<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
MCN CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(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(j)(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
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/ / 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
NOTICE OF 1995
ANNUAL MEETING
AND
PROXY STATEMENT
MCN Corporation
<PAGE> 3
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Letter from the Chairman............................................................. 3
Notice of 1995 Annual Meeting of Shareholders........................................ 4
Proxy Statement...................................................................... 5
Proposal 1 -- Election of Directors................................................ 5
Meetings and Committees of the MCN Board........................................... 10
Beneficial Security Ownership of Directors, Nominees and Executive Officers........ 11
Compensation of Directors and Executive Officers................................... 12
Directors' Compensation......................................................... 12
Executives' Compensation........................................................ 13
Other Compensation Matters...................................................... 14
Report of the Compensation Committee of The Board of Directors on Executive
Compensation.................................................................... 18
Performance Graph.................................................................. 23
Proposal 2 -- Approval to amend the MCN Corporation Stock Incentive Plan to
Increase the number of shares of MCN Common Stock authorized to be
issued under the Plan................................................ 24
Proposal 3 -- Selection of Auditors................................................ 25
Other Proxy Matters................................................................ 25
</TABLE>
<PAGE> 4
Alfred R. Glancy III
Chairman, President and Chief Executive Officer
MCN Corporation 500 Griswold Street
Detroit, Michigan 48226
[MCN LOGO]
March 2, 1995
To our Shareholders:
You are cordially invited to attend the 1995 Annual Meeting
of Shareholders of MCN Corporation which will be held at the
Company's headquarters in Detroit, Michigan on Thursday, April 27,
1995 at 1:00 p.m. Eastern Daylight Saving Time. The business items
to be acted on during the Annual Meeting are listed in the Notice
of Annual Meeting and are described more fully in the Proxy
Statement.
If you plan to attend the meeting, please mark the
appropriate box on the proxy card to request an attendance card
for the Annual Meeting. Whether or not you plan to attend, you can
be sure your shares are represented at the meeting by promptly
completing, signing, dating and returning your proxy card in the
enclosed postage-paid envelope.
Along with the other members of the Board of Directors, I
look forward to the opportunity of greeting personally those
shareholders who are able to attend the Annual Meeting.
Sincerely,
/s/ A. R. Glancy
3
<PAGE> 5
NOTICE OF MCN CORPORATION'S 1995 ANNUAL MEETING OF SHAREHOLDERS
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1:00 p.m., April 27, 1995
Guardian Building, 32nd Floor Auditorium
500 Griswold St.
Detroit, Michigan 48226
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March 2, 1995
To our Shareholders:
MCN Corporation's 1995 Annual Meeting of shareholders will be held at the
Company's headquarters in the Guardian Building, 32nd Floor Auditorium, 500
Griswold Street, Detroit, Michigan on Thursday, April 27, 1995 at 1:00 p.m.,
Eastern Daylight Saving Time. Shareholders will act on the following matters:
(1) To elect four directors to serve for terms of three years each;
(2) To approve an amendment to the MCN Corporation Stock Incentive Plan to
increase the number of shares of MCN Common Stock authorized to be
issued under the plan;
(3) To ratify the appointment of Deloitte & Touche LLP as independent
auditors for the year ending December 31, 1995; and
(4) To transact such other business as may properly come before the Annual
Meeting, or any adjournments thereof.
Shareholders of record at the close of business on February 27, 1995 are
entitled to receive notice of and to vote at the Annual Meeting.
You are cordially invited to attend the Annual Meeting in person.
Regardless of whether you expect to attend the Annual Meeting in person, your
Board of Directors urges you to vote, sign, date and return the accompanying
proxy card in the enclosed postage-paid envelope.
By Order of the Board of Directors,
[SIGNATURE]
DANIEL L. SCHIFFER
Vice President, General Counsel
and Secretary
4
<PAGE> 6
[LOGO]
PROXY STATEMENT
The Board of Directors of MCN Corporation (the "MCN Board") solicits your
proxy for use at the Annual Meeting of Shareholders of MCN Corporation ("MCN" or
the "Company") to be held on Thursday, April 27, 1995 at 1:00 p.m., and at any
adjournments. This Proxy Statement and a proxy card are scheduled to be mailed
to shareholders beginning on March 3, 1995.
As of February 27, 1995, the record date for determination of shareholders
entitled to notice of and to vote at the Annual Meeting, there were 59,986,300
outstanding shares of MCN common stock, $.01 par value ("MCN Common Stock").
Each outstanding share is entitled to one vote on all matters which may come
before the Annual Meeting.
You can ensure that your shares are voted at the Annual Meeting by
completing, signing, dating and returning the accompanying proxy card in the
enclosed postage-paid envelope. Sending in a signed proxy will not affect your
right to attend the Annual Meeting and vote. A shareholder who gives a proxy may
revoke it at any time before it is exercised by notifying the Secretary of MCN
in writing before the proxy is exercised, or by delivering to the Secretary of
MCN a proxy bearing a later date, or by attending the Annual Meeting and voting
in person.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The MCN Board consists of ten members divided into three classes, with the
term of each director expiring at the Annual Meeting of MCN in the year
indicated below. Generally, one-third of the MCN Board is elected each year.
Unless otherwise instructed on the proxy card, the proxy holders intend to
vote for the election of Thomas H. Jeffs II, Arthur L. Johnson, Dale A. Johnson
and William K. McCrackin to three-year terms as directors. Each of the nominees
is a current member of the MCN Board. The MCN Board believes that, if elected,
each nominee will be able and willing to serve. However, if any nominee should
be unable or unwilling to serve as a director, the MCN Board may select a
substitute nominee and, in that event, the proxy will be voted for the person so
selected. The remaining six directors will continue to serve in accordance with
their previous elections.
Information concerning the four directors nominated for a term of three
years, and the six continuing MCN Board members, is set forth on pages 6 through
9.
5
<PAGE> 7
NOMINEES FOR ELECTION AS DIRECTORS FOR THREE-YEAR TERMS TO EXPIRE IN 1998
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THOMAS H. JEFFS II, 56, DIRECTOR SINCE 1991
[PHOTO] Member: Compensation Committee, Corporate Responsibility
Committee
Attendance: 83% of Board and Committee Meetings
Mr. Jeffs has been President and Chief Operating Officer of NBD
Bancorp, Inc. and its principal subsidiary, NBD Bank, since
January 1994. He previously served as Vice Chairman of NBD
Bancorp, Inc. and NBD Bank from 1985 through December 1993. Mr.
Jeffs is a Director of NBD Bancorp, Inc., NBD Bank, and
MasterCard International, Inc.
He is a Director and Executive Committee member of the Highway Users Federation.
He is also a Director of New Detroit, Inc. and The Economic Club of Detroit. Mr.
Jeffs serves as Vice Chairman and a member of the Executive Committee of the
Detroit Symphony Orchestra Hall, Inc. He is a member of the Visiting Committee
of the University of Michigan, School of Business Administration and The
Bankers' Roundtable.
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ARTHUR L. JOHNSON, 69, DIRECTOR SINCE 1988
[PHOTO] Member: Audit Committee, Corporate Responsibility Committee
Attendance: 100% of Board and Committee Meetings
Mr. Johnson has been Senior Vice President for University
Relations at Wayne State University ("WSU") since 1992 and has
been a tenured Professor of Educational Sociology since 1972. He
was Vice President for Community Relations at WSU from 1979 to
1992.
Mr. Johnson is the Treasurer and a Director of Comprehensive
Health Services of Detroit and Vice Chairman of New Detroit,
Inc. He is a Trustee of the Founders Society of the Detroit Institutes of Arts.
Mr. Johnson is also a Director of the Detroit Symphony Orchestra Hall, Inc.,
American Symphony Orchestra League, Public Broadcasting Service and Detroit
Public Television.
6
<PAGE> 8
NOMINEES FOR ELECTION AS DIRECTORS FOR THREE-YEAR TERMS TO EXPIRE IN 1998
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DALE A. JOHNSON, 57, DIRECTOR SINCE 1992
[PHOTO] Chairman: Compensation Committee
Member: Finance Committee
Attendance: 92% of Board and Committee Meetings
Mr. Johnson has been Chairman and Chief Executive Officer of SPX
Corporation since 1991. He previously served as President and
Chief Executive Officer of SPX Corporation from 1990 to 1991,
and as its President and Chief Operating Officer
from 1988 to 1990. SPX Corporation designs, manufactures and
markets specialty service tools and engineered components for
the global motor vehicle industry.
Mr. Johnson is a Director of SPX Corporation and Douglas & Lomason Company. He
is the past Chairman of the Motor Equipment Manufacturing Association, Chairman
of the Michigan Manufacturing Association and a Trustee of the Muskegon County
Community Foundation.
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WILLIAM K. MCCRACKIN, 61, DIRECTOR SINCE 1988
[PHOTO] Attendance: 100% of Board Meetings
Mr. McCrackin has been Vice Chairman and Chief Financial Officer
of MCN since August 1988 and Treasurer from August 1988 to
September 1992. Mr. McCrackin served as Vice Chairman of
Michigan Consolidated Gas Company ("MichCon") from 1986 until
September 1992 and as Chief Financial Officer of MichCon from
1985 until September 1992. He has been a Director of MCN
Investment Corporation ("MCNIC") since 1988 and a Director of MichCon since
1984.
Mr. McCrackin is currently a Trustee and Chairman of the Detroit Science Center.
He is a Director and Vice Chairman of Junior Achievement of Southeastern
Michigan and a life member of the NAACP. Mr. McCrackin is also a Director of the
Greater Detroit Capital Corporation and the United Way for Southeastern
Michigan.
7
<PAGE> 9
CONTINUING DIRECTORS WHOSE TERM EXPIRES IN 1997
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ALFRED R. GLANCY III, 57, DIRECTOR SINCE 1988
[PHOTO] Attendance: 100% of Board Meetings
Mr. Glancy has been Chairman and Chief Executive Officer of MCN
since August 1988 and President since September 1992. He has
been Chairman of MCNIC since 1988. Mr. Glancy has been Chairman
of MichCon since 1984 and served as its Chief Executive Officer
from 1984 until September 1992. He has been a Director of
MichCon since 1981. Mr. Glancy is also a Director of MLX Corp.,
NBD Bancorp, Inc. and NBD Bank.
Mr. Glancy is Chairman of The Detroit Medical Center, Detroit Renaissance, Inc.
and Detroit Symphony Orchestra Hall, Inc. He is a Vice Chairman of the United
Way for Southeastern Michigan and Trustee of the Founders Society of the Detroit
Institute of Arts. He is also a Director of Detroit Economic Growth Corporation,
American Gas Association, Community Foundation for Southeastern Michigan, New
Detroit, Inc., Citizens Research Council of Michigan, Greater Detroit Chamber of
Commerce, Michigan Cancer Foundation and the Hudson-Webber Foundation. He is
Vice Chairman of UNICO Investment in Seattle, Washington.
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FRANK M. HENNESSEY, 56, DIRECTOR SINCE 1988
[PHOTO] Chairman: Audit Committee
Member: Finance Committee
Attendance: 100% of Board and Committee Meetings
Mr. Hennessey has been President, Chief Executive Officer and
Director since December 1990 of Emco Limited, a leading Canadian
manufacturer and distributor of plumbing-related products,
roofing and other building products. He is also a
Vice President for Strategic Planning at Masco Corporation. In
addition, Mr. Hennessey is the former President, Chief Executive
Officer and Director of the Handleman Company, having served as President and
Director from 1981 to December 1989 and Chief Executive Officer from March 1988
to December 1989.
Mr. Hennessey is a Trustee and Treasurer of the Hudson-Webber Foundation and a
Director of New Detroit, Inc. Mr. Hennessey is a Director of the United Way for
Southeastern Michigan; Habitat for Humanity, Canada; and the Citizens Research
Council of Michigan as well as a member of the Board and Treasurer of the
Greater Detroit and Windsor Japan-America Society.
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HOWARD F. SIMS, 61, DIRECTOR SINCE 1988
[PHOTO] Chairman: Corporate Responsibility Committee
Member: Finance Committee
Attendance: 100% of Board and Committee Meetings
Mr. Sims is Chairman and Chief Executive Officer of Sims-Varner
& Associates, Inc., an architectural design firm, and has been a
practicing architect since 1963. He is Chairman of SV
Corporation of Detroit. Mr. Sims serves as a Director of
Comerica Incorporated.
Mr. Sims is a Director of NICO Ventures, Citizens Research Council of Michigan,
Greater Detroit Area Health Council, Detroit Economic Growth Corporation and the
United Way of Southeast Michigan. He is a Trustee of the Kellogg Foundation,
Michigan Cancer Foundation, Oakland University and WTVS. Mr. Sims is a member of
the Executive Board of the Detroit Area Council, Boy Scouts of America; and a
life member of the NAACP.
8
<PAGE> 10
CONTINUING DIRECTORS WHOSE TERM EXPIRES IN 1996
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STEPHEN E. EWING, 51, DIRECTOR SINCE 1988
[PHOTO] Attendance: 100% of Board Meetings
Mr. Ewing has been President of MichCon since 1985, Chief
Executive Officer since September 1992 and Chief Operating
Officer from 1985 to September 1992. He previously served as
President and Chief Operating Officer of MCN from August 1988 to
September 1992. Mr. Ewing has been a Director of MichCon since
1984.
Mr. Ewing is the Chairman of United Way's Capital Fund Committee and past
Chairman of the Metropolitan Affairs Corporation and the Midwest Gas
Association. He is a board member of the Michigan First, Michigan Opera Theater
and United Way's Advisory Board. Mr. Ewing is also a member of Leadership
Detroit, Boy Scouts of America's Detroit Area Advisory Council, and a life
member of the NAACP.
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ROGER FRIDHOLM, 54, DIRECTOR SINCE 1988
[PHOTO] Chairman: Finance Committee
Member: Audit Committee
Attendance: 93% of Board and Committee Meetings
Mr. Fridholm has been President of the St. Clair Group, a
private investment company, since 1991. He previously served as
President and Chief Executive
Officer of Of Counsel, Enterprises, Inc. from February through
July 1994 and as Senior Vice President of Corporate Development
of Kelly Services, Inc. from March 1992 through January 1994. He was President
and Chief Operating Officer of The Stroh Brewery Company from 1979 to 1991.
Mr. Fridholm serves as a Director of The Stroh Brewery Company, Comerica
Bank-Detroit, and the Dana Corporation. He is also a Trustee of the Henry Ford
Health System.
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HELEN O. PETRAUSKAS, 51, DIRECTOR SINCE 1990
[PHOTO] Member: Audit Committee, Compensation Committee
Attendance: 93% of Board and Committee Meetings
Ms. Petrauskas has been Vice President for Environmental and
Safety Engineering with Ford Motor Company since 1983. She is a
Director of The Sherwin-Williams Company and the International
Institute of Detroit and a member of the
Society of Automotive Engineers. Ms. Petrauskas is also on the
Advisory Boards of the Center for Risk Analysis, Harvard School
of Public Health, and Resources for the Future in Washington, D.C.
9
<PAGE> 11
MEETINGS AND COMMITTEES OF THE MCN BOARD
The MCN Board held eight regular meetings and two special meetings during
1994. A majority of directors attended all meetings of the Board. The MCN Board
has the following standing committees.
AUDIT COMMITTEE -- The Audit Committee, which held three meetings during
1994, recommends to the MCN Board the selection of independent auditors; reviews
the scope of audit procedures and the results of the respective audits and
recommendations to management; reviews auditors' fees, annual financial
statements, adequacy of internal audit procedures and results of those
procedures; and reviews MCN's policies relating to business conduct.
COMPENSATION COMMITTEE -- The Compensation Committee held one meeting
during 1994. Subject to MCN Board approval, the Compensation Committee
establishes the salaries and other direct compensation for officers of MCN,
MichCon and MCNIC; and reviews the salary policies for other officers,
management and supervisory personnel.
FINANCE COMMITTEE -- The Finance Committee held two meetings during 1994.
The Finance Committee reviews and consults with management and makes
recommendations to the MCN Board regarding the financial affairs of MCN and its
subsidiaries, including the review of financial plans, recommendations regarding
the timing and amount of securities to be issued, and investment policies of the
trusteed benefit plans and other corporate funds.
CORPORATE RESPONSIBILITY COMMITTEE -- The Corporate Responsibility
Committee, which held two meetings during 1994, consults with management
regarding corporate contributions and contributions from the MichCon Foundation,
reviews and recommends to the MCN Board an annual corporate contribution budget,
and conceives and recommends programs to assure that MCN and its subsidiaries
carry out their respective corporate responsibilities in an effective and
efficient manner.
10
<PAGE> 12
BENEFICIAL SECURITY OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table includes MCN Common Stock and stock-based holdings, as
of February 27, 1995, of the Company's chief executive officer and its four most
highly-compensated executive officers in 1994 (collectively, the "Named
Executive Officers") and its directors.
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COMMON STOCK AND TOTAL STOCK-BASED HOLDINGS
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<TABLE>
<CAPTION>
COMMON STOCK
OWNERSHIP
--------------------- STOCK
NAME AMOUNT(1) PERCENT EQUIVALENTS(2) TOTAL
- ------------------------------------------------- --------- ------- -------------- -------
<S> <C> <C> <C> <C>
Alfred R. Glancy III............................. 276,733(3) .5% 103,086 379,819
Rai P. K. Bhargava............................... 26,299(3) * 42,360 68,659
Stephen E. Ewing................................. 46,029(3) .1% 57,000 103,029
William K. McCrackin............................. 45,106(3) .1% 52,340 97,446
Daniel L. Schiffer............................... 18,220(3) * 27,600 45,820
Roger Fridholm................................... 10,600(4) * -- 10,600
Frank M. Hennessey............................... 8,895 * -- 8,895
Thomas H. Jeffs II............................... 2,000 * -- 2,000
Arthur L. Johnson................................ 1,241 * -- 1,241
Dale A. Johnson.................................. 2,600 * -- 2,600
Helen O. Petrauskas.............................. 647 * -- 647
Howard F. Sims................................... 1,652 * -- 1,652
Directors and executive officers as a group...... 440,022 .7% 282,386 722,408
</TABLE>
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* Less than 0.1%
(1) This column lists voting securities, including shares of restricted stock in
which the beneficial owners have voting power but do not have investment
power until the shares vest. In many instances, voting power and investment
power are shared with another as joint tenants.
(2) This column includes the non-voting common stock equivalents, such as
performance units and deferred stock units under the MCN Corporation
Mandatory Deferred Compensation Plan.
(3) Includes shares held in the MichCon Savings and Stock Ownership Plan (the
"Savings Plan"). The beneficial owners of the shares have sole voting power
on all shares. Beneficial owners have investment power on all shares except
those purchased by MCN and held as restricted under provision of the Savings
Plan.
(4) Includes 3,200 shares held in the St. Clair Charitable Trust, of which Roger
Fridholm is a Trustee. Mr. Fridholm has shared voting and investment power
on these shares.
11
<PAGE> 13
EXECUTIVE STOCK OWNERSHIP GUIDELINES
In 1995, the Compensation Committee of the MCN Board approved stock
ownership guidelines for all executives and external directors to formalize its
policy of encouraging share ownership by officers and directors. The guidelines
require the Chairman & CEO to own stock with a value at least five times annual
salary. Other executive and director stock ownership guidelines range from one
to three times salary or retainer fee, depending on their level, with the
expectation that the shares required to at least minimally meet the guidelines
will be acquired over a period of five years. At February 27, 1995, 58% of the
Named Executive Officers and directors meet or exceed the guidelines. The
comparable percentage for all MCN, MichCon and MCNIC officers and directors is
79%. The average stockholdings at February 27, 1995 for the Named Executive
Officers and directors as a multiple of salary or retainer fee is 5.3 times. The
comparable relationship for all MCN, MichCon and MCNIC officers and directors is
4.4 times at February 27, 1995.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS' COMPENSATION
Officers of MCN or its subsidiaries who serve on the MCN Board do not
receive any additional compensation for service as directors. However, directors
of MCN who are not employees of MCN or its subsidiaries ("Non-officer
Directors") receive an annual fee of $18,000. In addition, MCN's Non-officer
Directors receive 200 restricted shares of MCN Common Stock annually.
Non-officer Directors are also paid a fee of $750 for attendance at each MCN
Board and committee meeting. Non-officer Directors are eligible to participate
in a plan which provides for deferral of all or part of their annual fee, with
interest accrued on amounts deferred. The deferral plan also includes a pre-
retirement survivor benefit which provides the participant's beneficiary with a
payment equal to the present value of any deferrals that would have been made
prior to normal retirement. It is anticipated that future increases in
Non-officer Director compensation will be primarily through additional
restricted shares of MCN Common Stock.
Non-officer Directors also participate in the Supplemental Death Benefit
and Retirement Income Plan. Under the plan, if a Non-officer Director dies while
in office, the director's surviving spouse is entitled to a lump-sum payment of
$100,000. This plan also provides that in the event a Non-officer Director holds
office until reaching age 65 and thereafter ceases to hold office, the director
can elect to receive either (i) a supplemental retirement benefit of $10,000
annually for each of the ten years following the date the director ceased to
hold office, or (ii) a postretirement death benefit of $100,000 payable solely
to the director's surviving spouse upon the director's death.
12
<PAGE> 14
EXECUTIVES' COMPENSATION
The following table sets forth the aggregate compensation paid or awarded
for performance from 1992 through 1994 to the Named Executive Officers of MCN.
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SUMMARY COMPENSATION TABLE
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<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) ALL OTHER
-------------------------- COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(2) ($)(3)
- -------------------------------------------------------- ---- --------- ----------- ---------------
<S> <C> <C> <C> <C>
A. R. GLANCY III........................................ 1994 445,000 268,000 26,700
Chairman, President, & Chief 1993 430,000 166,900 22,933
Executive Officer 1992 421,250 180,600 21,063
S. E. EWING............................................. 1994 319,375 112,200 15,969
President & Chief 1993 310,000 104,900 15,500
Executive Officer, MichCon 1992 295,000 111,600 14,750
W. K. MCCRACKIN......................................... 1994 280,625 130,000 16,837
Vice Chairman & 1993 275,000 91,500 14,666
Chief Financial Officer 1992 272,000 99,000 13,600
R. P. K. BHARGAVA....................................... 1994 190,000 175,000 8,750
President & Chief 1993 164,000 61,000 7,721
Executive Officer, MCNIC 1992 142,700 41,300 7,300
D. L. SCHIFFER.......................................... 1994 165,525 65,000 8,712
Vice President, 1993 158,650 44,400 7,901
General Counsel & Secretary 1992 152,075 41,300 7,505
</TABLE>
- -------------------------
(1) Includes amounts received or deferred.
(2) Amounts under the MCN Corporation Annual Performance Plan are shown for the
year upon which performance is measured. They are paid in February or March
of the subsequent year.
(3) Amounts shown in this column represent the Company's contributions to
defined contribution plans.
Note: The following table reflects the aggregate restricted stock holdings, from
previous years awards, for the Named Executive Officers, the value of the
aggregate shares as of the date of grant and as of December 31, 1994, and
the number of shares that vested in 1994:
<TABLE>
<CAPTION>
NON-VESTED SHARES AT
DECEMBER 31, 1994
---------------------------------------
VALUE -- VALUE -- SHARES(#)
AGGREGATE DATE OF DECEMBER 31, VESTED
SHARES(#) GRANT($) 1994($) IN 1994
--------- ---------- ------------ ---------
<S> <C> <C> <C> <C>
A. R. Glancy III................ 39,000 $ 414,125 $ 702,000 20,000
S. E. Ewing..................... 27,300 289,888 491,400 14,000
W. K. McCrackin................. 25,740 273,323 463,320 13,200
R. P. K. Bhargava............... 7,800 82,825 140,400 4,000
D. L. Schiffer.................. 7,800 82,825 140,400 4,000
Executive officers as a group... 107,640 1,142,986 1,937,520 55,200
</TABLE>
This table does not include the performance units awarded under the
Company's long-term incentive plan described on page 14.
13
<PAGE> 15
Beginning with the 1992 performance year, the Company revised its Stock
Incentive Plan replacing restricted stock awards with performance units.
Performance units are awarded in February subsequent to the year upon which
performance is measured. Performance units awarded for the 1994 performance year
to the Named Executive Officers are indicated in the table below.
- --------------------------------------------------------------------------------
LONG-TERM INCENTIVE PLAN -- AWARDS FOR THE YEAR 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERFORMANCE
OR OTHER ESTIMATED FUTURE PAYOUTS UNDER
PERIOD NON-STOCK PRICE-BASED PLANS
UNTIL -------------------------------
NUMBER OF MATURATION THRESHOLD TARGET MAXIMUM
NAME UNITS(#) OR PAYOUT (#) (#) (#)
----------------------- --------- ----------- --------- ------ --------
<S> <C> <C> <C> <C> <C>
A. R. Glancy III....... 32,000 3 years 0 32,000 64,000
S. E. Ewing............ 18,000 3 years 0 18,000 36,000
W. K. McCrackin........ 16,000 3 years 0 16,000 32,000
R. P. K. Bhargava...... 14,000 3 years 0 14,000 28,000
D. L. Schiffer......... 10,000 3 years 0 10,000 20,000
</TABLE>
Each performance unit is equivalent to a share of MCN Common Stock. The
performance units initially granted are based on MCN's total shareholder return
for the previous three years compared to the total shareholder return for a
group of peer companies (identified in footnote 1 of the Report of the
Compensation Committee on page 18) over the same period. Once initially granted,
regular dividend equivalents are paid on those performance units. The initial
grants are adjusted upward or downward after a three year period based on MCN's
total shareholder return for this subsequent period compared to the total
shareholder return for a group of peer companies over the same period. The final
grant, which is expected to be paid 50% in cash and 50% in MCN Common Stock,
will range from zero to 200% of the initial grant and the stock must be held,
except for extraordinary circumstances, so long as the recipient is employed by
the Company.
OTHER COMPENSATION MATTERS
CHANGE OF CONTROL EMPLOYMENT AGREEMENTS
MCN entered into Change of Control Employment Agreements with its Named
Executive Officers and other officers during 1990. Change of control is defined
in the agreements as any of the following: (1) the acquisition of beneficial
ownership of 20% or more of the outstanding voting securities of the Company,
(2) the appointment or election of new directors to the Company's Board which
causes the existing directors to no longer constitute at least a majority of the
Company's Board, (3) a reorganization, merger or consolidation in which the
beneficial owners of the outstanding voting securities have a beneficial
interest of less than 60% of the common stock or outstanding voting securities
of the corporation resulting from such reorganization, merger or consolidation,
or (4) a complete liquidation or dissolution of the Company. The agreements
generally have a term of three years beginning with the change of control,
obligate the officer to continue to serve MCN in the officer's then current
capacity, require MCN to compensate the officer in an amount at least equal to
the officer's base salary plus the average annual bonus paid to the
14
<PAGE> 16
officer during the preceding three years and provide for the vesting of various
unfunded benefits. These unfunded benefits include the Supplemental Retirement
Plan discussed on page 16, the Supplemental Death Benefit and Retirement Income
Plan discussed on page 17 and the Supplemental Savings Plan, which permits
certain key executives to defer income and be credited with matching
contributions to the extent that would otherwise be permitted under the Savings
Plan but for limitations imposed by Federal tax law on tax-qualified savings
plans. The agreements also provide for the grossed-up payment of any Federal
excise taxes due from the executive as a result of any payments received under
the agreement and provide three years of continued participation in MCN's
benefit and retirement programs. MCN's obligations to the officer, including the
obligation to pay base salary and any bonuses, can only be extinguished if the
officer's employment is terminated by MCN for "good cause" or by the officer
without "good reason" both as defined in the agreements, or by death or
disability.
SPECIAL RETENTION AGREEMENT
Early in 1995, the MCN Board authorized an eight year retention agreement
with Mr. Bhargava, the President and Chief Executive Officer of MCNIC. Mr.
Bhargava is the executive officer who is expected to manage and grow the
Company's diversified business ("Diversified Services") in order to produce a
significant portion of the growth in shareholder value inherent in the Company's
strategic direction. The retention agreement is intended to encourage the
attainment of short-term and long-term financial goals and discourage
alternative offers of employment. Recognizing the entrepreneurial nature of
Diversified Services, the agreement is also intended to provide Mr. Bhargava
with the economic equivalent of an equity stake in its affairs.
Specifically, Mr. Bhargava will receive annual restricted stock awards
equivalent to 5% of the net income that is in excess of the threshold return on
equity ("ROE"), but less than the target ROE, plus 3% of net income in excess of
the target ROE. If earnings are below the threshold ROE levels, then no award is
paid. In 1995, the threshold and target ROE levels are 11% and 14%,
respectively, and 12% and 15%, thereafter. Annual awards are limited to 1.5% of
net income and total awards payable under the agreement are limited to
$4,000,000, subject to increase at the discretion of the MCN Board. Dividends
will be paid on the shares of restricted stock awarded and the shares will vest
at the end of eight years.
The awards of restricted stock are generally forfeitable if Mr. Bhargava
leaves the Company prior to the end of the contract term. The restricted shares
awarded immediately vest under specified circumstances, including Mr. Bhargava's
death, permanent disability, or involuntarily termination without cause.
INDEBTEDNESS OF MANAGEMENT
In order to encourage executives to maintain their holdings in shares
purchased under the MCN Stock Option Plan, which was replaced by the MCN Stock
Incentive Plan in May 1989, the Company provided loans at an interest rate in
accordance with IRS guidelines based on the market yield of U.S. short-term
marketable securities. Pursuant to this provision, Mr. Glancy initiated a loan
in conjunction with the exercise of stock options in 1992. The loan, at the then
current interest rate of 4.43%, covered a maximum outstanding amount of
$1,159,738, including interest, during 1994. A balance of $1,053,598, including
interest, was outstanding as of December 31, 1994. The loan is secured by
169,628 shares of MCN Common Stock with a year-end market value of $3,053,304.
15
<PAGE> 17
RETIREMENT PLANS
- --------------------------------------------------------------------------------
PENSION PLAN TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL RETIREMENT BENEFIT FOR YEARS OF SERVICE
--------------------------------------------------------------------
FINAL AVERAGE 15 20 25 30 35 40
ANNUAL EARNINGS YEARS YEARS YEARS YEARS YEARS YEARS
- --------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$150,000.................... $ 41,000 $ 54,700 $ 68,400 $ 82,100 $ 95,700 $105,700
200,000.................... 54,800 73,000 91,300 109,500 127,800 141,000
250,000.................... 68,500 91,300 114,100 137,000 159,800 176,400
300,000.................... 82,200 109,600 137,000 164,400 191,800 211,700
350,000.................... 95,900 127,900 159,900 191,900 223,800 247,100
400,000.................... 109,700 146,200 182,800 219,300 255,900 282,400
450,000.................... 123,400 164,500 205,600 246,800 287,900 317,800
500,000.................... 137,100 182,800 228,500 274,200 319,900 353,100
550,000.................... 181,300 241,800 276,100 301,600 351,900 388,500
600,000.................... 197,800 263,800 301,300 329,100 383,900 423,800
</TABLE>
RETIREMENT PLANS. All salaried employees of MCN and certain of its
subsidiaries (the "Participating Companies") participate in a noncontributory,
defined benefit retirement plan (the "Retirement Plan"). Under the Retirement
Plan, the monthly pension at normal retirement (age 65) is calculated using a
formula providing a single life monthly benefit equal to (1) 1.33% of final
average monthly earnings multiplied by the number of total years of credited
service with the Participating Companies; plus (2) 0.5% of final average monthly
earnings which exceed a 35 year average social security wage base multiplied by
the number of years of credited service up to 35 years. Early retirement
benefits (at a reduced benefit if such retirement is before the participant
attains age 62) are permitted under the plan, (1) on or after the date a
participant attains age 55, if the participant's age plus years of credited
service (as defined in the plan) equals or exceeds 70, or (2) when the
participant has attained 30 years of credited service. An employee's final
average monthly earnings is defined as his or her highest average monthly
earnings for a consecutive 60-month period during the participant's last 15
years of employment. Average monthly earnings are calculated based on an
individual's base salary only. An employee is not vested under the Retirement
Plan until he or she has completed five years of credited service or has
attained age 65.
The Supplemental Retirement Plan is also maintained which provides for the
payment of benefits that would otherwise be payable under the Retirement Plan
but for limitations imposed by Federal tax law on benefits paid by qualified
plans.
The table above illustrates the total estimated annual normal retirement
pension benefits including the Supplemental Retirement Plan amounts, if
applicable, that will be payable upon normal retirement at age 65 to
participants for the specified remuneration and years of credited service
classifications. Retirement benefits are not subject to any deduction for social
security or other offset amounts. The table does not reflect any reductions in
retirement benefits that would result from the selection of one of various
available survivorship options or the election to retire prior to age 62.
Benefit amounts are computed on a straight life annuity basis.
16
<PAGE> 18
As of December 31, 1994, the credited years of service (rounded to the
nearest whole year) for the Named Executive Officers are as follows: Mr. Glancy,
32 years; Mr. Ewing, 23 years; Mr. McCrackin, 39 years; Mr. Bhargava, 20 years
and Mr. Schiffer, 18 years.
SUPPLEMENTAL DEATH BENEFIT AND RETIREMENT INCOME PLAN. The Company's Named
Executive Officers and certain other officers of the Participating Companies
currently participate in a Supplemental Death Benefit and Retirement Income
Plan. Under this plan, the pre-retirement death benefits payable to an
employee's surviving spouse are 50% of the employee's final salary until such
time as the employee would have reached age 65; thereafter, payments are 20% of
salary until the employee would have reached age 75. At retirement an employee
may elect to receive (1) annual supplemental retirement income equal to 20% of
the employee's final annual salary payable for a period of ten years after age
62; or (2) other available post retirement benefits which are actuarially
equivalent to the ten-year payment option.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Dale A. Johnson, Mr. Thomas H. Jeffs II and Ms. Helen O. Petrauskas
serve on the Compensation Committee of MCN. Mr. Jeffs is an executive officer of
NBD Bancorp and its principal subsidiary, NBD Bank. Mr. Alfred R. Glancy III,
Chairman, President and Chief Executive Officer of MCN, serves as a Director of
NBD Bancorp and NBD Bank.
MCN prohibits an officer-director of MCN from serving on the compensation
committee of an unaffiliated corporation if an officer-director of the
unaffiliated corporation serves on the MCN Compensation Committee. Also, no
director of MCN can serve on the MCN Compensation Committee if he or she is an
officer-director of an unaffiliated corporation on whose Compensation Committee
one or more officer-directors of MCN serve. Mr. Jeffs' service on the MCN
Compensation Committee and Mr. Glancy's service as a Director of NBD Bancorp and
NBD Bank, are consistent with the MCN policy.
17
<PAGE> 19
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON
EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") establishes MCN's strategic
compensation objectives. The Committee then monitors and evaluates the design
and effectiveness of MCN's executive pay programs against those objectives. For
1994, under Committee review, MCN's executive compensation programs were
administered to continue to link executive pay with MCN's strategic direction
and Company objectives. Specifically, the Committee broadened the market for
compensation purposes, and evaluated the diversified energy market in view of
MCN's further transition to a diversified energy company. Following is a summary
of MCN's current executive compensation objectives:
OBJECTIVES & METHODOLOGY:
The primary and overriding objective is to provide a total compensation
package that allows MCN to attract, retain and motivate executive employees. In
doing so,
- MCN establishes total compensation opportunity (base salary plus annual
incentive and long-term incentive) at competitive levels.
- Base salary levels are generally set between the 40th and 65th
percentile relative to peer companies.
- Total compensation opportunity can exceed that of peer companies
(90th percentile) when MCN performance warrants.
The traditional methodology used to determine market
competitiveness is an annual survey of MCN's peer companies(1) as
well as analysis of national and industry executive compensation
data. As mentioned above, in 1994 the Company expanded its market
analysis methodology to incorporate a broader view of the
diversified energy market(2). This expansion is essential to
provide a more complete assessment of MCN's comparative position
relative to the market the Company is transitioning to. This is
especially important in assessing the overall pay levels of MCNIC,
the diversified services segment of the organization.
- Performance, both Company and individual, drive total compensation
levels.
- Overall executive effectiveness, assessed against a set of
objectives, determines base pay increases.
- Annual incentives relate to attaining financial, operating, and
individual objectives.
- Long-term incentives relate to creating shareholder value.
- -------------------------
(1) Peer Companies are: Atlanta Gas Light, Brooklyn Union Gas, CMS Energy,
Columbia Gas Systems, Consolidated Natural Gas, Detroit Edison, Equitable
Resources, Laclede Gas, National Fuel Gas, NICOR, Noram Energy (Arkla),
Peoples Energy Corp., Southwest Gas, Washington Gas Light, and WICOR.
(2) Diversified energy companies include: Brooklyn Union Gas Company, CMS Energy
Inc., Columbia Gas Systems, Consolidated Natural Gas, Enron, Equitable
Resources, National Fuel Gas, Noram Energy (Arkla), Panhandle Eastern Corp,
Sonat Inc., Transco Energy Co., Valero Energy Corp., and Williams Gas.
18
<PAGE> 20
- Variable ("incentive") compensation opportunity is set at levels to put
a significant percentage of executive compensation at risk relative to
Company performance, thus linking executive and shareholder interests.
Current programs put approximately 50% of Chairman & CEO's compensation
at-risk.
- Program design encourages and increases stock ownership by executives to
better align their interests with those of shareholders. Currently, any
awards under the long-term incentive plan are to be paid out 50% in
stock with a requirement, except for extraordinary circumstances, that
the executives retain ownership while employed by the Company or any of
its affiliates.
- All components of executive compensation programs are communicated to
participating executives to insure they understand the opportunity (and
the risks) available based on performance, thus increasing the
motivational impact of the plans.
ROLE OF THE COMMITTEE:
Specifically, the Committee makes recommendations to the Board of Directors
on the compensation levels of all officers of MCN, MCNIC and MichCon, and
reviews the aggregate recommendations for base pay, annual incentive awards and
long-term incentive awards for the other senior executives of the Company. In
addition, the Committee has oversight responsibility for all the Company's
compensation programs to ensure that they are aligned with the strategic
direction and objectives of the Company.
In fulfilling these responsibilities, the Committee utilizes the internal
compensation function and outside consultants to:
- Research and summarize pay and incentive practices of peer companies,
industry averages and other benchmarks.
This year, the Committee through MCN's executive compensation staff,
utilized Hewitt Associates in evaluating the pay practices and levels of
the broader diversified energy market in addition to MCN's traditional
peer company mix.
- Develop and recommend annual merit program and long and short-term
incentive award parameters.
SPECIFIC DISCUSSION ON THE COMPONENTS OF EXECUTIVE COMPENSATION:
The components of an MCN executive's direct compensation consist of base
salary, annual incentives and long-term incentives. These are discussed below:
BASE SALARY -- The base salary of an executive is established when
entering the position, based on the individual's experience, internal
equity and external market comparison. In 1995, the Company further
strengthened its' focus on the market by removing executives from the
traditional merit program and began to manage pay strictly on the basis of
the market. The intent of this shift was to change the expectation of
executives away from moderate annual increases to one where larger
increases are granted less frequently (based on the executive's
contribution and their salary relative to benchmark jobs in the market) and
toward a greater focus on incentive compensation.
19
<PAGE> 21
In February 1995, the Committee found, using the market data developed
by Hewitt Associates, that Mr. Alfred R. Glancy III's salary was at the
17th percentile of the broader diversified energy company market. Based on
these factors, the Committee determined to increase the base salary of Mr.
Glancy to $575,000, which represents a 27.8% increase in his base salary.
This increase places Mr. Glancy's base salary at the 52nd percentile of the
market. The majority of MCN, MichCon and MCNIC officers did not receive
increases in base salary in 1995. Eight other MCN, MichCon and MCNIC
officers, including Messrs. Bhargava and Schiffer, who received base salary
increases based on the same market data are not expected to receive further
increases in 1996.
The Committee, in developing these recommendations, reviewed not only
the market for these increases, but also considered the scope and role of
the executive within the organization. In addition, the Committee factored
in the executives' contribution and results. Finally, the Committee
reviewed the base salary to incentive compensation and total compensation
levels compared to the market.
INCENTIVE AWARDS -- Short-term incentive awards are based on the
Company's return on equity and operational performance targets. Long-term
awards are based on the relative financial performance of MCN compared to
peer companies. Both are discussed below.
SHORT-TERM INCENTIVES ("THE ANNUAL PERFORMANCE PLAN") -- Payout
under the Company's annual performance plan is based on the performance
of the Company and the individual executive's performance, as measured
against goals established by the Committee prior to the start of the
fiscal year.
In 1994, the measures of Company performance used in determining
annual incentive awards were as follows:
- For MichCon executives, the achievement of combined financial and
operating goals. Specifically for 1994:
Authorized rate of return -- weighted 70%.
Customer Satisfaction -- weighted 20% (measured through
point-of-service survey).
Employee Satisfaction -- weighted 10% (measured through an
annual employee survey).
- for MCNIC, the achievement of targeted return on equity.
- for MCN, the weighted combination of MichCon and MCNIC results.
Weighting is determined annually by the Committee prior to the
start of the fiscal year. For 1994, the weighting was 75% MichCon
and 25% MCNIC.
In 1994, the target award opportunity for the Chairman & CEO was
35% of base salary. Target awards for the 96 other executives ranged
from 15% to 40%. The adjusted award could be more or less than the
target award depending on the achievement of the Company's performance
measures discussed above. Actual payout of the award is based on
individual performance and may vary from 0 to 125% of the adjusted award
amount. Individual performance is measured using a combination of
sources including:
- the performance appraisal to measure specific accomplishments and
results, and
- leadership abilities and the executive's fiscal responsibility.
20
<PAGE> 22
MichCon's performance in 1994, using the above measures, resulted
in an adjusted incentive award fund equal to 122% of the target payout.
MCNIC's performance in 1994, using the above measure, resulted in an
adjusted incentive award fund equal to 201% of the target payout. The
weighted performance of these two MCN subsidiaries resulted in an MCN
adjusted incentive award fund equal to 142% of the target payout. For
Chairman and CEO, Alfred R. Glancy III, this produced an adjusted award
of 49.6% of his 1994 base salary and an actual award of $268,000 or
59.6% of his 1994 base salary.
In 1994, the Annual Performance Plan for executives was expanded to
include all MCN Corporate staff and MCNIC employees. Employees are
eligible to receive awards using the same funding criteria as
executives. MichCon non-executive employees including a majority of
those covered by Collective Bargaining Agreements continue to
participate in the MichCon Employee Incentive Program introduced in
1993. Awards under this program are paid on the basis of both overall
Company and specific department performance.
As a result of the overall compensation review of the market, the
Committee, in 1995, adjusted the target award opportunity for the
Chairman & CEO to 55% of base salary. Target awards for other executives
were also raised 5 to 10 percentage points and range from 15% to 50% of
base salary.
LONG-TERM INCENTIVES ("PERFORMANCE UNIT PLAN") -- In late 1992, the
Company redesigned its Long-Term Incentive Program to encourage a more
strategic focus on long-term performance from a shareholder perspective,
to place a larger portion of long-term incentives at-risk and increase
the retention of stock issued under the plan.
This program awards performance units to executives based on total
shareholder return covering a six-year period, as compared to the peer
company group described earlier. This period is divided into two parts.
The first three years determines the initial grant of performance units.
Participants receive dividend equivalents on the performance units
during the subsequent three-year period. The initial grant is adjusted
upward or downward based upon performance over the subsequent three-year
period. The final award, if any, will be paid 50% in cash and 50% in
stock that must be retained, except for extraordinary circumstances,
while the participant is an employee of the Company. Both the initial
grant and the final award are based on MCN's performance ranking within
its peer group using the following:
<TABLE>
<CAPTION>
PERFORMANCE
RANKING PERCENT OF
(QUARTILE) STANDARD AWARD
----------- --------------
<S> <C>
125% - 200%
First.............................
75% - 150%
Second............................
25% - 100%
Third.............................
0% - 50%
Fourth............................
</TABLE>
Individual standard awards are based on the impact of the
executive's position to corporate success and to the size of the
standard grant (at current market value) compared to 1995 salary to
achieve an appropriate relationship between base pay and incentive
opportunity. In late 1994, the standard award level for executives were
adjusted to reflect MCN's 2 for 1 stock split in November 1994. The
standard award for the Chairman & CEO is now set at 16,000 performance
units. In addition, the Company extended the
21
<PAGE> 23
program one level further down into the organization to create a new
"entry level" of executive compensation that recognizes the
contributions of key middle management and individual contributors, as
well as the external compensation market place. In addition, the
Committee authorized discretionary awards for exempt salaried employees
generally on a one time basis, up to 300 performance units. The standard
awards for all other participating executives range from 0 to 10,000.
This design is intended to meet the Company's compensation objectives by
providing both risk and reward potential tied to competitive performance
as measured by total return to shareholders.
For the three-year period 1992-1994, MCN's total return to
shareholders was 72.2% which placed the Company at the top of its peer
group and was approximately 400% of the average for the peer group.
Using the program guidelines above and considering MCN's top ranking,
the Committee granted awards at 200% of the standard award level. For
Chairman & CEO, Alfred R. Glancy III, the Committee granted 32,000
performance units.
These units may be as much as doubled or forfeited completely based
on how MCN's total shareholder return compares to peer companies, using
the above scale based on the total shareholder return for the 1995-1997
period.
TREATMENT OF INDIVIDUAL EXECUTIVE'S COMPENSATION EXCEEDING $1 MILLION ANNUALLY
In 1994, the Company adopted a plan requiring covered executives who
receive more than $1 million in compensation in any calendar year to defer the
excess until he or she leaves the Company. This excess amount is placed in an
account in which the value is adjusted in terms of MCN Common Stock at
prevailing market prices. Executives receive dividend equivalents on 50% of the
common stock units deferred.
OTHER COMPENSATION MATTERS
The Compensation Committee reviewed and authorized the Special Retention
Agreement for Mr. Bhargava described on page 15.
CONCLUSION
We believe that MCN's Executive Compensation programs closely align each
executive's total compensation potential with individual and Company performance
and shareholder returns, while providing a balanced compensation mix between
base pay and incentives that is market and performance driven. We believe these
programs will allow MCN to attract, retain and motivate executive employees. It
is the Compensation Committee's intent to ensure that these alignments continue
into the future and to review and refine the Company's pay and incentive
programs to reflect this objective.
THE COMPENSATION COMMITTEE
Dale A. Johnson, Chairman
Thomas H. Jeffs II
Helen O. Petrauskas
22
<PAGE> 24
PERFORMANCE GRAPH
COMPARISON OF $100 INVESTED IN MCN STOCK
SINCE DECEMBER 1989
WITH DIVIDENDS REINVESTED
<TABLE>
<CAPTION>
12/89 12/90 12/91 12/92 12/93 12/94
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
MCN $100.00 $99.25 $121.26 $164.18 $194.42 $210.71
S&P 500 $100.00 $96.82 $126.42 $136.14 $149.74 $151.67
S&P UTILITY $100.00 $97.25 $111.58 $120.67 $138.12 $127.07
PEER GROUP $100.00 $96.39 $ 98.65 $111.23 $125.88 $111.66
- -------------------------
</TABLE>
(1) The above graph compares the performance of MCN Corporation with that of a
broad equity market index, the S&P 500 Composite, and a published industry
specific index, the S&P Utilities Composite. Also included is the
performance of the peer group of companies used in connection with the
Company's long-term incentive plan. These peer companies include the
following: Atlanta Gas Light, Brooklyn Union Gas, CMS Energy, Columbia Gas
Systems, Consolidated Natural Gas, Detroit Edison, Equitable Resources,
Laclede Gas, National Fuel Gas, NICOR, Noram Energy (Arkla), Peoples Energy
Corp., Southwest Gas, Washington Gas Light, and WICOR.
(2) The returns for each company included in the peer group are weighted
according to the company's stock market capitalization at the beginning of
each month.
23
<PAGE> 25
PROPOSAL 2 -- APPROVAL TO AMEND THE MCN CORPORATION STOCK INCENTIVE PLAN TO
INCREASE THE NUMBER OF SHARES OF MCN COMMON STOCK AUTHORIZED TO BE
ISSUED UNDER THE PLAN
At the 1989 Annual Meeting of Shareholders, shareholders approved the MCN
Corporation Common Stock Incentive Plan (the "Plan") and the issuance of up to
1,200,000 shares (on a post-split basis) of MCN Common Stock, thereunder. As of
December 31, 1994, 862,160 shares remain available for issuance. However,
additional shares will be required under the MCN Performance Unit Plan adopted
in 1993. That plan provides stock-based compensation to a broader group of key
employees than prior plans. Currently, 114 employees participate in the
Performance Unit Plan compared with 19 employees who had participated in the
Restricted Stock Plan which it replaced. Commencing in 1996 the initial grants
of performance units will be finalized and shares of the MCN Common Stock may be
issued. At February 28, 1995, 977,116 performance units were outstanding. The
MCN Board proposes to amend the Plan to increase the number of authorized shares
available for distribution under the Plan.
The purpose of the Plan is to promote the success of the Company by
providing a method whereby key employees of the Company and its subsidiaries may
be awarded incentive compensation for services rendered and encouraged to invest
in MCN Common Stock thereby increasing their proprietary interest in the
Company's business and encouraging them to remain in the employment of the
Company and its subsidiaries. This increases their personal interest in the
continued success and progress of MCN.
If this proposal is approved by the Company's shareholders, the aggregate
number of shares of MCN Common Stock with respect to which Options, Stock
Appreciation Rights, Awards and Performance Units may be granted under the Plan
in any calendar year, shall not exceed one-percent of the shares of common stock
outstanding on the first day during the calendar year on which the award is
granted. Provided, however, that the number of Options, Stock Appreciation
Rights, Awards and Performance Units that may be issued under the Plan
subsequent to February 27, 1995 may not exceed 5% of the number of shares issued
and outstanding on that date (approximately 3,000,000 shares), which may be
adjusted for stock splits or other changes in the capital structure affecting
MCN Common Stock. In addition, no Option or Award shall be granted under the
Plan after March 1, 2005.
THE MCN BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE FOR THIS
PROPOSAL.
24
<PAGE> 26
PROPOSAL 3 -- SELECTION OF AUDITORS
The MCN Board has selected Deloitte & Touche LLP as independent auditors to
audit the financial statements of MCN and its subsidiaries for the year ending
December 31, 1995 and is submitting its choice for ratification by shareholders.
Deloitte & Touche LLP, or its predecessors, has served as MCN's auditors since
1988 and MichCon's auditors since 1986. A representative of Deloitte & Touche
LLP will be present at the Annual Meeting of Shareholders and will have an
opportunity to make a statement and respond to appropriate questions. If the
appointment is not ratified, the MCN Board will appoint another firm as the
independent auditors for the year ending December 31, 1995.
THE MCN BOARD OF DIRECTORS RECOMMENDS THE RATIFICATION OF DELOITTE & TOUCHE
LLP AS INDEPENDENT AUDITORS, TO AUDIT THE FINANCIAL STATEMENTS OF THE
CORPORATION AND ITS SUBSIDIARIES FOR THE YEAR ENDING DECEMBER 31, 1995.
OTHER PROXY MATTERS
VOTING
Michigan law and the Company's bylaws require the presence of a quorum for
the annual meeting, defined here as a majority of the votes entitled to be cast
at the meeting. Votes withheld from director nominees and abstentions will be
counted in determining whether a quorum has been reached.
Assuming a quorum has been reached, a determination must be made as to the
results of the vote on each matter submitted for shareholders approval. The
director nominees must receive a plurality of the votes cast at the meeting,
therefore abstentions will not affect the election of directors. The
ratification of the amendment to the MCN Corporation Stock Incentive Plan must
be approved by a majority of votes present, or represented and entitled to vote
at the meeting, therefore abstentions will have the same legal effect as votes
against the matter. The selection of the Company's auditors must be approved by
a majority of the votes cast at the meeting, therefore abstentions will not
affect the selection of the Company's auditors.
Under the rules of the New York Stock Exchange ("NYSE"), brokers who hold
shares on behalf of their customers (shares held in street name), have the
authority to vote on certain items when they have not received instructions from
beneficial owners. However, brokers are not authorized to vote on "non-routine"
matters if they do not receive instructions from beneficial owners ("Broker
Non-votes"). Under NYSE rules, all the matters presently before the meeting are
"routine" matters, therefore brokers holding shares in street name for their
customers may vote, in their discretion, on behalf of any customer who does not
furnish voting instructions. If a "non-routine" matter comes before the meeting,
Broker Non-votes will not be treated as votes cast in determining the outcome of
the vote.
COST OF SOLICITATION OF PROXIES
The cost of soliciting Proxies will be borne by MCN and the solicitation
will be made by use of the mails, personally or by telephone or telegraph by
officers, directors and regular employees of MCN and its subsidiaries who will
not be additionally compensated therefor. The firm of Corporate
25
<PAGE> 27
Investor Communications, Inc. has been retained to assist with the solicitation
of broker and nominee Proxies at a cost of approximately $6,000. MCN will also
reimburse banks, brokers, nominees and other fiduciaries for reasonable expenses
incurred by them in forwarding the Proxy material to the beneficial owners of
MCN Common Stock.
SHAREHOLDER PROPOSALS
Shareholder proposals to be considered for inclusion in MCN's 1996 proxy
statement for presentation at the 1996 Annual Meeting of Shareholders must be
received by the Secretary of MCN at 500 Griswold Street, Detroit, Michigan
48226, no later than November 6, 1995. Other shareholder proposals concerning
business to be conducted at MCN's annual meeting must be received by the
Secretary of MCN at 500 Griswold Street, Detroit, Michigan 48226 not earlier
than January 27, 1996 nor later than February 26, 1996.
26
<PAGE> 28
500 Griswold Street
Detroit, Michigan 48226
<PAGE> 29
/X/ PLEASE MARK YOUR | 4769
VOTES AS IN THIS EXAMPLE. |_____
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" ALL OF THE
BOARD OF DIRECTORS' NOMINEES AND "FOR" PROPOSALS 2 AND 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1,2 AND 3.
<TABLE>
<S> <C> <C>
1. Election of FOR WITHHELD FOR ALL 2. Approval to amend FOR AGAINST ABSTAIN 3. Ratification of FOR AGAINST ABSTAIN
Directors EXCEPT the MCN Corporation / / / / / / Deloitte & Touche / / / / / /
/ / / / / / Stock Incentive Plan LLP as independent
to increase the number auditors for the
of shares of MCN year ending
Common Stock December 31, 1995.
authorized to be
NOMINEES: issued under the plan. 4. In their
THOMAS H. JEFFS II, ARTHUR discretion the
L. JOHNSON, DALE A. JOHNSON Proxies are
AND WILLIAM K. MCCRACKIN authorized to vote
upon such other
IF YOU DO NOT WISH YOUR SHARES business as may
VOTED "FOR" A PARTICULAR NOMINEE, properly come
MARK THE "FOR ALL EXCEPT" BOX before the meeting
AND STRIKE A LINE THROUGH THE or adjournment
NOMINEE(S) NAME. YOUR SHARES thereof.
WILL BE VOTED FOR THE REMAINING
NOMINEE(S). Mark box at right / /
to request that an
Attendance Card to
the Annual Meeting
be sent to you.
Mark box at right / /
if comments have
been noted on the
reverse side of
this card.
Please sign
exactly as name
appears hereon.
Joint owners
should each sign.
When signing as
attorney,
executor,
administrator,
trustee or
guardian, please
give full title
as such.
____________________
____________________
SIGNATURE(S) DATE
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[MCN CORPORATION LOGO]
500 GRISWOLD
DETROIT, MICHIGAN 48226
Dear Shareholder:
Your vote is very important to the successful conduct of the company's
business. I strongly encourage you to exercise your right to vote your shares.
We must receive your vote prior to the Annual Meeting of Shareholders on April
27, 1995.
Please mark the boxes on the proxy card to indicate how you wish to vote your
shares. Then sign, date and detach the card and return it in the enclosed
postage-paid envelope. If you expect to attend the Annual Meeting, please mark
the appropriate box above and an Attendance Card will be mailed to you prior to
the meeting.
We, as always, welcome your comments on how informative you have found our Proxy
Statement, Annual Report and other financial reports, including how well we are
doing as a management team. Please write your comments on the back side of
this proxy card and mark the appropriate box above.
We look forward to meeting you if you are able to attend the Annual Meeting and
thank you for promptly returning your proxy card.
Sincerely,
/S/ ALFRED R. GLANCY III
Alfred R. Glancy III
Chairman, President
& Chief Executive Officer
<PAGE> 30
[MCN CORPORATION LOGO]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MCN CORPORATION
P
R The undersigned, having received the proxy soliciting material relative
O to the Annual Meeting, hereby (i) appoints Alfred R. Glancy III,
X William K. McCrackin and Daniel L. Schiffer, or any one of them, as
Y Proxies with full power of substitution, for and in the name of the
undersigned, to vote all shares of Common Stock of MCN Corporation
owned of record by the undersigned, and (ii) directs Putnam Fiduciary
Trust Company, Trustee under the MichCon Savings and Stock Ownership
Plan and Trustee under the MichCon Investment and Stock Ownership Plan,
to vote in person or by proxy all shares of Common Stock of MCN
Corporation allocated to any accounts of the undersigned under such
Plans, and which the undersigned is entitled to vote, in each case, on
all matters which may come before the 1995 Annual Meeting of
Shareholders to be held at the Company's Headquarters in the Guardian
Building, 32nd Floor Auditorium, 500 Griswold, Detroit, Michigan on
April 27, 1995 at 1:00 p.m. Eastern Daylight Savings Time, and any
adjournments thereof, unless otherwise specified herein. The Proxies,
in their discretion, are further authorized to vote for the election of
a person to the Board of Directors if any nominee named herein becomes
unable to serve or for good cause will not serve, are further
authorized to vote on matters which the Board of Directors does not
know a reasonable time before making the proxy solicitation will be
presented at the meeting, and are further authorized to vote on other
matters which may properly come before the 1995 Annual Meeting and any
adjournments thereof.
DO YOU HAVE ANY COMMENTS?
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