-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, OC/nToipFlpdrmaRkKw5d+rpDTYLERYim/mt48UdA2LZNmV+vDSTTdyE8lbPgG4g 8KCJ1gC1ROe5mNRjMcblCA== 0000081018-95-000011.txt : 19950414 0000081018-95-000011.hdr.sgml : 19950414 ACCESSION NUMBER: 0000081018-95-000011 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950410 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUBLIC SERVICE CO OF COLORADO CENTRAL INDEX KEY: 0000081018 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 840296600 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-03280 FILM NUMBER: 95527848 BUSINESS ADDRESS: STREET 1: 1225 17TH ST STE 300 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3035717511 MAIL ADDRESS: STREET 1: P O BOX 840 STE 300 CITY: DENVER STATE: CO ZIP: 80201 DEF 14A 1 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant (X) Filed by a Party other than the Registrant ( ) Check the appropriate box: ( ) Preliminary Proxy Statement (X) Definitive Proxy Statement ( ) Definitive Additional Materials ( ) Soliciting Material Pursuant to Section 240.14a-11(c) of Section 240.14a 12 Public Service Company of Colorado (Name of Registrant as Specified In Its Charter) ________________________________________________________________________ Name of Person(s) Filing Proxy Statement Payment of Filing Fee (check the appropriate box): (X) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6 (i)(2). ( ) $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). ( ) Fee computed on table below per Exchange Act Rules 14a- 6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: __________________________ 2) Aggregate number of securities to which transaction applies: __________________________ 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11, (1) 4) Proposed maximum aggregate value of transaction: __________________________ (1) Set forth amount on which the filing fee is calculated and state how it was determined. ( ) Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount previously paid: 2) Form, Schedule or Registration Statement No: 3) Filing Party: 4) Date Filed: April 10, 1995 Dear Shareholder: You are invited to attend the Annual Meeting of Shareholders (the "Meeting") of Public Service Company of Colorado (the "Company"). The 1995 Meeting will be held: DATE: May 11, 1995 TIME: 10:00 A.M., Denver time PLACE: Adam's Mark Hotel, 1550 Court Place Grand Ballroom - Lobby Level Denver, Colorado The attached Notice of Annual Meeting and Proxy Statement cover the formal business of the Meeting. The Meeting will consider the election of Directors and the approval of independent public accountants. The accompanying Proxy Statement contains discussion of the matters to be considered. At the Meeting, your management will report on the operations of the Company, and Directors and officers of the Company will respond to questions that shareholders may have. The Board of Directors encourages you to promptly complete, date, sign and return your Proxy Card. Return of the Proxy Card indicates your interest in the Company's affairs. If you attend the Meeting and wish to vote your shares personally, you may revoke your proxy at that time. Sincerely yours, /s/D. D. Hock Chairman of the Board Notice of Annual Meeting of Shareholders May 11, 1995 To the Shareholders of the Company: NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Meeting") of Public Service Company of Colorado (the "Company") will be held on the 11th day of May, 1995, at the Adam's Mark Hotel, Grand Ballroom, 1550 Court Place, Denver, Colorado, at 10:00 A.M., Denver time, for the purposes of (1) electing a Board of Directors for the ensuing year, (2) approving the appointment of Arthur Andersen & Co. as independent public accountants for the 1995 calendar year, and (3) transacting such other business as may properly come before the Meeting or any adjournment or adjournments thereof. The holders of record of Common Stock at the close of business on March 24, 1995, will be entitled to vote at the Meeting and at any adjournments thereof. Proxy soliciting material is being mailed to shareholders commencing on April 10, 1995. By order of the Board of Directors. Dated: April 10, 1995. W. WAYNE BROWN Corporate Secretary The shareholders of the Company are urged to attend the Meeting, if possible. Please complete, date and sign the enclosed form of proxy now and mail it promptly in the self-addressed, postage paid envelope enclosed for that purpose, even if you presently plan to attend the Meeting. Any shareholder present at the Meeting may nevertheless vote personally on all matters with respect to which such shareholder is entitled to vote. PROXY STATEMENT This Proxy Statement is furnished in connection with the solicitation by and on behalf of the Board of Directors of Public Service Company of Colorado, a Colorado corporation (the "Company"), of proxies to be voted at the Annual Meeting of Shareholders (the "Meeting") of the Company to be held on May 11, 1995, at the time and place and for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders and at any and all adjournments of the Meeting. A form of proxy for use at the Meeting is enclosed. Any shareholder signing a proxy has the power to revoke the same in writing, addressed to the Secretary of the Company, or in person at the Meeting at any time before the proxy is exercised. The entire cost of the solicitation of proxies will be borne by the Company. Solicitations will be made by the Company primarily by use of the mails. Additional solicitation of proxies of brokers, banks, nominees and institutional investors will be made pursuant to the special engagement of Beacon Hill Partners, Inc., at a cost to the Company of approximately $3,500, plus out-of-pocket expenses. If necessary to obtain reasonable representation of shareholders at the Meeting, solicitations by the Company may also be made by telephone, facsimile, or personal interview. The Company will request brokers, banks, or other persons holding stock in their names or in the names of their nominees to forward proxy material to the beneficial owners of such stock or request authority for the execution of the proxies and will reimburse such brokers or other persons for their expenses in so doing. At March 24, 1995, the Company had outstanding 62,692,927 shares of Common Stock, par value $5 per share, entitled to one vote per share. In lieu of closing the stock transfer books of the Company, the Board of Directors fixed March 24, 1995, as the record date for the determination of shareholders entitled to vote at the Meeting and at any and all adjournments thereof. Colorado Law and the By-laws of the Company provide that a majority of the shares entitled to vote shall constitute a quorum at a meeting of shareholders of the Company. The Annual Report to shareholders for the year ended December 31, 1994, which is not a part of this Proxy Statement, was mailed commencing on March 24, 1995, under separate cover to shareholders of record. The Board of Directors urges shareholders to complete, date, sign and return their proxies promptly. ELECTION OF DIRECTORS A board of fourteen Directors of the Company (the "Directors") is to be elected at the Meeting. These Directors will hold office until the next annual election and until their successors shall be duly elected and qualified. The nominees below will be elected Directors of the Company if they each receive the affirmative vote of a majority of the shares represented at the Meeting and entitled to vote. The indication of a "withholding" of a vote on a nominee will have the same effect as a vote against the particular nominee. The Restated Articles of Incorporation of the Company do not permit cumulative voting. Shares represented by an executed proxy in the form enclosed will be voted for the election of the following nominees as Directors of the Company, unless otherwise directed: 2 WAYNE H. BRUNETTI Wayne H. Brunetti is president and chief operating officer of Public Service Co. of Colorado. Since assuming this position in July 1994, he is responsible [PHOTO] for managing all operating functions within the company. Mr. Brunetti is the former president and chief executive officer of Management Systems International, a Florida management consulting firm that he founded in 1991. Prior to that, he was executive vice president of Florida Power & Light Company, where he had responsibility for more than half of that company's operations. Mr. Brunetti began Age 52 his business career in 1964 in Florida Power & Light's Director since 1994 treasury department. He worked his way through positions including assistant comptroller, assistant to the vice president of public affairs, vice president of energy management and group vice president. His career at Florida Power & Light spanned nearly 28 years before he left the company to form his own consulting business. Mr. Brunetti has been active in various professional and civic groups, including serving on numerous committees with the Electric Power Research Institute and the Edison Electric Institute. He holds a B.S. in Business Administration from the University of Florida, and he is a graduate of the Harvard Business School's Program for Management Development. COLLIS P. CHANDLER, JR. (g) Collis P. Chandler, Jr. is chairman and chief executive officer of Chandler & Associates, Inc. Chandler & Associates, Inc. is engaged in the oil and [PHOTO] gas exploration and production business with emphasis in the Rocky Mountain region. He is also president of Chandler-Simpson, Inc. Mr. Chandler founded the Chandler Companies in 1955. He received a B.S. in Mechanical Engineering from Purdue University in 1948 and is a Registered Professional Engineer in Colorado. Mr. Chandler is a member of the National Petroleum Council and served as its chairman from 1976 to 1979. Age 68 In 1979, he received the Secretary of Energy's Director since 1985 Distinguished Service Medal for his service as chairman of the Council. He is a director of the American Petroleum Institute, and in 1994 was the recipient of its highest award, the Gold Medal for Distinguished Achievement. He is a former director of the Gas Research Institute and a past chairman of the Natural Gas Supply Committee, a Washington, D. C.- based committee of large and small producers of natural gas. He is a past president of the Purdue University Alumni Association and a former member of 3 the Purdue Foundation Board of Governors. He is also a member of the Rocky Mountain Association of Geologists, the American Association of Petroleum Landsmen and the Society of Petroleum Engineers. DR. DORIS M. DRURY (a)(h) Dr. Doris M. Drury is the John J. Sullivan Professor [PHOTO] of Free Enterprise Economics at Regis University, a position she has held since January 1990. She was also executive director of the MBA Program until July 1993 when Dr. Drury became special assistant to the president of Regis University. Prior to her positions with Regis University, she was a professor of economics at the University of Denver for 24 years. She is also president of the Center for Business and Age 68 Economic Forecasting, Inc. Dr. Drury is a director of Director since 1975 Equitable of Iowa Companies and Blue Cross/Blue Shield of Colorado. She served on the Colorado Bankers Association's Project Consensus Task Force and on the Governor's Management and Efficiency Study Committee. Dr. Drury was previously chairperson of the Board of Directors of the Federal Reserve Bank of Kansas City, Missouri, and chairperson of the Department of Economics and Public Affairs Program and director of the Division of Research at the University of Denver. THOMAS T. FARLEY (c) Thomas T. Farley is a senior partner in the law firm [PHOTO] of Petersen & Fonda, P.C. in Pueblo, Colorado, which he joined in 1974. He received his LL.B. from the University of Colorado and a B.S. in Economics from the University of Santa Clara, where he is now a member of its Board of Regents. He was formerly president of the governing boards of Colorado State University, the University of Southern Colorado and Ft. Lewis College, and he served as chairman of the Age 60 Colorado Wildlife Commission. He also served as Director since 1983 Minority Leader of the Colorado House of Representatives from 1967 to 1975. Mr. Farley is a 4 recipient of distinguished service awards from the Board of Regents of the University of Colorado and the University of Southern Colorado, as well as the Foremost Among Fifty Award from Sierra Club International. He is a director of Health Systems International, Inc. (f\k\a Qual-Med, Inc.), a publicly traded, multi-state health maintenance organization and a member of its Executive and Audit Committees. He is also a community director of Norwest Pueblo and Norwest Sunset, and a member of Norwest Bank Colorado's statewide Community Reinvestment Committee. He is a member of the Colorado Forum and is a trustee of the Farley Foundation and the Great Outdoors Colorado Trust Fund. GAYLE L. GREER (c) Gayle L. Greer is vice president of Time Warner Cable (successor to American Television & Communications Corporation) and group vice president for Time Warner [PHOTO] Cable's National Division. She has held such positions since 1984. Prior to 1984, she was manager, director and vice president of new market development for Time Warner Cable. Ms. Greer serves on the Community Board of Bank One-Denver and is a director for Blue Cross/Blue Shield of Colorado. She is a Age 53 member of the Executive Committee of Mile High United Director since 1986 Way, The Women's Forum of Denver, the National Association of Minorities in Cable Foundation, the Women in Cable Foundation and Ocean Journey Aquarium. She is a recipient of the INROADS Corporate Achiever Award, the Martin Luther King Social Responsibility Award and the National Cable Television Association's Vanguard Award for Leadership. Ms. Greer received a B.S. in Political Science and Sociology and a Masters in Social Work from the University of Houston. A. BARRY HIRSCHFELD (e) A. Barry Hirschfeld is president of A. B. Hirschfeld [PHOTO] Press, Inc., a commercial printing company. He has held this position since 1984. He is the third generation to head this family-owned business, which was founded in 1907. Mr. Hirschfeld is also founder and co-owner of Colorado Carphone Corporation, which was organized in 1983. He received his M.B.A. from the University of Denver and a B.S. in Business Administration from California State Polytechnic Age 52 University. Mr. Hirschfeld and his wife received the Director since 1988 1991 University of Denver Alumni Association award for community service. Mr. Hirschfeld serves on the boards of directors of the Boettcher Foundation; Mountain States Employers Council, where he serves as vice chairman/chairman elect; the Colorado Business 5 Committee for the Arts; the Rocky Mountain Multiple Sclerosis Center; the National Conference of Christians and Jews; the Allied Jewish Federation Endowment Fund; the Boy Scouts of America; the Cherry Creek Arts Festival; and the National Jewish Center, where he serves as vice president of the board. He is also a member of the Scientific and Cultural Facilities District Board for Colorado and a member of the KUSA 9Who Care Board of Governors. Mr. Hirschfeld is past chairman of the Denver Metro Convention and Visitors Bureau and the Denver Art Museum; past president of the Metro Denver Executive Club; past vice president of Graland Country Day School and a past board member of the Allied Jewish Federation. D. D. HOCK (b) D. D. Hock is chairman and chief executive officer of [PHOTO] Public Service Co. of Colorado. He began his career with Public Service Co. in 1962 as director of auditing. In 1973, he was elected assistant vice president of accounting and controller, in 1976 he became vice president of accounting and secretary, and in 1985 he was elected senior vice president of utility services and to the board of directors. Mr. Hock became president and chief operating officer in Age 59 1986 and assumed the position of president and chief Director since 1985 executive officer in October 1988. In December 1988, he was elected chairman of the board effective February 1989. Mr. Hock received a B.S. in Accounting from the University of Colorado, Boulder. He serves on the board of trustees for Mile High United Way and on its campaign cabinet. He also serves on the boards of the Denver Area Council/Boy Scouts of America; the Committee for Economic Development; the Colorado Business Alliance for Youth; the University of Colorado President's Business Council; the University of Colorado Foundation; and the Economic Club of Colorado. He also serves as director of the Stapleton Redevelopment Foundation, the Greater Denver Corporation, and the Mountain States Employers Council. He is on the boards of directors of the Edison Electric Institute, Electric Power Research Institute, the Western Energy Supply and Transmission (WEST) Associates, and the Association of Edison Illuminating Companies. He also serves on the Western Regional Council Board of Trustees. Mr. Hock is a member of the Colorado Forum, Colorado Society and American Institute of Certified Public Accountants, the Western Stock Show Association Board of Directors and The Rotary Club of Denver. 6 GEORGE B. McKINLEY (a)(g) George B. McKinley is active in the banking, [PHOTO] investment and cattle businesses. Mr. McKinley is chairman and chief executive officer of First National Banks in Evanston and Kemmerer, Wyoming, and he is a director and president of First McKinley Corporation, a bank holding company. He served as president and chief executive officer of C.C.B., Inc., and of the Central Bancorporation, Inc. (Denver), until November 1985. Mr. McKinley is active in the American, Age 67 Colorado and Wyoming bankers associations and is a Director since 1976 former director of the Wyoming Bankers Association. WILL F. NICHOLSON, JR. (a)(g) Will F. Nicholson, Jr. is chairman of Rocky Mountain [PHOTO] Bank Card System Inc., a credit card company. On February 28, 1995, he retired as chairman, director, chief executive officer and president of Colorado National Bankshares, Inc., a bank holding company. He was elected president of Colorado National Bankshares, Inc. in 1975 and chairman and chief executive officer in 1985. Mr. Nicholson serves as chairman of the Greater Denver Corporation and as a director of First Age 65 Bank System, Inc.; Boys and Girls Clubs of Metro Director since 1981 Denver; HealthONE; the Colorado Golf Association; the National Western Stock Show Association; Downtown Denver, Inc.; the Greater Denver Chamber of Commerce; and the U.S. Chamber of Commerce. He is chairman of Visa, U.S.A., Inc. and a director of Visa International. Mr. Nicholson has participated in many civic and charitable enterprises, including the Denver Urban Renewal Authority, the Denver Board of Water Commissioners, the Judicial Selection Committee for the Second Judicial District, the United States Golf Association and Mile High United Way. 7 J. MICHAEL POWERS (d) J. Michael Powers has been president of Powers Brick & [PHOTO] Tile of Cheyenne and Fort Collins and of Powers Products Co., a specialty construction company in Cheyenne and Denver, since 1974. A native of Cheyenne, Wyoming, Mr. Powers is a director of the American National Bank - Cheyenne. He is past chairman of Cheyenne LEADS, an economic development organization, and has also served as president of the Age 52 Cheyenne Chamber of Commerce. Mr. Powers is a 1965 Director since 1978 graduate of the University of Arizona. THOMAS E. RODRIGUEZ (c) [PHOTO] Thomas E. Rodriguez is a CPA in Colorado and has been president and general manager of Thomas E. Rodriguez & Assoc., P.C., a certified public accounting firm, since 1985. Mr. Rodriguez served as a director and president of Rodriguez, Roach & Assoc., P.C. from 1982 to 1985. He is a director of Mercy Housing, Inc. and Accurate Machining, Inc. He is a trustee of the Colorado Historical Foundation and the American Tax Policy Institute in Washington, D. C., as well as Age 50 president of the Colorado Association of Hispanic CPAs Director since 1986 and the Archdiocesan Finance Council of Denver. Mr. Rodriguez has served since 1982 as an Appeals Court Judge for the Selective Service System. Until 1993, he served as a director of the Federal Reserve Bank in Kansas City, and in 1985 he was president of the National Association of Hispanic CPAs. Mr. Rodriguez is a past president of the Latin Chamber of Commerce; and a past director of the Executive Committee of the SBA in Washington, D. C., the Denver Chamber of Commerce and Skyline Office Products. He has also served as chairman of the Leadership Denver Selection Committee and was a member of the Colorado Hispanic Advisory Council, the Minority Energy Task Force for Colorado, and the Colorado Small Business Council. He was named Colorado Accountant Advocate of the Year in 1983 and Colorado Small Businessman of the Year in 1982. Mr. Rodriguez was also named one of the 10 outstanding business and professional leaders by the publishers of the Minority Business and Professional Directory. He received a B.S. in Business and Accounting from Colorado State University. [PHOTO] RODNEY E. SLIFER (e) Rodney E. Slifer is a partner in Slifer, Smith & Age 60 Frampton/Vail Associates LLC, a diversified real Director since 1988 estate company. He served as president of Slifer & 8 Company from 1968 until 1989. He is currently a director of Alpine Banks of Colorado, a position he has held since 1983. Mr. Slifer is vice president and a board member of the Vail Valley Foundation and co- founder and director of the Jerry Ford Invitational Golf Tournament. Mr. Slifer has served as mayor and a member of the Town Council for the Town of Vail; a board member of Colorado Open Lands, a member of the Urban Land Institute and a board member of the University of Colorado Real Estate Council. W. THOMAS STEPHENS (f)(g) W. Thomas Stephens is chairman, president and chief executive officer of Manville Corporation, an [PHOTO] international manufacturing and natural resources company. Mr. Stephens began his career with Manville Corporation in 1963. In October 1982, he was elected president of Manville Forest Products Corporation, a subsidiary of Manville Corporation. He was elected chief financial officer and executive vice president of Manville Corporation in December 1984, president in Age 52 April 1986, and chief executive officer in September Director since 1989 1986. He has been a member of the Manville Corporation Board since March 1986, and became its chairman in June 1990. Mr. Stephens serves on the boards of directors of Riverwood Corporation and Ball Corporation. He is also a member of The Business Roundtable and The Conference Board. Mr. Stephens received his B.S. and M.S. degrees in Industrial Engineering from the University of Arkansas. ROBERT G. TOINTON (a)(g) Robert G. Tointon is president and chief executive [PHOTO] officer of Phelps-Tointon, Inc., a position he assumed in June 1989. Phelps-Tointon, Inc. is a specialty construction contractor formed by Mr. Tointon in June 1989 as a spin-off of certain assets of Phelps, Inc., where he served as president since 1982. Phelps- Tointon, Inc. has four operating divisions: Rocky Mountain Prestress, Southern Steel Company, Phelps- Tointon Millwork and Armor Safe Corporation. Prior to Age 61 1982, Mr. Tointon was president of Hensel Phelps Director since 1988 Construction Company. Mr. Tointon is a director of the Writer Corporation and a former director of Mountain Bell and Bank One of Colorado. Mr. Tointon is chairman of Agenda 21 and a member of the Greeley Rotary Club and the Colorado Forum. 9 NOTES The age of each Director is as of December 31, 1994. (a) Member of Executive Committee. (b) Chairperson of Executive Committee. (c) Member of Audit Committee. (d) Chairperson of Audit Committee. (e) Member of Pension Investment Committee. (f) Chairperson of Pension Investment Committee. (g) Member of Compensation Committee. (h) Chairperson of Compensation Committee. If, at the time of the Meeting, any of these nominees will be unable to serve in the capacity for which he or she is nominated or will not be a candidate, an event which the Board of Directors does not anticipate, it is the intention of the persons designated as proxies to vote, in their discretion, for other nominees. The Company has a standing Executive Committee which exercises, subject to limitations provided by law, all the authority of the Board of Directors in the management of the Company between the meetings of the Board of Directors. The Executive Committee met two times during 1994. The Company has a standing Audit Committee, which held nine meetings during 1994. The functions of the Audit Committee are to select and recommend to the Board of Directors a firm of independent public accountants to audit annually the books and records of the Company and its consolidated subsidiary companies; to review the scope of such audit; to receive and review the audit reports and recommendations; to transmit such audit reports and recommendations to the Board of Directors; to review the internal control procedures of the Company and its consolidated subsidiary companies and recommend to the Board of Directors any changes deemed necessary in such procedures; and to perform such other functions as the Board of Directors from time to time may delegate to the Audit Committee. The Company has a standing Pension Investment Committee, which provides investment oversight for the assets of the Company's Employees' Retirement Plan and the Employees' Savings and Stock Ownership Plan. The Pension Investment Committee appoints executives responsible for the management of pension plan assets, and approves investment objectives and policy guidelines for them to follow. The Pension Investment Committee receives regular reports on the status of pension plan and savings plan assets and reports at least annually to the Board of Directors. The Pension Investment Committee held two meetings in 1994. The Company has a standing Compensation Committee, which reviews performance of and recommends salaries and other forms of compensation 10 for executive officers. The Compensation Committee annually reviews the process of establishing salaries and wages of Company employees; reviews the process of management development and long-range planning for Company development; and reviews and makes recommendations regarding fees and other compensation for Directors. In addition, the Compensation Committee is responsible for the oversight of the Omnibus Incentive Plan, the appointment of an executive officer responsible for day to day management of such plan, and the approval of the guidelines for the granting of awards under the Omnibus Incentive Plan. The Compensation Committee met eight times during 1994. Sixteen meetings of the Board of Directors were held during 1994. All incumbent Directors attended 75% or more of the aggregate of the meetings of the Board and the committees on which they served in 1994. The Company does not have a nominating committee, but the Executive Committee functions in that capacity. Shareholders wishing to nominate candidate(s) for future consideration by the Executive Committee may do so by writing to the Secretary of the Company, at the address shown on the cover of this proxy, giving the candidate's name, biographical data and qualifications. Nominations must be received by September 30 of the year preceding the annual meeting date. 11 Security Ownership of Management and Directors as of January 31, 1995
Title of Class Name of Beneficial Owner Amount and nature % of class of (d) (a) beneficial ownership (c) Common Stock Wayne H. Brunetti 4,000 Common Stock Collis P. Chandler, Jr. (1) 7,201 Common Stock Dr. Doris M. Drury 1,608 Common Stock Thomas T. Farley (2) 3,085 Common Stock Gayle L. Greer 579 Common Stock A. Barry Hirschfeld (3) 4,329 Common Stock Delwin D. Hock (4) 39,891(e) Common Stock George B. McKinley 1,000 Common Stock Will F. Nicholson (5) 2,110 Common Stock J. Michael Powers (6) 5,284 Common Stock Thomas E. Rodriguez (7) 1,701 Common Stock Rodney E. Slifer 7,661 Common Stock W. Thomas Stephens 2,023 Common Stock Robert G. Tointon (8) 5,000 Common Stock Richard C. Kelly (9) 8,868(e) Common Stock A. Clegg Crawford 3,892(e) Common Stock Marilyn E. Taylor 4,037(e) Common Stock Directors & Executive Officers 122,424(e) as a Group (b) Preferred Stock Directors & Executive Officers 0 as a Group (b) Notes (a) Common Stock listed in the table represents the Company's Common Stock, $5 par value; Preferred Stock listed in the table represents the Company's Cumulative Preferred Stock, $100 par value. (b) There are a total of 23 Executive Officers and Directors. (c) The common shares represented above include those shares, if any, held under the Company's Employees' Savings and Stock Ownership Plan (the "Savings Plan"). (d) On January 31, 1995, the percentage of shares beneficially owned by any Director or named Executive Officer, or by all Directors and Executive Officers as a group, does not exceed one percent of each class of securities described above. 12 (e) The number of shares includes those which the following have the right to acquire as of February 22, 1995 through the exercise of vested options granted under the Omnibus Incentive Plan: Mr. Hock, 17,285 shares; Mr. Brunetti, 0 shares; Mr. Kelly, 6,200 shares; Mr. A. Clegg Crawford, 3,273 shares; Ms. Taylor, 2,893 shares; and all executive officers as a group, 39,294 shares. Unless otherwise specified, each Director and named Executive Officer has sole voting and sole investment power with respect to the shares indicated. (1) Mr. Chandler's wife owns 300 of these shares, ownership of which Mr. Chandler disclaims. In addition, Mr. Chandler shares investment power with Chandler-Simpson, Inc., of which he is President, with respect to 4,597 of these shares. (2) Included in the total amount are 2,565 common shares held in a family trust of which Mr. Farley is beneficiary. Mr. Farley has no voting power but shares investment power with respect to these shares. (3) Mr. Hirschfeld's wife owns 1,231 of these shares; Mr. Hirschfeld disclaims ownership of these shares. (4) Mr. Hock shares voting and investment power with his wife with respect to 18,954 of these shares. (5) Mr. Nicholson's wife owns 500 of these shares; Mr. Nicholson disclaims ownership of these shares. (6) Mr. Powers' son owns 500 of these shares; Mr. Powers disclaims ownership of these shares. (7) Mr. Rodriguez's wife is custodian and has sole investment and voting power for their minor children with regard to 901 of these shares. Also, Mr. Rodriguez's wife owns 331 of these shares. Mr. Rodriguez disclaims ownership of these 1,232 shares. (8) Mr. Tointon shares voting and investment power with respect to these shares with Phelps-Tointon, Inc., of which he is President and Chief Executive Officer. (9) Mr. Kelly's wife owns 263 of these shares; Mr. Kelly disclaims ownership of these shares.
Compliance With Section 16(a) of the Securities Exchange Act Based solely upon a review of Forms 3, 4 and 5 and written representation furnished to the Company, the Company believes that all Directors and officers filed in a timely manner their reports required under Section 16(a) of the Securities Exchange Act of 1934, as amended. 13 COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS Report of the Compensation Committee on Executive Compensation The Compensation Committee of the Board of Directors (the "Committee") is composed entirely of independent outside Directors. The Board has delegated to the Committee the responsibility for establishing and administering the Company's base salary system, executive annual and long-term incentive compensation plans, and benefit programs. A primary objective of the Committee regarding executive compensation is to provide a total compensation package which, as a whole, will enable the Company to attract, retain and motivate a high-quality executive management team that will be focused on enhancing shareholder value. A guiding principle used in the development and administration of the Company's executive compensation plans is to align the interests of executive management with those of shareholders and customers. One of the ways this is achieved is by establishing plans that compensate executives on the basis of corporate, business unit, and individual performance goals. The plans include equity-based incentives so that the executives are motivated on an annual and long-term basis to respond to business challenges and opportunities as owners, not just as employees. Each year, the Committee reviews the total executive compensation program (which includes base salaries, annual and long-term incentives, benefits and perquisites). This review is conducted with the assistance of independent outside experts, including compensation consultants. In establishing compensation policies and levels, the Committee considers all elements of total compensation. The Omnibus Budget Reconciliation Act was passed by the U.S. Congress during 1993. Several provisions of the Act impact executive compensation. One of the provisions resulted in the enactment of Section 162(m) of the Internal Revenue Code of 1986, as amended. This section generally limits the corporate deduction for compensation paid during a year to any executive officer named in the proxy statement to $1 million, unless the compensation is performance based. The Committee, along with the Company's independent auditors, legal counsel, and compensation consultants, have conducted an in-depth review of the potential impact of these provisions of the Act on the Company. Aggregate compensation levels in 1994 did not exceed $1 million and are not expected to in 1995 for any executive officer named in the proxy statement. Therefore, we believe Section 162(m) will not impact the Company's tax deduction for 1994 or 1995 compensation. 14 Base Salaries Base salaries for executives are reviewed by the Committee annually. In determining appropriate base salary levels, the Committee considers factors such as responsibilities, experience, individual performance, internal equity, and pay practices of other companies in the utility industry. Formal weightings are not assigned to these factors. In general, base salaries are targeted at or near the 50th percentile for the utility industry. We believe this objective allows the Company to attract and retain top quality executive talent, and the continuity of management enhances the Company's ability to achieve strategic objectives designed to benefit shareholders and customers. Overall, 1994 base salaries for all executives, including Mr. Hock, were in line with the 50th percentile. For compensation comparison purposes, data was collected from public and private surveys composed of utility companies which are similar to the Company in terms of sales volumes, lines of business, employment levels, customer mix, and service areas. The primary survey group of over 100 utilities includes almost all of the companies included in the S&P Electric Power Group, which is depicted in the Cumulative Five-Year Total Return Graph, as well as other utilities. We believe the S&P Electric Power Group is a representative cross section of the survey companies used for compensation comparisons and is appropriate for inclusion in the graph. Annual Incentives Executives have the opportunity to earn annual incentive awards under the Omnibus Incentive Plan. The purpose of these awards is to promote the achievement of Company financial and strategic objectives which are designed to benefit shareholders and customers, focus executive attention on pre- established goals, and recognize individual performance while fostering team performance. The Committee believes that annual incentive awards serve to communicate Company goals to the executives and motivate executives not only to achieve but also potentially to exceed these goals. The Committee further believes that having a significant portion of executive compensation at risk fosters meeting these goals. In 1994, target awards were set for 15 executive officers, including all named executive officers. Target awards are expressed as a percentage of base salary, which in 1994 was 40% for Mr. Hock and ranged from 25% to 35% for all other named executive officers. Target awards for Mr. Hock and the other named executive officers are equivalent to average levels in the utility industry. Each executive earns the right to receive an award if pre-established corporate goals (based on earnings per share) are met. In addition, the 15 Committee may adjust these awards based on its subjective assessment of business unit and individual performance. This assessment focuses on factors such as customer service, actual resource allocations relative to budget, other strategic business unit factors, and individual performance; however, formal weightings are not assigned to these factors. Achievement of 100 percent of goals would result in the target amount, with achievement of between 90 and 110 percent of goals resulting in a lesser or greater award. Actual awards are payable in cash or a combination of restricted stock (one- third) and cash (two-thirds). The Committee believes paying bonuses partially in restricted stock reinforces the Company's principal business objective of enhancing shareholder value as it aligns the interests of executives with those of shareholders. Actual annual incentive awards for 1994 for Mr. Hock and the named executive officers were calculated based on corporate performance that was between 95 percent and 100 percent of the earnings per share goal. Stock Options Stock options were granted in 1994 to 15 executives, including Mr. Hock and the named executive officers. The grants are made under the Omnibus Incentive Plan and are designed to link the interests of executives to improvement in long-term shareholder value. Award levels have been targeted at or below the 50th percentile in the utility industry. Stock options vest ratably during the three-year period immediately following the date of grant. If vested, they may be exercised any time during the ten-year period following the date of grant. The stock option grants made to Mr. Hock and the executive officers are based on the value of the stock on the date of grant, competitive practices, and individual contributions. No formal weightings have been established for these criteria. Dividend Equivalents To further strengthen the tie between executive compensation and shareholder value, the 15 executives who received stock options were granted a target number of dividend equivalents under the Omnibus Incentive Plan. Payment of the dividend equivalents is subject to the achievement of earnings per share goals over a three-year performance period. The goals are established on an annual basis and are the same as those used for annual incentive awards. Attainment of 90 percent of the earnings per share goals represents the threshold at which 50 percent of the awarded dividend equivalents can be earned. Attainment of the target earnings per share goals (100%) will result in the executive earning 100 percent of the dividend equivalents awarded for that particular performance period. The maximum amount of dividend equivalents (150%) will be earned if at least 110 percent of the earnings per share goals are attained. Performance is assessed each year, and 16 based on the schedule described above, a percentage award is calculated. Payment of dividend equivalents is dependent upon the average of the annual percentage awards during the entire performance period. In determining the average for the three-year period, any year in which the minimum performance (threshold) is not achieved, the percentage award is included as zero. Although the Company's achievement of between 95 and 100 percent of the established goal in 1994 resulted in an annual award, the actual percentage of dividend equivalents granted in 1994 which will be paid is dependent on performance during each year of the entire 1994 to 1996 performance period. The amounts to be paid in early 1995, which are reported in the Summary Compensation Table, reflect performance during 1992, 1993, and 1994. Average performance during those years was below target and resulted in awards of between 50 and 60 percent of target. This award level is slightly above the minimum level. The number of dividend equivalents granted to Mr. Hock and the executive officers was based on the number of unvested stock options from 1993 and 1994, as well as dividend-equivalent awards in 1992. Stock option and dividend equivalent grants for 1994 for the Chief Executive Officer and the named executive officers as a group remained below the 50th percentile. Compensation Committee Members Dr. Doris M. Drury, Chairman Collis P. Chandler, Jr. George B. McKinley Will F. Nicholson, Jr. W. Thomas Stephens Robert G. Tointon 17
Summary Compensation Table Annual Compensation Long-term Compensation Awards All other Name and principal position compen- Year Awards Payouts sation Salary ($) Bonus ($) Other Restricted Securities LTIP ($) (d) (a) annual stock Underlying payouts compen- awards Options/ ($) sation ($)(c) SAR's (#) ($) (b) Delwin D. Hock 1994 $428,014 $197,648 $0 22,700 $17,160 $19,260 Chairman of the Board, 1993 425,012 53,035 26,265 14,578 21,376 President and 1992 410,027 50,000 41,045 Chief Executive Officer Wayne H. Brunetti 1994 148,320 58,251 123,085 17,000 0 0 President and Chief Operating 1993 Officer 1992 Richard C. Kelly 1994 215,005 49,970 24,756 8,200 5,631 10,362 Sr. V.P. Finance, 1993 211,674 27,108 13,292 5,200 11,113 Administration and 1992 194,217 20,000 9,426 Chief Financial Officer A. Clegg Crawford 1994 167,000 27,165 13,335 4,200 3,175 4,755 V.P. Electric Production 1993 165,513 15,509 7,491 2,810 5,265 1992 158,077 10,000 1,135 Marilyn E. Taylor 1994 150,007 24,424 11,998 3,700 2,789 6,750 V.P. Human Resources 1993 148,339 11,826 5,674 2,489 6,300 1992 139,337 6,120 (a) The amounts shown in the "Bonus" column for 1994 represent the cash awards earned under the Omnibus Incentive Plan for financial performance in 1994. These awards were made in February 1995. In accordance with the plan guidelines, the entire award amount can be paid in cash or two-thirds of the award may be paid in cash and one-third in the form of restricted stock. At the election of each executive officer, all or a portion of the award may be deferred into the Executive Savings Plan. Mr. Hock's award was $131,497 and 2,164 shares ($65,731) of restricted stock. However, Mr. Hock elected to defer the value of the entire award into the Executive Savings Plan. Accordingly, both the cash portion and the value of the restricted stock portion of Mr. Hock's 1994 award are reflected in the "Bonus" column. Mr. 18 Brunetti's reported bonus amount also includes a hiring bonus of $25,000. In addition, Mr. Hock and each of the named executive officers, except Mr. Brunetti, received a bonus of $420 under the 1994 Employee Incentive Plan. (b) Perquisites and other personal benefits do not exceed the lesser of either $50,000 or 10% of the total annual salary and bonus reported for the named executive officers. (c) The amounts shown in the "Restricted Stock Awards" column for 1994 reflect the value (as of the date of grant in February 1995) of the restricted stock awards made under the Omnibus Incentive Plan described in footnote (a). The restricted stock amount reported for Mr. Brunetti also includes a hiring bonus of 4,000 shares (valued at $106,500 as of the date of grant) of restricted stock. Aggregate restricted stock holdings as of the February 1995 grant are as follows: Mr. Hock held 824 ($24,205) shares of restricted stock; Mr. Brunetti held 4,546 ($133,539) shares of restricted stock; Mr. Kelly held 1,232 ($36,190) shares of restricted stock; Mr. Crawford held 674 ($19,799) shares of restricted stock; and Ms. Taylor held 573 ($16,832) shares of restricted stock. The value of the shares reported in this paragraph were calculated using the Company's 1994 year end stock price of $29.375. Dividends are paid on restricted stock when and as paid on the Company's Common Stock. Restrictions lapse two years from the date of grant, except for the shares granted to Mr. Brunetti as part of his hiring bonus. The restrictions on those shares lapse three years from the date of grant. (d) The amounts represented in the "All Other Compensation" column reflect the total of the matching contributions made under the Employees' Savings and Stock Ownership Plan (the "ESOP") and the matching contributions provided by the Executive Savings Plan. The Executive Savings Plan allows the named executives to receive credits for Company contributions to which they would be entitled under the ESOP if pre-tax deferral contributions were not limited by federal income tax laws. In accordance with the provisions of the Executive Savings Plan, the 1992, and in the case of Mr. Kelly, the 1993 and 1994 amounts also include Company contributions for the years 1989, 1990 and 1991. In 1994, the value of contributions made under the ESOP to Messrs. Hock, Brunetti, Kelly, Crawford and Ms. Taylor were $6,750, $0, $6,750, $4,755 and $6,750 respectively. The value of the contributions made under the Executive Savings Plan in 1994 to Messrs. Hock, Brunetti, Kelly, Crawford and Ms. Taylor were $12,510, $0, $3,612, $0 and $0 respectively.
19
Options/SAR Grants in Last Fiscal Year Individual Grants Name Number of securities underlying % of Total options/ options/SARS Exercise SARS granted to or base Grant date granted employees in price Expiration present value (#)(a) fiscal year ($/Sh) Date ($)(b) Delwin D. Hock 22,700 15.16% $29.000 2/22/04 $84,104 Wayne H. Brunetti 17,000 11.36% $26.625 7/18/04 $48,229 Richard C. Kelly 8,200 5.48% $29.000 2/22/04 $30,381 A. Clegg Crawford 4,200 2.81% $29.000 2/22/04 $15,561 Marilyn E. Taylor 3,700 2.47% $29.000 2/22/04 $13,709 (a) All options were granted to executive officers by the Compensation Committee of the Board of Directors on February 22, 1994, except in the case of Mr. Brunetti whose options were granted on July 18, 1994. The options vest and may be exercisable only to the extent of 33 1/3% on the first anniversary date of the grant and to the same extent on the second anniversary and third anniversary. Such rights to exercise will be cumulative to the extent not exercised. All options expire 10 years from the date of grant. (b) These amounts represent a theoretical present valuation based on the Black Scholes Option Pricing Model as adjusted for dividends. The values in the column are estimated based on an option price of $3.71 for messers. Hock, Kelly, Crawford, and Ms. Taylor and $2.84 for Mr. Brunetti. The option prices were derived using the following assumptions: 1. the time to exercise is the option life of 10 years; 2. the risk free rate is 6.13% (6.21% in the case of Mr. Brunetti), the interest rate on 10-year treasury strips on January 3, 1994; 3. the option strike price is $29; ($26.625 in the case of Mr. Brunetti) 4. the stock price at grant date is $29; ($26.625 in the case of Mr. Brunetti) 5. the standard deviation of PSCo Common Stock, which is a measure of the volatility of the stock, is 16.97%; and 6. future dividends were assumed to stay constant at $2.00 and were discounted at a rate of 10.13% (10.21% in the case of Mr. Brunetti).
Executives may not sell or assign these options, which have value only to the extent of future stock price appreciation. These amounts or any of the assumptions should not be used to predict future performance of stock price or dividends. 20
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values Number of Value of Securities Unexercised Underlying In-the-Money Unexercised Options/SARS Options/SARs at FY-End ($) at FY-End (#) (a) Name Shares Value Realized Exercisable/ Exercisable/ Acquired on ($) Unexercisable Unexercisable Exercise (#) Delwin D. Hock 0 $0 4,859/ $6,074/ 32,419 20,661 Wayne H. Brunetti 0 0 0/ 0/ 17,000 46,750 Richard C. Kelly 0 0 1,733/ 2,167/ 11,667 7,408 A. Clegg Crawford 0 0 937/ 1,171/ 6,073 3,917 Marilyn E. Taylor 0 0 830/ 1,037/ 5,359 3,462 (a) Option values were calculated with the closing stock price on December 31, 1994, of $29.375.
21
Long-Term Incentive Plans - Awards in Last Fiscal Year Name Number Performance Estimated future payouts under of or other non-stock price-based plans shares, period until units or maturation other or payout Threshold Target Maximum right (a) ($ or #) ($ or #) ($ or #) (#) Delwin D. Hock 37,572 1/1/94 thru $37,572 $75,144 $112,716 12/31/96 Wayne H. Brunetti 17,000 1/1/94 thru $17,000 $34,000 $51,000 12/31/96 Richard C. Kelly 13,358 1/1/94 thru $13,358 $26,716 $40,074 12/31/96 A. Clegg Crawford 7,027 1/1/94 thru $7,027 $14,054 $21,081 12/31/96 Marilyn E. Taylor 6,196 1/1/94 thru $6,196 $12,392 $18,588 12/31/96 (a) Dividend equivalents are granted under the Omnibus Incentive Plan. Dividend equivalents entitle the recipient to the cash amount equal to $2.00 multiplied by the number of units granted. Dividend equivalents are earned, if at all, at the end of a three-year performance period depending upon achievement of Earnings Per Share (EPS) goals over the performance period. The target level represents the amount to be awarded if 100% attainment of the goal is achieved. Threshold represents the amount to be awarded if 90% of the goal is achieved, and Maximum represents the amount to be awarded if 110% of the goal is attained. Additional dividend equivalents may be granted each year. Dividend equivalents vest immediately upon a change in control.
22 The following table shows the estimated pension benefits payable to a covered participant at normal retirement age under the Employees' Retirement Plan ("Retirement Plan") and the Supplemental Executive Retirement Plan ("SERP").
Pension Plan Table Remuneration Years of Service 15 20 25 or more years $100,000 $54,375 $65,000 $65,000 125,000 67,969 81,250 81,250 150,000 81,562 97,500 97,500 175,000 93,750 113,750 113,750 200,000 105,938 130,000 130,000 225,000 118,125 146,250 146,250 250,000 130,313 162,500 162,500 300,000 154,688 195,000 195,000 400,000 203,438 260,000 260,000 450,000 227,813 292,500 292,500 500,000 252,188 325,000 325,000 600,000 300,938 390,000 390,000
The Retirement Plan portion of the amounts listed in the table is calculated based on the following formula: 1.5% of average final compensation multiplied by years of credited service. Average final compensation is the highest average monthly compensation based on the compensation for any five 12-month periods which yield the highest total compensation. Federal regulations require that for the 1994 plan year no more than $150,000 in compensation be considered for the calculation of retirement benefits from the Retirement Plan, and the maximum amount paid from a qualified defined benefit plan cannot exceed $120,000, as of January 1, 1995. Benefits are calculated on a straight life annuity basis. The benefit amounts under the Retirement Plan are not subject to any deduction for Social Security benefits or other offset amounts. The number of years of service credited under the Retirement Plan as of December 31, 1994, were 32 years for Mr. Hock, 26 years for Mr. Kelly, 7 years for Ms. Taylor , 6 years for Mr. Crawford, and 0 years for Mr. Brunetti (see "Employment Contracts and Change-in-Control Arrangements" for Mr. Crawford and Mr. Brunetti). Mr. Crawford is not a member of the SERP. There is no maximum number of years of credited service for calculation of benefits under the Retirement Plan. 23 The SERP is a non-qualified supplemental pension plan for designated executive officers that provides increased benefits including those that would otherwise be denied because of certain Internal Revenue Code limitations on qualified benefit plans. As of December 31, 1994, there were 10 executive officers participating in the SERP, including the named executive officers (with the exception of Mr. Crawford). Benefits under the SERP are calculated such that, when added to the maximum benefits payable under the Retirement Plan, benefits will equal 65% of the participant's base salary at the participant's normal retirement date (age 65 or such earlier date as the participant is eligible and elects to retire with full benefits under the Retirement Plan). For executives who became participants in the SERP after March 26, 1991, the SERP benefits accrue over a 20-year period. Benefits are paid for 20 years with a 50% survivor benefit if death occurs sooner. The benefit amounts under the SERP are not subject to any deduction for Social Security benefits or other offset amounts. Compensation of Directors Each Director who is not an officer is currently paid a fee of $24,000 per annum. Effective January 1, 1994, each non-officer Director is paid an additional attendance fee of $500 for each Board and committee meeting that such Director attends, with committee chairpersons receiving $750 per meeting of their respective committees that they attend. In remaining consistent with the Company's effort to reduce overall operating costs, the Board of Directors took a voluntary 10% pay cut for 1994. Therefore, actual fees paid to Directors in 1994 were $21,600 plus attendance fees of $450 for each Board and committee meeting attended, with committee chairpersons receiving $675 per meeting of their respective committees that they attended. Effective January 26, 1988, the Company adopted a modified tenure policy for Directors. The primary purpose of the policy is to assure the continued availability to the Company of the varied experience of the Directors after their retirement. Under the provisions of the policy, and in consideration of the Directors' agreement to provide advice and counsel to the Board as requested, all Directors retiring after January 26, 1988, will be paid a monthly retainer equal to the base fee being paid to outside Directors at the time of their retirement. This retainer will be paid for 10 years or life, whichever is less. In addition, any outside Director who has served as a Director for a minimum of 10 years and who does not seek re-election for reasons other than physical or mental disability, the press of other duties, or similar reasons, shall also be paid this retainer. On January 1, 1994, the "Directors' Voluntary Deferral Plan" became effective. This non-qualified plan allows Directors to defer receipt of retention fees and/or meeting fees on a pre-tax basis. Messrs. McKinley, Nicholson, Rodriguez, and Tointon have elected to participate. 24 Employment Contracts and Change-in-Control Arrangements The Company has entered into severance agreements with certain key employees, including those listed in the Summary Compensation Table (each, an "Employee"). The agreements were effective as of November 26, 1991, (except in the case of Mr. Brunetti, whose severance agreement was effective as of July 18, 1994) and will continue until (i) 24 full calendar months following an occurrence of a change in control of the Company, or (ii) the Employee attains age 65 following the date of an occurrence of a change in control of the Company, whichever occurs first. During the time periods referenced above, the agreements provide that in the event the employment of the Employee is terminated for any reason other than cause, death or disability, or the employee is constructively discharged, as defined by the agreements, the Employee is entitled to receive (A) accrued but unpaid salary and accrued but unused vacation; (B) a lump sum payment equal to three times the Employee's compensation, including certain compensation under the Omnibus Incentive Plan and the Company matching contributions allocated to the Employees' Savings Plan and Executive Savings Plan accounts for the calendar year preceding the change in control; and (C) all benefits under the Company's welfare benefit plans until the first to occur of 36 months following termination or the attainment of age 65. In the event the Employee is age 62 or older, the lump sum severance benefit shall be multiplied by a fraction, the numerator of which is the number of months (including fractions of a month) from the date of termination of employment to the date of the first day of the calendar month coincident with or next following the date the Employee will have attained age 65, and the denominator of which is 36. In the event payments made to the Employee would be subject to an excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended, such payments shall be reduced to an amount, and only to the extent necessary, so that such payments would not be subject to the excise tax. The Company has entered into an agreement with Mr. Crawford, under which the Company will make additional benefit payments to him such that his total benefit payments under the Retirement Plan and such agreement will be equal to 40% of his salary at the time of termination if said termination occurs after the attainment of age 62. Accordingly, the estimated annual benefit for Mr. Crawford if termination occurs at age 65 is $66,800. This payment will be made for a period of 20 years. If Mr. Crawford's death occurs prior to the termination of his employment, his beneficiary will receive reduced benefits for a period of 20 years. Pursuant to this agreement, Mr. Crawford will be entitled to receive severance pay in an amount equal to 26 weeks of pay at his then current rate if he is terminated because his position has been eliminated. 25 The Company has entered into an employment agreement with Mr. Hock for a term ending January 31, 1997. The agreement provides for a base salary of not less than $428,000 plus an annual target bonus opportunity of not less than 40% of his base salary and an annual stock option award opportunity of not less than 160% of his base salary. Upon termination after a change in control, Mr. Hock would receive the greater of payments he would otherwise be entitled to receive under this agreement, which includes tax free reimbursement of any excise taxes paid thereunder, and the payments provided for in his severance agreement discussed above. If the Company terminates Mr. Hock's employment without cause, or if Mr. Hock terminates for good reason (each as defined in the agreement), Mr. Hock shall receive his base salary for the remainder of the term of the agreement, the greater of target or actual annual bonus paid for that year continued for the term of the agreement and an immediate vesting of all outstanding incentive awards (including dividend equivalents) plus the economic equivalent of any long-term awards he would have received for the remainder of the term (including dividend equivalents). The Company has entered into an employment agreement with Mr. Brunetti for a term ending July 17, 1997. The agreement provides for a single lump sum cash sign-on bonus in the gross amount of $25,000 in addition to the issuance of 4,000 shares restricted stock of the Company. Each of the sign-on bonuses are outlined in the Summary Compensation Table. The agreement also provides for a base salary of not less than $325,000 plus an annual target bonus opportunity of not less than 35% of his base salary and an annual stock option award opportunity of not less than 140% of his base salary. Upon the commencement of his employment with the Company, Mr. Brunetti was also issued stock options for 17,000 shares of stock of the Company. Upon termination after a change in control, Mr. Brunetti would receive the greater of payments he would otherwise be entitled to receive under this agreement, which includes tax free reimbursement of any excise taxes paid thereunder, or the payments provided for in his severance agreement discussed above. If the Company terminates Mr. Brunetti's employment without cause, or if Mr. Brunetti terminates for good reason (each as defined in the agreement), Mr. Brunetti shall receive his base salary for the remainder of the term of the agreement, the greater of target or actual annual bonus paid for that year continued for the term of the agreement, an immediate vesting of all outstanding incentive awards (including dividend equivalents) plus the economic equivalent of any long-term awards he would have received for the remainder of the term (including dividend equivalents). The agreement also provides that Mr. Brunetti will participate in the SERP and will be entitled to full benefits upon retirement at age 65. 26 TOTAL RETURN GRAPH 27 Compensation Committee Interlocks and Insider Participation During 1994, the following Directors served on the Compensation Committee: Dr. Doris M. Drury, Collis P. Chandler, Jr., George B. McKinley, Will F. Nicholson, Jr., W. Thomas Stephens and Robert G. Tointon. None of these Directors are or have been an officer or employee of the Company or any of its subsidiaries. Mr. Tointon, however, was involved in the following transactions with a subsidiary of the Company. During 1990, Fuel Resources Development Co. (Fuelco), a wholly-owned subsidiary of the Company, entered into an agreement with The San Juan Basin Consortium, Ltd. (of which Mr. Tointon and his affiliates were members) to purchase various ownership interests in proven acreage and further develop 40 net gas wells and the related gas gathering and water disposal systems. During 1992, Fuelco received $95,793 from The San Juan Basin Consortium in settlement of the final outstanding issues relating to the 1990 purchase of the San Juan Basin properties. By the end of 1991, 47 gross wells (completing Fuelco's 40 net well obligation) had been drilled. The wells are in various stages of production, dewatering or completion and the gathering and water disposal facilities serving several groups of wells have been completed. Fuelco's working interests in the properties range from 50% to 100% before, and 30% to 87% after, termination of the carried interest and payout. Prior to 1990, The San Juan Basin Consortium had invested $9,700,000 in this project. The working interest of the Consortium members ranged from 10% to 48% before payout, and from 8% to 26% after payout. Expenses related to such interests were carried by Fuelco during 1990 and 1991. Fuelco's obligation for payment of expenses related to such carried interests were to terminate on September 30, 1992, with respect to 33 gross wells. Due to a delay in development of these projects, however, Mr. Tointon and his affiliates agreed with Fuelco to extend the termination date as follows: (i) Fuelco continued to pay all expenses for the carried interest of Mr. Tointon and such affiliates through July 1, 1993, with respect to the wells and certain water disposal and gathering facilities and (ii) thereafter, Fuelco agreed to pay certain additional expenses with respect to these projects until completion thereof which occurred in 1994. Such expenses paid by Fuelco and attributed to the interests of Mr. Tointon and his affiliates aggregated $407,687 and $60,894 in 1993 and 1994 respectively. The terms and conditions of this transaction are substantially similar to those which would have been effected with unrelated parties. In addition, the Company paid Rocky Mountain Prestress, of which Mr. Tointon is CEO and President, the sum of $1,250,948 for construction services during 1994. Such services were provided upon terms and conditions substantially similar to those which would have been effected with unrelated parties. 28 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS During 1994, the Company received $63,774 from Chandler & Associates, Chandler-Simpson, Inc., and related companies for natural gas transportation to Northwest Pipeline Corporation. Mr. Chandler is sole owner, President and a Director of Chandler & Associates and Chandler-Simpson, Inc. The terms and conditions of the transactions between the companies with which Mr. Chandler is associated and the Company and are substantially similar to those which would have been effected with unrelated parties. During 1994, the Company paid A.B. Hirschfeld Press, Inc., of which Mr. Hirschfeld is President, the sum of $199,945 for printing services. Such services were provided upon terms and conditions substantially similar to those which would have been effected with unrelated parties. APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS Subject to approval by the holders of Common Stock at the Meeting, the Board of Directors has appointed Arthur Andersen & Co. as the independent public accountants to audit the accounts of the Company and its consolidated subsidiaries for the 1995 calendar year. The firm audited the Company's accounts in 1994. A representative of Arthur Andersen & Co. is expected to be present at the Meeting, will be provided the opportunity to make a statement if such representative desires to do so, and is expected to be available to respond to appropriate questions. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE APPOINTMENT OF ARTHUR ANDERSEN & CO. AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE 1994 CALENDAR YEAR. TRANSACTION OF OTHER BUSINESS The Board of Directors does not intend to bring before the Meeting any matters other than (1) the election of Directors and (2) the approval of the appointment of the Company's independent public accountants and has no present knowledge that any other matter will or may be brought before such Meeting by others. However, if any other matter properly comes before the Meeting, it is the intention of the persons named in the form of proxy to vote the proxies in accordance with their judgment on such matter. 29 SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING Shareholder proposals intended to be presented at the 1996 Annual Meeting must be received by the Company no later than December 12, 1995, in order to be eligible for inclusion in the Company's proxy statement and form of proxy relating to that meeting. By order of the Board of Directors. Dated: April 10, 1995. W. WAYNE BROWN Corporate Secretary ALL SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT IN THE SELF-ADDRESSED, POSTAGE PAID ENVELOPE, WHETHER OR NOT THEY PLAN TO ATTEND THE MEETING. ANY SHAREHOLDER PRESENT AT THE MEETING MAY, NEVERTHELESS, VOTE PERSONALLY ON ALL MATTERS WITH RESPECT TO WHICH SUCH SHAREHOLDER IS ENTITLED TO VOTE. 30 -----END PRIVACY-ENHANCED MESSAGE-----