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Notice of Annual Meeting of Shareholders

Tuesday, May 17, 2011

9:00 a.m. Mountain Daylight Time

South Broadway Cultural Center

1025 Broadway SE

Albuquerque, New Mexico

April 5, 2011

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 17, 2011, 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 28, 2011.

At the meeting, shareholders are being asked to:

·                  Elect ten (10) directors.

·                  Ratify appointment of Deloitte & Touche LLP as independent public accountants for 2011.

·                  Approve an Amendment to our Performance Equity Plan.

·                  Approve, on an advisory basis, the compensation of our named executive officers (“Say-on-Pay”).

·                  Vote, on an advisory basis, on frequency of future “Say-on-Pay” advisory votes.

·                  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 5, 2011.  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.  If you hold shares in “street name” and do not provide specific instructions to your broker, your broker cannot vote on any matter, except the ratification of Deloitte & Touche as our independent accountants.  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 2011 Annual Meeting of Shareholders

Tuesday, May 17, 2011

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 5, 2011.  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 2010 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:

www.proxyvote.com and http://www.pnmresources.com/asm/annual-proxy.cfm.

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 28, 2011, 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 five proposals will be considered and voted on at the Annual Meeting:

Proposal 1 — Elect Ten Directors

All directors are elected on an annual basis.  Thus, ten current members of the Board 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 10.

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, 2011.

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 will consider other auditors for 2012.  However, because of the difficulty in making any substitution of auditors so long after the beginning of the current year, the appointment of Deloitte & Touche will stand unless the Audit Committee determines there is a compelling reason for a change.

Proposal 3 — Approve an Amendment to our Performance Equity Plan

The Board is asking shareholders to approve amending the current PNM Resources, Inc. Second Amended and Restated Omnibus Performance Equity Plan (the “PEP” or “Performance Equity Plan”) to increase the limit on shares that may be subject to restricted stock, restricted stock rights, performance share and performance unit awards under the PEP by 1,680,000 shares.  This increase will change the sublimit from the current 1,560,000 shares (469,910 of which are currently unallocated) to 3,240,000 shares (enabling 2,149,910 shares to be allocated going forward).  Currently, there are a total of 12,343,000 shares of our common stock authorized for issuance under the PEP, but only 1,560,000 shares may be subject to restricted stock, restricted stock rights, performance share and performance unit awards.  The proposed amendment will give the Board more flexibility to determine how to allocate the remaining authorized shares among the various types of full-value and stock appreciation equity awards available under the PEP.  The Amendment makes two additional best practice changes by adding a definition of repricing (which is prohibited without shareholder approval) and by prohibiting any transfer of an award for value or consideration.

Proposal 4 - Advisory Vote on Compensation of Named Executive Officers

Shareholders will be given the opportunity to vote on the following advisory resolution (commonly referred to as “Say-on-Pay”):

RESOLVED, that the shareholders of PNM Resources, Inc. approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in the PNM Resources,

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Inc. 2011 proxy statement pursuant to the compensation disclosure rules of the SEC (which disclosure includes the Compensation Discussion and Analysis section, the compensation tables and the accompanying footnotes and narratives within the Executive Compensation section of the proxy statement).

The Compensation Committee will consider the outcome of this advisory vote when making future executive compensation decisions.

Proposal 5 — Advisory Vote on Frequency of Future “Say-on-Pay” Advisory Votes

Shareholders will be given the opportunity to vote on the following advisory resolution:

RESOLVED, that shareholders shall be given the opportunity to vote on an advisory resolution regarding the compensation of the Company’s named executive officers (vote for one alternative only):

·      every year;

·      every two years;

·      every three years; or

·      abstain from voting on this matter.

The Board will consider the outcome of this advisory vote along with other factors when making its decision about the frequency of future shareholder advisory votes on the compensation of our NEOs.

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, “For” the ratification of the appointment of Deloitte & Touche, “For” the amendment to the PEP, “For” the resolution approving the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis section of this proxy statement, and “For” holding future Say-on-Pay advisory votes on NEO compensation every year.

How do I vote my shares?

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

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.

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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 (A. E. Archuleta, J. A. Dobson, R. R. Nordhaus) appointed by the Board the authority to vote your shares in the manner you indicate.  If you are a shareholder of record and 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;

·                  FOR ratification of the appointment of Deloitte & Touche as independent public accountants for 2011;

·                  FOR the approval of an amendment to our PEP;

·                  FOR the resolution approving the compensation of our NEOs as disclosed in this proxy statement; and

·                  FOR holding future Say-on-Pay advisory votes on NEO compensation every year.

If you hold your shares in “street name” and do not provide specific voting instructions to your broker, a “broker non-vote” will result with respect to Proposals 1, 3, 4 and 5.  More information about the implications of holding your shares in street name and broker non-votes is set forth below.

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.

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.

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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.

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, and approve the amendment to the PEP.  The shareholder advisory votes on the compensation of our named executive officers and the frequency of future “Say-on-Pay” advisory votes will not be binding upon PNM Resources, the Board, or any committee of the Board, although the results of such advisory votes will be considered by the Board and the Compensation Committee, respectively, in making future decisions.   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.

Further, in order to satisfy the requirements of New Mexico law relating to director conflict of interest transactions, shares owned by or voted under the control of our directors are not entitled to be counted in the vote on Proposal 3 concerning approval of the amendment to the PEP.

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 2011 is considered the only 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.  “Non-routine” matters include the election of directors, actions relating to equity compensation plans and actions relating to executive compensation (including Say-on-Pay shareholder advisory votes).  Thus, your “street name” shares cannot be voted on Proposals 1, 3, 4 or 5 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.

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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.

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 28, 2011.  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 Annual 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 $8,000 plus any out-of-pocket expenses.  PNM Resources will pay all costs related to solicitation.  Broadridge Investor Communications Solutions, Inc. 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 proxies. 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 1-505-241-2868.

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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.  With the goal of incorporating evolving best corporate governance principles, the Board requires the Nominating and Governance Committee (“Nominating Committee”) to review the principles at least annually and recommend changes from time-to-time for consideration and adoption by the full Board.

The Corporate Governance Principles document 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 1980s.  Most recently, upon the retirement of Mr. Jeffry E. Sterba, the Board separated the two offices again

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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, all of whom qualify as independent under applicable NYSE listing standards.  As discussed below on page 17, the Board routinely holds executive sessions at which only non-management directors are present, and, each year, the non-management directors select a lead independent director responsible for facilitating and chairing the non-management directors meetings scheduled for that year.

Board committees provide additional oversight of management and each committee is presently composed entirely of independent directors.

Board’s Role in Risk Oversight

PNM Resources’ management is responsible for managing risk and bringing the most material risks facing the Company to the Board’s attention.  The Board has oversight responsibility for the processes established to report and monitor material risks applicable to the Company.  Throughout the year, the Board reviews briefing materials developed through the Company’s enterprise risk management program regarding the potential significant risks facing the Company.  In 2009, each significant risk was assigned to a Board committee with a responsible reporting officer.  In 2010, the Board determined that it would oversee these risks.  The strategic scope of the Company’s most significant risks motivated the transition of the oversight to the full Board, with all its experience and expertise, in order to facilitate more effective integrated risk and strategy oversight.

In addition to oversight of strategic risks, the Board oversees the appropriate allocation of responsibility for oversight of specific risks among the committees of the Board.  Over the past several years, Board committees have played an important 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 the execution of the Company’s supply, sales, and financial hedging programs.  The Audit 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 Nominating Committee considers risks related to succession planning.  The Compensation Committee considers risks related to the attraction and retention of talent, risks related to the design of compensation programs and arrangements, and monitors the design and administration of the Company’s overall incentive programs to ensure that they incentivize strong individual and group performance and include appropriate safeguards to avoid unintended or excessive risk-taking by Company employees.

The Board does not believe that its leadership structure (i.e. whether it may combine the Chairman and CEO roles in the future) affects its ability to effectively oversee risk management because a majority of the Board is comprised of independent directors and each committee is comprised entirely of non-management independent directors.

Equity Compensation Awards Policy

The Board adopted the Stock Option Grant Policy (now known as the “Equity Compensation Awards 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 was amended in February 2011 to rename it the Equity Compensation Awards Policy, to better reflect all forms of equity awards, including restricted stock and performance share awards.  The Equity Compensation Awards Policy is attached as Appendix B, and can also be found on our website at www.pnmresources.com.

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The Company conducts an annual review of equity compensation awards to ensure compliance with the requirements of the Equity Compensation Awards Policy.

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 Nominating Committee, or by the Board or another committee in the normal fulfillment of their respective charters and responsibilities. In determining whether to approve such transactions, the Nominating Committee will consider, among other factors, the extent of the related person’s interest in the transaction; the availability of other sources of comparable products or services; whether the terms are no less favorable than terms generally available in unaffiliated transactions under like circumstances; the benefit to the Company; and the aggregate value of the transaction at issue.  For a discussion of 2010 related person transactions approved under this policy, please see pages 24-25 of this proxy statement under the caption “Related Person Transactions.”

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

General Information

All ten members of the Board are seeking election for one-year terms at this year’s Annual Meeting.  There are no vacancies as the Board fixed the number of directors at ten, effective March 1, 2010.

Our Chairman, Mr. Sterba, retired as our CEO on March 1, 2010 and became CEO of American Water Works on August 16, 2010.

The Director Service Policy provides that directors who undergo a significant change in their business or professional career are required to submit a letter of resignation to the Chair of the Nominating Committee.  The Board, in its discretion, is then to determine whether or when to accept the resignation.  The Board is recommending that Mr. Sterba be elected to serve an additional one-year term because the Board believes it is in the best interests of the Company to continue to receive Mr. Sterba’s assistance and support on strategic and public policy issues.  In accordance with the Director Service Policy, Mr. Sterba submitted a letter of resignation to the Board, which the Board may accept at such time as the Board, in its discretion, deems advisable.  Assuming his re-election to the Board, there is no current expectation that Mr. Sterba’s resignation will be accepted by the Board during the upcoming year.

No third party fees were paid in 2010 for identifying Board candidates.

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 Nominating Committee.  Alternatively, the seat will remain vacant if a substitute nominee is not selected prior to the Annual Meeting.

As discussed below on page 16, under the “Director Independence” section, eight 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.  The age of each director is as of April 5, 2011.

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DIRECTORS NOMINATED THIS YEAR — TERM EXPIRING IN 2011

Adelmo E. Archuleta

Director since July 15, 2003

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

Mr. Archuleta, age 60, 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 Nominating and Governance Committee and is a member of the Finance 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 52, 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.  In March 2010, she became President and CEO.  Ms. Collawn has more than 19 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); and United Way of Central New Mexico (chair-elect).

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 54, 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, where she serves on the compensation committee and on the nominating committee; and Safeguard Scientifics, Inc., Wayne, Pennsylvania, for which she serves as chair of the compensation committee and is a member of the nominating and governance 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 Compensation 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 regulations

·                  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., Attorneys at Law, since 1997

Mr. Nordhaus, age 74, is a resident of Washington, DC, and is a member of Van Ness, Feldman, P.C., Attorneys at Law.  Mr. Nordhaus served as General Counsel of the Federal Energy Regulatory Commission from 1977 to 1980, and 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 Audit and Ethics Committee and the Nominating and Governance 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, Ph.D.

Director since November 20, 2001

Interim President, New Mexico State University, 6/09-1/10

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

President Emeritus, University of Missouri System, 1997-2003

Dr. Pacheco, age 69, is a resident of Phoenix, Arizona, and served as Interim President of New Mexico State University, Las Cruces, New Mexico, from June 2009 to January 2010; 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 Compensation 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 58, 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: Former Express Jet Holdings of Houston, Texas, which was sold to Atlantic Southeast Airlines on November 12, 2010, for which she served 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 Finance Committee and the Nominating and Governance Committee.

Specific Qualifications / Attributes:

·            Customer service and delivery systems expertise

·            Marketing background and experience

·            Airline distribution expertise

·            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 the 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 Chair of the Finance Committee and is a member of the Compensation and Human Resources Committee.

Specific Qualifications / Attributes:

·                   CEO experience

·                   Board and Board Chairman experience

·                   Regulatory environment experience

·                   Technology and innovation experience

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Jeffry E. Sterba

Director since March 7, 2000

Chief Executive Officer, American Water Works, Inc., 8/16/10-Present

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 56, is a resident of Keswick, Virginia, and is Chief Executive Officer of American Water Works, Inc., the largest investor-owned U.S. water and wastewater utility company, headquartered in Vorhees, New Jersey.  Mr. Sterba retired from PNM Resources on March 1, 2010, and is currently 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 include: American Water Works, Inc.; Meridian Institute; and Optim Energy, LLC.

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

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Bruce W. Wilkinson

Director since May 18, 2010

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

Mr. Wilkinson, age 66, 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, from August 2000 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.  Mr. Wilkinson currently serves as a member of the Audit and Ethics Committee and the Finance Committee. The Board of Directors has determined that Mr. Wilkinson qualifies as an “audit committee financial expert” as defined by the SEC regulations.

Specific Qualifications /Attributes:

·            Board Chairman and CEO experience

·            “Financial expert” under SEC regulations

·            Extensive business background and experience

·            Energy and power industry experience

·            Engineering and construction experience

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Joan B. Woodard, Ph.D.

Director since July 15, 2003

Consultant, 2010-Present

Sandia National Laboratories

Executive Vice President & Deputy Director of National Security Programs, 2005-2010

Executive Vice President & Chief Operating Officer, 1999-2005

Dr. Woodard, age 58, is a resident of Albuquerque, New Mexico, and retired in 2010 from Sandia National Laboratories as Executive Vice President and Deputy Director.  She served as the Chief Operating Officer from 1999 to 2005.  During her 36-year career at Sandia National Laboratories she led the energy technology development programs as well as the national security programs.  She holds a Doctorate degree in Mechanical Engineering from the University of California Berkeley and Masters in Engineering Economics from Stanford.  Other directorships include:  Missouri University of Science & Technology Board of Trustees, (chair-elect); Bosque School Board of Trustees; and the New Mexico Women’s Forum, (treasurer).  Dr. Woodard currently serves as the Chair of the Compensation and Human Resources Committee and is a member of the Nominating and Governance Committee, and serves as the lead independent director of the non-management directors’ meetings.

Specific Qualifications/Attributes:

·                  Board experience

·                  COO experience

·                  Energy technology and industry experience

·                  New Mexico candidate

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 and Jeffry E. Sterba, 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.  Donald K. Schwanz joined the Board on July 29, 2008, and the Board determined at that time that Mr. Schwanz would not qualify as an independent director until three years following his retirement as CEO of CTS Corporation (“CTS”) because at the time he served as CEO of CTS, an executive officer of PNMR, Patricia K. Collawn, served on the compensation committee of CTS.  More than three years have now elapsed since Mr. Schwanz’ retirement from CTS on October 2, 2007, and on December 14, 2010, the Board affirmatively determined that given that Mr. Schwanz has not served as an executive officer of CTS Corporation during the past three years and currently has no direct or indirect relationship with PNMR other than service on the Board or a Board committee, Mr. Schwanz now qualifies as an independent PNMR director.

In determining the independence of the remaining seven 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 lead independent director.  A lead independent director is nominated and approved by the non-management directors annually.  Dr. Joan B. Woodard currently serves as the lead independent 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 years where the non-management directors are not all independent, the independent directors meet at least once a year in executive session.

In 2010, the full Board met seven times.  The non-management directors held four regularly scheduled meetings in 2010.  Attendance in 2010 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 2010 Annual Meeting held on May 18, 2010.

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 lead independent director or with the non-management or independent directors as a group may do so by writing to Lead Independent Director, c/o Corporate Secretary, 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-7 of the Corporate Governance Principles (Appendix A) and on the Company’s website at www.pnmresources.com.

The Director Service Policy provides that a director is required to submit a letter of resignation in the event of a significant change in his or her professional career.  Thus, upon retiring as our CEO on March 1, 2010, and becoming the CEO of American Water Works on August 16, 2010, Mr. Sterba tendered his resignation.  In view of the value of Mr. Sterba’s continued service on the Board and as Chairman, upon the recommendation of the BGHRC, the Board did not accept Mr. Sterba’s resignation.  As discussed on page 25, in light of the reduced level of Mr. Sterba’s support to the Company on strategic and public policy issues, the Board reviewed and reduced the annual cash retainer paid to Mr. Sterba.

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BOARD COMMITTEES AND THEIR FUNCTIONS

From time to time the Board modifies and reorganizes the committees to ensure good governance, balance workloads and respond to the current needs of the Company.  On December 14, 2010, the BGHRC recommended, and the Board approved, balancing committee workloads effective January 1, 2011 by splitting the functions of the BGHRC among two committees and assigning the duties of the Public Policy & Sustainability Committee (“PPSC”) to the full Board.  Thus, the governance and director nomination and compensation functions of the BGHRC were transferred to the new Nominating and Governance Committee (“Nominating Committee”).  The remaining compensation responsibilities of the BGHRC were transferred to the new Compensation and Human Resources Committee (“Compensation Committee”).  The public policy, corporate citizenship, safety program, environmental policy, sustainability and market oversight functions of the PPSC were assigned to the full Board.

Accordingly, the Board has four current standing committees: the Audit and Ethics Committee (or Audit Committee), the Compensation and Human Resources Committee (or Compensation Committee), the Finance Committee, and the Nominating and Governance Committee (or Nominating Committee).  All committee members are independent directors.

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 comply with applicable NYSE Listing Standards.

The table below provides 2010 membership and meeting information for each of the Board Committees in place during 2010.

*Committee Chair

(1)          Effective January 1, 2011, the governance, director compensation and nomination, and related party transaction functions of the BGHRC were transferred to the new Nominating Committee.  The remaining compensation responsibilities of the BGHRC were transferred to the new Compensation Committee.

(2)          Effective January 1, 2011, the public policy and sustainability oversight functions of the PPSC were assigned to the full board.

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Effective January 1, 2011, the membership of each of the four standing board committees in 2011 is as follows:

A summary of the committee responsibilities is included below:

Audit and Ethics Committee

Compensation and Human Resources Committee (functions performed in 2010 by the BGHRC)

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Finance Committee

Nominating & Governance Committee (functions performed in 2010 by the BGHRC)

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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 2012 Annual Meeting” on page 75 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 Nominating Committee and Board have no formal policy regarding diversity in recruiting directors.  However, the Nominating Committee 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 former 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 Nominating Committee seeks to recruit nominees who will represent the balanced, best interests of the shareholders as a whole rather than special interest groups or constituencies.

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

(As of March 30, 2011)

(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)         The amounts shown are 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, and also include the number of restricted stock rights 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, 2011, 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, 2011, the number of shares reported in this column include the following ESP II share rights held by our NEOs:  P. K. Collawn - 64,035 and C. N. Eldred — 5,826.

*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 2 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 filed February 4, 2011 by Franklin Resources, Inc. (“FRI”).  The filing reported that all securities are beneficially owned by one or more open- or closed-end investment companies or other managed accounts that are investment management clients of investment managers that are direct or indirect subsidiaries of FRI.  The filing reported that Charles B. Johnson and Rupert H. Johnson, Jr. each own in excess of 10% of the outstanding stock of FRI and are the principal stockholders of FRI, and that FRI and its principal stockholders may be deemed to be the beneficial owners of PNMR common stock held by persons or entities for whom or for which FRI subsidiaries provide investment management services. The filing reported that FRI and its principal shareholders beneficially owned 8,479,350 shares (9.8%), Franklin Advisory Services, LLC had sole voting power for 5,056,100 shares and sole dispositive power for 5,171,100 shares (6%),  Franklin Advisers, Inc. has sole voting and dispositive power for 3,330,000 shares,  and Fiduciary Trust Company International had sole voting and dispositive power for 8,250 shares.

(2) 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 PNM Resources 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.  See “Related Person Transactions” on page 24.

(3) As reported on Schedule 13G/A filed February 2, 2011 with the SEC by BlackRock, Inc. as the parent holding company or control person of BlackRock Japan Co. Ltd., BlackRock Institutional Trust Company, N.A., BlackRock Fund Advisors, BlackRock Asset Management Australia Limited, BlackRock Advisors, LLC, BlackRock Investment Management, LLC, and BlackRock International Limited.

(4) 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 owned 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.  The filing reported that it is being filed by Mario J. Gabelli and various entities which he directly or indirectly controls or for which he acts as chief investment officer.

(5) As reported on Schedule 13G filed February 11, 2011 with the SEC by Donald Smith & Co., Inc.  This filing reported that Donald Smith & Co., Inc. beneficially owned 4,395,272 shares with sole voting power and 5,404,844 shares with sole dispositive power; Donald Smith Long/Short Equities Fund, L.P. beneficially owned 18,322 shares with sole voting power and 5,404,844 shares with sole dispositive power; and that the aggregate number of PNMR shares beneficially owned by Donald Smith & Co. Inc. was 5,404,844 shares (6.24%) (4,313,594 shares with sole voting power and 5,404,844 shares with sole dispositive power); and, to the knowledge of Donald Smith & Co., Inc., with respect to all securities reported in this schedule owned by advisory clients of Donald Smith & Co., Inc., not more than 5% of the class is owned by any one client.

(6) As reported on Schedule 13G filed February 4, 2011 by The Bank of New York Mellon Corporation.  This filing reported that the shares reported on the filing are beneficially owned by the following direct or indirect subsidiaries of The Bank of New York Mellon Corporation:  The Bank of New York Mellon, The Bank of New York Mellon Trust Company, National Association, BNY Mellon, National Association, The Boston Company Asset Management LLC, The Dreyfus Corporation (parent holding company of MBSC Securities Corporation), Lockwood Advisors, Inc., Mellon Capital Management Corporation, Pershing LLC, BNY Separate Account Services, Inc. (parent holding

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company of Lockwood Advisors, Inc.), MAM (MA) Holding Trust (parent holding company of The Boston Company Asset Management LLC), MBC Investments Corporation (parent holding company of Mellon Capital Management Corporation), Pershing Group LLC (parent holding company of Pershing LLC).

*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 2 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 28, 2011.

RELATED PERSON TRANSACTIONS

Since January 1, 2010, 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 23.

Cascade Registration Rights.  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 PNM Resources 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 Convertible Preferred Stock, Series A is entitled to receive dividends equivalent to any dividends paid on PNM Resources common stock as if the preferred stock had been converted into common stock.  The Convertible Preferred Stock, Series A is entitled to vote on all matters voted upon by common stockholders, except for the election of the Board.  In the event of liquidation of PNM Resources, preferred holders would receive a preference of $0.10 per common share equivalent.  After that preference, common holders would receive an equivalent liquidation preference per share and all remaining distributions would be shared ratably between common and preferred holders using the number of shares of common stock into which the Convertible Preferred Stock, Series A is convertible.  The terms of the Convertible Preferred Stock, Series A result in it being substantially equivalent to common stock.  Therefore, for earnings per share purposes, the number of common shares into which the Convertible Preferred Stock, Series A is convertible is included in the weighted average number of common shares outstanding for periods after the Convertible Preferred Stock, Series A was issued.  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.

In connection with the equity-linked units transaction, PNM Resources entered into a registration rights agreement which requires PNM Resources, under certain circumstances, to register for resale certain securities held by Cascade.  In March 2011, pursuant to the terms of a letter agreement between PNM Resources and Cascade amending the registration rights agreement, PNM Resources agreed to file a registration statement covering its securities and to file an applicable prospectus supplement, if requested by Cascade at a later date, covering shares of common stock currently held by Cascade or issued upon conversion of shares of the Convertible Preferred Stock, Series A.  On March 17, 2011, PNM Resources filed a universal automatic shelf registration statement with the SEC that will permit PNM Resources, from time to time, in one or more public offerings, to offer for sale certain securities.  The registration statement also permits sales of PNM Resources securities by selling security holders who may be named in a prospectus supplement. The filing of this universal shelf registration statement satisfies PNM Resources’ obligation under the registration rights agreement, as amended, to register Cascade’s shares.  The dollar value of the amount involved in such transaction cannot be determined at this time.  Cascade may, pursuant to a prospectus and an applicable prospectus supplement, elect to sell some or all of such common stock, from time to time, subject to market conditions and any applicable legal requirements.  However, Cascade has no obligation to sell all or any portion of such securities.

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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 covered by the Electric Reliability Council 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 has 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 April 2010, PNM Resources and ECJV each made an equity contribution to Optim Energy of $15.0 million in cash, which Optim Energy used to reduce amounts outstanding under its bank financing arrangement.  PNM Resources and ECJV also made additional cash contributions during 2010 that in aggregate equaled approximately $5.3 million from each owner.  Optim Energy used the additional contributions to reduce debt.

PNM Resources’ transactions with Cascade were pre-approved by the full Board pursuant to the Policy and Procedures Governing Related Party Transactions discussed on page 9.  In addition, the terms of the arrangements with Cascade regarding Optim Energy were arrived at in arms’ length negotiations between the two entities.  PNM Resources and Cascade were each represented in the arms’ length negotiations between themselves by competent counsel who represented their respective clients zealously.  As a result, PNM Resources believes that the terms were comparable to those that could have been obtained in transactions with unaffiliated third parties.

DIRECTOR COMPENSATION

The BGHRC was responsible for recommending 2010 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.   As compensation, Mr. Sterba received a separate annual retainer (payable quarterly) of $175,000 prorated from August 16, 2010 to December 31, 2010.  Initially, Mr. Sterba received a separate annual retainer of $250,000 prorated from March 1, 2010, which was reduced to reflect his reduced level of support following becoming the CEO of another company on August 16, 2010.  The retainer is designed to be a reasonable and competitive amount of compensation to pay 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 Compensation Discussion and Analysis (“CD&A”).

The Board desires to achieve a reasonable compensation package for non-employee directors that will attract and retain highly qualified non-employee directors.  Thus, the Board committee responsible for recommending appropriate non-employee director compensation 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.  The Board believes the median of director compensation awarded by the companies in the PNMR Peer Group represents a reasonable comparative compensation level.  In 2009, the BGHRC revised the PNMR Peer Group to include 14 companies (down from 23 companies in 2003-2009) that the BGHRC believed would provide more relevant comparison data for its consideration in connection with making compensation decisions.  The 14 companies are similar to PNM Resources in financial size, and organizational and operational characteristics.

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In December 2009, the BGHRC conducted its annual review of director compensation by considering the compensation benchmark analysis prepared at its direction by the Corporate Governance Department with PRM input on the significance of various trend indicators.  The benchmark analysis was based upon:

·                  compensation data available at salary.com compiled from proxy statements filed by the 14 member PNMR Peer Group of similarly situated companies set forth 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 analysis showed that the Company’s director equity compensation levels continued to be significantly below the median of the PNMR Peer Group and the annual cash retainer remained slightly below the median.  The grant date fair value of the PNMR 2009 director equity awards was $1,870 for 1,000 stock options and $21,125 for 2,500 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.  The Corporate Secretary reviewed the analysis and PRM input and forwarded the information to the BGHRC, together with a recommendation to increase the 2010 retainer by increasing the award of restricted stock rights.  After reviewing the analysis and recommendation, the BGHRC recommended and the Board approved increasing the 2010 annual retainer from the 2009 annual retainer by increasing the amount of restricted stock rights from 2,400 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).  Thus, the 2010 annual retainer for non-employee directors consisted of the following cash and stock based compensation:

* As discussed above, in lieu of the $35,000 annual retainer, Mr. Sterba currently receives an annual retainer of $175,000 for continuing to serve as Chairman following his March 1, 2010 retirement as CEO.

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.

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

In 2010, PNMR management engaged Towers Watson and Pay Governance, LLC to prepare an analysis, including alternatives and recommendations, to the BGHRC on the amount and form of 2011 non-employee director compensation.  The analysis prepared by Towers Watson in August 2010 and updated by Pay Governance in November 2010 compared PNMR’s 2010 director compensation levels with the PNMR Peer Group and also provided “general industry” information about director compensation in companies of similar size to PNMR (i.e., the S&P Midcap Index (median revenue approximately $2 billion)).  In addition, PRM, the compensation consultant retained directly by the BGHRC, confirmed the benchmark analysis, provided additional NACD Survey information to review trends in director compensation, and provided recommendations.

In December 2010, following review of the comparative data, benchmark analysis, alternatives and recommendations prepared by Towers Watson, Pay Governance and PRM, the BGHRC recommended and the Board approved increasing the 2011 annual retainer by (1) increasing the annual cash retainer from $35,000 to $52,500 (and eliminating attendance fees for Board meetings); (2) providing an additional annual cash retainer of $15,000 for the lead independent director; and (3) providing restricted stock rights with a grant date fair value of $55,000 in lieu of the 1,000 stock options and 4,000 restricted stock rights.  Based on the analysis provided by Pay Governance and PRM, the Board concluded that the 2011 retainer amounts better reflected the median of the PNMR Peer Group.

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SUMMARY OF NON-EMPLOYEE DIRECTOR COMPENSATION IN 2010

The following table summarizes the total compensation paid or earned by each of the non-employee directors for the year ended December 31, 2010.

Director Compensation

(1)Jeffry E. Sterba, retired as CEO on March 1, 2010 and then became eligible for non-employee director compensation.  Patricia K. Collawn became a director in March 2010 and will not receive any director compensation, as she is an employee, i.e. President and CEO.

(2)Represents the grant date fair value of $11.25 per restricted stock right calculated in accordance with FASB ASC Topic 718 of the 4,000 restricted stock rights awarded under the PEP to each non-employee director on May 18, 2010.  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, 2010.  As of December 31, 2010, each non-employee director has the following number of restricted stock rights outstanding:  A. E. Archuleta — 6,251; J. A. Dobson — 6,251; R. R. Nordhaus — 6,251; M. T. Pacheco — 6,251; B. S. Reitz — 6,251; D. K. Schwanz — 5,666; J. E. Sterba — 70,274; B. W. Wilkinson — 4,000; and J. B. Woodard — 6,251. 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 $3.17 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 May18, 2010.  See Note 13 of the consolidated financial statements in PNMR’s Annual Report on Form 10-K for the year ended December 31, 2010 regarding assumptions underlying the determination of grant date fair value of stock option awards.  As of December 31, 2010, each non-employee director has the following number of options outstanding: A. E. Archuleta —2,017; J. A. Dobson — 2,017; R. R. Nordhaus — 2,017; M. T. Pacheco — 2,017; B. S. Reitz — 2,017; D. K. Schwanz —1,666;  J. E. Sterba — 1,000; B. W. Wilkinson — 1,000; and J. B. Woodard — 2,017.  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 9,000 stock options awarded on May 18, 2010 is $12.71.

(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 Equity Compensation Awards 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 2010