<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)(1) 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:
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<PAGE> 2
DTE ENERGY LOGO
2000 2ND AVENUE
DETROIT, MICHIGAN 48226-1279
1998 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT
Day: Monday, April 27, 1998
Time: 10:00 a.m. Detroit time
Place: Detroit Edison Plaza
660 Plaza Drive
Detroit, Michigan 48226
We invite you to attend the annual meeting of DTE Energy Company ("DTE" or
"Company") to:
1. Elect four directors.
2. Ratify the appointment of Deloitte & Touche LLP by the Board of
Directors as the independent auditors of DTE for the year 1998.
3. Consider a shareholder proposal regarding the impact of
deregulation, including its impact on the operation of Fermi 2.
4. Consider any other business that may properly come before the
meeting or any adjournments of the meeting.
The Record Date for this annual meeting is February 27, 1998. Only shareholders
of record at the close of business on that date can vote at the meeting.
For more information, please read this 1998 Proxy Statement.
This Notice of Annual Meeting, as well as the accompanying Proxy Statement and
proxy card, will be mailed to DTE common stock shareholders on or about March
27, 1998.
Finally, it is important that your stock be represented at the meeting.
Therefore, please complete and mail the enclosed proxy card in the return
envelope. If you attend the meeting and vote at it, your vote at the meeting
will replace your proxy card vote.
Susan M. Beale
Susan M. Beale
Vice President and Corporate Secretary
By Order of the Board of Directors
John E. Lobbia
John E. Lobbia
Chairman of the Board and Chief Executive Officer
March 17, 1998
<PAGE> 3
1998 PROXY STATEMENT OF DTE ENERGY COMPANY
QUESTIONS AND ANSWERS
Q 1: WHAT IS A PROXY?
A: A Proxy is a document, also referred to as a "proxy card," on which you
authorize someone else to vote for you, in the way that you want to vote. You
may also choose to abstain from voting. THIS PROXY IS BEING SOLICITED BY DTE'S
BOARD OF DIRECTORS.
Q 2: WHAT IS A PROXY STATEMENT?
A: A Proxy Statement is a document, required by the Securities and Exchange
Commission (the "S.E.C."), that, among other things, explains the items on which
you are asked to vote on the proxy card.
Q 3: WHAT AM I VOTING ON?
A: - To elect four directors (the candidates are Terence E. Adderley, Anthony
F. Earley, Jr., Allan D. Gilmour and Theodore S. Leipprandt). (See pages 4
& 5)
- To ratify Deloitte & Touche LLP as DTE's independent auditors. (See page
20)
- One shareholder proposal. (See page 21)
Q 4: WHO IS ENTITLED TO VOTE?
A: Only holders of DTE's common stock at the close of business on February 27,
1998 (the Record Date), are entitled to vote at the annual meeting. Each share
of common stock has one vote. See Q 10 for information on cumulative voting in
the election of directors.
Q 5: HOW DO I VOTE?
A: Sign and date each proxy card that you receive and return it in the prepaid
envelope. Proxies will be voted as you specify on each card. If you do not
specify how to vote on any proposal on your proxy card, the shares represented
by your proxy will be voted FOR Proposals 1 and 2 and AGAINST Proposal 3. Your
shares will also be voted on any other business that comes before the meeting.
You may revoke your proxy by a written request or a subsequently dated proxy
card, either of which must be received by the tabulator, Corporate Election
Services, P.O. Box 535600, Pittsburgh, PA 15233-9931 before the annual meeting.
You may also revoke your proxy by voting in person at the annual meeting.
Q 6: IS MY VOTE CONFIDENTIAL?
A: Yes, your vote is confidential. The tabulator and inspectors of election are
not employees of the Company.
The Company may be advised if you have not voted. Also, shareholders' votes will
be disclosed to the Company if a contested proxy solicitation occurs or if a
disclosure is required by law.
2
<PAGE> 4
Q 7: WHAT SHARES ARE INCLUDED ON MY PROXY CARD?
A: The shares on your card represent shares for which you have a certificate
and your shares in the Company's Dividend Reinvestment and Stock Purchase Plan
("DRIP"). Shares owned by employees and retirees of DTE and its affiliates in
the Detroit Edison Savings & Investment Plans ("SIP") are voted on a separate
voting instruction form sent by the SIP trustee.
Q 8: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
A: It indicates that your shares are registered differently and are in more
than one account. Sign and return all proxy cards to ensure that all your shares
are voted. We encourage you to register all your accounts in the same name and
address. To do this contact Shareholder Services at 1-800-551-5009.
Q 9: WHAT MAKES UP A QUORUM?
A: There were 145,079,986 shares of DTE's common stock outstanding on the
Record Date. A majority of the outstanding shares, present or represented by
proxy, constitutes a quorum. A quorum is necessary to conduct an annual meeting.
Q 10: HOW DOES THE VOTING WORK?
A: - Each director requires approval from a plurality of the shares voted,
excluding abstentions and broker non-votes, but including "withholds."
Withholds are considered "no" votes.
- You may withhold votes from one or more directors by writing their names
in the space provided for that purpose on your proxy card.
- Without prior notice to DTE, you may also cumulate votes for directors by
multiplying the number of your shares by the number of directors to be
elected and by casting all such votes either (a) for one candidate or (b)
by distributing them among two or more candidates. You cannot vote for
more than four directors.
- Ratification of the appointment of auditors and the shareholder proposal
require approval from a majority of the votes cast (excluding abstentions
and broker non-votes).
Q 11: WHO CAN ATTEND THE ANNUAL MEETING?
A: All shareholders as of the Record Date can attend, although seating is
limited.
Q 12: WHAT PERCENTAGE OF STOCK DO THE DIRECTORS AND OFFICERS OF THE COMPANY
OWN?
A: Together, they own less than 1 percent of our common stock as of the Record
Date. (See page 11)
3
<PAGE> 5
ITEM 1. TO ELECT DIRECTORS
The Board of Directors is divided into three classes by the Amended and Restated
Articles of Incorporation, as amended, of DTE. One class of directors is elected
each year for a three-year term. The terms of directors in one class expire in
1998. The four directors in this class have been nominated for election for
terms expiring in 2001. All of the nominees have consented to serve if elected.
All are present members of the Board of Directors.
Proxies cannot be voted for more than four persons. The persons named on the
enclosed proxy card will vote for the nominees named in this proxy statement,
unless otherwise instructed by a shareholder. If any nominee becomes unable or
unwilling to serve at the time of the meeting, the persons named in the enclosed
proxy card have discretionary authority to vote for a substitute nominee or
nominees. It is not anticipated that any nominee will be unavailable for
election.
Information about each nominee for election at this meeting and each director
continuing in office is given below. The Company's directors also serve as
directors of The Detroit Edison Company ("Detroit Edison"), the Company's
principal operating affiliate. The dates shown for service as a director and
officer include service as a director and officer of Detroit Edison.
NOMINEES FOR ELECTION AT THIS MEETING FOR TERMS EXPIRING 2001
<TABLE>
<CAPTION>
<S> <C>
TERENCE E. ADDERLEY, age 64 Director since 1987
ADDERLY PHOTO - Chairman, President and Chief Executive Officer, Kelly Services, Inc.,
Troy, Michigan
- Director of DTE, Detroit Edison, Kelly Services, the First National Bank
of Chicago and First Chicago NBD Corporation and a director or trustee of
many community and professional organizations
- University of Michigan (B.B.A. and M.B.A.)
- Committees: Executive, Finance and Organization and Compensation (Chair)
ANTHONY F. EARLEY, Jr., age 48 Director since 1994
EARLEY PHOTO - President and Chief Operating Officer, DTE Energy and Detroit Edison
(since 1994). Mr. Earley has been elected Chairman and Chief Executive
Officer to be effective August 1, 1998
- Formerly President and Chief Operating Officer, Long Island Lighting
Company, Long Island, N.Y.
- Director of DTE, Detroit Edison and Mutual of America Capital Management
Corp. and director or trustee of many community and professional
organizations
- University of Notre Dame (B.S. in physics, M.S. in engineering, and J.D.)
- Committees: Executive
</TABLE>
4
<PAGE> 6
NOMINEES FOR ELECTION AT THIS MEETING FOR TERMS EXPIRING 2001
<TABLE>
<CAPTION>
<S> <C>
ALLAN D. GILMOUR, age 63 Director since 1995
GILMOUR PHOTO - Retired Vice Chairman of the Board, Ford Motor Company
- Director of DTE, Detroit Edison, The Dow Chemical Company, The Prudential
Insurance Company of America, US West, Inc. and Whirlpool Corporation and
Chairman of the Henry Ford Health System
- Harvard University (B.A. in economics) and University of Michigan (M.B.A.)
- Committees: Nominating and Finance (Chair)
THEODORE S. LEIPPRANDT, age 64 Director since 1990
LEIPPRANDT PHOTO - Retired President and Chief Executive Officer and Marketing Specialist,
Cooperative Elevator Company, Pigeon, Michigan
- Director of DTE, Detroit Edison and East Central Michigan Farm Credit
System, past president of Michigan Agri-Business Association and Michigan
4-H Foundation Board of Trustees and director or trustee of many community
and professional organizations
- Michigan State University (animal science degree)
- Committees: Audit and Nuclear Review
</TABLE>
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 1999
<TABLE>
<CAPTION>
<S> <C>
LILLIAN BAUDER, age 58 Director since 1986
BAUDER PHOTO - Vice President for Corporate Affairs, Masco Corporation, Taylor, Michigan,
and President, Masco Charitable Trust (1996)
- Formerly President and Chief Executive Officer, Cranbrook Educational
Community, Bloomfield Hills, Michigan
- Director of DTE, Detroit Edison and Comerica Bank and director or trustee
of many community organizations
- Rutgers University (B.A. from Douglass College) and University of Michigan
(M.A. and Ph.D.)
- Committees: Audit, Executive and Nuclear Review
DAVID BING, age 54 Director since 1986
BING PHOTO - Chairman of The Bing Group, Detroit, Michigan. The Bing Group consists of
Bing Steel L.L.C.; Superb Manufacturing, Inc.; Bing Manufacturing, Inc.;
Detroit Automotive Interiors, L.L.C. and Trim Tech, L.L.C.
- Director of DTE and Detroit Edison
- Played professional basketball for 12 years, advisor to many youth groups
and director of many civic groups
- Syracuse University (B.A. degree)
- Committees: Audit, Organization and Compensation and Special Committee on
Compensation (Chair)
</TABLE>
5
<PAGE> 7
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 1999
<TABLE>
<CAPTION>
<S> <C>
LARRY G. GARBERDING, age 59 Director since 1990
GARBERDING PHOTO - Executive Vice President and Chief Financial Officer, DTE and Detroit
Edison
- Director of DTE and Detroit Edison and director or trustee of many
community and professional organizations
- Iowa State University (B.S. in industrial administration)
- Committees: Executive and Finance
ALAN E. SCHWARTZ, age 72 Director since 1969
SCHWARTZ PHOTO - Partner of law firm Honigman Miller Schwartz and Cohn, Detroit, Michigan
- Director of DTE, Detroit Edison, Handleman Company, Pulte Corporation and
Unisys Corporation and director or trustee of many community organizations
- University of Michigan (B.A.) and Harvard Law School
(law degree)
- Committees: Executive, Finance, Organization and Compensation and
Nominating (Chair)
WILLIAM WEGNER, age 71 Director since 1990
WEGNER PHOTO - Consultant; owner of W-Squared, Inc. a consulting firm to nuclear utility
companies
- Director of DTE and Detroit Edison
- Formerly Deputy Director of the Naval Nuclear Propulsion Program, Atomic
Energy Commission
- U.S. Naval Academy (graduate), Webb Institute of Naval Architecture
(master's degrees in naval architecture and marine engineering) and
Massachusetts Institute of Technology (master's degree in nuclear
engineering)
- Committee: Nuclear Review (Chair)
</TABLE>
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 2000
<TABLE>
<CAPTION>
<S> <C>
WILLIAM C. BROOKS, age 63 Director since 1997
BROOKS PHOTO - Vice Chairman, Luftig and Warren International (consultants in business
performance technology), Southfield, Michigan (1998)
- Formerly Chairman, Entech HR Services (1997) and Vice President for
Corporate Affairs, General Motors Corporation
- Director of DTE, Detroit Edison and the Louisiana-Pacific Corporation and
director or trustee of many professional and community organizations
- Long Island University (B.A.), University of Oklahoma (M.B.A.) and Harvard
Business School (Advanced Management Program)
- Committee: Nominating
</TABLE>
6
<PAGE> 8
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 2000
<TABLE>
<CAPTION>
<S> <C>
JOHN E. LOBBIA, age 56 Director since 1988
LOBBIA PHOTO - Chairman of the Board and Chief Executive Officer, DTE and Detroit Edison.
Mr. Lobbia will retire as Chairman and Chief Executive Officer on July 31,
1998. He will remain on the Board.
- Director of DTE, Detroit Edison, NBD Bank and Rouge Industries and
director or trustee of many community and professional organizations
- University of Detroit (B.A. in electrical engineering)
- Committees: Executive (Chair)
EUGENE A. MILLER, age 60 Director since 1989
MILLER PHOTO - Chairman of the Board and Chief Executive Officer, Comerica Incorporated
and Comerica Bank, Detroit, Michigan
- Director of DTE, Detroit Edison, Comerica Incorporated, Comerica Bank and
Amerisure Companies and director or trustee of many community and
professional organizations
- Detroit Institute of Technology (B.B.A.)
- Committees: Finance, Organization and Compensation, Special Committee on
Compensation and Nominating
DEAN E. RICHARDSON, age 70 Director since 1977
RICHARDSON PHOTO - Retired Chairman of the Board, Manufacturers National Corporation,
Detroit, Michigan
- Director of DTE, Detroit Edison, Automobile Club of Michigan and Tecumseh
Products Company and director or trustee of many community organizations
- Michigan State University (B.A.), and University of Michigan (L.L.B.)
- Committees: Executive, Finance, Organization and Compensation, Special
Committee on Compensation and Audit (Chair)
</TABLE>
RETIRED DIRECTOR
<TABLE>
<CAPTION>
<S> <C>
LONGE PHOTO PATRICIA S. LONGE
Economist and senior partner of The Longe Company, an economic consulting
firm in Naples, Florida, retired from the Board of Directors effective
January 26, 1998. DTE expresses its appreciation to Dr. Longe for her many
contributions to the Company since joining the Board in 1973.
</TABLE>
7
<PAGE> 9
BOARD AND BOARD COMMITTEES
- - All directors are on the Boards of both DTE and Detroit Edison. The Boards met
10 times in 1997. Most of the directors attended 100 percent of the Board and
committee meetings and, with the exception of Mr. Brooks who attended 67
percent of the meetings because of an illness, all directors attended at least
91 percent of the meetings.
- - DTE and Detroit Edison Boards have standing committees for Audit, Executive,
Finance, and Organization and Compensation. DTE has a Nominating Committee and
a Special Committee on Compensation. Detroit Edison has a Nuclear Review
Committee.
- - With the exception of the Executive Committee, which has the 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, all
other committees act in an advisory capacity to the full Board of Directors.
AUDIT COMMITTEE (4 MEETINGS IN 1997)
- - Reviews scope of the annual audit and the annual audit report of the
independent auditors.
- - Recommends the firm of independent auditors to do such audits.
- - Considers non-audit functions proposed to be done by the independent auditors.
- - Reviews the functions performed by the internal audit staff.
- - Determines whether the recommendations of auditors are satisfactorily
implemented.
- - Recommends special studies or actions.
EXECUTIVE COMMITTEE (NO MEETINGS IN 1997)
- - Has authority to act on most matters when the Board of Directors is not in
session.
FINANCE COMMITTEE (7 MEETINGS IN 1997)
- - Reviews matters related to the capital structure.
- - Recommends dividend policy.
NOMINATING COMMITTEE (2 MEETINGS IN 1997)
- - Considers the organizational structure of the Board of Directors and corporate
governance matters.
- - Assists the full board in the selection of the nominees for the Board of
Directors.
- - Reviews nominations from shareholders. The Bylaws of the Company require that
recommendations for nominations be in writing and addressed to the Corporate
Secretary of the Company at its principal business address. Recommendations
should include (a) the qualifications of the proposed nominee to serve on the
Board of Directors, (b) the principal occupations and employment of the
proposed nominee during the past five years, (c) each directorship currently
held by the proposed nominee and (d) a statement from the proposed nominee
that he or she has consented to the submission of the recommendation.
NUCLEAR REVIEW COMMITTEE (10 MEETINGS IN 1997)
- - Provides non-management oversight and review of Fermi 2 for staffing,
personnel selection, training and retention, adequacy of funding and internal
performance and safety reviews.
8
<PAGE> 10
ORGANIZATION AND COMPENSATION COMMITTEE (8 MEETINGS IN 1997)
- - Comprised of five non-employee directors.
- - Reviews recommendations and approves, subject to Board of Director approval,
the compensation for vice presidents and higher.
- - Assists in the selection of officers to assure that there are successors for
each office.
SPECIAL COMMITTEE ON COMPENSATION (4 MEETINGS IN 1997)
- - Formed in 1997, comprised entirely of disinterested directors, who grant and
approve awards to employees under the Long-Term Incentive Plan (the "LTIP") in
accordance with certain Internal Revenue Code requirements.
BOARD COMPENSATION
Employee directors receive no payment for service as directors. Non-employee
directors are reimbursed for out-of-pocket expenses incurred to attend meetings
and are compensated as follows:
- - Board Service
- Annual retainer of $22,000.
- 300 shares of common stock awarded under the LTIP, which was approved by
shareholders, and 200 shares of common stock awarded by Board of Directors
resolution. The stock awards are made on the date of each annual meeting to
directors elected at the meeting and those who continue to serve following
the meeting.
- - Committee Service
- Annual retainer of $8,000 for service on Nuclear Review Committee.
- No annual retainer for service on Executive and Special Committee on
Compensation.
- Annual retainer of $4,000 for service on all other committees.
- - Service as a Committee Chair
- Annual retainer of $8,000 for chair of Nuclear Review Committee.
- No annual retainer for chair of Executive Committee.
- Annual retainer of $4,000 for chair of all other committees.
- - Meeting Fees
- $1,000 for attending Board meetings.
- $750 for attending Board committee meeting or other Company meetings held on
days other than the day of or day prior to a Board meeting.
- No meeting fees are paid for attending Board committee meetings or other
Company meetings if held on the day of or day prior to a Board meeting.
9
<PAGE> 11
- Director Retirement Plan
- Non-employee directors with a minimum of five years of Board service are
eligible for retirement benefits of a monthly amount of 1/12 of the
annual retainer in effect at the time of retirement for the number of
months of service on the Board while not an employee.
- Director Deferred Compensation Plan
- DTE and Detroit Edison each maintain an unfunded deferred compensation
plan which permits non-employee directors to defer receipt of any part
of their annual retainer and meeting fees.
- Deferred fees accrue in an unfunded account for future payment with
interest accrued monthly at the 5-year U.S. Treasury Bond rate.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
PERCENT
AMOUNT AND NATURE OF OF
TITLE OF CLASS NAME OF BENEFICIAL OWNERS BENEFICIAL OWNERSHIP* CLASS
-------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Common The Capital Group Companies, Inc. and Capital
Research & Management Company 8,715,000 6.00
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, at February 10, 1998, Capital Research and Management Company is
the beneficial owner of, with investment power over, 8,715,000 shares of
the Company's common stock as a result of acting as an investment
adviser. The Capital Group reported 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.
10
<PAGE> 12
SECURITY OWNERSHIP OF MANAGEMENT AND BOARD OF DIRECTORS
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
AS OF DECEMBER 31,
TITLE OF CLASS NAME OF BENEFICIAL OWNERS 1997 (1)
---------------------------------------------------------------------------------------------------
<C> <S> <C>
Common Terence E. Adderley 1,900
---------------------------------------------------------------------------------------------------
Common Gerard M. Anderson 15,767(2)
---------------------------------------------------------------------------------------------------
Common Lillian Bauder 2,042
---------------------------------------------------------------------------------------------------
Common David Bing 1,300
---------------------------------------------------------------------------------------------------
Common William C. Brooks 400
---------------------------------------------------------------------------------------------------
Common Robert J. Buckler 16,105(2)
---------------------------------------------------------------------------------------------------
Common Anthony F. Earley, Jr. 28,869(2)
---------------------------------------------------------------------------------------------------
Common Larry G. Garberding 24,045(2)
---------------------------------------------------------------------------------------------------
Common Allan D. Gilmour 1,900
---------------------------------------------------------------------------------------------------
Common Theodore S. Leipprandt 1,767
---------------------------------------------------------------------------------------------------
Common John E. Lobbia 64,943(2)
---------------------------------------------------------------------------------------------------
Common Eugene A. Miller 1,900
---------------------------------------------------------------------------------------------------
Common Dean E. Richardson 2,900
---------------------------------------------------------------------------------------------------
Common Alan E. Schwartz 1,230
---------------------------------------------------------------------------------------------------
Common William Wegner 1,400
---------------------------------------------------------------------------------------------------
Directors and officers as a group
Common (25 persons) 246,548(2)
---------------------------------------------------------------------------------------------------
</TABLE>
(1) Directors and officers owned not more than 1 percent individually and in the
aggregate of the outstanding common 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) Includes performance restricted shares, unvested as of December 31, 1997, of
DTE common stock awarded under DTE's LTIP to Messrs. Anderson, Buckler,
Earley, Garberding and Lobbia of 14,500; 10,833; 24,667; 14,000 and 42,000
shares, respectively, and a total of 160,721 performance restricted shares
for the group of 25 persons. Also includes equivalent shares held in the SIP
and phantom shares deemed to be held in the Savings Reparation Plan ("SRP")
as of December 31, 1997. All restricted stock and stock options will vest in
the event of a change-in-control of the Company.
11
<PAGE> 13
REPORT OF THE ORGANIZATION AND COMPENSATION COMMITTEE
The Organization and Compensation Committee ("Committee") of the Board of
Directors is made up of five non-employee 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. The executive compensation program considers changes in
the electric utility industry that are occurring because of deregulation and the
expansion and success of non-regulated businesses. New approaches to
compensation consistent with a competitive energy industry are also considered.
Q: WHAT IS OUR EXECUTIVE COMPENSATION POLICY?
A. DTE's principal business activities are carried out through Detroit Edison.
Messrs. Lobbia, Earley, Garberding, Anderson and Buckler are officers of
both DTE and Detroit Edison. Officers of DTE who are also officers of
Detroit Edison do not receive additional compensation from DTE for services
as a DTE officer.
- CORPORATE GOALS: DTE's executive compensation program, which has been
adopted by Detroit Edison, rewards executives for achieving corporate goals
and superior results. Executives are compensated for (1) enhancing
shareholder and customer value and (2) supporting performance-oriented
behavior at all levels of the Company. This policy (a) motivates key
executives to achieve corporate goals, (b) links executive and shareholder
interests, (c) attracts and assists in the retention of key executives and
(d) provides a compensation package that recognizes individual contributions
to corporate performance, including the results of affiliates.
- TOTAL COMPENSATION: To determine total compensation for executive officers,
an evaluation is made of (1) the responsibilities of the position held, (2)
the experience and performance of the individual, (3) the competition for
executive talent and (4) comparisons to comparable positions at other
energy companies in the Comparative Market.
In 1995 and 1996, the key elements of our program were base salary, the
Shareholder Value Improvement Plan (the "SVIP") and the LTIP, including
restricted stock grants. In 1997, the Executive Incentive Plan (the "EIP") and
stock options under the LTIP were added to the elements considered. In January
1997, the Special Committee on Compensation was formed to administer the LTIP.
It is composed entirely of disinterested directors. Awards made by the Special
Committee on Compensation are considered in determining overall compensation
policy. Policies concerning each of these elements, including the basis for the
compensation awarded to Mr. Lobbia, are discussed below.
Q: WHAT COMPARISON GROUPS DO WE USE?
A. The compensation program is reviewed annually and DTE's executive
compensation, business performance and total shareholder return are compared to
several groups of electric utilities and electric utility holding companies as
follows:
- FOR SHAREHOLDER RETURN: The appropriate comparison group is the Dow Jones
Electric Utility Industry Group ("DJEUIG") since shareholder return
information is available for each of these companies.
12
<PAGE> 14
- FOR TOTAL COMPENSATION: The comparison group is 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. Total compensation is competitive with the
Comparative Market taking into account DTE's relative performance.
Q: HOW DO WE DETERMINE BASE SALARY?
A: Annual increases, if any, in each officer's base salary are determined by
(1) considering the market position of the salary, (2) using subjective judgment
in evaluating the performance of DTE, (3) evaluating the performance of each
executive officer and (4) the amount of time elapsed since the last base salary
increase. Mr. Lobbia's evaluation of each officer at the level of vice president
and higher is considered. The evaluation is based in part on whether the officer
attained individual objectives established for the year. Based on the factors
discussed above, Mr. Lobbia's base salary remained the same as it was in 1996,
which was approximately at the median of the Comparative Market. The 1997 base
salary of Mr. Earley was above the median of the Comparative Market and the base
salaries of Mr. Garberding, Mr. Anderson and Mr. Buckler were below the median.
Q: IS ANY OF THE EXECUTIVES' PAY AT RISK?
A: Yes, the Company has both annual and long-term incentive plans that put a
significant amount of the executives' pay at risk.
Q: HOW DO WE DETERMINE ANNUAL INCENTIVES?
A: - SHAREHOLDER VALUE IMPROVEMENT PLAN FOR CASH AWARDS: All Detroit Edison
employees, including executive officers, are eligible for the SVIP.
Measures are established for all participants and each measure is
weighted by its relative importance. For 1997, four categories, weighted
as follows, were established for executives -- financial (50 percent),
safety (10 percent), customer satisfaction (30 percent) and organization
specific (10 percent).
- EXECUTIVE INCENTIVE PLAN FOR CASH AWARDS: In 1997, the EIP was
established with three measures -- Fermi plant performance, electric
industry restructuring and new business growth, including earnings and
the establishment of new businesses. Each measure is weighted one-third.
However, if no awards are paid under the SVIP, then no awards are paid
under EIP.
For both SVIP and EIP, award amounts are paid to executive officers from a fund
established by multiplying (1) the base pay of the eligible executive officers
by (2) the performance measure weight and (3) the award opportunity percentage
that was achieved for each performance measure. This Committee makes award
recommendations to the Board and the Board grants awards in such amounts, if
any, as it deems appropriate.
Q: HOW DO WE USE COMPENSATION TO FOCUS MANAGEMENT ON LONG-TERM VALUE?
A: Long-Term Incentive Plan:
- REASONS FOR THE PLAN: The LTIP was approved by the shareholders in 1995.
It is designed to expand DTE's flexibility to structure compensation
incentives for officers and other key
13
<PAGE> 15
employees by rewarding long-term growth and profitability in the emerging
competitive electric industry. The Special Committee on Compensation
independently administers the LTIP. Certain key employees of DTE and its
affiliates, including Detroit Edison, may be granted stock-based
compensation. Although this results in more pay at risk, stock ownership
helps attract and retain qualified employees. It also encourages
employees to pursue and sustain DTE's financial success by achieving
corporate goals. The amount of stock options and restricted stock awarded
to each executive was determined by reference to executive level,
responsibility and past contribution to the overall success of the
Company.
- RESTRICTED STOCK: Restricted stock awards were made by this Committee in
1995 and 1996. The 1995 awards provided for a vesting schedule beginning
December 31, 1996, and ending December 31, 1998, with actual vesting
dependent upon the annual achievement of measures related to total
shareholder return, customer satisfaction and manufacturing customer
price. Based upon the measures, at December 31, 1996, and December 31,
1997, 45 percent and 29 percent, respectively, of the award vested.
In 1996, restricted stock awards, vesting on December 31, 1999, were
made. Vesting is contingent upon the achievement of the same measures
identified for 1995.
In 1997, the Special Committee on Compensation assumed responsibility for
the LTIP. Also in 1997, restricted stock awards, vesting on December 31,
2000, were made. Vesting will be determined after consideration of the
achievement of performance measures related to total shareholder return,
customer satisfaction and production cost.
- STOCK OPTIONS: In 1997, the Special Committee on Compensation awarded
nonqualified stock options as part of the continuing program to link
executive compensation to overall corporate performance.
Q: HOW HAVE WE RESPONDED TO IRS LIMITS ON DEDUCTIBILITY OF COMPENSATION?
A: COMPENSATION BASED ON PERFORMANCE: Under Section 162(m) of the Internal
Revenue Code ("IRC"), the Company cannot deduct executive compensation over $1
million on its Federal income tax return unless it is (1) based on performance
and (2) paid under a plan that meets IRC requirements. Continued reliance on
performance-based compensation programs designed to fulfill future corporate
business objectives at all levels of the Company is expected. Although these
programs are expected to satisfy the requirements of Section 162(m), it may be
appropriate in certain circumstances to use performance-based plans that may not
meet all of the IRC requirements or for the Committee to consider deferral
programs for compensation in excess of $1 million. This is particularly true
during the transition to a deregulated electric utility industry and the
development of new businesses.
ORGANIZATION AND COMPENSATION COMMITTEE
Terence E. Adderley, Chair
David Bing
Eugene A. Miller
Dean E. Richardson
Alan E. Schwartz
14
<PAGE> 16
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------------------
AWARDS PAYOUTS
------------------------ ALL
SECURITIES LTIP OTHER
UNDERLYING PAYOUTS($) COMPENSATION
NAME AND PRINCIPAL POSITION IN 1997 YEAR SALARY($) BONUS($)(1) OPTIONS(#) (2)(3) ($)(4)
(A) (B) (C) (D) (G) (H) (I)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John E. Lobbia 1997 $650,000 $224,120 35,000 $61,056 $39,000
Chairman of the Board and 1996 636,539 0 0 86,569 34,963
Chief Executive Officer 1995 577,116 57,712 0 0 22,689
(DTE and Detroit Edison)
- -----------------------------------------------------------------------------------------------------------------------
Anthony F. Earley, Jr. 1997 $498,462 $151,951 25,000 $33,916 $22,540
President and Chief Operating 1996 454,615 0 0 48,094 16,892
Officer(5) 1995 435,115 43,462 0 0 4,396
(DTE and Detroit Edison)
- -----------------------------------------------------------------------------------------------------------------------
Larry G. Garberding 1997 $348,001 $ 92,178 15,000 $20,364 $22,806
Executive Vice President and 1996 345,039 0 0 28,856 18,352
Chief Financial Officer 1995 333,769 33,377 0 0 13,351
(DTE and Detroit Edison)
- -----------------------------------------------------------------------------------------------------------------------
Robert J. Buckler 1997 $268,539 $ 71,130 15,000 $16,958 $16,889
Executive Vice President 1996 228,768 0 0 24,047 12,185
(DTE and Detroit Edison) 1995 214,615 21,462 0 0 8,585
- -----------------------------------------------------------------------------------------------------------------------
Gerard M. Anderson 1997 $256,539 $117,952 15,000 $10,182 $15,780
Executive Vice President 1996 214,615 20,000 0 14,428 10,939
(DTE and Detroit Edison) 1995 200,000 20,000 0 0 6,885
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For 1995, includes cash awards for Messrs. Lobbia, Earley, Garberding and
Buckler under the SVIP and a cash award for Mr. Anderson under an
affiliate's incentive plan. For 1997, includes cash awards for Messrs.
Lobbia, Earley, Garberding, Anderson and Buckler under the SVIP and EIP and
a cash award for Mr. Anderson.
(2) Includes the value at January 27, 1997, and January 22, 1998 (the dates that
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) The number and value of the aggregate performance restricted stock holdings
of the named officers as of December 31, 1997, based on the market value on
that day without giving effect to the diminution of value attributed to
restrictions on such stock, are: Mr. Lobbia, 42,000 shares or $1,456,875;
Mr. Earley, 24,667 shares or $855,637; Mr. Garberding, 14,000 shares or
$485,625; Mr. Anderson, 14,500 shares or $502,969; and Mr. Buckler, 10,833
shares or $375,770. The holders of restricted stock receive the same cash
dividends as other shareholders owning the common stock. All restricted
stock will vest in the event of a change in control of the Company.
(4) Includes matching contributions by Detroit Edison to the SIP. Under the SIP,
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
15
<PAGE> 17
to $160,000 for 1997. For 1997, Messrs. Lobbia, Earley, Garberding, Anderson
and Buckler were credited with matching contributions of $9,600; $8,266;
$9,600; $9,600 and $9,600, respectively. During 1997, $1,353, $777, $1,351
and $1,926 were reimbursed to Messrs. Anderson, Buckler, Earley and
Garberding, respectively, for the payment of taxes on the value of services
provided by Deloitte & Touche LLP which services the officers were required
to use. Also includes amounts matched by Detroit Edison pursuant to the SRP.
The SRP provides that up to 15 percent of compensation in excess of $160,000
may be deferred. Matching contributions are limited to 6 percent of the
salary in excess of this amount. The value of the account will appreciate or
depreciate based on the market value attributed to the employee's account.
SRP account balances are paid only in cash to participants upon termination
of employment. For 1997, Messrs. Lobbia, Earley, Garberding, Anderson and
Buckler were credited with matching SRP contributions of $29,400; $12,923;
$11,280; $4,827 and $6,512, respectively.
LONG-TERM INCENTIVE PLAN -- AWARDS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
-------------------------------------
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE BASED PLANS($)
- --------------------------------------------------------------------------------------------------------------
NUMBER PERFORMANCE PERIOD THRESHOLD TARGET MAXIMUM
NAME OF SHARES UNTIL PAYOUT $ $ $
(A) (B) (C) (D) (E) (F)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John E. Lobbia 15,000 4 years 0 $213,750 $427,500
- --------------------------------------------------------------------------------------------------------------
Anthony F. Earley, Jr. 9,000 4 years 0 $128,250 $256,500
- --------------------------------------------------------------------------------------------------------------
Larry G. Garberding 5,000 4 years 0 $ 71,250 $142,500
- --------------------------------------------------------------------------------------------------------------
Gerard M. Anderson 5,000 4 years 0 $ 74,766 $149,531
- --------------------------------------------------------------------------------------------------------------
Gerard M. Anderson 4,000 4 years 0 $ 57,000 $114,000
- --------------------------------------------------------------------------------------------------------------
Robert J. Buckler 4,000 4 years 0 $ 57,000 $114,000
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The awards of restricted stock shown in the table above were made in 1997
pursuant to the LTIP. The restrictions will lapse and such shares may become
non-forfeitable based on the criteria established by the Special Committee on
Compensation for the grants and described under Report of the Organization and
Compensation Committee and if approved by the Special Committee on Compensation.
If minimum performance for the various criteria is not met, all shares will be
forfeited and the pay out will be zero. Amounts shown in the table in Column (e)
"Target" reflect attainment of 50 percent of the maximum performance under the
vesting criteria established for the awards and are based on the average of the
high and low stock price on the New York Stock Exchange Composite Index on the
date of the grant. One-fourth of the 5,000 shares for Mr. Anderson vests each
year beginning December 31, 1998, through December 31, 2001, if performance
criteria related to new business development is met.
16
<PAGE> 18
The following table provides information about stock option grants in 1997 for
the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
PERCENT OF
TOTAL OPTIONS
NUMBER OF SECURITIES GRANTED TO EXERCISE OF GRANT DATE
UNDERLYING OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION VALUE
NAME GRANTED (#)(1) FISCAL YEAR ($/SH)(2) DATE ($)(3)
(A) (B) (C) (D) (E) (F)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John E. Lobbia 35,000 10.79% $28.50 March 11, 2007 $145,250
- --------------------------------------------------------------------------------------------------------------------
Anthony F. Earley,
Jr. 25,000 7.70% $28.50 March 11, 2007 $103,750
- --------------------------------------------------------------------------------------------------------------------
Larry G. Garberding 15,000 4.62% $28.50 March 11, 2007 $ 62,250
- --------------------------------------------------------------------------------------------------------------------
Gerard M. Anderson 15,000 4.62% $28.50 March 11, 2007 $ 62,250
- --------------------------------------------------------------------------------------------------------------------
Robert J. Buckler 15,000 4.62% $28.50 March 11, 2007 $ 62,250
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Up to 25 percent of the options are exercisable one year from the date of
grant, with up to an additional 25 percent exercisable on each succeeding
anniversary date of the grant for the next three years; all options must be
exercised within ten years of the date of grant. Options may be terminated
by the Company in the event that an optionee acts in a manner adverse to the
Company's best interests.
The options expire one year after the death of the optionee and up to three
years after termination of employment, as may be determined appropriate by
the Special Committee on Compensation. All stock options become immediately
exercisable in the event of a change in control of the Company.
(2) The exercise price of the stock options is the average of the high and low
sales price on the New York Stock Exchange Composite Index on the date of
grant. Stock appreciation rights were not granted in 1997.
(3) The fair value for these options was estimated at the date of grant using a
modified Black/Sholes option pricing model -- American Style, a risk-free
interest rate of 6.83 percent, a dividend yield of 7.26 percent, an expected
volatility of 18.31 percent and an expected life of ten years. The fair
value of the options granted in 1997 was $4.15 per option. The final value
of the option, if any, will depend on the future value of the common stock
and the optionee's decisions with respect to such options.
17
<PAGE> 19
PENSION PLANS TABLE
<TABLE>
<CAPTION>
AVERAGE YEARS OF BENEFIT SERVICE
FINAL ------------------------------------------------------------------------------------
COMPENSATION 5 10 15 20 25 30 35 40
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$275,000 $19,250 $110,000 $123,750 $137,500 $151,250 $165,000 $171,875 $178,750
300,000 21,000 120,000 135,000 150,000 165,000 180,000 187,500 195,000
325,000 22,750 130,000 146,250 162,500 178,750 195,000 203,125 211,250
350,000 24,500 157,500 175,000 192,500 210,000 218,750 227,500 236,250
400,000 28,000 180,000 200,000 220,000 240,000 250,000 260,000 270,000
425,000 29,750 191,250 212,500 233,750 255,000 265,625 276,250 286,875
450,000 31,500 202,500 225,000 247,500 270,000 281,250 292,500 303,750
500,000 35,000 225,000 250,000 275,000 300,000 312,500 325,000 337,500
550,000 38,500 247,500 275,000 302,500 330,000 343,750 357,500 371,250
600,000 42,000 270,000 300,000 330,000 360,000 375,000 390,000 405,000
650,000 45,500 292,500 325,000 357,500 390,000 406,250 422,500 438,750
700,000 49,000 315,000 350,000 385,000 420,000 437,500 455,000 472,500
750,000 52,500 337,500 375,000 412,500 450,000 468,750 487,500 506,250
800,000 56,000 360,000 400,000 440,000 480,000 500,000 520,000 540,000
850,000 59,500 382,500 425,000 467,500 510,000 531,250 552,500 573,750
</TABLE>
- ---------------
Note: The above includes benefits payable by the Detroit Edison Employees
Retirement Plan (the "Retirement Plan") as well as directly by Detroit
Edison pursuant to supplemental plans. Covered compensation under the
Retirement Plan was $160,000 in 1997.
Compensation used to calculate the benefits in the Pension Plans Table utilized
base salaries plus lump sums. The 1997 amounts for Messrs. Lobbia, Earley,
Garberding, Anderson and Buckler were $650,000; $498,462; $348,001; $268,539 and
$256,539, respectively. The plans require certain years of service before
benefits under the plans vest with the individual. Under all plans, Messrs.
Lobbia, Earley, Garberding, Anderson and Buckler have 34, 4, 8, 4 and 24 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.
18
<PAGE> 20
PROXY PERFORMANCE GRAPH
Value of $100 Invested December 31, 1992
(Includes Reinvested Dividends)
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) DTE S&P DJEUIG
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 97.12 110.08 111.67
1994 91.28 111.53 97.92
1995 129.32 153.46 128.83
1996 129.57 188.71 130.15
1997 148.75 251.65 164.63
</TABLE>
Assumes $100 investment on December 31, 1992, in DTE common stock, the S&P 500
Index and the Dow Jones Electric Utility Industry Group.
19
<PAGE> 21
MISCELLANEOUS EMPLOYMENT MATTERS
In 1995, irrevocable trusts were established to provide a source of funds to
assist DTE and Detroit Edison in meeting their liabilities under certain
director and executive compensation plans described previously. 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
subject to the claims of DTE or Detroit Edison's, as the case may be, general
creditors.
In 1997, the Company entered into Change-in-Control Severance Agreements with
certain officers including Messrs. Lobbia, Earley, Garberding, Buckler and
Anderson. These agreements provide for severance compensation in the event that
the named executives are terminated (actually or constructively) as a result of,
and within two years of, a change-in-control of the Company. Generally, a
change-in-control occurs for purposes of these agreements if the Company is
acquired by another company or merges with another company and less than 55
percent of the new company's combined voting stock is held by holders of the
voting stock of the Company immediately prior to the merger. The severance
amounts would equal 300 percent in the case of Messrs. Lobbia and Earley, and
200 percent in the case of Messrs. Garberding, Anderson and Buckler of base
salary plus target incentive payments under the SVIP and EIP. In addition, the
covered executives would receive an additional two years of age and service for
purposes of the MSBP. MSBP, as well as other executive benefits, would
immediately vest and be payable. In 1997, the Company established a revocable
trust, which is currently unfunded, to provide a source of funds for amounts
that may be owing pursuant to the Change-in-Control Severance Agreements.
Messrs. Earley and Garberding have employment contracts with Detroit Edison. Mr.
Earley's contract 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.
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 1997. There are no interlocks
with any members of the Special Committee on Compensation.
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
1998. Deloitte & Touche LLP has performed this function since 1995.
Deloitte & Touche LLP has advised DTE that it is independent with respect to DTE
and all of its affiliates within the rules and regulations of the S.E.C.
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 AND MANAGEMENT RECOMMEND A VOTE "FOR" THE PROPOSAL TO
RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS.
20
<PAGE> 22
ITEM 3. SHAREHOLDER PROPOSAL
The Sisters, Servants of the Immaculate Heart of Mary, 610 West Elm Avenue,
Monroe, Michigan, the beneficial owners of 1,650 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 and Mercy Health
Services, 34605 Twelve Mile Road, Farmington Hills, Michigan, the beneficial
owners of 2,600 shares of Common Stock have formally notified the Company that
they intend to attend the meeting to present the following proposal:
WHEREAS the expected deregulation of the electrical industry in Michigan
means that the ground rules upon which the company has made past decisions
will be inoperative and that the rate structure for DTE Energy will soon be
determined in the marketplace rather than in Lansing;
WHEREAS a deregulated environment favors companies with low costs of
production, low rates within customer classes and low dividend payout
ratio;
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 so in a competitive
environment there will be heavy pressure on DTE Energy to cut costs and
shut down inefficient power facilities;
WHEREAS it is likely that the $2.8 billion DTE Energy net plant investment
in Fermi 2 will become a "stranded asset" whose cost the company may not be
able to recover in a deregulated environment;
WHEREAS several nuclear power plants have been or are in the process of
being decommissioned ahead of scheduled dates (e.g. Shoreham, Main Yankee,
Big Rock Point, Haddemneck) at an average cost of $400 million each, and
whereas the estimated cost of Fermi 2 is $520 million in current dollars
and $3 billion in the year 2025, and whereas the DTE Energy fund for
decommissioning was only $138 million in December, 1996;
RESOLVED: The shareholders request that the company:
1) provide the shareholders with an independent assessment of:
a) how it will be possible to operate in a deregulated environment
while providing:
- stable or lower rates for all classes of consumers
- consistent dividends to shareholders
- sufficient financial resources for least risk operation of Fermi
2 and other facilities;
b) how deregulation will alter the cost-benefit analysis of continuing
operation of Fermi 2, that analysis to include public health and
environmental protection liabilities and 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. DTE Energy 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. It is a matter of basic justice that any plan must not unduly burden the
small electricity consumer for the benefit of another
21
<PAGE> 23
sector, reflect proper stewardship for the environment, and share the risks and
rewards of change fairly among captive customers, departing customers and
shareholders.
MANAGEMENT RESPONSE
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 this proposal has been made. Last year this proposal was
overwhelmingly defeated.
The debate regarding deregulation has continued over the past year, and the
final outlines and timing of deregulation are far from clear.
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. President Earley is
personally leading the effort on the Company's behalf.
To assist an outside consultant in the preparation of any 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 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.
Last year we began a major effort to keep our shareholders informed of
developments regarding deregulation and the Company's plans. In addition to
several mailings to all shareholders of record and updates in our periodic
reports, we have worked closely with DTE Shareholders United (DTESU), a group of
over 33,000 shareholders formed to give shareholders a voice in the deregulation
debate. Senior executives of the Company have attended forums of DTESU to
discuss deregulation and its impact on the Company. As a result of this
education effort, many shareholders have participated in the debate on
deregulation by writing or telephoning their elected representatives, and a
large number have even attended and spoken at public hearings. 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.
ITEM 4. 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 and has not been notified of any other business proposed to be
brought before the meeting. However, if any other business should be properly
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.
1999 ANNUAL MEETING OF SHAREHOLDERS
The 1999 Annual Meeting of Shareholders will be held on Wednesday, April 28,
1999. Under the Company's Bylaws, if a shareholder wishes to ask the
shareholders to consider business at the 1999 Annual Meeting, or to nominate a
candidate for director from the floor at the meeting, the shareholder
22
<PAGE> 24
must give notice and certain information to the Corporate Secretary between
January 28, 1999 and February 26, 1999. (Also see page 8 for additional
information on recommendations for nominations from shareholders.) These dates
do not apply to shareholder proposals for inclusion in the Proxy Statement which
are due November 30, 1998 (see below). Specific information regarding this
requirement can be obtained from the Corporate Secretary of DTE.
SHAREHOLDER PROPOSALS
Shareholder proposals to be considered for inclusion in the proxy statement for
the 1999 Annual Meeting must be received by the Corporate Secretary of DTE at
its principal business address no later than 5 p.m. on November 30, 1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 S.E.C.
and to furnish copies of these reports to the Company. Messrs. Anderson,
Buckler, Champley, Cockerham, Earley, Garberding, Gipson, Lobbia, Loomans, Nern
and Taylor each failed to report on the annual Form 5 for 1996 monthly exempt
acquisitions of "phantom stock" made under the SRP after new S.E.C. rules became
effective in August 1996 requiring the reporting of such acquisitions on the
annual Form 5. Although the value of the hypothetical investment (the phantom
stock) in DTE common stock was fully reported on the Summary Compensation Table
and will be paid only in cash upon termination of employment, S.E.C. rules
consider the phantom stock to be a "derivative security" which is subject to
Form 5 reporting. The officers all relied on a determination by counsel that a
report was not necessary but it has now been determined that a report was, in
fact, required. Mr. Leipprandt failed to file five reports on Form 4 from July
1995 to October 1996 to report a total of eight shares acquired through a
broker's reinvestment account.
SOLICITATION OF PROXIES
The Company paid $8,500 plus out-of-pocket expenses to Morrow & Co., Inc. to
help distribute proxy materials and solicit votes. DTE will pay the cost to
solicit proxies, which will be done mainly by mail. Directors, officers and
employees of DTE and its affiliates may solicit proxies either personally or by
telephone or electronic or facsimile transmission.
- --------------------------------------------------------------------------------
IMPORTANT
The interest and cooperation of all shareholders in the affairs of DTE 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
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.
- --------------------------------------------------------------------------------
23
<PAGE> 25
MAP
<PAGE> 26
[DTE ENERGY LETTERHEAD]
March 27, 1998
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 27
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 three issues at the April meeting. They will be
asked to elect four members to the Company's Board of Directors and ratify the
appointment of Deloitte & Touche LLP as independent auditors for 1998.
Shareholders will also be asked to vote on a shareholder proposal concerning
the impact of deregulation on the nuclear plant.
By completing the voting form enclosed, you will be partcipating 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 E. Lobbia
Enclosure
<PAGE> 27
I, as participant in The Detroit Edison Company 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 27, 1998, and at all adjournments
thereof, upon the matters set forth below and upon such other matters as may
come before the meeting.
<TABLE>
<S><C>
------------------------------------------------------------------
1. Election of Directors *For Withheld
1. Election of Directors [ ] [ ]
------------------------------------------------------------------
Terence E. Adderley Anthony F. Earley, Jr. For Against Abstain
Allan D. Gilmour Theodore S. Leipprandt 2. Independent Auditors [ ] [ ] [ ]
==================================================================
- ------------------------------------------------------------- 3. Shareholder Proposal: Impact For Against Abstain
*TO WITHHOLD AUTHORITY FROM ANY NOMINEE(S), WRITE THE NAME(S) of Deregulation on Nuclear
Plant [ ] [ ] [ ]
ABOVE: ==================================================================
CONFIDENTIAL VOTING INSTRUCTIONS
TO FIDELITY MANAGEMENT TRUST COMPANY AS TRUSTEE
UNDER THE DETROIT EDISON COMPANY SAVINGS AND INVESTMENT PLANS
This voting instruction 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.
If you sign and return this form by April 21, 1998, the shares will be voted as you direct. If you sign and return this form, but
do not give voting directions, the shares credited to your account will be voted FOR proposals 1 and 2 and AGAINST proposal 3. If
this form is not signed and returned, or if this form is not received by April 21, 1998, the shares credited to your account will
not be voted.
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.
Dated:
---------------------------------------------------
----------------------------------------------------------
Signature
Pleae sign exactly as name appears hereon. When signing as
attorney, executor, administrator, trustee, guardian, etc.,
give full title as such.
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<PAGE> 28
[DTE LOGO]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PROXY By signing on the other side, I (we) appoint David Bing, Eugene A.
Miller, Dean E. Richardson, 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 27, 1998, 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 PROPOSAL 3. If the proxy is not signed and returned, the shares cannot
be voted for you.
RECORD VOTE AND SIGN ON REVERSE SIDE
<PAGE> 29
PROXY
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<S><C>
Election of Directors: Nominees are
Terence E. Adderley, Anthony F. Your Board of Directors recommends a vote FOR Proposals 1 & 2.
Earley, Jr., Allan D. Gilmour ==============================================================
and Theodore S. Leipprandt.
*For Withheld
- ------------------------------------ 1. Election of Directors [ ] [ ]
*To withhold vote from any --------------------------------------------------------------
Nominee(s), write the name(s) here:
*For Against Abstain
2. Independent Auditors [ ] [ ] [ ]
H --------------------------------------------------------------
Your Board of Directors recommends a vote AGAINST Proposal 3.
==============================================================
*For Against Abstain
3.Shareholder Proposal - 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
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