<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
CMS ENERGY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
CMS ENERGY CORPORATION
- --------------------------------------------------------------------------------
(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 Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 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 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(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> 2
[Logo: "CMS ENERGY"]
CMS ENERGY CORPORATION
CALL AND NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 26, 1995
To the Shareholders of CMS Energy Corporation:
The annual meeting of shareholders of CMS ENERGY CORPORATION will be held on
Friday, the 26th day of May 1995, at 10:30 A.M., Eastern Daylight Saving Time,
at the Dearborn Inn, 20301 Oakwood Boulevard, Dearborn, Michigan, 48124-4099 for
the purpose of:
(1) Electing a Board of Directors of 12 members;
(2) Ratifying the appointment of Arthur Andersen LLP, independent public
accountants, to audit the financial statements of the Corporation for
the year ending December 31, 1995;
(3) Considering the approval of an amendment to the Corporation's
Performance Incentive Stock Plan; and
(4) Transacting such other business as may properly come before the meeting.
The annual report to the shareholders for the year 1994, including financial
statements, has been furnished to you.
The Board of Directors has fixed March 30, 1995 as the record date for the
determination of shareholders entitled to notice of and to vote at the meeting.
Common Shareholders will be entitled to vote on all matters that come before the
meeting. All shareholders are cordially invited to attend the annual meeting.
The Board of Directors requests that you sign and date the enclosed proxy and
return it in the enclosed envelope, which requires no postage if mailed in the
United States.
By order of the Board of Directors,
Thomas A. McNish, Secretary
CMS Energy Corporation
Fairlane Plaza South
Suite 1100
330 Town Center Drive
Dearborn, Michigan 48126
April 17, 1995
<PAGE> 3
PROXY STATEMENT
------------------------
INTRODUCTION
The Board of Directors solicits your proxy for use at this annual meeting.
The shares represented by your proxy will be voted if the proxy is signed and
returned prior to the meeting. You may revoke your proxy at any time before it
is exercised, provided that you so notify the Secretary of CMS Energy
Corporation (the "Corporation") in writing before the proxy is exercised.
As of December 31, 1994, the Corporation's outstanding Common Stock ($.01
par value) consisted of 86,534,549 shares. Each outstanding share is entitled to
one vote on all matters which may come before the annual meeting. All shares
represented by signed proxies will be voted at the annual meeting.
The Corporation has received a copy of Schedule 13G filed with the
Securities and Exchange Commission ("SEC") by Mellon Bank Corporation, Mellon
Bank Center, Pittsburgh, PA 15258, which indicates holdings of 5,950,000 shares
representing 6.9% of the outstanding Common Stock of the Corporation. The
Corporation has also received a copy of Schedule 13G filed with the SEC by
Brinson Partners, Inc., 209 South LaSalle, Chicago, Illinois, 60604-1295, which
indicates holdings of 5,274,100 shares representing 6.1% of the outstanding
Common Stock of the Corporation. These forms indicate that the shares were
purchased in a fiduciary capacity in the ordinary course of business for
investment purposes. To the knowledge of management, no other person owns
beneficially more than 5% of any class of the Corporation's outstanding voting
securities.
The determination of approval of corporate action by the shareholders is
based on votes "for" and "against". Abstentions and broker non-votes are not
counted as "against" votes but are counted in the determination of a quorum.
NOMINEES FOR ELECTION AS MEMBERS OF
THE BOARD OF DIRECTORS
The nominees for directors of the Corporation and Consumers Power Company
("Consumers") will hold office until the next annual meeting or until their
successors are elected and qualified. Unless a shareholder withholds authority
to vote for the election of directors as provided in the proxy, the returned
proxy will be voted for the listed nominees. The Board of Directors has no
reason to believe that the persons named will not be available but in the event
any nominee is unable to serve, the proxy will be voted for a substitute nominee
designated by the Board of Directors. All of the nominees are presently serving
as directors. Robert D. Tuttle, who has announced his retirement, is not
standing for reelection. The twelve nominees receiving the greatest number of
votes will be elected.
2
<PAGE> 4
<TABLE>
<S> <C>
WILLIAM T. MCCORMICK, JR., 50, has served as Chairman of the Board and Chief
- --------------------- Executive Officer of the Corporation since it was incorporated in February 1987 and
[PHOTO] as Chairman of the Board of Consumers since November 1985. Until January 1992 he was
- --------------------- also CEO of Consumers, and until December 1987, he was also President of the
Corporation and of Consumers. He is a director of NBD Bancorp, Inc., Rockwell
International Corporation, and Schlumberger Ltd. He is also a director of the
American Gas Association, the Edison Electric Institute, and the National Petroleum
Council. He has been a director of the Corporation since 1987 and of Consumers since
1985.
JAMES J. DUDERSTADT, 52, has served since 1988 as the President of the University of
- --------------------- Michigan, Ann Arbor, Michigan. He is a director of the Unisys Corporation and the
[PHOTO] University of Michigan Hospitals. He has been a director of the Corporation and of
- --------------------- Consumers since 1993.
KATHLEEN R. FLAHERTY, 43, has served since 1993 as Corporate Senior Vice President
- --------------------- of MCI Communications Corporation, Washington, D.C., a provider of global
[PHOTO] telecommunications services, and as Senior Vice President, Worldwide Sales and
- --------------------- Marketing, of Concert Management Services, Inc., a joint venture with British
Telecom. Previously, she had served from 1985-1993 as Vice President of MCI
Communications Corporation. She was elected a director of the Corporation and of
Consumers in January, 1995.
VICTOR J. FRYLING, 47, has served as President of the Corporation and Vice Chairman
- --------------------- of Consumers since January 1992. Previously, he had been Executive Vice President
[PHOTO] and Chief Financial Officer of the Corporation and of Consumers from 1988-1991. He
- --------------------- has been a director of the Corporation and of Consumers since 1990.
</TABLE>
3
<PAGE> 5
<TABLE>
<S> <C>
EARL D. HOLTON, 61, has served since 1980 as President and Chief Operating Officer
- --------------------- of Meijer, Inc., a Grand Rapids, Michigan based operator of food and general
[PHOTO] merchandise super centers in Michigan, Ohio, Indiana and Illinois. He is a director
- --------------------- of Meijer, Inc. and Old Kent Financial Corporation. He has been a director of the
Corporation and of Consumers since 1989.
LOIS A. LUND, 67, is Professor, College of Human Ecology, Michigan State University,
- --------------------- East Lansing, Michigan. Previously, she served as Dean, College of Human Ecology,
[PHOTO] Michigan State University, from 1973-1985. She has been a director of the
- --------------------- Corporation since 1987 and of Consumers since 1983.
FRANK H. MERLOTTI, 68, has served as Chairman of the Executive Committee since 1990
- --------------------- and President and Chief Executive Officer from 1988-1990 of Steelcase Inc., Grand
[PHOTO] Rapids, Michigan, a manufacturer of office furniture. He is a director of Steelcase
- --------------------- Inc., Laser Alignment, and Oliver Products. He has been a director of the
Corporation and of Consumers since 1987.
WILLIAM U. PARFET, 48, has served since 1993 as President and Chief Executive
- --------------------- Officer of Richard-Allan Medical Industries, Richland, Michigan, a manufacturer of
[PHOTO] surgical products. Previously, he served as Vice Chairman from 1992-1993; as
- --------------------- President from 1991-1992; and as Executive Vice President from 1989-1990 of The
Upjohn Company. He is a director of The Upjohn Company, Old Kent Financial
Corporation, Universal Foods Corporation, Stryker Corporation, Flint Ink
Corporation, and Bissell, Inc. He has been a director of the Corporation and of
Consumers since 1991.
</TABLE>
4
<PAGE> 6
<TABLE>
<S> <C>
PERCY A. PIERRE, 56, has served since 1990 as Vice President for Research and
- --------------------- Graduate Studies and Professor of Electrical Engineering, Michigan State University,
[PHOTO] East Lansing, Michigan. Previously, he held the following positions at Prairie View
- --------------------- A&M University: Professor of Electrical Engineering from 1989-1990; President from
1983-1989. Dr. Pierre is a former Assistant Secretary of the Army for Research,
Development and Acquisition (1977-81). He is a director of Old Kent Financial
Corporation. He has been a director of the Corporation and of Consumers since 1990.
S. KINNIE SMITH, JR., 64, has served as Vice Chairman of the Corporation since
- --------------------- January 1992 and Vice Chairman of Consumers since 1987. He served as President of
[PHOTO] the Corporation from 1988 through 1991. He is a director of Clarcor Corporation and
- --------------------- Michigan National Corporation. He has been a director of the Corporation and of
Consumers since 1987.
KENNETH WHIPPLE, 60, has served since 1988 as Executive Vice President of Ford Motor
- --------------------- Company, Dearborn, Michigan, a world-wide automotive manufacturer, and President of
[PHOTO] the Ford Financial Services Group. He previously served as Chairman and Chief
- --------------------- Executive Officer of Ford of Europe, Inc. from 1986-1988. He has been a director of
the Corporation and of Consumers since 1993.
JOHN B. YASINSKY, 55, has served as President and Chief Executive Officer since July
- --------------------- 1994 and President and Chief Operating Officer from 1993 through June 1994 of
[PHOTO] GenCorp, Fairlawn, Ohio, a manufacturer of aerospace, automotive and polymer
- --------------------- products. Previously, he served as Group President in 1993 and President of
Westinghouse Power Systems from 1990-1993 and as Executive Vice President from
1989-1990. He is a director of GenCorp. He has been a director of the Corporation
and of Consumers since February, 1994.
</TABLE>
5
<PAGE> 7
MANAGEMENT SECURITY OWNERSHIP
The following chart summarizes the ownership of the Corporation's Common
Stock by the directors and executive officers.
<TABLE>
<CAPTION>
Shares
Name Beneficially Owned*
------------------------------------ -------------------
<S> <C>
William T. McCormick, Jr. .......... 126,163
James J. Duderstadt................. 1,129
Kathleen R. Flaherty................ 400
Victor J. Fryling................... 48,758
Earl D. Holton...................... 4,136
Lois A. Lund........................ 2,337
Frank H. Merlotti................... 4,423
William U. Parfet................... 11,000
Percy A. Pierre..................... 2,625
S. Kinnie Smith, Jr. ............... 51,969
Robert D. Tuttle.................... 8,100
Kenneth Whipple..................... 2,000
John B. Yasinsky.................... 2,000
Michael G. Morris................... 41,733
Alan M. Wright...................... 15,099
All Directors and Executive
Officers.......................... 382,009
</TABLE>
* Shares shown as beneficially owned by Messrs. McCormick, Smith, Fryling,
Morris and Wright, and all other executive officers of the Corporation as a
group include the number of shares represented by their respective interests in
the Employees' Savings and Incentive Plan and the Performance Incentive Stock
Plan as of December 31, 1994. The directors each own 10 shares of Preferred
Stock of Consumers as qualifying shares. One executive officer of Consumers owns
200 shares of non-voting Preferred Stock of Consumers. No other executive
officer owns shares of Consumers Preferred Stock. The directors and executive
officers together own less than 1% of the outstanding shares of the Corporation.
DIRECTORS AND OFFICERS SECURITIES REPORT
The federal securities laws require the Corporation's directors and
designated executive officers, and persons who own more than 10% of the
Corporation's Common Stock, to file with the SEC reports of ownership and
changes in ownership of any securities or derivative securities of the
Corporation. To the Corporation's knowledge during the year ended December 31,
1994 all the Corporation's officers and directors made all required filings.
6
<PAGE> 8
BOARD OF DIRECTORS AND COMMITTEES OF THE CORPORATION AND CONSUMERS
The Board of Directors of the Corporation met 14 times and Consumers' Board
of Directors met 13 times during 1994. All incumbent directors attended more
than 75% of the board and assigned committee meetings during 1994.
AUDIT COMMITTEES
Members: Frank H. Merlotti (Chair), Lois A. Lund, William U. Parfet, Percy
A. Pierre, and John B. Yasinsky.
Meetings during 1994: Corporation 3 -- Consumers 3
These committees meet with representatives of the independent public
accountants from time to time during the year and after the completion of the
annual audit of the Corporation's and Consumers' financial statements to review
and discuss such audit, internal controls and other appropriate matters; review
the activities of the Internal Audit Department; review the relationship of the
Corporation's and Consumers' independent public accountants with the Corporation
and Consumers insofar as they perform nonaudit services; and review and
recommend to the Boards of Directors the appointment of independent public
accountants.
NOMINATING COMMITTEES
Members: Percy A. Pierre (Chair), James J. Duderstadt, Frank F. Merlotti,
Robert D. Tuttle, and John B. Yasinsky.
Meetings during 1994: Corporation 4 -- Consumers 4
These committees conduct a continuing study of the size, structure,
composition and compensation of the boards; seek out possible candidates to fill
board positions; aid in attracting qualified candidates to the boards; recommend
annually, prior to the solicitation of proxies, a slate of qualified candidates
for election to the boards at the annual meeting and, in case of any vacancies
on the boards, candidates to fill those vacancies; review periodically and
recommend to the Boards of Directors modifications, as appropriate, to the
director tenure policy; and determine from time to time criteria for selection
and retention of board members. The committees consider shareholders'
recommendations of nominees for election to the Boards of Directors. The
recommendations must be accompanied by the consent of each of the recommended
nominees to act as a director. Shareholders should send their written
recommendations of nominees to: Mr. Thomas A. McNish, Secretary, CMS Energy
Corporation, Fairlane Plaza South, Suite 1100, 330 Town Center Drive, Dearborn,
Michigan 48126.
ORGANIZATION AND COMPENSATION COMMITTEES
Members: Earl D. Holton (Chair), William U. Parfet, Robert D. Tuttle,
Kenneth Whipple, and John B. Yasinsky.
Meetings during 1994: Corporation 5 -- Consumers 5
These committees review the executive organization of the Corporation and of
Consumers from time to time; review from time to time the salaries and other
compensation of all the officers of the Corporation and of Consumers; monitor
the development of personnel for availability to fill key management positions
as vacancies occur; establish goals annually for the Executive Incentive
Compensation Plan; review and approve the incentive compensation payment
schedule; review and approve grants under the Executive Stock Option and Stock
Appreciation Rights Plan; administer the Corporation's Performance Incentive
Stock Plan; and report to the Boards of Directors with respect to the
committees' recommendations.
7
<PAGE> 9
ENVIRONMENTAL AND CORPORATE RESPONSIBILITY COMMITTEES
Members: Lois A. Lund (Chair), James J. Duderstadt, Kathleen R. Flaherty,
Earl D. Holton, Percy A. Pierre, and Kenneth Whipple.
Meetings during 1994: Corporation 2 -- Consumers 2
These committees make recommendations to the Boards of Directors regarding
significant environmental matters affecting the Corporation's and Consumers'
operations; advise the Boards on the adoption and evaluation of policies
designed to maintain the Corporation's and Consumers' position of corporate
responsibility; review and monitor the Corporation's and Consumers' policies and
objectives related to equal employment opportunities; review and monitor the
Corporation's and Consumers' compliance with federal and state laws and
regulations affecting personnel matters, such as the Occupational Safety and
Health Act, Americans with Disabilities Act and the Age Discrimination in
Employment Act; and review the Corporation's and Consumers' policies related to
contributions and support of charitable, educational and community
organizations.
EXECUTIVE COMMITTEES
Members: William T. McCormick, Jr. (Chair), Earl D. Holton, Lois A. Lund,
Frank H. Merlotti, Percy A. Pierre, S. Kinnie Smith, Jr. and Robert
D. Tuttle.
No meetings were held during 1994.
These committees exercise the power and authority of the Boards of Directors
as may be necessary during the intervals between meetings of the Boards of
Directors, subject to such limitations as are provided by law or by resolution
of the boards.
FINANCE AND PENSION COMMITTEES
Members: Robert D. Tuttle (Chair), Kathleen R. Flaherty, Earl D. Holton,
Lois A. Lund, William U. Parfet, and Kenneth Whipple.
Meetings during 1994: Corporation 1 -- Consumers 2
These committees give advice and counsel to the officers of the Corporation
and Consumers with respect to the means for providing the funds required to
carry out the Corporation's and Consumers' programs; review the financial
policies including capitalization objectives, use of short-term financing and
issuance of long-term securities; and recommend to the Boards of Directors
financial policies for the Corporation and Consumers. In addition, the committee
of Consumers reviews the investment policies for all employee benefit funds with
respect to assets being managed, including adequacy of funding; reviews
quarterly the investment performance of each of the investment managers for all
employee benefit funds of Consumers; reports to the Board of Directors on
findings regarding selection and retention of investment managers; and reviews
the administration of the employee benefit plans.
8
<PAGE> 10
COMPENSATION OF DIRECTORS
Directors who are not officers of the Corporation or Consumers received in
1994 an annual retainer fee of $30,000, and $1,000 for attendance at each board
meeting and $750 for attendance at each committee meeting. Committee
chairpersons receive $1,000 for attendance at each committee meeting. Retainer
and attendance fees are set by the Boards of Directors. In addition in 1994 such
directors were vested in 200 restricted shares of common stock of the
Corporation with a fair market value of $4575.00. An additional 800 shares of
restricted stock will vest 25% per year in 1995 through 1998 for those directors
who continue to serve through such years. Directors are reimbursed for expenses
incurred in attending board or committee meetings. Directors who are officers of
the Corporation or Consumers do not receive retainers or meeting fees for
service on the board or as a member of any board committee. Pursuant to a
Directors' Deferred Compensation Plan, a director of the Corporation or
Consumers who is not an employee may at any time prior to a calendar year in
which a retainer and fees are to be earned, or at any time during the year prior
to the month in which a retainer and fees are earned may elect to irrevocably
defer payment for that year, or a portion thereof, through written notice to the
Corporation or Consumers, of all or half of any of the retainer and fees which
would otherwise be paid to the director, to a time following the director's
retirement from the Board of Directors. Any amount deferred will either (a)
accrue interest at either the prime rate or the rate for 10-year Treasury Notes
(whichever is greater), (b) be treated as if it were invested as an optional
cash payment in the Corporation's Dividend Reinvestment and Common Stock
Purchase Plan, or (c) be treated as if it were invested in a Standard & Poor's
500 stock index fund. Accrued amounts will be distributed in a lump sum or in
five annual installments in cash. Outside directors who retire with five years
of service on the board will receive monthly retirement payments equal to the
monthly retainer. These payments will continue for a period of time equal to
their years of service on the board. All benefits will cease at the death of the
retired director. Outside directors are offered optional life insurance
coverage, business-related travel accident insurance, and optional health care
insurance, and the Corporation and Consumers pay the premiums associated with
participation by directors. The value for income tax purposes of the life
insurance coverage in 1994 was: Messrs. Duderstadt, $502; Holton, $871;
Merlotti, $1,786; Parfet, $462; Pierre, $663; Tuttle, $1,965; Whipple, $871;
Yasinsky, $490; and Ms. Lund, $899. The value for health care coverage in 1994
was $2,067 for Ms. Lund, the only selecting Director.
9
<PAGE> 11
EXECUTIVE COMPENSATION
The following charts contain information concerning annual and long-term
compensation and awards of stock options and restricted stock under the
Corporation's Performance Incentive Stock Plan. The charts include the Chairman
of the Board and the next four most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation(3)
-------------------------
Awards Payouts
Annual ---------- ----------
Compensation Securities Long-Term All Other
----------------------- Underlying Incentive Compen-
Name and Principal Position Year Salary Bonus Options Payouts(1) sation(2)
- --------------------------- ----- --------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
William T. McCormick, Jr. 1994 $ 725,000 $ 470,000 36,000 $104,400 $21,750
Chairman and CEO, 1993 675,000 435,000 32,000 96,563 20,235
Corporation and Chairman, 1992 625,000 0 32,000 16,063 18,726
Consumers
S. Kinnie Smith, Jr. 1994 460,000 277,855 16,000 51,613 13,800
Vice Chairman, 1993 435,000 269,560 16,000 45,063 13,035
Corporation and Consumers 1992 410,000 0 16,000 7,501 12,275
Victor J. Fryling 1994 466,000 312,015 22,000 51,613 13,980
President, Corporation 1993 430,000 306,310 20,000 45,063 12,932
and Vice Chairman, 1992 380,000 0 16,000 6,953 11,389
Consumers
Michael G. Morris 1994 423,667 289,935 18,000 45,022 12,710
President and CEO, 1993 365,000 208,800 16,000 38,625 11,154
Consumers 1992 330,000 0 14,000 5,360 9,888
Alan M. Wright 1994 240,000 147,195 11,000 27,949 0
Senior Vice President 1993 215,000 116,880 9,000 19,312 0
and CFO, Corporation 1992 190,000 0 9,000 0 0
and Consumers
</TABLE>
(1) Market value of common stock paid under the Corporation's Performance
Incentive Stock Plan for three-year performance periods.
(2) Employer matching contribution to defined contribution plans.
(3) Aggregate restricted stock held as of December 31, 1994 by named officers
was: William T. McCormick, Jr. 47,600 shares; S. Kinnie Smith, Jr. 22,747
shares; Victor J. Fryling 27,747 shares; Michael G. Morris, 32,890 shares;
Alan M. Wright, 13,695 shares; with respective values based on market price
at December 31, 1994 of $1,088,850; $520,338; $634,713; $752,359; and
$313,273. Regular dividends are paid on such restricted stock.
10
<PAGE> 12
EMPLOYMENT ARRANGEMENTS
Agreements with the executive officers named above and four other senior
executive officers provide for payments of two times annual compensation if
there is a change of control and adverse change of responsibilities. The
Corporation and Consumers also provide long-term disability insurance policies
for all executive officers which would provide payments of 60% of compensation
in the event of disability.
OPTION GRANTS IN 1994
<TABLE>
<CAPTION>
Number of
Securities
Underlying Percentage of Total Exercise Grant Date
Options Options Granted to Price Per Expiration Present
Name Granted Employees in 1994 Share Date Value(1)
- ---------------------------------- --------- ------------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
William T. McCormick, Jr. ........ 36,000 13.79 $22.00 8/27/04 $220,320
S. Kinnie Smith, Jr. ............. 16,000 6.13 22.00 8/27/04 97,920
Victor J. Fryling................. 22,000 8.43 22.00 8/27/04 134,640
Michael G. Morris................. 18,000 6.90 22.00 8/27/04 110,160
Alan M. Wright.................... 11,000 4.21 22.00 8/27/04 67,320
</TABLE>
(1) The present value is based on the Black-Scholes Model, a mathematical
formula used to value options traded on securities exchanges. The model
utilizes a number of assumptions and adjustments, including the exercise
price, the underlying stock's volatility of 22.29% using daily prices for a
one year period prior to grant date, the dividend rate of $0.84, the term of
the option, and the level of interest rates at 7.24%, equivalent to the rate
of 10-year Treasury Notes. However, the Model does not take into account a
significant feature of options granted to employees under the Corporation's
Plan, i.e., the non-transferability of options awarded under the
Corporation's Plan.
AGGREGATED OPTIONS/SARS EXERCISES IN 1994 AND YEAR-END OPTIONS/SARS VALUES
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Shares Acquired Value Unexercised Options/ Options/SARs At
Name On Exercise Realized SARS at Year End Year End(1)(2)
- ---------------------------------- ---------------- -------- -------------------- ---------------
<S> <C> <C> <C> <C>
William T. McCormick, Jr. ........ 39,300 $580,912 401,666 $2,057,990
S. Kinnie Smith, Jr. ............. 0 0 126,000 189,175
Victor J. Fryling................. 0 0 137,500 252,000
Michael G. Morris................. 0 0 87,000 117,250
Alan M. Wright.................... 0 0 30,000 43,125
</TABLE>
(1) All options/SARs listed in this table are exercisable. The named officers
have no unexercisable options/SARs.
(2) Based on the December 31, 1994 closing price of the Corporation's Common
Stock as shown in the report of the NYSE Composite Transactions ($22.875).
11
<PAGE> 13
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1994
<TABLE>
<CAPTION>
Estimated Future Payouts
Under Non-Stock Price-Based
Plans (Shares)(1)
Number of Period Until ------------------------------------
Name Shares Payout Threshold Target Maximum
- ------------------------------------ --------- ------------ --------- ------ -------
<S> <C> <C> <C> <C> <C>
William T. McCormick, Jr. .......... 18,000 2-5 Years 4,500 18,000 27,000
S. Kinnie Smith, Jr. ............... 8,000 2-5 Years 2,000 8,000 12,000
Victor J. Fryling................... 11,000 2-5 Years 2,750 11,000 16,500
Michael G. Morris................... 9,000 2-5 Years 2,250 9,000 13,500
Alan M. Wright...................... 5,500 2-5 Years 1,375 5,500 8,250
</TABLE>
(1) Under the Corporation's Performance Incentive Stock Plan, awards of
restricted stock for the above officers vest at the rate of 25% per year
after two years and are subject to achievement of specified levels of total
shareholder return over a three-year period. The target amount will be
earned if 100% of the targeted average 15% annual total shareholder return
is achieved. The threshold amount will be earned on achievement of 40% of
the target, and the maximum award will be earned on achieving 140% of the
target.
PENSION PLAN TABLE
The following table shows the aggregate annual pension benefits at Normal
Retirement Date presented on a straight life annuity basis under the
Corporation's qualified pension plan and non-qualified supplemental executive
retirement plan (offset by a portion of Social Security benefits).
<TABLE>
<CAPTION>
Years of Service
--------------------------------------------------------------------
Compensation 15 20 25 30 35
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 400,000 $126,000 $168,000 $196,000 $224,000 $252,000
600,000 189,000 252,000 294,000 336,000 378,000
800,000 252,000 336,000 392,000 448,000 504,000
1,000,000 315,000 420,000 490,000 560,000 630,000
1,200,000 378,000 504,000 588,000 672,000 756,000
</TABLE>
Regular, straight-time salary as shown in the Summary Compensation Table
during the 5 years of highest earnings is used in computing benefits under the
Pension Plan; in addition, awards under the Executive Incentive Compensation
Plan as shown in the Summary Compensation Table during the 5 years of highest
earnings are used in computing benefits under the Supplemental Executive
Retirement Plan. The estimated years of service for each named executive is:
William T. McCormick, Jr., 18.44 years, S. Kinnie Smith, Jr., 16.00 years,
Victor J. Fryling, 18.00 years, Michael G. Morris, 12.86 years, and Alan M.
Wright, 7.52 years.
12
<PAGE> 14
ORGANIZATION AND COMPENSATION COMMITTEE REPORT
Compensation Philosophy
The Corporation's executive compensation program is directed by a committee
composed entirely of independent outside directors. The Committee is responsible
for determining and administering executive compensation policies and plans as
well as reviewing and recommending officer appointments to the Board of
Directors. The Committee also has the responsibility for approving both annual
compensation and awards under the long-term stock ownership programs. Such
programs seek to enhance the profitability of the Corporation and, hence,
shareholder value by aligning the financial interests of the Corporation's
officers with those of its shareholders. In doing so, the Committee relies to a
large degree on incentive compensation including stock-related awards to attract
and retain outstanding officers.
Compensation for Mr. McCormick and the other executive officers consists of
a base salary, which is intended to be at the competitive median of the amounts
paid to senior executives with equivalent positions at other energy companies of
comparable size, and substantial annual and long-term incentive compensation
closely tied to the Corporation's success in achieving earnings, stock
appreciation and other performance goals. The incentive program is also designed
to be competitive with plans of other comparable energy companies and variable
"at risk" compensation is intended to be above median in years when the
corporation meets or exceeds its performance goals.
Annual Compensation
Just prior to the beginning of each fiscal year, the Committee reviews the
base salary of Mr. McCormick and the other executive officers and approves an
annual salary plan for them based on industry, peer group, and national surveys
and judgment as to the past and expected future contributions of each
individual. In the case of Mr. McCormick, such judgment also involves the
Committee's assessment of his past performance and its expectation as to his
future contribution in leading the Corporation.
The annual incentive (bonus) compensation payment, if any, is based on the
Corporation's success in meeting challenging earnings per share goals set by the
Committee at the beginning of each year. In addition individual performance
goals are established for each executive officer for specific financial,
operating and management achievements. For the above-named executive officers,
the performance goals are a composite of the goals set for all other officers.
Following the end of each year, the results on a corporate and individual basis
are reviewed by the Committee to determine the appropriateness of awards. For
1994, because the Corporation substantially met its earnings goal the Committee
granted annual incentive bonuses as shown in the Summary Compensation Table in
accordance with the Corporation's Executive Incentive Compensation Plan. The
Plan has a threshold payout at 80% of the earnings per share goal and a maximum
payout at 120% of goal. Mr. McCormick's award was based on a standard award
under the Plan of 75% of the median for his salary grade, adjusted to reflect
the Committee's judgement as to his leadership performance for the year.
Long-term Compensation
The last element of executive compensation considered by the Committee
during each year is long-term incentive awards in the form of stock options and
restricted stock awards under the Corporation's Performance Incentive Stock
Plan. The Committee believes such awards are desirable in encouraging common
stock ownership by executives, thus linking their interests directly to that of
other shareholders. Therefore, in 1994, the Committee decided to grant stock
options with an exercise price equal to the market price on the date of the
grant to the
13
<PAGE> 15
executive officers as shown in the above charts. Options have been granted
annually usually in respect of approximately the same number of shares. The
Committee believes grants should be made annually on a generally consistent
basis. In determining grants, the Committee weighed a number of factors
including prior grants and corporate performance. The Committee also awarded
performance-based restricted stock which will vest at the rate of 25% per year
beginning after two years, rising to 100% after five years. However, the nominal
restricted stock award will be paid only if the average annual shareholder
return target of 15% is achieved for each three-year performance period. If the
average annual shareholder return is less than the target, the award will be
smaller, and if the return is more than the target, then the award will be
greater.
Compensation Deductibility
The Committee has reviewed the Corporation's Compensation Plans and the
applicability of Section 162(m) of the Internal Revenue Code and proposed
regulations thereunder dealing with federal income tax deductibility for
compensation in excess of $1 million. The Committee believes that because both
are based on performance, awards of stock options and vesting of restricted
stock under the Corporation's Performance Incentive Stock Plan are not
considered compensation under the transitional rules in the proposed regulations
under Section 162(m). In order for payments under these plans to continue to be
deductible after that time, minor amendments to these plans were submitted and
approved at the March 21, 1995 Special Meeting of Shareholders. Because of the
uncertainty associated with the proposed regulations, and the fact that
applicable compensation for the named officers will in the near future not
materially exceed the tax deductible maximum, the Committee will continue to
study the effects of Section 162(m) on the annual bonus awards under the
Corporation's Executive Incentive Compensation Plan.
Compensation Consultant
In connection with its ongoing independent review of executive compensation,
the Committee has retained Hewitt Associates, a recognized compensation and
benefit consultant, to assist the Committee in evaluating the appropriateness
and competitiveness of its compensation policies and programs.
Submitted by the Organization and Compensation Committee: Earl D. Holton
(Chair), William U. Parfet, Robert D. Tuttle, Kenneth Whipple, and John B.
Yasinsky.
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<PAGE> 16
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG CMS ENERGY CORPORATION, S&P 500 INDEX & DOW JONES UTILITY INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD DOW JONES
(FISCAL YEAR COVERED) CMS ENERGY S&P 500 INDEX UTILITY INDEX
<S> <C> <C> <C>
1989 100 100 100
1990 75 97 95
1991 51 126 109
1992 52 136 113
1993 74 150 123
1994 69 152 104
</TABLE>
COMPARISON OF TEN-YEAR CUMULATIVE TOTAL RETURN
AMONG CMS ENERGY CORPORATION, S&P 500 INDEX & DOW JONES UTILITY INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD DOW JONES
(FISCAL YEAR COVERED) CMS ENERGY S&P 500 INDEX UTILITY INDEX
<S> <C> <C> <C>
1984 100 100 100
1985 145 132 128
1986 291 156 161
1987 252 165 170
1988 451 192 196
1989 703 253 260
1990 526 245 249
1991 359 320 286
1992 369 344 296
1993 518 379 323
1994 489 384 273
</TABLE>
Total return assumes reinvestment of dividends.
Fiscal years ending December 31.
Assumes the value of the investment in the Corporation's common stock and
each index was $100 on December 31, 1989 for the five-year chart and December
31, 1984 for the ten-year chart.
15
<PAGE> 17
PROPOSAL FOR APPROVAL OF AMENDMENT TO CMS ENERGY
PERFORMANCE INCENTIVE STOCK PLAN
DESCRIPTION OF THE PLAN
The following description is of the CMS Energy Performance Incentive Stock
Plan (the "Plan") without giving effect to the proposed amendment thereto
described below, except where specifically noted and is qualified in its
entirety by reference to the Plan.
The Plan is administered by the Organization and Compensation Committee of
the Board of Directors (the "Committee"), which is entirely composed of outside
(non-employee) independent members of the Board of Directors. Each officer or
other key executive employee of CMS Energy or its subsidiaries is eligible to
participate. As of December 31, 1994 approximately 31 people were eligible to
participate in the Plan. The Committee selects the participants, determines the
amount of grants and prescribes the other terms and conditions of each award.
The Board of Directors may amend, suspend or terminate the Plan, but no
amendment to the Plan may be made without shareholder approval which increases
the total number shares available under the Plan, changes the Plan's eligibility
requirements or materially increases benefits to eligible employees under the
Plan.
The Board recommends the proposed increase because, since the Plan was first
adopted in 1988, the Corporation has grown and diversified, resulting in a
substantial increase in employees eligible for the Plan. The encouragement of
common stock ownership by executives to link their financial interests with
other shareholders continues to be an important corporate goal which will be
furthered by the proposed increase.
Under the Plan, the Committee may grant to eligible employees share awards
representing a contingent right to receive shares of CMS Energy Common Stock
("Restricted Stock") and/or Incentive Stock Options ("ISOs") intended to qualify
as such under federal tax law and/or Nonqualified Stock Options ("NQOs"). (ISO's
and NQO's are collectively referred to herein as "Options.") Stock Appreciation
Rights ("SAR's") may also be granted in conjunction with ISOs or NQOs.
Shares awarded or subject to Options may not be more the 2% of the
outstanding shares of each class of Common Stock of CMS Energy on January 1 of
any year less the number of shares awarded or subject to Options granted under
the Plan during the previous four years. Any shares or Options which are
forfeited become available to be granted under the Plan. If this proposal is
approved, the 2% of outstanding shares of each class in the above formula would
increase to 3%.
Under the Plan, the exercise price for all Options and SARs is at least 100%
of the fair market value of the related shares on the date of the grant.
Options and SARs may not be transferred other than by will or by the laws of
descent and distribution and, during the lifetime of the optionee may be
exercised only by the optionee. Options and SARs terminate no later than 10
years and one month after the date of the grant.
Except as set forth below, Options and SARs terminate upon the termination
of employment of the optionee with CMS Energy. In the case of a termination of
optionee's employment due to a reason other than the death of the optionee, the
Committee may permit the exercise of Options and SARs for a period of up to one
year after termination or up to three years upon retirement under a Pension Plan
of CMS Energy or one of its subsidiaries (ISOs and related SARs must generally
be exercised within three months of termination of employment unless such
termination was by reason of disability). In the case of a termination of the
optionee's employment by reason of the optionee's death, any Option and related
SAR may be exercised for up to one year following the optionee's death. In
16
<PAGE> 18
no event may an Option or SAR be exercisable subsequent to its expiration date.
Options and SARs may only be exercised after the termination of the optionee's
employment to the extent exercisable on the date of such termination.
Upon the exercise of an Option, a participant may purchase all or a portion
of the optioned shares by paying cash or, with the consent of the Committee,
surrendering Common Stock of CMS Energy already owned by the participant. Upon
the exercise of an SAR, the participant will receive an amount equal to the
difference between the exercise price and the fair market value on the exercise
date. Such amount may be paid in cash, common stock or partly in each. If an SAR
is granted in conjunction with an Option, exercise of the Option reduces the
number of shares as to which the SAR may be exercised and exercise of the SAR
cancels the Option as to such number of shares.
During the period of restriction relating to a grant of Restricted Stock,
the participant has the right to vote the shares, to receive dividends, when
declared for all shareholders, and to exercise other shareholder rights with
respect to the Restricted Stock, except that CMS Energy retains custody of the
stock certificate and, in general, the participant may not transfer the shares.
If a participant's employment is terminated during the restriction period other
than by retirement on or after age 62, or death, all rights to any shares of
Restricted Stock will be forfeited to CMS Energy. However, the Committee may, if
circumstances warrant, approve the distribution of such otherwise forfeitable
shares. Upon the occurrence of a Change in Control (as defined in the Plan) each
award of Restricted Stock becomes fully vested for all award periods that have
not then ended.
CMS Energy believes that under present federal tax laws the grant of Options
or SARs will create no tax consequences for a participant or CMS Energy. An
optionee will have no taxable income upon exercising an ISO (except that the
alternative minimum tax may apply), and CMS Energy will receive no deduction
when an ISO is exercised. After exercise of an NQO or SAR, the participant must
generally recognize ordinary income equal to the difference between the exercise
price and the fair market value of the shares on the date of exercise and CMS
Energy will be entitled to a deduction of the same amount. Participants who are
considered insiders under applicable rules of the Securities and Exchange
Commission recognize income upon exercise of an NQO or SAR provided that the
exercise thereof was at least six months from the date of grant. If the
participant does not dispose of shares acquired pursuant to an ISO within two
years from the date of grant or within one year of the transfer of the shares to
such participant, any gain or loss realized on their subsequent disposition will
be capital gain or loss. If these holding period requirements are not satisfied,
the participant will generally realize ordinary income at the time of
disposition in an amount equal to the lesser of (i) the excess of the fair
market value of the shares on the date of exercise over the option price or (ii)
the excess of the amount realized upon disposition, if any, over the option
price and CMS Energy will be entitled to a corresponding deduction. Generally,
there will be no tax consequence to CMS Energy from dispositions of shares
acquired pursuant to NQOs or SARs.
PLAN BENEFITS
The grant of awards under the Plan is based on future performance as
determined in the discretion of the Committee and accordingly, it is not
possible to determine amounts that will be received thereunder in the future.
Awards under the Plan during 1994 for Messrs. McCormick, Smith, Fryling, Morris,
and Wright are shown in the tables on pages 11 and 12. The restricted stock
shown had a market value at December 31, 1994 of $411,750, $183,000, $251,625,
$205,875, and $125,813 respectively. The executive officers as a group and the
non-executive officer group were awarded stock options for 126,000 and 147,000
shares respectively and restricted stock of 63,000 with a market value at
December 31, 1994, of $1,441,125 and 70,500 shares with a market value of
$1,612,688 respectively.
17
<PAGE> 19
DESCRIPTION OF PROPOSED AMENDMENT
The Board of Directors has approved an amendment to the Plan which would
provide that shares awarded or subject to options may not be more than 3% of the
outstanding shares of each class of Common Stock of CMS Energy on January 1 of
any year less the number of shares awarded or subject to Options granted under
the Plan during the previous four years.
The Board believes that the proposed increase in shares available under the
Plan would give the Organization and Compensation Committee the flexibility to
continue to meet the objective of the Plan, i.e., to link financial interests of
the Corporation's executives with those of other shareholders, consistent with
the substantial increase in participants in the Plan since the Plan was first
implemented in 1988 due to the growth of the Corporation and to provide for
projected future participation resulting from expanding business opportunities.
If the proposal is not approved by the shareholders, the Plan will remain in
effect in its current form.
Approval of this proposal requires the affirmative vote of the holders of a
majority of the shares of common stock present at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE PROPOSAL.
RATIFICATION OF THE APPOINTMENT OF AUDITORS
Subject to the approval of the shareholders, the Board of Directors has
appointed Arthur Andersen LLP, independent public accountants, to audit the
financial statements of the Corporation for the year 1995. Arthur Andersen LLP
also served as the Corporation's auditors for the year 1994. A representative of
Arthur Andersen LLP will be present at the annual meeting of shareholders and
will have an opportunity to make a statement and respond to appropriate
questions.
Approval of the proposal to ratify the appointment of auditors requires the
affirmative vote of the holders of a majority of the shares of common stock
present at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS RATIFICATION OF THE
APPOINTMENT OF AUDITORS
1996 PROXY STATEMENT INFORMATION
A shareholder who intends to submit a proposal for consideration at the 1996
annual meeting pursuant to the applicable rules of the Securities and Exchange
Commission must send the proposal to reach the Corporation's Corporate Secretary
on or before December 18, 1995. The proposals should be addressed to: Mr. Thomas
A. McNish, Secretary, Fairlane Plaza South, Suite 1100, 330 Town Center Drive,
Dearborn, Michigan 48126.
OTHER MATTERS
The Board of Directors does not know of any other matters that might be
presented to the meeting except matters incident to the conduct of the meeting.
However, if any other matters (including matters incident to the conduct of the
meeting) do come before the meeting, it is intended that the holders of the
proxies will vote thereon in their discretion.
18
<PAGE> 20
The cost of solicitation of proxies will be borne by the Corporation and
Consumers. Proxies may be solicited by officers and other employees of the
Corporation and Consumers or their subsidiaries, personally or by telephone,
facsimile or mail. The Corporation and Consumers have arranged for Morrow & Co.,
of 909 Third Ave., New York, New York 10022-4799, to solicit proxies in such
manner, and it is anticipated that the cost of such solicitations will not
exceed $25,000, plus incidental expenses. The Corporation and Consumers may also
reimburse brokers, dealers, banks, voting trustees or other record holders for
postage and other reasonable expenses of forwarding the proxy material to the
beneficial owners of shares of stock held of record by such brokers, dealers,
banks, voting trustees or other record holders.
- - - - -
PLEASE MARK, SIGN AND MAIL THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE
NO POSTAGE STAMP NECESSARY IF MAILED IN THE UNITED STATES
19
<PAGE> 21
[Form of Common Stock Proxy - Side 1]
[LOGO: "CMS Energy"] COMMON STOCK PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS
The undersigned appoints W. T. MC CORMICK, JR. and T. A. MC NISH, and each of
them, proxies with full power of substitution, to vote on behalf of the
undersigned at the annual meeting of shareholders of CMS Energy Corporation to
be held at the Dearborn Inn, 20301 Oakwood Boulevard, Dearborn, Michigan on May
26, 1995 and at any adjournment or adjournments thereof. Said proxies, and
each of them present and acting at the meeting, may vote upon the matters set
forth on the reverse side hereof and with discretionary authority on all other
matters that come before the meeting; all as more fully set forth in the Proxy
Statement received by the undersigned. The shares represented hereby will be
voted on the proposals as specified. IF THIS PROXY IS RETURNED SIGNED BUT NOT
COMPLETED, IT WILL BE VOTED IN FAVOR OF THE ELECTION OF DIRECTORS, THE
RATIFICATION OF APPOINTMENT OF AUDITORS, AND THE PROPOSAL TO AMEND THE
PERFORMANCE INCENTIVE STOCK PLAN.
PLEASE VOTE, SIGN AND DATE THIS
PROXY ON THE REVERSE SIDE AND
RETURN IT IN THE ENCLOSED ENVELOPE.
Thank you for your prompt response.
[Form of Common Stock Proxy - Side 2]
PLEASE VOTE, SIGN AND DATE BELOW
/----------------------------------------------------------------------------/
/ [ ] TO VOTE AS RECOMMENDED by the Board of Directors on all items, /
/ MARK THIS BOX, SIGN, DATE AND RETURN THIS PROXY. (No additional /
/ boxes need be marked. If additional boxes are marked, this box /
/ will take precedence.) /
/----------------------------------------------------------------------------/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 and 3.
(1) ELECTION OF DIRECTORS
[ ] FOR all nominees listed below (except as indicated below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
William T. McCormick, Jr., James D. Duderstadt, Kathleen R Flaherty,
Victor J. Fryling, Earl D. Holton, Lois A. Lund, Frank H. Merlotti,
William U Parfet, Percy A. Pierre, S. Kinnie Smith, Jr., Kenneth
Whipple and John B. Yasinsky
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
________________________________________________________________________________
(2) Ratification of appointment of
auditors PLEASE SIGN, DATE AND
[ ] FOR [ ] AGAINST [ ] ABSTAIN RETURN THIS PROXY IN
THE ENCLOSED ENVELOPE.
No postage is needed
if mailed in the
United States.
(3) Proposal to amend the CMS Energy
Performance Incentive Stock Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Signed______________________
Dated_________________, 1995
<PAGE> 22
[Form of Employee Benefit Plans Proxy - Side 1]
[LOGO: "CMS ENERGY"] EMPLOYEE BENEFIT PLANS OF CONSUMERS POWER
COMPANY COMMON STOCK VOTING INSTRUCTIONS
SOLICITED BY THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS
The undersigned instructs the Plans trustees, or their nominees, to appoint W.
T. MC CORMICK, JR. AND T. A. MC NISH and each of them, proxies with full power
of substitution, to vote on behalf of the shares held by the undersigned in the
Employee Benefit Plans at the annual meeting of shareholders of CMS Energy
Corporation to be held at the Dearborn Inn, 20301 Oakwood Boulevard, Dearborn,
Michigan on May 26, 1995 and at any adjournment or adjournments thereof. Said
proxies, and each of them present and acting at the meeting, may vote upon the
matters set forth on the reverse side hereof and with discretionary authority
on all other matters that come before the meeting; all as more fully set forth
in the Proxy Statement received by the undersigned. The shares represented
hereby will be voted on the proposals as specified. IF THIS PROXY IS RETURNED
SIGNED BUT NOT COMPLETED, IT WILL BE VOTED IN FAVOR OF THE ELECTION OF
DIRECTORS, THE RATIFICATION OF APPOINTMENT OF AUDITORS, AND THE PROPOSAL TO
AMEND THE PERFORMANCE INCENTIVE STOCK PLAN.
PLEASE VOTE, SIGN AND DATE THESE
INSTRUCTIONS ON THE REVERSE
SIDE AND RETURN IT IN THE
ENCLOSED ENVELOPE.
Thank you for your prompt response.
[Form of Employee Benefits Plans Proxy - Side 2]
PLEASE VOTE, SIGN AND DATE BELOW
/-----------------------------------------------------------------------/
/ [ ] TO VOTE AS RECOMMENDED by the Board of Directors on all items, /
/ MARK THIS BOX, SIGN, DATE AND RETURN THIS PROXY. (No additional /
/ boxes need be marked. If additional boxes are marked, this box /
/ will take precedence.) /
/-----------------------------------------------------------------------/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 and 3.
(1) ELECTION OF DIRECTORS
[ ] FOR all nominees listed below (except as indicated below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
William T. McCormick, Jr., James D. Duderstadt, Kathleen R Flaherty,
Victor J. Fryling, Earl D. Holton, Lois A. Lund, Frank H. Merlotti,
William U Parfet, Percy A. Pierre, S. Kinnie Smith, Jr., Kenneth
Whipple and John B. Yasinsky
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
________________________________________________________________________________
(2) Ratification of appointment of
auditors PLEASE SIGN, DATE AND
[ ] FOR [ ] AGAINST [ ] ABSTAIN RETURN THESE INSTRUCTIONS
IN THE ENCLOSED ENVELOPE.
No postage is needed
if mailed in the
United States.
(3) Proposal to amend the CMS Energy
Performance Incentive Stock Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Signed______________________
Dated_________________, 1995
