<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 Com-
mission 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
DTE ENERGY COMPANY
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(Name of Registrant as Specified in Its Charter)
DTE ENERGY COMPANY
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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(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:
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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
[DTE ENERGY LOGO]
Dear DTE Energy Shareholder:
On behalf of the Board of Directors and management, I cordially invite you to
attend the Annual Meeting of Common Stock Shareholders of DTE Energy Company on
Monday, April 22, 1996, at 10:00 a.m. at Detroit Edison's General Offices, 2000
2nd Avenue, Detroit, Michigan.
The principal items of business will be the election of directors, the
ratification of the appointment of the independent auditors, and the
consideration of two shareholder proposals.
Additional details about the meeting are in the accompanying Notice of Annual
Meeting and Proxy Statement. At the meeting, I will also report on the progress
of the Company during the past year and answer shareholder questions.
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND PERSONALLY, PLEASE COMPLETE AND MAIL THE ENCLOSED PROXY CARD
IN THE RETURN ENVELOPE. IF YOU DO ATTEND AND VOTE AT THE MEETING, THAT VOTE WILL
SUPERSEDE THE EARLIER VOTE BY PROXY.
SINCERELY,
JOHN E. LOBBIA
Chairman and Chief Executive Officer
<PAGE> 3
[MAP]
<PAGE> 4
[DTE ENERGY LOGO]
NOTICE OF ANNUAL MEETING OF COMMON STOCK SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of Common Stock Shareholders
(the "Annual Meeting") of DTE ENERGY COMPANY ("DTE" or "Company") will be held
at Detroit Edison's General Offices, 2000 2nd Avenue, Detroit, Michigan, on
Monday, April 22, 1996, at 10:00 a.m., Detroit time, to consider and take action
on:
1. The election of five directors;
2. Ratification of the appointment of Deloitte & Touche LLP by the
Board of Directors as the independent auditors of DTE for the year 1996;
3. A shareholder proposal regarding criterion for closing the nuclear
power plant;
4. A shareholder proposal regarding the cost of closing the nuclear
power plant before its license expires; and
5. Such other business as may properly come before the meeting, or any
adjournment or adjournments thereof.
Holders of record of shares of Common Stock at the close of business on February
23, 1996, are entitled to notice of, and to vote at, the meeting.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING.
MARCH 15, 1996 BY ORDER OF THE BOARD OF DIRECTORS,
SUSAN M. BEALE
VICE PRESIDENT AND CORPORATE SECRETARY
IMPORTANT
EVEN THOUGH YOU EXPECT TO ATTEND THE ANNUAL MEETING, IT IS URGENTLY REQUESTED
THAT, WHETHER YOUR SHARE HOLDINGS ARE LARGE OR SMALL, YOU PROMPTLY FILL IN,
DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED HEREWITH.
IF YOU WILL DO SO NOW, THE COMPANY WILL BE SAVED THE EXPENSE OF FOLLOW-UP
NOTICES.
<PAGE> 5
DTE ENERGY COMPANY
2000 2ND AVENUE
DETROIT, MICHIGAN 48226-1279
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of DTE Energy Company ("DTE" or "Company") of proxies for
use at the DTE Annual Meeting of Common Stock Shareholders to be held on April
22, 1996 (the "Annual Meeting"). If the enclosed proxy card is executed and
returned, it will be voted as specified on such proxy card. If the proxy card is
executed and returned but no specification is made on the proxy card as to any
proposal, the shares represented by the proxy will be voted FOR Proposals 1 and
2 and AGAINST Proposals 3 and 4.
It is the policy of DTE that any proxy card, ballot or other voting
material that identifies the particular vote of a shareholder will be kept
confidential except in the event of a contested proxy solicitation or as may be
required by law. DTE may be informed whether or not a particular shareholder has
voted and will have access to any comment written on a proxy card, ballot or
other material. Under the policy, the inspectors of election at any meeting will
be outside parties.
You may revoke your proxy by a written request or by a subsequently dated
proxy card, which, in either case, must be received by the Vice President and
Corporate Secretary before the Annual Meeting, or by voting in person at the
Annual Meeting.
The holders of DTE Common Stock, the only security entitled to vote at the
meeting, are entitled to one vote for each share of such stock held, whether of
record or in any account under the Company's Dividend Reinvestment and Stock
Purchase Plan (DRIP) or the Detroit Edison Savings & Investment Plans, on the
Record Date. Record shares and DRIP shares are combined in a single proxy card.
A majority of the shares of outstanding Common Stock present in person or
represented by proxy will constitute a quorum. As of February 23, 1996, the
Record Date, there were 145,119,875 shares of Common Stock outstanding. The
Notice of Annual Meeting and Proxy Statement and the proxy card were first
mailed to holders of DTE Common Stock on or about March 22, 1996.
Each holder of Common Stock has the right, without prior notice to DTE, to
cumulate votes for the election of directors by multiplying the number of votes
to which such holder is entitled by the number of directors to be elected and
casting all such votes for one candidate or distributing them among any two or
more candidates. Any shareholder who may wish to withhold votes from one or more
director or directors may do so by writing the name or names of such directors
in the space provided on the proxy card for such purpose. Shareholders cannot
vote for more than five directors. The election of each director requires the
affirmative vote of the holders of a plurality of the shares of Common Stock
voted. Broker non-votes will not be included in determining the number of votes
cast in the election. A "withhold" from voting for a director is the equivalent
of a "no" vote and will be included in determining the number of votes cast in
the election of directors. Under Michigan law, only votes cast are counted and,
with respect to the election of directors, abstentions have no effect. To be
approved, shareholder proposals must receive affirmative votes from a majority
of the votes cast by shareholders entitled to vote thereon. Abstentions and
broker non-votes will be treated as not having been voted for determining the
number of votes cast.
1
<PAGE> 6
An Annual Report for the calendar year 1995 was mailed on or about March 4,
1996, to all shareholders of record on the Record Date.
ITEM 1. THE ELECTION OF DIRECTORS
The amended and Restated Articles of Incorporation of DTE divide the Board
of Directors into three classes, with one class of directors elected each year
for a three-year term. The terms of directors in one class expire in 1996. The
five directors in this class have been nominated for re-election for terms
expiring in 1999. All of the nominees have consented to serve if elected and are
presently members of the Board of Directors. Pursuant to the provisions of the
Company's Bylaws, the Board of Directors has by resolution set the number of
directors comprising the full Board at 13.
Proxies cannot be voted for more than five persons. It is the intention of
the persons named in the enclosed proxy card, unless otherwise instructed by the
shareholders, to vote for the nominees named in this Proxy Statement. If, for
any reason, any of the nominees becomes unable or is unwilling to serve at the
time of the meeting, the persons named in the enclosed proxy card will have
discretionary authority to vote for a substitute nominee or nominees. It is not
anticipated that any nominee will be unavailable for election.
The following sets forth information as to each nominee for election at this
meeting and each director continuing in office. The dates shown for service as a
director include service as a director of Detroit Edison prior to the January 1,
1996, share exchange with the Company. All of the Company's current directors
are also the directors of Detroit Edison, now a wholly owned subsidiary of the
Company. The committees listed include committees of both companies.
NOMINEES FOR ELECTION AT THIS MEETING TO TERMS EXPIRING IN 1999
[LILLIAN BAUDER
PHOTO] LILLIAN BAUDER, 56, President and Chief Executive Officer,
Cranbrook Educational Community, Bloomfield Hills, Michigan. Dr.
Bauder has served in her present position since 1984. She has
been a director since 1986 and is also a director of Comerica
Bank and Masco Corporation. Dr. Bauder received a B.A. degree
from Douglass College and M.A. and Ph.D. degrees in sociology
from the University of Michigan. Committees: Audit, Executive
and Nuclear Review.
[DAVID BING
PHOTO] DAVID BING, 52, Chairman of the Board, Bing Steel, Inc.,
Detroit, Michigan -- a steel service center serving automotive
manufacturers, steel fabricators, construction subcontractors
and the farm implement and appliance industries. Mr. Bing has
served in his present position since 1986. He is also Chief
Executive Officer of Superb Manufacturing, Inc., a metal
stamping company. Mr. Bing played professional basketball for 12
years and continues to serve the community as advisor to many
youth groups. He has been a director since 1985 and also serves
as a director of a number of civic organizations. Mr. Bing
received a B.A. degree from Syracuse University. Committees:
Audit, Energy Resources Planning and Organization and
Compensation.
2
<PAGE> 7
[LARRY G.
GARBERDING
PHOTO] LARRY G. GARBERDING, 57, Executive Vice President and Chief
Financial Officer, DTE Energy and Detroit Edison. Mr. Garberding
has served in his present position since 1990. He has been a
director since 1990 and also serves as a director or trustee of
various community and professional organizations. Mr. Garberding
received a B.S. degree in industrial administration from Iowa
State University. Committees: Executive and Finance.
[ALAN E.
SCHWARTZ PHOTO] ALAN E. SCHWARTZ, 70, a Partner of the law firm of Honigman
Miller Schwartz and Cohn, Detroit, Michigan. Mr. Schwartz has
been a director since 1969. He is also a director of Comerica
Incorporated; Core Industries, Inc.; Handleman Company; Howell
Industries, Inc.; Pulte Corporation and Unisys Corporation. Mr.
Schwartz received a B.A. degree from the University of Michigan
and a law degree from Harvard Law School. Committees: Executive,
Finance, Nominating and Organization and Compensation.
[WILLIAM WEGNER
PHOTO] WILLIAM WEGNER, 69, Consultant; owner of W-Squared, Inc. -- a
consulting firm engaged in providing services to nuclear utility
companies. Mr. Wegner has been a nuclear consultant since 1979.
From 1964 to 1979 he served in the U.S. Navy and Atomic Energy
Commission in the naval nuclear propulsion program where he was
Admiral Rickover's Deputy Director. Mr. Wegner has been a
director since 1990. He graduated from the U.S. Naval Academy,
received masters' degrees in naval architecture and marine
engineering from the Webb Institute of Naval Architecture and in
nuclear engineering from the Massachusetts Institute of
Technology. Committees: Energy Resources Planning and Nuclear
Review.
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 1997
[JOHN E. LOBBIA
PHOTO] JOHN E. LOBBIA, 54, Chairman of the Board and Chief Executive
Officer, DTE Energy and Detroit Edison. Mr. Lobbia has served in
his present position since 1990. He has been a director since
1988. Mr. Lobbia is also a director of Flint Ink Corporation,
NBD Bank and the Rouge Steel Company, as well as a director or
trustee of a number of community and professional organizations.
He received a B.S. degree in electrical engineering from the
University of Detroit. Committee: Executive.
3
<PAGE> 8
[PATRICIA S.
LONGE PHOTO] PATRICIA S. LONGE, 62, Economist and Senior Partner, The Longe
Company, Naples, Florida -- an economic consulting and
investment firm. Dr. Longe has served in her present position
since 1981. She was a professor of Business Administration at
the Graduate School of Business Administration of the University
of Michigan from 1973 to 1986. Dr. Longe has been a director
since 1973. She is also a director of Jacobson Stores, Inc.; The
Kroger Company; Comerica Incorporated; Comerica Bank & Trust,
F.S.B. and The Warner-Lambert Company. Dr. Longe received B.S.
and M.B.A. degrees from the University of Detroit and a Ph.D.
degree in economics from Wayne State University. Committees:
Audit, Nominating and Nuclear Review.
[EUGENE A.
MILLER PHOTO] EUGENE A. MILLER, 58, Chairman of the Board and Chief Executive
Officer, Comerica Incorporated and Comerica Bank, Detroit,
Michigan. Mr. Miller served as Chairman of the Board, President
and Chief Executive Officer of Comerica Incorporated and
Comerica Bank prior to the merger of Comerica Incorporated and
Manufacturers National Corporation in 1992. He has been a
director since 1989. Mr. Miller is also a director of Amerisure
Companies, Comerica Incorporated and Comerica Bank and serves as
a director or trustee of a number of community and professional
organizations. He received a B.B.A. degree from the Detroit
Institute of Technology. Committees: Finance, Nominating and
Organization and Compensation.
[DEAN E.
RICHARDSON
PHOTO] DEAN E. RICHARDSON, 68, retired Chairman of the Board,
Manufacturers National Corporation, Detroit, Michigan. Prior to
his retirement in 1990, Mr. Richardson served in the above
position since 1973. He has been a director since 1977 and is
also a director of the Automobile Club of Michigan and Tecumseh
Products Company. Mr. Richardson received a B.A. degree from
Michigan State University and an LL.B. degree from the
University of Michigan. Committees: Audit, Executive, Finance
and Organization and Compensation.
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 1998
[TERENCE E.
ADDERLEY PHOTO] TERENCE E. ADDERLEY, 62, President and Chief Executive Officer,
Kelly Services, Inc., Troy, Michigan--an international provider
of business, technical and professional staffing services. Mr.
Adderley has served in his present position since 1967. He has
been a director since 1987. Mr. Adderley is also a director of
Kelly Services, Inc.; The First National Bank of Chicago and
First Chicago NBD Corporation. He received B.B.A. and M.B.A.
degrees from the University of Michigan. Committees: Executive,
Finance and Organization and Compensation.
4
<PAGE> 9
[ANTHONY F.
EARLEY, JR.
PHOTO] ANTHONY F. EARLEY, JR., 46, President and Chief Operating
Officer, DTE Energy and Detroit Edison. Mr. Earley has served in
his present position since March 1, 1994. He previously served
as President and Chief Operating Officer of the Long Island
Lighting Company (LILCO), an electric and gas utility company
serving Long Island, New York, from 1989 to 1994 and in various
executive capacities at LILCO from 1985 to 1989. Before that,
Mr. Earley was a partner in the law firm of Hunton & Williams
and served as an officer in the U.S. Navy nuclear submarine
program. He has been a director since March 1994. Mr. Earley is
also a director of Mutual of America Capital Management
Corporation and serves as a director on a number of community
and professional organizations. He received a B.S. degree in
physics, an M.S. degree in engineering and a J.D. degree from
the University of Notre Dame. Committee: Executive.
[ALLAN D.
GILMOUR PHOTO] ALLAN D. GILMOUR, 61, retired Vice Chairman of the Board, Ford
Motor Company. Mr. Gilmour was employed in various capacities at
Ford Motor Company since 1960 and was President of the Ford
Automotive Group from March 1990 until his appointment in 1993
as Vice Chairman, the position from which he retired in January
1995. He has been a director since 1995. Mr. Gilmour is also a
director of The Dow Chemical Company; The Prudential Insurance
Company of America; US West, Inc.; Whirlpool Corporation and is
Chairman of Henry Ford Health System. Mr. Gilmour received a
B.A. degree in economics from Harvard University and an M.B.A.
degree from the University of Michigan. Committees: Finance
and Nominating.
[THEODORE S.
LEIPPRANDT
PHOTO] THEODORE S. LEIPPRANDT, 62, retired Marketing Specialist,
Cooperative Elevator Company, Pigeon, Michigan. Prior to his
retirement in 1995, Mr. Leipprandt served in the above position
since 1987 and in various other positions since 1958, including
President and Chief Executive Officer for 13 years. He is a past
president of the Michigan Agri-Business Association and the
Michigan 4-H Foundation Board of Trustees and a past District
Governor of Rotary International. Mr. Leipprandt has been a
director since 1990. He received a B.S. degree in animal science
from Michigan State University. Committees: Audit, Energy
Resources Planning and Nuclear Review.
5
<PAGE> 10
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
SHARES OF STOCK
OWNED BENEFICIALLY
DIRECTOR/EXECUTIVE OFFICER CLASS OF STOCK FEBRUARY 29, 1996(1)(2)
------------------------------------------- -------------- -----------------------
<S> <C> <C>
Terence E. Adderley........................ Common 1,300
Frank E. Agosti............................ Common 11,113(3)
Lillian Bauder............................. Common 1,240
David Bing................................. Common 700
Anthony F. Earley, Jr. .................... Common 11,949(3)
Larry G. Garberding........................ Common 10,603(3)
Allan D. Gilmour........................... Common 1,300
Douglas R. Gipson.......................... Common 5,631(3)
Theodore S. Leipprandt..................... Common 993
John E. Lobbia............................. Common 31,487(3)
Patricia S. Longe.......................... Common 1,600
Eugene A. Miller........................... Common 1,300
Dean E. Richardson......................... Common 2,300
Detroit Edison..... Preferred 500
Alan E. Schwartz........................... Common 630
William Wegner............................. Common 800
Directors and executive officers as a group
(24 persons)............................. Common 128,531(3)
Detroit Edison..... Preferred 500
</TABLE>
- -------------------------
(1) Directors and officers owned not more than 1 percent individually and in the
aggregate of the outstanding stock of the Company or its affiliates. Voting
power and investment power in many instances are shared with a joint tenant,
generally a spouse.
(2) Does not include 1,446 shares held by spouse or other family member in which
the director or officer disclaims any beneficial ownership interest.
(3) Includes unvested restricted shares of DTE Common Stock awarded under
Detroit Edison's Long-Term Incentive Plan to Messrs. Agosti, Earley,
Garberding, Gipson and Lobbia of 4,000, 10,000, 6,000, 4,000 and 18,000
shares, respectively. Also includes shares held in the Detroit Edison
Savings & Investment Plan as of December 31, 1995.
THE BOARD OF DIRECTORS AND BOARD COMMITTEES
All directors are on the boards of both DTE and Detroit Edison and serve on
the same standing committees of each board. Directors who are also employees
receive no payment for service as a director.
Non-employee directors are paid an annual retainer of $18,000 plus an award
of 300 shares of Common Stock. Under the terms of the Long-Term Incentive Plan
adopted by shareholders, the stock award is non-discretionary and is made the
date of each annual shareholder meeting. Directors receive $750 for each meeting
attended of the board or board committees or other company-related meetings.
Directors who serve as chairs of board committees are paid an additional annual
retainer of $2,000. The annual retainer, meeting fees and chair retainer
represent aggregate amounts for service on both boards.
Reimbursement is made for out-of-pocket expenses incurred by any director
to attend meetings.
6
<PAGE> 11
DTE and Detroit Edison each maintain an unfunded deferred compensation plan
under which non-employee directors may elect to defer the receipt of all or any
part of their annual retainer and meeting fees paid by that company. For each
director who elects to participate in the plan, deferred fees accrue in an
unfunded account for such director for payment in the future with interest
accrued monthly at the 5-year U.S. Treasury Bond rate.
Directors with a minimum of five years of board service are eligible to
participate in a retirement plan. The plan provides for a monthly retirement
payment for the number of months that an eligible director served on the board
while not an employee, in the amount of one-twelfth of the annual retainer in
effect at the time of retirement.
During 1995, there were 10 meetings of the Detroit Edison Board of
Directors and 26 meetings of the various committees of that Board. Most of the
directors attended 100 percent of the meetings and all directors attended at
least 82 percent of the meetings held during 1995.
The boards of directors of DTE and Detroit Edison have each established
five standing committees (Audit, Executive, Finance, Nominating and Organization
and Compensation). In addition to the above-mentioned standing committees,
Detroit Edison has established an Energy Resources Planning Committee and a
Nuclear Review Committee. With the exception of the Executive Committee, which
has authority to act on most matters when the board is not in session, these
committees act in an advisory capacity to the full boards of directors. All
committees report to the full boards of directors with respect to matters
considered at each committee meeting held.
The principal functions of the Audit Committee are to review the scope of
the annual audit and the annual audit report of the independent auditors,
recommend the firm of independent auditors to perform such audits, consider
non-audit functions proposed to be performed by the independent auditors, review
the functions performed by the internal audit staff, ascertain whether the
recommendations of auditors are satisfactorily implemented and recommend such
special studies or actions which the Committee deems desirable. During 1995,
three meetings of the Detroit Edison Audit Committee were held.
The principal functions of the Nominating Committee are to consider the
organizational structure of the board of directors and to assist the full board
in the selection of the nominees for the board of directors. In the selection of
nominees for the board of directors, the Committee will consider any nominee
recommended by a shareholder if the recommendation is made in writing and
includes (i) the qualifications of the proposed nominee to serve on the board of
directors, (ii) the principal occupations and employment of the proposed nominee
during the past five years, (iii) each directorship currently held by the
proposed nominee and (iv) a statement from the proposed nominee that he or she
has consented to the submission of the recommendation. Recommendations should be
addressed to the Vice President and Corporate Secretary of the Company at its
principal business address. Two meetings of the Detroit Edison Nominating
Committee were held during 1995.
The Organization and Compensation Committee is comprised of five outside
directors. The Committee reviews recommendations and approves, subject to full
board agreement, the compensation of those executives who are at the level of
vice president or higher. The Committee also assists in the selection of
officers to assure that successors for each office are provided for and
selected. Five meetings of the Detroit Edison Organization and Compensation
Committee were held during 1995.
7
<PAGE> 12
The Nuclear Review Committee provides non-management oversight and review
of Fermi 2, focusing on matters such as staffing, personnel selection, training
and retention, adequacy of funding, internal performance review and internal
safety review. During 1995, 12 meetings of the Nuclear Review Committee were
held.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overall Policy. DTE Energy's principal business activities are carried out
through Detroit Edison. The reorganization to a holding company occurred on
January 1, 1996, therefore, the compensation reported in the Summary
Compensation Table is solely for the officers' service to Detroit Edison.
Messrs. Lobbia, Earley and Garberding are officers of both DTE Energy and
Detroit Edison without additional compensation; Messrs. Agosti and Gipson are
officers of Detroit Edison only. For 1996, officers of DTE Energy who are also
officers of Detroit Edison will not receive additional compensation from DTE
Energy for services as a DTE Energy officer.
DTE Energy's executive compensation program is designed to align
compensation with the achievement of corporate goals. To this end, DTE Energy
has developed an overall compensation plan that rewards executives for the
enhancement of shareholder and customer value and supports
performance-orientated behavior. The overall objectives of this compensation
strategy are to motivate key executives to achieve the corporate goals, to link
executive and shareholder interests, to attract and retain key executives and to
provide a compensation package that recognizes individual contributions to
corporate performance.
Organization and Compensation Committee. The Organization and Compensation
Committee ("Committee") of the Board of Directors is comprised of five outside
directors. The Committee reviews recommendations and approves, subject to Board
agreement, the compensation of those executives who are at the level of vice
president or higher, including the individuals whose compensation is detailed in
this Proxy Statement. The Committee has retained an independent consultant to
review the executive compensation program.
The Committee reviews the executive compensation program annually. This
review includes comparing DTE Energy's executive compensation, business
performance and total shareholder return to several groups of electric utilities
and electric utility holding companies. For purposes of comparing shareholder
return, the Committee believes that the appropriate group is the Dow Jones
Electric Utility Industry Group ("DJEU Group") since shareholder return
information is available for all these companies. However, the Committee
believes the appropriate group for the purpose of total compensation comparisons
is not the utilities included in the DJEU Group, but rather a group of utilities
(including utility holding companies) selected on the basis of revenues
generated, availability of compensation information, financial performance and
geographic area (the "Comparative Market"). The companies in this group may
change from year to year, based on the above factors. It is the Committee's
intent that total compensation be competitive with the Comparative Market taking
into account DTE Energy's relative performance.
The key elements of Detroit Edison's executive compensation program for
1993 were base salary and the Shareholder Value Improvement Plan. In 1994, a
lump sum payment in lieu of a base salary adjustment was made. In 1995, the key
elements were base salary, the Shareholder Value Improvement Plan and the
Long-Term Incentive Plan. The Committee's policies with respect to each of these
elements, including the basis for the compensation awarded to Mr. Lobbia, DTE
Energy's chief executive officer, are discussed below.
8
<PAGE> 13
Base Salaries and Lump Sum Awards. Base salaries for executive officers are
determined by evaluating the responsibilities of the position held and the
experience and performance of the individual. Reference is also made to the
competition for executive talent, including a comparison to comparable positions
at other utility companies in the Comparative Market.
Annual increases in each officer's base salary, if any, are determined by
considering the market position of the salary and by evaluating the performance
of DTE Energy and of each executive officer. In reviewing DTE Energy
performance, no specific performance target is used, but rather, a subjective
judgment is used. In reviewing the individual performance of the officers at the
level of vice president or higher, the Committee takes into account Mr. Lobbia's
evaluation of such officers' performance. This evaluation is based in part on
the attainment of the officers' individual objectives established for the year.
Three of the executive officers' base salaries were below and two were
approximately at the Comparative Market median.
In 1994, Detroit Edison awarded lump sum awards in lieu of base salary
adjustments for all employees, including the named executive officers, except
for Mr. Earley who joined Detroit Edison on March 1, 1994. The amounts shown for
1994 in Column (c) "Salary," include both the base salary and the lump sum
award, if any.
With respect to the salary increase granted to Mr. Lobbia in 1995, the
Committee took into account the factors discussed above. The total of Mr.
Lobbia's base salary and lump sum award for 1994 was below the median of the
Comparative Market. Mr. Lobbia's base salary was increased to $600,000 effective
April 1, 1995, which was below the median of the Comparative Market.
Shareholder Value Improvement Plans ("SVIP"). All non-union represented
employees of Detroit Edison, including executive officers, are eligible for the
SVIP. The measures for the SVIP, which are established each year by the
Organization and Compensation Committee, are common for all participants. Each
measure is assigned a weight to indicate its relative importance. Each measure
has three levels, the attainment of which results in different levels of awards,
and a fourth level, which results in no payout for that measure. The maximum
award levels available to employees increase with increasing levels of
responsibility to put a greater percentage of compensation at risk for those
more senior level employees. In the case of executive officers, award amounts
are payable from a fund established by multiplying the base pay of eligible
members of senior management by the award opportunity percentage that was
achieved for each performance measure by the performance measure weight. Awards
are granted, in the sole discretion of and in such amount, if any, as is
determined to be appropriate by the Board of Directors. There are two categories
of SVIP measures, the current year shareholder value measure and the customer
value measure. The current year shareholder value measure is the total
shareholder return (measured by stock price and dividends) compared to the DJEU
Group. If the total shareholder return is below the median of the DJEU Group but
at least 10 percent, an award is made at a minimum level. If total shareholder
return is negative or below the median and less than 10 percent, no award is
made. This measure is weighted at 40 percent.
The customer satisfaction measures in the aggregate are weighted at 60
percent. These measures, which support long-term shareholder value, include
residential customer satisfaction (based on a survey by an outside entity);
industrial safety; operation, maintenance and capital expenditures and the cost
of producing generation and purchasing power for sale to Detroit Edison
customers. In aggregate, the performance in each of the five measures resulted
in a 1995 SVIP award to Messrs. Lobbia, Earley, Garberding, Agosti and Gipson of
$57,712, $43,462, $33,377, $22,231 and $21,731, respectively.
9
<PAGE> 14
The awards earned in 1995 and 1994 were paid in cash. For 1993, one-half of
the total award for executive officers and other members of management was paid
in cash. Payment of the remaining one-half of the total was deferred. A record
of this amount is maintained in an unfunded, unsecured account on behalf of the
participant, generally for three years. The amount appreciates or depreciates
based on the market value of DTE Energy's Common Stock (Detroit Edison Common
Stock prior to January 1, 1996) plus imputed dividends. The value of the
deferred award will be distributed as a cash payment after the end of three
years if the participant is actively employed by Detroit Edison or an affiliate
at the end of the three-year period. The value of the deferred award is
forfeited if the participant terminates employment prior to the end of the
three-year period for reasons other than due to disability, death or retirement
(as defined in the SVIP). If the participant terminates employment as a result
of disability, death or retirement within the three-year period, the value of
the deferred award at termination will be distributed as soon as possible
following termination.
The amounts awarded under the 1993, 1994 and 1995 SVIP programs for the
five named officers are shown on the Summary Compensation Table in Column (d)
"Bonus."
Long-Term Incentive Plan ("Incentive Plan"). The Incentive Plan was adopted
in 1995 and approved by shareholders at the 1995 Annual Meeting of Common Stock
Shareholders. The Incentive Plan is designed to expand DTE Energy's flexibility
to structure compensation incentives for officers and other key employees by
rewarding long-term growth and profitability in the emerging competitive
environment. Accordingly, certain key employees of DTE Energy and its
affiliates, including Detroit Edison, may be granted Stock Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares and Performance Units.
Non-employee directors will also receive awards of DTE Energy's Common Stock.
While it puts more pay at risk, ownership of stock assists in the attraction and
retention of qualified employees and directors and provides them with additional
incentives to devote their best efforts to pursue and sustain DTE Energy's
financial success through the achievement of corporate goals.
During 1995 the Committee made initial awards in the form of Restricted
Stock under the Incentive Plan as shown in the Long-Term Incentive Plan-Awards
in the Last Fiscal Year Table. These awards involved current grants of Detroit
Edison Common Stock (which became grants of DTE Energy Common Stock effective
January 1, 1996) that are subject to forfeiture if specified performance
criteria are not met during vesting cycles that extend through December 31,
1998. During the performance period indicated on the Long-Term Incentive
Plan-Awards in the Last Fiscal Year Table, the executive officer to whom the
award has been made has the right to vote the shares and to receive dividends
thereon. The vesting criteria are based on three separate factors: total
shareholder return, customer satisfaction and manufacturing customer price.
Total shareholder return is weighted 60 percent and the other two factors are
each weighted 20 percent. These factors are measured for each of three vesting
cycles which began on March 31, 1995, and end on December 31, 1996, 1997 and
1998. One-third of each award is eligible to become non-forfeitable at the end
of each cycle.
Total shareholder return is measured by reference to the DJEU Group, in the
same manner as under the SVIP. In order to earn any percentage for this factor,
the total shareholder return must be positive. To earn 100 percent, the Company
must rank in the 90th percentile of the DJEU Group or above. If the total
shareholder return is below the 90th percentile, but at or above the 50th
percentile, between 50 and 75 percent of this factor will be earned. If total
shareholder return is below the 50th percentile, but at or above the 25th
percentile, this factor will be earned at 25 percent. Below the 25th percentile,
no percentage is earned for this factor.
10
<PAGE> 15
The second factor, customer satisfaction, is measured by reference to a
survey by an outside entity, as under the SVIP. In order to earn any percentage
for this factor, customer satisfaction must be in the top 40th percentile of
comparison companies. To earn 100 percent, the level of customer satisfaction
must be 95 percent or better. If the level of customer satisfaction is between
89 percent and 94.5 percent, between 50 and 96 percent of this factor may be
earned. If the level is between 86 and 89 percent, this factor will be earned at
25 percent. Below the 86 percent level, no percentage is earned for this factor.
The third factor, manufacturing customer price, is measured by reference to
base prices charged to manufacturing customers in a peer group of 30 comparison
companies, treating the lowest price as achieving the highest performance
percentile. To earn 100 percent of this factor, Detroit Edison's manufacturing
customer price must be in the 50th percentile or above. Between the 26th and
50th percentiles, this factor is earned at from 25 to less than 100 percent. No
portion is earned for this factor below the 26th percentile.
The members named below serve on the Organization and Compensation
Committee for both DTE Energy and Detroit Edison.
ORGANIZATION AND COMPENSATION COMMITTEE:
Terence E. Adderley, Chair
David Bing
Eugene A. Miller
Dean E. Richardson
Alan E. Schwartz
11
<PAGE> 16
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION($) ($)
------------------ ALL OTHER
NAME AND PRINCIPAL POSITION IN 1995 YEAR SALARY BONUS(1) COMPENSATION(3)
- ------------------------------------------------------ ---- ------- -------- ---------------
(A) (B) (C) (D) (I)
<S> <C> <C> <C> <C>
John E. Lobbia........................................ 1995 577,116 57,712 22,689
Chairman of the Board and Chief Executive Officer 1994 540,000 33,475 15,452
(DTE and Detroit Edison) 1993 501,250 124,060 20,570
Anthony F. Earley, Jr................................. 1995 435,115 43,462 4,396
President and Chief Operating Officer(2) 1994 397,989 17,231 4,523
(DTE and Detroit Edison)
Larry G. Garberding................................... 1995 333,769 33,377 13,351
Executive Vice President and Chief Financial Officer 1994 333,000 16,250 12,062
(DTE and Detroit Edison) 1993 322,500 74,174 15,129
Frank E. Agosti....................................... 1995 222,307 22,231 42,237
Senior Vice President -- Power Supply 1994 225,501 10,750 40,329
(Detroit Edison) 1993 212,250 50,940 41,687
Douglas R. Gipson..................................... 1995 217,458 21,731 8,692
Senior Vice President -- Nuclear Generation 1994 215,501 10,500 7,911
(Detroit Edison) 1993 202,513 34,800 6,991
</TABLE>
- -------------------------
(1) Includes cash and deferred awards under the SVIP for the years shown.
(2) Mr. Earley joined Detroit Edison on March 1, 1994.
(3) Includes matching contributions by Detroit Edison to the Savings &
Investment Plan. Under the Plan, which is a qualified defined-contribution
plan, Detroit Edison makes matching contributions periodically on behalf of
the participants in the amount of 50 percent of each such participant's
contributions. These matching contributions are limited to 4 percent of a
participant's salary, up to $150,000 for 1995. Prior to April 1994, the
matching contributions were limited to 3 percent of a participant's salary.
For 1995, Messrs. Lobbia, Earley, Garberding, Agosti and Gipson were
credited with matching contributions of $5,604, $4,396, $6,000, $6,000 and
$6,000, respectively.
Also includes amounts matched by Detroit Edison pursuant to the Savings
Reparation Plan ("SRP"). The SRP provides that up to 10 percent of
compensation in excess of $150,000 may be deferred. Matching contributions
of 50 percent of each participant's contribution are limited to 4 percent
of the salary in excess of this amount. Prior to July 1994, the matching
contributions were limited to 3 percent of a participant's salary. The
value of the account will appreciate or depreciate based on the market
value of the Company's Common Stock plus imputed dividends. Assets in the
SRP are paid to participants upon termination of employment. For 1995,
Messrs. Lobbia, Garberding, Agosti and Gipson were credited with matching
SRP contributions of $17,085, $7,351, $2,892 and $2,692, respectively.
Also includes deferred awards of $31,845, $32,250 and $33,345 for the years
1993, 1994 and 1995, respectively, for Mr. Agosti under the Key Employe
Deferred Compensation Plan ("KEDCP"), which is a non-qualified retirement
plan for specified employees. Under the terms of the KEDCP,
12
<PAGE> 17
Mr. Agosti is eligible to receive an annual deferred compensation award
that is not in excess of 1 percent of regular compensation (including
employee contributions to the Savings & Investment Plan and the SRP, but
not including incentive awards). KEDCP awards are payable for 15 years
after retirement and reflect the 1993, 1994 and 1995 awards of 1 percent
for each of the 15 years subsequent to a participant's retirement.
LONG-TERM INCENTIVE PLAN -- AWARDS IN THE LAST FISCAL YEAR TABLE
<TABLE>
<CAPTION>
ESTIMATED PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS
NUMBER PERFORMANCE PERIOD ---------------------------------
NAME OF SHARES UNTIL PAYOUT THRESHOLD TARGET MAXIMUM
- ----------------------------------- --------- ------------------ --------- -------- --------
(A) (B) (C) (D) (E) (F)
<S> <C> <C> <C> <C> <C>
1 3/4 - 3 3/4
John E. Lobbia..................... 18,000 years $ 0 $257,625 $515,250
1 3/4 - 3 3/4
Anthony F. Earley, Jr.............. 10,000 years 0 143,125 286,250
1 3/4 - 3 3/4
Larry G. Garberding................ 6,000 years 0 85,875 171,750
1 3/4 - 3 3/4
Frank E. Agosti.................... 4,000 years 0 57,250 114,500
1 3/4 - 3 3/4
Douglas R. Gipson.................. 4,000 years 0 57,250 114,500
</TABLE>
The awards of restricted stock shown in the table above were made in 1995
pursuant to the Incentive Plan. The restrictions will lapse and such shares will
become non-forfeitable based on the criteria established by the Committee for
the grants and described under Board Compensation Committee Report on Executive
Compensation. As noted, if minimum performance for the various criteria is not
met, all shares will be forfeited and the payout will be zero. Amounts shown in
the table as "Target" reflect attainment of 50 percent of the maximum
performance under the vesting criteria established for the awards and are based
on a stock price of $28.625, the price at the close of business on the date of
the grant. The table reflects amounts based on the entire 3 3/4 year restriction
period and one-third of such amounts may be earned during each of the three
vesting periods in such restriction period. Actual payouts will depend on the
actual levels achieved in each of the three vesting criteria as described in the
Committee report.
PENSION PLANS TABLE
<TABLE>
<CAPTION>
AVERAGE YEARS OF BENEFIT SERVICE
FINAL --------------------------------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40 45
- ------------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$225,000 $101,250 $112,500 $123,750 $135,000 $140,625 $146,250 $151,875
250,000 112,500 125,000 137,500 150,000 156,250 162,500 168,750
300,000 135,000 150,000 165,000 180,000 187,500 195,000 202,500
350,000 175,000 192,500 210,000 218,750 227,500 236,250 245,000
400,000 200,000 220,000 240,000 250,000 260,000 270,000 280,000
450,000 225,000 247,500 270,000 281,250 292,500 303,750 315,000
500,000 250,000 275,000 300,000 312,500 325,000 337,500 350,000
550,000 275,000 302,500 330,000 343,750 357,500 371,250 385,000
600,000 300,000 330,000 360,000 375,000 390,000 405,000 420,000
650,000 325,000 357,500 390,000 406,250 422,500 438,750 455,000
700,000 350,000 385,000 420,000 437,500 455,000 472,500 490,000
750,000 375,000 412,500 450,000 468,750 487,500 506,250 525,000
</TABLE>
- -------------------------
Note: The above includes benefits payable directly by the Company when total
annual benefits exceed the benefits payable under the Retirement Plan and
covered compensation exceeds $150,000.
13
<PAGE> 18
Compensation used to calculate the benefits in the Pension Plans Table
utilized only base salaries included in the "Salary" column of the Summary
Compensation Table. The base salaries for Messrs. Lobbia, Earley, Garberding,
Agosti and Gipson were $600,000, $440,000, $337,000, $225,000; and $220,000,
respectively. The plans require certain years of service before benefits under
the plans vest with the individual. Under all plans, Messrs. Lobbia, Earley,
Garberding, Agosti and Gipson have 32, 2, 6, 38 and 8 actual years of service,
respectively. Messrs. Earley, Garberding and Gipson have 15, 25 and 14 years,
respectively, of additional awarded service for the purpose of calculating
benefits under the Management Supplemental Benefit Plan (MSBP). Messrs. Earley
and Gipson's eligibility for the additional awarded service is subject to their
meeting the eligibility requirements of the MSBP. Mr. Garberding's eligibility
for the additional awarded service is subject to his remaining with Detroit
Edison a specified number of years. The benefits are calculated based upon age,
years of service (actual and awarded), final average compensation, management
position at retirement and payment option selected. Such benefits are not
subject to any deductions for Social Security benefits.
In 1995, irrevocable trusts were established to provide a source of funds
to assist DTE and Detroit Edison in meeting its liabilities under certain of the
directors' and executives' compensation plans described above. DTE and Detroit
Edison will make contributions to the trusts from time to time in amounts
determined in accordance with the provisions of the trusts sufficient to pay
benefits when due to participants under such plans. Notwithstanding the trusts,
these plans are not qualified or funded and amounts on deposit in the trusts are
not subject to the claims of DTE or Detroit Edison's, as the case may be,
general creditors.
EMPLOYMENT CONTRACTS
Messrs. Earley and Garberding have employment contracts with Detroit
Edison. Mr. Earley received a lump sum upon joining Detroit Edison, which is
included in Column (c) "Salary" in the Compensation Table. Under certain
circumstances, if Mr. Earley leaves Detroit Edison, he would be allowed a
six-month paid leave of absence and would receive a lump sum equal to his annual
salary. The contract also provides that retirement benefits are calculated as if
he had become vested under the Retirement Plan. Mr. Garberding's contract
provides certain benefits for retiree health and life insurance and dependent
life insurance available to all employees who satisfy certain length of service
requirements, which length of service requirements Mr. Garberding cannot achieve
due to mandatory retirement.
14
<PAGE> 19
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
MEASUREMENT PERIOD DETROIT
(FISCAL YEAR COVERED) EDISON S&P 500 INDEX DJEU GROUP
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 130.86 130.47 129.61
1992 130.91 140.41 138.49
1993 127.14 154.56 154.65
1994 119.49 156.60 135.61
1995 169.29 215.45 178.42
</TABLE>
The graph assumes $100 invested on December 31, 1990, in Detroit Edison
Common Stock, the S&P 500 Index and the DJEU Group. It also assumes the
reinvestment of dividends.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The law firm of Honigman Miller Schwartz and Cohn, of which Alan E.
Schwartz is a Partner, provided professional services during 1995.
ITEM 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to ratification by the shareholders, the Board of Directors has
appointed Deloitte & Touche LLP as independent auditors of DTE for the year
1996. Deloitte & Touche LLP has performed this function since 1995.
The firm has advised DTE that neither the firm nor any of its partners has
any direct financial interest or any material indirect financial interest in DTE
or any of its affiliates.
Prior to 1995, Price Waterhouse LLP served as independent accountants of
Detroit Edison. After a review of proposals from several accounting firms and an
evaluation of Detroit Edison's needs and the capabilities of the candidates, the
Audit Committee of Detroit Edison's Board of Directors determined that Deloitte
& Touche LLP should be appointed as independent auditors. This appointment was
ratified by the shareholders at the 1995 Annual Meeting.
15
<PAGE> 20
During the Company's two fiscal years ending December 31, 1994, and the
subsequent interim period from January 1, 1995, through the date hereof, there
have been no disagreements with Price Waterhouse LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which, if not resolved to its satisfaction, would have caused Price
Waterhouse LLP to make reference thereto in its report on the financial
statements for such years. None of Price Waterhouse LLP's reports on the
financial statements for 1993 and 1994 contained an adverse opinion or a
disclaimer of opinion, or was qualified or modified as to uncertainty, audit
scope or accounting principles.
Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting and will be afforded an opportunity to make a statement, if they desire,
and to respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO RATIFY THE
APPOINTMENT OF INDEPENDENT AUDITORS.
ITEM 3. SHAREHOLDER PROPOSAL
Ms. Imelda T. Bogen, 600 West Huron, #510, Ann Arbor, Michigan, the
beneficial owner of 80 shares of Common Stock, has formally notified the Company
that she intends to attend the meeting to present the following proposal:
Whereas: In 1969 DECo estimated the cost of Fermi 2 construction at
$229 million. Fermi 2 costs established by MPSC in December of 1988 place
project costs at $4.858 billion.
Whereas: Expert testimony on behalf of the Attorney General of
Michigan states: "Fermi 2 costs will exceed its benefits by approximately
$3.762 billion over the lifetime of the facility, in 1986 present value
terms, ...even if the capital cost of the Fermi 2 facility were zero, it
would still not break even economically. ...A variety of sensitivity
analysis of the economics of Fermi 2 for the DECo system and its
ratepayers, under plausible alternative assumptions, also show large
cumulative present value losses, ranging between about $3.5 billion and
about $4.2 billion." (Direct Testimony of Stephen S. Bernow, pp. 16-18,
MPSC Case No. U-7660)
Whereas: According to the Nuclear Regulatory Commission, during the
three year period of 1991 through 1993 the operation and maintenance (O&M)
costs of Fermi 2 have averaged $193 million dollars per year. These O&M
costs alone are 49% above replacement power.
Whereas: The 1992 Energy Policy Act has established wholesale wheeling
of electric power (competition for commercial customers); this places Fermi
2 at risk of becoming a stranded investment because of high costs and
inability to compete.
Whereas: FERC ruling ER-92-592-000 states owners of nuclear plants
could shut down a facility and recover full investment if it is
economically prudent.
Whereas: The International Joint Commission has recommended that
persistent toxic substances be virtually eliminated. Fermi 2 releases these
persistent toxics regularly during operation.
Whereas: There is no economic advantage for ratepayers or stockholders
for the continued operation of Fermi 2. The life time losses from the plant
exceed the current cost of the plant. Since the
16
<PAGE> 21
sunken cost can now be retired at a net savings to the ratepayer, it is
economically advantageous for DECo to cease operation of Fermi.
Resolved: Company (DECo) establish and communicate to shareholders by
end of 3rd quarter FY 96, a definitive set of quantitative and qualitative
economic and environmental bench mark criterion by which Company will
permanently cease nuclear operations of Fermi 2. This criterion should
include, but not be limited to, considerations of option(s) provided by
December 1988 MPSC order* (supported by FERC ruling ER-92-592-000) to
permanently cease nuclear operations of Fermi 2 and amortize net plant
investment in rates. *See DECo 1994 annual report, Note 3.
Supporting Statement: This resolution is necessary to protect the
interests of shareholders. Fermi 2 constitutes 28 (%) percent of Company
assets, yet is only 11 (%) percent of grid capacity. The continued
escalating expenditures of Fermi 2 must be scrutinized for economic and
environmental prudence. Simply stated: Is Company sending good money after
bad? Establishing a set of bench mark criterion will provide the crucial
tool needed to make that decision.
THE BOARD OF DIRECTORS AND MANAGEMENT OPPOSE THIS SHAREHOLDER PROPOSAL AND
RECOMMEND A VOTE AGAINST IT FOR THE REASONS SET FORTH BELOW.
The proposal requests the Company to "...establish and communicate to
shareholders by end of 3rd quarter FY 96, a definitive set of quantitative and
qualitative economic and environmental bench mark criterion by which Company
will permanently cease nuclear operations of Fermi 2."
The Company has always had one unchangeable criterion for the continuing
operation of Fermi 2: If the plant cannot be operated safely and in an
environmentally responsible manner, it will not be run. Beyond that criterion,
the Company assesses, on an ongoing basis, a variety of options for all of its
facilities, including Fermi 2.
Based on what is known at this time, the continuing operation of Fermi 2 is
in the best interest of the Company's shareholders and its customers. We expect
Fermi 2 to operate for the entire length of its operating license. Management
does not believe that a definitive set of quantitative and qualitative criteria
can be established which would determine the permanent cessation of operations
at Fermi 2. The electric utility industry is being deregulated and major changes
are expected to occur in the future. These will need to be evaluated at the time
they occur.
The shareholders of DTE have invested $3.9 billion in the Fermi plant. The
plant represents 27 percent of the assets of the Company. Fermi has been running
safely and efficiently. As of March 10, 1996, it had been operating for 268
consecutive days, a new record for the plant. Fermi is one of our major
generating assets. During last summer's extreme heat wave, Fermi's performance
allowed the Company to avoid either buying much higher priced power or cutting
off customers during the periods when power was not available at any price. It
makes no sense to shut down Fermi and lose its needed capacity.
In addition, the cost of decommissioning the Fermi 2 facility is being
recovered from current customers and the amounts are being held in a trust fund.
The projected full cost of decommissioning has not yet been recovered, and there
are no assurances that any shortfall in funds necessary to decommission Fermi 2
would be recovered if the plant stopped operating prior to the expiration of its
license.
Many of the statements made by the proponent of this proposal are
inaccurate or incomplete. These inaccuracies are so pervasive that only a few
will be discussed here.
17
<PAGE> 22
The proposal cites testimony in a Michigan Public Service Commission (MPSC)
case in stating that there is no economic advantage for ratepayers or
stockholders for continued operation of Fermi 2 and that the lifetime losses
from the plant exceed the current cost of the plant. Not mentioned in the
proponent's statement is the fact that the MPSC did not agree with the testimony
cited and found that the operation of Fermi 2 will produce savings to ratepayers
during the life of the plant.
The proposal also states that the Federal Energy Regulatory Commission
(FERC) has ruled that owners of nuclear plants could shut down a facility and
recover the full investment from customers. On the contrary, the FERC case the
proponent describes involved a power plant that had been operating for 30 years
and only applies to that plant, not all nuclear facilities.
By any reasonable criterion, it is in the best interest of both
shareholders and ratepayers to continue the operation of Fermi 2. We expect that
it will continue to be in their best interest to operate the plant for the
entire duration of Fermi 2's operating license. Any attempt to establish
specific criterion for the continued operation of Fermi 2 would be obsolete as
soon as it is established. The Company will continue to assess the impact on all
of its operations, including Fermi 2, of the changes that the electric utility
industry is undergoing.
YOUR BOARD OF DIRECTORS AND MANAGEMENT URGE YOU TO VOTE "AGAINST" THIS
PROPOSAL.
ITEM 4. SHAREHOLDER PROPOSAL
The Sisters, Servants of the Immaculate Heart of Mary, 610 West Elm Avenue,
Monroe, Michigan, the beneficial owners of 3,026 shares of Common Stock; the
Sisters of St. Joseph, Offices of Congregational Administration, Nazareth,
Michigan, the beneficial owners of 600 shares of Common Stock; and the Sisters
of Mercy of the Americas, 29000 Eleven Mile Road, Farmington Hills, Michigan,
the beneficial owners of 420 shares of Common Stock, have formally notified the
Company that they intend to attend the meeting to present the following
proposal:
WHEREAS: Detroit Edison is responsible for and liable for the ultimate
dismantling of the Fermi II nuclear power plant and the return of the plant
site to its original, non-radioactive, greenfield condition;
WHEREAS estimates for decommissioning a large reactor vary from $130
million to $3 billion according to a 1988 U.S. Government Accounting Office
report;
WHEREAS Fermi II's Nuclear Regulatory Commission license would allow
the plant to operate for 30 more years (until 2025), but accidents and/or
age-related degradation of vital safety components have caused 21 U.S.
commercial nuclear power plants to be shut down years before their
licenses' expiration (at an average of service life of 11 years);
WHEREAS there has already been one serious accident at Fermi II, and
Chairman John Lobbia reported at the 1995 Annual Meeting that the cost of
that accident will be within the $70 to $80 million range;
WHEREAS the longer Fermi II operates, the greater will be the
accumulation of radioactivity there, and the higher will be the radiation
fields within which demolition workers will have to work to dismantle the
plant, thereby increasing costs, liability and occupational hazards;
18
<PAGE> 23
WHEREAS the longer the plant operates, the greater will be the
accumulation of irradiated fuel rods which must be stored at the plant in a
fuel pool or dry casks requiring surveillance and maintenance; and the rods
and other highly radioactive components may then someday be transported to
a federal deep-geologic repository which has neither been finally sited nor
constructed, and may never be;
WHEREAS Detroit Edison Chairman Lobbia reported at the 1995 meeting
that plant storage capacity in the spent-fuel pool at the plant will last
only until 2000 and will have to be modified thereafter;
WHEREAS even if safe technologies were to be developed for the
dismantling of the Fermi II buildings and reactor vessel, it is unlikely
that a safe disposal site will ever be found for the wastes contained
therein which will remain radioactive for thousands of years, or that there
exist railroad or other transportation corridors for these wastes that
would be acceptable to the public;
RESOLVED: The shareholders request that the company:
(1) provide the shareholders with an independent financial
assessment of the comparative costs of dismantling Fermi II before the
expiration of its operating license versus operating it for the full
licensed duration, including such costs as:
-- the stockpiling of mounting amounts in volume and
radioactivity of high- and low-level radioactive wastes for which
the company may remain morally and financially liable for an
indefinite time;
-- the greater number of workers needed to replace worn-out,
malfunctioning or obsolete components because of the increasing
buildup of radiation levels within the plant;
-- the cost of replacement of damaged and corroded reactor
internals as the plant ages;
-- the potential of another major accident;
(2) provide a summary of this assessment to shareholders in the
next annual report and a copy of the full assessment to shareholders on
request.
Supporting Statement: We believe that an independent assessment of these
comparative costs is essential for realistic and responsible planning by the
company. Management and shareholders should be made aware of the inevitable
long-term costs and burdens inherent in the continued operation of Fermi II for
the company, the environment and the surrounding communities. To ignore these
costs and burdens is to jeopardize the interests of shareholders, consumers, and
the public at large.
THE BOARD OF DIRECTORS AND MANAGEMENT OPPOSE THIS SHAREHOLDER PROPOSAL AND
RECOMMEND A VOTE AGAINST IT FOR THE REASONS SET FORTH BELOW.
The proposal requests "... an independent financial assessment of the
comparative costs of dismantling Fermi II before the expiration of its operating
license versus operating it for the full license duration ..."
The Company believes that the study described in the proposal would be
misleading and is unnecessary. The study would add an unnecessary cost to the
Company at a time when it is imperative that costs be reduced to meet the
challenges the Company faces in the newly competitive electric utility
19
<PAGE> 24
industry. This massive study would divert the attention of key management and
technical personnel. These individuals are deeply involved with improving the
performance of the plant.
The Company assesses, on an ongoing basis, a variety of options for all of
its facilities, including Fermi 2. The continuing operation of the plant is the
best option for the Company's shareholders and its customers.
The shareholders of DTE have invested $3.9 billion in the Fermi plant. The
plant represents 27 percent of the assets of the Company. Fermi has been running
safely and efficiently. As of March 10, 1996, it had been operating for 268
consecutive days, a new record for the plant. Fermi 2 is one of our major
generating assets. During last summer's extreme heat wave, Fermi's performance
allowed the Company to avoid either buying much higher priced power or cutting
off customers during the periods when power was not available at any price. It
makes no sense to shut down Fermi and lose its needed capacity.
In concluding that Fermi 2 is operating safely, and that its continued
operation is the best option at this time, management has considered both safety
and financial issues. Members of management are shareholders and customers of
the Company. Many of our managers and their families live in the communities
surrounding the plant. We work at the plant. Our primary concern is that Fermi 2
operate safely. We are also, as shareholders as well as employees, concerned
about the financial health of the Company.
In any complicated analysis, the factors to be considered and the
assumptions made regarding those factors determine the outcome. The only factors
the proposal would consider are cost factors. It does not consider that there
are benefits to the continued operation of Fermi 2. For example, the proposal is
largely based on decommissioning costs. Those costs will be incurred whether the
plant is shut down now or later. The plant has operated for a number of years,
and decommissioning costs are not expected to change much in the future. The
Company is currently collecting an amount expected to cover the decommissioning
costs from its customers, and those amounts are being held in a trust fund to
pay for the eventual decommissioning of Fermi 2. If the plant were closed now,
it is uncertain whether the Company would be able to collect decommissioning
costs from customers, or whether shareholders would have to pay those costs.
Other examples of benefits of operating Fermi 2 are that the operation of Fermi
2 reduces the amount of greenhouse gasses and other effluents discharged into
the environment, and that its operating costs are projected to decrease over
time.
The study proposed would be costly and would not produce useful
information, since the factors to be considered are slanted only towards costs.
Any study done now will immediately be obsolete since the electric utility
industry is undergoing profound changes as it is deregulated. The proposed study
would distract management's focus at a time when management should concentrate
on continuing to run Fermi 2 safely and efficiently and preparing the Company as
a whole to face the challenges of a competitive, deregulated electric utility
business.
YOUR BOARD OF DIRECTORS AND MANAGEMENT URGE YOU TO VOTE "AGAINST" THIS
PROPOSAL.
20
<PAGE> 25
TRANSACTION OF OTHER BUSINESS AND OTHER INFORMATION
AS TO OTHER BUSINESS WHICH MAY COME BEFORE THE MEETING
Management of DTE does not intend to bring any other business before the
meeting for action. However, if any other business should be presented for
action, it is the intention of the persons named on the enclosed proxy card to
vote in accordance with their judgment on such business.
SHAREHOLDER PROPOSALS
Shareholder proposals to be considered for inclusion in the Proxy Statement
for the 1997 Annual Meeting must be received by the Vice President and Corporate
Secretary of DTE at its principal business address no later than 5:00 p.m. on
November 15, 1996.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers to file reports of ownership and changes in ownership
with respect to the securities of the Company and its affiliates with the SEC
and to furnish copies of these reports to the Company. Based on a review of
these reports and written representations from the Company's directors and
officers regarding the necessity of filing a report, the Company believes that
during 1995 all filing requirements were met on a timely basis.
OTHER INFORMATION
DTE will bear the cost of solicitation of proxies, which will be
principally by mail. Proxies may also be solicited by directors, officers and
employees of DTE and its affiliates, personally, by telephone or by electronic
or facsimile transmission. In addition, Morrow & Co., Inc. of New York, New
York, has been retained to assist in the solicitation of proxies for the Annual
Meeting by the means described above at an estimated cost (excluding expenses)
to DTE of approximately $7,500.
- --------------------------------------------------------------------------------
IMPORTANT
THE INTEREST AND COOPERATION OF ALL SHAREHOLDERS IN THE AFFAIRS OF DTE
ENERGY COMPANY ARE CONSIDERED TO BE OF THE GREATEST IMPORTANCE BY YOUR
MANAGEMENT. EVEN THOUGH YOU EXPECT TO ATTEND THE ANNUAL MEETING, IT IS
URGENTLY REQUESTED THAT, WHETHER YOUR SHAREHOLDINGS ARE LARGE OR SMALL,
YOU PROMPTLY FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENVELOPE PROVIDED HEREWITH. IF YOU WILL DO SO NOW, THE COMPANY WILL BE
SAVED THE EXPENSE OF FOLLOW-UP NOTICES.
- --------------------------------------------------------------------------------
21
<PAGE> 26
Appendix 1 of 4
[DTE ENERGY LOGO]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PROXY By signing on the other side, I (we) appoint Terence E. Adderley, Allan
D. Gilmour, Eugene A. Miller, and any of them, as proxies to vote my
(our) shares of Common Stock at the Annual Meeting of Shareholders to be held on
Monday, April 22, 1996, and at all adjournments thereof, upon the matters set
forth on the reverse side hereof and upon such other matters as may come before
the meeting.
If you sign and return this proxy, the shares will be voted as directed. IF NO
DIRECTION IS INDICATED, THE SHARES WILL BE VOTED FOR PROPOSALS 1 AND 2 AND
AGAINST PROPOSALS 3 AND 4. If the proxy is not signed and returned, the shares
cannot be voted for you.
RECORD VOTE AND SIGN ON REVERSE SIDE
FRONT
- --------------------------------------------------------------------------------
PROXY
Election of Directors: Nominees are Lillian Bauder, David Bing,
Larry G. Garberding, Alan E. Schwartz, and William Wegner.
- ------------------------------------------------------------------
*To withhold vote from any Nominee(s), write the name(s) here:
Your Board of Directors recommends a vote FOR Proposals 1 & 2.
- ------------------------------------------------------------------
*For Withheld
1. Election of Directors / / / /
- ------------------------------------------------------------------
For Against Abstain
2. Independent Auditors / / / / / /
- ------------------------------------------------------------------
Your Board of Directors recommends a vote AGAINST Proposals 3 & 4.
- ------------------------------------------------------------------
3. Shareholder Nuclear For Against Abstain
Criterion Proposal / / / / / /
- ------------------------------------------------------------------
4. Shareholder Nuclear For Against Abstain
Cost Proposal / / / / / /
- ------------------------------------------------------------------
The signature(s) below should correspond exactly with the name(s)
as shown on the left. Where stock is registered jointly in the names
of two or more persons, ALL should sign. When signing as Attorney,
Executor, Administrator, Trustee, Guardian, or as Corporate Officer
on behalf of a Corporation, please give full title as such.
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Signature(s) Date
<PAGE> 27
Appendix 2 of 4
[DETROIT EDISON LETTERHEAD]
March 22, 1996
Dear Savings & Investment Plan Participant:
As a participant in The Detroit Edison Company's Savings & Investment
Plan, you own shares of DTE Energy Common Stock. As in the past, you are
entitled to direct Fidelity Management Trust Company to vote on your behalf at
the April 22 Annual Meeting of the DTE Energy Company Common Stock
Shareholders. Use the enclosed form to show how you would like Fidelity to
vote.
Shareholders will be voting on four issues at the April meeting. They will be
asked to elect five members to the Company's Board of Directors and ratify the
appointment of Deloitte & Touche LLP as independent auditors for 1996.
Shareholders will also be asked to vote on two shareholder proposals: The
first shareholder proposal concerns the establishment of criterion by which
Detroit Edison will permanently cease nuclear operations of Fermi 2; the second
shareholder proposal concerns an independent financial assessment of the
comparative costs of dismantling Fermi 2 before the expiration of its operating
license versus operating it for the full license duration.
To complete the form, simply follow the instructions on the Confidential Voting
Instructions Form.
By completing the voting form enclosed, you will be participating in an
important decision-making process. Please take the time to review the
instructions provided, complete the form, and return it in the enclosed
envelope.
Sincerely,
John E. Lobbia
Enclosure
<PAGE> 28
Appendix 3 of 4
CONFIDENTIAL VOTING INSTRUCTIONS
TO FIDELITY MANAGEMENT TRUST COMPANY AS TRUSTEE
UNDER THE DETROIT EDISON COMPANY SAVINGS & INVESTMENT PLANS
This voting instructions form is sent on behalf of the Board of Directors of
DTE Energy Company. Please complete this form on the reverse side, sign your
name exactly as it appears below, and return it in the enclosed envelope to
Fidelity Management Trust Company.
If you sign and return this form by April 18, 1996, the shares will be voted as
you direct. If you sign and return the form, but do not give voting
directions, the shares will be voted FOR proposals 1 and 2 and AGAINST
proposals 3 and 4. If this form is not signed and returned, the shares cannot
be voted for you.
Only the Trustee can vote your shares, and the Trustee only votes shares for
which the Trustee has received voting instructions. Your shares cannot be
voted in person at the Annual Meeting. How you vote these shares is
confidential. The Trustee will not disclose how you have instructed the
Trustee to vote.
SIGNATURE SHOULD CORRESPOND EXACTLY WITH
YOUR NAME AS PRINTED ON THE LEFT SIDE OF THIS
FORM.
---------------------------------------------
Signature Date
<PAGE> 29
<TABLE>
<S><C>
Appendix 4 of 4
I, as a participant in the Detroit Edison Savings & Investment Plan, hereby direct Fidelity Management Trust Company as Trustee for
the Plan to vote all of the shares of Common Stock of DTE Energy Company represented by my proportionate interest in the Trust at
the Annual Meeting of Shareholders of the Company to be held on Monday, April 22, 1996, and at all adjournments thereof, upon
the matters set forth below and upon such other matters as may come before the meeting.
PLEASE USE /X/ TO INDICATE YOUR VOTE IN THE BOXES BELOW,
USING BLUE OR BLACK INK OR DARK PENCIL. DO NOT USE RED INK.
ELECTION OF DIRECTORS YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
PROPOSALS 1 & 2.
Lillian Bauder David Bing ------------------------------------------------------------
*FOR WITHHELD
Larry G. Garberding Alan E. Schwartz 1. ELECTION OF DIRECTORS / / / /
------------------------------------------------------------
William Wegner FOR AGAINST ABSTAIN
2. INDEPENDENT AUDITORS / / / / / /
------------------------------------------------------------
- ---------------------------------------------------
*TO WITHHOLD VOTE FOR ANY NOMINEE(S), WRITE THE YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST"
NAME(S) ABOVE: PROPOSALS 3 & 4.
------------------------------------------------------------
3. CRITERION PROPOSAL FOR AGAINST ABSTAIN
SHAREHOLDER NUCLEAR / / / / / /
------------------------------------------------------------
4. PROPOSAL FOR AGAINST ABSTAIN
SHAREHOLDER NUCLEAR COST / / / / / /
------------------------------------------------------------
</TABLE>
