SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
SOUTHEASTERN MICHIGAN GAS ENTERPRISES, INC.
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
5) Total fee paid:
________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________________
3) Filing Party:
________________________________________________________________________
4) Date Filed:
________________________________________________________________________
<PAGE>
[LOGO]
SOUTHEASTERN
MICHIGAN GAS ENTERPRISES
NOTICE OF ANNUAL MEETING OF COMMON SHAREHOLDERS
TO BE HELD ON APRIL 16, 1996
To the Common Shareholders of
SOUTHEASTERN MICHIGAN GAS ENTERPRISES, INC.
NOTICE IS HEREBY GIVEN pursuant to call by the Board of Directors of the
Company in accordance with the laws of Michigan that the Annual Meeting of
Shareholders of Southeastern Michigan Gas Enterprises, Inc. (the Company) will
be held at the McMorran Auditorium, 701 McMorran Boulevard, Port Huron,
Michigan (see map on back), on Tuesday, April 16, 1996 at 2:00 p.m., for the
following purposes:
I. To elect four members to the Board of Directors.
II. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Common Shareholders of record at the close of business on February 20,
1996, will be entitled to notice of and to vote at the meeting or at any
adjournment thereof.
Whether or not you expect to attend the meeting, please sign, date and
return the accompanying proxy in the enclosed envelope, which requires no
postage if mailed in the United States. If you should attend, you may vote in
person, if you wish, whether or not you have sent in your proxy.
By order of the Board of Directors
Sherry L. Abbott, Secretary
405 Water Street P.O. Box 5026
Port Huron, Michigan 48061-5026 (810) 987-2200
<PAGE>
[LOGO]
SOUTHEASTERN
MICHIGAN GAS ENTERPRISES, INC.
405 Water Street, Port Huron, MI 48060
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of
Southeastern Michigan Gas Enterprises, Inc. (the Company) for use at the Annual
Meeting of the Shareholders of the Company on Tuesday, April 16, 1996, at
2:00 p.m., and any adjournments thereof, to be held at McMorran Auditorium, 701
McMorran Boulevard, Port Huron, Michigan. It is expected that the proxy
materials will be mailed to shareholders on or about March 15, 1996.
A Shareholder giving the enclosed proxy (or his authorized representative)
may revoke it any time before it is exercised by executing a subsequent proxy,
or by oral or written notice to the Company or by voting in person at the
meeting.
The Company will bear the cost of soliciting proxies, including charges
and expenses of brokerage firms and others for forwarding solicitation
material to beneficial owners of stock. In addition to mailings, proxies may
be solicited by personal interview, telephone or telegraph by certain of the
Company's employees without compensation. The Company may also retain and
compensate one or more outside organizations to assist in soliciting proxies.
A copy of the Company's 1995 Annual Report is enclosed.
STOCK OUTSTANDING, VOTING RIGHTS AND VOTES REQUIRED
Only Common Shareholders of record on the Company's stock transfer books
at the close of business on February 20, 1996 (the record date) will be
entitled to vote at the meeting.
The Company had approximately 11,834,000 shares of Common Stock, $1 Par
Value (Common Shares), outstanding on the record date. A majority of the
Common Shares entitled to vote constitutes a quorum.
Common Shareholders are entitled to cumulative voting for directors. Each
Common Shareholder may cast a number of votes equal to the number of shares
held on the record date multiplied by the number of directors to be elected.
The shareholder may cast all votes for a single director or distribute them
among the directors to be voted for, as the shareholder sees fit.
To the Company's knowledge, only the following persons own beneficially
more than 5% of the common stock as of the record date:
<TABLE>
<CAPTION>
Number
of Shares
Title of Name and Address Beneficially Percent of
Class of Beneficial Owner Owned Class
<S> <C> <C> <C>
Common Stock, $1 Par Value Southeastern Michigan Gas Enterprises, Inc.
Employee Stock Ownership Trust
405 Water Street
Port Huron, Michigan 48060 864,321<F1> 7.3%
_____________________
<FN>
<F1>
The Company's Employee Stock Ownership Trust (ESOT) has the following
trustees: Robert F. Caldwell, D. Kent Herzer and Nancy C. Rankin. The
shares held by the ESOT may be voted by the individual participant to the
extent such shares are allocated to the participant's account. The
Trustees have the power to sell shares in the ESOT and can vote unallocated
shares (approximately 9,328 shares).
</FN>
</TABLE>
<TABLE>
Management's security ownership as of the record date is:
<CAPTION>
Amount and
Nature of Percent
Name of Beneficial of
Title of Class Beneficial Owner Ownership<F2> Class
<S> <C> <C> <C>
Common Stock, $1 Par Value Directors, Nominees and
Executive Officers --
Frank G. Andreoni 20,180 <F1>
Daniel A. Burkhardt 1,760 <F4> <F1>
Robert F. Caldwell 14,750 <F3> <F1>
Marcia M. Chmielewski 2,195 <F3> <F1>
Edward J. Curtis 1 <F4><F5> <F1>
John T. Ferris 33,567 <F1>
Michael O. Frazer 6,126 <F1>
Ward N. Kirby <F6> 9,091 <F3> <F1>
Harvey I. Klein 883 <F4><F5> <F1>
Frederick S. Moore 595 <F4><F5> <F1>
Edith A. Stotler 1,745 <F4> <F1>
Donald W. Thomason 2,197 <F1>
All directors, nominees and
executive officers as a group 93,096 <F1>
Cumulative Preferred Stock
of Subsidiary -- Directors, Nominees and
Southeastern Michigan Gas Executive Officers --
Company Robert F. Caldwell 43 <F1>
Ward N. Kirby <F6> 32 <F1>
All directors, nominees and
executive officers as a group 75 <F1>
___________________
<FN>
<F1>
Less than one percent.
<F2>
Each of the identified beneficial owners has sole voting and investment
power as to all of the shares shown with the exception of those held by
certain officers and directors jointly with their spouses or directly by
their spouses, minor children, or certain other relatives, and with the
exceptions described in (2) below. None of the shares shown is a share as
to which the person shown as the beneficial owner has the right to acquire
beneficial ownership in the future.
<F3>
Inclusive of the individual's beneficial interest in shares held by ESOT as
follows:
Common Shares
Name Held by ESOT
Robert F. Caldwell 9,182
Marcia M. Chmielewski 1,629
Ward N. Kirby 4,416
All directors, nominees and executive officers as a group 15,227
Such persons may vote their shares held by ESOT. Such persons have no
investment power as to the shares held by the ESOT except for certain
limited rights of diversification required to be granted under the Internal
Revenue Code.
<F4>
Pursuant to Board resolutions, Board members are required to own a minimum
of 2,000 shares of Company common stock or the equivalent of 2,000 shares
in Phantom Stock under the Deferred Compensation and Phantom Stock
Agreements (see the "Director Compensation" section on page 7 for further
information concerning these Agreements) or a combination thereof within 60
months of December 1994 (for new members, the deadline is 60 months from
election to the Board); lesser minimums are required after 18, 36 and 54
months from such dates. The acquisition of Phantom Stock pursuant to such
Agreements does not give a Board member any rights as a shareholder of the
Company, and no voting or investment power is attributable to any Phantom
Stock.
<F5>
Three directors are deferring their 1996 director's compensation under
Deferred Compensation and Phantom Stock Agreements. As of March 15, 1996,
the deferred compensation accounts for the three directors showed Phantom
Stock ownership as follows:
Name Phantom Shares
Edward J. Curtis 413
Harvey I. Klein 1,302
Frederick S. Moore 1,113
<F6>
Mr. Kirby resigned his position as President and Chief Executive Officer,
and as a director of the Company, effective January 18, 1996. As of the
date of this proxy statement, no successor has been appointed to the
positions that he held.
</FN>
</TABLE>
RESPECTING THE ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide for three classes of
directors. The term of office of each class is three years and the term of one
class expires each year. The Company's Bylaws provide for a Board of Directors
with eleven members. The classes will be comprised of as nearly equal a number
of directors as possible. Therefore, approximately one-third of the Board of
Directors will be elected at each Annual Meeting of Shareholders. In case of a
vacancy in the Board of Directors, the remaining Directors, by a majority vote,
could elect a successor to serve until the next election of the class for which
the director was chosen. There is presently one vacancy on the Board of
Directors in the class whose term expires in 1998 that resulted from Mr.
Kirby's resignation in January of this year. The Board of Directors does not
presently intend to fill this vacancy until the Board selects a new President
and Chief Executive Officer for the Company.
Four directors are to be elected at this Annual Meeting, each to hold
office for a term of three years or until his successor shall have been fully
elected and qualified. It is the intention of the persons named in the
enclosed Form of Proxy, unless otherwise instructed by the shareholder, to
vote for the election of the persons listed below, each of whom is presently
a member of the Board of Directors.
Frank G. Andreoni
Daniel A. Burkhardt
Edward J. Curtis
Harvey I. Klein
The Board does not contemplate that any nominee will become unavailable
for any reason. Should that occur before the meeting, however, proxies will be
voted for another person selected by the Board.
The persons named in the enclosed proxy form also reserve the right to
vote the proxies cumulatively and for less than all of the nominees, but do not
intend to do so unless other nominees are nominated at the meeting. In any
case, the proxies will not vote for any nominees other than those named for the
class of directors whose term expires in 1999, unless a nominee becomes
unavailable as described above.
INFORMATION ABOUT DIRECTORS
<TABLE>
<CAPTION>
Name, Position with the Company<F1> and Director
Business Experience During Past Five Years Age Since
<S> <C> <C>
NOMINEES (for terms expiring 1999)
Frank G. Andreoni............................................................................... 66 1978
Chairman of the Board of Directors of the Company since April 1995; President of
Community Foundation of St. Clair County since June 1994; Port Huron City Chairman of
Michigan National Bank from July 1994 until retirement in March 1995 and Port Huron City
President prior to July 1994.
Daniel A. Burkhardt............................................................................. 48 1993
Associated with Edward D. Jones & Co., a securities brokerage firm, since 1978; Principal
in Investment Banking Department of Jones; Member of Jones' Investment Policy Committee;
Director of: Essex County Gas Co., Galaxy Cablevision L.P., Mid-America Realty
Investments, Inc. and St. Joseph Light & Power Co.
Edward J. Curtis................................................................................ 53 1995
President of E.J. Curtis Associates, Inc., a professional management consulting firm;
Director of Essex County Gas Co.
Harvey I. Klein................................................................................. 56 1993
President of Global Strategies Group L.C., a private consulting firm, since 1995; Employed
by Ford Motor Company from January 1962 to January 1995 in positions of increasing
responsibility with the last position held being Manager of Advanced Vehicle/Safety
and Fuel Economy Planning.
OTHER DIRECTORS (terms expiring 1997)
John T. Ferris.................................................................................. 45 1994
Senior Partner in law firm of Ferris & Schwedler, P.C. in Bad Axe, Michigan, former
prosecutor for Huron County, Michigan.
Michael O. Frazer............................................................................... 57 1986
Attorney practicing in Battle Creek, Michigan.
Frederick S. Moore.............................................................................. 57 1995
President and Chairman DSLT Inc., a holding company with subsidiaries serving the food
service industry and engaging in the real estate development business.
Edith A. Stotler................................................................................ 49 1987
Partner, Stotler Grain Company; President, Homer Grain Company since 1990; Vice President
and Director, Utilities Group, Canadian Imperial Bank of Commerce, Inc., Chicago,
Illinois from December 1988 to February 1990 and Assistant General Manager -- Utilities
Group prior thereto.
OTHER DIRECTORS (terms expiring 1998)
Robert F. Caldwell.............................................................................. 40 1992
Executive Vice President of the Company since April 1993, Senior Vice President of the
Company from April 1991 to April 1993, Vice President from February 1989 to April 1991,
Secretary from January 1985 to February 1991, Treasurer from January 1985 to February 1989.
Donald W. Thomason.............................................................................. 52 1995
Executive Vice President - Corporate Services and Technology of the Kellogg Company since
September 1990; prior thereto, a vice president of Kellogg and a division executive
vice president.
_________________
<FN>
<F1>
Other than Mr. Caldwell, each director's and nominee's principal employment is and has been with a company
which is not affiliated with the Company.
</FN>
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Audit Committee members are Michael O. Frazer, Chairman,
Daniel A. Burkhardt, Edward J. Curtis and Frederick S. Moore. The committee
held 4 formal meetings in 1995. The Audit Committee's functions are primarily
to review with the independent public accountants their reports and audit
findings, including with respect to the internal audit function which such
accountants also perform, and the scope and plans for future audit programs,
and to meet with the officers of the Company and separately with the
independent public accountants to review annual financial statements,
accounting and financial controls and compliance with appropriate codes of
conduct. The committee also recommends to the Board the independent public
accountants.
The Company's Compensation Committee members are Harvey I. Klein,
Chairman, John T. Ferris, Edith A. Stotler and Donald W. Thomason. The
committee held 7 formal meetings in 1995. The Compensation Committee, after
review and analysis of available data, recommends compensation of executive
officers and directors to the Board of Directors.
The Company's Nominating Committee members are Daniel A. Burkhardt,
Chairman, Harvey I. Klein, Frederick S. Moore and Edith A. Stotler. The
committee held 8 meetings in 1995. The functions of the Nominating Committee
are to recommend to the Board directors to serve as members of the Board
committees, candidates to serve as trustees of employee benefit plan trusts,
candidates to fill Board vacancies, the slate of director candidates for
shareholder approval, personal qualifications criteria for Board membership and
general criteria regarding Board committee composition. Recommendations by
shareholders of candidates for Board membership will be considered by the
Nominating Committee. Such recommendations should be sent to the Nominating
Committee of the Board of Directors at 405 Water Street, Port Huron, Michigan
48060.
The Board of Directors held 8 meetings during 1995. Each director
attended 75% or more of the total meetings of the board and the committees on
which each served in 1995, except for Donald W. Thomason who attended 70%
(seven of ten) of the aggregate of (1) the total number of meetings of the
board of directors (held during the period for which he has been a director)
and (2) the total number of meetings held by all committees of the board on
which he served (during the periods that he served).
SECTION 16(a) REPORTING REQUIREMENTS
Pursuant to Section 16(a) of the Securities Exchange Act of 1934,
directors and executive officers must file reports with the Securities and
Exchange Commission disclosing changes in their ownership of Company stock.
All such reports were filed timely for 1995.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
Summary Compensation Table
Only the following three executive officers of the Company had salary and
bonus exceeding $100,000 in 1995.
<CAPTION>
Name and Principal Other Annual All Other
Position Year Salary<F1> Bonus<F2> Compensation<F3> Compensation<F4>
<S> <C> <C> <C> <C> <C>
Ward N. Kirby, President and CEO <F5>.............. 1995 $209,973 $45,418 $2,630 $2,311
1994 $201,504 $65,315 $2,590 $4,262
1993 $191,397 $64,251 $2,590 $7,040
Robert F. Caldwell, Executive Vice President
and COO........................................... 1995 $183,115 $40,869 $1,024 $2,311
1994 $175,739 $55,481 $1,008 $4,262
1993 $166,863 $53,483 $1,008 $6,139
Marcia M. Chmielewski, Vice President, Treasurer
and CFO........................................... 1995 $96,000 $17,176 $841 $1,802
1994 $88,923 $22,648 $828 $2,938
1993 $79,757 $16,180 $828 $2,707
____________________
<FN>
<F1>
Actual salary paid during the year.
<F2>
Cash incentive earned during the year pursuant to the Company's incentive
plan then in effect and bonus paid to reimburse the premium cost of a whole
life insurance policy.
<F3>
Amount paid to reimburse the executive for taxes relating to the bonus for
life insurance discussed in the preceding note.
<F4>
Portion of the Company's contribution to the Employee Stock Ownership Trust
which is applicable to the executive.
<F5>
Mr. Kirby resigned his positions with the Company effective January 18,
1996.
</FN>
</TABLE>
Employment and Related Agreements
Mr. Caldwell is a party to an employment agreement with the Company that
expires January 1, 1997. The employment agreement provides for a lump sum
payment to Mr. Caldwell if the Company terminates his employment other than for
"cause" or if Mr. Caldwell resigns due to a required relocation of personal
residence or a reduction in base salary. "Cause" is limited to certain
intentional misconduct. The lump sum payment will equal Mr. Caldwell's present
salary for the remainder of the term of the agreement, provided that not less
than six nor more than twelve months salary shall be paid. The Company also
agrees to continue insurance, medical, dental and similar benefit plans for the
term of the agreement. Certain other limitations apply. In addition, the
agreement gives Mr. Caldwell the right to resign in case of a change of control
and receive severance compensation equal to 2.99 times his average annual
compensation over the last five years.
Mr. Kirby has entered into separation and consulting agreements with the
Company, effective January 18, 1996. Pursuant to these agreements, and in
connection with his resignation, he has been paid $210,300 as a severance
payment, and $18,000 as a lump sum consulting fee for consulting services that
he is to render to the Company in 1996. Mr. Kirby also receives certain
insurance, his Company automobile, and other incidental benefits in connection
with his severance.
Pension Plan
<TABLE>
Pension Plan Table
<CAPTION>
Annual Years of Credited Service
Remuneration 5 10 15 20 25 30 35 40
<S> <C> <C> <C> <C> <C> <C> <C> <C>
90,000 7,875 15,750 23,625 31,500 39,375 47,250 55,125 63,000
110,000 9,625 19,250 28,875 38,500 48,125 57,750 67,375 77,000
130,000 11,375 22,750 34,125 45,500 56,875 68,250 79,625 91,000
150,000 13,125 26,250 39,375 52,500 65,625 78,750 91,875 105,000
170,000 14,875 29,750 44,625 59,500 74,375 89,250 104,125 119,000
190,000 16,625 33,250 49,875 66,500 83,125 99,750 116,375 133,000
210,000 18,375 36,750 55,125 73,500 91,875 110,250 128,625 147,000
230,000 20,125 40,250 60,375 80,500 100,625 120,750 140,875 161,000
250,000 21,875 43,750 65,625 87,500 109,375 131,250 153,125 175,000
270,000 23,625 47,250 70,875 94,500 118,125 141,750 165,375 189,000
</TABLE>
The above table sets forth the estimated annual benefits payable at normal
retirement age (65) under the Retirement Plan and the Supplemental Retirement
Plan for Certain Officers based on a straight-life annuity form of retirement
income.
The Retirement Plan is a non-contributory plan. Substantially all
employees are eligible to participate. All above-named executive officers
participate. Compensation for purposes of the Retirement Plan is equal to base
salary (including commissions for sales persons), excluding overtime and
bonuses.
At normal retirement age (65), a participant will receive an annual
retirement benefit equal to 1.5% of the highest average of his annual
compensation for any consecutive three calendar years preceding the earlier of
the retirement date or the date of termination of employment multiplied by
years of credited service prior to November 1, 1970, and by 1.75% of such
average annual compensation multiplied by years of credited service after
October 31, 1970. The benefits listed in the Pension Plan Table are not
subject to any deduction for Social Security or other offset amounts.
As of January 1, 1996, Mr. Kirby, Mr. Caldwell and Ms. Chmielewski had 23,
16 and 9 years of credited service after October 31, 1970, respectively.
Federal law limits the annual benefits that can be paid from any funded
retirement plan that qualifies for federal tax exemption, and the amount for
calendar year 1996 is $120,000. In addition, federal law limits the amount of
covered compensation for purposes of calculating pension benefits. As of
January 1, 1996, that maximum is $150,000. To the extent that annual benefits
payable from the retirement plan are so limited, benefits are provided for
Messrs. Kirby and Caldwell under the Supplemental Retirement Plan for Certain
Officers adopted by the Company on December 7, 1995, so as to provide them with
the retirement benefits to which they would be entitled but for such limitation.
Director Compensation
Employees who are directors receive no additional compensation for service
as directors. All other directors were paid $1,000 per month and $575 for each
directors' meeting attended in 1995 except that the chairman of the board was
paid $2,000 per month and $775 per meeting attended. Non-employee directors
received $575 for each committee meeting attended except that committee
chairmen were paid $775.
The Company has also established Deferred Compensation and Phantom Stock
Agreements for non-employee directors. Non-employee directors have the option
to defer the annual compensation described in the above paragraph for each
upcoming year. If deferred, the compensation accrues interest at the prime
rate or, at the prior election of the director, is treated as if it were
invested in Common stock (Phantom Stock) through the dividend reinvestment
plan. Three directors are deferring compensation for 1996; such compensation
is being used to purchase Phantom Stock.
Non-employee directors also accrue $3,000 per year in the form of
retirement compensation payable after leaving the Board.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Membership on the Compensation Committee for 1995 was as follows: Frank
G. Andreoni and John W. Wirtz from January 1, 1995 through April 19, 1995;
William March from April 19, 1995 through October 12, 1995; Harvey I. Klein
and Edith A. Stotler from January 1, 1995 through the present; Donald W.
Thomason from April 19, 1995 through the present; and John T. Ferris from
October 12, 1995 through the present. The Company from time to time makes
short-term and long-term borrowings from Michigan National Bank, of which Mr.
Andreoni was Port Huron City Chairman during his term on the Compensation
Committee. In 1995, the maximum amount of such indebtedness at any one time
outstanding was $39,900,000 at an interest rate of approximately 6.5% per
annum which was used for working capital of the Company and its subsidiaries.
Such borrowings were at rates considered to be competitive and were on terms
and conditions similar to other like loans made by such bank. At
December 31, 1995, there was outstanding indebtedness of $39,900,000 to such
bank.
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, or the Securities Exchange Act of
1934, the following report and the Performance Graph shall not be deemed to be
incorporated by reference into any such filings except to the extent that they
are specifically incorporated.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (CC) is responsible for recommending to the
full Board the compensation of Executive Officers. The CC is composed of four
non-employee directors. The CC has adopted a strategy to adjust all salary,
benefits and perquisites for an executive to reflect an average of that paid to
executives with similar experience, responsibilities and authority in a peer
group including 18 other utility companies and our Company. The elements of
compensation include base salary, benefits, perquisites and incentive. An
independent consulting firm has been employed by the CC to assist in developing
and implementing this strategy. The incentive plan provides an executive with
an opportunity for above-average total compensation. The incentive plan for
1995 provided for cash bonuses to the Company's executives based on the degree
of achievement of the Company's income target for 1995 and the executive's
individual performance. The 1995 income target and Mr. Kirby's individual
performance were determined by the CC. All the incentive awards for 1995 are
included in the above compensation table in the "Bonus" column. The 1995 base
salary amounts were determined by the CC.
Mr. Kirby's 1995 base salary, shown in the "Salary" column of the above
Compensation Table, was increased by 4.2% from his 1994 base salary, which
percentage was equal to the projected average merit increase for utility
executives based on a review of national surveys.
Mr. Kirby's incentive award for 1995 was based on the level of corporate
income versus the 1995 income target.
The Company also provided a bonus to Mr. Kirby to reimburse him for the
cost of two whole life insurance policies (with face amounts totaling
$250,000). The portion of the bonus relating to the premium cost of these
policies is reflected in the "Bonus" column of the above Compensation Table
and the projected tax burden portion is reflected in the "Other Annual
Compensation" column. Mr. Kirby's life insurance policies were first
purchased in 1988 ($200,000) and 1989 ($50,000). The premiums were
established with an intent to have each policy paid up in ten years.
In 1995, the Company contributed $300,000 to its Employee Stock Ownership
Trust ("ESOT"). The contribution amount is redetermined in December each year
and is based in most part on the extent to which the Company is projected to
meet its income target that year. All full-time employees, with at least one
year of service and at least 21 years old, participate in the ESOT.
Contributions to the ESOT are allocated to participants in proportion to their
other compensation (not including compensation in excess of $150,000). Mr.
Kirby's portion of the contribution is shown in the "All Other Compensation"
column of the above Compensation Table.
The Company also provided Mr. Kirby certain other perquisites of the
office of President including limited personal use of a Company car. These
other perquisites are not significant.
All decisions of the CC regarding executive compensation are reviewed by
the full Board of Directors.
COMPENSATION COMMITTEE
Harvey I. Klein, Chair
John T. Ferris
Edith A. Stotler
Donald W. Thomason
PERFORMANCE GRAPH
The following graph compares cumulative total returns (assuming
reinvestment of dividends). The stock price performance shown on the graph is
not necessarily indicative of future price performance. The graph assumes the
investment of $100 in the Company's stock, the stocks representing the EDJ
index and the stocks representing the S&P 500 index on December 31, 1990.
<TABLE>
Comparison of Five Year Cumulative Total Return
Among stock of Southeastern Michigan Gas Enterprises, Inc.,
S&P 500 Index and
Edward D. Jones & Co. Natural Gas Distribution Company Index
<CAPTION>
Measurement Period Southeastern Michigan Edward D. S&P 500
(Fiscal Year Covered) Gas Enterprises, Inc. Jones Index Index
<S> <C> <C> <C>
Measurement Pt-12/31/90 $100 $100 $100
FYE 12/31/91 $120 $120 $130
FYE 12/31/92 $165 $145 $140
FYE 12/31/93 $215 $169 $154
FYE 12/31/94 $191 $152 $156
FYE 12/31/95 $204 $196 $215
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP have been the auditors for the Company and
Southeastern Michigan Gas Company for over thirty (30) years and have been
appointed by the Board of Directors to continue in that capacity during 1996.
A member of Arthur Andersen LLP will be available at the Shareholders Meeting
to make a statement if he so desires and to answer appropriate questions.
SHAREHOLDER PROPOSALS
A proposal to be included in the proxy statement or form of proxy for the
Company's next annual meeting of shareholders must be received at the Company's
principal executive office not later than November 15, 1996.
OTHER BUSINESS
The management of the Company knows of no matters other than those above
stated which are to be brought before the meeting. However, if any other such
matters should be presented for action, it is the intention of the persons
named in the enclosed form of proxy to vote in accordance with their judgment on
such matters.
It is important that proxies be returned promptly to avoid unnecessary
expenses. Therefore, all Common Shareholders (even those planning to attend
the meeting) are urged, regardless of the number of shares of stock owned, to
sign, date and return the enclosed proxy in the business-reply envelope, also
enclosed. Shareholders attending in person may withdraw their proxies and vote
in person.
By order of the Board of Directors
Sherry L. Abbott, Secretary
<PAGE>
[MAP]
<PAGE>
APPENDIX
Map on back cover shows general area, specific street and specific building
where shareholders meeting will take place.
<PAGE>
[Logo]
SOUTHEASTERN
MICHIGAN GAS ENTERPRISES
Annual Meeting to be held at
McMorran Auditorium
701 McMorran Boulevard
Port Huron, Michigan 48060
April 16, 1996, at 2:00 p.m.
YOUR VOTE IS IMPORTANT.
Whether or not you plan to attend, you can be sure your
shares are represented at the meeting by promptly
returning your completed proxy in the enclosed postage-paid envelope
which is addressed to our tabulation service at
Corporate Election Services, P.O. Box 1150, Pittsburgh, PA 15230.
[arrow symbol] Detach Proxy Card Here [arrow symbol]
SOUTHEASTERN
MICHIGAN GAS ENTERPRISES, INC.
405 Water Street, Port Huron, MI 48060
This Proxy is Solicited by the Board of Directors.
The undersigned hereby appoints George C. Noble and Edward K. Corry, or either
one of them, with power of substitution in each, proxies to vote, as designated
on the reverse side, all of the undersigned's shares of Common Stock of
SOUTHEASTERN MICHIGAN GAS ENTERPRISES, INC. at the Annual Meeting of
Shareholders to be held on April 16, 1996, and any and all adjournments thereof.
Please date, sign exactly as name appears hereon, and mail promptly in the
enclosed envelope which requires no postage if mailed in the United States.
When signing as attorney, executor, administrator, trustee, guardian, etc.,
give full title as such. If shares are held jointly, both owners must sign.
Dated , 1996
--------------------------------
Signature
-----------------------------------
Signature
-----------------------------------
(Continued on the other side)
<PAGE>
[arrow symbol] Detach Proxy Card Here [arrow symbol]
Properly executed proxies will be voted as marked and,
if not marked, will be voted FOR all of the nominees.
Please Mark Your Choice Like This. [X]
- --------------------------------------------------------------------------------
1. Election of Directors -- The Board of Directors recommends a vote FOR the
nominees named below.
(Check Only One Box)
A. For all nominees listed below [ ]
B. For none of the nominees listed below [ ]
C. For all nominees except names crossed out [ ]
Frank G. Andreoni Daniel A. Burkhardt Edward J. Curtis Harvey I. Klein
- --------------------------------------------------------------------------------
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS
THEREOF.
- --------------------------------------------------------------------------------
(To be Dated and Signed on Other Side)
