<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:
- --------------------------------------------------------------------------------
<PAGE> 2
[DTE ENERGY LOGO]
2000 2ND AVENUE
DETROIT, MICHIGAN 48226-1279
1999 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT
Day: Wednesday, April 28, 1999
Time: 10:00 a.m. Detroit time
Place: DTE Energy Building
(Detroit Edison Plaza; see map on the last
page)
660 Plaza Drive
Detroit, Michigan 48226
We invite you to attend the annual meeting of DTE Energy Company ("DTE" or
"Company") to:
1. Elect three directors.
2. Ratify the appointment of Deloitte & Touche LLP by the Board of
Directors as the independent auditors of DTE for the year 1999.
3. 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 March 1, 1999. Only shareholders of
record at the close of business on that date can vote at the meeting.
For more information, please read this 1999 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
26, 1999.
Finally, it is important that your stock be represented at the meeting.
Shareholders may vote their shares (1) by telephone, (2) via the internet or (3)
by completing and mailing the enclosed proxy card in the return envelope.
Specific instructions for voting by telephone or via the internet are attached
to the proxy card. If you attend the meeting and vote at it, your vote at the
meeting will replace an earlier vote.
By Order of the Board of Directors
/s/ SUSAN M. BEALE /s/ ANTHONY F. EARLEY, JR.
Susan M. Beale Anthony F. Earley, Jr.
Vice President and Corporate Chairman of the Board and Chief Executive
Secretary Officer and President and Chief Operating
Officer
March 26, 1999
<PAGE> 3
1999 PROXY STATEMENT OF DTE ENERGY COMPANY
QUESTIONS AND ANSWERS
Q: 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: 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: WHAT IS THE PURPOSE OF THIS ANNUAL MEETING?
A: At the 1999 DTE annual meeting, common stock shareholders are asked to:
- Elect three directors. The nominees are Lillian Bauder, David Bing and
Larry G. Garberding. (See pages 4 & 5)
- Ratify Deloitte & Touche LLP as DTE's independent auditors. (See page 22)
- Consider any other business that may properly come before the meeting or
any adjournments of the meeting.
Q: WHO IS ENTITLED TO VOTE?
A: Only holders of DTE's common stock at the close of business on March 1, 1999
(the Record Date), are entitled to vote at the annual meeting. Each share of
common stock has one vote. Information on cumulative voting in the election
of directors is shown on page 3.
Q: HOW DO I VOTE?
A: Sign and date each proxy card that you receive and return it in the enclosed
prepaid envelope. Proxies will be voted as you specify on each card. If you
do not specify how to vote on either Item 1 or 2 on your proxy card, the
shares represented by your proxy will be voted FOR 1 and 2. Your shares will
also be voted on any other business that comes before the meeting. (See
pages 4 and 22)
Q: CAN I VOTE BY TELEPHONE OR ELECTRONICALLY?
A: Yes. If you hold your shares in your own name, you may vote by telephone or
electronically through the internet by following the instructions attached
to your proxy card.
If your shares are registered in the name of a broker, bank or other
nominee, you must contact the broker, bank or other nominee to find out
whether you will be able to vote by telephone or electronically.
Q: CAN I CHANGE MY VOTE AFTER I HAVE VOTED?
A: Any subsequent vote by any means will change your prior vote. For example,
if you voted by telephone, a subsequent internet vote will change your vote.
If you wish to change your vote by mail, you do so by a written request or a
subsequently dated proxy, either of which must be received by the tabulator,
Corporate Election Services, P.O. Box 535600, Pittsburgh, PA
2
<PAGE> 4
15253-9931. The last vote received prior to the meeting will be the one
counted. You may also change your vote by voting in person at the annual
meeting.
Q: IS MY VOTE CONFIDENTIAL?
A: Yes, your vote is confidential. The tabulator and inspectors of election are
not employees of the Company nor are they affiliated with the Company in any
way.
The Company may be advised whether you have voted. Also, shareholders' votes
will be disclosed to the Company if a contested proxy solicitation occurs or
if a disclosure is required by law.
Q: WHAT SHARES ARE INCLUDED ON MY PROXY CARD?
A: The shares on your proxy card represent shares for which you have a
certificate and also any shares you may have 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: 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: WHAT MAKES UP A QUORUM?
A: There were 145,060,367 shares of DTE's common stock outstanding on the
Record Date. A majority of the outstanding shares present or represented by
proxy at the meeting constitutes a quorum. A quorum is necessary to conduct
an annual meeting.
Q: HOW DOES THE VOTING WORK?
A: - Each director requires approval from a plurality of the shares voted.
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. If you vote by
telephone or electronically, follow the instructions attached to the 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 three directors.
- Ratification of the appointment of auditors requires approval from a
majority of the votes cast (excluding abstentions and broker non-votes).
Q: WHO MAY ATTEND THE ANNUAL MEETING?
A: Any shareholder as of the Record Date may attend. Seating is limited and
admission is on a first come basis.
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
1999. The three directors in this class who have not reached the mandatory
retirement age have been nominated for election for terms expiring in 2002. 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 three 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 anticipated that all nominees will be available 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 subsidiary. The dates shown for service as a director
include service as a director of Detroit Edison.
NOMINEES FOR ELECTION AT THIS MEETING FOR TERMS EXPIRING IN 2002
<TABLE>
<CAPTION>
<S> <C>
[BAUDER PHOTO] LILLIAN BAUDER, age 59 Director since 1986
- Vice President for Corporate Affairs, Masco Corporation, Taylor,
Michigan, and President, Masco Charitable Trust (1995)
- 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, Nuclear Review and Public Responsibility
(Chair)
[BING PHOTO] DAVID BING, age 55 Director since 1985
- 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 Bing Blanking, L.L.C.
- Director of DTE, Detroit Edison, Lear Corporation, Standard Federal
Bank and Steelcase Inc.
- Played professional basketball for 12 years; advisor to many youth
groups and director of many civic groups
- Syracuse University (B.A.)
- Committees: Audit, Organization and Compensation and Special Committee
on Compensation (Chair)
</TABLE>
4
<PAGE> 6
NOMINEES FOR ELECTION AT THIS MEETING FOR TERMS EXPIRING IN 2002
<TABLE>
<CAPTION>
<S> <C>
LARRY G. GARBERDING, age 60 Director since 1990
[GARDERDING PHOTO] - Executive Vice President and Chief Financial Officer, DTE and Detroit
Edison
- Director of DTE and Detroit Edison and a director or trustee of many
community and professional organizations
- Iowa State University (B.S. in industrial administration)
- Committees: Executive and Finance
</TABLE>
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 2001
<TABLE>
<CAPTION>
<S> <C>
TERENCE E. ADDERLEY, age 65 Director since 1987
[ADDERLEY PHOTO] - Chairman, President and Chief Executive Officer, Kelly Services, Inc.,
Troy, Michigan
- Director of DTE; Detroit Edison; Kelly Services, Inc. and 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 49 Director since 1994
[EARLEY PHOTO] - Chairman of the Board and Chief Executive Officer and President and
Chief Operating Officer (1998), DTE and Detroit Edison
- Formerly President and Chief Operating Officer, DTE and Detroit Edison
and President and Chief Operating Officer, Long Island Lighting
Company, New York
- Director of DTE, Detroit Edison, Comerica Bank and Mutual of America
Capital Management Corporation 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.)
- Committee: Executive (Chair)
ALLAN D. GILMOUR, age 64 Director since 1995
[GILMOUR PHOTO] - Retired Vice Chairman of the Board, Ford Motor Company
- Director of DTE; Detroit Edison; AP Automotive Systems, Inc.; The Dow
Chemical Company; MediaOne Group, Inc.; The Prudential Insurance
Company of America 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: Corporate Governance, Finance (Chair) and Public
Responsibility
</TABLE>
5
<PAGE> 7
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 2001
<TABLE>
<CAPTION>
<S> <C>
[LEIPPRANDT PHOTO] THEODORE S. LEIPPRANDT, age 65 Director since 1990
- Retired President and Chief Executive Officer and Marketing Specialist,
Cooperative Elevator Company, Pigeon, Michigan
- Director of DTE and Detroit Edison, past president of Michigan
Agri-Business Association and Michigan 4-H Foundation Board of Trustees
and director or trustee of many church, community and professional
organizations
- Michigan State University (B.S. in animal science)
- Committees: Audit and Nuclear Review
</TABLE>
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 2000
<TABLE>
<CAPTION>
<S> <C>
[BROOKS PHOTO] WILLIAM C. BROOKS, age 65 Director since 1997
- Chairman, The Brooks Group International, Ltd. (a holding company
involved in human resources and economic development), Detroit,
Michigan (1998)
- Formerly Vice Chairman, Luftig and Warren (1998); Chairman, Entech HR
Consulting Services (1997) and Vice President for Corporate Affairs,
General Motors Corporation
- Director of DTE; Detroit Edison; Louisiana-Pacific Corporation; United
American Health Care Corporation; Complete Business Solutions, Inc. and
Sigma Associates, Inc. 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)
- Committees: Corporate Governance and Public Responsibility
[LOBBIA PHOTO] JOHN E. LOBBIA, age 57 Director since 1988
- Retired Chairman of the Board and Chief Executive Officer, DTE and
Detroit Edison (1998)
- Director of DTE, Detroit Edison and Rouge Industries and director or
trustee of many community and professional organizations
- University of Detroit (B.A. in electrical engineering)
- Committees: Executive and Nuclear Review
[MILLER PHOTO] EUGENE A. MILLER, age 61 Director since 1989
- 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 Corporate Governance
</TABLE>
6
<PAGE> 8
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 2000
<TABLE>
<CAPTION>
<S> <C>
[RICHARD PHOTO] DEAN E. RICHARDSON, age 71 Director since 1977
- Retired Chairman of the Board, Manufacturers National Corporation,
Detroit, Michigan
- Director of DTE, Detroit Edison and the Automobile Club of Michigan and
director or trustee of many community organizations
- Michigan State University (B.A.) and University of Michigan (L.L.B.)
- Committees: Audit (Chair), Executive, Finance, Organization and
Compensation and Special Committee on Compensation
</TABLE>
DIRECTORS NOT STANDING FOR RE-ELECTION
Mr. Alan E. Schwartz and Mr. William Wegner have reached mandatory retirement
age and are not standing for re-election.
Mr. Schwartz, a partner in the law firm Honigman Miller Schwartz and Cohn,
served as a director for 30 years. Mr. Wegner, an expert in nuclear power,
served as a director for nine years.
Directors and management express their deep appreciation to Mr. Schwartz and Mr.
Wegner for their years of dedicated service as directors of the Company.
[SCHWARTZ PHOTO] [WEGNER PHOTO]
ALAN E. SCHWARTZ WILLIAM WEGNER
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 1998. Most of the directors attended 100 percent of the Board and
committee meetings and all directors attended at least 77 percent of the
meetings.
- - The DTE and Detroit Edison Boards both have standing committees for Audit,
Executive, Finance, Organization and Compensation and Public Responsibility.
DTE has a Corporate Governance (formerly 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 1998)
- - 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 (1 MEETING IN 1998)
- - Has authority to act on most matters when the Board of Directors is not in
session.
FINANCE COMMITTEE (3 MEETINGS IN 1998)
- - Reviews matters related to the capital structure.
- - Recommends dividend policy.
- - Reviews financial planning policies and goals.
CORPORATE GOVERNANCE COMMITTEE (5 MEETINGS IN 1998)
- - Reviews and assists the full Board with corporate governance matters.
- - Considers the organizational structure of the Board of Directors.
- - 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 (9 MEETINGS IN 1998)
- - Provides non-management oversight and review of the Fermi 2 nuclear power
plant.
8
<PAGE> 10
ORGANIZATION AND COMPENSATION COMMITTEE (8 MEETINGS IN 1998)
- - 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.
PUBLIC RESPONSIBILITY COMMITTEE (FORMED IN 1998; 1 MEETING IN 1998)
- - Monitors the Company's performance as a responsible corporate citizen
including its performance with respect to people.
SPECIAL COMMITTEE ON COMPENSATION (5 MEETINGS IN 1998)
- - Comprised entirely of disinterested directors. Administers the Long-Term
Incentive Plan (the "LTIP") in accordance with certain Internal Revenue Code
requirements.
BOARD COMPENSATION
During 1998, the compensation paid to directors was revamped to emphasize equity
compensation. As of January 1, 1999, cash compensation was reduced, equity
compensation was increased and the directors' retirement plan was eliminated for
future service.
Compensation for 1998 and the changes made beginning January 1, 1999, are
described below.
- - CASH COMPENSATION
- 1998 Compensation
- Cash retainer of $22,000.
- Committee chair retainer of $4,000 per committee except $8,000 for
chairing the Nuclear Review Committee which has an unusually heavy work
load. No retainer was paid for chairing the Executive Committee.
- Committee member retainer of $4,000 per committee except $8,000 for
service on the Nuclear Review Committee. No compensation was paid for
service on the Executive Committee and the Special Committee on
Compensation.
- Board meeting fees of $1,000 per meeting attended.
- Committee meeting fees of $750 per committee meeting attended on days
other than the day of or the day before a board meeting.
- 1999 Compensation
- Cash retainer of $35,000.
- Committee chair retainer of $4,000 per committee except $8,000 for
chairing the Nuclear Review Committee.
- No Committee member retainer except $4,000 for service on the Nuclear
Review Committee.
- No meeting fees.
- - EQUITY COMPENSATION
- 1998 Compensation
- 500 shares of common stock
- 1999 Compensation
- 900 shares of phantom common stock with all imputed dividends reinvested.
9
<PAGE> 11
- - DIRECTORS' RETIREMENT PLAN
- 1998
- Non-employee directors with a minimum of five years of Board service were
eligible for retirement benefits of a monthly amount of 1/12 of the
annual retainer in effect at the time of retirement, during the life of
the director, for the number of months of service on the Board while not
an employee. Retirement payments end upon the death of a director.
- 1999
- The directors' retirement plan was eliminated for future service.
Benefits were frozen as of December 31, 1998, and all non-employee
directors were deemed vested on that date. No further benefits will be
accrued.
- - DIRECTOR DEFERRED COMPENSATION PLAN
- 1998 Plan
- DTE and Detroit Edison each maintained an unfunded deferred compensation
plan which permitted non-employee directors to defer receipt of any part
of their annual retainer and meeting fees.
- Deferred fees accrued in an unfunded account for future payment with
interest accrued monthly at the 5-year U.S. Treasury Bond rate.
- 1999 Plan
- The DTE and Detroit Edison plans were merged.
- In addition to the account described above, deferred fees may also be
invested in phantom shares of DTE common stock with all imputed dividends
reinvested.
Employee directors receive no payment for service as directors. Non-employee
directors do not receive additional compensation for service on the Detroit
Edison board, other than as described above for service on the Nuclear Review
Committee. Directors are reimbursed for out-of-pocket expenses incurred to
attend meetings.
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 Stock Capital Research & Management Company 7,865,000 5.42
333 South Hope Street
Los Angeles, CA 90071
-------------------------------------------------------------------------------------------------
</TABLE>
* Capital Research and Management Company has reported on Schedule 13G
that, at December 31, 1998, it is the beneficial owner of, with
investment power over, 7,865,000 shares of the Company's common stock as
a result of acting as an investment advisor to various investment
companies. The report indicated 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 MARCH 1,
TITLE OF CLASS NAME OF BENEFICIAL OWNERS 1999 (1)
---------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Common Terence E. Adderley 3,540(2)
---------------------------------------------------------------------------------------------------
Common Gerard M. Anderson 18,679(3)
---------------------------------------------------------------------------------------------------
Common Lillian Bauder 3,606(2)
---------------------------------------------------------------------------------------------------
Common David Bing 2,711(2)
---------------------------------------------------------------------------------------------------
Common William C. Brooks 3,010(2)
---------------------------------------------------------------------------------------------------
Common Robert J. Buckler 19,115(3)
---------------------------------------------------------------------------------------------------
Common Anthony F. Earley, Jr. 60,783(3)
---------------------------------------------------------------------------------------------------
Common Larry G. Garberding 26,776(3)
---------------------------------------------------------------------------------------------------
Common Allan D. Gilmour 3,311(2)
---------------------------------------------------------------------------------------------------
Common Douglas R. Gipson 12,824(3)
---------------------------------------------------------------------------------------------------
Common Theodore S. Leipprandt 3,313(2)
---------------------------------------------------------------------------------------------------
Common John E. Lobbia 41,345(3)
---------------------------------------------------------------------------------------------------
Common Eugene A. Miller 3,516(2)
---------------------------------------------------------------------------------------------------
Common Dean E. Richardson 4,311(2)
---------------------------------------------------------------------------------------------------
Directors and officers as a group
Common (25 persons) 290,594(3)
---------------------------------------------------------------------------------------------------
</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 900 shares of phantom common stock awarded to directors on January
1, 1999, pursuant to the newly established Deferred Stock Compensation Plan
for Non-Employee Directors. Also includes shares of phantom common stock
held by directors who participate in the Plan for Deferring the Payment of
Directors' Fees and who selected the phantom common stock investment option.
Also includes phantom shares deemed purchased with imputed dividends.
(3) Includes restricted shares, unvested as of March 1, 1999, of DTE common
stock awarded under DTE's LTIP to Messrs. Anderson, Buckler, Earley,
Garberding, Gipson and Lobbia of 15,750; 12,000; 28,000; 14,500; 8,500 and
19,050 shares, respectively, and a total of 173,800 restricted shares for
the group of 25 persons. Also includes equivalent shares held in the SIP and
equivalent phantom shares deemed to be held in the Savings Reparation Plan
("SRP") as of March 1, 1999. Also for Mr. Earley, includes the unvested
portion of 30,000 shares of restricted stock subject to vesting at time
intervals, awarded upon his election to the position of Chairman, of which
10,000 shares have vested as of March 1, 1999. All restricted stock 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 and the expansion and success of non-regulated
businesses. New approaches to compensation consistent with the transition to a
competitive energy industry are also considered.
Q: WHICH EXECUTIVES ARE DISCUSSED IN THIS REPORT?
A: Mr. Lobbia served as Chairman of the Board and Chief Executive Officer of
DTE and Detroit Edison until July 31, 1998, when he relinquished those
titles. Under Detroit Edison's normal policies covering accrued vacation and
retirement, Mr. Lobbia remained an employee for the remainder of the year
(although on vacation much of the time), and the compensation reported is
for all of 1998. Mr. Earley continued as President and Chief Operating
Officer and was elected Chairman of the Board and Chief Executive Officer of
DTE and Detroit Edison effective August 1, 1998. Effective August 1, 1998,
Mr. Anderson, who was formerly Executive Vice President of DTE and Detroit
Edison, was elected President of DTE Energy Resources of DTE and Detroit
Edison; and Mr. Buckler, who was formerly Executive Vice President of DTE
and Detroit Edison, was elected President of DTE Energy Distribution of DTE
and Detroit Edison. Mr. Garberding was the Executive Vice President and
Chief Financial Officer for DTE and Detroit Edison for all of 1998. Messrs.
Anderson, Buckler, Earley and Garberding are members of the DTE and Detroit
Edison Office of the President. Mr. Gipson was a Senior Vice President for
Detroit Edison for all of 1998.
Q: WHAT IS OUR EXECUTIVE COMPENSATION POLICY?
A: DTE's principal business activities are carried out through Detroit Edison.
- 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, (2) supporting performance-oriented
behavior at all levels of the Company and (3) achieving those results in a
manner consistent with the Company's values. 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 retention issues and (4)
comparisons to comparable positions at other energy companies in the
Comparative Market.
In 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 and 1998, the Executive Incentive Plan (the "EIP") and stock
options under the LTIP were added as elements
12
<PAGE> 14
to this program. The Special Committee on Compensation administers the LTIP
and compensation matters arising under Section 162(m) of the Internal
Revenue Code ("IRC"). It is composed entirely of disinterested directors.
Awards made by the Special Committee on Compensation are considered by this
Committee in determining overall compensation policy. Policies concerning
each of these elements, including the basis for the compensation awarded to
Messrs. Earley and Lobbia, are discussed below. In 1998, Mr. Earley also was
granted restricted stock as discussed in Footnote 5 to the Summary
Compensation Table.
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.
- 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. The Chairman'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 1998 base salary was increased to remain at the median of the
Comparative Market. Also, based on the factors discussed above, as well as
Mr. Earley's assumption of additional responsibilities when he was elected
Chairman and Chief Executive Officer, Mr. Earley's base salary increased;
however, his base salary is below the median of the Comparative Market. The
1998 base salary of Mr. Garberding is above the median of the Comparative
Market and the base salaries of Messrs. Anderson, Buckler and Gipson are
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
13
<PAGE> 15
participants and each measure is weighted. For 1998, four categories,
weighted as follows, were established for executives -- financial (45
percent), safety (9 percent), customer satisfaction (18 percent) and
leadership initiative (28 percent).
- EXECUTIVE INCENTIVE PLAN FOR CASH AWARDS: In 1998, the EIP had four
annual measures weighted as follows -- Fermi plant performance (30
percent), electric industry restructuring (30 percent), employee
satisfaction (10 percent), new business growth, including earnings and
the establishment of new businesses (20 percent) and Year 2000 compliance
(10 percent). 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. Awards under these plans may be
deferred, at the option of the recipient, for one to five years, with
interest accrued at the 5-year U.S. Treasury Bond rate.
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 expands DTE's flexibility to structure compensation incentives for
officers and other key 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, retention issues and contributions to the overall
success of the Company.
- RESTRICTED STOCK: Restricted stock awards were made by this Committee in
1995 and 1996. The 1995 award provided for vesting cycles ending December
31, 1996; December 31, 1997; and 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 achievement of the measures, at December 31, 1996;
December 31, 1997; and December 31, 1998; 45 percent, 29 percent and 50.5
percent, respectively, of the scheduled portion of the 1995 award vested.
The 1996 award will vest, based on the achievement of the measures, on
December 31, 1999.
In 1997, the Special Committee on Compensation assumed responsibility for
the LTIP. In 1997 and 1998, restricted stock awards, with restriction
periods ending on December 31, 2000, and December 31, 2001, respectively,
were made. In 2000, vesting will be determined after consideration of the
achievement of performance measures for the restriction period which are
related to total shareholder return, customer satisfaction and production
cost. In 2001, vesting will be dependent upon the achievement, for the
restriction period, of those measures and a nuclear plant performance
measure.
14
<PAGE> 16
- STOCK OPTIONS: In 1997 and 1998, 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 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 $1 million. This is
particularly true during the transition to a competitive electric utility
industry and the development of new businesses.
ORGANIZATION AND COMPENSATION COMMITTEE
Terence E. Adderley, Chair
David Bing
Eugene A. Miller
Dean E. Richardson
Alan E. Schwartz
15
<PAGE> 17
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
-----------------------------------------------------------------------
AWARDS PAYOUTS
------------------------------------------- ALL
SECURITIES LTIP OTHER
NAME AND PRINCIPAL POSITION RESTRICTED UNDERLYING PAYOUTS($) COMPENSATION
IN 1998 YEAR SALARY($) BONUS($)(1) STOCK AWARDS($) OPTIONS(#) (2)(3) ($)(4)
(A) (B) (C) (D) (F) (G) (H) (I)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John E. Lobbia 1998 $697,500 $227,676 0 $121,011 $41,850
Chairman of the Board 1997 650,000 224,120 35,000 61,056 39,000
and Chief Executive
Officer until July 31, 1996 636,539 0 0 86,569 34,963
1998 (DTE and Detroit
Edison)
- ----------------------------------------------------------------------------------------------------------------------------------
Anthony F. Earley, Jr. 1998 $617,693 $250,810 $1,160,622(5) 25,000 $ 67,255 $26,503
Chairman of the Board, 1997 498,462 151,951 25,000 33,916 22,540
Chief Executive Officer 1996 454,615 0 0 48,094 16,892
(effective August 1,
1998) and President and
Chief Operating Officer
(DTE and Detroit Edison)
- ----------------------------------------------------------------------------------------------------------------------------------
Larry G. Garberding 1998 $367,730 $121,718 10,000 $ 40,337 $24,259
Executive Vice President 1997 348,001 92,178 15,000 20,364 22,806
and Chief Financial 1996 345,039 0 0 28,856 18,352
Officer (DTE and Detroit
Edison)
- ----------------------------------------------------------------------------------------------------------------------------------
Robert J. Buckler 1998 $314,384 $111,222 10,000 $ 33,627 $19,355
President and Chief 1997 268,539 71,130 15,000 16,958 16,889
Operating Officer DTE 1996 228,768 0 0 24,047 12,185
Energy Distribution
(effective August 1,
1998) (DTE and Detroit
Edison)
- ----------------------------------------------------------------------------------------------------------------------------------
Gerard M. Anderson 1998 $311,153 $110,153 10,000 $ 70,090 $17,969
President and Chief 1997 256,539 117,952 15,000 10,182 15,780
Operating Officer DTE 1996 214,615 20,000 0 14,428 10,939
Energy Resources
(effective August 1,
1998) (DTE and Detroit
Edison)
- ----------------------------------------------------------------------------------------------------------------------------------
Douglas R. Gipson 1998 $251,923 $ 83,387 10,000 $ 26,918 $15,525
Senior Vice-President 1997 230,000 60,922 12,000 13,553 13,645
Nuclear Generation 1996 227,308 0 0 19,238 12,100
Detroit Edison
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes awards for Messrs. Lobbia, Earley, Garberding, Anderson, Buckler
and Gipson under the SVIP and EIP and, for 1996 and 1997, a cash award for
Mr. Anderson.
(2) Includes the value at January 27, 1997, January 22, 1998, and February 23,
1999 (the dates that performance was certified), of the portion of the 1995
LTIP award that became unrestricted as the result of meeting the performance
criteria described previously. For 1998, includes the value of a
16
<PAGE> 18
1997 restricted stock grant to Mr. Anderson that vested as a result of the
performance of an affiliate project.
(3) The number and value of the aggregate performance restricted stock holdings
of the named officers as of December 31, 1998, 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, 36,000 shares or $1,545,750;
Mr. Earley, 31,334 shares or $1,345,494; Mr. Garberding, 16,500 shares or
$708,469; Mr. Anderson, 18,000 shares or $772,875; Mr. Buckler, 13,667
shares or $586,827; and Mr. Gipson, 9,834 shares or $422,247. 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
to $160,000 for 1998. For 1998, Messrs. Lobbia, Earley, Garberding,
Anderson, Buckler and Gipson were credited with matching contributions of
$9,600; $7,200; $9,600; $9,600; $9,600; and $9,600, respectively. During
1998, $995; $2,195; $811; $492; and $409 were reimbursed to Messrs. Earley,
Garberding, Anderson, Buckler and Gipson, 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
(18 percent in 1999) 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
1998, Messrs. Lobbia, Earley, Garberding, Anderson, Buckler and Gipson were
credited with matching SRP contributions of $32,250; $18,308; $12,464;
$7,558; $9,263 and $5,515, respectively.
(5) For 1998, includes an award made concurrently with Mr. Earley's election as
Mr. Lobbia's successor as Chairman and Chief Executive Officer by the
Special Committee on Compensation of 30,000 shares of the Company's common
stock. This award encouraged Mr. Earley to continue his employment with
Detroit Edison and also furthered the Company's policy of linking executive
and shareholder interests. Because of the number of chief executive officer
positions available industry-wide, the Board wanted to ensure that Mr.
Earley did not leave prior to becoming Chairman and that he stayed for a
reasonable period to ensure the stability of the leadership team. This award
does not fully vest until August 2000. The award is valued as of March 23,
1998, the date the award was made.
17
<PAGE> 19
LONG-TERM INCENTIVE PLAN -- AWARDS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
-------------------------------------
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE BASED PLANS($)
- --------------------------------------------------------------------------------------------------------------
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 0 0 0 0 0
- --------------------------------------------------------------------------------------------------------------
Anthony F. Earley, Jr. 10,000 4 years 0 $187,188 $374,375
- --------------------------------------------------------------------------------------------------------------
Larry G. Garberding 4,500 4 years 0 $ 84,234 $168,469
- --------------------------------------------------------------------------------------------------------------
Gerard M. Anderson 4,500 4 years 0 $ 84,234 $168,469
- --------------------------------------------------------------------------------------------------------------
Robert J. Buckler 4,500 4 years 0 $ 84,234 $168,469
- --------------------------------------------------------------------------------------------------------------
Douglas R. Gipson 2,500 4 years 0 $ 46,797 $ 93,594
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The awards of restricted stock shown in the table above were made in 1998
pursuant to the LTIP. As described in the Report of the Organization and
Compensation Committee, at the end of the restriction period, some or all of
such shares may become non-forfeitable based on the level of satisfaction of
performance. If minimum performance criteria are 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.
The following table provides information about stock option grants in 1998 for
the named executive officers.
LONG TERM INCENTIVE PLAN - 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 0 0 0 -- 0
- --------------------------------------------------------------------------------------------------------------------
Anthony F. Earley,
Jr. 25,000 9.1% $38.60 March 22, 2008 $6.43
- --------------------------------------------------------------------------------------------------------------------
Larry G. Garberding 10,000 3.6% $38.60 March 22, 2008 $6.43
- --------------------------------------------------------------------------------------------------------------------
Gerard M. Anderson 10,000 3.6% $38.60 March 22, 2008 $6.43
- --------------------------------------------------------------------------------------------------------------------
Robert J. Buckler 10,000 3.6% $38.60 March 22, 2008 $6.43
- --------------------------------------------------------------------------------------------------------------------
Douglas R. Gipson 10,000 3.6% $38.60 March 22, 2008 $6.43
- --------------------------------------------------------------------------------------------------------------------
</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 will
expire if not exercised within ten years of the date of grant. Options
18
<PAGE> 20
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 1998.
(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 5.84 percent, a dividend yield of 5.39 percent, an expected
volatility of 17.48 percent and an expected life of ten years. The fair
value of the options granted in 1998 was $6.43 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.
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>
$250,000 $17,500 $100,000 $112,500 $125,000 $137,500 $150,000 $156,250 $162,500
300,000 21,000 120,000 135,000 150,000 165,000 180,000 187,500 195,000
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
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
900,000 63,000 405,000 450,000 495,000 540,000 562,500 585,000 607,500
</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 1998.
19
<PAGE> 21
Compensation used to calculate the benefits in the Pension Plans Table utilized
base salaries plus lump sums in lieu of base salary increases for the Retirement
Plan portion of the calculation, and base salaries plus lump sums in lieu of
base salary increases and SVIP lump sums for the Management Supplemental Benefit
Plan ("MSBP") portion of the calculation. The 1998 amounts for Messrs. Lobbia,
Earley, Garberding, Anderson, Buckler and Gipson were $791,750; $689,970;
$418,190; $348,351; $353,322 and $285,273, 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,
Buckler and Gipson have 35, 5, 10, 5, 25 and 11 actual years of service,
respectively. Messrs. Earley, Garberding and Gipson have 15, 25 and 14 years,
respectively, of additional awarded service for the purpose of calculating
benefits under the MSBP. Mr. Earley's eligibility for the additional awarded
service is subject to his meeting the eligibility requirements of the MSBP. The
benefits are calculated based upon age, years of service (actual and, for MSBP,
awarded), final average compensation, management position at retirement and
payment option selected. Such benefits are not subject to any deductions for
Social Security benefits.
20
<PAGE> 22
PROXY PERFORMANCE GRAPH
Value of $100 Invested December 31, 1993
(Includes Reinvested Dividends)
[LINE GRAPH]
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DTE $100.00 $ 93.99 $133.16 $133.41 $153.16 $200.11
--------------------------------------------------------------------------------------------------------------
S&P $100.00 $101.32 $139.20 $171.19 $228.32 $293.59
--------------------------------------------------------------------------------------------------------------
DJEUIG $100.00 $ 87.68 $115.37 $116.49 $147.35 $168.57
--------------------------------------------------------------------------------------------------------------
</TABLE>
Assumes $100 investment on December 31, 1993, in DTE Energy common stock, the
S&P 500 Index, and the Dow Jones Electric Utility Industry Group.
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, 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, Anderson
and Gipson. 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
21
<PAGE> 23
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. Earley, Anderson and Buckler and 200 percent in the case of Messrs.
Garberding and Gipson 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 will be calculated to
reflect a specified amount for full years of service prior to establishing
eligibility in MSBP. In addition, Mr. Earley, under certain circumstances, may
receive accelerated vesting of common stock granted at the time of his election
as Chairman and Chief Executive Officer. 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 1998. Mr. Schwartz is retiring
from the Board as a director. There are no interlocks with any other 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
1999. 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.
ITEM 3. 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.
22
<PAGE> 24
2000 ANNUAL MEETING OF SHAREHOLDERS
- - ACTION FROM THE FLOOR: The 2000 Annual Meeting of Shareholders will be held on
Wednesday, April 26, 2000. Under the Company's Bylaws, if a shareholder wishes
to ask the shareholders from the floor to consider business at the 2000 Annual
Meeting, or to nominate a candidate for director from the floor at the
meeting, the shareholder must give notice and certain information to the
Corporate Secretary between January 25, 2000, and February 28, 2000. (Also see
page 3 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 discussed 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 2000 Annual Meeting must be received by the
Corporate Secretary of DTE at its principal business address no later than 5
p.m. Detroit time on November 29, 1999.
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. 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 1998 all filing requirements were met on a timely basis.
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 and officers of
DTE and employees of 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 or vote by telephone or on the
internet. If you will do so now, the Company will be saved the expense of
follow-up notices.
- --------------------------------------------------------------------------------
23
<PAGE> 25
[MAP]
<PAGE> 26
ANTHONY F. EARLEY, JR.
Chairman and Chief Executive Officer
DTE Energy Company
2000 2nd Ave., Detroit, MI 48226-1279
Tel: 313.235.4000
[DTE ENERGY LOGO]
March 26, 1999
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 two issues at the April meeting. They will be
asked to elect three members to the Company's Board of Directors and ratify the
appointment of Deloitte & Touche LLP as independent auditors for 1999.
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,
/s/ TONY EARLEY
Enclosure
<PAGE> 27
<TABLE>
<CAPTION>
<S><C>
VOTE BY TELEPHONE
Have your proxy card available when you CALL
THE TOLL-FREE NUMBER 1-800-250-9081 using
a Touch-Tone phone. You will be prompted
to enter your control number and then you can
follow the simple prompts that will be
presented to you to record your vote.
VOTE BY INTERNET
Have your proxy card available when you
ACCESS THE WEBSITE HTTP://WWW.VOTEFAST.COM.
You will be prompted to enter your control
number and then you can follow the simple
prompts that will be presented to you to record
your vote.
VOTE BY MAIL
Please mark, sign and date your proxy card
and return it in the postage paid envelope
provided or return it to: Corporate Election
Services, P.O. Box 535600, Pittsburgh,
Pennsylvania 15253.
- ------------------------------------------------------------------------------------------------------------------------------------
VOTE BY TELEPHONE VOTE BY INTERNET VOTE BY MAIL
Call TOLL-FREE using a Access the WEBSITE and Return your proxy
Touch-Tone phone Cast your vote in the POSTAGE-PAID
1-800-250-9081 HTTP://WWW.VOTEFAST.COM envelope provided
- ------------------------------------------------------------------------------------------------------------------------------------
Vote 24 hours a day, 7 days a week!
Your telephone and internet vote MUST BE RECEIVED BY 5:00 P.M. EASTERN DAYLIGHT TIME ON APRIL 27, 1999 to be counted in the final
tabulation.
If you vote by telephone or internet, please do not send your proxy by mail.
____________________________________________________________________________
| YOUR CONTROL NUMBER IS: |
|____________________________________________________________________________|
PROXY MUST BE SIGNED AND DATED BELOW.
\/ PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING \/
DTE ENERGY COMPANY CONFIDENTIAL VOTING INSTRUCTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
This voting instruction form is sent to you 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.
I, as a participant in the DTE Energy Company Savings & Investment Plan, hereby direct Fidelity Management Trust Company, as Trustee
for the DTE Energy Company Savings & Investment 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 Wednesday, April 28, 1999,
and at all adjournments thereof, upon the matters set forth below and upon such other matters as may come before the meeting.
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.
Sign here as name appears to the left.
_______________________________________________
Please sign exactly as name appears herein.
When signing as attorney, executor,
administrator, trustee, guardian, etc. give
full title as such
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
<S><C>
PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
\/ PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING \/
The Trustee is directed to vote as specified below. If you return this card properly signed but do not otherwise specify, your
shares will be voted FOR the proposals specified below. If you do not sign and return this form or vote by telephone or internet,
the shares credited to your account will not be voted by the Trustee.
Election of Directors: Nominees are: (01) Lillian Bauder
*For Withheld
(02) David Bing 1. Election of Directors [ ] [ ]
_________________________________________________________
(03) Larry G. Garberding For Against Abstain
2. Independent Auditors [ ] [ ] [ ]
___________________________________________________________________ _________________________________________________________
*To withhold vote from any Nominee(s), write the name(s) here.
PROXY TO BE SIGNED ON THE REVERSE SIDE
</TABLE>
<PAGE> 29
[DTE ENERGY LOGO]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Proxy
By signing on the other side, I (we) appoint William C. Brooks, Allan D.
Gilmour, Theodore S. Leipprandt and any of them, as proxies to vote my (our)
shares of Common Stock at the Annual Meeting of Shareholders to be held on
Wednesday, April 28, 1999, and at all adjournments thereof, upon the matters set
forth on the reverse side hereof and upon such other matters as may properly
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. Unless
you have voted by telephone or internet, or have returned a signed proxy, your
shares cannot be voted for you.
RECORD VOTE AND SIGN ON REVERSE SIDE
B 967-1756 3-99
- --------------------------------------------------------------------------------
<PAGE> 30
<TABLE>
<S> <C>
Election of Director: Nominees are (01) Lillian Bauder (02) David Bing Your Board of Directors recommends a vote FOR
(03) Larry G. Garberding Proposals 1 & 2.
-----------------------------------------------
*For Withheld
- --------------------------------------------------------------- 1. Election of Directors / / / /
*To withhold vote from any Nominee(s), write the name(s) above. -----------------------------------------------
For Against Abstain
2. Independent Auditors / / / / / /
-----------------------------------------------
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
</TABLE>
- --------------------------------------------------------------------------------
Please detach proxy at perforation before mailing.
IF YOU ARE VOTING BY TELEPHONE OR THE INTERNET, PLEASE DO NOT MAIL YOUR PROXY.
<TABLE>
<S> <C> <C>
VOTE BY TELEPHONE VOTE BY INTERNET VOTE BY MAIL
Call TOLL-FREE using a Access the WEBSITE and Return your proxy in the
Touch-Tone phone cast your vote POSTAGE-PAID envelope
provided.
1-800-250-9081 http://www.votefast.com
</TABLE>
VOTE 24 HOURS A DAY, 7 DAYS A WEEK!
Your telephone or internet vote must be received by 5:00 p.m. eastern daylight
time on April 27, 1999, to be counted in the final tabulation.
YOUR CONTROL NUMBER IS / /
VOTE BY TELEPHONE
Have your proxy card available when you call the Toll-Free number
1-800-250-9081 using a Touch-Tone phone. You will be prompted to enter your
control number and then you can follow the simple prompts that will be
presented to you to record your vote.
VOTE BY INTERNET
Have your proxy card available when you access the website
HTTP://WWW.VOTEFAST.COM. You will be prompted to enter your control number and
then you can follow the simple prompts that will be presented to you to record
your vote.
VOTE BY MAIL
Please mark, sign and date your proxy card and return it in the postage paid
envelope provided or return it to: Corporate Election Services, P.O. Box
535600, Pittsburgh, Pennsylvania 15253.
TO CHANGE YOUR VOTE
Any subsequent vote by any means will change your prior vote. For example, if
you voted by telephone, a subsequent internet vote will change your vote. The
last vote received before 5:00 p.m. eastern daylight time, April 27, 1999, will
be the one counted. You may also revoke your proxy by voting in person at the
annual meeting.
[DTE ENERGY LOGO]
