PERFORMANCE SHARE AWARD AGREEMENT PNM RESOURCES, INC. OMNIBUS PERFORMANCE EQUITY PLAN
Exhibit
10.4
PNM
RESOURCES, INC.
OMNIBUS
PERFORMANCE EQUITY PLAN
PNM
Resources, Inc., a New Mexico corporation, (“PNMR” or the “Company”) hereby
awards to __________, (the “Grantee”), a Participant in the PNM Resources, Inc.
Omnibus Performance Equity Plan (the “Plan”), as it may be amended, a
Performance Share Award (the “Award”) for the number of shares of Common Stock
of Company (“Stock”) specified in Section 2 below. The grant is made effective
as of the __th day of February, 2007.
Capitalized
terms used in this Performance Share Award Agreement (the “Agreement”) and not
otherwise defined herein shall have the meanings given to such terms in the
Plan.
1. Target
Award.
Pursuant to the provisions of the Plan, the Human Resources and Compensation
Committee (the “Committee”) of Company’s Board of Directors adopted the
Long-Term Performance Share Program (the “Program”), which established the
general guidelines pursuant to which Performance Shares would be granted by
the
Committee. The Committee amended the Program effective as of January 1, 2004
and
Grantee previously received a copy of the amended Program document. In
accordance with the provisions of the amended Program, the Committee established
a “Target Award” of ______ shares for Grantee. The Target Award was subject to
adjustment in accordance with the provisions of the Program, as described in
Section 2.
2. Performance
Goals.
Pursuant to the Program, Grantee is entitled to an award of Performance Shares
only if Company’s “Total Shareholder Return” (“TSR”), as that term is defined in
the Program document, is at the 40th
percentile or higher of companies in the S & P Midcap 400 Utility Index (the
“Index”) for the relevant “Performance Period”. The “Performance Period” covered
by this Award Agreement is the period beginning on January 1, 2004 and ending
on
December 31, 2006. Under the Program, Participants may earn from 0% to 200%
of
the Target Award, depending on Company’s TSR.
For
the
Performance Period, Company’s TSR was ___, placing it in the __ percentile of
companies included in the Index. As a result, Grantee is entitled to an award
of
Performance Shares equal to ___% of the Target Award. Grantee, accordingly,
is
hereby awarded ____ Performance Shares for the Performance Period.
3. Form
and Timing of Delivery of Certificate.
Within
an administratively reasonable period of time following the date of this Award
Agreement, and after satisfaction of all applicable withholding requirements,
Grantee shall receive a Stock certificate evidencing Grantee’s ownership of the
number of Performance Shares specified in Section 2.
Section 409A
of the Code imposes a number of requirements on “non-qualified deferred
compensation plans and arrangements.” Based on regulations proposed by the
Internal Revenue Service, the Company has concluded that this Performance Share
Award Agreement is subject to Section 409A. The Company also has concluded,
however, that since the Stock Certificate evidencing the Performance Shares
granted hereunder will be issued within an administratively reasonable period
after the date on which the Performance Period ends and Grantee obtains a vested
right to the Performance Shares, the award of Performance Shares qualifies
for
the short-term deferral exception to Section 409A. In order to ensure
compliance with the short-term deferral exception, the Company shall issue
the
Stock Certificate as soon as possible after the date of the Agreement and in
any
event by March 15, 2007. If for some unforeseen reason it is
administratively impracticable to issue the Stock Certificate by March 15,
2007, the Stock Certificate shall be issued as soon as reasonably practicable
following March 15, 2007 and in no event later than December 31, 2007.
Under no circumstances may the time or schedule of receipt of the Stock
Certificate hereunder be accelerated or subject to a further deferral except
as
otherwise permitted or required pursuant to regulations and other guidance
issued pursuant to Section 409A. Grantee does not have any right to make
any election regarding the time or form of any payment. This Agreement and
the
Plan shall be operated in compliance with Section 409A and each provision
of this Agreement and the Plan shall be interpreted, to the extent possible,
to
comply with Section 409A.
4. Withholding
and Deductions.
The
Company shall have the right to deduct from any payments made by the Company
to
the Grantee, any federal, state or local taxes of any kind as are required
by
law to be withheld with respect to the Performance Shares granted hereunder.
The
Company also shall have the right to take such other actions as may be necessary
in the opinion of the Company to satisfy all obligations for withholding and
payment of such taxes, including, in its sole discretion, and subject to the
provisions of applicable law and to any conditions the Committee may determine
to be necessary in order to comply with all applicable conditions of Rule 16b-3
or its successors under the Exchange Act, to permit the Grantee, at the
Grantee’s election, to satisfy, in whole or in part, any tax withholding
obligation which may arise in connection with the Performance Shares by
requesting that the Company withhold shares of Stock having a Fair Market Value
of the Stock equal to the amount of the income tax withholding. Any shares
of
Stock deliverable to the Grantee under the terms of this Agreement also are
subject to offset by the Company, and the Grantee hereby authorizes such offset,
to liquidate and reduce any outstanding debt or unpaid sums owed by the Grantee
to the Company or its successor.
5. Dividend
Equivalents.
Grantee
is not entitled to receive a dividend equivalent with respect to the Performance
Shares awarded pursuant to the Program and this Agreement.
6. Compliance
with Exchange Act.
If
Grantee is subject to Section 16 of the Exchange Act, Performance Shares granted
pursuant to this Award are intended to comply with all applicable conditions
of
Rule 16b-3 or its successors under the Exchange Act.
7. Non-Assignability.
Grantee’s rights under this Agreement shall not be transferable other than by
will or by the laws of descent and distribution.
8. Voting
Rights.
Grantee
will have no voting rights with respect to the Performance Shares until delivery
of the Stock certificate in accordance with Section 3.
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9. Tax
Issues.
Pursuant to Section 83 of the Code, the value of the Performance Shares
will be taxed as ordinary income as of the date distributed to
Grantee.
10. Employment
Agreement.
Notwithstanding anything to the contrary contained in this Agreement, (a)
neither the Plan nor this Agreement is intended to create an express or implied
contract of employment for a specified term between Grantee and Company and
(b)
unless otherwise expressed or provided, in writing, by an authorized officer,
the employment relationship between Grantee and Company shall be defined as
“employment at will” wherein either party, without prior notice, may terminate
the relationship with or without cause.
11. Regulatory
Approvals and Listing.
Company
shall not be required to issue any certificate for shares of Stock prior to
satisfying any regulatory approval, registration, qualification or other
requirements of the Securities and Exchange Commission, the Internal Revenue
Service or any other governmental agency which the Committee, in its sole
discretion, shall determine to be necessary or advisable. (See Section 20.1
of
the Plan).
12. Administration.
This
Agreement shall at all times be subject to the terms and conditions of the
Plan
and the Program documents. The Committee shall have the sole and complete
discretion with respect to the interpretation of this Agreement and the Plan
and
the Program documents as well as all matters reserved to it by the
Plan.
13. Waiver
and Modification.
The
provisions of this Agreement may not be waived or modified unless such waiver
or
modification is in writing signed by Company.
14. Validity
and Construction.
The
validity and construction of this Award shall be governed by the laws of the
State of New Mexico.
MANY
OF THE PROVISIONS OF THIS AWARD AGREEMENT ARE SUMMARIES OF SIMILAR PERTINENT
PROVISIONS OF THE PLAN OR PROGRAM DOCUMENTS. TO THE EXTENT THIS AGREEMENT IS
SILENT ON
AN ISSUE OR THERE IS A CONFLICT BETWEEN THE PLAN OR THE PROGRAM DOCUMENTS AND
THIS AGREEMENT, THE PROVISIONS OF THE PLAN OR PROGRAM DOCUMENTS SHALL
CONTROL.
IN
WITNESS WHEREOF, the Company has caused this Performance Share Award Agreement
to be executed, effective as of February __, 2007.
PNM
RESOURCES, INC.
By
XXXXXX
X. XXXXXX
Chairman,
President and Chief Executive Officer
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ACKNOWLEDGEMENT
By
signing below, the Grantee acknowledges receipt of a copy of the Performance
Share Award Agreement dated February ___, 2007, the Plan and the Program
document and further acknowledges that the Performance Shares granted under
the
terms of the Award Agreement are governed by the terms and conditions of the
Plan, the Program document and the Award Agreement.
_____________________________________
(Name
of
Grantee)
_____________________________________
(Signature
of Grantee)
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LONG-TERM
PERFORMANCE SHARE PROGRAM
Amended
Effective January 1, 2004
INTRODUCTION
PNM
Resources, Inc. (the “Company”) has adopted the PNM Resources, Inc. Omnibus
Performance Equity Plan (the “PEP”). Under the PEP, the Board Governance and
Human Resources Committee* (the “Committee”) of the Company’s Board of Directors
has the power to issue Performance Shares (the “Awards”). The PNM Resources,
Inc. Long-Term Performance Share Program (the “Program”) sets forth the general
guidelines pursuant to which Performance Shares will be made under the PEP.
(*
now
known as the Human Resources and Compensation Committee)
All
Awards granted pursuant to the Program will subject to the PEP and will be
evidenced in an Award agreement. The Award agreement will be in a form approved
by the Committee that will contain such terms and restrictions as are
appropriate under the PEP. The Committee reserves the right to make grants
of
Awards separate from this Program and in accordance with the terms of the PEP.
The following describes the objectives of the Program, its various elements,
and
how the Program is intended to function.
PROGRAM
OBJECTIVES
Through
grants of Awards, the Program is designed to motivate and retain participants
by
rewarding them for their contributions towards the Company’s achievement of
superior financial performance measured by comparison to other companies in
the
industry.
EFFECTIVE
DATES
The
Program is effective for the period from January 1, 2004 until the termination
of the PEP, or until the Committee so designates, whichever is earlier. The
Committee reserves the right to adjust, amend or suspend the Program in its
discretion.
ADMINISTRATION
The
Program will be administered by the Committee. The Committee will have the
sole
authority and discretion to interpret the Program, approve Awards and perform
all other duties necessary to administer the Program. The Committee’s
interpretation of the Program, any Awards granted under the Program, any
Agreement issued under the Program, and all decisions and determinations by
the
Committee with respect to the Program are final, binding, and conclusive on
all
parties.
ELIGIBILITY
As
a
general matter, all Officers of the Company and its affiliates shall participate
the Program, but the Committee retains discretion to select eligible
participants from among employees of the Company and its
affiliates.
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PROGRAM
DESCRIPTION
| · |
Overview
|
Awards
may be issued to participants when the Company’s Total Shareholder Return (TSR)
is at the 40th
percentile or above of companies in the S&P Midcap 400 Utility Index for
each Performance Period. A target number of shares is set for each participant
level (the “Target”). Participants may earn a minimum of 0% up to a maximum of
200% of the Target Award.
| · |
Award
Opportunity
|
Award
amounts are based on the Company’s TSR performance relative to companies in the
S&P Midcap 400 Utility Index for each Performance Period. Results will be
interpolated between the established targets below to reward for incremental
performance. The Target Award for each award level are as follows:
|
Award
Level
|
Target Award |
|
Chair,
President and CEO
|
6,000 Performance Shares |
|
Executive
Vice Presidents
|
3,000 Performance Shares |
|
Senior
Vice Presidents
|
1,800 Performance Shares |
|
Vice
Presidents
|
800 Performance Shares |
Awards
are paid for PNM Resources, Inc. TSR performance relative to companies in the
S&P Midcap 400 Utility Index as follows:
|
Performance
|
Award |
|
85th
percentile
and above
|
200% of target award |
|
55th
percentile
|
100% of target award |
|
40th
percentile
|
50% of target award |
|
Less
than 40th
percentile
|
0% |
Note:
Participants that are hired after the start date of a Performance Period will
be
eligible for a pro-rata award.
The
issuance of Awards under the Program will be subject to the availability of
shares of stock under the PEP.
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| · |
TSR
Calculation
|
TSR
will
be calculated by using the average stock price over the first 30 days and the
last 30 days of the Performance Period.
| · |
Performance
Period
|
The
“Performance Period” will be a three-year period beginning with the 2004
calendar year. A new Performance Period will begin each year thereafter. Thus,
the Performance Periods will overlap.
| · |
Award
Frequency
|
In
general, Awards will be granted upon completion of each Performance Period.
This
means that there will be grants made at the end of each 3-year rolling
Performance Period.
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| · |
Award
Payouts
|
Awards
will be issued to Participants in the form of Company common stock as soon
as
administratively possible after completion of the then current Performance
Period and calculation of the Company’s TSR performance. Awards issued to
Participants will not be subject to any restrictions.
| · |
Disposition
of Awards to Employees Who Terminate
Employment
|
Under
the
Program, no performance shares will be issued to participants until they are
fully earned. As a result, participants will not have unvested performance
shares in the traditional sense. Participants who terminate employment due
to
death, disability, retirement, impaction or change in control shall receive
pro-rata shares for the number of full months of service during the Performance
Period. Distribution of shares shall be at the same time as payment is made
to
those participants who did not terminate service during the performance
period.
Awards
will not be issued to any participant who voluntarily or involuntarily
terminates employment prior to the end of a Performance Period for any reason
other than those described above.
| · |
Voting
Rights
|
During
the Performance Period, participants will have no voting rights with respect
to
unissued Awards.
| · |
Dividend
Equivalents and Other
Distributions
|
During
the Performance Period, participants will not be entitled to receive dividend
equivalents or other distributions for any unissued Awards.
| · |
Tax
Implications
|
The
full
value of the shares is taxed as ordinary income upon award.
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