiaries.
(6) Includes 6,505 shares held for the benefit of Mr. Hamilton in the EIP, over
which Mr. Hamilton has sole voting power but no investment power. Includes
1,860 restricted share equivalents held pursuant to the 1989 Plan, over
which Mr. Hamilton has no voting or investment power. Also includes 478
shares that may be acquired within 60 days of September 30, 1996, pursuant
to the exercise of options granted under the 1989 Plan.
(7) Includes 5,615 shares held for the benefit of Mr. Helton in the EIP, over
which Mr. Helton has sole voting power but no investment power. Includes
4,008 restricted share equivalents held pursuant to the 1989 Plan, over
which Mr. Helton has no voting or investment power. Also includes 938
shares that may be acquired within 60 days of September 30, 1996, pursuant
to the exercise of options granted under the 1989 Plan. Also includes 756
shares held in trusts for the benefit of Mr. Helton's grandchildren. Mr.
Helton's wife retains the right to the corpus of the trusts upon their
termination. Mr. Helton disclaims beneficial ownership of the shares held
in the trusts.
(8) Includes 751 shares held for the benefit of Mr. Ladd in the EIP, over which
Mr. Ladd has sole voting power but no investment power. Includes 1,884
restricted share equivalents held pursuant to the 1989 Plan, over which Mr.
Ladd has no voting or investment power. Also includes 488 shares that may
be acquired within 60 days of September 30, 1996, pursuant to the exercise
of options granted under the 1989 Plan. Also includes 211 shares held in a
trust of which Mr. Ladd is trustee and his grandchildren are beneficiaries.
(9) Includes 750 shares owned by Mr. Maddox's wife and 4,825 shares and 5,175
shares held in trusts of which Mr. Maddox is trustee and his daughter and
son, respectively, are beneficiaries.
(10) Includes 1,105 share equivalents held pursuant to the Directors' Deferred
Plan, over which Mr. Mock has no voting or investment power.
(11) Includes 1,985 shares held for the benefit of Mr. Wilks in the EIP, over
which Mr. Wilks has sole voting power but no investment power. Includes
2,484 restricted share equivalents held pursuant to the 1989 Plan, over
which Mr. Wilks has no voting or investment power. Also includes 501 shares
that may be acquired within 60 days of September 30, 1996, pursuant to the
exercise of options granted under the 1989 Plan.
(12) Includes 42,080 shares held for the benefit of the executive officers in
the EIP, over which the executive officers have sole voting power but no
investment power. Includes 972 shares held pursuant to the 1989 Plan, over
which the executive officers have sole voting power but no investment
power, and 20,660 restricted share equivalents held pursuant to the 1989
Plan, over which the executive officers have no voting or investment power.
Also includes 5,035 shares that may be acquired within 60 days of September
30, 1996, pursuant to the exercise of options granted under the 1989 Plan.
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PROXY STATEMENT
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
References to "SAR" and "FY" in the tables below mean stock appreciation
rights and fiscal year, respectively.
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of its Chief
Executive Officer and the other four most highly compensated executive officers
of the Company (determined as of the end of the last fiscal year) for the
fiscal years ended August 31, 1996, 1995, and 1994:
Summary Compensation Table
Long-term Compensation
Annual Compensation ----------------------
---------------------------- Awards
Other ----------
Annual Restricted All Other
Compen- Stock Compen-
sation Award(s) sation
Name and Principal Position Year Salary($) Bonus($) ($)(1)(2) ($)(3) ($)(2)(4)
- ----------------------------- ---- --------- -------- --------- ---------- ---------
Bill D. Helton 1996 318,333 100,000 20,126 61,105 12,245
Chairman of the Board and 1995 291,667 95,300 43,878 0 128,513
Chief Executive Officer; 1994 265,000 73,381 0 0 5,433
Director
David M. Wilks 1996 196,667 55,038 10,750 38,115 6,046
President and 1995 148,121 51,340 23,345 0 65,047
Chief Operating Officer; 1994 143,900 38,735 0 0 2,415
Director
Doyle R. Bunch II 1996 153,426 39,306 11,286 30,129 6,343
Executive Vice President, 1995 148,818 43,410 24,718 0 65,850
Accounting and 1994 145,900 33,797 0 0 2,479
Corporate Development
Kenneth L. Ladd, Jr. 1996 149,050 37,424 10,471 29,040 3,064
Senior Vice President 1995 143,201 38,222 22,787 0 62,625
1994 139,300 35,680 0 0 2,685
Henry H. Hamilton 1996 147,447 38,916 10,256 28,556 6,712
Vice President, Production 1995 140,427 40,477 22,293 0 62,807
1994 136,600 37,355 0 0 3,099
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(1) The amounts shown in this column consist of tax reimbursements credited to
the performance unit accounts of Messrs. Helton, Wilks, Bunch, Ladd, and
Hamilton for the fiscal years ended August 31, 1995 and 1996, pursuant to
the EPS Plan.
(2) In the 1993 fiscal year, pursuant to the EPS Plan, the Board of Directors
granted Messrs. Helton, Wilks, Bunch, Ladd, and Hamilton performance units
(the "Performance Units") in each fiscal year ending August 31, 1993, 1994,
and 1995; and in the 1995 fiscal year, the Board of Directors granted to
those same executives Performance Units in each of the seven fiscal years
ending August 31, 1996, through
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PROXY STATEMENT
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2002. The Performance Units equal the amount of the executive's base salary
actually paid during each fiscal year, i.e., one Performance Unit per $1 of
base salary. Each Performance Unit creates a credit to each executive
officer's account in an amount derived by multiplying the increase, if any,
of earnings per share of the Common Stock for the current fiscal year over
the prior year's earnings per share by the executive officer's Performance
Units. The executive officer must apply all dollar amounts thereby credited
to his account to the exercise price of options granted pursuant to the 1989
Plan, except in certain instances as provided in the EPS Plan. When amounts
credited to the executive officer's account become subject to the payment of
income taxes, his account is also credited in that amount. For the fiscal
year ended August 31, 1996, Messrs. Helton, Wilks, Bunch, Ladd, and Hamilton
were awarded 318,333, 196,667, 153,426, 149,050, and 147,447 Performance
Units, respectively, which had no value because earnings for the 1996 fiscal
year did not increase over those of the 1995 fiscal year.
(3) In the 1996 fiscal year, Messrs. Helton, Wilks, Bunch, Ladd, and Hamilton
were granted 2,020, 1,260, 996, 960, and 944 performance non-certificated
restricted stock awards, respectively, pursuant to the 1989 Plan, consisting
of that nearest number of whole shares of the Common Stock equal to 20
percent of the executive officer's base salary on September 1, 1995, divided
by the fair market value on September 1, 1995, subject to certain
performance objectives and vesting restrictions. The amounts reported in the
summary compensation table represent the market value of unrestricted Common
Stock at the date of grant. A stock certificate was issued in the
executive's name for 100 percent of the shares, on the basis of 25 percent
of the shares for attaining each of the following four performance
objectives for the fiscal year ending August 31, 1996: (i) total shareholder
return on the Common Stock equal to or better than the S&P 24 Electric
Utilities Index, (ii) total return on common equity of the Company at least
equal to or better than the third highest of the ten utilities comparable to
the Company in kilowatt-hour sales, (iii) average retail rates of the
Company equal to or better than the third lowest when compared to the
average retail rates of the composite regional companies, and (iv) dividend
payout ratio of 90 percent or less of the Company's annual earnings per
share. Thus, 100 percent of the shares were transferred to the executive
because all four performance objectives were met. Because a "change of
control" occurred on January 31, 1996, for purposes of the 1989 Plan,
restrictions lapsed and the shares vested on September 1, 1996 (rather than
the scheduled vesting date of August 31, 2001). Dividend equivalents were
not paid on the non-certificated restricted stock. At August 31, 1996, such
stock had market values of $66,155, $41,265, $32,619, $31,440, and $30,916
for Messrs. Helton, Wilks, Bunch, Ladd, and Hamilton, respectively.
Dividends are payable on previously awarded certificated restricted shares,
whether or not the shares are vested, if and to the extent paid on the
Common Stock generally. As of August 31, 1996, Messrs. Helton, Wilks, Bunch,
Ladd, and Hamilton held 536, 138, 147, 134, and 132 restricted shares,
respectively, of the Common Stock, which shares vested on that date, were
awarded pursuant to the 1989 Plan, and had market values of $17,554, $4,520,
$4,814, $4,389, and $4,323, respectively.
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PROXY STATEMENT
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(4) The amounts shown for the 1996 fiscal year are comprised of the following:
Company
Contributions
to the
Company Non-Qualified
Contributions Salary Deferral Insurance
Name to the EIP Plan Premiums
-------------------- ------------- --------------- ---------
Bill D. Helton $3,537 $7,046 $1,662
David M. Wilks 3,110 1,726 1,210
Doyle R. Bunch II 2,889 2,365 1,089
Kenneth L. Ladd, Jr. 1,488 0 1,576
Henry H. Hamilton 2,860 2,190 1,662
Option/SAR Exercises and Values
The following table provides information for the executive officers
named below, concerning the exercise of options/SARs during the last fiscal year
and unexercised options/SARs held as of the end of the fiscal year:
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable(1)
- -------------------- --------------- ------------------ --------------- ----------------
Bill D. Helton 2,045 4,218 0/5,624 0/184,186
David M. Wilks 1,088 2,244 0/3,008 0/ 98,512
Doyle R. Bunch II 1,152 2,376 0/3,157 0/103,392
Kenneth L. Ladd, Jr. 1,062 2,190 0/2,924 0/ 95,761
Henry H. Hamilton 1,039 2,143 0/2,869 0/ 93,960
- -------------------
(1) The closing price of the Common Stock on August 31, 1996, was $32.75
per share, and the exercise price for all options was $30.8125 per share.
Retirement Benefits
The following table contains approximate annual retirement benefits
payable to executive officers and certain key employees of the Company in
certain salary classifications pursuant to its non-contributory retirement plan
(the "Retirement Plan") and the Supplemental Retirement Income Plan (the
"Supplemental Plan"), assuming retirement on August 31, 1996, at age 65 and
election of the lifetime only option under the Retirement Plan and not one of
the various survivor options. The annual retirement benefits payable under any
other option would generally be lower than the amounts shown in the table. The
amounts listed in the table take into account the reduction for Social Security
benefits.
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PROXY STATEMENT
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Pension Plan Table
Years of Service (1)
--------------------------------------------------------------
Remuneration (2)(3) 15 20 25 30 35 40
- ----------------------- ------- -------- -------- -------- -------- --------
$125,000............. $30,590 $ 40,787 $ 65,892 $ 79,620 $ 86,483 $ 86,483
150,000............. 36,768 49,024 82,365 98,838 107,075 107,075
175,000............. 42,945 57,260 98,838 118,057 127,666 127,666
200,000............. 49,122 65,497 115,311 137,275 148,257 148,257
225,000............. 55,300 73,733 131,784 156,494 168,848 168,848
250,000............. 61,477 81,970 148,257 175,712 189,440 189,440
300,000............. 73,832 98,443 181,203 214,149 230,622 230,622
350,000............. 86,187 114,916 214,149 252,586 271,805 271,805
400,000............. 98,541 131,389 247,095 291,023 312,987 312,987
- --------------------
(1) Includes years of credited service with the Company and accumulated, unused
sick leave. As of August 31, 1996, Messrs. Helton, Wilks, Bunch, Ladd, and
Hamilton had accrued 33, 19, 21, 35, and 34 years of service, respectively.
(2) As of August 31, 1996, the amount of compensation covered by the Retirement
and Supplemental Plans for Messrs. Helton, Wilks, Bunch, Ladd, and Hamilton
was $325,000, $200,000, $155,000, $151,000, and $150,000, respectively,
which corresponded to each executive officer's annual base salary at that
date.
(3) The Supplemental Plan provides for (i) a pre-retirement death benefit for
the surviving spouse of a participant who dies while employed and has at
least 25 years of service with the Company and its subsidiaries equal to a
percentage of the final monthly salary of the participant, converted into an
amount that would be received by a surviving spouse under the Retirement
Plan on a joint and two-thirds survivor form of payment and reduced by the
amount that would be paid under the Retirement Plan; and (ii) post-
retirement death benefit protection in the amount of $70,000.
Employment Agreements
The Company has entered into employment agreements (the "Employment
Agreements") with the executive officers of the Company, including Messrs.
Helton, Wilks, Bunch, Ladd, and Hamilton, and one key employee. Following a
Change of Control (as defined in the Employment Agreements), the Employment
Agreements provide for a three-year employment term, and they specify the
employee's position, salary, bonus, and benefits payable during that period.
If, following a Change of Control, the employee's employment is terminated
before the end of the three-year term by the Company for any reason other than
cause, death, or disability or by the employee for "good reason" or for any
reason during the 30-day period immediately following the first anniversary of
consummation of the merger with Public Service Company of Colorado, then the
Company will pay to the employee a severance benefit in a lump sum equal to
three times the sum of (i) the employee's base salary (on an annualized basis)
for the year which includes the date of termination and (ii) the highest annual
bonus earned (whether or not deferred) by the employee during the three years
immediately preceding the year which includes the date of termination. In
addition, the Company will be obligated to (i) pay to the employee an amount
equal to a pro rata portion of the annual bonus paid to the employee for the
last full fiscal year, prorated based on the number of days in the current
fiscal year through the date of termination; (ii) continue to provide life
insurance, disability, health, dental, and other employee welfare benefits to
the employee and his dependents for a period equal to the lesser of three years
following the date of termination or until the employee obtains substantially
comparable coverage from another employer; (iii) treat the employee as if he
had continued participation and benefit accruals under the
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PROXY STATEMENT
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Supplemental Plan for three years following the date of termination; and (iv)
pay to the employee any compensation previously deferred by the employee,
together with any accrued earnings thereon.
A Change of Control occurred on January 31, 1996, when the shareholders
of the Company approved the agreement and plan of reorganization, as amended,
relating to a "merger-of-equals" transaction with Public Service Company of
Colorado.
Compensation of Directors
Members of the Board of Directors who are not employees of the Company
are paid (i) a retainer at the annual rate of $15,000 per fiscal year (or
fraction thereof), payable in monthly installments; (ii) $1,000 for
participation in each regular or special meeting of the Board of Directors;
(iii) $1,000 for participation in an informational meeting of the Board of
Directors if the Chairman of the Board, after consultation with the Chairman of
the Compensation Committee, deems compensation appropriate; (iv) $800 for
participation in each committee meeting of the Board of Directors; and (v) $500
for serving as Chairman of the Audit Committee or Chairman of the Compensation
Committee for each committee meeting attended.
Two non-employee members of the Board of Directors also serve on the
Board of Directors of the Company's subsidiaries -- Mr. Conklin serves on the
Board of Directors of Quixx Corporation, and Mr. Mock serves on the Board of
Directors of Utility Engineering Corporation. These directors are paid $1,000
for participation in each regular, special, or informational meeting of the
Board of Directors of the respective subsidiary.
Under the Directors' Deferred Plan, compensation payments may be
deferred in whole or in part at the election of the director. Compensation so
deferred may be denominated in dollars or in shares of the Common Stock
determined by reference to the average of the high and low market prices on the
date of deferral. Share-denominated accounts will be credited with dividends, if
any, and dollar accounts will be credited monthly at a rate equal to the base
rate of Bank One, Texas, N.A., Dallas, Texas.
On January 31, 1996, the Board of Directors adopted a tenure policy for
non-employee directors of the Company to assure the continued availability to
the Company of the directors' advice and counsel utilizing their varied
experience after their retirement. Under the policy, and in consideration of
the directors' agreement to provide advice and counsel to the Board of
Directors as requested, all non-employee directors retiring after the adoption
of the policy on their normal retirement date and having served a minimum of
ten years will be paid an annual retainer equal to their annual retainer in
effect on the director's retirement date. This retainer will be paid for ten
years in 120 equal monthly installments or until the death of the director,
whichever occurs first. In addition, any non-employee director who has served
as a director for at least ten full years and who does not seek reelection for
reasons other than a physical or mental disability or an inability or
unwillingness to conduct his or her duties as a director shall also be paid
this retainer.
Presently, only three directors have served a minimum of ten years.
---------------
Compensation Committee Report on Executive Compensation
General. The Compensation Committee of the Board of Directors (the
"Committee") is composed of independent, non-employee directors. The Committee
is responsible for reviewing and approving the compensation paid to executive
officers of the Company, including salaries, bonuses, stock options, and other
incentive awards, and administering the EPS Plan, the Incentive Plan, and the
1989 Plan. Following review
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PROXY STATEMENT
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and approval by the Committee, all issues pertaining to executive compensation
are submitted to the full Board of Directors for approval.
Compensation Policy for Executive Officers. The Committee's policy
regarding executive pay is to offer competitive and incentive-based
compensation to executive officers. That policy is based on the following
objectives:
. To enhance the Company's competitiveness by attracting and retaining
quality talent.
. To link executive officers' long-term earnings to the long-term
success of the Company.
. To reward individual performance as well as team accomplishments.
. To consider base and total compensation commensurate for similar
positions, as determined by reference to surveys of electric utility
companies based on comparable kilowatt-hour sales.
Other than as described under "Components of Compensation/Annual
Incentives" below, there is no specific formula pursuant to which any executive
officer's compensation is adjusted or incentive awards are made. Consideration
is given to the Company's return on equity, cash flow, dividends, and other
factors. Executive officers' contributions to such items are subjectively
evaluated by the Committee (after consultation with the Chief Executive Officer
and the Chief Operating Officer) in determining adjustments to salaries and
whether incentive awards will be made.
In determining compensation for executive officers, the Committee
reviews and considers compensation information, adjusted for the consumer price
index, from companies with comparable kilowatt-hour sales and targets the
average compensation levels of individuals in comparable positions at these
companies. The Committee believes that these companies are the Company's most
direct competitors for executive talent. Thus, the peer group used to compare
total compensation is not the same as the S&P 24 Electric Utilities Index used
in the performance graph included in this proxy statement.
Based on the Company's current level of compensation, it is not
necessary to adopt a policy at this time with respect to Section 162(m) of the
Internal Revenue Code.
Components of Compensation/Base Salary. Salary grades with minimum,
midpoint, and maximum ranges were established as guidelines for each executive
officer position based on salary information from comparable companies as
described above. Once a range is established for a particular position, the
base salary compensation of each executive officer is determined by the
potential impact of each executive on the Company's operations, the skills and
experience required by the job, and the performance and potential of the
executive in the job. The Chief Executive Officer annually reviews the other
executive officers' base salaries, and the Committee acts after considering the
recommendations of the Chief Executive Officer. Base salary adjustments are
based on a subjective evaluation of each executive's performance against
established individual expectations and objectives, the executive's
compensation position within a designated salary range, and individual
performance, initiative, and contribution to the achievement of goals, such as
earnings growth and containment of operating and maintenance expenses. In
determining an appropriate salary adjustment, consideration is also given to
the level of responsibility, the experience of the executive, the degree to
which planned objectives were achieved, the competitiveness of the executive's
compensation, and the profitability of the Company. In making its decision, the
Committee does not assign specific weights to the factors considered.
The midpoint in the salary grade for the Chief Executive Officer was the
average of the Chief Executive Officers' salaries in comparable companies. Mr.
Helton's base salary is below that midpoint.
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PROXY STATEMENT
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Mr. Helton has been the Chief Executive Officer of the Company since
October 1990. His salary is set annually as of January 1 by the Board of
Directors upon the recommendation of the Committee. In recommending the salary
set as of January 1, 1996, the Committee acknowledged Mr. Helton's leadership
and contributions to planning and strategy development. After reviewing
earnings and dividends for fiscal 1995, the Committee decided that the salary
for each executive officer, including Mr. Helton, should be increased, and that
Mr. Helton's salary should be increased from $305,000 to $325,000.
Components of Compensation/Annual Incentives. Each executive officer is
entitled to a minimum annual bonus award pursuant to the agreements described
above under "Employment Agreements" equal to the average of the highest annual
bonuses payable to the executive officer for two of the last three fiscal years
preceding the date of the Change of Control. In addition, executive officers,
including Mr. Helton, are provided an opportunity to receive incentive awards
above the minimum amount in accordance with a policy that rewards individual
and team performance versus established objectives. Each fiscal year is a
performance period (the "Performance Period") for evaluating employee and
Company performance. The amount available to be placed in the pool for any
Performance Period is 0.5 percent of the Company's fiscal year earnings
applicable to the Common Stock. However, 50 percent of the amount available for
the pool is funded only if the Company's actual return on average common
shareholders' equity is at least 90 percent of the Company's budgeted return
for the Performance Period, as approved by the Board of Directors. That goal
was not met for the 1996 Performance Period primarily because of merger- and
transition-related expenses. The remainder of the amount available for the pool
may be funded to the extent the Committee determines that management has
substantially met certain goals approved by the Committee at the beginning of
the Performance Period and after considering other appropriate criteria. For
the 1996 Performance Period, 7 of the 14 goals were achieved. The goals for the
1996 Performance Period related to the critical merger- and transition-related
tasks; reduction of employee personal injuries; production plant equivalent
availability factors; various expenses per customer; wholesale markets;
on-system residential, commercial, industrial, agricultural, and wholesale load
additions; net income increase for Utility Engineering Corporation; index of
reliability; reduction in employee absenteeism; fuel and purchased power cost
per kilowatt-hour sold; operating income per kilowatt-hour sold; production
expenses, excluding fuel and purchased power per kilowatt-hour generated;
off-system sales margin revenue per share; and net income increase for Quixx
Corporation (the last seven goals were not met). The amount available to be
awarded based on the achievement of these specific goals, if each goal were
given equal weight, would have been less than the amount provided under the
Employment Agreements. However, the Committee believed that the merger- and
transition-related activities undertaken by the executive officers have a
greater potential of increasing shareholder value in the long term than the
achievement of certain of the other goals and should be given greater weight.
Therefore, the Committee determined that the overall performance of the
executive officers and, in particular, the contributions of each executive
officer in merger-related tasks and the transition process deserved recognition
and awarded bonuses in an amount equal to the minimum bonus awards provided in
the Employment Agreements to each executive officer, other than Mr. Helton and
Mr. Wilks, whose bonuses exceeded the minimum provided in the Employment
Agreements. A participant may defer distribution of all or a portion of his
benefits so that they will be payable over the five-year period following
retirement; however, all deferred amounts will be paid to a participant upon
consummation of the merger. Interest on deferred benefits is accrued at the
prime rate of interest.
Mr. Helton was granted an annual bonus incentive award for the 1996
Performance Period of $100,000. The Committee determined this bonus award based
upon a subjective evaluation of Mr. Helton's leadership in planning, strategy
development, and overall performance of the Company and his contributions in
connection with merger-related activities and the transition process.
Components of Compensation/Long-term Incentives. The 1989 Plan permits
the grant to executive officers of stock options and awards of the Common Stock
(including restricted stock) on terms and
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14
PROXY STATEMENT
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conditions determined by the Committee and approved by the Board of Directors.
The Committee considers these equity-based awards to be an integral part of the
Company's overall compensation program for executive officers, including Mr.
Helton. Long-term incentive compensation is intended to promote long-term
growth, to allow participants to acquire the Common Stock and thereby further
correlate their personal interests with the interests of other shareholders, and
to enable the Company to match long-term compensation with long-term
performance. Through these grants, the actual amount of the executive officers'
long-term compensation depends on future increases in shareholder value. The
Committee's goal is to increase executive ownership of the Common Stock so that
executive officers will have a significant interest as shareholders in the
Company's performance. On July 23, 1996, Mr. Helton and the other executive
officers were granted performance non-certificated restricted stock awards
consisting of that nearest number of whole shares of the Common Stock equal to
20 percent of the executive officer's base salary on September 1, 1996, divided
by the fair market value on September 1, 1996, subject to certain performance
objectives and vesting restrictions. A stock certificate will be issued in the
executive's name for up to 100 percent of the shares as soon as practicable
after September 1, 1997, on the basis of 25 percent of the shares for attaining
each of the following four performance objectives for the fiscal year ending
August 31, 1997: (i) total shareholder return on the Common Stock equal to or
better than the S&P 24 Electric Utilities Index, (ii) total return on common
equity of the Company at least equal to or better than the third highest of the
ten utilities comparable to the Company in kilowatt-hour sales, (iii) average
retail rates of the Company equal to or better than the third lowest when
compared to the average retail rates of the composite regional companies, and
(iv) dividend payout ratio of 90 percent or less of the Company's annual
earnings per share. Thus, 100 percent of the shares will be transferred to the
executive if all four performance objectives are met. Restrictions will lapse
and the shares will vest on the earlier of (i) September 1, 1997, and (ii)
consummation of the merger with Public Service Company of Colorado; provided
that if such vesting occurs before September 1, 1997, the performance objectives
will be measured from September 1, 1996, to a specified date before consummation
of the merger, and the number of shares awarded will be prorated based on the
date of the merger.
Performance Units, pursuant to the EPS Plan, were previously granted to
the executive officers in each fiscal year ended August 31, 1993, 1994, and
1995, to increase share ownership by encouraging the exercise of options granted
under the 1989 Plan in circumstances where actions by the key employees of the
Company and its subsidiaries have improved shareholder returns. Additional
Performance Units were granted on July 25, 1995, in each of the seven fiscal
years ending August 31, 1996, through 2002. The Performance Units equal the
amount of the executive's base salary actually paid during each fiscal year,
i.e., one Performance Unit per $1 of base salary. Each Performance Unit creates
a credit to each executive officer's account in an amount derived by multiplying
the increase, if any, of earnings per share of the Common Stock for the current
fiscal year over the prior year's earnings per share by the executive officer's
Performance Units. The executive officer must apply all dollar amounts thereby
credited to his account to the exercise price of options granted pursuant to the
1989 Plan, except in certain instances as provided in the EPS Plan. When amounts
credited to the executive officer's account become subject to the payment of
income taxes, his account is also credited in that amount.
The Performance Units granted for the fiscal year ended August 31, 1996,
had no value because earnings for the 1996 fiscal year did not increase over
those of the 1995 fiscal year.
Mr. Gene H. Bishop, a director of the Company, was appointed to the
Committee on January 31, 1996.
Compensation Committee of the Board of Directors: Giles M. Forbess, Chairman
Gene H. Bishop
R. R. Hemminghaus
J. Howard Mock
------------------
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15
PROXY STATEMENT
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Performance Graph
Below is a graph comparing the cumulative total shareholder return on
the Common Stock with the cumulative return of companies in the S&P 500 Stock
Index and the S&P 24 Electric Utilities Index.
This illustration assumes $100 invested on August 31, 1991, in the
Company, the S&P 500 Stock Index, and the S&P 24 Electric Utilities Index. Each
mark on the axis displaying the years 1991 through 1996 represents August 31 of
that year. Total return includes reinvestment of all dividends. The historical
shareholder return shown below may not indicate future performance.
Five-year Cumulative Total Shareholder Return Comparison
Performance Graph
[SWPS PERFORMANCE GRAPH APPEARS HERE]
August 31,
--------------------------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
The Company...................... $100 $111 $112 $106 $128 $150
S&P 500 Stock Index.............. 100 108 124 128 155 183
S&P 24 Electric Utilities Index.. 100 116 145 129 151 168
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PROXY STATEMENT
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OTHER OWNERSHIP OF EQUITY SECURITIES
The following table contains certain information regarding persons who
the Company has been advised are beneficial owners of more than 5 percent of the
Common Stock as of the date indicated in the footnote to the table.
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent of Class
-------------------------------- -------------------- ----------------
Franklin Resources, Inc. 3,380,250(1) 8.3
777 Mariners Island Boulevard
San Mateo, California 94403-7777
- ---------------------
(1) According to Schedule 13G filed as of December 31, 1995, with the Securities
and Exchange Commission by Franklin Resources, Inc. ("Franklin"), Franklin
had (i) sole voting power with respect to 3,367,000 shares; (ii) sole
dispositive power with respect to 1,100 shares; and (iii) shared dispositive
power with respect to 3,379,150 shares.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The firm of Deloitte & Touche LLP has been appointed by the Board of
Directors to audit the accounts of the Company for the 1997 fiscal year, or for
a shorter period that may be necessary as a result of completing the merger
with Public Service Company of Colorado. Deloitte & Touche LLP has been the
Company's independent public accountants since 1993. Representatives of the
firm are expected to attend the Meeting to answer appropriate questions which
any shareholder may ask, and those representatives will have an opportunity to
make a statement to the Meeting if they desire to do so.
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PROXY STATEMENT
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OTHER MATTERS
The Board of Directors knows of no business to be presented for
consideration at the Meeting other than that stated in the Notice of Annual
Meeting of Shareholders. If any other business should come before the Meeting,
the persons named as proxies in the enclosed proxy intend to vote in accordance
with their judgment on such business. The cost of this proxy solicitation will
be borne by the Company. Proxies may be solicited by mail, personal interview,
telephone, telegraph, and facsimile by officers, directors, and regular
employees of the Company. To assist in the solicitation of proxies, the Company
has retained Corporate Investor Communications, Inc., at a fee of $6,250, plus
expenses. The Company will reimburse brokers, banks, and other nominees for
their reasonable expenses in sending proxy materials to beneficial owners.
For a shareholder proposal to be included in next year's proxy
statement, it must be submitted to the Company by August 4, 1997.
By order of the Board of Directors,
Robert D. Dickerson
Secretary
Dated: December 2, 1996
---------------------
The Annual Report of the Company for the fiscal year ended August 31,
1996, was mailed to the shareholders beginning on or about November 15, 1996. If
you have not received the Annual Report, please notify James D. Steinhilper,
Group Manager, Finance, or Louise C. Ross, Manager, Investor Relations,
Southwestern Public Service Company, P. O. Box 1261, Amarillo, Texas 79170,
telephone: 806-378-2121, and a copy will be sent to you.
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18
SOUTHWESTERN PUBLIC SERVICE COMPANY
TYLER AT SIXTH
AMARILLO, TEXAS 79101
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P
The undersigned, revoking all proxies heretofore given, hereby appoints
R Bill D. Helton, David M. Wilks, and Robert D. Dickerson, and each of them,
as proxies of the undersigned, with full power of substitution, to vote the
O Common Stock of the undersigned at the Annual Meeting of Shareholders of
Southwestern Public Service Company to be held at 11:00 a.m., local time,
X on January 8, 1997, and at any adjournment or adjournments thereof as
specified herein.
Y
(If your address has changed, pleaase provide new address and mark the
"Change of Address" box on the reverse side of this card.)
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
YOU MAY SPECIFY YOUR CHOICE BY MARKING A BOX ON THE REVERSE SIDE, BUT IF YOU DO
NOT SPECIFY A CHOICE, THE PROXIES WILL VOTE AS RECOMMENDED BY THE BOARD OF
DIRECTORS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS
PROXY CARD.
SEE
REVERSE
SIDE
[X] Please mark your SHARES IN YOUR NAME REINVESTMENT SHARES
vote as in this
example.
FOR WITHHELD
1. Election of The Board of Directors recommends a vote
Directors [_] [_] FOR these nominees:
CLASS I DIRECTORS: J. C. Chambers, Giles
M. Forbess, Shirley Bird Perry, and
David M. Wilks.
For, except vote
withheld from the 2. In their discretion, the proxies
following nominee(s): are authorized to vote upon any other
business that may properly come before
the Annual Meeting or any adjournment
-------------------------------- or adjournments thereof.
[_] Change
of
Address
SIGNATURE(S) DATE
-------------------------------- ------------
SIGNATURE(S) DATE
-------------------------------- ------------
NOTE: Please sign exactly as name appears above. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in partnership
name by an authorized person.