PNM RESOURCES, INC. 2011 OFFICER SHORT TERM CASH INCENTIVE PLAN

Exhibit 10.4

PNM RESOURCES, INC.

2011 OFFICER SHORT TERM CASH INCENTIVE PLAN

Introduction

PNM Resources, Inc. (the “Company”) has adopted this 2011 Officer Short Term Cash Incentive Plan (the “Plan”) for the purpose of providing annual cash-based incentive awards (each an “Award”) to eligible Officers (as defined below). The Awards payable to Officers under the Plan are intended to qualify as Performance Cash Awards granted pursuant to Section 9.4 of the PNM Resources, Inc. Second Amended and Restated Omnibus Performance Equity Plan (the “PEP”). In the case of Officers who are Covered Employees as defined in the PEP, the Awards also are intended to qualify as Performance-Based Awards granted pursuant to Section 12 of the PEP.

Capitalized terms used in the PEP and not otherwise defined in this Plan document have the meanings given to them in the PEP.

Eligibility

All Officers of the Company and its Affiliates are eligible to participate in the Plan with the exception of the First Choice Power, L.P. (“FCP”) or Optim Energy, LLC (“Optim”) officers, who may be eligible to participate in other incentive plans. For purposes of the Plan, the term “Officer” means any employee who has the title of Chief Executive Officer, President, Executive Vice President, Senior Vice President or Vice President and who is in salary grade H18 or higher.

Award Determinations in General

Awards are based on the Incentive Earnings Per Share (“EPS”) levels for the Performance Period as set forth in Table 1 of Attachment A, the weighting between Corporate and Business Area goals as described in Table 2 of Attachment A and Award levels achieved during the Performance Period as described in Table 3 of Attachment A. The Performance Period began on January 1, 2011 and will end on December 31, 2011.

An Officer’s Award will equal the Officer’s share of the Incentive EPS Award Pool described below. If the Officer’s share of the appropriate Performance Award Pool described below is less than the Officer’s share of the Incentive EPS Award Pool, however, the Officer will receive the smaller amount.

An Officer’s share of an Award Pool will be based upon the amount potentially payable to the Officer for the attained level of performance (Threshold, Target or Maximum), as determined in accordance with Table 3 of Attachment A, as compared to the aggregate amounts potentially payable for the attained level of performance to all of the Officer’s who are entitled to share in that Award Pool. In determining the amount potentially payable to an Officer, the base salaries will be determined as of January 1, 2011. In no event will the amount payable to an Officer exceed the indicated percentage of the Officer’s base salary for the attained performance level as set forth in Table 3 of Attachment A. In addition, in no event will the amount payable to one Officer be increased due to a decrease in the amount payable to any other Officer.

Incentive EPS Award Pool

In order for any Awards to be payable to eligible Officers, the Company must achieve the Threshold EPS level set forth in Table 1 of Attachment A. If the Company does not achieve the Threshold EPS level, no Awards are payable under the Plan to any Officer.

If the Threshold, Target or Maximum EPS levels, as listed in Table 1, are achieved, the aggregate potential Awards payable to the Officers at that level of performance (e.g., the aggregate level of Awards payable at Threshold, Target or Maximum as shown in Table 3 of Attachment A) will make up the “Incentive EPS Award Pool.” If the actual EPS exceeds the minimum level for a performance level by at least $0.01, but is less than the maximum level for that performance level (e.g., if the actual EPS exceeds $0.89 but is less than $0.98), the EPS Award Pool will be increased by using straight-line interpolation between the size of the EPS Award Pool based on the attained level (e.g., Threshold) and the size of the Incentive EPS Award Pool at the next higher level (e.g., Target). The Compensation and Human Resources Committee (the “Committee”) of the Company’s Board of Directors (the “Board”) has the discretion to increase the Incentive EPS Award Pool by an amount less than the amount determined by using straight-line interpolation. The EPS Award Pool is capped by the aggregate Maximum Awards shown in Table 3 for all eligible Officers.

Performance Award Pools

A Corporate Goals Scorecard and Business Area Scorecards listing each performance measure established by the Committee will be maintained by the PNM Resources, Inc. Management Systems Group. As set forth in Table 2 of Attachment A, the performance of the Chief Executive Officer and the Senior Officers (the Executive Vice President and the Senior Vice Presidents) are measured 100% on the Corporate Goals Scorecard. Vice Presidents are measured 60% on the Corporate Goals Scorecard and 40% on the Business Area Goals Scorecard.

The “Performance Award Pool” for each Business Area is the amount that could be paid in the aggregate to the Vice Presidents assigned to that Business Area based on performance alone, determined by using the following multi-step process:

The Performance Award Pool for the CEO and the Senior Officers will be constructed by using the same process but will be based solely upon the Corporate Goals Scorecard.

Award Approval and Payout Timing

In January 2012, the Committee will determine and certify the level of Awards, if any, payable for the Performance Period in the manner described above. The final Awards calculation and recommendation to the Committee by management will be reviewed and certified by the VP, Human Resources, Director, Audit Services, Director, Management Systems group, and Corporate Controller, respectively. The Board then will approve the CEO’s Award and the Committee will approve the Awards for all other Officers. To the extent Awards are payable under the Plan, the Company will make the payment on or before March 15, 2012 in a single lump sum cash payment subject to applicable withholding.

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Provisions for a Change in Control

If a Change in Control occurs during the Performance Period and the Officer remains employed by the Company or an Affiliate (for purposes of this section, Optim and FCP are not included as Affiliates) at the end of the Performance Period, the Officer may be entitled to receive an Award for the Performance Period. If the Plan is modified after the occurrence of a Change in Control in a manner that has the effect of reducing the amounts otherwise payable under the Plan, the Officer will receive, at a minimum, an Award equal to 50% of the Maximum Award available under this Plan for the Performance Period.

Pro-rata Awards for Partial Service Periods

In certain circumstances (as set forth below) Officers may or may not be eligible for a Pro-rata Award under the Plan.

The following Officers may be eligible for a Pro-rata Award:

The following Officers are not eligible for any Award, including a Pro-rata Award:

If an Officer is eligible for a Pro-rata Award, it will be calculated based on the number of full months that the Officer was actively employed at each eligibility level during the Performance Period compared to the number of full months included in the Performance Period. (Note: Any month in which an Officer is actively on the payroll for at least one day will count as a full month.) Any Pro-rata Awards to which an Officer becomes eligible pursuant to this paragraph will be paid to the Officer in a single lump sum cash payment subject to applicable withholding on or before March 15, 2012.

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Ethics

The purpose of the Plan is to fairly reward performance achievement. Any Officer who manipulates or attempts to manipulate the Plan for personal gain at the expense of customers, other employees, or the Company or its Affiliates will be subject to disciplinary action, up to and including termination of employment, and will forfeit and be ineligible to receive any Award under the Plan.

Continuation of Employment

This Plan does not confer upon any Officer any right to continue in the employment of the Company or any Affiliate and does not limit the right of the Company or any Affiliate, in its sole discretion, to terminate the employment of any Officer at any time, or in accordance with any written employment agreement the Company and Officer may have.

Amendments

The Committee, in its sole discretion, reserves the right to adjust, amend or suspend the Plan during the Performance Period.

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ATTACHMENT A

Incentive EPS Table

(Table 1)

Scorecard Weighting Table

(Table 2)

Award Levels Table

(Table 3)

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