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Notice of Annual Meeting of Shareholders

Tuesday, May 18, 2010

9:00 a.m., Mountain Daylight Time

South Broadway Cultural Center

1025 Broadway SE

Albuquerque, New Mexico

April 7, 2010

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders of PNM Resources, Inc.   The meeting will be held on Tuesday, May 18, 2010, at 9:00 a.m. (Mountain Daylight Time), at the South Broadway Cultural Center, 1025 Broadway SE, Albuquerque, New Mexico.  A map to the meeting location is included on the back page of this proxy statement for your reference.  You are entitled to vote all shares of our common stock held by you as of the record date of March 29, 2010.

At the meeting, shareholders are being asked to:

·                  Elect ten (10) directors.

·                  Ratify appointment of Deloitte & Touche LLP as independent public accountants for 2010.

·                  Transact any other business properly brought up at the meeting.

The proxy statement and form of proxy were first made available to our shareholders on or about April 7, 2010.  We are pleased to take advantage of the Securities and Exchange Commission rules that allow us to furnish proxy materials to our shareholders on the Internet.  We believe these rules allow us to provide you with the information you need while lowering the costs of delivery and reducing the environmental impact of our Annual Meeting.

Your vote is extremely important.  After reading the proxy statement, please vote so that we can be assured of having a quorum present at the meeting and so your shares may be voted in accordance with your wishes.  Your continued interest in the business of PNM Resources, Inc. is appreciated, and we hope you will be able to attend the Annual Meeting.

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GLOSSARY OF TERMS USED IN THIS PROXY

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PNM Resources, Inc.

Proxy Statement for 2010 Annual Meeting of Shareholders

Tuesday, May 18, 2010

SOME QUESTIONS YOU MAY HAVE REGARDING THIS PROXY STATEMENT

Why am I being asked to review these materials?

You are receiving these materials because you hold shares in PNM Resources, Inc. and are entitled to vote at the Annual Meeting.  This proxy statement summarizes the information you need to know to vote at the Annual Meeting.  You do not need to attend the Annual Meeting to vote your shares. Our Board of Directors (“Board”) has made these materials available to you on the Internet or, upon your request, has delivered printed versions of these materials to you by mail.  We made these materials available to shareholders on or about April 7, 2010.  Our shareholders are invited to attend the Annual Meeting and are requested to vote on the proposals described in this proxy statement.  For a complete listing of terms defined and used in this proxy statement, see the Glossary on page ii.

What is included in these materials?

These materials include:

·                  Our proxy statement for the Annual Meeting; and

·                  Our 2009 Annual Report to Shareholders and Annual Report on Form 10-K, which includes our consolidated financial statements.

If you requested printed versions of these materials by mail, these materials also include the proxy card for the Annual Meeting.  Proxy materials are available at http://www.proxyvoting.com/pnm.

Why did I receive a one-page notice in the mail regarding Internet availability of proxy materials this year instead of a full set of proxy materials?

Pursuant to rules adopted by the Securities and Exchange Commission (“SEC”), we have elected to provide access to our proxy materials over the Internet.  Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our shareholders of record and beneficial owners.  All shareholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials.  The Notice includes instructions on how to access the proxy materials over the Internet or how to request a printed copy.  The Notice is not a ballot proxy card and cannot be used to vote your shares.  Pursuant to applicable law, beneficial owners of shares held in the RSP (our 401(k) plan for employees) will automatically receive paper copies of the proxy materials by mail instead of the Notice.

Who may vote at the Annual Meeting?

You may vote all of the shares of our common stock that you own at the close of business on March 29, 2010, the record date.  On the record date, PNM Resources had 86,673,174 shares of common stock outstanding and entitled to be voted on at the Annual Meeting.  You may cast one vote for each share of common stock held by you on all matters presented at the Annual Meeting.

We also have outstanding 477,800 shares of Convertible Preferred Stock, Series A (“preferred stock”), which are entitled to vote together with the holders of common stock on all matters which are voted upon by our shareholders, except the election of directors.  Each share of preferred stock is entitled to 10 votes at the Annual Meeting because each share of preferred stock is convertible into 10 shares of common stock, subject to certain anti-dilution adjustments.

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What proposals will be voted on at the Annual Meeting?

The following two proposals will be considered and voted on at the Annual Meeting:

Proposal 1 — Elect Ten Directors

All directors are elected on an annual basis.  One current director (Robert M. Price) is retiring from the Board effective as of the Annual Meeting.  The Board approved the nomination of Bruce W. Wilkinson for election to the Board to fill the vacancy created by Mr. Price’s retirement.  Thus, nine current members of the Board and Mr. Wilkinson are seeking election for one-year terms at this year’s Annual Meeting.  The Board recommends:

for election to the Board at the Annual Meeting.  Detailed information about these nominees is provided beginning on page 9.

If a nominee becomes unavailable for election, proxy holders will vote for another nominee proposed by the Board or the seat will remain vacant until the Board proposes another nominee.

Proposal 2 — Ratify Appointment of Independent Public Accountants

The Audit and Ethics Committee of the Board (“Audit Committee”), which is comprised entirely of independent non-employee directors, selects and hires the independent registered public accountant, subject to ratification by the Company’s shareholders, to audit the Company’s financial records.  The Audit Committee has selected Deloitte & Touche to audit the Company’s consolidated financial statements for the fiscal year beginning January 1, 2010.

Representatives of Deloitte & Touche will attend the Annual Meeting, where they will have the opportunity to answer questions.  If shareholders fail to ratify the appointment of Deloitte & Touche, the Audit Committee would reconsider its selection.

What are our Board of Directors’ Voting Recommendations?

Our Board unanimously recommends that you vote your shares “For” each of the nominees to the Board and “For” the ratification of the appointment of Deloitte & Touche.

How do I vote my shares?

For your convenience, we have established four easy methods for voting shares held in your name:

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Your shares will be voted in the manner you indicate.  Holders of our preferred stock may only vote in person or by faxing the completed paper proxy card pursuant to the instructions on the proxy card for the preferred stock.

What is a proxy?

A proxy is your legal designation of another person (the “proxy”) to vote on your behalf.  By voting by telephone or the Internet, or by completing and mailing a printed proxy card, you are giving the proxy committee (B. S. Reitz, D. K. Schwanz, and J. B. Woodard) appointed by the Board the authority to vote your shares in the manner you indicate.  If you sign and return your proxy card without indicating how you want your shares to be voted, or if you vote by telephone or Internet in accordance with the Board of Directors’ voting recommendations, the proxy committee will vote your shares as follows:

FOR the election of the directors nominated, and

FOR ratification of the appointment of Deloitte & Touche as independent public accountants for 2010.

Can I change my vote or revoke my proxy?

Yes.  Any subsequent vote by any means will change your prior vote.  The last vote actually received before the Annual Meeting will be the one counted.  You may also revoke your proxy by voting in person at the Annual Meeting.

What happens if additional matters are presented at the Annual Meeting?

The Board knows of no other business to be conducted at the Annual Meeting other than those discussed in this proxy statement.  If any other matter is properly presented, the proxy committee will vote on the matter in accordance with its judgment.  Shareholders attending the meeting will directly vote on those matters.

Why did I receive more than one proxy card or Notice?

You will receive multiple proxy cards or Notices if you hold your shares in different ways (e.g., joint tenancy, trusts, custodial accounts) or in multiple accounts.  Each Notice and proxy card that you receive will contain a specific “control number” with the relevant information to vote the specific shares at issue.  Note that the proxy card or Notice for shares registered in your name will include any shares you may hold in the PNMR Direct Plan, a dividend reinvestment and stock purchase plan.    If your shares are held by a broker (i.e., in “street name”), you will receive a Notice on how to obtain your proxy materials and vote from your broker.  You should vote according to the instructions on each Notice you receive and vote on, sign and return each proxy card you receive.

How do I vote my RSP shares?

If you participate in the RSP, our 401(k) plan for our employees, and shares have been allocated to your account under the PNMR Stock Fund investment option, then you will receive a separate vote authorization form and supplemental materials on voting instructions for these shares from the PNMR Corporate Investment Committee.  Thus, if you have shares allocated to your RSP account, you will need to vote your RSP shares with the RSP vote authorization form.  If you participate in the RSP, you will receive the proxy statement and RSP voting materials by mail.

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What constitutes a quorum and why is a quorum required?

A quorum of shareholders is necessary to conduct business at the Annual Meeting. If at least a majority of all of the PNM Resources common stock and preferred stock outstanding on the record date is represented at the Annual Meeting, in person or by proxy (by voting by telephone or on the Internet or by properly submitting a proxy card or voting instruction form by mail), a quorum will exist.  Abstentions, withheld votes, and broker non-votes will be counted as present for quorum purposes.

What vote is required to approve each proposal?

A quorum and the affirmative vote of the holders of a majority of the shares of PNM Resources common stock present, in person or by proxy, and entitled to vote at the Annual Meeting are required to elect directors.  A quorum and the affirmative vote of a majority of the shares of our common stock and preferred stock, voting together as a single class, are required to ratify the appointment of independent public accountants.   Abstentions and withheld votes will have the effect of a vote against these matters, while broker non-votes will not be counted in calculating voting results on these matters.

What is the difference between a “shareholder of record” and a “street name” holder?

These terms describe how your shares are held. If your shares are registered directly in your name with BNY Mellon Shareowner Services, the Company’s transfer agent, you are a “shareholder of record” with respect to those shares and the Notice was sent directly to you by PNM Resources.

If your shares are held in the name of a brokerage, bank, trust or other nominee as a custodian, you are a “street name” holder, and the Notice was forwarded to you by that organization.  As a beneficial owner, you have the right to direct that organization on how to vote the shares held in your account.

What happens if I don’t give my broker voting instructions for my “street name” shares?

If you do not give your broker voting instructions, your brokerage firm may only vote your “street name” shares on certain “routine” matters.   When a brokerage firm votes its customers’ unvoted shares on routine matters, these shares are counted to determine if a quorum exists to conduct business at the meeting.  Ratification of the appointment of Deloitte & Touche as independent public accountants for 2010 is considered a routine matter for which brokerage firms may vote your shares without your voting instructions.

What is a broker non-vote?

A broker non-vote occurs when a broker is not permitted under NYSE rules to vote on a “non-routine” matter without instructions from the beneficial owner of the shares and no instruction is given.  In prior years, brokers would exercise discretionary voting on uncontested elections of directors.  On July 1, 2009, the SEC approved a change to NYSE rules to provide that election of directors is now considered a non-routine matter.  Thus, your “street name” shares cannot be voted on Proposal 1 without receipt of your voting instructions.

We encourage you to provide instructions to your broker by giving your proxy.  This ensures that your shares will be voted in accordance with your wishes on all matters at the Annual Meeting.

How are votes withheld, abstentions and broker non-votes treated?

Votes withheld and abstentions are deemed as “present” at the Annual Meeting, are counted for quorum purposes, and will have the same effect as a vote against the matter.  Broker non-votes, if any, while counted for general quorum purposes, are not deemed to be “present” with respect to any matter for which a broker does not have authority to vote.

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Who may attend the Annual Meeting?

Admission tickets will be distributed at the registration tables in the lobby of the South Broadway Cultural Center prior to the Annual Meeting.  Attendance is limited to shareholders of record on March 29, 2010.  If your shares are held in the name of your broker, bank, or other nominee, please bring an account statement or letter from the nominee indicating that you are the beneficial owner of the shares as of the record date.

Can I vote my shares in person at the Meeting?

If you are a “shareholder of record,” you may vote your shares in person at the Annual Meeting.  If you hold your shares in “street name,” you must obtain a proxy from your broker, banker, trustee or nominee, giving you the right to vote the shares at the Annual Meeting.

Who pays the cost of this proxy solicitation?

The enclosed proxy is being solicited on behalf of PNM Resources’ Board of Directors.  This solicitation is being made by mail, but also may be made in person, by telephone or via the Internet.  The Company has hired Georgeson Shareholder Communications, Inc., to assist in the solicitation for an estimated fee of $7,500 plus any out-of-pocket expenses.  PNM Resources will pay all costs related to solicitation.  BNY Mellon Shareowner Services is tabulating the vote.

Is this proxy statement the only way that proxies are being solicited?

No.  As stated above, the Company has retained Georgeson Shareholder Communications, Inc., to aid in the solicitation of proxy materials. In addition to mailing these proxy materials, certain directors, officers or employees of the Company may solicit proxies by telephone, facsimile, e-mail or personal contact. They will not be specifically compensated for doing so.

Where can I find voting results of the Annual Meeting?

Preliminary voting results will be disclosed in a Current Report on Form 8-K within four business days after the date of the Annual Meeting, and final voting results will be disclosed in an amended Form 8-K within four business days after the final voting results are known.  Such results will also be published on our website at www.pnmresources.com.

Whom should I call with other questions?

If you have any further questions about voting your shares or attending the Annual Meeting, please call our Shareholder Services at 1-800-545-4425.

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INTRODUCTION

PNM Resources is an investor-owned holding company of energy and energy-related businesses.  Its headquarters are in Albuquerque, New Mexico, and it trades on the NYSE under the symbol “PNM.”

GOVERNANCE

In recognition of the importance of governance to the proper management of the Company, the Board has organized the various governance policies adopted and practiced over the years into 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.  The Board has chosen those practices it believes to be in the best interests of its investors.  Because the Board wants to follow and stay abreast of best corporate governance practices, it has charged its Board Governance and Human Resources Committee (“BGHRC”) with reviewing the principles at least annually (more often if necessary) and recommending any necessary changes to the Board.

The Corporate Governance Principles document is attached as Appendix A, and can also be found on PNM Resources’ website at www.pnmresources.com.  The principles document sets forth key practices and addresses the following:

CODE OF ETHICS

The Company has 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 in print to any shareholder who requests it by writing to the Ethics and Governance Department, PNM Resources, Inc., Alvarado Square, MS-2850, Albuquerque New Mexico 87158.  Do the Right Thing is also available on our website at www.pnmresources.com.  The Company will post amendments to or waivers from its code of ethics (to the extent applicable to the Company’s executive officers and directors) at this location on its website.

Concerns relating to financial statement disclosures, accounting, internal accounting controls, or auditing matters, and other matters involving violations of law are handled in accordance with the complaint procedures adopted by the Audit Committee that are posted on the Company’s website at www.pnmresources.com. The Company also established an anonymous/confidential hotline through which employees and others may report concerns about the Company’s business practices.

OTHER GOVERNANCE POLICIES

Leadership Structure

We believe the Company and its 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 the Company’s Corporate Governance Principles and bylaws, the Board has the authority to combine or separate the positions of Chairman and Chief Executive Officer (“CEO”), as well as to determine whether, if the positions are separated, the Chairman should be an employee, non-employee, or an independent director.

The Board has addressed the question of whether to separate the offices of Chairman and CEO on several occasions and has reached different determinations, based on its conclusions of what was in the best interests of the Company and its shareholders at the time.  The Board has separated the two offices on four different occasions since the late

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1980s.  Most recently, upon the retirement of Jeffry E. Sterba, the Board separated the two offices again effective March 1, 2010. The Board believes that it should retain the flexibility to make a judgment regarding its leadership structure.  Currently, the Board believes that separating the two offices allows the Board to retain Mr. Sterba as the best qualified person to serve as Chairman of the Board and to appoint Ms. Patricia K. Collawn as the best qualified person to serve as CEO.

Even though Mr. Sterba’s long employment history with the Company disqualifies him as serving as an independent chair, the Company already has policies and practices in place to provide independent oversight of management and the Company’s strategy. The Board currently includes eight non-management directors among its ten members, seven of whom qualify as independent under applicable NYSE listing standards.  As discussed below on page 15, the Board routinely holds executive sessions at which only non-management directors are present, and, each year, the non-management directors select a presiding independent director responsible for facilitating and chairing the non-management directors meetings scheduled for that year.

Board committees provide additional oversight of management.  All Board committee members are non-employee directors who have not participated in company management and all committees have a majority of independent directors.  In addition, the Audit Committee and the BGHRC are composed entirely of independent directors.

Board’s Role in Risk Oversight

Our management is responsible for managing risk and bringing the most material risks facing the Company to the Board’s attention.  Our Board has oversight responsibility for the processes established to report and monitor material risks applicable to the Company.  The Board also oversees the appropriate allocation of responsibility for risk oversight among the committees of the Board.  Over the past several years, Board committees have played a crucial role in risk oversight.  For example, the Finance Committee reviews and recommends to the full Board the Company’s capital structure and oversees the Company’s management of risks associated with capital availability and costs thereof.  In addition, the Finance Committee monitors risks associated with the Company’s trading activities.  The Audit and Ethics Committee plays a central role in overseeing the integrity of the Company’s financial statements and reviewing and approving the performance of the Company’s internal audit function and independent accountants.  The Public Policy and Sustainability Committee considers risks to our reputation and reviews risks related to the sustainability of our operations, including risks associated with climate change and environmental regulation.  The BGHRC considers risks related to succession planning and considers risk related to the attraction and retention of talent and risks related to the design of compensation programs and arrangements.  The BGHRC monitors the design and administration of the Company’s overall incentive programs to ensure that they incent strong individual and group performance and include appropriate safeguards to avoid unintended or excessive risk taking by Company employees.

In July and September 2009, the Board reviewed briefing materials prepared by the Company’s enterprise risk management team regarding the potential significant risks facing the Company.  Each risk was assigned to a Board committee with a responsible reporting officer.  The Board discussed the appropriate level of Board oversight for these risks and determined that while the more detailed oversight would continue at the committee level, the Board would also be updated as developments occurred.  The Board does not believe that its process for risk oversight should affect its leadership structure (i.e. whether it may combine the Chairman and CEO roles in the future) because Board committees (comprised entirely of non-management directors) play the central role in risk oversight.

Stock Option Grant Policy

The Board adopted the Stock Option Grant Policy on December 4, 2006, to govern the granting of all forms of equity compensation.  The policy was amended in February 2007, to set 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 the Company’s securities under PNM Resources’ Insider Trading Policy.  The Stock Option Grant Policy, as amended to date, is attached as Appendix B, and can also be found on our website at www.pnmresources.com.

The Company conducts an annual review of equity compensation awards to ensure compliance with the requirements of the Stock Option Grant Policy.

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Related Person Transactions Policy

On February 13, 2007, the Board approved the “Policy and Procedures Governing Related Party Transactions,” attached as Appendix C to this proxy statement, and posted on our website at www.pnmresources.com.  The policy provides that all transactions with executive officers, directors or greater than 5% shareholders or any immediate family member of any of the foregoing where the aggregate amount involved is expected to exceed $120,000 per year, are subject to pre-approval or ratification by the BGHRC, 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 BGHRC 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.  For a discussion of 2009 related person transactions approved under this policy, please see page 21 of this proxy statement under the caption “Related Person Transactions.”

PROPOSAL 1:  ELECT TEN DIRECTORS (PROPOSAL 1 ON YOUR PROXY CARD)

General Information

As discussed below, ten director nominees are seeking election to the Board for one-year terms at this year’s Annual Meeting:  nine current members of the Board and Bruce W. Wilkinson (nominated to fill the vacancy created by retirement of Robert Price).  There are no vacancies as the Board fixed the number of directors at ten, effective March 1, 2010.

Patricia K. Collawn joined the Board on March 1, 2010, when Jeffry E. Sterba retired as CEO and Ms. Collawn became CEO and President.  Mr. Sterba will continue as Board Chairman.  The BGHRC recommended the appointment of Ms. Collawn to the Board effective March 1, 2010.

Robert M. Price will complete his current term, but will not stand for election at the Annual Meeting of Shareholders on May 18, 2010.  We sincerely acknowledge his dedication, leadership, engagement, and contributions to the Company during his tenure.

The BGHRC contracted the services of Spencer Stuart to provide assistance in identifying candidates for consideration of board membership.   Spencer Stuart recommended Bruce W. Wilkinson for Board consideration as a director candidate.  The BGHRC interviewed Mr. Wilkinson and subsequently approved his nomination for election to the Board to fill the vacancy created by Mr. Price’s retirement.

Each nominee has consented to being nominated and to serve if elected. In the unlikely event that any nominee becomes unable to serve for any reason, the proxies will be voted for a substitute nominee selected by the Board upon the recommendation of the BGHRC, the nominating committee of the Board.  Alternatively, the seat will remain vacant if a substitute nominee is not selected prior to the Annual Meeting.

As discussed below on page 14, under the “Director Independence” section, seven of the ten director nominees are independent directors.  Biographical information including a brief description of the specific relevant qualifications and attributes regarding each nominee is noted below.

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DIRECTORS NOMINATED THIS YEAR – TERM EXPIRING IN 2011

Adelmo E. Archuleta

Director since July 15, 2003

President and CEO, Molzen-Corbin & Associates, a New Mexico consulting engineering and architecture firm, since 1982

Mr. Archuleta, age 59, is a resident of Albuquerque, New Mexico, and holds a Master’s degree in Civil Engineering from New Mexico State University.  He joined Molzen-Corbin & Associates in 1975, and has led the firm as its President and Chief Executive Officer since 1982.  Other directorships include:  the Bank of Albuquerque; Presbyterian Healthcare Services; New Mexico Mutual Casualty, and the Greater Albuquerque Chamber of Commerce. Mr. Archuleta currently serves as Chair of the Public Policy and Sustainability Committee and is a member of the Audit and Ethics Committee.

Specific Qualifications/ Attributes:

·                  CEO experience

·                  Engineering background and experience

·                  New Mexico candidate

·                  Community engagement

·                  Business background and experience

Patricia K. Collawn

Director since March 1, 2010

President and CEO, PNM Resources, Inc., since 3/1/10

President and Chief Operating Officer, PNM Resources, Inc. – 8/08 – 2/10

Utilities President, PNM Resources, Inc. – 2007 – 2008

President and CEO, Public Service Company of Colorado – 2005 – 2007

President, Customer and Field Operations – Xcel Energy – 7/03 - 10/05

President of Retail Services – Xcel Energy  – 3/01 – 7/03

Vice President of Marketing and Sales – Xcel Energy – 8/00 – 3/01

Vice President of Marketing – New Century Energies – 1999  – 2000

Ms. Collawn, age 51, is a resident of Albuquerque, New Mexico, and is President and CEO of PNM Resources, PNM and TNMP.  She holds an MBA from Harvard University.  Ms. Collawn joined PNMR in June 2007 as Utilities President and she became PNMR’s President and Chief Operating Officer in August 2008.  Ms. Collawn has more than 15 years of utility experience.  Other directorships in addition to various Company subsidiaries include: CTS Corporation, for which she serves on the nominating and governance committee, and is the chair of the compensation committee; the Greater Albuquerque Chamber of Commerce (Chair-elect); and United Way of Central New Mexico.

Specific Qualifications/ Attributes:

·                  CEO and COO experience

·                  Business background and experience

·                  Extensive utility and energy industry expertise and leadership

·                  Federal electric, natural gas and environmental regulatory experience

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Julie A. Dobson

Director since July 16, 2002

Chairman, TeleBright Corp., a telecommunications decision-support technology company, since 2002

Chief Operating Officer, TeleCorp PCS, 1998 - 2002

Ms. Dobson, age 53, is a resident of Potomac, Maryland, and was Chief Operating Officer and one of the founding principals of TeleCorp PCS, a wireless/mobile phone company serving more than a million customers when sold to AT&T Wireless.  A 1978 William & Mary graduate, she earned an MBA in Finance at the University of Pittsburgh the following year before beginning a long career in what became Verizon, starting in sales with Bell of Pennsylvania, and concluding as president of one of the company’s non-regulated businesses, Bell Atlantic Mobile (New York).  Other directorships include:  The American Water Works Company, Voorhees, New Jersey, and serves on the compensation committee; and Safeguard Scientifics, Inc., Wayne, Pennsylvania, for which she serves as chair of the compensation committee.  Prior committee memberships at Safeguard Scientifics, Inc., include the audit committee and the corporate governance committee. She previously served as non-executive Chairman and Director of  LCCI, McLean, Virginia.  Ms. Dobson currently serves as Chair of the Audit and Ethics Committee and is a member of the Board Governance and Human Resources Committee.  The Board of Directors has determined that Ms. Dobson qualifies as an “audit committee financial expert” as defined by the SEC regulations.

Specific Qualifications/ Attributes:

·                  CFO and COO experience

·                  “Financial expert” under SEC requirements

·                  Finance educational background

·                  Technology background

·                  Business background and experience in regulated and non-regulated corporations

Robert R. Nordhaus

Director since September 18, 2007

Member, Van Ness, Feldman, P.C., Attorney at Law, since 1997

Mr. Nordhaus, age 73, is a resident of Washington, DC, and is a member of Van Ness, Feldman, P.C., Attorneys at Law.  Mr. Nordhaus practiced with the firm from 1981 to 1993, when he was appointed General Counsel of the Department of Energy by President Clinton. He rejoined the firm in 1997.  Mr. Nordhaus is a 1960 graduate of Stanford University, and a 1963 graduate of Yale Law School.  Mr. Nordhaus currently serves as a member of the Finance Committee and the Public Policy and Sustainability Committee.

Specific Qualifications/ Attributes:

·                  Extensive utility and energy industry legal expertise and leadership

·                  Federal electric, natural gas and environmental regulatory experience

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Manuel T. Pacheco

Director since November 20, 2001

Interim President, New Mexico State University – 6/09 - 12/09

Interim President, Highlands University – 7/06 - 1/07

Retired President, University of Missouri System – 1997 - 2003

Dr. Pacheco, age 68, is a resident of Phoenix, Arizona, and served as Interim President of New Mexico State University, Las Cruces, New Mexico, from June 2009 to December 2009; and as Interim President of New Mexico Highlands University, Las Vegas, New Mexico, from July 2006 to January 2007.  He retired in 2003 as the President of the University of Missouri System.  From 1984 to 1997, he served as President of various universities, including the University of Arizona and the University of Houston. He holds a Doctorate degree in Foreign Language Education.  Dr. Pacheco currently serves as a member of the Audit and Ethics Committee and the Board Governance and Human Resources Committee.

Specific Qualifications/ Attributes:

·                  Board experience

·                  New Mexico native

·                  Leadership background and experience

·                  Academic background

Bonnie S. Reitz

Director since July 16, 2002

Owner, InsideOut…Culture to Customer, since 3/03

President, EOS Airlines - 4/05 – 8/05

Senior Vice President, Sales and Distribution, Continental Airlines, Inc., 1994 - 2003

Ms. Reitz, age 57, is a resident of St. Petersburg, Florida, and is the owner/founder of InsideOut…Culture to Customer, a business consulting company.  Ms. Reitz was President of EOS Airlines from April to August 2005.  Ms. Reitz retired in 2003, as Senior Vice President for Sales and Distribution of Continental Airlines.  Ms. Reitz is a 1974 Purdue graduate and began her career in the airline industry in 1977.  Other directorships include: Express Jet Holdings of Houston, Texas, for which she serves on the compensation committee and the corporate governance committee; the local and national organizations of Dress for Success; and Farelogix, a provider of low-cost, multi-source distribution and independent faring technology to the global travel industry.  Ms. Reitz currently serves as a member of the Board Governance and Human Resources Committee and the Public Policy and Sustainability Committee.

Specific Qualifications/ Attributes:

·                  Customer service and delivery systems expertise

·                  Marketing background and experience

·                  Business consulting background

·                  Regulated industry (travel industry) experience

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Donald K. Schwanz

Director since July 29, 2008

Chairman and CEO, CTS Corporation - 2002 - 2007

CEO, CTS Corporation - 2001 - 2007

COO, CTS Corporation - 1/01 - 9/01

Honeywell, 1979 - 2000

Mr. Schwanz, age 66, is a resident of Scottsdale, Arizona, and is retired Chairman and CEO of CTS Corporation, a global manufacturer of electronic components and sensors and a provider of electronic manufacturing services. Mr. Schwanz held various management and senior executive roles at Honeywell from 1979 to 2000, where he last served as President of Industrial Controls Business.  He graduated from Massachusetts Institute of Technology with a Bachelor’s degree in Mechanical Engineering, and he earned an MBA in General Management from Harvard Graduate School of Business in 1968. Other directorships include: Multi-Fineline Electronix, Inc. (MFLEX), where he currently serves as Chair, Compensation Committee, and is a member of the Audit Committee.  Mr. Schwanz currently serves as a member of the Finance Committee and the Public Policy and Sustainability Committee.

Specific Qualifications/ Attributes:

·                  CEO experience

·                  Board and Board Chairman experience

·                  Regulatory environment experience

·                  Technology and innovation experience

Jeffry E. Sterba

Director since March 7, 2000

Chairman of the PNM Resources, Inc. Board of Directors, since 3/1/10

Chairman and CEO, PNM Resources, Inc. – 8/11/08 – 3/1/10

Chairman, President and CEO, PNM Resources, Inc. – 2000 – 8/11/08

Executive Vice President, USEC, 1999 - 2000

Executive Vice President and Chief Operating Officer, PNM - 1997 - 1999

Mr. Sterba, age 55, is a resident of Albuquerque, New Mexico, and retired from PNM Resources on March 1, 2010, and currently is Chairman of the Board of PNM Resources.  Mr. Sterba became President of PNM on March 6, 2000, became President and CEO of PNM on June 6, 2000, and was elected Chairman of the Board of the Company on October 1, 2000.  Previously, Mr. Sterba served as Executive Vice President of USEC, Inc., from January 1999 to February 2000.  Before joining USEC in January 1999, Mr. Sterba was Executive Vice President and Chief Operating Officer of PNM overseeing all of its business units.  During his previous years at the Company, Mr. Sterba held various executive positions and was responsible for bulk power services, corporate strategy and asset restructuring, retail electric and water services, and electric business development and finance.  Other directorships in addition to various Company subsidiaries include: Edison Electric Institute; the Keystone Center; Albuquerque Community Foundation; U. S. Chamber of Commerce; Meridian Institute; and Optim Energy, LLC.  Mr. Sterba also serves on an advisory board for Wells Fargo Bank, N.A.

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Specific Qualifications/Attributes:

·                  Extensive Board experience, including Board Chairman

·                  CEO Experience

·                  Extensive utility and energy industry expertise and leadership

·                  Extensive electric, natural gas and environmental regulatory experience

Bruce W. Wilkinson

New Director Nominee

Retired Chairman and Chief Executive Officer McDermott International, Inc. – 2000 - 2008

Mr. Wilkinson, age 65, served as President and Chief Operating Officer from May 2000 to July 2000, and as Chairman and Chief Executive Officer of McDermott International, Inc., an energy services company, until his retirement in September 2008.  He was a Principal of Pinnacle Equity Partners, L.L.C., a private equity group, from May 1999 to April 2000; Chairman and Chief Executive Officer of Chemical Logistics Corporation, a company formed to consolidate chemical distribution companies, from April 1998 to April 1999; President and Chief Executive Officer of Tyler Corporation (a diversified manufacturing and service company) from April 1997 to October 1997; Interim President and Chief Executive Officer of Proler International, Inc. (a ferrous metals recycling company) from July 1996 to December 1996; and Chairman and Chief Executive Officer of CRSS, Inc. (a global engineering and construction services company) from October 1989 to March 1996.  Mr. Wilkinson has a B.A and J.D. from the University of Oklahoma and an LLM from the University of London.

Other directorships include:  Director of Cameron International Corporation (formerly, Cooper Cameron Corp.), since 2002;  Trustee of the University of St. Thomas in Houston, Texas; and Trustee of Duchesne Academy of the Sacred Heart in Houston.

Specific Qualifications/Attributes:

·                  Board Chairman and CEO experience

·                  Extensive business background and experience

·                  Energy and power industry experience

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Joan B. Woodard, Ph. D.

Director since July 15, 2003

Sandia National Laboratories

Executive Vice President and Deputy Director of National Security Technologies & Systems – 3/09 – 4/10

Executive Vice President and Deputy Director for Nuclear Weapons – 2005 - 2009

Executive Vice President and Deputy Director, Chief Operating Officer – 1999 – 2005

Dr. Woodard, age 57, is a resident of Albuquerque, New Mexico, and is retired Executive Vice President and Deputy Director for Sandia National Laboratories in Albuquerque. She began her career with Sandia National Laboratories in 1974, and previously led the nuclear deterrent program, served as the lead Vice President for energy research and development, and served as the chief operations officer.    She holds a Doctorate degree in Mechanical Engineering from the University of California.  She serves on advisory boards for the Missouri University of Science and Technology, as well as the Intelligence Science Board.  Dr. Woodard currently serves as Chair of the Board Governance and Human Resources Committee, and is a member of the Finance Committee, and serves as the presiding director of the non-management directors’ meetings.

Specific Qualifications/ Attributes:

·                  COO experience

·                  Executive leadership experience and background

·                  Energy background and expertise

·                  New Mexico candidate

·                  Academic background

The Board of Directors unanimously recommends a vote FOR each director nominee.

DIRECTOR INDEPENDENCE

In accordance with the Company’s Corporate Governance Principles, the Board has affirmatively determined that all of the directors, except Patricia K. Collawn, Jeffry E. Sterba, and Donald K. Schwanz, are independent of PNM Resources and its management.  Ms. Collawn is considered an inside director because of her employment as the President and CEO of the Company.  Mr. Sterba is not considered to be independent because he was employed as CEO of the Company until March 1, 2010.  Mr. Schwanz is not considered to be independent under applicable NYSE listing standards because he served as Chairman and CEO of CTS Corporation in 2007 and 2006 when Patricia Collawn, our President and CEO, served on the compensation committee of CTS Corporation.  Mr. Schwanz retired as Chairman and CEO of CTS Corporation in October 2007 and was elected to the Board on July 29, 2008.  Mr. Schwanz currently has no direct or indirect relationship with PNM Resources other than service on the Board, Finance Committee, and Public Policy and Sustainability Committee.

Prior to selecting Bruce W. Wilkinson as a new director nominee, the Board determined that Mr. Wilkinson would qualify as an independent director.  In determining the independence of Mr. Wilkinson and the remaining 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, including the NYSE listing standards.  In addition, other than service on the Board or Board committee, all other relationships were considered to be immaterial in amount and significance.

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BOARD MEETINGS

The Chairman of the Board presides at all meetings of the shareholders and of the Board.  In circumstances where the non-employee (i.e. non-management) directors meet without the Chairman, the Board selects a presiding director.  A presiding director is nominated and approved by the non-management directors annually.  Dr. Joan B. Woodard currently serves as the presiding director.  The director selected is responsible for facilitating and chairing the non-management directors’ meetings scheduled for that year.  The non-management directors meet at least twice a year without management present, and will meet more often as the need arises.

In 2009, the full Board met seven times.  The non-management directors held four regularly scheduled meetings in 2009.  Attendance in 2009 at full Board and committee meetings was 99%.

Directors are expected to attend the Annual Meeting, and as stated in the Corporate Governance Principles (Appendix A), directors 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 and committee meetings.  All directors attended the 2009 Annual Meeting held on May 19, 2009.

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, PNM Resources, Inc., Alvarado Square, MS-2822, Albuquerque, New Mexico 87158. All shareholder communications will be relayed to the Board of Directors 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 the Company’s website  www.pnmresources.com for any changes in this process.

Shareholders and other interested parties wishing to communicate directly with the presiding director or with the non-management or independent directors as a group may do so by writing to Presiding Director, c/o Corporate Secretary, PNM Resources, Inc., Alvarado Square, MS-2822, Albuquerque, New Mexico 87158.

DIRECTOR SERVICE POLICY

On February 19, 2002, the Board adopted a revised Director Service Policy addressing various aspects of board service, retirement practices, terms of office and inside directors.  The current Director Service Policy can be found on page A-8 of the Corporate Governance Principles, (Appendix A) and on the Company’s website at www.pnmresources.com.

BOARD COMMITTEES AND THEIR FUNCTIONS

The Board has four current standing committees: the Audit and Ethics Committee, the Board Governance and Human Resources Committee, the Finance Committee, and the Public Policy and Sustainability Committee.  All committee members are independent directors, with the exception of Donald K. Schwanz, who is a member of the Finance Committee and the Public Policy and Sustainability Committee.  The Finance Committee and Public Policy and Sustainability Committee are not required to be comprised solely of independent directors under applicable rules.

Each committee has a written charter that addresses the committee’s purpose and responsibilities.  All charters attached to this proxy statement can be found at www.pnmresources.com, and are available in print without charge to any shareholder who requests it.  The charters are in compliance with applicable NYSE Listing Standards.

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The table below provides 2009 membership and meeting information for each of the Board Committees.

*Committee Chair

(1) Finance Committee Chair Elect

(2)Elected BGHRC Chair on February 16, 2010

Upon his election at the Annual Meeting, Mr. Wilkinson will serve on the Audit and Ethics and the Finance Committees.

A summary of the committee responsibilities is included below:

Audit and Ethics Committee

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Board Governance and Human Resources Committee

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General Board attributes and director qualifications can also be found on page A-3 of the Corporate Governance Principles (Appendix A).

In addition, please see “Shareholder Proposals for the Year 2011 Annual Meeting” on page 67 below for information on how to submit a shareholder proposal for nomination of a director candidate in accordance with our bylaws and applicable SEC rules.

The BGHRC and Board have no formal policy regarding diversity in recruiting directors.  However, the BGHRC does consider diversity in identifying nominees for a balanced board with varied expertise including having accounting or related financial management expertise.  For example, in the past, efforts were made to recruit more female nominees.  More recently, the BGHRC focused on geographic diversity to recruit candidates from Texas and New Mexico to reflect the geographic market served by the Company and its utility subsidiaries, PNM and TNMP.  In addition, the BGHRC seeks to recruit nominees who will represent the balanced, best interests of the shareholders as a whole rather than special interest groups or constituencies.

Ms. Bonnie S. Reitz served as Chair of the BGHRC from February 13, 2006 to February 16, 2010.  Dr. Joan B. Woodard was elected Chair of the BGHRC on February 16, 2010.

Finance Committee

Mr. Robert M. Price served as chair of the Finance Committee since May 19, 2009.  Mr. Price will complete his current term, but will not stand for election at the Annual Meeting of Shareholders on May 18, 2010.  Mr. Donald K. Schwanz was elected Chair of the Finance Committee to be effective May 18, 2010.

Public Policy and Sustainability Committee

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PNM Resources Common Stock** Owned by Executive Officers and Directors

(As of March 30, 2010)

(a)          Beneficial ownership means the sole or shared power to vote, or to direct the voting of a security and/or investment power with respect to a security.

(b)         Shares held in the individual’s name, individually or jointly with others, or in the name of a bank, broker, or nominee for the individual’s account. The amounts shown also include the number of restricted stock units held by each director and officer.

(c)          The number of shares directors and executive officers have a right to acquire through stock option exercises within 60 days after March 30, 2010, and number of shares that executive officers have a right to acquire through the ESP II upon the participant’s death or termination of employment.  As of March 30, 2010, the number of shares reported in this column include the following ESP II share rights held by our NEOs:  J. E. Sterba — 4,402; P. K. Collawn — 61,738; C. N. Eldred — 5,617; P. T. Ortiz — 3,989; and 17,785 ESP share rights held by our directors and officers as a group.

(d)         Mr. P. T. Ortiz retired from the Company on December 31, 2009.

(e)         Mr. B. W. Wilkinson is a director nominee for election at the annual Meeting and is not a current director.

*Less than 1% of PNM Resources outstanding shares of common stock.

**The only other outstanding class of equity securities of PNM Resources consists of 477,800 shares of Convertible Preferred Stock, Series A issued to Cascade as discussed below in footnote 1 of the next table.

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Ownership of More than Five Percent of PNM Resources’ Common Stock*

(1) As reported on Schedule 13G/A filed February 17, 2009 with the SEC by Cascade Investment, L.L.C. (“Cascade”).  The filing reported that all shares beneficially owned by Cascade may be deemed to be beneficially owned by William H. Gates III as the sole member of Cascade.   As previously reported, on October 7, 2007, PNM Resources issued 4,000,000 equity-linked units to Cascade which were settled on November 17, 2008 upon the issuance by PNMR of 477,800 shares of its Convertible Preferred Stock, Series A to Cascade.  The 477,800 preferred shares are convertible into 4,778,000 shares of common stock, subject to certain anti-dilution adjustments. The number of shares in the table does not reflect any shares of common stock that Cascade would be entitled to receive upon conversion of the preferred stock.  Certain regulatory approvals must be obtained before any conversion into common stock that would result in Cascade owning 10% or more of the outstanding common stock of PNM Resources.

(2) As reported on Schedule 13D/A filed October 23, 2009 with the SEC by GAMCO Investors, Inc. et al.  This filing reported that Gabelli Funds, LLC beneficially owed 2,380,000 shares (2.75%) with sole voting and sole dispositive power; and GAMCO Asset Management Inc. beneficially owned 3,413,000 shares with sole voting power and 3,627,100 shares (4.18%) with sole dispositive power.

(3) As reported on Schedule 13G filed January 29, 2010 with the SEC by BlackRock, Inc.  This filing reported that it amended the most recent Schedule 13G filing, if any, made by Barclays Global Investors, N.A. and certain of its affiliates (“BGI Entities”) and that as previously announced, on December 1, 2009, BlackRock, Inc. completed its acquisition of Barclays Global Investors from Barclays Bank PLC.  As a result, substantially all of the BGI Entities are now included as subsidiaries of BlackRock, Inc. for purposes of Schedule 13G filings.

(4) As reported on Schedule 13G filed February 11, 2010 with the SEC by Donald Smith & Co., Inc.  This filing reported that all securities reported in this schedule are owned by advisory clients of Donald Smith & Co., Inc., no one of which, to the knowledge of Donald Smith & Co., Inc., owns more than 5% of the class.

*The only other outstanding class of equity securities of PNM Resources consists of the 477,800 shares of Convertible Preferred Stock, Series A issued to Cascade as discussed in footnote 1 above, and as reported by Cascade in its Schedule 13G/A filed February 17, 2009 with the SEC.  The filing reported that all preferred stock beneficially owned by Cascade may be deemed to be beneficially owned by William H. Gates III as the sole member of Cascade.

The information provided above is based on reports filed with the SEC.  PNM Resources makes no representation as to the accuracy or completeness of the information.  These are the only persons known to PNM Resources to be the beneficial owners of more than five percent of PNM Resources’ common stock, as of March 30, 2010.

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RELATED PERSON TRANSACTIONS

Since January 1, 2009, PNM Resources has not participated, and has no current plans to participate, in any transactions in which its directors or executive officers or any of their immediate family members have a material interest that is reportable under applicable SEC rules.  PNM Resources has participated in the following transactions with Cascade, a shareholder, which owns more than 5% of our common stock as indicated in the above table on page 20.

Optim Energy, LLC.  In January 2007, PNM Resources and ECJV, a wholly owned subsidiary of Cascade, created EnergyCo, LLC to serve expanding U.S. markets, principally in certain areas of Texas.  EnergyCo’s name was changed to Optim Energy, LLC (“Optim Energy”) on February 2, 2009.  References to Optim Energy in this discussion encompass periods prior to the name change.  PNM Resources and ECJV each have a 50 percent ownership interest in Optim Energy, a limited liability company.  PNMR Services Company provides corporate services to PNM Resources, its subsidiaries, and Optim Energy in accordance with shared services agreements.  Services provided to Optim Energy are billed at cost plus a profit element.  There is also a service agreement for Optim Energy to provide services to PNM Resources.

On June 1, 2007, Optim Energy entered into a bank financing arrangement with a term of five years, which includes a revolving line of credit.  This facility also provides for bank letters of credit to be issued as credit support for certain contractual arrangements entered into by Optim Energy.  Cascade and ECJV have guaranteed Optim Energy’s obligations on this facility and, to secure Optim Energy’s obligation to reimburse Cascade and ECJV for any payments made under the guaranty, have a first lien on all assets of Optim Energy and its subsidiaries.  In June 2007, Optim Energy distributed $87.5 million to each of PNM Resources and ECJV from a long-term borrowing under this facility.

In June 2009, Optim Energy and NRG Cedar Bayou completed a jointly developed 550 MW combined-cycle natural gas unit at the existing NRG Cedar Bayou Generating Station near Houston.   Optim Energy’s share of this unit is 275 MW and its share of the construction costs was $209.6 million.  Optim Energy financed its portion of the Cedar Bayou construction with borrowings under its existing credit facility and operating cash flows.

PNMR has no commitments or guarantees with respect to Optim Energy.  However, PNMR and ECJV are currently negotiating a contribution agreement where each party may agree to make a cash-equity contribution to Optim Energy of approximately $20 million each. It is anticipated Optim Energy would use such cash contribution to reduce debt.

All of the above-described Optim Energy transactions with Cascade were pre-approved by the full Board pursuant to the Policy and Procedures Governing Related Party Transactions discussed above on page 8.  In addition, the terms of the arrangements with Cascade regarding Optim Energy were arrived at in arms’ length negotiations between the two entities.  PNMR and Cascade were each represented in the arms’ length negotiations between themselves by competent counsel who represented their respective clients zealously.  As a result, PNMR believes that the terms were comparable to those that could have been obtained in transactions with unaffiliated third parties.

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DIRECTOR COMPENSATION

The Board Governance and Human Resources Committee recommends non-employee director compensation levels and stock ownership guidelines for review and approval by the full Board.  Salaried employees receive no compensation for board service. Thus, Ms. Collawn, our current CEO, receives no additional compensation for board service.  Similarly, while employed as CEO through March 1, 2010, Mr. Sterba received no additional compensation for serving as a director or as the Chairman of the Board.  Following his March 1, 2010 retirement as our CEO, at the request of the Board, Mr. Sterba continues to serve as our Chairman and, among other things, provides support on strategic and public policy issues to the Company.   He also continues to serve as chair of the First Choice Power board of managers and as PNMR representative on the board of Optim Energy, LLC and as its chairman.  As compensation, Mr. Sterba receives a separate annual retainer of $250,000 prorated from March 1, 2010 to December 31, 2010. This amount was determined to be a reasonable and competitive amount of compensation to pay to a retiring CEO who continues to serve as chairperson of the Company’s Board of Directors.     Other compensation matters relating to Mr. Sterba’s prior service as CEO are discussed in the CD&A.

The BGHRC seeks to recommend a reasonable compensation package for non-employee directors that will attract and retain highly qualified non-employee directors.  The BGHRC selects, weighs and reviews each element of director compensation on an annual basis to recommend a total compensation amount that approximates the 50th percentile of non-employee director compensation in similarly situated utility and energy companies.

On an annual basis, the BGHRC directs the Corporate Governance Department of the Company to prepare a compensation benchmark analysis based upon:

·                  compensation data available at salary.com compiled from the proxy statements filed by the utility and energy companies comprising the director compensation peer group discussed below; and

·                  the annual survey of director compensation provided by the National Association of Corporate Directors (“NACD survey”), which is also used to review trends in director compensation.

The Corporate Secretary reviews the compensation benchmark analysis and also confers with PRM to assess the significance of various trend indicators.  The Corporate Secretary then provides the analysis to the BGHRC together with a recommendation on any action to be taken on director compensation.

The BGHRC reevaluated its use of peer groups in 2009 and chose a smaller 14 member peer group (the “PNMR Peer Group”).  The BGHRC also concluded it was appropriate to use the same updated PNMR Peer Group for director compensation that is used for executive compensation. The 14 companies are similar to the Company in financial size, organizational and operational characteristics.  More than half of the companies in the new peer group were also a part of the prior peer group (referred to as the “Index Group” below and in the 2009 proxy statement).  The BGHRC believes the median of director compensation awarded by the companies in the Peer Group represents a reasonable comparative compensation level.

Non-employee directors receive their annual retainer in the form of cash and stock-based compensation as determined by the Board.  The annual retainer and fees for 2009 were as follows:

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In addition, all directors were 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.

As discussed on pages 19-20 of the 2009 proxy statement, effective May 19, 2009, the 2009 annual retainer and fees were increased from 2008 by (1) increasing the amount of restricted stock rights awarded from 1,750 to 2,500 and decreasing the amount of options from 1,050 to 1,000; (2) increasing the non-audit chair fee from $4,000 to $5,000; and (3) increasing the meeting attendance fees from $0 to $1,750 per Board meeting, and from $1,250 to $1,500 per Board committee meeting (no attendance fees for teleconference meetings of less than one hour in duration).  The changes were made to bring cash and equity compensation for our non-employee directors closer to the 50th percentile of companies comprising the Index Group as of November 2008.  The majority of Index Group (and PNMR Peer Group) companies do not award stock options as a component of equity compensation.  Nonetheless, the BGHRC recommended, and the Board approved, retaining a modest award of stock options to mirror the type of equity awards received by executives and to align the interests of directors with those of the shareholders through both stock options and restricted stock awards.

In December 2009, the BGHRC conducted its annual review of director compensation.  The Company’s director equity compensation levels continued to be below the median compared to both the PNMR Peer Group and the previously used Index Group.  As shown in the table on page 25, the grant date fair value of the PNMR director 2009 equity awards was $1,870 for 1,000 stock options and $21,125 for restricted stock rights.  By comparison, the median grant date fair value of the PNMR Peer Group equity awards was $0 for stock options and $50,000 for restricted stock awards and the median grant date fair value of the Index Group director equity awards was $0 for stock options and $52,760 for restricted stock.   The annual cash retainer of $35,000 remains slightly below the median.

Accordingly, effective May 18, 2010, the BGHRC recommended and the Board approved increasing the 2010 annual retainer from the 2009 annual retainer described above by increasing the amount of restricted stock rights from 2,500 to 4,000.   No other changes were made to any other component of non-employee director compensation (i.e. stock options, the cash retainer, committee chair and meeting fees).  As discussed above, in February 2010, the Board asked Mr. Sterba to continue serving as Chairman following his retirement as CEO and approved a separate annual retainer of $250,000 pro-rated from March 1, 2010 to December 31, 2010 (in lieu of the $35,000 annual retainer received by other non-employee directors).

(1)                    Stock options and restricted stock rights granted under the PEP each vest in three equal annual installments beginning on the first anniversary of the grant date.  These awards are typically made at the annual meeting of directors, 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 Stock Option Grant Policy, 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 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 date is the immediately preceding trading date or (ii) in the case of pre-approval 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 exercise price of the stock option is equal to the closing price of the common stock on the New York Stock Exchange, or NYSE, on the date of the grant.   The PEP prohibits option re-pricing.

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The Index Group used as part of the benchmark analysis for changes to 2009 director compensation consisted of the following companies comprising the Index Group as of November 2008:

The Index Group used as part of the benchmark analysis for changes to 2010 director compensation consisted of the following companies comprising the Index Group as of December 2009:

The PNMR Peer Group used for the 2010 director compensation benchmark analysis consists of the following publicly-traded energy and utility companies:

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SUMMARY OF NON-EMPLOYEE DIRECTOR COMPENSATION IN 2009

The following table summarizes the total compensation paid or earned by each of the non-employee directors for the year ended December 31, 2009.

Director Compensation

(1)Jeffry E. Sterba, Chairman and CEO during 2009, is not included in this table, as he was an employee of PNM Resources and received no compensation in 2009 for serving on the Board. Patricia K. Collawn became a director in March 2010 and will not receive any compensation, as she is an employee, i.e. President and CEO.In addition, Bruce W. Wilkinson is not included in this 2009 compensation table because he is a new director nominee seeking election to the Board as of May 18, 2010.

(2)Represents the grant date fair value of $8.45 per restricted stock right calculated in accordance with FASB ASC Topic 718 of the 2,500 restricted stock rights awarded under the PEP to each non-employee director on May 19, 2009. The assumptions used in determining the grant date fair value of restricted stock rights are set forth in Note 13 of the consolidated financial statements in PNMR’s Annual Report on Form 10-K for the year ended December 31, 2009. As of December 31, 2009, each non-employee director has the following number of restricted stock rights outstanding: A. E. Archuleta — 4,018; J. A. Dobson — 4,018; R. R. Nordhaus — 3,668; M. T. Pacheco — 4,018; R. M. Price — 4,018; B. S. Reitz — 4,018; D. K. Schwanz — 2,500; and J. B. Woodard — 4,018. The actual value that a director may realize on the vesting of the restricted stock will depend on the market price of our common stock at the date of vesting.

(3)Represents the grant date fair value of $1.87 per stock option calculated in accordance with FASB ASC Topic 718 of the 1,000 stock options awarded under the PEP to each non-employee director on May 19, 2009. See Note 13 of the consolidated financial statements in PNMR’s Annual Report on Form 10-K for the year ended December 31, 2009 regarding assumptions underlying the determination of grant date fair value of stock option awards. As of December 31, 2009, each non-employee director has the following number of options outstanding: A. E. Archuleta — 20,200; J. A. Dobson — 22,450; R. R. Nordhaus — 2,050; M. T. Pacheco — 20,200; R. M. Price — 16,700; B. S. Reitz — 26,200; D. K. Schwanz — 1,000; and J. B. Woodard — 20,200. The actual value, if any, that a director may realize on the exercise of stock options, will depend on the excess of the stock price over the exercise price. The exercise price for the 1,000 stock options awarded on May 19, 2009 is $9.43.

(4)The options and restricted stock rights granted under the PEP vest in three equal annual installments beginning on the first anniversary of the grant. The exercise price of the stock option is equal to the closing price of the common stock on the NYSE on the date of grant or immediately preceding trading day if the stock was not traded on the grant date. The Stock Option Grant Policy provides that for awards made on and after 2007, the grant date for awards approved on a non-trading date will be the immediately preceding trading day. As discussed below in “Stock Ownership Guidelines”, directors will hold 75% of the annual restricted stock award until they hold stock equal to the required multiple of annual cash retainer. This amount of restricted stock is held until six months after termination of board service.

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Additional Information About Fees Earned or Paid in Cash in 2009

*Mr. R. M. Price was elected Chair of the Finance Committee in May 2009 and received ½ of the Committee Chair fee.

STOCK OWNERSHIP GUIDELINES

The Board believes that directors should be shareholders and have a financial stake in the Company to help ensure that director financial interests are aligned with the financial interests of the Company’s longer term shareholders. Accordingly, the Board requires that newly elected directors, before commencing board service, become shareholders in the Company, and that over time, directors attain a significant level of Company stock ownership.

The BGHRC is responsible for recommending Board compensation levels and stock ownership guidelines to the Board for approval.  The current Stock Ownership Guidelines were adopted by the Board in December 2005 and amended in February 2006.

According to the guidelines, within three years, directors should hold stock equal to two times the annual cash retainer.  Within five years, the amount of ownership should be five times the annual cash retainer.  Directors will hold 75% of the annual restricted stock award until the required multiple of the annual cash retainer is achieved.  This amount of restricted stock is held until six months after termination of Board service. We believe these holding requirements are appropriate because they approximate the median of holding requirements found in the NACD survey and would require a reasonable amount of share acquisition in addition to the annual equity awards received by the directors. Similar stock ownership guidelines have been developed for executives and are discussed further below under “Compensation Discussion and Analysis — Stock Ownership Guidelines.”

The Stock Ownership Guidelines will be reviewed periodically for any appropriate changes.  The Guidelines can be found on page A-7 of the Corporate Governance Principles document, attached as Appendix A, and can also be found on PNM Resources’ website at pnmresources.com.

AUDIT AND ETHICS COMMITTEE REPORT

The primary function of the Audit Committee is oversight of the Company’s financial reporting process, public financial reports, internal accounting and financial controls, and the independent audit of the annual consolidated financial statements. The Audit Committee acts under a charter, which can be found on the PNM Resources web site at pnmresources.com. The Audit Committee reviews the adequacy of the charter at least annually. All Audit Committee members are independent, and one of our members is an audit committee financial expert under Securities and Exchange Commission rules. The Audit Committee held 9 meetings in 2009 at which, as discussed in more detail below, the committee had extensive reports and discussions with the independent auditors, internal auditors, and other members of management.

In carrying out our responsibilities, the Audit Committee looks to management and the independent auditors.  The Company’s management is responsible for the preparation and fair presentation of the Company’s financial

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statements and for maintaining effective internal control. Management is also responsible for assessing and maintaining the effectiveness of internal control over the financial reporting process in compliance with Sarbanes-Oxley Section 404 requirements. The independent auditors are responsible for auditing the Company’s annual financial statements, and expressing an opinion as to whether the statements are fairly stated in conformity with generally accepted accounting principles. In addition, the independent auditors are responsible for auditing the Company’s internal control over financial reporting and for expressing an opinion on the effectiveness of internal control over financial reporting. The independent auditors perform their responsibilities in accordance with the standards of the Public Company Accounting Oversight Board.

In performing its oversight function, the Audit Committee reviewed and discussed the consolidated financial statements with management and Deloitte & Touche LLP (Deloitte), the independent auditors. Management and Deloitte informed the Audit Committee that the Company’s consolidated financial statements were fairly stated in accordance with generally accepted accounting principles. The Audit Committee discussed significant accounting policies applied by the Company in its financial statements, as well as alternative treatments.

The Audit Committee discussed with Deloitte the matters required to be discussed by the Statement on Auditing Standards No. 61 (Communication with Audit Committees), as amended (AICPA Professional Standards, Vol. 1, AV Section 380), as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T. In addition, the Audit Committee reviewed and discussed management’s report on internal control over financial reporting and the related audit performed by Deloitte, which confirmed the effectiveness of the Company’s internal control over financial reporting.

The Audit Committee has received the written disclosures and the letter from Deloitte required by the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and discussed with Deloitte’s the firm’s independence.

The Audit Committee discussed with the Company’s internal auditors and Deloitte the overall scope and plans for their respective audits. The committee met with the internal auditors and Deloitte at each meeting, both with and without management present. Discussions included the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting.

The Audit Committee also assessed the performance of the independent auditors and have appointed Deloitte to audit the Company’s financial statements for 2010, subject to shareholder ratification of that appointment.

Based on the reviews and discussions referred to above, reliance on management and Deloitte, and subject to the limitations of our role described above, the Audit Committee recommended to the Board, and the Board has approved, the inclusion of the audited financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, for filing with the Securities and Exchange Commission.

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INDEPENDENT AUDITOR FEES

Audit Fees for 2009 and 2008

The following table represents aggregate fees billed to the Company for fiscal year ended December 31, 2009 and 2008 by Deloitte & Touche, the Company’s principal accounting firm.

(a)          Audit fees are primarily the audit of the Company’s annual financial statements, review of financial statements included in the Company’s 10-Q filings and the annual Sarbanes-Oxley audit.  Audit fees in 2008 also include fees of $198,000 related to the audit of the gas operations in connection with the sale to New Mexico Gas Company, which were reimbursed by the buyer.

(b)         Primarily financial accounting and reporting consultations.

(c)          All fees have been approved by the Audit Committee.

The Audit Committee reviewed, and approved in advance, all audit related and tax services and concluded that the provision of these services by Deloitte & Touche was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions.  The Audit Committee preapproves all auditing services and all permitted non-audit services.  The Audit Committee also determined that, beginning March 31, 2002, the auditor of PNM Resources’ books and records would not be eligible to provide consulting services for PNM Resources without prior approval of the Audit Committee, and certain services prohibited by law.

PROPOSAL 2:  RATIFY APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS (PROPOSAL 2 ON YOUR PROXY CARD)

The Board is recommending that the shareholders ratify the selection of Deloitte & Touche as independent public accountants for 2010.

The Audit Committee has performed its annual evaluation of the quality and cost of services provided by Deloitte & Touche and an assessment of auditor independence.  The Audit Committee reported to the Board complete satisfaction with the services provided by Deloitte & Touche and recommended that Deloitte & Touche be selected as independent public accountants for 2010.  The Board agrees with the Audit Committee’s recommendations, as described in the Audit Committee report contained in this proxy statement.

Representatives of Deloitte & Touche will be available at the Annual Meeting where they will have the opportunity to make statements and answer questions.

The Board of Directors unanimously recommends a vote FOR the appointment of Deloitte & Touche LLP as independent public accountants for fiscal year 2010.

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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

The following Compensation Discussion and Analysis (“CD&A”) should be read together with the Summary Compensation Table and other tables that are presented below, beginning at page 46.  Please note that this CD&A contains information about our corporate goals and performance targets (including Adjusted Cash Earnings, Incentive EPS and FFO/Debt Ratio), as well as the individual goals and performance targets of certain of our business units and executive officers.  We have included this information for the limited purpose of enabling investors and other readers of this CD&A to better understand our executive compensation program, policies and practices.  This information should not be understood to represent our management’s estimates of our future results or other guidance, and we specifically caution investors and other readers not to apply this information to other contexts.

Introduction — Named Executive Officers

The purpose of this CD&A is to provide information about the compensation of our named executive officers (“NEOs”) and to provide context for the information disclosed in the Summary Compensation Table and other tables that follow the CD&A.  In addition, this CD&A explains the objectives of our executive compensation program, as well as the policies and practices that we use to determine the compensation of our NEOs.

In 2009, our NEOs were Jeffry E. Sterba, Chairman and Chief Executive Officer; Patricia K. Collawn, President and Chief Operating Officer; Charles N. Eldred, Executive Vice President and Chief Financial Officer; Alice A. Cobb, Senior Vice President and Chief Administrative Officer; and Patrick T. Ortiz, Senior Vice President, General Counsel and Secretary.

Overview of Our Executive Compensation Program

Philosophy and Objectives

Attracting, motivating and retaining talented executives is critical to our achievement of the Company’s financial and strategic objectives.  Our executive compensation program is designed with that premise in mind, taking into account the interests of our shareholders.

The Company’s basic philosophy is that our NEOs should be paid for performance, as determined by a combination of individual, business unit and corporate performance measures.  We also believe that each NEO’s total direct compensation should be commensurate with the scope and impact of his or her responsibilities and reflective of external market and peer company compensation for similar positions.  Internal pay equity between and among the NEOs also is an important consideration.