Annual Advisory Vote On Our Executive Compensation Programs
The compensation programs for our NEOs are performance-based and market competitive, aligning incentive opportunities with the performance expected of us by our shareholders and customers. In 2024, 84% of votes cast were in favor of approval of the Say-on-Pay proposal at the 2024 annual meeting of shareholders.
The Compensation and HC Committee continues to examine our executive compensation program to ensure continued alignment between the interests of our executives and our shareholders and customers. We ask that our shareholders approve, on an advisory basis, the compensation of our NEOs as described in the Executive Compensation section (including the CD&A and compensation tables) of this proxy statement beginning on page 36.
ü Performance-based: 80% of CEO and 65% of other NEO 2024 pay opportunity is at risk
ü Market competitive pay mix of equity and cash:
•Designed to attract and retain talented executives
•Targets the median of 2024 Benchmark Data
•Stock ownership guidelines align with long-term shareholder value
ü Performance metrics align with business strategy:
| | | | | | | | |
Annual Incentive Pay under 2024 AIP |
| 60% Incentive EPS | 20% Customer Satisfaction | 20% Reliability |
| | |
Long-Term Incentive Performance Shares under 2024 LTIP |
50% Earnings Growth | 25% Relative TSR | 25% FFO/Debt Ratio |
Forward-Looking Statements
Statements made in this proxy statement that relate to future events or our expectations, projections, estimates, intentions, goals, targets, and strategies are made pursuant to the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all forward-looking statements are based upon current expectations and estimates and apply only as of the date of this proxy statement. We assume no obligation to update this information.
Because actual results may differ materially from those expressed or implied by these forward-looking statements, we caution readers not to place undue reliance on these statements. Our business, financial condition, cash flows, and operating results are influenced by many factors, which are often beyond our control, that can cause actual results to differ from those expressed or implied by the forward-looking statements. We describe risks and uncertainties that can cause actual results and events to differ materially in the “Risk Factors,” “Quantitative and Qualitative Disclosures about Market Risk,” and “Management’s Discussion and Analysis” sections of our Forms 10-K and 10-Q filed with the SEC.
INFORMATION ABOUT OUR CORPORATE GOVERNANCE
Corporate Governance Principles
Our Board is elected by shareholders to oversee management to assure we optimize long-term shareholder value by operating in an ethical and forthright manner and responsibly addressing the concerns of our various constituencies. In recognition of the importance of governance to the proper management of the Company, the Board adopted a consolidated Corporate Governance Principles document so that investors, employees, customers, regulators, and the community may be aware of the policies followed by the Company. These principles have been approved by the full Board after analysis of policy considerations and peer benchmarks. With the goal of incorporating evolving best corporate governance principles, the Board requires the Nominating Committee to review the principles at least annually and recommend changes from time to time for consideration and adoption by the full Board. The Corporate Governance Principles document can be found on TXNM Energy’s website at www.txnmenergy.com/sustainability/governance/governance-documents.aspx.
Code of Ethics
We have adopted a code of ethics, Do the Right Thing: Principles of Business Conduct, which applies to all directors, officers (including the principal executive officer, principal financial officer, and principal accounting officer), and employees. Do the Right Thing is available on our website at www.txnmenergy.com/sustainability/governance/governance-documents.aspx, and also available in print to any shareholder who requests it by writing to the Ethics and Governance Department, TXNM Energy, Inc., 414 Silver Avenue SW, MS-1285, Albuquerque, NM 87102-3289. We post any amendments to or waivers from our code of ethics requiring disclosure under applicable rules with respect to any of the Company’s executive officers and directors, within four business days of such amendment or waiver on our website at www.txnmenergycom. We have also adopted a Supplier Code of Conduct providing our suppliers with a resource setting out our expectations for our business relationships. The Supplier Code of Conduct is available on our website at www.txnmenergy.com/sustainability/governance/governance-documents.aspx.
Concerns relating to financial statement disclosures, accounting, internal accounting controls, auditing matters, or other matters involving violations of law are handled in accordance with the complaint procedures adopted by the Audit Committee. These procedures are posted on our website at www.txnmenergy.com/sustainability/governance/governance-documents.aspx. We have established an anonymous, confidential hotline through which employees and others may report concerns about our business practices.
Director Independence
In accordance with our Corporate Governance Principles, the Board has affirmatively determined that all current directors and the director nominees are independent of TXNM Energy and its management with the exception of Patricia K. Collawn and Joseph D. Tarry. Ms. Collawn and Mr. Tarry are considered non-independent directors because of their employment with the Company.
In determining the independence of the non-employee members of the Board, the Board examined all direct and indirect relationships of these non-employee directors with the Company and determined that all such relationships complied with the specific independence criteria under applicable law and regulations, including the NYSE listing standards. In addition, the only direct or indirect relationships between TXNM Energy and each current non-employee director nominee consist of service on the Board or a Board committee and being a shareholder or a retail utility customer of the Company.
Majority Voting for Directors
Our restated articles of incorporation and bylaws provide for the annual election of directors. As discussed under Question 12 on page 75, each director must receive the affirmative vote of a majority of our shares of common stock represented at the meeting and entitled to vote on the election.
Our Corporate Governance Principles also provide that any nominee in an uncontested election who does not receive the required affirmative majority vote must promptly submit his or her resignation for consideration by the Nominating Committee, which shall make a recommendation to the full Board within a reasonable period of time. The director whose resignation is under consideration will abstain from participating in the Nominating Committee’s recommendation and the Board’s decision on this matter. If a resignation is not accepted by the Board, the director may continue to serve. Directors added to the Board during the course of the year will stand for election at the next annual meeting of shareholders.
In addition to the annual election of directors, the Board’s accountability to shareholders is enhanced by:
•the rigorous nomination process conducted by the Nominating Committee (which includes consideration of director candidates proposed by shareholders as described further on page 15); and
•the Board’s policy that a substantial majority of the Board be independent and that the Audit, Compensation and HC and Nominating Committees consist entirely of independent directors and the Finance Committee shall be composed entirely of non-employee directors, a majority of whom are independent.
Director Service Policy
Our Director Service Policy set forth in the Corporate Governance Principles provides that directors will not serve more than 12 years on the Board absent certain conditions. The policy requires directors serving more than 12 years, employee directors who leave the Company and directors who undergo a significant change in their business or professional career to submit resignations to the Board for acceptance at such time as the Board deems appropriate. Term limits for Directors can be found on page 7 of the Corporate Governance Principles, available on our website at www.txnmenergy.com/sustainability/governance/governance-documents.aspx.
Succession Planning
Our Nominating Committee regularly assesses whether the composition of the Board reflects the knowledge, skills, expertise, and diversity appropriate to oversee the management of our Company.
Nominations Policy for Directors
Our Board recognizes that the contribution of the Board depends not only on the character and capabilities of the directors individually, but also on their collective strengths. Our Nominating Committee recognizes the importance of recruiting a well-balanced board, which reflects the interests of our shareholders, customers, employees, regulators and the communities we serve. The Nominating Committee does consider the diversity of the Board (including age, ethnicity, geographic representation, gender, experience, and education) in identifying nominees for a balanced board with varied expertise relevant to our electric energy business. For example, our current members reflect the Board’s successful efforts to recruit female, African-American and Hispanic nominees, as well as candidates from Texas and New Mexico (to reflect the geographic market of our utility subsidiaries, PNM and TNMP). Two candidates joined the Board in 2019 with significant environmental, climate change and sustainability expertise highly relevant to transforming to a cleaner energy portfolio and enhancing the reliability and resiliency of the grid.
Shareholder Recommendations of Directors
Any shareholder may recommend potential nominees to the Nominating Committee for consideration for membership on the Board. Recommendations can be made by sending a written statement of the qualifications of the recommended individual to the Corporate Secretary, TXNM Energy, Inc., 414 Silver Ave. SW, MS-1245, Albuquerque, NM 87102-3289. As discussed on page 15, the Nominating Committee will evaluate candidates recommended by shareholders on the same basis as it evaluates other candidates.
Proxy Access
Our bylaws permit any shareholder (or group of no more than 20 shareholders) owning three percent or more of our common stock, continuously for at least three years, to nominate up to an aggregate limit of one candidate or 20 percent of our Board (whichever is greater) for inclusion in the proxy statement. For the 2026 annual meeting of shareholders notice of such nominees must be received no earlier than November 2, 2025 and no later than the close of business on December 2, 2025. Notice should be addressed to the Corporate Secretary, TXNM Energy, Inc., 414 Silver Ave. SW, MS-1245, Albuquerque, NM 87102-3289. Requirements for such nominations and nominees are detailed in our bylaws, which are available on our website at www.txnmenergy.com/sustainability/governance/governance-documents.aspx.
Board Leadership Structure and Lead Director
We believe the Company and our shareholders are best served by a Board that has the flexibility to establish a leadership structure that fits the needs of the Company at a particular point in time. Under our Corporate Governance Principles and bylaws, the Board has the authority to combine or separate the positions of Chair and CEO, as well as to determine whether, if the positions are separated, the Chair should be an employee, non-employee, or an independent director. The Board has separated the two offices on four occasions since the 1980s.
The Board believes the most effective leadership structure for the Company at this time is one with a combined Chair and CEO coupled with an independent lead director. The Chair is Patricia K. Collawn, our CEO. Combining the roles of Chair and CEO: (1) enhances the Board’s ability to provide strategic direction and communicate clearly and effectively with management; and (2) avoids creating a structure that would effectively duplicate the work of our lead director. Ms. Collawn’s knowledge of our utilities and of the significant risks, challenges, and opportunities for our industry, including climate change, technological innovation, cybersecurity, and regulatory outcomes, makes her best suited to serve as Chair and CEO and provide strong, unified leadership for TXNM Energy. As Chair, Ms. Collawn also brings contemporary industry insights to the Board as a result of her leadership roles in leading industry organizations, such as EPRI and EEI, both of which are instrumental in addressing policy, operational, and technological issues facing the utility industry.
The position of lead director and role of our Board committees (comprised entirely of independent directors) are designed to promote strong, independent oversight of our management and affairs. Our lead director, Norman P. Becker, performs the following functions:
•approves Board meeting agendas and information sent to the Board;
•approves meeting schedules to ensure sufficient time for discussion of all agenda items;
•chairs all meetings of the independent directors, including executive sessions of the independent directors, and presides at all meetings of the Board in the absence of the Chair;
•works with committee chairs to ensure coordinated coverage of Board responsibilities;
•ensures the Board is organized properly and functions effectively and independent of management;
•in consultation with the Board, is authorized to retain independent advisors and consultants on behalf of the Board;
•facilitates the annual self-evaluation of the Board and Board committees;
•serves as a liaison for communications between (1) management and the independent directors, and (2) the Board, our shareholders, and other interested parties; and
•performs such other duties as the Board may from time to time delegate.
The lead director is elected by the independent directors, who review the role and functions of the lead director on an annual basis. The lead independent director received an annual retainer of $30,000, in addition to his ordinary director compensation, for the additional services the lead director provides.
The lead director, with the above described duties, facilitates independent oversight of management. The balance of the lead director and combined Chair and CEO positions ensures that the Board receives the information, experience and direction to
effectively govern. The Board established this leadership structure because the Board believes it is effective, efficient, appropriate to TXNM Energy’s size and complexity, and represents a cost-effective allocation of responsibilities.
The Board has also determined that the cost and efficiency benefits of its leadership structure do not result in control over both management and corporate governance being overly invested in one person. The Board is confident that, as currently constituted, it will provide ample counterbalance to a combined Chair and CEO and that it continues to provide suitable independent oversight of management. The independent directors on the Board are all accomplished professionals possessing substantial relevant experience to oversee our regulated utility businesses. The independent directors meet in separate sessions, excluding management, at each regular meeting of the Board. Any director has the right to submit items to be heard at any Board meeting.
Board’s Role in Risk Oversight
Our management is responsible for managing risk and bringing to the Board’s attention the most significant risks facing the Company. The Board has oversight responsibility for the processes established to identify, assess, mitigate, and monitor these risks. In addition, the Board integrates these processes with its ongoing strategic oversight responsibilities. Board oversight includes consideration of the various challenges and opportunities presented by the Company’s risks, plans to mitigate the risks, and the impact these risks may have on our strategy.
Throughout the year, the Board reviews information regarding the potential significant risks facing the Company. Each significant strategic risk is overseen by the full Board in order to facilitate more effective integrated risk and strategy oversight. For many years, management has identified and reported to the full Board on multiple risks and opportunities related to climate change, including potential environmental regulation, transformation of PNM’s generation portfolio, technological innovation, and the wider power sector transformation. In addition, the full Board approves certain Company investments in environmental equipment and grid modernization technologies. In contemplating new investments and against a backdrop of a transforming and increasingly interconnected industry, the Board also considers risks related to cybersecurity. Other significant risks overseen by the full Board include safety, customer experience, and personnel and infrastructure security.
The Board also allocates responsibility for oversight of other risks among the committees of the Board. For example, the Finance Committee reviews and recommends to the full Board decisions regarding capital structure and oversees our management of risks associated with capital availability, liquidity, and costs thereof. In addition, the Finance Committee monitors the execution of our energy supply, sales, and hedging programs. The Audit Committee plays a central role in overseeing the integrity of our financial statements and reviewing and approving the performance of our internal audit function and independent auditors. Additionally, the Board has adopted a Cyber Risk Policy, which can be found on our website at www.txnmenergy.com/sustainability/governance/governance-documents.aspx, and provided for Audit Committee oversight of management’s efforts to identify and mitigate cyber risk. While the full Board annually reviews the CEO succession planning process, the Nominating Committee oversees risks related to succession planning for the Board, and the Compensation and HC Committee oversees risks related to succession planning for Company officers. In addition, the Compensation and HC Committee considers risks related to the attraction and retention of talent and to the design of compensation programs and arrangements. In doing so, the Compensation and HC Committee monitors the design and administration of our overall incentive programs to ensure that they incentivize strong individual and group performance and include appropriate safeguards to avoid unintended or excessive risk-taking by our employees.
In executing its risk oversight duties, the Board can and does access extensive internal and external expertise regarding our challenges and opportunities, including those related to climate change and cybersecurity. For instance, the Board’s Chair, Ms. Collawn, previously served on the board of EPRI, a non-profit research institute engaged in researching innovative technologies and policy matters for the power industry. We are actively involved in multiple EPRI programs and have representatives on various committees of EEI focused on environmental risks and technological innovation. Such active participation in industry groups and programs has supported the development of a robust internal Environmental Management System throughout the Company. The foundation of the Environmental Management System is a screening process that allows for the review of PNM and TNMP jobs and projects before work begins to ensure protection and preservation of the environment. The Environmental Management System is supported by the Company’s Environmental Services Department’s environmental engineers, air quality and natural scientists, biologists and archaeologists who prepare and oversee implementation of measures that minimize and mitigate the environmental impacts of electric utility operations.
The Board believes that its current leadership structure (i.e., combining the Chair and CEO roles, coupled with an independent lead director) enhances its ability to effectively oversee risk management. Ms. Collawn’s expertise makes her uniquely qualified to lead the Board in developing and monitoring the strategic direction of the Company. Meanwhile, the lead director,
appointed by our independent directors to provide independent Board leadership, has clearly defined responsibilities designed to provide independent oversight of management on behalf of shareholders and to prevent conflicts of interest.
Communication with the Board
Shareholders wishing to communicate with the Board or with a specific director may do so by writing to the Board or to the particular director and delivering the communication in person or mailing it to: Board of Directors, c/o Corporate Secretary, TXNM Energy, Inc., 414 Silver Avenue SW, MS-1245, Albuquerque, NM 87102-3289. All shareholder communications will be relayed to the Board or an appropriate committee of the Board. If the shareholder desires to communicate a concern directly with the Board without initial review by the Corporate Secretary, the concern should be submitted in writing, in a sealed envelope addressed to the Board, in care of the Corporate Secretary, with a notation indicating that it is to be opened only by the Board. The Corporate Secretary shall promptly forward the unopened envelope to the Board. From time to time, the Board may change the process for shareholder communications with the Board or its members. Please refer to our website www.txnmenergy.com/sustainability/governance.aspx for any changes in this process.
Shareholders and other interested parties wishing to communicate directly with the lead independent director or with the non-management or independent directors as a group may do so by writing to Lead Independent Director, c/o Corporate Secretary, TXNM Energy, Inc., 414 Silver Avenue SW, MS-1245, Albuquerque, NM 87102-3289.
Shareholder Engagement
Investor Relations and Shareholder Services engages with institutional and retail investors, as well as the broader investment community. In addition to public events, the Company proactively looks to engage with its top shareholders identified through public filings annually, at a minimum, to discuss and gain feedback on strategic direction, financial targets, key developments and governance items. The Company experienced significant changes to its shareholder base over the course of the previously proposed Merger and following its termination, potentially impacting shareholder voting results. Engagement with new and previous shareholders continues to be welcomed and proactively initiated. Investors wishing to engage with the Company may reach out to Investor Relations and Shareholder Services at 505-241-2868.
Director Education
Our Corporate Governance Principles encourage all directors to participate in director continuing education programs. In addition, management monitors and reports to the directors significant corporate governance initiatives. The directors also receive continuing education through presentations at Board or committee meetings on insights into aspects of the Company’s business, developments in corporate governance, and legal or regulatory requirements that affect the business.
Related Person Transaction Policy
Our “Policy and Procedure Governing Related Party Transactions” is posted on our website at www.txnmenergy.com/sustainability/governance/governance/governance-documents.aspx. The policy provides that all transactions with executive officers, directors, director nominees or greater than 5% shareholders, or any immediate family member of any of the foregoing (collectively referred to as “related persons”), where the aggregate amount involved is expected to exceed $120,000 per year, are subject to pre-approval or ratification by the Nominating Committee, or by the Board or another committee in the normal fulfillment of their respective charters and responsibilities. In determining whether to approve such transactions, the Nominating Committee will consider, among other factors, the extent of the related person’s interest in the transaction; the availability of other sources of comparable products or services; whether the terms are no less favorable than terms generally available in unaffiliated transactions under like circumstances; the benefit to the Company; and the aggregate value of the transaction at issue. Since January 1, 2024, we have not participated, and have no current plans to participate, in any transactions in which any related person has a material interest that would be subject to pre-approval under this policy or otherwise be reportable under applicable SEC rules.
Equity Compensation Awards Policy
The Board adopted the Equity Compensation Awards Policy to govern the granting of all forms of equity compensation. The policy provides that equity compensation awards shall only be made in compliance with the PEP and applicable laws and regulations. The PEP prohibits option repricing, incorporates, as a general rule, a “double trigger” vesting rule in connection with a change in control, and contains a “clawback” provision subjecting all awards issued under the PEP to potential forfeiture or recovery to the fullest extent called for by any clawback policy that may be adopted by the Company. For additional information on the Clawback Policy adopted in August 2023, see Clawback Policy below and on page 50. The Equity
Compensation Awards Policy provides that equity compensation awards are prospective only and sets forth additional good governance procedures for making equity awards when the regular schedule for the grant of equity compensation falls within a black-out period for trading in our securities under TXNM Energy’s Insider Trading Policy. The Equity Compensation Awards Policy is available on our website at www.txnmenergy.com/sustainability/governance/governance-documents.aspx.
Political Contributions, Lobbying and Governmental Communication Policies
We support an open and transparent political process and are committed to ensuring our actions reflect the Company’s strong ethical standards. We voluntarily report information related to our efforts in the “Public Policy” section of our Sustainability Report available at www.txnmenergy.com/sustainability/reporting-and-disclosures/reporting_library.aspx. In addition, our policies on communications with regulatory agencies are set forth in our Do The Right Thing: Principles of Business Conduct available at www.txnmenergy.com/sustainability/governance/governance-documents.aspx.
Insider Trading Policy Includes No Hedging or Pledging
The Company has adopted an Insider Trading Policy (the “Insider Trading Policy”) governing the purchase, sale and/or other dispositions of the Company’s securities by its directors, officers and employees, that is reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable listing standards. The Insider Trading Policy applies to directors, officers, employees and consultants of the Company, its affiliates and its subsidiaries. Among other things, the Insider Trading Policy prohibits trading in the Company’s securities if a director, officer, employee or consultant is aware of material non-public information (except for transactions pursuant to a written plan that has been adopted in conformity with Rule 10b5-1 under the Exchange Act and pre-cleared with the Company). These individuals are also prohibited from disclosing material non-public information about the Company to any other persons. The Insider Trading Policy also sets forth information with respect to restricted trading periods, pre-clearance procedures and Section 16 compliance. In addition, the policy prohibits all directors, officers, and employees from engaging in hedging or monetization transactions, such as zero-cost collars and forward sales contracts, or transactions that allow a person to lock in much of the value of his or her Company securities. Further, our Insider Trading Policy prohibits all directors and executive officers, including our NEOs, from pledging Company securities as collateral for a loan. The Company’s Insider Trading Policy is filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Clawback Policy
Under the Clawback Policy adopted in August 2023, and described more fully on page 50 of this proxy statement, incentive compensation awarded to all Officers is subject to recoupment if (1) an accounting restatement occurs due to material noncompliance by the Company with any financial reporting requirement under the securities laws or (2) any improper conduct by a current or former Section 16 officer or any other current or former TXNM Energy Officer who receives any incentive compensation. In addition, (1) the PEP provides that all unvested and unpaid awards are subject to forfeiture for conduct which is demonstrably and materially injurious to the Company, and (2) the LTIPs and AIPs provide that a recipient will forfeit unvested and unpaid incentive compensation awards issued under the PEP for any manipulation or attempted manipulation of the performance results for personal gain at the expense of customers, shareholders, other employees or the Company.
Sustainability
We are committed to integrating sustainability into our everyday actions to help create enduring value for our shareholders, customers, and employees and the communities we serve. At TXNM Energy, the term “sustainability” encompasses a broad range of important actions. It starts with our responsibility to deliver safe, reliable, affordable, and environmentally responsible energy to our customers and focuses on the following areas: advancement of cleaner sources of energy, including renewable energy, resulting in the significant reduction of CO2 emissions; natural resource conservation and protection; energy efficiency; economic development and improving the quality of life in our communities; and corporate governance. Information about these activities, including details on the significant efforts PNM has made and continues to make to reduce its GHG emissions and water usage, and transform its generation portfolio to a carbon-free portfolio in accordance with the Energy Transition Act, is available in our Sustainability Report available at www.txnmenergy.com/sustainability/reporting-and-disclosures/reporting_library.aspx.
ADDITIONAL INFORMATION ABOUT OUR BOARD AND BOARD COMMITTEES
Board Meetings
The Chair of the Board presides at all meetings of the shareholders and of the full Board. As discussed on page 8 under “Board Leadership Structure and Lead Director,” the lead independent director chairs meetings of the independent directors and assumes other duties designed to support the Board’s independent oversight of management. The lead independent director is nominated and approved by the independent directors annually. The independent directors meet at each regular Board meeting without management present and will meet more often as the need arises. Norman P. Becker has served as the lead independent director since January 1, 2021.
In 2024, the Board met seven times, holding five regularly scheduled meetings and two specially called meetings. During 2024, all incumbent directors attended 94% of the total number of meetings of the Board and of the committees of the Board on which they served.
Directors are expected to attend the Annual Meeting and, as stated in the Corporate Governance Principles, are responsible for attending all director meetings and for reviewing materials provided in advance of each meeting. Directors are expected to actively participate in Board meetings and meetings of the committees of the Board on which they serve. All directors serving at such time attended the 2024 annual meeting held on June 4, 2024.
Board Committees and their Functions
The Board has four current standing committees: the Audit Committee, the Compensation and HC Committee, the Finance Committee, and the Nominating Committee. All committee members are independent directors.
Each committee has a written charter that addresses the committee’s purpose and responsibilities. All current committee charters can be found at www.txnmenergy.com/sustainability/governance/governance-documents.aspx and are available in print without charge to any shareholder who requests them. The charters comply with applicable NYSE listing standards.
The following table provides 2024 membership and meeting information for each of the four Board committees.
| | | | | | | | | | | | | | |
| Name | Audit Committee | Nominating Committee | Finance Committee | Compensation and HC Committee |
| V. A. Bailey |
| x* | | x |
| N. P. Becker** | | | x | x |
| E. R. Conley | x | | | x* |
| A. J. Fohrer | x* | x | | |
| S. M. Gutierrez | x | x | | |
| J. A. Hughes | | x | x | |
S. C. Maestas | x | | x | |
L. J. Montoya | x | | | x |
| M. T. Mullarkey | | | x* | x |
# Meetings in 2024 | 6 | 3 | 3 | 3 |
# Executive Sessions in 2024 | 6 | — | — | 3 |
*Committee Chair
**Lead Independent Director |
The membership of each of the four standing committees in 2025 was confirmed on December 3, 2024, as follows:
| | | | | |
| Audit Committee | Finance Committee |
E. R. Conley A. J. Fohrer*** S. M. Gutierrez S. C. Maestas M. T. Mullarkey*
| N. P. Becker** J. A. Hughes* M. T. Mullarkey S. C. Maestas
|
| Compensation and HC Committee | Nominating Committee |
V. A. Bailey N. P. Becker** E. R. Conley* L. J. Montoya
| V. A. Bailey* A. J. Fohrer*** J. A. Hughes S. M. Gutierrez L. J. Montoya |
*Committee Chairs confirmed on February 25, 2025 **Lead Independent Director ***Mr. Fohrer is not standing for re-election and will serve on these committees until he retires from the Board on May 13, 2025. |
A summary of each current standing committee’s responsibilities is included below:
Audit and Ethics Committee
| | | | | |
| Membership: | Five independent, non-employee directors in 2024 |
| Functions: | •Oversees the integrity of our financial statements, system of disclosure and internal controls regarding finance, accounting, legal, compliance, and ethics that management and the Board have established. •Ensures compliance with our legal and regulatory requirements. •Assesses and ensures the independent auditor’s qualifications and independence. •Reviews and approves the performance of our internal audit function and that of the independent auditors. •Approves independent auditor services and fees for audit and non-audit services. •Oversees our management of risks as assigned by the Board. |
| Charter: | A current copy of the Audit Committee Charter may be found on our website at www.txnmenergy.com/sustainability/governance/governance-documents.aspx. The Audit Committee Charter prohibits any committee member from serving on the audit committees of more than two other publicly traded companies. |
| Evaluation: | The Audit Committee evaluated its 2024 performance and confirmed that it fulfilled all of the responsibilities described in its Charter. |
| Financial Expert: | The Board has unanimously determined that all Audit Committee members are financially literate and that E. Renae Conley and Alan J. Fohrer qualify as “audit committee financial experts” within the meaning of SEC regulations and met the independence requirements of the NYSE listing standards. |
Compensation and Human Capital Committee
| | | | | |
| Membership: | Five independent, non-employee directors in 2024 |
| Functions: | •Recommends the compensation philosophy, guidelines, and equity-based compensation for Officers (emphasizing rewarding long-term results and maximizing shareholder value). •Establishes an appropriate compensation program for the CEO and reviews and approves corporate goals and objectives relevant to CEO compensation. •Evaluates CEO performance in light of corporate goals and objectives. •Reviews and recommends to the independent directors, the CEO’s annual compensation level and components. •Reviews and approves all components of compensation and stock ownership guidelines for all senior officers, giving due consideration to the CEO’s recommendations. •Monitors our affirmative action program. •Oversees our annual compensation risk assessment.
|
| Charter: | A current copy of the Compensation and HC Committee Charter may be found on our website at www.txnmenergy.com/sustainability/governance/governance-documents.aspx. |
| Evaluation: | The Compensation and HC Committee evaluated its 2024 performance and confirmed that it fulfilled all of the responsibilities described in its Charter. |
Committee Interlocks and Insider Participation: | During the fiscal year ended December 31, 2024, there were no relationships or transactions between the Company and any member of the Compensation and HC Committee requiring disclosure hereunder. None of our executive officers currently serves, or during the fiscal year ended December 31, 2024 served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation and HC Committee. |
Finance Committee
| | | | | |
| Membership: | Four independent, non-employee directors in 2024 |
| Functions: | •Reviews and recommends to the Board decisions regarding our capital structure and financial strategy, including dividend policy. •Oversees our financial performance, capital expenditures, and investment procedures and policies. •Oversees our investments in subsidiaries, investment trusts and other corporate investments. •Oversees our management of risks as assigned by the Board.
|
| Charter: | A current copy of the Finance Committee Charter may be found at www.txnmenergy.com/sustainability/governance/governance-documents.aspx. |
| Evaluation: | The Finance Committee evaluated its 2024 performance and confirmed that it fulfilled all of the responsibilities described in its Charter. |
Nominating and Governance Committee
| | | | | |
| Membership: | Four independent, non-employee directors in 2024 |
| Functions: | •Recommends candidates for election to the Board. •Develops policy on composition and size of the Board, as well as director tenure. •Develops director independence standards consistent with applicable laws or regulations. •Oversees the performance evaluation of the Board. •Recommends applicable revisions to the corporate governance principles. •Recommends Board compensation levels and stock ownership guidelines. •Oversees the Policy and Procedure Governing Related Party Transactions. •Oversees the Company’s management of risks as assigned by the Board.
|
| Charter: | A current copy of the Nominating Committee Charter may be found at www.txnmenergy.com/sustainability/governance/governance-documents.aspx. |
| Evaluation: | The Nominating Committee evaluated its 2024 performance and confirmed that it fulfilled all of the responsibilities described in its Charter. |
| Director Candidates and Nominations: | The Nominating Committee will consider director candidates proposed by shareholders. Director candidates recommended by shareholders will be evaluated against the same criteria as nominees submitted by the Nominating Committee. Candidates must be highly qualified and exhibit both willingness and interest in serving on the Board. Candidates should represent the interests of all shareholders and not those of a special interest group. A shareholder wishing to nominate a candidate should forward the candidate’s name and a detailed description of the candidate’s qualifications, appropriate biographical information, and signed consent to serve to the Secretary of the Company, taking into consideration the criteria for new directors: • directors should be individuals of the highest character and integrity and have inquiring minds, vision, the ability to work well with others, and exercise good judgment; • directors should be free of any conflict of interest which would violate any applicable law or regulation or interfere with the proper performance of the responsibilities of a director; • directors should possess substantial and significant experience which would be of particular importance to the Company in the performance of the duties of a director; • directors should have sufficient time available to devote to the affairs of the Company in order to carry out the responsibilities of a director; • directors should have the capacity and desire to represent the balanced, best interests of the shareholders as a whole and not primarily a special interest group or constituency; and • each director’s ownership interest should increase over time, consistent with the stock ownership guidelines and applicable insider trading restrictions, so that an appropriate amount of stock is accumulated.
General Board attributes and director qualifications can also be found on page 3 of the current Corporate Governance Principles document posted at www.txnmenergy.com/sustainability/governance-documents.aspx.
In addition, please see the answer to Question 28 on page 77 for information on how to submit a shareholder proposal for nomination of a director candidate in accordance with our bylaws and applicable SEC rules.
As described on page 7 under Nominations Policy for Directors, the Board also considers diversity in identifying nominees for a well-balanced board with varied experience relevant to our electric energy business.
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