Xcel Energy Inc. Governance, Compensation and Nominating Committee

Committee Members:

Douglas W. Leatherdale (Chair)

C. Coney Burgess

A. Barry Hirschfeld.

A. Patricia Sampson

Committee Charter

(As amended and adopted on March 2, 2005)

A. Purpose and Responsibility.  The Governance, Compensation and Nominating Committee (“Committee”) (a) identifies individuals qualified to become Board members, consistent with criteria approved by the Board of Directors, (b) recommends candidates to fill Board vacancies and newly-created director positions, (c) recommends whether incumbent directors should be nominated for re-election to the Board, (d) develops and recommends corporate governance principles applicable to the Board and the Company’s employees and (e) oversees the evaluation of the Board and management. 

The Committee also shall establish and administer the compensation policies and programs of the Xcel Energy Companies and the forms and amount of compensation paid to the members of the Xcel Energy Board of Directors and to the Xcel Energy Companies’ executive and senior officers.  Among other things, the Committee shall have direct responsibility to: (1) review and approve corporate goals and objectives relevant to chief executive officer (CEO) compensation, evaluate the CEO's performance in light of those goals and objectives, and, either as a committee or together with the other independent directors (as directed by the Board), determine and approve the CEO's compensation level based on this evaluation; (2) make determinations or recommendations with respect to non-CEO compensation, incentive-compensation plans and equity-based plans; and (3) produce a compensation committee report on executive compensation as required by the Securities and Exchange Commission to be included in the Company's annual proxy statement.

B. Authority.  The Committee is granted the authority by the Board of Directors to perform the specific duties enumerated in this Committee Charter.  The Committee shall be provided adequate resources to discharge its responsibilities, including without limitation funding, in such amounts as the Committee deems necessary, to compensate any consultants or advisors retained by the Committee.  The Committee shall receive staff support from the Human Resources Department and the office of the Corporate Secretary.

The Committee has sole authority to retain and terminate compensation consultant(s) including fees and other retention terms.

The Committee shall have the sole authority to engage search firms to assist in the identification of director candidates and the sole authority to set the fees and the other retention terms of such search firms. The Committee may also retain independent counsel and other independent advisors to assist it in carrying out its responsibilities.

The Committee may, it its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee.

The Committee shall hold executive sessions without management as determined by the Committee chair.

C. Membership and Qualification:  The size of the Committee shall be determined by the Board, but it must always have at least three members, each of whom satisfies the requirements for independence under applicable law and the listing standards of the New York Stock Exchange, as such qualifications are interpreted by the Board in its business judgment.  The members must also be “outside directors” for purposes of Section 162(m) of the Internal Revenue Code and a “non-employee” director for purposes of Rule 16b-3.

Desirable qualifications for Committee members include experience in corporate governance, business management, executive compensation, employee benefits, human resources and organizational behavior. 

The Board selects Committee members based on recommendations of the Committee.  The Committee selects a Committee Chair from among its members.  Each Committee member will serve at the pleasure of the Board for such term as the Board may decide or until such Committee member is no longer a Board member.

D. Specific Duties.  The Committee shall:

1. Review and approve, at least annually, corporate goals and objectives relevant to the compensation of its chief executive officer.  The Committee will evaluate the performance of the chief executive officer in the light of those corporate goals and objectives and set the compensation for the chief executive officer based on such evaluation and any other factors as it deems appropriate.

2. Review and recommend approval, adoption and amendment of all cash and equity-based incentive compensation plans in which any executive officer of the Company participates.  Review and recommend approval, adoption and amendment of all other equity-based plans.

3. Administer the Company's equity-based incentive compensation plans and other plans adopted by the Board that contemplate administration by the Committee.

4. Annually review performance and approve salaries and other forms of compensation, including perquisites and awards under incentive compensation plans and equity-based plans, for executive and senior officers and report the results of such performance and compensation evaluations to the Board.

5. To the extent, and in the manner, it deems appropriate, link a portion of executive compensation to the performance of the Company and the Xcel Energy Companies as measured against specific performance goals established by the Committee.  Review Xcel Energy and the Xcel Energy Companies’ twelve-month or other long-term performance.  Approve short-term and long-term incentive awards.

6. Review Xcel Energy’s human resources strategy and conduct an annual review of the process of establishing salaries and wages of the Xcel Energy Companies’ employees.

7. Review the process of management development and long range planning for the Xcel Energy Companies’ development.

8. Review and make recommendations regarding fees and other compensation for Directors. 

Periodically review status of Board compensation in relation to other comparable companies and such other factors the Committee deems appropriate.

9. Review and recommend appropriate retirement policies and plans for Directors.

10. Identify individuals believed to be qualified to become Board members and recommend candidates to the Board to fill new or vacant positions.  In recommending candidates, the Committee may consider such factors as it deems appropriate, consistent with the factors in the Company's corporate governance guidelines.  These factors may include judgment, skill, diversity, integrity, experience with businesses and other organizations of comparable size, the interplay of the candidate's experience with the experience of other Board members, and the extent to which the candidate would be a desirable addition to the Board and any committees of the Board.  The Committee shall also review the qualifications of, and make recommendations to the Board regarding, director nominations submitted to the Company in accordance with the Company's by-laws or otherwise.

11. The Committee shall evaluate whether an incumbent director should be nominated for re-election to the Board upon expiration of such director's term.  The Committee will use the same factors established for new director candidates to make its evaluation and will also take into account the incumbent director's performance as a Board member.

12. Recommend Board members to be appointed to each Board Committee.  Recommend Board members to chair each Board Committee.

13. Recommend independent Directors to be appointed by the Board as rotating Presiding Independent Directors for Executive Sessions of the Board consistent with Guidelines on Corporate Governance

14. Prepare, with the assistance of management, a detailed orientation program for new Directors and a continuing education program for incumbent Directors.

15. Prepare criteria for assessing the performance of the Board of Directors, Board committees (including this Committee) and individual Directors.  Annually perform such assessment and report the results of such assessment to the Board of Directors.

16. At least annually, review and, if appropriate, recommend changes to the Bylaws or the Guidelines on Corporate Governance to ensure effective corporate governance.

17. Recommend Company corporate Code of Conduct.

18. Review and recommend procedures for Board meetings.  This review should consider, among other things, the role of the Chairman, and other Company officers, and administration of executive sessions.

19. Review proxy disclosures regarding Directors’ and officers’ compensation and benefits.

20. Review/establish stock ownership levels for Directors and officers consistent with the Guidelines on Corporate Governance.

21. Review Chief Executive Officer and senior officer severance plan.

22. Review charter with Board and recommend any changes to the Board.

23. Prepare a compensation committee report on executive compensation for inclusion in the Company's proxy statement relating to the Company's annual meeting of shareholders.

E. Meeting.   The Committee shall meet as frequently as necessary, but not fewer than four times per year in order to carry out its responsibilities under this Charter.  The Committee Chair shall, in consultation with the other members of the Committee and appropriate officers of the Company, establish the agenda for each Committee meeting.  Each Committee member may submit items to be included on the agenda.  Committee members may also raise subjects that are not on the agenda at any meeting.  The Committee Chair or a majority of the Committee members may call a meeting of the Committee at any time.  A majority of the number of Committee members selected by the Board shall constitute a quorum for conducting business at a meeting of the Committee.  The act of a majority of Committee members present at a Committee meeting at which a quorum is in attendance shall be the act of the Committee, unless a greater number is required by law, the Company’s certificate of incorporation or its by-laws.  The Committee Chir shall supervise the conduct of the meetings and shall have other responsibilities, which the Committee may designate from time to time. 

The Committee may request any officer or employee of the Company, or any representative of the Company’s advisors, to attend a meeting or to meet with any members or representatives of the Committee.

F. Supporting Material and Agendas.  The Committee Chairman, in consultation with the other members of the Committee, the Committee secretary and the Vice President of Human Resources shall develop the meeting agenda.  The agenda and all materials to be reviewed at a Committee meeting shall be provided to the Committee members prior to the meeting date.