<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
DTE Energy Company
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
DTE ENERGY LOGO
2000 2nd Avenue
Detroit, Michigan 48226-1279
March 21, 1997
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 28, 1997, at 10 a.m. at the Detroit Edison Plaza, 660 Plaza Drive,
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
JOHN E. LOBBIA
Chairman and Chief Executive Officer
<PAGE> 3
MAP
<PAGE> 4
2000 2nd Avenue
DTE ENERGY LOGO Detroit, Michigan 48226-1279
NOTICE OF ANNUAL MEETING OF COMMON STOCK SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Common Stock Shareholders
(the "Annual Meeting") of DTE ENERGY COMPANY ("DTE Energy" or "Company") will be
held at the Detroit Edison Plaza, 660 Plaza Drive, Detroit, Michigan, on Monday,
April 28, 1997, at 10 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 Energy for the year
1997;
3. A shareholder proposal regarding criterion for closing the nuclear
power plant;
4. A shareholder proposal regarding the impact of deregulation,
including its impact on the operation of Fermi 2, 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
28, 1997, are entitled to notice of, and to vote at, the meeting.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING.
MARCH 21, 1997 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. 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
MARCH 21, 1997
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of DTE Energy Company ("DTE Energy" or "Company") of
proxies for use at the DTE Energy Annual Meeting of Common Stock Shareholders to
be held on April 28, 1997 (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 Energy 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 Energy 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 Energy 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 ("SIP"), 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 28, 1997, the Record Date, there were 145,103,729 shares of Common
Stock outstanding. The Notice of Annual Meeting and Proxy Statement and the
proxy card were first mailed to holders of DTE Energy Common Stock on or about
March 21, 1997.
Each holder of Common Stock has the right, without prior notice to DTE
Energy, 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 wishes 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 1996 was mailed on or about March 4,
1997, to all shareholders of record on the Record Date, as well as to DRIP and
SIP participants.
ITEM 1. THE ELECTION OF DIRECTORS
The Amended and Restated Articles of Incorporation of DTE Energy 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 1997.
The five directors in this class have been nominated for election for terms
expiring in 2000. All of the nominees have consented to serve if elected and,
with the exception of Mr. Brooks who is a nominee for the first time, are
presently members of the Board of Directors.
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 Company's directors also
serve as directors of The Detroit Edison Company ("Detroit Edison"), now a
wholly owned subsidiary of the Company. The dates shown for service as a
director and officer include service as a director and officer of Detroit Edison
prior to the January 1, 1996, share exchange with the Company. The committees
listed include committees of both companies.
2
<PAGE> 7
NOMINEES FOR ELECTION AT THIS MEETING TO TERMS EXPIRING IN 2000
PHOTO
WILLIAM C. BROOKS, 63, Vice President -- Corporate Affairs,
General Motors Corporation, Detroit, Michigan. Mr. Brooks has
been employed in various capacities at General Motors between
1973 and 1989 and again since 1990. He has been a vice president
since 1994. In 1989 and 1990, Mr. Brooks was Assistant
Secretary, Employment Standards Administration, with the U.S.
Department of Labor. Prior to 1973, he served as an officer in
the United States Air Force in various positions including
assignments with the Department of Defense and other Federal
government departments. Mr. Brooks is a nominee for the first
time as a director of DTE Energy. He is a director of Motor Enterprises, Inc., a
General Motors subsidiary, and the Louisiana-Pacific Corporation. Mr. Brooks is
also a director or trustee of a number of community organizations. He attended
the Advanced Management Program at Harvard Business School and holds a B.A.
degree from Long Island University and an M.B.A. degree from the University of
Oklahoma.
PHOTO
JOHN E. LOBBIA, 55, 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 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.
PHOTO
PATRICIA S. LONGE, 63, 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 Comerica Bank & Trust,
F.S.B.; Comerica Incorporated; Jacobson Stores, Inc.; The Kroger
Company 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.
PHOTO
EUGENE A. MILLER, 59, 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. In addition to Comerica Incorporated and
Comerica Bank, Mr. Miller is also a director of Amerisure
Companies 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, Organization and Compensation and the Special Committee on
Compensation.
3
<PAGE> 8
PHOTO
DEAN E. RICHARDSON, 69, 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,
Organization and Compensation and the Special Committee on
Compensation.
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 1998
PHOTO
TERENCE E. ADDERLEY, 63, 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.
PHOTO
ANTHONY F. EARLEY, JR., 47, President and Chief Operating
Officer, DTE Energy and Detroit Edison. Mr. Earley has served in
his present position since 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 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.
4
<PAGE> 9
PHOTO
ALLAN D. GILMOUR, 62, 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 1990 until his appointment in 1993 as Vice
Chairman, the position from which he retired in 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. and Whirlpool Corporation and is Chairman
of the 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.
PHOTO
THEODORE S. LEIPPRANDT, 63, 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 has been
a director since 1990. Mr. Leipprandt is a past president of the
Michigan Agri-Business Association and the Michigan 4-H
Foundation Board of Trustees. He currently serves as a director
of East Central Michigan Farm Credit System. Mr. Leipprandt
received a degree in animal science from Michigan State
University. Committees: Audit, Energy Resources Planning and Nuclear Review.
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 1999
PHOTO
LILLIAN BAUDER, 57, Vice President for Corporate Affairs, Masco
Corporation, and President, Masco Charitable Trust, Taylor,
Michigan. Dr. Bauder has served in her present position since
1996. She served as President and Chief Executive Officer,
Cranbook Educational Community, Bloomfield Hills, Michigan, from
1983 to 1996. Dr. Bauder has been a director since 1986 and is
also a director of Comerica Bank. She received a B.A. degree
from Douglass College, Rutgers University, and M.A. and Ph.D.
degrees in sociology from the University of Michigan.
Committees: Audit, Executive and Nuclear Review.
PHOTO
DAVID BING, 53, 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, Organization and Compensation and the Special Committee on
Compensation.
5
<PAGE> 10
PHOTO
LARRY G. GARBERDING, 58, 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.
PHOTO
ALAN E. SCHWARTZ, 71, a Partner of the law firm Honigman Miller
Schwartz and Cohn, Detroit, Michigan. Mr. Schwartz has been a
director since 1969. He is also a director of 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.
PHOTO
WILLIAM WEGNER, 70, 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.
6
<PAGE> 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP* OF CLASS
- -------------- ------------------------------------ --------------------- --------
<C> <S> <C> <C>
Common The Capital Group Companies, Inc.
and Capital Research & Management
Company 7,819,000 5.39
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
- -------------------------
* Capital Research and Management Company and its parent holding company, The
Capital Group Companies, Inc., have reported jointly on Schedule 13G that
Capital Research and Management Company is the beneficial owner of, with
investment power over, 7,819,000 shares of the Company's Common Stock as a
result of acting as an investment adviser. The Capital Group has informed the
Company that the shares are held solely for investment purposes in the
ordinary course of business and not with the purpose or effect of changing or
influencing control.
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL OWNERSHIP
TITLE OF CLASS NAME OF BENEFICIAL OWNER AS OF DECEMBER 31, 1996(1)(2)
- -------------- ------------------------ -----------------------------
<C> <S> <C>
Common Terence E. Adderley.................................. 1,600
Common Frank E. Agosti...................................... 14,507(3)
Common Lillian Bauder....................................... 1,616
Common David Bing........................................... 1,000
Common William C. Brooks.................................... 100(4)
Common Robert J. Buckler.................................... 11,694(3)
Common Anthony F. Earley, Jr. .............................. 21,107(3)
Common Larry G. Garberding.................................. 16,012(3)
Common Allan D. Gilmour..................................... 1,600
Common Theodore S. Leipprandt............................... 1,351
Common John E. Lobbia....................................... 47,969(3)
Common Patricia S. Longe.................................... 1,900
Common Eugene A. Miller..................................... 1,600
Common Dean E. Richardson................................... 2,600
Common Alan E. Schwartz..................................... 930
Common William Wegner....................................... 1,100
Directors and executive officers as a group
Common (26 persons)....................................... 194,931(3)
</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.
7
<PAGE> 12
(2) Does not include 1,224 shares held by spouse or other family member in which
the director or officer disclaims any beneficial ownership interest.
(3) Includes performance restricted shares, unvested as of December 31, 1996, of
DTE Energy Common Stock awarded under DTE Energy's Long-Term Incentive Plan
to Messrs. Agosti, Buckler, Earley, Garberding, and Lobbia of 7,000, 8,500,
19,000, 11,000 and 33,000 shares, respectively. Also includes shares held in
the Detroit Edison Savings & Investment Plan as of December 31, 1996.
(4) Mr. Brooks is a nominee for director for the first time. His holdings are as
of March 4, 1997.
THE BOARD OF DIRECTORS AND BOARD COMMITTEES
All directors are on the boards of both DTE Energy 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 on 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.
DTE Energy 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. 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 1996, there were 10 meetings of the DTE Energy Board of Directors
and 22 meetings of the various committees of the Board. Most of the directors
attended 100 percent of the meetings and, with the exception of Dr. Longe who
attended 72 percent of the meetings because of an illness, all directors
attended at least 93 percent of the meetings held during 1996.
The boards of directors of DTE Energy and Detroit Edison have each
established four standing committees (Audit, Executive, Finance 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. DTE Energy has established a Nominating Committee and
a Special Committee on Compensation. With the exception of the Executive
Committee, which has authority to act on most matters when the board is not in
session, and the Special Committee on Compensation which has authority to act on
certain compensation matters, 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
8
<PAGE> 13
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 1996,
three meetings of the 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. One meeting of the Nominating Committee was held
during 1996.
The Organization and Compensation Committee reviews recommendations and
approves, subject to Board agreement, the compensation of those executives who
are at the level of vice president and higher. The Committee also assists in the
selection of officers to assure that successors for each office are provided for
and selected. Four meetings of the Organization and Compensation Committee were
held during 1996.
In 1997, a Special Committee on Compensation was established consisting
entirely of disinterested directors to consider and approve certain compensation
of executives which may be subject to certain IRS restrictions.
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 1996, 11 meetings of the Nuclear Review Committee were
held.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
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 and 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.
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. Messrs. Lobbia, Earley and Garberding are officers of both DTE
Energy and Detroit Edison. Messrs. Agosti and Buckler are officers of Detroit
Edison only (effective April 1, 1997, Mr. Buckler will also be an officer of DTE
Energy). Officers of DTE Energy who are also officers of Detroit Edison do 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 and Detroit Edison has adopted an overall compensation plan that
rewards executives for the enhancement of shareholder and customer value and
supports performance-oriented 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
9
<PAGE> 14
attract and retain key executives and to provide a compensation package that
recognizes individual contributions to corporate performance.
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.
Section 162(m) of the Internal Revenue Code provides that executive
compensation in excess of $1 million will not be deductible for purposes of
corporate income taxes unless it is performance-based compensation and is paid
pursuant to a plan meeting certain requirements of the Code. The total
compensation paid to each of the executive officers was significantly below the
$1 million deductibility cap. The Committee intends to continue increased
reliance on performance-based compensation programs. Such programs will be
designed to fulfill, in the best possible manner, future corporate business
objectives. To the extent consistent with this goal, the Committee currently
anticipates that such programs will also be designed to satisfy the requirements
of Section 162(m) with respect to the deductibility of compensation paid.
However, particularly during the period of transition to a deregulated electric
utility industry, the Committee believes it may be appropriate in certain
circumstances to utilize performance-based plans that may not meet all of the
requirements of the Code.
The Committee is currently re-evaluating the Company's executive
compensation program in light of the changes in the electric utility industry
which are occurring as a result of the deregulation of the industry. New
approaches more consistent with a competitive industry are being considered.
Total Compensation. Total compensation for executive officers is 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. All of the named executive
officers' total compensation was below the median of the Comparative Market. Mr.
Lobbia's total compensation continues to be below the median of the Comparative
Market after the 1996 adjustment to his base pay.
The key elements of Detroit Edison's executive compensation program for
1994 were base salary and the Shareholder Value Improvement Plan. Also in 1994,
a lump sum payment in lieu of a base salary adjustment was made. In 1995 and
1996, 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 on the following
pages.
Base Salary. 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's 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
10
<PAGE> 15
president and 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. All
of the named executive officers' base salaries were below the Comparative Market
median.
With respect to the salary increase granted to Mr. Lobbia in 1996, the
Committee took into account the factors discussed above. Mr. Lobbia's base
salary for 1995 was below the median of the Comparative Market. Mr. Lobbia's
base salary was increased to $650,000 effective April 1, 1996, which was
approximately at the median of the Comparative Market.
Shareholder Value Improvement Plans ("SVIP"). Non-union represented
employees of Detroit Edison, including executive officers, were eligible for the
SVIP. The measures for the SVIP, which are established each year by the
Organization and Compensation Committee, were common for all participants. Each
measure was 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.
Performance in each of the five measures resulted in no award for 1996. The
amounts awarded under the 1994 and 1995 SVIP programs for the five named
officers are shown in Column (d) "Bonus" in the Summary Compensation Table.
Long-Term Incentive Plan ("Incentive Plan"). The Incentive Plan was adopted
in 1995 and approved by shareholders at the 1995 Detroit Edison 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 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 to officers in the form of
restricted stock under the Incentive Plan. The first one-third of these awards
was subject to forfeiture if certain performance criteria
11
<PAGE> 16
were not met during a vesting cycle that ended December 31, 1996. Based on the
Company's performance during this period, 45 percent of the first one-third of
the 1995 award was vested. The value of this payout is shown in Column (h) "LTIP
Payouts" in the Summary Compensation Table.
During 1996, the Committee made awards in the form of Restricted Stock
under the Incentive Plan as shown in the "Long-Term Incentive Plan -- Awards in
Last Fiscal Year" table. These awards involved current grants of DTE Energy
Common Stock that are subject to forfeiture if specified performance criteria
are not met during a vesting cycle that began January 1, 1996, and extends
through December 31, 1999. During the performance period indicated on the
"Long-Term Incentive Plan -- Awards in 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.
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.
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
88.5 and 94.5 percent, between 50 and 96 percent of this factor may be earned.
If the level is between 86 and 88.5 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 must improve its
competitive position by at least 30 percent. If the competitive position is
maintained or improved by less than 30 percent, this factor is earned at from 50
to less than 100 percent. No percentage 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:
Terence E. Adderley, Chairman
David Bing
Eugene A. Miller
Dean E. Richardson
Alan E. Schwartz
12
<PAGE> 17
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
($)
($) LONG TERM
ANNUAL COMPENSATION COMPENSATION ($)
------------------------- --------------- ALL OTHER
NAME AND PRINCIPAL POSITION IN 1996 YEAR SALARY BONUS(1) LTIP PAYOUTS(2) COMPENSATION(3)(4)
----------------------------------- ---- ------ -------- --------------- ------------------
(A) (B) (C) (D) (H) (I)
<S> <C> <C> <C> <C> <C>
John E. Lobbia....................... 1996 636,539 0 86,569 34,963
Chairman of the Board and 1995 577,116 57,712 22,689
Chief Executive Officer 1994 540,000 33,475 15,452
(DTE Energy and Detroit Edison)
Anthony F. Earley, Jr................ 1996 454,615 0 48,094 16,892
President and Chief Operating 1995 435,115 43,462 4,396
Officer(5) (DTE Energy and Detroit
Edison) 1994 397,989 17,231 4,523
Larry G. Garberding.................. 1996 345,039 0 28,856 18,352
Executive Vice President and Chief 1995 333,769 33,377 13,351
Financial Officer 1994 333,000 16,250 12,062
(DTE Energy and Detroit Edison)
Frank E. Agosti...................... 1996 230,115 0 19,238 46,753
Senior Vice President -- 1995 222,307 22,231 42,237
Power Supply (Detroit Edison) 1994 225,501 10,750 40,329
Robert J. Buckler.................... 1996 228,768 0 24,047 12,185
Senior Vice President -- 1995 214,615 21,462 8,585
Energy, Marketing and Distribution 1994 215,000 10,000 7,002
(Detroit Edison)
</TABLE>
- -------------------------
(1) Includes cash awards under the SVIP for the years shown.
(2) Includes the value at January 27, 1997 (the date that the performance was
certified), of the portion of the 1995 LTIP award that became vested as the
result of meeting the performance criteria described previously.
(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. These matching contributions are limited to 6 percent of a
participant's salary up to $150,000 for 1996. Prior to May 1996, the
matching contributions were limited to 4 percent of a participant's salary.
For 1996, Messrs. Lobbia, Earley, Garberding, Agosti and Buckler were
credited with matching contributions of $6,000.01, $4,707.74, $6,649.35,
$7,431.49 and $7,458.44, respectively.
Also includes amounts matched by Detroit Edison pursuant to the Savings
Reparation Plan ("SRP"). The SRP provides that up to 15 percent of
compensation in excess of $150,000 may be deferred. Matching contributions
are limited to 6 percent of the salary in excess of this amount. Prior to
April 1996, the matching contributions were limited to 4 percent of this
excess amount. The value of the account will appreciate or depreciate based
on the market value attributed to the employee's account.
13
<PAGE> 18
Assets in the SRP are paid to participants upon termination of employment.
For 1996, Messrs. Lobbia, Earley, Garberding, Agosti and Buckler were
credited with matching SRP contributions of $28,961.55, $12,185, $11,702.47,
$4,806.94 and $4,726.16, respectively.
Also includes deferred awards of $32,250, $33,345 and $34,515 for the years
1994, 1995 and 1996, respectively, for Mr. Agosti under the Key Employee
Deferred Compensation Plan ("KEDCP"), which is a non-qualified retirement
plan for specified employees. Under the terms of KEDCP, 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 1994, 1995 and 1996 awards of 1 percent for each
of the 15 years subsequent to a participant's retirement.
(4) The number and value of the aggregate restricted stock holdings of the named
officers as of December 31, 1996, are: Mr. Lobbia, 33,000 shares or
$1,068,375; Mr. Earley, 19,000 shares or $615,125; Mr. Garberding, 11,000
shares or $356,125; Mr. Agosti, 7,000 shares or $226,625; and Mr. Buckler,
8,500 shares or $275,188.
(5) Mr. Earley joined Detroit Edison on March 1, 1994.
LONG-TERM INCENTIVE PLAN -- AWARDS IN THE LAST FISCAL YEAR
<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>
John E. Lobbia..................... 15,000 4 years $0 $250,125 $500,250
Anthony F. Earley, Jr.............. 9,000 4 years 0 151,875 303,750
Larry G. Garberding................ 5,000 4 years 0 84,375 168,750
Frank E. Agosti.................... 3,000 4 years 0 50,625 101,250
Robert J. Buckler.................. 3,500 4 years 0 59,063 118,125
</TABLE>
The awards of restricted stock shown in the table above were made in 1996
pursuant to the Incentive Plan. The restrictions will lapse and such shares may
become non-forfeitable based on the criteria established by the Committee for
the grants and described under Board Compensation Committee Report on Executive
Compensation and if approved by the Special Committee on 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 in Column (e)
"Target" reflect attainment of 50 percent of the maximum performance under the
vesting criteria established for the awards and are based on the stock price at
the close of business on the date of the grant.
14
<PAGE> 19
PENSION PLANS TABLE
<TABLE>
<CAPTION>
AVERAGE YEARS OF BENEFIT SERVICE
FINAL -----------------------------------------------------------------------------------------------
COMPENSATION 5 10 15 20 25 30 35 40 45
- ------------ - -- -- -- -- -- -- -- --
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$225,000 $15,750 $ 90,000 $101,250 $112,500 $123,750 $135,000 $140,625 $146,250 $151,875
250,000 17,500 100,000 112,500 125,000 137,500 150,000 156,250 162,500 168,750
275,000 19,250 110,000 123,750 137,500 151,250 165,000 171,875 178,750 185,625
300,000 21,000 120,000 135,000 150,000 165,000 180,000 187,500 195,000 202,500
325,000 22,750 130,000 146,250 162,500 178,750 195,000 203,125 211,250 219,375
350,000 24,500 157,500 175,000 192,500 210,000 218,750 227,500 236,250 245,000
400,000 28,000 180,000 200,000 220,000 240,000 250,000 260,000 270,000 280,000
425,000 29,750 191,250 212,500 233,750 255,000 265,625 276,250 286,875 297,500
450,000 31,500 202,500 225,000 247,500 270,000 281,250 292,500 303,750 315,000
500,000 35,000 225,000 250,000 275,000 300,000 312,500 325,000 337,500 350,000
550,000 38,500 247,500 275,000 302,500 330,000 343,750 357,500 371,250 385,000
600,000 42,000 270,000 300,000 330,000 360,000 375,000 390,000 405,000 420,000
650,000 45,500 292,500 325,000 357,500 390,000 406,250 422,500 438,750 455,000
700,000 49,000 315,000 350,000 385,000 420,000 437,500 455,000 472,500 490,000
750,000 52,500 337,500 375,000 412,500 450,000 468,750 487,500 506,250 525,000
</TABLE>
- -------------------------
Note: The above includes benefits payable directly by Detroit Edison when total
annual benefits exceed the benefits payable under the Retirement Plan and
covered compensation exceeds $150,000.
Compensation used to calculate the benefits in the Pension Plans Table
utilized base salaries and lump sums. The base salaries for Messrs. Lobbia,
Earley, Garberding, Agosti and Buckler in 1996 were $636,539, $454,615,
$345,039, $230,115 and $228,768, respectively. None of these executives received
lump sums for 1996. 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 Buckler have 33, 3, 7, 39 and 23 actual years of
service, respectively. Messrs. Earley and Garberding have 15 and 25 years,
respectively, of additional awarded service for the purpose of calculating
benefits under the Management Supplemental Benefit Plan ("MSBP"). Mr. Earley's
eligibility for the additional awarded service is subject to his 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 Energy and Detroit Edison in meeting their liabilities under
certain directors' and executives' compensation plans described previously. DTE
Energy 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 subject to the claims of DTE Energy or Detroit
Edison's, as the case may be, general creditors.
15
<PAGE> 20
EMPLOYMENT CONTRACTS
Messrs. Earley and Garberding have employment contracts with Detroit
Edison. Mr. Earley received a lump sum upon joining Detroit Edison in 1994,
which is included in Column (c) "Salary" in the Summary 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.
PERFORMANCE GRAPH
VALUE OF $100 INVESTED DECEMBER 31, 1991
(Includes Reinvested Dividends)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD DTE S&P DJEUIG
(FISCAL YEAR COVERED)
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 100.04 107.60 106.85
1993 97.16 118.45 119.32
1994 91.31 120.02 104.62
1995 129.37 165.13 137.66
1996 129.61 203.06 139.07
</TABLE>
The graph assumes $100 invested on December 31, 1991, 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 1996. There are no
interlocks with any members of the Special Committee on Compensation.
16
<PAGE> 21
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 Energy for the
year 1997. Deloitte & Touche LLP has performed this function since 1995.
Deloitte & Touche LLP has advised DTE Energy that it is independent with
respect to DTE Energy and all of its subsidiaries within the rules and
regulations of the Securities and Exchange Commission.
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 and 1996 Annual Meetings.
During the Company's fiscal year ending December 31, 1994, and the
subsequent 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 1994. Price Waterhouse LLP's report on the financial statements
for 1994 did not contain an adverse opinion or a disclaimer of opinion nor was
it 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 50 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
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)
17
<PAGE> 22
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 owner 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 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/DTE) establish and communicate to shareholders
by end of 3rd quarter FY 97, 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.
Supporting Statement: This resolution is necessary to protect the
interests of shareholders. Fermi 2 represents approximately 27% of total
assets, yet is only 9% of summer net rated capability. 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.
This is the second time Ms. Bogen has submitted this proposal. Last year
this proposal was overwhelmingly rejected by shareholders. The Company's
position remains that there is only 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 operated. Beyond that
criterion, the Company assesses, on an ongoing basis, a variety of options for
all of its facilities, including Fermi 2.
The Company is playing a significant role as a participant in the debate
regarding the deregulation of the electric utility industry. Deregulation is
expected to cause major changes in the industry. Any set of criterion developed
at this time would be outdated as soon as it was developed. Based on what is
known at this time, the continued operation of Fermi 2 is in the best interest
of the Company's shareholders and customers.
Fermi 2 is one of our major generating assets. During times of high demand,
Fermi's performance has allowed the Company to avoid either buying much higher
priced power or cutting off customers during
18
<PAGE> 23
those periods when power was not available at any price. It makes no sense to
shut down Fermi 2 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.
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 order
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 the public to continue the operation of Fermi 2. 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, and to keep our
shareholders informed regarding deregulation and its impact on the Company.
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 1,550 shares of Common Stock; and the
Sisters of St. Joseph, Offices of Congregational Administration, Nazareth,
Michigan, the beneficial owners of 600 shares of Common Stock, have formally
notified the Company that they intend to attend the meeting to present the
following proposal:
WHEREAS the coming deregulation of the electrical industry means that
the ground rules upon which the company has made decisions in the past are
now changing, that the rate structure for Detroit Edison will soon be
determined in the market place instead of in Lansing;
WHEREAS a deregulated environment will favor companies with low costs
of production, low rates within customer classes and low dividend payout
ratios;
WHEREAS the cost of electricity in Michigan is as much as 30 percent
higher than in comparable industrial states adding substantially to the
cost of doing business in Michigan, discouraging investors from locating or
expanding here, and inhibiting job creation, and thus there is pressure for
deregulation;
19
<PAGE> 24
WHEREAS Michigan is one of the states in which the regulatory
commission is already making plans for deregulation, and has already
initiated the five year experiment in "retail wheeling" which allows
consumers to use transmission lines of the power companies to purchase
electricity from far flung sources;
WHEREAS there is danger that the $5 billion investment in Fermi 2 is
in danger of becoming a "stranded asset" the cost of which Detroit Edison
may not be able to recover in a deregulated environment;
WHEREAS Chairman Lobbia was quoted in the Detroit News (6/18/95) as
saying that if deregulation happened at the time of the beginning of the
period of "retail wheeling" company "would be in desperate shape;"
RESOLVED: The shareholders request that the company;
1) provide the shareholders with an independent assessment of:
a) what options the company has for operating in a deregulated
environment while providing:
- stable or lower rates for all consumers
- consistent dividends to shareholders
- adequate financial resources for least risk operation of
Fermi 2 and other DTE power facilities;
b) how deregulation will alter the cost-benefit analysis of
continuing operation of Fermi 2, that analysis to include cost to
public health and environmental liabilities/risks.
2) provide a summary of this report to the shareholders in the next
annual report and a copy of the full assessment on request.
Supporting Statement: We believe that an independent outside assessment of
the options before the company in a deregulated market is essential for
realistic planning by the company and the shareholders.
Some power companies (e.g. Northeast Utilities in Connecticut) are
contemplating shutting down their nuclear power plants prior to the expiration
of their licenses because they have become uneconomical in the new deregulated
environment. Detroit Edison owes its consumers, employees, shareholders, and all
those who depend on it for electricity, for income and for a safe environment
the best possible information on the prospects for the future.
THE BOARD OF DIRECTORS AND MANAGEMENT OPPOSE THIS SHAREHOLDER PROPOSAL AND
RECOMMEND A VOTE AGAINST IT FOR THE FOLLOWING REASONS.
The Company is devoting significant management and financial resources to
the debate on deregulation. Even more significant resources are being devoted to
planning various contingencies for operating through the transition to, and
ultimately in, a deregulated, competitive marketplace.
To assist an outside consultant in the preparation of an analysis or report
of various deregulation scenarios and various options for responding to those
scenarios would waste resources and divert management's attention from the
enormously important issues facing the Company during this critical
20
<PAGE> 25
period. Also, the Company's options involve competitive information that could
injure the interests of the Company and its shareholders if it were publicly
discussed.
We have begun a major effort to keep our shareholders informed of
developments regarding deregulation and the Company's plans. We will continue to
keep our shareholders informed regarding deregulation and its impact on the
Company.
YOUR BOARD OF DIRECTORS AND MANAGEMENT URGE YOU TO VOTE "AGAINST" THIS
PROPOSAL.
TRANSACTION OF OTHER BUSINESS AND OTHER INFORMATION
AS TO OTHER BUSINESS WHICH MAY COME BEFORE THE MEETING
Management of DTE Energy 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 1998 Annual Meeting must be received by the Vice President and Corporate
Secretary of DTE Energy at its principal business address no later than 5 p.m.
on November 21, 1997.
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
Securities and Exchange Commission 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 1996 all filing requirements were met on a timely
basis.
OTHER INFORMATION
DTE Energy 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 Energy 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 Energy of approximately $7,500.
- --------------------------------------------------------------------------------
IMPORTANT
THE INTEREST AND COOPERATION OF ALL SHAREHOLDERS IN THE AFFAIRS OF DTE
ENERGY 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. IF YOU WILL DO SO NOW, THE COMPANY WILL BE SAVED THE
EXPENSE OF FOLLOW-UP NOTICES.
- --------------------------------------------------------------------------------
21
<PAGE> 26
[DTE ENERGY LOGO]
Appendix 1 of 4
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PROXY By signing on the other side, I (we) appoint Lillian Bauder, Alan E.
Schwartz, William Wegner, 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 28, 1997, 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
B 967-1756 3-97
PROXY
Election of Directors: Nominees are William C. Brooks, John E. Lobbia, Patricia
S. Longe, Eugene A. Miller and Dean E. Richardson.
- -------------------------------------------------
*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 Proposal - For Against Abstain
Establish Nuclear Criterion [ ] [ ] [ ]
- ------------------------------------------------------------------------
4. Shareholder Proposal - For Against Abstain
Impact of Deregulation on
Nuclear Plant [ ] [ ] [ ]
========================================================================
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
[DTE ENERGY LETTERHEAD]
March 21, 1997
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 28
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 1997.
Shareholders will also be asked to vote on two shareholder proposals: The
first shareholder proposal concerns the establishment of criterion for closing
the nuclear power plant; the second shareholder proposal concerns the impact of
deregulation, including its impact on the operation of Fermi 2.
By completing the voting form enclosed, you will be participating in an
important decision-making process. If you do not complete the form, your
shares will not be voted.
Please take the time to review the instructions provided, complete the form,
and return it in the enclosed envelope.
Sincerely,
John 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 24, 1997, 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.
<TABLE>
<S><C>
Date
----------------------------------------
SIGNATURE SHOULD CORRESPOND EXACTLY WITH
YOUR NAME AS PRINTED ON THE LEFT SIDE OF THIS
FORM.
--------------------------------------------
Signature
835
</TABLE>
<PAGE> 29
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 28, 1997, 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.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 & 2.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
*FOR WITHHELD
1. ELECTION OF DIRECTORS: Nominees are William C. Brooks, John E. Lobbia,
Patricia S. Longe, Eugene A. Miller and Dean E. Richardson. [ ] [ ]
__________________________________________________________________________
*TO WITHHOLD VOTE FROM ANY NOMINEE(S), WRITE THE NAME(S) ABOVE: FOR AGAINST ABSTAIN
2. INDEPENDENT AUDITORS [ ] [ ] [ ]
- -----------------------------------------------------------------------------------------------------------------------
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSALS 3 & 4.
- -----------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
3. SHAREHOLDER PROPOSAL - ESTABLISH NUCLEAR CRITERION [ ] [ ] [ ]
4. SHAREHOLDER PROPOSAL - IMPACT OF DEREGULATION ON NUCLEAR PLANT [ ] [ ] [ ]
</TABLE>
