DIRECTOR COMPENSATION
Elements of Director Compensation
The Nominating Committee recommends non-employee director compensation levels and stock ownership guidelines for review and approval by the full Board. Ms. Collawn and Mr. Tarry are the only salaried employees serving on the Board and they receive no additional compensation for their Board service.
The general policy of the Board is to provide a reasonable director compensation package that will attract and retain highly qualified non-employee directors. The Nominating Committee reviews and compares the form and amount of director compensation on an annual basis to consider trends in director compensation and to recommend a total compensation amount that approximates the median of non-employee director compensation in similarly situated utility and energy companies, such as the TXNM Peer Group described on page 39 of this proxy statement.
As discussed in the 2024 proxy statement, director compensation was increased for 2024 based on a July 2023 analysis prepared by Pay Governance showing that, despite an increase in 2023 director compensation, the total compensation levels were below the median of the TXNM Peer Group and the S&P 400 MidCap Utilities Index. Following discussion and review of the Pay Governance analysis and recommendations, in August 2023, the Nominating Committee recommended and the Board approved making the following changes to director compensation for 2024: increasing the (1) annual cash retainer from $100,000 to $105,000, and (2) market value of the annual award of restricted stock rights from $130,000 to $135,000. Thus, the 2024 annual compensation for non-employee directors consisted of the following cash and stock-based compensation:
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Annual Retainer (Cash and Equity):
| $105,000 in cash paid in quarterly installments Restricted stock rights(1) with a market value of $135,000(2) |
| Lead Director Retainer: | $30,000 paid in quarterly installments |
| Audit Committee Chair Retainer: | $15,000 paid in quarterly installments |
| Compensation and HC Committee Chair Retainer: | $15,000 paid in quarterly installments |
| Finance Committee Chair Retainer: | $15,000 paid in quarterly installments |
| Nominating Committee Chair Retainer: | $15,000 paid in quarterly installments |
Supplemental Meeting Fees: | $1,500 - payable for and after each meeting of a particular committee or the Board, as the case may be, attended by a committee member or non-employee director, in excess of eight committee or full Board meetings annually. |
(1) Restricted stock rights granted under the PEP for the 2024 annual retainer vest on the first anniversary of the grant date, subject to vesting acceleration upon certain events, including disability. These awards are typically made at our annual meeting of directors which follows our Annual Meeting, unless the meeting occurs during a black-out period for trading in the Company’s securities as specified in the Company’s Insider Trading Policy. As set forth under the heading “Equity Compensation Awards Policy,” in this proxy statement, under those circumstances, the Board will either (a) schedule a special meeting after the expiration of the black-out period, (b) make awards pursuant to a unanimous written consent executed after the expiration of the black-out period, or (c) pre-approve the equity awards with an effective date after the expiration of the black-out period. The grant date of the awards is the date on which the Board approves the awards, unless (i) the approval date is a non-trading day, in which case the grant date is the immediately preceding trading date or (ii) pre-approval occurs during a black-out period, in which case the grant date is the first trading date after the expiration of the black-out period. The PEP limits the maximum amount of shares that may be granted to any non-employee director during any calendar year to no more than 15,000 shares.
(2) The amount of restricted stock rights is determined by dividing $135,000 by the closing price of our stock on the NYSE on the day of the grant. Thus, 3,568 restricted stock rights were granted on June 4, 2024 to each non-employee director, based on the closing price on that date of $37.84 per share.
In addition, all directors are reimbursed for any Board-related expenses, such as travel expenses incurred to attend Board and Committee meetings and director education programs sponsored by educational and other institutions. Further, directors are indemnified by TXNM to the fullest extent permitted by law pursuant to our bylaws and indemnification agreements between the Company and each director. In December 2017, we adopted a program that allows directors to defer receipt of vested restricted stock rights awards granted on and after May 2018 to the earlier of (1) the five-year anniversary of termination of service with the Board, or (2) a date certain or termination of service anniversary selected by the director. No retirement or other benefit plans are available to directors.
In July 2024, Pay Governance presented the Nominating Committee an analysis of director compensation that showed, despite the increase in 2024 director compensation, current total compensation levels were slightly below the median of both the TXNM Peer Group and the S&P 400 MidCap Utilities Index. Following discussion and review of the Pay Governance analysis and recommendations, in July 2024, the Nominating Committee recommended and the Board approved the following changes to director compensation for 2025 to better align with peer median: increasing the (1) annual cash retainer from $105,000 to $115,000, (2) Audit Committee Chair retainer from $15,000 to $20,000, and (3) market value of the annual award of restricted stock rights from $135,000 to $145,000.
Stock Ownership and Retention Guidelines for Directors
The Board believes directors should be shareholders and have a financial stake in the Company to help align director financial interests with the financial interests of our longer term shareholders. The Board requires directors to attain a significant level of Company stock ownership over a reasonable period of time.
The Nominating Committee is responsible for recommending Board compensation levels and stock ownership and retention guidelines to the Board for approval. The current stock ownership guidelines provide that non-employee directors will hold an amount of shares (including unvested restricted stock rights) equal to five times the annual cash retainer within a reasonable period of time. In addition, each director is required to hold 100% of all vested restricted stock rights until his or her holdings exceed five times the annual cash retainer (sales of a portion of vested stock sufficient to satisfy related tax obligations are permitted). Further, directors must hold all restricted stock right awards for a period of six months after termination of Board service or until the director achieves the holding requirements. We believe these holding guidelines are appropriate because they continue to approximate the holding requirements of the TXNM Peer Group. All of the directors have met or we believe will meet in the applicable time frame their holding requirements under the guidelines. Similar stock ownership guidelines have been developed for executive officers and are discussed on page 51.
The guidelines are reviewed periodically for any appropriate changes as described on page 7 of the Corporate Governance Principles document available on TXNM Energy’s website at www.txnmenergy.com/sustainability/governance/governance-documents.aspx.
Summary of Non-Employee Director Compensation in 2024
The following table summarizes the total compensation paid to or earned by each non-employee director for the year ended December 31, 2024.
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Name(1) | Fees Earned Or Paid In Cash ($)(2) | Stock Awards ($)(3) | Option
Awards
($) | Non-Equity
Incentive Plan
Compensation
($) | Change in Pension
Value and Non-qualified Deferred Compensation Earnings | All Other
Compensation
($) | Total
($) |
| V. A. Bailey | 123,000 | | 135,000 | | — | — | — | — | 258,000 | |
| N. P. Becker | 138,000 | | 135,000 | | — | — | — | — | 273,000 | |
| E. R. Conley | 123,000 | | 135,000 | | — | — | — | — | 258,000 | |
| A. J. Fohrer | 123,000 | | 135,000 | | — | — | — | — | 258,000 | |
| S. M. Gutierrez | 108,000 | | 135,000 | | — | — | — | — | 243,000 | |
| J. A. Hughes | 108,000 | | 135,000 | | — | — | — | — | 243,000 | |
S. C. Maestas | 78,750 | | 135,000 | | — | — | — | — | 213,750 | |
L. J. Montoya | 78,750 | | 135,000 | | — | — | — | — | 213,750 | |
| M. T. Mullarkey | 123,000 | | 135,000 | | — | — | — | — | 258,000 | |
(1) As employees of the Company, Ms. Collawn and Mr. Tarry do not receive director compensation. |
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(2) The following table provides additional information about fees earned or paid in cash to non-employee directors in 2024: |
| Name |
Annual
Retainer
($) |
Committee
Chair Fee
($) |
Board
Meeting Fees
($) |
Lead
Independent
Director Fee
($) | Total
($) | |
| V. A. Bailey | 105,000 | 15,000 | 3,000 | — | 123,000 | | |
| N. P. Becker | 105,000 | | 3,000 | 30,000 | 138,000 | | |
| E. R. Conley | 105,000 | 15,000 | 3,000 | — | 123,000 | | |
| A. J. Fohrer | 105,000 | 15,000 | 3,000 | — | 123,000 | | |
| S. M. Gutierrez | 105,000 | — | 3,000 | — | 108,000 | | |
| J. A. Hughes | 105,000 | — | 3,000 | — | 108,000 | | |
| S. C. Maestas | 78,750 | — | — | — | 78,750 | | |
| L. J. Montoya | 78,750 | — | — | — | 78,750 | | |
| M. T. Mullarkey | 105,000 | 15,000 | 3,000 | — | 123,000 | | |
| | | | | | | |
(3) Represents the grant date fair value of $37.84 per restricted stock right calculated in accordance with FASB ASC Topic 718 of the 3,568 restricted stock rights awarded under the PEP to each non-employee director on June 4, 2024. The assumptions used in determining the grant date fair value of restricted stock rights are set forth in Note 12 of the consolidated financial statements in TXNM’s Annual Report on Form 10-K for the year ended December 31, 2024. As of December 31, 2024, the non-employee directors listed on the table above had 3,568 outstanding restricted stock rights that will vest in May 2025. As discussed above, directors may elect to defer receipt of vested restricted stock awards granted on and after May 2018. The actual value that a director may realize on the payment of vested restricted stock rights will depend on the market price of our common stock at the date of settlement and ultimately, the value received by the director on the sale of stock. |
OWNERSHIP OF OUR COMMON STOCK
Largest Shareholders
The following table contains information regarding the only entities we know of that beneficially owned more than 5% of our common stock based on reports filed by such persons with the SEC as of March 24, 2025, except to the extent indicated otherwise in the footnotes.
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| Name and Address | Voting Authority | Dispositive Authority |
| Sole | Shared | None | Sole | Shared | Total Amount | Percentage of Class |
BlackRock, Inc. (1) 50 Hudson Yards New York, NY 10001 | 12,886,605 | — | — | 13,232,136 | — | 13,232,136 | 14.6% |
The Vanguard Group (2) 100 Vanguard Blvd. Malvern, PA 192355 | — | 109,361 | — | 9,144,749 | 186,181 | 9,330,930 | 10.87% |
T. Rowe Price Investment Management, Inc. (3) 101 E. Pratt Street Baltimore, MD 21201 | 6,230,887 | — | — | 6,250,680 | — | 6,250,680 | 6.9% |
(1) As reported on Schedule 13G filed November 8, 2024, with the SEC by BlackRock, Inc. as the parent holding company or control person of thirteen subsidiaries.
(2) As reported on Schedule 13G filed February 13, 2024 with the SEC by The Vanguard Group.
(3) As reported on Schedule 13G filed November 14, 2024 with the SEC by T. Rowe Price Investment Management, Inc. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires TXNM Energy’s executive officers and directors to file certain reports of ownership and changes in ownership with the SEC within two business days of a transaction. To the Company’s knowledge, based solely on a review of such filings on file with the SEC and written representations from the Company’s executive officers and directors, we believe all executive officers’ and directors’ applicable filing requirements were met.
Stock Ownership of Directors and Executive Officers
The Board believes that our directors and executive officers should be shareholders and have a significant long-term financial stake in the Company. The stock ownership guidelines for directors and officers are discussed on pages 17 and 51 of this proxy statement. The following table shows the amount of TXNM common stock owned by our current directors, the named executive officers and our directors and executive officers as a group as of March 24, 2025.
| | | | | | | | | | | | | | | | | |
| Name | Amount and Nature of Shares Beneficially Owned (a) |
| Shares Held | Right to Acquire within 60 Days (b) | Total Shares Beneficially Owned | Percent of Shares Beneficially Owned | Deferred RSAs (c) |
| Non-Employee Directors: |
| Vicky A. Bailey | 13,225 | 3,568 | 16,793 | * | — |
| Norman P. Becker | 21,810 | 3,568 | 25,378 | * | — |
| E. Renae Conley | 22,725 | 6,268 | 28,993 | * | 5,554 |
| Alan J. Fohrer | 26,721 | 8,910 | 35,631 | * | 2,344 |
| Sidney M. Gutierrez | 23,143 | 3,568 | 26,711 | * | — |
| James A. Hughes | 11,007 | 5,786 | 16,793 | * | — |
Steven C. Maestas | — | 3,568 | 3,568 | * | — |
Lillian J. Montoya | — | — | — | * | 3,568 |
| Maureen T. Mullarkey | 17,809 | 11,254 | 29,063 | * | — |
| NEOs: | | | | | |
| Patricia K. Collawn | 749,557 | 139,576 | 889,133 | * | — |
| Joseph D. Tarry | 41,847 | 29,247 | 71,094 | * | — |
| Elisabeth A. Eden | 21,921 | 4,723 | 26,644 | * | — |
Brian G. Iverson | 3,493 | 8,175 | 11,668 | * | — |
Patrick A. Apodaca 1 | 90,004 | 4,945 | 94,949 | * | — |
Directors and current Executive Officers as a Group (13 persons) | 953,258 | 228,211 | 1,181,469 | 1.28% | 11,466 |
*Less than 1% of TXNM outstanding shares of common stock. 1 Mr. Apodaca is not included under the “group” ownership reporting as he retired effective October 2, 2024. (a) Unless otherwise noted, each person has sole investment and voting power over the reported shares (or shares such powers with his or her spouse). (b) Beneficial ownership also includes the shares directors and executive officers have a right to acquire through (1) potential accelerated vesting (upon disability) under the PEP of non-employee director restricted stock awards that the director has elected not to defer receipt to a later date, (2) potential accelerated vesting (including upon retirement or disability) under the PEP of officer RSAs, and (3) the number of shares that executive officers have a right to acquire through the ESP II upon the participant’s termination of employment. As of February 18, 2025, the number of shares reported in this column include the following ESP II phantom share rights: P. K. Collawn - 94,442. (c) The amounts shown are restricted stock rights that directors have elected to defer receipt of under the program described on page 16. The information in this column is not required by SEC rules because the effect of the deferral election is that the director does not have the right to acquire any underlying shares within 60 days of March 24, 2025. TXNM Energy has provided this information to provide a more complete picture of the financial stake that its directors have in TXNM. |
