South Jersey Industries
1 South Jersey Plaza, Folsom, New Jersey 08037
Tel. (609) 561-9000 l Fax (609) 561-8225 l TDD ONLY 1-800-547-9085
Notice of Annual Meeting of Shareholders
April 19, 2001
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of South Jersey
Industries, Inc. will be held at the Renault Winery Restaurant, 72 N. Bremen
Avenue, Egg Harbor City, New Jersey, on Thursday, April 19, 2001, at 10:00 a.m.,
Eastern Time, for the following purposes:
1. To elect four Directors:
a. Three Directors in Class III (Term expiring in 2004)
b. One Director in Class I (Term expiring in 2002)
2. To approve the action of the Board of Directors in appointing Deloitte &
Touche LLP as auditors for the year 2001.
3. To transact such other business that may properly come before the meeting
The Board of Directors has fixed the close of business on February 27, 2001 as
the record date for determining the shareholders of the Company entitled to
notice of and to vote at the Annual Meeting or any adjournments thereof.
Accordingly, only shareholders of record on that date are entitled to notice of
and to vote at the meeting.
You are cordially invited to attend the meeting. Whether or not you expect to
attend the meeting, we urge you to vote your shares now. Please complete and
sign the enclosed proxy form and promptly return it in the envelope provided, or
if you prefer , you may vote by telephone or the Internet. Please refer to the
enclosed proxy card for instructions on how to use these options. Should you
attend the meeting, you may revoke your proxy and vote in person.
By Order of the Board of Directors,
George L. Baulig
Secretary
Folsom, N.J. 08037
March 9, 2001
YOUR VOTE IS IMPORTANT
PLEASE VOTE, DATE, AND PROMPTLY RETURN YOUR VOTE IN THE
ENCLOSED ENVELOPE, OR VOTE BY TELEPHONE, OR BY THE INTERNET.
SOUTH JERSEY INDUSTRIES, INC.
PROXY STATEMENT
This statement is furnished on behalf of the Company's Board of Directors to
solicit proxies for use at its Annual Meeting of Shareholders. The meeting is
scheduled for Thursday, April 19, 2001, at 10:00 a.m. at the Renault Winery
Restaurant, 72 N. Bremen Avenue, Egg Harbor City, New Jersey. The approximate
date proxy material will be sent to shareholders is March 9, 2001.
The Company bears the cost of this solicitation, which is primarily made by
mail. However, the Secretary or employees of the Company may solicit proxies by
phone, telegram, fax, e-mail or in person. The Company may also use a proxy-
soliciting firm a t a cost not exceeding $2,500 plus expenses, to distribute to
brokerage houses and other custodians, nominees, and fiduciaries, additional
copies of the proxy materials and Annual Report to Shareholders for beneficial
owners of our stock.
As of February 27, 2001, the Company had 11,583,168 shares of Common Stock
outstanding. Shareholders are entitled to have one vote per share on each
matter to be acted upon. Only shareholders of record at the close of business on
February 27, 2001 may vote at the meeting.
Directors are elected by a plurality vote of all votes cast at the meeting. The
approval of the Company's auditors and other matters that come before the
meeting require the affirmative vote of a majority of the votes cast at the
meeting. Abstention s and broker non-votes will be treated as present to
determine a quorum but will not be deemed to be cast and therefore will not
affect the director elections or the approval of the appointment of the
independent auditors. Properly signed proxies received by the Company will be
voted at the meeting. If a proxy contains a specific instruction as to any
matter to be acted on, the shares represented by the proxy will be voted in
accordance with those instructions. If you sign and return your proxy but do not
include how to vote, your shares will be voted "For" the election of the
nominated slate of directors and "For" approval of the appointment of Deloitte &
Touche LLP as the Company's independent auditors. A shareholder who returns a
proxy may revoke it at any time before it is voted. If you attend the meeting
and wish to revoke your proxy, you must notify the meeting's secretary in
writing prior to the voting of the proxy. For a quorum to be present, the
holders of a majority of the shares outstanding on the record date must be
present in person or by proxy.
DIRECTOR ELECTIONS
At the Annual Meeting, four directors are to be elected to the Board of
Directors. Three nominees are to be elected as Class III Directors to hold
office for a term of three years and one nominee is to be elected as a Class I
Director for a term of one year. As designated on the proxy form, unless
otherwise instructed, proxy votes will be cast for the following persons as
directors: Class III (term expiring in 2004) Thomas L. Glenn, Jr., Dr. Herman
D. James, Frederick R. Raring; Class I (term expiring in 2002) Keith S.
Campbell. The Board of Directors currently consists of ten members. Except for
Mr. Campbell, all of the nominees have previously been elected by the Company's
shareholders. Mr. Campbell was elected a director by the Board of Directors in
November 2000 and is standing for election by the Company's shareholders for the
first time. While we do not anticipate that, if elected, any of the nominees
will be unable to serve, if any should be unable to accept the nomination or
election, the persons designated as proxies on the proxy form will vote for the
election of such other person as the Board of Directors may recommend.
- 1 -
NOMINEES
Class III
Term Expires 2004
Thomas L. Glenn, Jr. has been a director since 1986. Age 66. Member of the Audit
Committee, the Executive Committee and Chairman of the Environmental Committee.
Chairman and Secretary (1984 to date) of Glenn Insurance, Inc., Absecon, NJ;
trustee, of AtlantiCare Foundation, Atlantic City, NJ.
Herman D. James, Ph.D. has been a director since 1990. Age 57. Member of the
Compensation/Pension Committee, the Nominating Committee and Chairman of the
Audit Committee. Distinguished Professor, Rowan University (1998 to date),
President, Rowan University (1984 - 1998), Glassboro, NJ; director (1994 -
1998) American Association of State Colleges and Universities, Washington, DC;
director (1992 - 1998) New Jersey State Chamber of Commerce, Trenton, NJ.
Frederick R. Raring has been a director since 1995. Age 63. Member of the Audit
Committee, the Environmental Committee and the Nominating Committee. President
(1990 to date) of Seashore Supply Company, Ocean City, NJ, a major distributor
of plumbing and heating supplies and materials.
- 2 -
NOMINEES (continued)
Class I
Term Expires 2002
Keith S. Campbell has been a director since 2000. Age 46. Member of the
Environmental Committee and the Nominating Committee. Chairman of the Board
(1995 to date) of Mannington Mills, Inc., Salem, NJ, a leading manufacturer of
hard and soft surface flooring; Chairman, Board of Trustees, Rowan University,
Glassboro, NJ; Chairman, Board of Trustees, Memorial Hospital of Salem County,
Salem, NJ.
DIRECTORS CONTINUING IN OFFICE
Class II
Term Expires in 2003
Shirli M. Billings, Ph.D. has been a director since 1983. Age 60. Member of the
Audit Committee, the Executive Committee and Chairman of the Nominating
Committee. President, Leadership Learning Academy (1999 to date), Lakeland, FL,
a human resource development agency; President, Billings-Vioni Management
Associates (1990 - 1999), Gahanna, OH, a human resource consulting firm;
Superintendent, Oberlin City Schools (1994 to 1997), Oberlin, OH; Director and
Vice President, Human Resource Development (1985-1990), Honeywell, Inc.,
Minneapolis, MN.; trustee of Citizens Scholarship Foundation of America,
Washington, DC.
Sheila Hartnett-Devlin, CFA has been a director since 1999. Age 42. Member of
the Audit Committee and the Compensation/Pension Committee. Executive Vice
President (1998 to date), Senior Vice President (1995 - 1998), Vice President
(1993 - 1995), Chair of Global Investment Committee (1996 to date), Member of
Investment Policy Committee (1995 to date) of Fiduciary Trust Company
International, New York, NY; director of Fiduciary Trust Company of California,
Los Angeles, CA; Member, New York Society of Security Analysts.
- 3 -
DIRECTORS CONTINUING IN OFFICE (continued)
Class II
Term Expires in 2003
Clarence D. McCormick has been a director since 1979. Age 71. Member of the
Executive Committee, the Nominating Committee and Chairman of the
Compensation/Pension Committee. Retired Chairman and CEO (1995 to 1999),
Chairman, President and CEO (1988 -1995) of The Farmers and Merchants National
Bank of Bridgeton, NJ; Chairman and President of Southern Jersey Bancorp of
Delaware (1989 to 1999); director of such banks; director of the Cumberland
Mutual Insurance Company; director of American Automobile Association of
Southern New Jersey.
DIRECTORS CONTINUING IN OFFICE
Class I
Term Expires in 2002
Charles Biscieglia has been a director since 1998. Age 56. Chairman of the
Executive Committee, member of the Environmental Committee and the Nominating
Committee. Chairman, President and Chief Executive Officer (2000 to date),
President and Chief Executive Officer (1998 to 1999) of the Company and South
Jersey Gas Company (Gas Company). Vice President (1997-1998) of the Company and
Executive Vice President and Chief Operating Officer (1991-1998) of Gas Company;
director of New Jersey State Chamber of Commerce, Trenton, NJ; director New
Jersey Utilities Association, Trenton, NJ; trustee Shore Memorial Hospital,
Somers Point, NJ.
Richard L. Dunham, has been a director since 1984. Age 71. Member of the
Compensation/Pension Committee, the Executive Committee and the Nominating
Committee. Retired, formerly Chairman of the Board (1999), Chairman of the Board
and Acting Chief Executive Officer (1998), of the Company; Chairman (1988 -
1995), President (1980 - 1988), of Zinder Companies, Inc., economic and
regulatory consulting firms, Washington, DC; Member (1986 -1995) of Advisory
Council of Gas Research Institute, Chicago, IL ; Former Chairman (1975-1977) of
the Federal Power Commission (now FERC), Washington, DC.
- 4 -
DIRECTORS CONTINUING IN OFFICE (continued)
Class I
Term Expires in 2002
W. Cary Edwards has been a director since September 1993 and was also a director
from April 1990 - January 1993. Age 56. Member of the Environmental Committee,
the Executive Committee and the Compensation/Pension Committee. Commissioner,
N.J. State Commission on Investigation (1997 to date); Managing Partner, Edwards
& Caldwell, Esqs. (1993 to date); Of Counsel (1993) and NJ Managing Partner
(1990 - 1993), law firm of Mudge Rose Guthrie Alexander & Ferdon; Attorney
General, State of New Jersey ( 1986 - 1989); Chief Legal Counsel -Governor of NJ
(1982 - 1986).
SECURITY OWNERSHIP
Directors and Management
The following table sets forth certain information with respect to the
beneficial ownership as of February 15, 2001 of (i) each director, (ii) our
chief executive officer and each other executive officer who earned more than
$100,000 during 2000 (collectively, the Named Executives) and (iii) all the
directors and executive officers as a group.
Number of Shares
of Common Stock
Owned Beneficially
as of Feb. 15, 2001 (1) Percent of Class
----------------------- -----------------
Shirli M. Billings, Ph.D. 6,212 (2) *
Charles Biscieglia 21,006 *
Keith S. Campbell 273 (2) *
Richard L. Dunham 8,245 (2) *
W. Cary Edwards 3,828 (2) *
Thomas L. Glenn, Jr. 8,080 (2) *
Sheila Hartnett-Devlin 869 (2) *
Herman D. James, Ph.D. 3,987 (2) *
Clarence D. McCormick 9,211 (2) *
Frederick R. Raring 22,904 (2) *
George L. Baulig 27,555 *
Edward J. Graham 6,602 *
David A. Kindlick 13,193 (3) *
Albert V. Ruggiero 3,107 (3) *
All directors and executive
officers as a group (16 persons) 139,707 (3)
1.2%
* less than 1%.
<FN>
- 5 -
Notes:
(1) Based on information furnished by the Company's directors and executive
officers. Unless otherwise indicated, each person has sole voting and
dispositive power with respect to the Common Stock shown as owned by him or
her.
(2) Includes shares awarded to each director under a Restricted Stock Program
for Directors. Restricted stock owners have the power to vote shares but no
investment power with respect to the shares until restrictions lapse.
(3) Includes options to purchase 1,500 shares of Common Stock exercisable within
60 days of February 15, 2001 (See Table at page 9).
</FN>
Section 16(a) Beneficial Ownership Reporting Compliance
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, the Company's
directors and executive officers are required to file reports with the
Securities and Exchange Commission, within specified monthly and annual due
dates, relating to their ownership of and transactions in the Company's Common
Stock. Keith S. Campbell, a director of the Company, inadvertently filed an
untimely report of beneficial ownership on Form 3.
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information, as of February 15, 2001, as
to each person known to the Company, based on their filings with the SEC, who
beneficially owns 5% or more of the Common Stock. Each of the Shareholders named
below has sole voting and investment power with respect to such shares, unless
otherwise indicated.
Name and Address of Shares Beneficially Owned Percent of Class
Beneficial Owner
- ------------------- ------------------------- ----------------
Dimensional Fund Advisors, Inc. 713,010 6.16%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401-1005
THE BOARD OF DIRECTORS
Meetings of the Board of Directors and Its Committees
The Board of Directors met seven times in 2000. Each director attended 75% or
more of the total of (i) the number of meetings of the Board of Directors held
during the period such director was in office and (ii) the number of meetings of
the committees of the Board on which he or she served. The average attendance
for all Board and Committee meetings in 2000 was 97%. During 2000, each of the
directors of the Company also served on the Boards of one or more of Gas
Company, South Jersey Energy Company (Energy), Energy & Minerals, Inc. (EMI) or
R&T Group, Inc. (R&T), all of which are direct subsidiaries of the Company.
The Audit Committee of the Board of Directors, which met three times in 2000, is
comprised of five "independent" directors as that term is defined in the listing
standards of the New York Stock Exchange: Dr. Herman D. James, Chairman; Dr.
Shirli M. Billings; Sheila Hartnett-Devlin; Thomas L. Glenn, Jr.; and Frederick
R. Raring. The Audit Committee (1) annually recommends to the Board a firm of
independent public accountants for appointment, subject to shareholder approval,
as auditors of the Company; (2) reviews with the independent auditors the scope
and results of each annual audit; (3) reviews with the independent auditors, the
Company's internal auditors and management the quality and adequacy of the
Company's internal controls and the internal audit function's organization,
responsibilities, budget and staffing; and (4) considers the possible effect on
the objectivity and independence of the independent auditors of any non-audit
services to be rendered by them. The Audit Committee 's activities and the scope
of its responsibilities as adopted by the Company's Board of Directors are more
fully described in the Report of The Audit Committee (at page 12) and in the
Audit Committee Charter attached as Appendix A to this Proxy Statement.
- 6 -
Audit Fees
For professional services rendered for the audit of South Jersey Industries,
Inc. fiscal year 2000 consolidated financial statements, Deloitte & Touche LLP
billed South Jersey Industries, Inc. a total of $189,000. No services were
performed by Deloitte & Touche LLP during 2000 in connection with financial
information systems design and implementation projects. All other fees billed by
Deloitte & Touche LLP with respect to fiscal year 2000 were $92,450, including
audit related services of $27,800 . Audit related services generally include
fees for employee benefit plan and transfer agent and registrar audits. Non-
audit services billed by Deloitte & Touche LLP in fiscal year 2000 consisted of
advice on real estate, tax matters and compliance with SFAS Nos. 133 and 138 -
Accounting For Certain Derivative Instruments and Certain Hedging Activities.
The Compensation/Pension Committee of the Board of Directors, which met three
times in 2000, is comprised of five nonemployee directors: Clarence D.
McCormick, Chairman; Sheila Hartnett-Devlin; Richard L. Dunham; W. Cary Edwards;
and Dr. Herman D. James. The Compensation/Pension Committee (1) is responsible
for making grants under and otherwise administering the Stock-Based Compensation
Plan; (2) reviews and makes recommendations to the Board of Directors on the
operations, performance and administration of the retirement plans, other
employee benefit plans, and employment policies; and (3) reviews and makes
recommendations to the Board of Directors on forms of compensation, including
the performance and levels of compensation of the officers of the Company.
The Environmental Committee of the Board of Directors, which met once in 2000,
is comprised of five directors: Thomas L. Glenn, Jr., Chairman; Charles
Biscieglia; Keith S. Campbell; W. Cary Edwards; and Frederick R. Raring. The
Environmental Committee (1) reviews and evaluates management activities with
respect to environmental remediation of the Company's and its subsidiaries'
current and former properties and (2) oversees litigation against the Companys'
insurance carriers for the recovery of remediation costs.
The Executive Committee of the Board of Directors, which met two times in 2000,
is comprised of six directors: Charles Biscieglia, Chairman; Dr. Shirli M.
Billings; Richard L. Dunham; W. Cary Edwards; Thomas L. Glenn, Jr.; and Clarence
D. McCormick. The Executive Committee (1) formulates policies to be followed in
planning and conducting the business and affairs of the Company; and (2) may act
on behalf of the Board of Directors during intervals between meetings of the
Board in the management o f the business and affairs of the Company.
The Nominating Committee of the Board of Directors met once in 2000. Members
are: Dr. Shirli M. Billings, Chairman; Charles Biscieglia; Keith S. Campbell;
Richard L. Dunham; Dr. Herman D. James; Clarence D. McCormick; and Frederick R.
Raring. Among its functions, the Nominating Committee (1) maintains a list of
prospective candidates for director, including those recommended by
shareholders; (2) reviews the qualifications of candidates for director; and (3)
makes recommendations to the Board of Directors to fill vacancies and for
nominees for election to be voted on by the shareholders. The Nominating
Committee will consider nominees for the Board of Directors recommended by
shareholders and submitted in compliance with the Company's bylaws, in writing
to the Secretary of the Company.
- 7 -
Compensation of Directors
Nonemployee directors receive annually, shares of restricted stock with a market
value of $8,000. In addition they receive $1,000 for each meeting of the Board
of the Company or its subsidiaries attended, except that the maximum fee paid to
any person for attendance at one or more meetings of these boards held on the
same day is $1,000. Nonemployee Board members also receive $500 for each meeting
of a Committee of the Board of the Company or of a subsidiary that they attend
if the meeting is held on the same day as a Board meeting or $1,000 if the
meeting is held on any other day. Chairmen of each of those committees are paid
an additional $200 for each meeting of their committee that they attend.
Nonemployee members of the Executive Commit tee are paid an annual retainer of
$13,600 and other nonemployee Board members receive an annual retainer of
$11,100. The Company has established a policy to recognize exceptional service
to the Company beyond that service normally provided by a Board member. In 2000
no payments were made under this policy. Directors who are also officers of the
Company receive no separate compensation for serving on the Board. The Company
has established a plan whereby directors may elect to defer the receipt of fees
until a specified date or until retirement from the Board. The deferred amount,
together with interest, may be paid in a lump sum or in equal annual
installments, as the director elects.
EXECUTIVE COMPENSATION
Summary Compensation Table
Long-Term
Annual Compensation Compensation
----------------------------- ------------
(a) (b) (c) (d) (e) (f) (i)
Name Other
and Annual Restricted All Other
Principal Compen- Stock Compen-
Position(s) Year Salary Bonus sation(1) Awards(2) sation(3)
- ----------- ---- ------ ----- --------- ---------- ---------
Charles Biscieglia 2000 $ 338,250 $ 73,870 $ 11,842 $ 164,994 $ 10,936
Chairman, President 1999 332,116 - 9,721 44,874 11,016
& CEO; President & 1998 227,489 - 795 - 11,537
CEO of South Jersey
Gas Company
Edward J. Graham 2000 179,380 39,180 752 70,013 5,172
Vice President; 1999 176,122 - - 23,802 5,577
President of South 1998 141,265 - - - 4,799
Jersey Energy
Company and
President of SJ
EnerTrade, Inc.
David A. Kindlick 2000 174,250 38,030 731 67,994 5,340
Vice President; Sr. 1999 171,090 - 193 23,120 5,577
Vice President of 1998 158,780 - - - 5,406
South Jersey Gas
Company
Albert V. Ruggiero 2000 179,380 39,180 752 70,013 5,656
Vice President; Sr. 1999 176,122 - - 23,802 5,687
Vice President of 1998 139,598 - - - 1,878
South Jersey Gas
Company
George L. Baulig 2000 143,500 31,340 - 28,011 8,020
Vice President and 1999 140,898 - - 19,053 8,337
Secretary; Sr. Vice 1998 132,520 - - - 8,827
President and
Secretary of South
Jersey Gas Company
and Secretary of
other Subsidiary
Companies
<FN>
- 8 -
Footnotes to Summary Compensation Table
(1) The Internal Revenue Code limits the contributions that may be made by or on
behalf of an individual under defined contribution plans such as the Company's
401(k) Plan. The Company has adopted a policy of currently reimbursing its
executive officers with the amount of Company contributions that may not be made
because of this limitation. This includes the tax liability incurred by the
additional income. Amounts paid pursuant to this policy are included in column
(e) of the table.
(2) Dollar values of restricted shares of Common Stock awards are based on
market price at the time of grant. The aggregate number of shares of restricted
stock held and their value as of December 31, 2000 for the named executives were
as follows: Mr . Biscieglia - 7,779/$231,431; Mr. Graham - 3,477/$103,431; Mr.
Kindlick - 3,377/$100,476; Mr. Ruggiero - 3,477/$103,431; Mr. Baulig -
1,744/$51,870. Dividends paid on restricted shares are reinvested in additional
shares that have the same restrictions and vesting schedule as their respective
underlying restricted shares. Restrictions on all shares awarded (including
shares from reinvested dividends) lapse three years from their respective date
of grant. All shares of restricted stock carry a risk of forefeiture and 2000
awards depend upon the Company achieving certain performance goals as measured
against a peer group of companies.
(3) Column (i) includes employer contributions to the 401(k) Plan, the income
value of group life insurance and the increase in vested benefit level of
deferred compensation contract. The 2000 values for these items are listed
below:
Biscieglia Graham Kindlick Ruggiero Baulig
401(k) Plan $ 4,800 $ 4,800 $ 4,800 $ 4,800 $ 4,300
Group Life Insurance 3,251 372 540 856 1,238
Deferred Compensation 2,885 - - - 2,482
Total Value $ 10,936 $ 5,172 $ 5,340 $ 5,656 $ 8,020
</FN>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
(a) (b) (c) (d) (e)
Value
Number of Securities of Unexercised
Underlying Unexercised In-The-Money
Shares Options at Options at
Acquired Value Fiscal Year-End Fiscal Year-End
Name on Exercise Realized (All Exercisable) (All Exercisable)
Charles Biscieglia - - - -
Edward J. Graham - - - -
David A. Kindlick - - 1,000 $ 5,063
Albert V. Ruggiero - - 500 2,531
George L. Baulig - - - -
The Company has employment agreements with certain of its officers, including
Messrs. Biscieglia, Graham, Kindlick, Ruggiero and Baulig. Each agreement is
for a three-year period ending September 30, 2002, and provides for a base
salary that will be reviewed periodically but will not be less than what was
being paid at the beginning of the period. If a change of control (as defined
in each agreement) occurs, the agreement is automatically extended for three
years from the date the change of control occurs. If, during the extended term
of the agreement, the officer's employment is terminated for other than cause,
or he resigns after there has been a significant adverse change in his
employment arrangements with the Company, he is entitled to a severance payment
equal to 300% of his average annual compensation during the preceding five
calendar years. If the officer's employment agreement is terminated for other
than cause without a change of control, he is entitled to a severance payment
equal to 150% of his average annual compensation during the preceding five
calendar years.
- 9 -
Executive Pension Plans
The following table illustrates the current retirement benefits under the
salaried employee pension plan, and the supplemental executive retirement plan,
assuming the executive retires at age 60.
Years of Service
Remuneration 15 20 25 30 35 40
$125,000 $43,750 $56,250 $68,750 $81,250 $81,250 $81,250
$150,000 $52,500 $67,500 $82,500 $97,500 $97,500 $97,500
$175,000 $61,250 $78,750 $96,250 $113,750 $113,750 $113,750
$200,000 $70,000 $90,000 $110,000 $130,000 $130,000 $130,000
$225,000 $78,750 $101,250 $123,750 $146,250 $146,250 $146,250
$250,000 $87,500 $112,500 $137,500 $162,500 $162,500 $162,500
$300,000 $105,000 $135,000 $165,000 $195,000 $195,000 $195,000
$400,000 $140,000 $180,000 $220,000 $260,000 $260,000 $260,000
$450,000 $157,500 $202,500 $247,500 $292,500 $292,500 $292,500
$500,000 $175,000 $225,000 $275,000 $325,000 $325,000 $325,000
The executive officers of the Company are eligible for benefits under a tax-
qualified pension plan for salaried employees provided by the Company.
Compensation considered under the pension plan consists of base salary only,
which in the case of the executive officers is included in the cash compensation
reported in column (c) of the Summary Compensation Table. Employees do not make
contributions to the plan, and the employer contributions (which are based on
aggregate actuarial calculations without individual allocation) are held and
invested by insurance companies of recognized standing until they are used to
provide retirement benefits. Under certain circumstances, early retirement with
reduced annual benefits is permitted (but not before age 55). Executive
officers who are 50 years of age or older are also covered by an unfunded
supplemental retirement plan that is designed in general to provide the officer
with a minimum retirement benefit from the salaried employee pension plan and
the supplemental plan that aggregates 2% of the average of the highest three of
the final six years salary (as defined in the plan), for each year of service,
plus 5%. Assuming continued employment and retirement at age 60, Messrs.
Biscieglia, Graham, Kindlick, Ruggiero and Baulig will have, respectively, 36,
36, 35, 19 and 42 years of credited service. No credit is provided under the
supplemental plan for more than 30 years of service.
Compensation/Pension Committee Report
on Executive Compensation
The Compensation/Pension Committee consists of five non-employee directors. No
member of the Committee is a current officer or employee of the Company or any
of its subsidiaries. Among other charges, the Committee makes recommendations to
the Board about the Company's executive compensation policies, practices and
objectives; administers the Company's Stock-Based Compensation Plan; and grants
awards to selected key employees at its discretion in consultation with the
Company's Chief Executive Officer (other than awards to the Chief Executive
Officer).
- 10 -
In 1998, the Committee reexamined its executive compensation philosophy by
drawing upon the experience and knowledge of its members in consultation with an
independent compensation consultant. This reexamination confirmed the mission
of the Company' s compensation policies: to attract and retain qualified
executive management. The Committee determined that executive compensation
should be more closely aligned with the interests of the Company's shareholders.
Toward this end, the Committee established an objective-based, three-part
incentive compensation structure linking compensation to the Company's financial
performance goals.
Compensation consists of the following components:
* base salary
* an annual cash award tied to earnings per share from continuing operations and
individual performance objectives
* a long-term incentive program using equity-based instruments, such as options
and restricted stock awards, based on total shareholder return, measured
against industry peers, over three-year cycles
In 1999, the Committee engaged its consultant to define the final two phases of
the executive compensation program, and the Committee implemented all three
phases with respect to fiscal year 2000 compensation. Under the compensation
plan, as the Company achieves its annual and long-term performance objectives,
executives are compensated at approximately the median compensation level (50th
percentile) paid to comparable executives in the Company's peer group of
utilities.
Executive base salaries, including that of Mr. Charles Biscieglia, Chief
Executive Officer, were adjusted in January 2000 to provide a 2.5% adjustment,
which was below the 4.3 % market adjustment proposed by the consultant.
Executive base salaries for 2000, including Mr. Biscieglia's salary, remain at
or near the 50th percentile of the peer group.
In January of 2000, long-term incentive awards were granted in the form of
restricted stock to executives, including Mr. Biscieglia. The performance
period for this long-term incentive is the three year period beginning January
1, 2000 and ending December 31, 2002. The Committee established at-risk
threshold, target and maximum incentive levels based upon total shareholder
returns for the period compared to shareholder returns of the peer group.
Awards are detailed in the Summary Compensation Table.
In January 2001, annual cash awards with respect to fiscal 2000 were provided to
executives, including Mr. Biscieglia, based upon previously established target
earnings per share from continuing operations for 2000. Awards are detailed in
the Summary Compensation Table.
The Committee continues to believe that at-risk compensation, both annual and
long-term, should represent a significant portion of total executive
compensation and has designed its program accordingly. The Committee also
believes that using a time-restricted, stock-based incentive compensation
element strongly encourages employees to conduct business in ways that promote
long-term shareholder value and helps to ensure that management's interests
remain aligned with those of the Company's shareholders.
Clarence D. McCormick, Chairman
Richard L. Dunham
W. Cary Edwards
Sheila Hartnett-Devlin
Dr. Herman D. James
- 11 -
Stock Performance
The graph below indexes the cumulative total return on the Company's Common
Stock for the five- year period ended December 31, 2000. The graph assumes that
$100 was invested on December 31, 1995 in the Company's Common Stock, the S&P
500 and the S&P Utility Index and that all dividends were reinvested.
Standard & Poor's Utility Index is a commonly used indicator of utility common
stock performance based on selected gas, electric and telephone companies. The
compounded annual growth rate for the Company on the graph is 11.26%. This
compares with 18. 33% for the Standard & Poor's 500 Index and 16.51% for the
Standard & Poor's Utility Index.
Indexed Total Return Assuming Dividends Reinvested Over 5 Years
(Chart)
1995 1996 1997 1998 1999 2000
S&P 500 100 122.96 163.98 210.84 255.21 231.98
S&P UTIL 100 103.12 128.55 147.53 134.43 214.65
SJI 100 112.30 148.11 134.85 154.76 170.45
AUDIT COMMITTEE REPORT
In accordance with its written charter adopted by the Board of Directors, the
Audit Committee assists the Board in fulfilling its responsibility for oversight
of the quality and integrity of the accounting, auditing and financial reporting
practices of the Company. Management has the responsibility for the preparation
of the Company's financial statements and the independent auditors have the
responsibility for the examination of those statements.
The Audit Committee reviewed the audited financial statements of the Company for
the fiscal year ended December 31, 2000 with management and with Deloitte &
Touche LLP, the Company's independent auditors. The Audit Committee discussed
with the independent auditors the matters required to be discussed by Statement
on Auditing Standards No. 61, "Communication with Audit Committees," relating to
the conduct of the audit. The Audit Committee also received written disclosures
from Deloitte & Touche LLP regarding its independence from the Company as
required by Independence Standards Board Standard No. 1, "Independence
Discussions with Audit Committees," and has discussed with Deloitte & Touche LLP
the independence of that firm.
- 12 -
Based on the above-mentioned review and discussions with management and the
independent auditors, the Audit Committee recommended to the Board that the
Company's audited financial statements be included in its Annual Report of Form
10-K for the fiscal year ended December 31, 2000, for filing with the Securities
and Exchange Commission.
Dr. Herman D. James, Chairman
Dr. Shirli M. Billings
Thomas L. Glenn, Jr.
Sheila Hartnett-Devlin
Frederick R. Raring
APPOINTMENT OF AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors, subject
to the approval of the shareholders, has appointed Deloitte & Touche LLP,
independent public accountants, as the auditors of the Company for the year
2001. Unless otherwise directed, it is proposed to vote proxies "FOR" approval
of this appointment.
Deloitte & Touche LLP served as the auditors of the Company during the year
2000. During 2000, the audit services performed by that firm for the Company
consisted of the audits of the financial statements of the Company and its
subsidiaries and the preparation of various reports based on those audits,
services related to filings with the Securities and Exchange Commission, the New
York Stock Exchange, and audits of employee benefit plans as required by the
Employee Retirement Income Security Act. A representative of Deloitte & Touche
LLP is expected to be present at the Annual Meeting and will have the
opportunity to make a statement, if he desires to do so, and to respond to
appropriate questions from shareholders.
- 13 -
ANNUAL REPORT AND FINANCIAL INFORMATION
A copy of the Company's Annual Report to Shareholders for the year ended
December 31, 2000 accompanies this proxy statement. The Annual Report is not
proxy soliciting material or a communication by which any solicitation is made.
Upon written request of any person who on the record date for the Annual Meeting
was a record owner of the Common Stock, or who represents in good faith that he
or she was on that date a beneficial owner of such stock entitled to vote at the
Annual Meeting, the Company will send to that person, without charge, a copy of
its Annual Report on Form 10-K for 2000, as filed with the Securities and
Exchange Commission. Requests for this report should be directed to George L.
Baulig, Vice President, Corporate Secretary, South Jersey Industries, Inc., 1
South Jersey Plaza, Folsom, New Jersey 08037.
OTHER MATTERS
Any proposal which a qualified shareholder of the Company wishes to include in
the Company's proxy statement to be released to shareholders in connection with
the 2002 Annual Meeting of Shareholders that is received by the Company after
November 9, 2001 will not be eligible for inclusion in the Company's proxy
statement and form of proxy for that meeting. To be a qualified shareholder, a
shareholder must have owned at least $2,000 in market value of the Company's
securities for at least one year before the date of submission of the proposal
to the Company. In compliance with the Company's bylaws, shareholders must
provide the Company with at least 60 days, but no more than 90 days, notice
prior to an announced annual meeting date of (i) business the shareholder wishes
to raise at the meeting and (ii) persons, if any, the shareholder wishes to
nominate for election as directors at that meeting.
The Board of Directors knows of no matters, other than those set forth in the
Notice of Annual Meeting of Shareholders, to come before the 2001 Annual
Meeting. If any other matters or motions properly come before the meeting,
including any matters dealing with the conduct of the meeting, it is the
intention of the persons named in the accompanying form of proxy to vote such
proxy in accordance with their judgment.
By Order of the Board of Directors,
George L. Baulig
Vice President, Corporate Secretary
March 9, 2001
APPENDIX A
SOUTH JERSEY INDUSTRIES, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of Directors
in fulfilling its oversight responsibilities by reviewing: the financial reports
and other financial information provided by the Corporation to any governmental
body or t he public; the Corporation's systems of internal controls regarding
finance, accounting, legal compliance and ethics that management and the Board
have established; and the Corporation's auditing, accounting and financial
reporting processes generally. Consistent with this function, the Audit
Committee should encourage continuous improvement of, and should foster
adherence to, the Corporation's policies, procedures and practices at all
levels. The Audit Committee's primary duties and responsibilities are to:
* Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control system.
* Review and appraise the audit efforts of the Corporation's independent
accountants and internal auditing department.
* Provide an open avenue of communication among the independent accountants,
financial and senior management, the internal auditing department, and the
Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by carrying
out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be independent directors as defined by the
rules of the New York Stock Exchange, and free from any relationship that, in
the opinion of t he Board, would interfere with the exercise of his or her
independent judgment as a member of the Committee. All members of the
Committee shall have a working familiarity with basic finance and accounting
practices, and at least one member of the Committee shall have accounting or
related financial management expertise. Committee members may enhance their
familiarity with finance and accounting by participating in educational programs
conducted by the Corporation or an outside consultant.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the members
of the Committee may designate a Chair by majority vote of the full Committee
membership.
III. MEETINGS
The Committee shall meet at least three times annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, the director of the
internal auditing department and the independent accountants in separate
executive sessions to discuss any matters that the Committee or each of these
groups believe should be discussed privately. In addition, the Committee or at
least its Chair should meet with the independent accountants and management
quarterly to review the Corporation's financial statements consistent with IV.4.
below.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the organization's annual financial statements and any reports or
other financial information submitted to any governmental body, or the public,
including any certification, report, opinion, or review rendered by the
independent accountants.
3. Review the regular internal reports to management prepared by the internal
auditing department and management's response.
4. Review with financial management and the independent accountants the
Corporation's quarterly reports on Form 10-Q prior to its filing or prior to the
release of earnings. The Chairman of the Committee may represent the entire
Committee for purposes of this review.
Independent Accountants
5. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the fees and
other compensation to be paid to the independent accountants. On an annual
basis, the Committee should review and discuss with the accountants all
significant relationships the accountants have with the Corporation to determine
the accountants' independence.
6. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances warrant.
7. Periodically consult with the independent accountants out of the presence of
management about internal controls and the fullness and accuracy of the
organization's financial statements.
Financial Reporting Processes
8. In consultation with the independent accountants and the internal auditors,
review the integrity of the organization's financial reporting processes, both
internal and external.
9. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in its
financial reporting
10. Consider and approve, if appropriate, major changes to the Corporation's
auditing and accounting principles and practices as suggested by the independent
accountants, management, or the internal auditing department.
Process Improvement
11. Establish regular and separate systems of reporting to the Audit Committee
by each of management, the independent accountants and the internal auditors
regarding any significant judgments made in management's preparation of the
financial statements and the view of each as to appropriateness of such
judgments.
12. Following completion of the annual audit, review separately with each of
management, the independent accountants and the internal auditing department any
significant difficulties encountered during the course of the audit, including
any restrict ions on the scope of work or access to required information.
13. Review any significant disagreement among management and the independent
accountants or the internal auditing department in connection with the
preparation of the financial statements.
14. Review with the independent accountants, the internal auditing department
and management the extent to which changes or improvements in financial or
accounting practices, as approved by the Audit Committee, have been implemented.
(This review should be conducted at an appropriate time subsequent to
implementation of changes or improvements, as decided by the Committee.)
Ethical and Legal Compliance
15. Establish, review and update periodically a Code of Ethical Conduct and
ensure that management has established a system to enforce this Code.
16. Review management's monitoring of the Corporation's compliance with the
organization's Ethical Code, and ensure that management has the proper review
system in place to ensure that the Corporation's financial statements, reports
and other financial information disseminated to governmental organizations, and
the public satisfy legal requirements.
17. Review activities, organizational structure, and qualifications of the
internal audit department.
18. Review, with the organization's counsel, legal compliance matters including
corporate securities trading policies.
19. Review, with the organization's counsel, any legal matter that could have a
significant impact on the organization's financial statements.
20. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee or the Board deems
necessary or appropriate.
Directions to the Annual Meeting of Shareholders
From Philadelphia:
Atlantic City Expressway to the Egg Harbor Exit 17. Left onto Route 50 north,
turn right onto Route 30. Left onto Bremen Avenue, 2 1/4 miles to Renault.
From North Jersey:
Garden State Parkway south to Exit 44. Sharp right onto Moss Mill Road (Alt.
#561), follow 5 miles to Bremen Avenue. Turn right, 1/4 mile to Renault.
From Atlantic City:
Route 30 west approximately 16 miles to Bremen Avenue. Right at the Renault wine
bottle, 2 1/4 miles to Renault.
From South Jersey:
Garden State Parkway north to Exit at rest stop/service area, mile marker #41.
Proceed to north end of service area. Follow signs to Jim Leeds Road. At traffic
light turn left. Proceed to fork, bear right and continue on Route 561.
Continue to Bremen Avenue and turn right. 1 1/2 miles to Renault.