South Jersey Industries
1 South Jersey Plaza, Folsom, New Jersey 08037
Tel. (609) 561-9000 o Fax (609) 561-8225 o TDD ONLY 1-800-547-9085
Notice of Annual Meeting of Shareholders
April 21, 2005
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 21, 2005, at
10:00 a.m., Eastern Time, for the following purposes:
1. To elect three Class I Directors to serve on the Board of Directors
until the 2008 annual meeting of shareholders.
2. To approve a proposal to amend our Certificate of Incorporation to
increase the number of shares of common stock authorized for
issuance from 20,000,000 shares to 60,000,000 shares to, among other
things, permit a stock split.
3. To approve an amendment and restatement of our 1997 Stock-Based
Compensation Plan to, among other things, increase the number of
shares authorized under the plan, extend its term and permit
non-employee directors to participate in the plan.
4. To ratify the appointment of Deloitte & Touche LLP as independent
registered public accounting firm for 2005.
5. To transact such other business that may properly come before the
meeting.
The Board of Directors has fixed the close of business on February 25, 2005
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 card and promptly return it in the envelope provided or,
if you prefer, you may vote by telephone or on the Internet. Please refer to the
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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,
Richard H. Walker, Jr.
Vice President, Corporate Counsel &
Corporate Secretary
Folsom, NJ
March 18, 2005
YOUR VOTE IS IMPORTANT
PLEASE VOTE, SIGN, DATE, AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE
OR VOTE BY TELEPHONE OR ON THE INTERNET.
SOUTH JERSEY INDUSTRIES, INC.
1 South Jersey Plaza, Folsom, New Jersey 08037
PROXY STATEMENT
This statement is furnished on behalf of the Board of Directors of South
Jersey Industries, Inc. to solicit proxies for use at its 2005 Annual Meeting of
Shareholders. The meeting is scheduled for Thursday, April 21, 2005, at 10:00
a.m. at the Renault Winery Restaurant, 72 N. Bremen Avenue, Egg Harbor City, New
Jersey. The approximate date proxy materials will be sent to shareholders is
March 18, 2005.
Proxy Solicitation
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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, but such persons will not be
separately compensated for such services. The Company may also use a
proxy-soliciting firm at a cost not expected to exceed $6,000, 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.
Record Date
- -----------
Only shareholders of record at the close of business on February 25, 2005
may vote at the meeting. On that date, the Company had 13,887,257 shares of
Common Stock outstanding. Shareholders are entitled to one vote per share on
each matter to be acted upon.
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Quorum and Vote Required
- ------------------------
A quorum is necessary to conduct the business of the meeting. This means
that holders of at least a majority of the outstanding shares of Common Stock
must be present at the meeting, either by proxy or in person. Directors are
elected by a plurality vote of all votes cast at the meeting. Approval of the
amendment to the certificate of incorporation requires a majority vote of the
shares held by all holders of shares entitled to vote. All other matters that
come before the meeting require the affirmative vote of a majority of the votes
cast at the meeting. Abstentions 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 outcome of any of the shareholder questions. A broker non-vote occurs
when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
with respect to that item and has not received instructions from the beneficial
owner.
Voting of Proxies and Revocation
- --------------------------------
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 indicate how
to vote for a particular matter, your shares will be voted as the Board of
Directors recommends. A shareholder who returns a proxy may revoke it at any
time before it is voted by submitting a later-dated proxy or by voting by ballot
at the meeting. 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.
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 proxy card to vote such proxy in accordance
with their judgment. The Board of Directors is not aware of any such matters
other than those described in this proxy statement.
PROPOSAL 1
DIRECTOR ELECTIONS
At the Annual Meeting, three Class I directors are to be elected to the Board of
Directors to hold office for a three-year term. The persons listed below have
been nominated by the Board, and unless otherwise instructed, proxy votes will
be cast for such persons as directors: Charles Biscieglia, Keith S. Campbell and
W. Cary Edwards. The Board of Directors currently consists of eleven members.
All of the nominees previously have been elected by the Company's shareholders
and are currently serving as directors. 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 card will vote for the election of such other person as the Board of
Directors may recommend.
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NOMINEES _______________________________________________________________________
Class I
Term Expires in 2008
Charles Biscieglia has been a director since 1998. Age 60. Chairman of the
Executive Committee, member of the Environmental Committee and the Management
Development Committee. Chairman of the Board (January 31, 2004 to date);
Chairman and Chief Executive Officer (2000 - January 31, 2004); President and
Chief Executive Officer (1998 - 2004) of the Company and South Jersey Gas
Company; Vice President (1997-1998) of the Company and Executive Vice President
and Chief Operating Officer (1991-1998) of South Jersey Gas Company; director,
American Gas Association, Washington, DC; Chairman-Elect, Board of Trustees,
Shore Memorial Hospital, Somers Point, NJ; President, Board of Directors, United
Way of Atlantic County, NJ; director, South Jersey Gas Company.
Keith S. Campbell has been a director since 2000. Age 50. Member of the
Environmental Committee, the Nominating and Governance Committee and the
Management Development Committee. Chairman of the Board, Mannington Mills, Inc.,
Salem, NJ, a leading manufacturer of hard and soft surface flooring (1995 to
date); trustee, Rowan University, Glassboro, NJ; director, Skytop Lodge, Inc.;
director, South Jersey Energy Company.
W. Cary Edwards has been a director since September 1993 and was also a director
from April 1990 - January 1993. Age 60. Member of the Environmental Committee,
the Executive Committee, the Management Development Committee, Chairman of the
Compensation/Pension Committee. Chairman, New Jersey State Commission on
Investigation (1997 to date); Senior Attorney, Edwards & Caldwell, LLC (1993 to
date); Of Counsel (1993) and New Jersey 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 New Jersey (1982 - 1986);
trustee, Monmouth University (1991 to date); Chairman and Director, South Jersey
Sanitation, Inc. (2003 to date); director, South Jersey Energy Company.
The Board of Directors recommends a vote "FOR" each of
the above nominees.
DIRECTORS CONTINUING IN OFFICE
Class I I
Term Expires in 2006
Shirli M. Billings, Ph.D. has been a director since 1983. Age 64. Member of the
Executive Committee, the Compensation/Pension Committee, the Management
Development Committee and Chairman of the Nominating and Governance Committee.
President, Billings-Vioni Management Associates, New Albany, OH, a human
resource consulting firm (2001 to date); President, Leadership Learning Academy,
Lakeland, FL, a human resource development agency (1999 - 2001); Superintendent
of Schools, Oberlin, OH (1994 - 1997); Vice President, Human Resource
Development, Honeywell, Inc., Minneapolis, MN (1985-1990); trustee, Scholarship
America, Saint Peter, MN.; director, South Jersey Gas Company.
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Thomas A. Bracken has been a director since 2004. Age 57. Member of Audit and
Compensation/Pension Committees. President and CEO of Sun Bancorp, Inc. and its
wholly-owned subsidiary Sun National Bancorp, Inc., Vineland, NJ (2001 to date);
Executive Vice President, Head of Commercial and Governmental Banking for New
Jersey, New York and Connecticut, First Union Bank, (1998 - 2000); Executive
Director Public Sector Group, First Union Bank, (2000 - 2001); Chairman,
Economic Development Corporation of Trenton, Trenton, NJ; Vice Chairman, New
Jersey Chamber of Commerce; director, New Jersey Bankers Association; Chairman,
Finance Committee, New Jersey Cancer Institute; director, New Jersey Alliance
for Action; director, New Jersey Network; Chairman, Keep New Jersey Moving
Coalition; director, South Jersey Energy Company.
Sheila Hartnett-Devlin, CFA has been a director since 1999. Age 46. Member of
the Audit Committee, the Compensation/Pension Committee and the Nominating and
Governance Committee. Formerly Executive Vice President (1997 - January 17,
2004), Senior Vice President (1991 - 1997), Vice President (1985 - 1991), Chair,
Global Investment Committee (1996 - January 17, 2004), Member, Investment Policy
Committee (1995 - January 17, 2004), Fiduciary Trust Company International, New
York, NY; member, New York Society of Security Analysts; director, Mercy
Investment Program, Inc. (January 2005 to date); director, South Jersey Gas
Company.
Frederick R. Raring has been a director since 1995. Age 67. Member of the
Executive Committee, the Audit Committee, the Nominating and Governance
Committee and Chairman of the Environmental Committee. President, Seashore
Supply Company, Ocean City, NJ, a distributor of plumbing and heating supplies
and materials (1990 to date); director, South Jersey Gas Company.
DIRECTORS CONTINUING IN OFFICE
Class I I I
Term Expires in 2007
Helen R. Bosley, CFA has been a director since 2004. Age 57. Member of the Audit
and Compensation/Pension Committees. President, Corporate Financial Management,
Inc., a financial management and insurance consulting firm, Yardley, PA (1990 to
date); President, TBN Agency, Inc., Yardley, PA; trustee, Abington Memorial
Foundation, Abington, PA; member, Financial Analysts of Philadelphia,
Philadelphia, PA; Chair, Investment Committee, Girl Scouts of Southeastern PA,
Miquon, PA; director, South Jersey Energy Company.
Edward J. Graham has been a director since 2004. Age 47. Member of the
Executive, Environmental and Chairman of the Management Development Committees.
President and Chief Executive Officer of the Company and South Jersey Gas
Company (February 1, 2004 to date); President and Chief Operating Officer (2003
- - January 31, 2004) and President (2003 to date), South Jersey Gas Company;
President (2000 - 2003), South Jersey Energy Company; Vice President of the
Company (2000 - 2001); Senior Vice President, Energy Management, South Jersey
Gas Company (1998 - 2000); director, New Jersey State Chamber of Commerce,
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Trenton, NJ; member, Leadership Council, American Gas Association, Washington,
DC; director, New Jersey Utilities Association, Trenton, NJ; Vice Chairman and
Treasurer, Rowan University Foundation, Glassboro, NJ; member, South Jersey
Health System Foundation Board, Vineland, NJ; director, South Jersey Gas
Company.
Ambassador William J. Hughes has been a director since 2002. Age 72. Member of
the Audit Committee and the Nominating and Governance Committee. Of Counsel, law
firm of Riker, Danzig, Scherer, Hyland & Perretti, LLP (2000 to date),
Morristown and Trenton, NJ; Visiting Distinguished Scholar of Public Policy, The
Richard Stockton College of New Jersey (1999 to date), Pomona, NJ; Visiting
Professor, Rutgers, The State University of New Jersey (1999 to 2003), New
Brunswick, NJ; United States Ambassador to the Republic of Panama (1995 - 1998);
Member, United States House of Representatives (1975 - 1995); director, South
Jersey Gas Company.
Herman D. James, Ph.D. has been a director since 1990. Age 61. Member of the
Compensation/Pension Committee, the Executive Committee, the Management
Development Committee and Chairman of the Audit Committee. Distinguished
Professor, Rowan University (1998 to date), President, Rowan University (1984 -
1998), Glassboro, NJ; director, American Association of State Colleges and
Universities, (1994 - 1998), Washington, DC; director, New Jersey State Chamber
of Commerce (1992 - 1998), Trenton, NJ; director, South Jersey Energy Company.
SECURITY OWNERSHIP _____________________________________________________________
Directors and Management
- ------------------------
The following table sets forth certain information with respect to the
beneficial ownership of our common stock, as of February 17, 2005, of (a) each
continuing director and nominee for director, (b) our chief executive officer
and the four other most highly compensated executive officers during 2004
(collectively, the "Named Executives") and (c) all of the directors and
executive officers of the Company as a group.
Number of Shares
of Common Stock (1) Percent of Class
- --------------------------------------------------------------------------------
Shirli M. Billings...................8,421 (2) *
Charles Biscieglia..................41,802 (2) *
Helen R. Bosley......................1,028 (2) *
Thomas A. Bracken......................489 (2) *
Keith S. Campbell....................1,249 (2) *
W. Cary Edwards......................4,734 (2) *
Edward J. Graham....................22,877 *
Sheila Hartnett-Devlin...............7,407 (2) *
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William J. Hughes....................2,065 (2) *
Herman D. James......................5,803 (2) *
Frederick R. Raring.................27,663 (2) *
Richard J. Jackson..................15,284 *
David A. Kindlick...................26,758 *
Albert V. Ruggiero..................14,909 *
Richard H. Walker, Jr................6,914 *
All continuing directors,
nominees for director and
executive officers as
a group (19 persons)..............200,964 1.4%
- --------------------------------------------------------------------------------
* Less than 1%.
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 the restrictions lapse.
Stock Ownership Requirements
- ----------------------------
The Board of Directors believes that significant ownership of Company
Common Stock better aligns the interests of management of the Company and its
principal subsidiaries with that of the Company's shareholders. Therefore, in
2001 the Board of Directors enacted the following stock ownership requirements
for officers and directors:
* The Chief Executive Officer is required to own shares of Company Common
Stock with a market value equal to a minimum of three times his or her
annual base salary;
* Other executive officers are required to own shares of Company Common
Stock with a market value equal to a minimum of one and one-half times
their annual base salary;
* Other officers are required to own shares of Company Common Stock with a
market value equal to a minimum of their annual base salary;
* Shares owned outright will be combined with vested restricted shares
awarded under the Stock-Based Compensation Plan and vested shares
beneficially owned through any employee benefit plan for purposes of
determining compliance with the stock ownership requirement for
officers. Current officers will have a period of six years from the
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original date of adoption and newly elected or promoted officers will have
a period of six years following their election or promotion to a new
position to meet these minimum stock ownership requirements; and
* Members of the Board of Directors are required, within six years of
becoming a director of the Company or any of its principal subsidiaries, to
own shares of Company Common Stock with a market value equal to a minimum
of five times the current value of the Board's annual cash retainer. Shares
owned outright will be combined with restricted shares awarded as part of
the annual stock retainer for the purpose of meeting these requirements.
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 relating to their ownership of and
transactions in the Company's Common Stock. Charles Biscieglia, a director of
the Company, inadvertently filed late two Form 4 filings in 2004. Each filing
was filed four days after the required filing date. Based on our records and
other information, the Company believes that all other Section 16(a) filing
requirements were met for 2004.
Security Ownership of Certain Beneficial Owners
- -----------------------------------------------
The following table sets forth certain information, as of February 17,
2005, as to each person known to the Company, based on filings with the
Securities and Exchange Commission, who beneficially owns 5% or more of the
Common Stock. Based on filings made with the SEC, the shareholder named below
has sole voting and investment power with respect to such shares.
Name and Address Shares Beneficially Owned Percent of Class
of Beneficial Owner
- ------------------------------- ------------------------- -----------------
Dimensional Fund Advisors, Inc. 1,014,721 7.36%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401-1005
THE BOARD OF DIRECTORS _________________________________________________________
Corporate Governance
- --------------------
Independence of Directors
The Board has adopted Corporate Governance Guidelines that require the
Board to be composed of a majority of directors who are "independent directors"
as defined by the rules of the New York Stock Exchange. No director will be
considered "independent" unless the Board of Directors affirmatively determines
that the director has no material relationship with the Company. When making
"independence" determinations, the Board considers all relevant facts and
circumstances, as well as any other facts and considerations specified by the
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New York Stock Exchange, by law or by any rule or regulation of any other
regulatory body or self-regulatory body applicable to the Company. As a part of
its Corporate Governance Guidelines, the Board had established the policy that
Board members may not serve on more than four other boards of publicly traded
companies.
Of all of the non-employee directors, three current directors, Messrs.
Biscieglia, Campbell and Bracken, have business relationships which warrant
closer consideration of the independence rules. Mr. Biscieglia, in addition to
having served as President and Chief Executive Officer until January 31, 2004,
also has a consulting agreement. Consequently, he is not considered independent.
Mr. Campbell is Chairman of Mannington Mills, Inc., which purchases natural gas
from subsidiaries of the Company. Commencing January 2004, as a result of
winning a competitive bid, another subsidiary of the Company owns and operates a
cogeneration facility that provides electricity to Mannington Mills, Inc. Mr.
Bracken is President of Sun National Bancorp, Inc., which provides a $10 million
line of credit for the Company and its subsidiaries, a $10 million letter of
credit for the Company and a bank account for another subsidiary of the Company.
The Board has determined that Messrs. Campbell and Bracken, as well as Billings,
Bosley, Edwards, Hartnett-Devlin, Hughes, James and Raring constituting all of
the other non-employee directors with the exception of Mr. Biscieglia, meet the
New York Stock Exchange standards and our own standards set forth above for
independence and are, therefore, considered to be independent directors.
Accordingly, during 2004, nine of the eleven directors of the Company were
considered to be "independent."
Codes of Conduct
The Company has adopted codes of conduct for all employees, officers and
directors, which include the code of ethics for our principal executive, our
principal financial officer and principal accounting officer within the meaning
of the SEC regulations adopted under the Sarbanes-Oxley Act of 2002.
Additionally, the Company has established a hotline and website for employees to
anonymously report suspected violations.
A copy of the codes of ethics are available on the Company's website
at www.sjindustries.com under the heading "Investor Relations". Copies of our
codes of conduct are also available at no cost to any shareholder who requests
them in writing at South Jersey Industries, Inc., 1 South Jersey Plaza, Folsom,
NJ 08037, Attention: Corporate Secretary.
Communication with Directors
The independent directors of the Board met two times during 2004. Topics
of these independent sessions included CEO performance and compensation and a
briefing by the external auditors. Meetings of the independent directors are
chaired by the independent director Chairman of each of the Board's Audit,
Compensation/Pension or Nominating and Governance Committee. The designation of
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chairman is determined in accordance with the principal items to be considered
at the meeting and which committee has responsibility for such matters.
Experience has shown that this procedure, which has been the Board's practice,
has been effective in providing independent leadership. You may communicate with
the chairmen of the Audit, Compensation/Pension and Nomination and Governance
Committees by sending an e-mail to auditchair@sjindustries.com,
compchair@sjindustries.com or nomgovchair@sjindustries.com, respectively, or you
may communicate with our outside independent directors as a group by sending an
e-mail to sjidirectors@sjindustries.com. The charters and scope of
responsibility for each of the Company's committees can be found on the
Company's website at www.sjindustries.com. You may also address any
correspondence to the chairmen of the committees or the outside directors at
South Jersey Industries, Inc., 1 South Jersey Plaza, Folsom, New Jersey 08037.
Meetings of the Board of Directors and its Committees
- -----------------------------------------------------
The Board of Directors met seven times in 2004. Each director attended 75%
or more of the total number of meetings of the Board of Directors and the
meetings of the committees of the Board on which he or she served. All of our
directors attended the 2004 Annual Meeting of Shareholders. Clarence McCormick
completed twenty-five years of service to the Company and did not stand for
re-election. The Company wishes to thank Mr. McCormick for his valued service.
During 2004, each of the directors of the Company also served on the Boards or
Executive Committees of one or more of South Jersey Gas Company, South Jersey
Energy Company, Marina Energy, LLC, South Jersey Resources Group, LLC, South
Jersey Energy Service Plus, LLC, Energy & Minerals, Inc. and R&T Group, Inc.,
all of which are direct subsidiaries of the Company.
There are six standing committees of the Board: the Audit Committee; the
Compensation/Pension Committee; the Environmental Committee; the Executive
Committee; the Nominating and Governance Committee; and the Management
Development Committee.
Audit Committee
The Audit Committee of the Board of Directors, which met eight times during
2004, is comprised of six "independent" directors as that term is defined in the
rules and regulations of the Securities and Exchange Commission and the listing
standards of the New York Stock Exchange: Dr. Herman D. James, Chairman; Helen
R. Bosley; Thomas A. Bracken; Sheila Hartnett-Devlin; William J. Hughes; and
Frederick R. Raring. The Board has determined that no member of the Audit
Committee has a material relationship that would jeopardize such member's
ability to exercise independent judgment. In January 2005, the Board of
Directors designated Ms. Hartnett-Devlin, Helen R. Bosley and Thomas A. Bracken
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as "audit committee financial experts" as such term is defined by applicable
rules and regulations of the Securities and Exchange Commission. The Audit
Committee: (1) annually engages an independent registered public accounting firm
for appointment, subject to Board and shareholder approval, as auditors of the
Company and has the authority to unilaterally retain, compensate and terminate
the Company's independent registered public accounting firm; (2) reviews with
the independent registered public accounting firm the scope and results of each
annual audit; (3) reviews with the independent registered public accounting
firm, 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 registered public accounting
firm of any non-audit services to be rendered to the Company. The Audit
Committee has established policies and procedures for the engagement of the
independent registered public accounting firm to provide audit and permitted
non-audit services. The Audit Committee evaluates itself on an annual basis. The
Board of Directors has adopted a written charter for the Audit Committee as
adopted by the Company's Board of Directors.
Compensation/Pension Committee
The Compensation/Pension Committee of the Board of Directors, which met
five times during 2004, is comprised of six "independent" directors: W. Cary
Edwards, Chairman; Dr. Shirli M. Billings; Helen R. Bosley; Thomas A. Bracken;
Sheila Hartnett-Devlin; and Dr. Herman D. James. Each member of the Committee
satisfies the independence requirements of the New York Stock Exchange. The
Compensation/Pension Committee: (1) is responsible for making grants under and
otherwise administering the Company's Stock-Based Compensation Plan; (2) reviews
and makes recommendations to the Board of Directors on the operation,
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.
Nominating and Governance Committee
The Nominating and Governance Committee of the Board of Directors, which
met four times during 2004, is comprised of five directors: Dr. Shirli M.
Billings, Chairman; Keith S. Campbell; Sheila Harnett-Devlin; William J. Hughes
and Frederick R. Raring. Each member of the Committee satisfies the independence
requirements of the New York Stock Exchange. 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 (minimum qualifications for director candidates are
provided in the Company's Corporate Guidelines available on the Company's web
site at www.sjindustries.com under the heading "Investor Relations" and include
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consideration of education, experience, judgment, diversity and other applicable
and relevant skills as determined by an assessment of the needs of the Board at
the time an opening exists); (3) makes recommendations to the Board of Directors
to fill vacancies and for nominees for election to be voted on by the
shareholders; and (4) is responsible for monitoring the implementation of the
Company's Corporate Governance Policy. The Nominating and Governance 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. Any shareholder wishing to propose a nominee should
submit a recommendation in writing to the Company's Secretary, indicating the
nominee's qualifications and other relevant biographical information and
providing confirmation of the nominee's consent to serve as a director.
Environmental Committee
The Environmental Committee of the Board of Directors, which met two times
during 2004, is comprised of five directors: Frederick R. Raring, Chairman;
Charles Biscieglia; Keith S. Campbell; W. Cary Edwards; and Edward J. Graham.
The Environmental Committee reviews and evaluates management activities with
respect to environmental remediation of the Company's and its subsidiaries'
current and former properties.
Executive Committee
The Executive Committee of the Board of Directors, which met one time
during 2004, is comprised of six directors: Charles Biscieglia, Chairman;
Dr. Shirli M. Billings; W. Cary Edwards; Edward J. Graham; Dr. Herman D. James
and Fredrick R. Raring. 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 managing the business and affairs of the Company.
Management Development Committee
The Management Development Committee of the Board of Directors, which met two
times during 2004, is comprised of six directors: Edward J. Graham, Chairman;
Dr. Shirli M. Billings; Keith S. Campbell; W. Cary Edwards; Charles Biscieglia;
and Dr. Herman D. James. The Management Development Committee: (1) reviews the
Company's programs and practices used to develop employees identified for
leadership positions in the organization; and (2) evaluates training and
educational programs to assure that they reflect current and emerging workplace,
industry and general business issues.
Compensation of Directors
- -------------------------
In 2003, a study of non-employee director compensation was conducted by
outside compensation consultants comparing the Company's director compensation
with a relevant peer group. The consultants recommended and the Board approved
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targeting non-employee director compensation at the median of the peer group.
Accordingly, effective January 1, 2004, non-employee directors receive shares of
restricted stock with a market value of $13,000. Non-employee members of the
Executive Committee are paid an annual cash retainer of $20,000 and all other
non-employee directors are paid an annual retainer of $17,500. Chairmen of
certain committee are paid a retainer as follows: Audit, $5,000; Executive,
$4,000; Compensation/Pension, $4,000; Nominating and Governance, $4,000.
Chairmen of the Environmental and Management Development committees were paid an
additional $300 per meeting.
In addition, directors 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. Non-employee directors 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. Non-employee directors who participate telephonically in
a Board or committee meeting receive $500. Directors who are also employees 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.
Certain Relationships
- ---------------------
Mr. Biscieglia has a consulting agreement with the Company at $125,000 per
year. Mr. Campbell is Chairman of Mannington Mills, Inc., which purchases
natural gas from subsidiaries of the Company. Commencing January 2004, as a
result of winning a competitive bid, another subsidiary of the Company owns and
operates a cogeneration facility that provides electricity to Mannington Mills,
Inc. Mr. Bracken is President of Sun National Bancorp, Inc., which provides a
$10 million line of credit for the Company and its subsidiaries, a $10 million
letter of credit for the Company and a bank account for another subsidiary of
the Company.
COMPENSATION/PENSION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation/Pension Committee consists of six independent directors.
Among other responsibilities, the committee makes recommendations to the Board
regarding the Company's executive compensation policies, practices and
objectives. The Committee administers the Company's Annual Cash and Stock-Based
Compensation plans.
The current executive compensation structure has been in place since 1998
and applies to all officers of the Company. At that time, a comprehensive study
of compensation alternatives was undertaken, a primary objective being the
creation of a system which aligns the interest of Company shareholders with the
financial incentives of executives on a short-term and long-term basis. That
-13-
study drew upon the experience and knowledge of committee members in
consultation with their independent compensation consultant. In November 2002,
an update to the 1998 study was completed, to ensure that the structure remained
consistent with contemporary compensation methods and tools. The committee's
consulting firm presented a detailed update which reexamined the component parts
of the executive compensation program as currently applied. Further, the report
provided a competitive analysis of how executives' base salary, annual cash and
long-term compensation compared to peer companies in the energy industry and the
general business community. The committee evaluated and assessed those findings
in the context of the Company's performance over the years and the growth
predicted going forward. The committee determined that its executive
compensation policy and methodology were advancing the corporate mission while
attracting and retaining qualified executive management to carry out the work
and goals of the organization. In 2004, the committee engaged its consultant to
provide a market-based update to its executive compensation schedule, in
anticipation of January 2005 compensation adjustments. That update was completed
and presented in November 2004. Total annual direct compensation forecasted for
2005 for the executive group, exclusive of the CEO, reported at 87% of the
competitive market median. Using the same data sources, for 2004 the total
annual direct compensation of Mr. Graham, the Chief Executive Officer, reported
at approximately 54% of the competitive market median.
In 2003, the committee directed the completion of a study to examine the
efficacy of the peer group utilized for the long-term incentive component. This
report was completed and presented to the committee. The criteria and screening
process employed by the consultant was carefully reviewed and discussed. The
committee found the process sound and appropriate. A defined procedure and
schedule for peer group population and review was adopted and documented in the
committee's chart of activities. The established incentive-based executive
compensation structure consists of three parts, two of which are directly linked
to achieving predefined short-term and long-term performance goals. These three
components were fully implemented with respect to compensation and performance
for fiscal year 2000 and each year thereafter. They are as follows:
Base Salary - which is set at the 50th percentile of the relevant peer
market;
Annual Cash Awards - which provides an annual award, 75% of which is
directly tied to the Company's earnings per share from continuing
operations, with the balance based upon specific, predefined
performance objectives for each executive; and
Long-Term Incentive - which employs equity-based instruments, currently
restricted stock grants, which are earned based upon the Company's
relative total shareholder return, measured against industry peer
companies, over three-year cycles.
In general, executive base salaries were increased in January 2005 to
provide a 3.5% adjustment, which was the market adjustment recommended by the
committee's consultant.
In January 2004, long-term incentive grants were provided to executives,
including Mr. Graham, in the form of restricted stock. The performance period
-14-
for this long-term incentive is the three-year period ending December 31, 2006.
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 predefined peer group. Performance-based restricted stock grants
provided in January 2001 vested and were awarded to executives, including
Mr. Graham. Since the Company exceeded its long-term incentive goals for the
2004 award, Mr. Graham received restricted stock in the amount of $225,018.
All awards are detailed in the Summary.
In January 2005, annual cash awards with respect to fiscal 2004 were
provided to executives, including Mr. Graham, 75% of which were based upon
predetermined earnings per share targets from continuing operations for 2004,
with the remaining 25% based upon individual performance goals. Since the
Company exceeded its 2004 performance goals, Mr. Graham received an annual cash
award of $140,630. Awards are detailed in the Summary Compensation Table.
The committee believes that the Company's performance over the past five
years provides tangible evidence that at-risk compensation, both annual and
long-term, should continue to represent a significant portion of total executive
compensation. Annual incentives promote short-term performance which instills a
measure of deserved confidence in the Company's ability to produce consistent
results, year after year. The use of a time-restricted, performance-oriented
stock-based incentive encourages management to conduct the business of the
Company in ways that advance both the market value of its stock and its ability
to continue to provide a competitive dividend to shareholders over time. The
committee believes alignment of interests is desirable and works to the benefit
of Company shareholders.
Section 162(m) of the Internal Revenue Code of 1986 limits the deduction
allowable to us for compensation paid to certain of our executive officers to
$1.0 million. Qualified performance-based compensation is excluded from this
limitation if certain requirements are met. Our policy is generally to preserve
the federal income tax deductibility of compensation paid, to the extent
feasible and necessary. Awards made under the 1997 Stock-Based Compensation Plan
to employees are intended to qualify as performance-based compensation and
thereby be excluded from the $1.0 million limitation. Notwithstanding our policy
to preserve the federal income tax deductibility of compensation payments, under
certain circumstances the Compensation Committee, in its discretion, may
authorize payment, such as salary, bonuses or otherwise, that may cause an
executive officer's income to exceed the deductible limits. The Compensation
Committee does not anticipate that such compensation will result in the loss of
deductibility under Section 162(m).
Compensation/Pension Committee
W. Cary Edwards, Chairman
Dr. Shirli M. Billings
Helen R. Bosley
Thomas A. Bracken
Sheila Hartnett-Devlin
Dr. Herman D. James
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EXECUTIVE COMPENSATION
Summary Compensation Table
- --------------------------
The following table sets forth compensation paid to or earned by each of the
Named Executives, including Charles Biscieglia, who served as our Chief
Executive Officer until January 31, 2004, during the past three fiscal years.
Annual Compensation Long-Term Compensation
(a) (b) (c) (d) (e) (f) (g)
Name Other
and Annual Restricted All Other
Principal Base Annual Compen- Stock Compen-
Position(s) Year Salary Cash sation(1) Awards(2) sation(3)
- --------------------------------------------------------------------------------------------------------------------------
Charles Biscieglia 2004 $ 33,213 $177,464 $ - $384,264 $ 2,289
Chairman & CEO; CEO of South Jersey 2003 384,330 144,124 9,868 230,598 29,900
Gas Company 2002 367,780 110,335 9,874 183,890 11,945
- --------------------------------------------------------------------------------------------------------------------------
Edward J. Graham(4) 2004 375,000 140,630 8,476 225,018 7,130
President and Chief Operating Officer and 2003 300,000 93,750 5,353 165,000 6,990
President of South Jersey Gas Company 2002 225,110 45,021 2,237 90,044 6,229
- --------------------------------------------------------------------------------------------------------------------------
David A. Kindlick 2004 211,360 52,840 - 105,665 7,018
Vice President and Chief Financial Officer; 2003 203,820 50,957 205 101,910 6,648
Executive Vice President and Chief Financial 2002 195,050 39,009 627 78,020 6,121
Officer of South Jersey Gas Company
- --------------------------------------------------------------------------------------------------------------------------
Albert V. Ruggiero 2004 211,360 52,840 - 105,665 7,467
Vice President; Executive Vice President and 2003 203,820 50,957 205 101,910 7,858
Chief Administrative Officer of South Jersey 2002 195,050 39,009 627 78,020 6,452
Gas Company
- --------------------------------------------------------------------------------------------------------------------------
Richard J. Jackson 2004 181,050 45,260 - 90,518 7,313
Vice President; Executive Vice President, 2003 169,590 42,398 - 84,795 6,800
Operations of South Jersey Gas Company 2002 162,290 32,457 - 64,916 6,700
- --------------------------------------------------------------------------------------------------------------------------
Richard H. Walker, Jr. 2004 162,080 40,520 - 48,640 6,879
Vice President, Corporate Counsel & 2003 149,030 36,575 - 43,890 6,676
Corporate Secretary; Senior Vice President, 2002 140,000 28,000 - 19,632 6,135
Corporate Secretary & Corporate Counsel
of South Jersey Gas Company
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.
-16-
(2) The dollar values of restricted shares expressed are based on market price
at the time of the grant. 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 granted
(including shares from reinvested dividends) lapse 38 months from their
respective date of grant. All restricted stock grants carry a risk of
forfeiture, and the lapse of restrictions on awards for the 2003 and 2004 grants
will depend upon the Company's achieving certain performance goals as measured
against its peer group.
(3) Includes employer contributions to the Company's 401(k) Plan and the income
value of group life insurance. The 2004 values for these items are listed below:
Biscieglia Graham Kindlick Ruggiero Jackson Walker
- ----------------------------------------------------------------------------------------------------------------------------
401(k) Plan $ 2,289 $ 6,500 $ 6,500 $ 6,500 $ 6,500 $ 6,500
Group Life Insurance - 630 518 967 813 379
- ----------------------------------------------------------------------------------------------------------------------------
Total Value $ 2,289 $ 7,130 $ 7,018 $ 7,467 $ 7,313 $ 6,879
(4) Elected to this office effective February 1, 2004.
Securities Authorized for Issuance Under Equity Compensation Plans
- ------------------------------------------------------------------
The following table provides information as of December 31, 2004 relating to
equity compensation plans of the Company pursuant to which grants of restricted
stock, options or other rights to acquire shares may be made from time to time.
Equity Compensation Plan Information
(a) (b) (c)
Number of securities remaining
Number of securities to available for future issuance
be issued upon exercise Weighted average exercise under equity compensation
of outstanding options price of outstanding options, plans excluding securities
Plan Category warrants and rights warrants and rights reflected in column (a)
(#) ($) (#)
Equity compensation plans
approved by security
holders(1) 121,452 (3) 79,960
Equity compensation plans
not approved by security
holders(2) 7,104 (3) -
Total 128,556 79,960
(1) These plans include those utilized to make awards of restricted stock
to the Company's Officers.
-17-
(2) This item includes ad hoc awards of restricted stock to the Company's
directors. Our proposed amendment to our 1997 Stock-Based Compensation
Plan, described under Proposal 3 below, would allow for awards to directors
to be made under such plan.
(3) Only restricted stock has been issued. The restricted stock is issuable
for no additional consideration, and therefore the shares are not included
in the calculation of weighted average exercise price in column (b).
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 in a diversified portfolio of funds of recognized standing until they
are used to provide retirement benefits. 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
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years' salary (as defined in the plan), for each year of service, plus 5%.
Assuming continued employment and retirement at age 60, Messrs. Graham,
Kindlick, Ruggiero, Jackson and Walker will have, respectively, 36, 36, 19, 23
and 31 years of credited service. No credit is provided under the supplemental
plan for more than 30 years of service.
Employment Contracts
- --------------------
The Company has employment agreements with each of the Named Executives.
Mr. Graham's employment agreement is for the period ending December 31, 2005.
The other Named Executives have agreements for three-year periods ending
December 31, 2005, which provide 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 if he resigns after there has
been a significant adverse change in his employment arrangement 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.
STOCK PERFORMANCE_______________________________________________________________
The graph below compares the cumulative total return on the Company's
Common Stock for the five- year period ended December 31, 2004 with the
cumulative total return on the S&P 500 and the S&P Utility Index. The graph
assumes that $100 was invested on December 31, 1999 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
18.2%. This compares with -2.3% for the S&P 500 and 3.7% for the S&P Utility
Index.
Indexed Total Return Over 5 Years Assuming Dividends Reinvested
---------------------------------------------------------------
S&P 500 100 90.9 80.1 62.4 80.3 89.0
S&P UTIL 100 157.2 109.3 76.5 96.6 120.1
SJI 100 110.1 126.6 134.2 171.8 231.0
AUDIT COMMITTEE REPORT__________________________________________________________
The Audit Committee of the Board of Directors is comprised of six
directors, each of whom is independent as defined under the listing standards
of the New York Stock Exchange and satisfies the additional independence
-19-
criteria applicable to Audit Committee members. The Board has determined that
Sheila Hartnett-Devlin, Thomas A. Bracken and Helen R. Bosley are "audit
committee financial experts" as defined by the rules of the Securities and
Exchange Commission. The Audit Committee's activities and scope of its
responsibilities are set forth in a written charter adopted by the Board,
and is posted on the Company's website at www.sjindustries.com under the heading
"Investor Relations".
In accordance with its charter adopted by the Board of Directors, the Audit
Committee, among other things, 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 for
an assessment of the effectiveness of the Company's internal control over
financial reporting, and the independent registered public accounting firm has
the responsibility for the examination of those financial statements and
management's assessment of the effectiveness of the Company's internal control
over financial reporting. The Audit Committee reviewed the audited financial
statements of the Company for the fiscal year ended December 31, 2004, and
management's assessment of the effectiveness of the Company's internal control
over financial reporting with management and with Deloitte & Touche LLP, the
Company's independent registered public accounting firm. The Audit Committee
discussed with the independent registered public accounting firm the matters
required to be discussed by Statement on Auditing Standards (SAS) No. 61,
"Communication with Audit Committees," as amended by SAS 89 and SAS 90, and Rule
2-07, "Communication with Audit Committees, of Regulation S-X", and by standards
of the Public Company Accounting Oversight Board (United States), 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.
Based on the above-mentioned review and discussions with management and the
independent registered public accounting firm, the Audit Committee recommended
to the Board that the Company's audited financial statements and management
assessment of the effectiveness of the Company's internal controls over
financial reporting be included in its Annual Report on Form 10-K for the fiscal
year ended December 31, 2004, for filing with the Securities and Exchange
Commission.
Audit Committee
Dr. Herman D. James, Chairman
Helen R. Bosley
Thomas A. Bracken
Sheila Hartnett-Devlin
William J. Hughes
Frederick R. Raring
-20-
Fees Paid to the Independent Registered Public Accounting Firm
- --------------------------------------------------------------
As part of its duties, the Audit Committee also considered whether the
provision of services other than the audit services by the independent
registered public accountants to the Company is compatible with maintaining the
accountants' independence. In accordance with its charter, the Audit Committee
must pre-approve all services provided by Deloitte & Touche LLP. The Audit
Committee discussed these services with the independent registered public
accounting firm and Company management to determine that they are permitted
under the rules and regulations concerning auditor independence promulgated by
the U.S. Securities and Exchange Commission to implement the Sarbanes-Oxley Act
of 2002, as well as the American Institute of Certified Public Accountants.
The fees for all services provided by the independent registered public
accounting firm to the Company during 2004 and 2003 are as follows:
2004 2003
---- ----
Audit Fees (a) 833,500 304,500
Audit-Related Fees (b) 33,500 35,000
Tax Fees (c) 30,956 38,763
All other fees - -
Total 897,956 378,263
(a) Fees for audit services billed or expected to be billed relating to fiscal
2004 and 2003 include audit of the Company's annual financial statements,
reviews of the Company's quarterly financial statements, comfort letters,
consents and other services related to Securities and Exchange Commission
matters. In addition, audit services billed or expected to be billed relating to
fiscal 2004 include attestation of management's assessment of internal control,
as required by the Sarbanes-Oxley Act of 2002, Section 404.
(b) Fees for audit-related services provided during fiscal 2004 and 2003
consisted of employee benefit plan audits, transfer agent & registrar audits,
and accounting consultations.
(c) Fees for tax services provided during fiscal 2004 and 2003 consisted of tax
compliance and tax software. Tax compliance services are services rendered based
upon facts already in existence or transactions that have already occurred to
document, compute, and obtain government approval for amounts to be included in
tax filings related to Federal, state and local income tax return assistance.
-21-
PROPOSAL 2
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES DESCRIPTION OF PROPOSED AMENDMENT
The shareholders are being asked to approve an amendment to our Certificate
of Incorporation to increase the authorized number of shares of Common Stock
from 20,000,000 shares to 60,000,000 shares. The Board of Directors authorized
the amendment on March 3, 2005. If the proposal is approved, Article Third of
our Certificate of Incorporation would be amended and restated in its entirety
as follows:
"THIRD: The aggregate number of shares which the corporation shall have
authority to issue is 62,500,000 shares, divided into two classes consisting of
60,000,000 shares of common stock ("Common Stock"), $1.25 par value per share,
and 2,500,000 shares of preference stock ("Preference Stock"), without par
value."
If the proposed amendment is adopted by the required vote of shareholders,
it will become effective upon the filing of a Certificate of Amendment with the
New Jersey Secretary of State.
PURPOSES AND EFFECTS OF THE AMENDMENT
The principal purpose of the proposed increase of our authorizedshares of
Common Stock is to permit a two-for-one split of all of the issued and
unissued shares of our Common Stock. As the value of our shares of Common Stock
has increased on the New York Stock Exchange, our Board believes that a stock
split would result in a market price for the Common Stock that would be more
attractive to a broader spectrum of investors and, therefore, would benefit both
us and our stockholders through greater liquidity in the market. Accordingly,
our Board of Directors approved a two-for-one stock split on March 3, 2005,
which is contingent upon shareholder approval of this proposal as we would not
otherwise have enough shares to give effect to the split. As of January 31,
2005, 13,849,287 shares of our Common Stock were issued and outstanding,
1,055,386 shares were reserved for issuance under the Dividend Reinvestment
Plan, 720,331 shares were reserved for issuance under the South Jersey
Industries, Inc. 401k Plans and 79,960 shares were reserved for issuance under
the 1997 Stock-Based Compensation Plan. As a result, as of January 31, 2005,
only 4,295,036 shares of Common Stock remained available for issuance.
-22-
Our Board of Directors also believes that it is advisable and in our best
interests to have available additional authorized but unissued shares of Common
Stock in an amount adequate to provide for our future needs. Our Board believes
that the availability of additional authorized shares will enable it to act with
flexibility when and as the need arises to issue additional shares in the future
without the delays necessitated by having to obtain shareholder approval. In
addition to the shares of Common Stock to be issued in connection with the stock
split, the shares proposed for authorization under the amendment could be issued
for any proper corporate purpose, including, without limitation, acquiring other
businesses or assets in exchange for shares of Common Stock, entering into joint
venture arrangements with other companies in which Common Stock or the right to
acquire Common Stock are part of the consideration, raising capital through the
sale of Common Stock, attracting and retaining valuable employees by the
issuance of stock options or restricted shares, paying stock dividends or
effecting additional stock splits. Our Board of Directors has no current plans
or commitments to issue any of the additional authorized Common Stock, other
than in connection with the stock split.
The increase in authorized Common Stock will not have any immediate effect
on the rights of existing shareholders. Each of the additional authorized shares
of Common Stock, if and when issued, will have the same rights and privileges as
the currently authorized Common Stock. However, if the proposed amendment is
approved, the additional shares will be available for issuance from time to time
by us, in the discretion of our Board of Directors, without further
authorization or vote of the shareholders unless such authorization is otherwise
required by applicable law or regulation or the rules of the New York Stock
Exchange or any other exchange on which the Common Stock is then listed. The
availability of additional authorized shares for issuance could render more
difficult or discourage a merger, tender offer, proxy contest or other attempt
to acquire or obtain control of us, even though our shareholders may deem such
an acquisition to be desirable. Issuance of shares of Common Stock could dilute
the ownership interest and voting power of shareholders who are seeking control
us. To the extent that it impedes any such attempts, the proposed amendment may
serve to perpetuate management. Our Board of Directors has not proposed the
increase in the amount of authorized shares with the intention of discouraging
tender offers or takeover attempts.
SHAREHOLDER APPROVAL
The affirmative vote of a majority of the votes cast by all of the holders
of shares entitled to vote thereon at the Annual Meeting is required to approve
the proposed amendment to the Certificate of Incorporation.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote "FOR" approval of the amendment.
-23-
PROPOSAL 3
PROPOSAL TO AMEND AND RESTATE OUR 1997 STOCK-BASED COMPENSATION PLAN
GENERAL
Our 1997 Stock-Based Compensation Plan was originally adopted in 1987 and
was amended and restated in 1997. In January 1999, the Board of Directors
amended the plan to provide for the grant of restricted stock awards to eligible
participants under the plan, which amendment was approved by our shareholders in
April 1999. The purpose of the plan is to provide an incentive to eligible
participants whose present and potential contributions are important to our
continued success. The plan affords these individuals an opportunity to acquire
or increase their ownership interest in us and enhances our ability to enlist
and retain the best available talent for the successful conduct of our business
in a competitive market.
The current plan is set to expire in November 2006. As the Board of
Directors was considering an extension of the plan's term, it determined that a
number of other amendments were necessary or appropriate in order to continue
the plan in the future and to modernize certain features of the plan. These
amendments include extending the term of the plan, increasing the number of
authorized shares available for issuance under the plan, permitting non-employee
directors to be eligible to participate under the plan and providing for the
Compensation/Pension Committee of the Board of Directors to administer the plan.
As a result of the approaching expiration of the plan, together with the other
modifications deemed necessary by the Board of Directors, the Board determined
that the plan should be amended and restated in its entirety. In January 2005,
the Board of Directors adopted the Amended and Restated 1997 Stock-Based
Compensation Plan, as set forth in Appendix A to this Proxy Statement. The
shareholders are being asked to consider and approve the amended and restated
plan.
As discussed in the Compensation/Pension Committee Report on Executive
Compensation, the Company has only been using restricted stock as the vehicle
for the long-term incentive component of executive compensation. As discussed,
there are currently no stock options or stock appreciation rights awarded and
outstanding. The Compensation/Pension Committee's current plans for long-term
incentive vehicles do not include stock options or stock appreciation rights.
Furthermore, the Company has adopted the policy if stock options were to be
issued that any stock options granted would be accounted for using the fair
value based method.
A summary of the principal terms of the plan is provided below, which
summary is qualified by reference to the full text of the plan attached as
Appendix A hereto.
-24-
DESCRIPTION OF THE PLAN
Types of Awards
The plan provides for the grant of stock options, including incentive stock
options and non-qualified stock options, stock appreciation rights and
restricted stock.
Stock Options. Under the plan, the Compensation/Pension Committee of our Board
of Directors, which will administer the plan, may grant awards in the form of
options to purchase shares of our Common Stock. The Compensation/Pension
Committee will determine the number of shares subject to the option, the manner
and time of the option's exercise and the exercise price per share of stock
subject to the option, each of which will be specified in the applicable award
agreement. Options may be either incentive stock options or non-qualified stock
options, each of which, as described below, results in different federal income
tax consequences to the recipient and us. The Compensation/Pension Committee has
the discretion to determine which type of option to grant.
Options may not be exercised prior to the one-year anniversary of the date
of grant and may not be exercised after an employee's employment terminates for
any reason other than death, unless the Compensation/Pension Committee provides
otherwise, or termination of service as a director. The term of an option
generally may not exceed ten years. However, the term of an incentive stock
option granted to a 10% shareholder may not exceed five years. Incentive stock
options generally may not have an exercise price less than the fair market value
of our Common Stock on the date of grant, except that the exercise price of an
incentive stock option granted to a 10% shareholder shall be at least 110% of
the fair market value of our Common Stock on the date of grant. The aggregate
fair market value, determined as of the date of grant, of shares for which any
employee may be granted incentive stock options that first become exercisable in
any one calendar year may not exceed $100,000.
The option exercise price is payable in cash or, at the discretion of the
Compensation/Pension Committee, in shares of our Common Stock having an
aggregate fair market value on the date of exercise equal to the option exercise
price, in any combination of cash and Common Stock, or by surrendering the
option in exchange for the issuance of shares equal to the difference between
the exercise price and the fair market value of the shares subject to the
option.
Stock Appreciation Rights. The plan also authorizes the Compensation/Pension
Committee to grant stock appreciation rights, or SARs. An SAR gives the
participant the right to receive its "value" in cash or in shares of Common
Stock or a combination of cash and shares as selected by the employee and
approved by the Compensation/Pension Committee in its sole discretion. The
-25-
"value" of an SAR is equal to the excess of the fair market value of one share
of our Common Stock on the date of exercise over the fair market value on the
date of grant. The general terms of the grant will be set forth in an applicable
award agreement. The Compensation/Pension Committee may grant SARs independent
of or attached to options. When an SAR and option are attached, the participant
may exercise either the SAR or the option, but not both. If an SAR is attached
to an option, the exercise of the SAR will result in the surrender of the right
to exercise the option to which the SAR was attached.
SARs may not be exercised prior to the one-year anniversary of the date of
grant and may not be exercised after employment terminates for any reason other
than death or termination of service as a director unless the Compensation/
Pension Committee provides otherwise. SARs may generally not have a term of more
than ten years. However, SARs granted to 10% shareholders may not have a term of
more than five years.
Restricted Stock. The plan provides that shares of Common Stock subject to
specific restrictions may be awarded to eligible participants as determined by
the Compensation/Pension Committee. The Compensation/Pension Committee will
determine the nature and extent of the restrictions on the shares, the duration
of the restrictions and any circumstance under which restricted shares will be
forfeited. Restricted stock awards may be granted based on the achievement of
preestablished performance goals. As may be determined by the Compensation/
Pension Committee, restricted stock awards may be credited with dividends during
the restriction period, and such dividends will be reinvested in additional
restricted shares. Restricted stock awards may vest over time and will generally
be subject to forfeiture if an awardee's employment or service as a director
with us terminates for certain reasons before the restricted period lapses.
Term of Plan
The plan will terminate on January 26, 2015, unless sooner terminated by
the Board of Directors.
Administration of Plan
The plan will be administered by the Compensation/Pension Committee of the
Board of Directors. Only those directors who are both "non-employee directors"
for purposes of Rule 16b-3 under the Securities Exchange Act and "outside
directors" for purposes of the regulations promulgated under Section 162(m) of
the Internal Revenue Code may act as Compensation/Pension Committee members.
Subject to the terms of the plan, and to any approvals and other authority as
the Board of Directors may reserve to itself from time to time, the
Compensation/Pension Committee, as administrator of the plan, will have
authority to, among other things, select the individuals to receive awards,
determine the timing, form, amount or value and term of grants and awards,
determine the conditions and restrictions, if any, subject to which grants and
awards will be made and become payable under the plan, and interpret the plan.
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Eligibility
Our non-employee directors as well as our and our affiliates' officers and
other employees are eligible to participate in the plan. The selection of
participants from eligible employees is within the discretion of the
Compensation/Pension Committee. We estimate that approximately 26 persons are
eligible to participate in the plan. No participant may be granted in any
calendar year awards covering more than 300,000 shares. The following table
lists the grants of restricted stock that may be received under the plan by our
Named Executives and the other groups listed below.
NEW PLAN BENEFITS
Amended and Restated 1997 Stock-Based Compensation Plan
Name and Position Dollar Value ($)(1) Number of Units(1)
Edward J. Graham
Chief Executive Officer and Director 255,000 4,852
David A. Kindlick
Vice President, Chief Financial Officer 109,380 2,081
Albert V. Ruggerio
Vice President 109,380 2,081
Richard H. Walker, Jr.
Vice President, Corporate Counsel 50,330 958
Richard J. Jackson
Vice President 93,700 1,783
Executive Group 389,102 7,403
Non-Executive Director Group 131,765 2,610
Non-Executive Non-Officer Employee Group - -
(1) Annually, executives are granted shares of performance-based restricted
stock. The number of shares and the dollar value expressed in the above table
are shown at the performance target at the median of the peer group. Actual
awards are based on the performance of the Company's total shareholder return
versus the peer group.
Shares Subject to Plan
A total of 1,000,000 shares of common stock are authorized for issuance
under the plan. As of January 31, 2005, 226,040 shares of Common Stock had been
issued, awarded or reserved for issuance under the plan, leaving 773,900 shares
available for future issuances or awards. If shares under an award are not
issued because they terminate, are forfeited or otherwise, such shares would
again be available for inclusion in future awards. If there is a stock split,
stock dividend, recapitalization or other relevant change affecting our shares,
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appropriate adjustments will be made in the number of shares that may be issued
or transferred in the future and in the number of shares and the prices of all
outstanding awards made before such event.
Transferability
Options and SARs granted under the plan are not transferable except by will
or the laws of descent and distribution and, during the lifetime of the
participant, are exercisable only by the participant. If a participant dies, the
unexercised portion of an option or SAR may be exercised by the participant's
estate, heirs or beneficiaries to the extent permitted by the terms of the
option or SAR within 12 months after the participant's death, unless the
Compensation/Pension Committee provides otherwise at the time of grant.
Change of Control
If, during the term of any option or SAR or during the restricted period of
any restricted stock award we are merged into, consolidated with or acquired by
another entity or we reorganize or liquidate, the Board, in its discretion, may
declare all outstanding option or SAR awards then held by a participant which
are unexercisable or otherwise unvested to automatically be deemed exercisable
or otherwise vested, as the case may be, for a period of 15 days immediately
prior to such event, may provide that all restricted stock awards then
outstanding shall become nonforfeitable and vest immediately, or may take such
other action as it determines to be reasonable to permit participants to realize
the value of rights granted to them under the plan.
Amendment of Plan
The plan may be amended by the Board of Directors, but shareholder approval
will be required for any amendment which
* increases the aggregate number of shares of Common Stock that may be
issued under the plan (except by reason of stock splits, stock
dividends, recapitalizations or other similar changes in our capital
structure);
* changes the class of eligible participants in the plan; or
* otherwise must be approved by the shareholders in order to maintain
the exemption provided by Rule 16b-3 under the Securities Exchange Act
of 1934.
In addition, no amendment may be made with respect to any outstanding
option, SAR or restricted stock award without the relevant participant's written
consent if such amendment is not favorable to the participant or has the effect
of changing an incentive stock option to a non-qualified stock option.
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Other Matters
The plan is intended to comply with Section 162(m) of the Internal Revenue
Code with respect to awards granted thereunder. Section 162(m) of the code
prohibits us from claiming a deduction on our federal income tax return for
compensation in excess of $1,000,000 paid for a given fiscal year to the chief
executive officer (or person acting in that capacity) at the close of the
corporation's fiscal year and the four most highly compensated officers of the
corporation, other than the chief executive officer, at the end of the
corporation's fiscal year. The $1,000,000 compensation deduction limitation does
not apply to performance-based compensation. The Internal Revenue Service has
issued regulations under Section 162(m) setting forth a number of provisions
which compensatory plans must contain for the compensation paid thereunder to
qualify as "performance-based" for purposes of Section 162(m). We believe that
awards made under the plan will qualify as "performance-based" compensation for
purposes of Section 162(m).
Federal Income Tax Consequences Relating to Awards
The following summarizes the current U.S. federal income tax consequences
generally arising with respect to awards under the plan.
Incentive Stock Options. A participant who is granted an incentive stock option
does not realize any taxable income at the time of the grant or at the time of
exercise, but in some circumstances may be subject to an alternative minimum tax
as a result of the exercise. Similarly, we are not entitled to any deduction at
the time of grant or at the time of exercise. If the participant makes no
disposition of the shares acquired pursuant to an incentive stock option before
the later of two years from the date of grant and one year from the date of
exercise, any gain or loss recognized on a subsequent disposition of the shares
will be treated as a long-term capital gain or loss. Under these circumstances,
we will not be entitled to any deduction for federal income tax purposes. If the
participant fails to hold the shares for that period, the disposal is treated as
a disqualifying disposition. The gain on the disposition is ordinary income to
the participant to the extent of the difference between the option price and the
fair market value on the exercise date (or, under certain circumstances, the
excess of the amount realized on the disposition over the adjusted basis of the
shares). Any excess is long-term or short-term capital gain, depending on the
holding period. Under these circumstances and subject to Section 162(m) of the
Code, we will be entitled to a tax deduction equal to the ordinary income amount
the participant recognizes in a disqualifying disposition.
Non-Qualified Stock Options. A participant who is granted a non-qualified stock
option does not have taxable income at the time of grant, but does have taxable
income at the time of exercise. The income equals the difference between the
exercise price of the shares and the market value of the shares on the date of
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exercise. Subject to Section 162(m) of the Code, we would be entitled to a
corresponding tax deduction for the same amount.
Stock Appreciation Rights. The grant of a SAR will produce no U.S. federal tax
consequences for the participant or us. The exercise of a SAR results in taxable
income to the participant, equal to the difference between the exercise price of
the SAR and the value of the SAR on the date of exercise, and subject to Section
162(m) of the Code, a corresponding tax deduction to us.
Restricted Stock. A participant who has been granted an award of restricted
shares of Common Stock will not realize taxable income at the time of the grant,
and we will not be entitled to a tax deduction at the time of the grant, unless
the participant makes an election to be taxed at the time of the award. When the
restrictions lapse, the participant will recognize taxable income in an amount
equal to the excess of the fair market value of the shares at that time over the
amount, if any, paid for the shares. We would be entitled to a corresponding tax
deduction. Dividends paid to the participant during the restriction period will
also be compensation income to the participant and deductible as compensation
expense by us. The holder of a restricted stock award may elect to be taxed at
the time of grant of the restricted stock award on the market value of the
shares, in which case we will be entitled to a deduction at the same time and in
the same amount, dividends paid to the participant during the restriction period
will be taxable as dividends to the participant and not deductible by us and
there will be no further federal income tax consequences when the restrictions
lapse. Subject to Section 162(m) of the Code, we may deduct in connection with
any award any taxes required by law to be withheld.
SHAREHOLDER APPROVAL
The affirmative vote of a majority of the votes cast at the Annual Meeting
for the holders of Common Stock is required to approve the adoption of the
Amended and Restated 1997 Stock-Based Compensation Plan.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote "FOR" approval of the adoption of
the plan.
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee and the Board of Directors, subject to the approval of
the shareholders, has reappointed Deloitte & Touche LLP, as the independent
registered public accounting firm of the Company for 2005. Unless otherwise
directed, proxies will be voted "FOR" approval of this appointment. If the
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shareholders do not ratify this appointment by the affirmative vote of a
majority of the votes cast at the meeting, other auditors will be considered by
the Audit Committee.
Deloitte & Touche LLP served as the independent registered public
accounting firm of the Company during 2004. During 2004, 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 attestation of management's
assessment of internal control, as required by the Sarbanes-Oxley Act of 2002,
Section 404 and the preparation of various reports based on those audits,
services related to filings with the Securities and Exchange Commission and 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.
The Board of Directors recommends a vote "FOR" the ratification of the
appointment of the Independent Registered Public Accounting Firm.
ANNUAL REPORT AND FINANCIAL INFORMATION
A copy of the Company's Annual Report to Shareholders for the year ended
December 31, 2004 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 and is 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 2003, as filed with the
Securities and Exchange Commission. Requests for this report should be directed
to Richard H. Walker, Jr., Vice President, Corporate Counsel and 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 sent to shareholders in connection with
the Company's 2006 Annual Meeting of Shareholders that is received by the
Company after November 19, 2005 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
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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 2005 Annual
Meeting.
By Order of the Board of Directors,
Richard H. Walker, Jr.
Vice President, Corporate Counsel & Corporate Secretary
March 18, 2005
APPENDIX A
SOUTH JERSEY INDUSTRIES, INC.
1997 STOCK-BASED COMPENSATION PLAN
(As Amended and Restated Effective January 26, 2005)
1. Purpose Of Plan
The purpose of the Plan is to enable the Company to recognize the
contributions made to the Company by employees (including employees who are
members of the Board of Directors) and non-employee directors of the Company by
providing such persons with additional incentive to devote themselves to the
future success of the Company and to improve the ability of the Company to
attract, retain and motivate persons upon whom the Company's sustained growth
and financial success depend, by: (i) providing incentive compensation
opportunities competitive with those of other major companies; (ii) providing
performance-related incentives that motivate superior performance; and (iii)
providing such persons with the opportunity to acquire or increase their
ownership interest in the Company and to thereby acquire a greater stake in the
Company and a closer identity with it.
2. Definitions
(a) "Award" means an award of Options, SARs, or Restricted Stock.
(b) "Board" means the board of directors of the Parent Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the committee described in Paragraph 5.
(e) "Company" means South Jersey Industries, Inc. and each of its
Subsidiary Companies.
(f) "Date of Grant" means the date on which an Option, SAR or
Restricted Stock Award is granted.
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(g) "Dividend Equivalent" means the right to receive the equivalent
value (in Shares) of dividends that are paid on Restricted Stock and reinvested
in Shares.
(h) "Eligible Participant" means an employee of the Company or a
director of the Parent Company as determined in accordance with Paragraph 7.
(i) "Fair Market Value" means on any given date the mean between the
highest and lowest prices of actual sales of Shares on the principal national
securities exchange on which the Shares are listed on such date or, if there are
no such sales on such date, the mean between the closing bid and asked prices of
the Shares on such exchange on such date.
(j) "Holder" means a person to whom (i) an SAR has been granted under
the Plan, which SAR has not been exercised and has not expired or terminated, or
(ii) a Restricted Stock Award has been granted, which Award has not become
vested or been forfeited.
(k) "Incentive Stock Option" means an Option granted under the Plan,
designated by the Committee at the time of such grant as an Incentive Stock
Option and containing the terms specified herein for Incentive Stock Options.
(l) "Non-Qualified Option" means an Option granted under the Plan,
designated by the Committee at the time of such grant as a Non-Qualified Option
and containing the terms specified herein for Non-Qualified Options.
(m) "Option" means any stock option granted under the Plan and
described either in Paragraph 3(a) or 3(b). (n) "Optionee" means a person to
whom an Option has been granted under the Plan, which Option has not been
exercised and has not expired or terminated.
(o) "Parent Company" means South Jersey Industries, Inc.
(p) "Performance Goal" means the annual consolidated earnings per share
from the Company's continuing operations, or any other goal that is established
at the discretion of the Committee including, among other things: (i) the price
of Shares, (ii) the market share of the Company (or any business unit thereof),
(iii) sales by the Company (or any business unit thereof), (iv) return on equity
of the Company, or (v) costs of the Company (or any business unit thereof). The
Committee shall have sole discretion to determine specific targets within each
category of Performance Goals.
(q) "Restriction Period" means the period during which Restricted Stock
awarded under the Plan is subject to forfeiture.
(r) "Restricted Stock" means Shares awarded by the Company under
Paragraph 11 of the Plan and described in Paragraph 3(d).
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(s) "SAR" means a stock appreciation right granted under the Plan and
described in Paragraph 3(c).
(t) "Share" or "Shares" means a share or shares of Common Stock of the
Parent Company.
(u) "Subsidiary Companies" means all corporations that, at the time in
question, are subsidiary corporations of the Parent Company within the meaning
of section 425(f) of the Code.
(v) "Ten Percent Shareholder" means a person who on the Date of Grant
owns, either directly or within the meaning of the attribution rules contained
in section 425(d) of the Code, stock possessing more than ten percent of the
total combined voting power of all classes of stock of his or her employer
corporation or of its parent or subsidiary corporations, as defined respectively
in sections 425(e) and (f) of the Code.
(w) "Value" of a SAR means the excess of the Fair Market Value of a
Share on the date of exercise of such SAR over the Fair Market Value of a Share
on the Date of Grant of such SAR.
3. Rights To Be Granted
Rights that may be granted under the Plan are:
(a) Incentive Stock Options, which give the Optionee the right for a
specified time period to purchase a specified number of Shares for a price not
less than their Fair Market Value on the Date of Grant;
(b) Non-Qualified Options, which give the Optionee the right for a
specified time period to purchase a specified number of Shares for a price
determined by the Committee on the Date of Grant;
(c) SARs, which give the Holder the right for a specified time period,
without payment to the Company, to receive the Value of such SARs, to be paid in
cash or Shares or a combination of cash and Shares, the number and amount of
which shall be determined pursuant to Paragraph 8(e) below.
(d) Restricted Stock Awards, which give the Holder a specific number of
Shares which are either (i) awarded upon the Company's achievement of
Performance Goals established by the Committee, or (ii) awarded, subject to
forfeiture if the Company fails to achieve Performance Goals established by the
Committee.
4. Stock Subject To Plan
Not more than 1,000,000 Shares in the aggregate may be delivered pursuant
to the Plan upon exercise of Options or SARs or pursuant to Restricted Stock
Awards. The Shares so delivered may, at the option of the Company, be either
treasury Shares or Shares originally issued for such purpose. If an Option or an
SAR covering Shares terminates or expires without having been exercised in whole
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or in part, other Options or SARs may be granted covering the Shares as to which
the Option or SAR was not exercised. If a Restricted Stock Award is forfeited,
other Restricted Stock Awards may be granted covering the Shares which were
forfeited.
5. Administration Of Plan
The Plan shall be administered by the Compensation/Pension Committee of the
Board or such other committee, consisting of two or more directors who, unless
the Board determines otherwise, are "outside directors" (within the meaning of
Section 162(m) of the Code) and "non-employee directors" (within the meaning of
Rule 16b-3(b)(3)(i) under the Securities Exchange Act of 1934) as may be
determined by the Board.
6. Grant of Rights
The Committee may grant Options, SARs, Restricted Stock Awards or all of
the foregoing to Eligible Participants.
7. Eligibility
(a) An Option may be granted to those Eligible Participants who are
designated by the Committee as eligible to receive an Option.
(b) An Incentive Stock Option shall not be granted to a Ten Percent
Shareholder except on such terms concerning the option price and period of
exercise as are provided in Paragraphs 8(a) and 8(f) with respect to such a
person. A Non-Qualified Option shall not be granted to a Ten Percent
Shareholder.
(c) A Restricted Stock Award may be granted to those Eligible
Participants who are designated by the Committee as eligible to receive a
Restricted Stock Award.
(d) No Eligible Participant may be granted in any calendar year Awards
covering more than 300,000 Shares.
8. Option and SAR Agreements and Terms
All Options and SARs shall be granted within ten years from January 26,
2005 and be evidenced by Option agreements or SARs agreements which shall be
executed on behalf of the Parent Company and by the respective Optionees or
Holders. The terms of each such agreement shall be determined from time to time
by the Committee, consistent, however, with the following:
(a) Option Price. The option price per Share shall be determined by the
Committee but, in the case of Incentive Stock Option, shall not be less than
100% of the Fair Market Value of such Share on the Date of Grant. With respect
to any Incentive Stock Option granted to a Ten Percent Shareholder, the option
price per Share shall not be less than 110% of the Fair Market Value of such
Share on the Date of Grant.
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(b) Restrictions on Transferability. No Option or SAR shall be
transferable otherwise than by will or the laws of descent and distribution and,
during the lifetime of the Optionee or Holder, shall be exercisable only by him
or her. Upon the death of an Optionee or Holder, the person to whom the rights
shall have passed by will or by the laws of descent and distribution may
exercise any Options or SARs only in accordance with the provisions of Paragraph
8(f).
(c) Payment Upon Exercise of Options. Full payment for Shares purchased
upon the exercise of an Option shall be made in cash or, at the election of the
Optionee and as the Committee may, in its sole discretion, approve, either
(i) by surrendering Shares with an aggregate Fair Market Value equal to the
aggregate option price, (ii) by delivering such combination of Shares and cash
as the Committee may, in its sole discretion, approve or (iii) at the election
of the Optionee, and if the Committee, in its sole discretion approves, by
surrendering the Option in exchange for issuance of a number of shares equal to
the difference between the exercise price of the Option and the Fair Market
Value of the Shares subject to the Option.
(d) Issuance of Certificates Upon Exercise of Options; Payment of Cash.
Only whole Shares shall be issuable upon exercise of Options. Any right to a
fractional Share shall be satisfied in cash. Upon payment of the option price, a
certificate for the number of whole Shares and a check for the Fair Market Value
on the date of exercise of any fractional Share to which the Optionee is
entitled shall be delivered to such Optionee by the Parent Company; provided,
however, that in the case of the exercise of a Non-Qualified Option, the
Optionee has remitted to his employer an amount, determined by such employer,
necessary to satisfy applicable federal, state or local tax-withholding
requirements, or made other arrangements with his or her employer for the
satisfaction of such tax-withholding requirements. The Parent Company shall not
be obligated to deliver any certificates for Shares until such Shares have been
listed (or authorized for listing upon official notice of issuance) upon each
stock exchange upon which outstanding Shares of such class at the time are
listed nor until there has been compliance with such laws or regulations as the
Parent Company may deem applicable. The Parent Company shall use its best
efforts to effect such listing and compliance.
(e) Issuance of Certificates Upon Exercise of SARs; Payment of Cash.
Upon exercise of an SAR, its Value shall be payable in cash, or in Shares or
such combination of cash and Shares as is selected by the Holder and approved by
the Committee in its sole discretion. Any Shares that may be due upon exercise
of an SAR shall be delivered to the Holder by the Parent Company and any payment
of cash shall be made by the employer of the Holder. The employer of the Holder
shall deduct from the amount of any cash so payable an amount necessary to
satisfy applicable federal, state, or local tax-withholding requirements. If no
cash is payable (or if the amount of cash payable is insufficient to satisfy
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applicable tax-withholding requirements), no Shares shall be delivered by the
Parent Company to the Holder until the Holder remits to his or her employer an
amount, determined by such employer, necessary to satisfy applicable federal,
state, or local tax-withholding requirements or makes other arrangements for the
satisfaction of such tax-withholding requirements. The Parent Company shall not
be obligated to deliver any certificates for Shares until such Shares have been
listed (or authorized for listing upon official notice of issuance) upon each
stock exchange upon which outstanding Shares of such class at the time are
listed nor until there has been compliance with such laws or regulations as the
Parent Company may deem applicable. The Parent Company shall use its best
efforts to effect such listing and compliance.
(f) Periods of Exercise of Options and SARs. An Option or SAR shall be
exercisable in whole or in part at such time as may be determined by the
Committee and stated in the Option or SAR agreement; provided, however, that,
unless otherwise determined by the Committee, no Option or SAR shall be
exercisable before one year or after five years from the Date of Grant in the
case of an Option or SAR granted to a Ten Percent Shareholder, or before one
year or after ten years from the Date of Grant in all other cases, except as
provided below:
(i) In the event that an Optionee or Holder ceases to be employed by
the Company for any reason other than retirement, disability (as
determined by the Committee) or death, any Option or SAR held by such
Optionee or Holder shall not be exercisable after the date the Optionee
or Holder ceases to be employed by the Company unless otherwise
determined by the Committee and set forth in the Option or SAR
agreement or a written amendment thereto; provided, however, that in no
event shall an Option or SAR be exercisable after five years from the
Date of Grant in the case of a Ten Percent Shareholder or after ten
years from the Date of Grant in all other cases;
(ii) If an Optionee or Holder ceases to be employed by the Company, and
if such cessation of employment is due to the disability (as determined
by the Committee) or the retirement of the Optionee or Holder, he or
she shall have the right to exercise his or her Options or SARs until
the last day of the sixth month following cessation of employment, or
such longer period as the Committee may determine and set out in
writing, even if the date of exercise is within any time period
prescribed by the Plan prior to which such Option or SAR shall not be
exercisable; provided, however, that in no event shall an Option or SAR
be exercisable after five years from the Date of Grant in the case of a
Ten Percent Shareholder or after ten years from the Date of Grant in
all other cases;
(iii) In the event that an Optionee or Holder ceases to be employed by
the Company by reason of his or her death, any Incentive Stock Option,
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Non-Qualified Option or SAR held by such Optionee or Holder shall be
exercisable, the person to whom the rights of the Optionee shall be
passed by will or by the laws of descent and distribution, until the
last day of the twelfth month following the date of the Optionee's or
Holder's death, or such longer period as the Committee may determine
and set out in writing, even if the date of exercise is within any time
period prescribed by the Plan prior to which such Option or SAR shall
not be exercisable; provided, however, that in no event shall an Option
or SAR be exercisable after five years from the Date of Grant in the
case of a Ten Percent Shareholder or after ten years from the Date of
Grant in all other cases.
(g) Date of Exercise. The date of exercise of an Option or SAR shall be
the date on which written notice of exercise, addressed to the Parent Company at
its main office to the attention of its Secretary, is hand delivered, telecopied
or mailed, first class postage prepaid; provided, however, that the Parent
Company shall not be obligated to deliver any certificates for Shares pursuant
to the exercise of an Option or SAR until the Optionee shall have made payment
in full of the option price for such Shares. Each such exercise shall be
irrevocable when given. Each notice of exercise must (i) specify the Incentive
Stock Option, Non-Qualified Option, SAR, or combination thereof, being
exercised; (ii) must, in the case of the exercise of an Option, include a
statement of preference (which shall not be binding on the Committee) as to the
manner in which payment to the Parent Company shall be made (Shares or cash or a
combination of Shares and cash); and (iii) must, in the case of the exercise of
an SAR, include a statement of preference (which shall not be binding on the
Committee) as to the manner in which payment to the Holder shall be made other
than only in cash (Shares or cash or a combination of Shares and cash).
(h) Termination of Employment. For purposes of the Plan, a transfer of
an employee between two employers, each of which is a Company, shall not be
deemed a termination of employment.
(i) Multiple Grants of Incentive Stock Options, Non-Qualified Options
and SARs. The grant, exercise, termination or expiration of any Incentive Stock
Option, Non-Qualified Option or SAR shall have no effect upon any other
Incentive Stock Option, Non-Qualified Option or SAR held by the same Optionee or
Holder; provided, however, that the Committee may, in its sole discretion,
provide in the Option agreement or SARs agreement that the exercise of a certain
number of SARs is conditioned upon the exercise of a certain number of Options
or provide that an SAR shall otherwise be attached to Options granted under the
Plan. All SARs which are attached to Options shall be subject to the following
terms:
(A) such SAR shall expire no later than the Option to which it is
attached;
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(B) such SAR shall be for an amount no more than the excess of the
Fair Market Value of the Shares subject to the attached Option on the date such
SAR is exercised over the option price of such Option;
(C) such SAR shall be subject to the same restrictions on
transferability as the Option to which it is attached;
(D) such SAR shall be exercisable only when the Option to which it
attached is eligible to be exercised;
(E) such SAR shall be exercisable only when the Fair Market Value of
the Shares subject to the attached Option exceeds the option price of such
Option; and
(F) such SAR shall expire upon the exercise of the Option to which
it is attached. Upon exercise of an SAR which is attached to an Option, the
Option to which the SAR is attached shall expire.
9. Limitation on Grant of Incentive Stock Options
The aggregate Fair Market Value (determined as of the time options are
granted) of the Shares for which any employee may be granted Incentive Stock
Options that first become exercisable in any one calendar year under the Plan
and any other plan of his or her employer corporation and its parent and
subsidiary corporations, as defined respectively in Sections 425(e) and (f) of
the Code, shall not exceed $100,000.
10. Rights As Shareholders With Respect to Options and SARs
Neither an Optionee nor a Holder shall have any right as a shareholder with
respect to any Shares subject to his or her Options or SARs until the date of
the issuance of a stock certificate to him or her for such Shares. 11.
Restricted Stock Awards The grant of a Restricted Stock Award shall be subject
to the following terms and conditions:
(a) Grant of Restricted Stock Award. Any Restricted Stock granted under
the Plan shall be evidenced by an agreement executed by the Company and the
Holder, which agreement shall conform to the requirements of the Plan, and shall
specify (i) the number of Shares subject to the Award, (ii) the Restriction
Period applicable to each Award, (iii) the events that will give rise to a
forfeiture of the Award, (iv) the Performance Goals that must be achieved in
order for the restriction to be removed from the Award, (v) the extent to which
the Holder's right to receive the Shares under the Award will be forfeited if
the Performance Goals are not met, and (vi) whether the Restricted Stock is
subject to a vesting schedule. The agreement may contain such other provisions
not inconsistent with the terms of the Plan as the Committee shall deem
advisable.
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(b) Delivery of Restricted Stock. Upon determination of the number of
shares of Restricted Stock that are to be granted to the Holder, the Committee
shall direct that a certificate or certificates representing the number of
Shares be issued to the Holder with the Holder designated as the registered
owner. The certificate(s) representing such shares shall be legended as to
restrictions on the sale, transfer, assignment, or pledge of the Restricted
Stock during the Restriction Period and deposited by the Holder, together with a
stock power endorsed in blank, with the Company.
(c) Dividend Equivalents. Notwithstanding any provision of the Plan to
the contrary, a Holder who has been granted a Restricted Stock Award pursuant to
this Paragraph 11 may, at the discretion of the Committee, be credited as of
dividend payment dates during the Restriction Period with Dividend Equivalents
with respect to the Shares underlying the Restricted Stock Award. Such Dividend
Equivalents shall be credited to an account established on behalf of the Holder
by the Company. The Dividend Equivalents credited under this Paragraph (c) shall
be notionally reinvested in Shares and shall be converted into additional Shares
under such formula, at such time, and subject to such limitations as may be
determined by the Committee.
(d) Receipt of Common Stock. At the end of the Restriction Period, the
Committee shall determine, in light of the terms and conditions set forth in the
Restricted Stock agreement, the number of shares of Restricted Stock with
respect to which the restrictions imposed hereunder shall lapse. The Restricted
Stock with respect to which the restrictions shall lapse shall be converted to
unrestricted Shares by the removal of the restrictive legends from the
Restricted Stock. Thereafter, Shares equal to the number of shares of the
Restricted Stock with respect to which the restrictions hereunder shall lapse
shall be delivered to the Holder. The Committee may, in its sole discretion,
modify or accelerate the vesting and delivery of shares of Restricted Stock.
(e) Termination By Reason of Death, Disability or Retirement. Unless
otherwise determined by the Committee, if a Holder ceases to be employed by the
Company and such cessation of employment is due to the Holder's death,
disability (as determined by the Committee) or retirement, the vested portion of
the Restricted Stock, if any, shall become nonforfeitable. The non-vested
portion of the Restricted Stock shall be forfeited as of the date of such
termination of employment.
(f) Other Termination. Unless otherwise determined by the Committee at
the time of grant, if a Holder ceases to be employed by the Company and such
cessation of employment is due to any reason other than for death, disability
(as determined by the Committee), or retirement, any Restricted Stock with
respect to which the Restriction Period has not expired shall be forfeited.
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12. Changes in Capitalization
In the event of a stock dividend, stock split, recapitalization,
combination, subdivision, issuance of rights, or other similar corporate change,
the Board shall make appropriate adjustments in the aggregate number of Shares
that may be covered by Options, SARs or Restricted Stock Awards under the Plan,
the number of Shares subject to, and the option price of, each then-outstanding
Option, the number of then-outstanding SARs and the Fair Market Value of Shares
upon which the Value of such SARs is based, and the number of Shares subject to
each then-outstanding Restricted Stock Award.
13. Mergers, Dispositions and Certain Other Transactions
If, during the term of any Option or SAR, or during the Restricted Period
of any Restricted Stock Award, the Parent Company or any of the Subsidiary
Companies shall be merged into or consolidated with or otherwise combined with
or acquired by another person or entity, or there is a divisive reorganization
or a liquidation or partial liquidation of the Parent Company, the Parent
Company may choose to take no action with regard to the Options, SARs or
Restricted Stock Awards outstanding or, notwithstanding any other provision of
the Plan, to take any of the following courses of action:
(a) Not less than 15 days or more than 60 days prior to any such
transaction, all Optionees and Holders shall be notified that their Options and
SARs shall expire on the 15th day after the date of such notice, in which event
all Optionees and Holders shall have the right to exercise all of their Options
and SARs prior to such new expiration date; or
(b) The Parent Company shall provide in any agreement with respect to
any such merger, consolidation, combination or acquisition that the surviving,
new or acquiring corporation shall grant options and stock appreciation rights
to the Optionees and Holders to acquire shares, or stock appreciation rights in
shares in such corporation with respect to which the excess of the fair market
value of the shares of such corporation immediately after the consummation of
such merger, consolidation, combination or acquisition over the option price, or
the value of such stock appreciation rights, shall not be greater than the
excess of the Fair Market Value of the Shares over the option price of Options
(or, in the case of an SAR, the Value of such SAR) , immediately prior to the
consummation of such merger, consolidation, combination or acquisition; or
(c) The Parent Company shall provide that all Restricted Stock Awards
that are outstanding on the date of the merger, consolidation, combination or
acquisition shall become nonforfeitable or immediately payable in cash; or
(d) The Parent Company shall take such other action as the Board shall
determine to be reasonable under the circumstances in order to permit Optionees
and Holders to realize the value of rights granted to them under the Plan.
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14. Plan Not To Affect Employment
Neither the Plan nor any Award shall confer upon any employee of the
Company any right to continue in the employment of the Company.
15. Interpretation
The Committee shall have the power to interpret the Plan and to make and
amend rules for putting it into effect and administering it. It is intended that
the Incentive Stock Options granted under the Plan shall constitute incentive
stock options within the meaning of section 422A of the Code, that the
Non-Qualified Options and Restricted Stock Awards shall constitute property
subject to federal income tax pursuant to the provisions of section 83 of the
Code and that the Plan shall qualify for the exemption available under Rule
16b-3 (or any similar rule) of the Securities and Exchange Commission. The
provisions of the Plan shall be interpreted and applied insofar as possible to
carry out such intent.
16. Amendments
(a) The Plan may be amended by the Board, but any amendment that
increases the aggregate number of Shares that may be issued pursuant to the Plan
upon exercise of Options or SARs or upon the grant of a Restricted Stock Award
(otherwise than pursuant to Paragraph 12), that changes the class of Eligible
Participants, or that otherwise requires the approval of the shareholders of the
Parent Company in order to maintain the exemption available under Rule 16b-3 (or
any similar rule) of the Securities Exchange Act of 1934, shall require the
approval of the holders of such portion of the shares of the capital stock of
the Parent Company present and entitled to vote on such amendment as is required
by applicable state law and the terms of the Parent Company's Articles of
Incorporation, as then in effect, to make the amendment effective. No
outstanding Option, SAR or Restricted Stock Award shall be affected by any such
amendment without the written consent of the Optionee, Holder, or other person
then entitled to exercise such Option or SAR or receive Shares pursuant to such
Restricted Stock Award.
(b) Subject to the provisions of the Plan, the Committee may amend any
Option agreement, SARs agreement or Restricted Stock agreement, subject to the
consent of the affected Optionee or Holder if such amendment is not favorable to
the Optionee or Holder or if such amendment has the effect of changing an
Incentive Stock Option to a Non Qualified Option, except that the consent of the
Optionee or Holder shall not be required for any amendment made pursuant to
Paragraph 13 hereof.
17. Compliance with Section 162(m) of the Code
This Plan is intended to comply with Section 162(m) of the Code with
respect to qualified performance-based Awards that may be awarded by the
Committee to Eligible Participants. For this purpose, an Award shall constitute
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qualified performance-based compensation to the extent that it is granted by the
Committee on account of the attainment of one or more preestablished, objective
performance goals established by the Committee, the material terms of which are
disclosed to the shareholders of the Parent Company and satisfaction of such
performance goals are certified by the Committee.
18. Securities Laws
The Committee shall have the power to make each Award under the Plan
subject to such conditions as it deems necessary or appropriate to comply with
the then-existing requirements of the Securities Act of 1933 or the Securities
Exchange Act of 1934, including Rule 16b-3 (or any similar rule), of the
Securities and Exchange Commission.
19. Effective Date and Term of Plan
The Plan shall expire no later than January 26, 2015, unless sooner
terminated by the Board. Any Incentive Stock Option granted before the approval
of the Plan by the Parent Company's shareholders shall be expressly conditioned
upon, and shall not be exercisable until, such shareholder approval.
20. General
Each Option, SAR or Restricted Stock Award shall be evidenced by a written
instrument containing such terms and conditions not inconsistent with the Plan
as the Committee may determine. The issuance of Shares on the exercise of an
Option or SAR, or pursuant to a Restricted Stock Award, shall be subject to all
of the applicable requirements of the New Jersey Business Corporation Act and
other applicable laws, including federal or state securities laws, and all
Shares issued under the Plan shall be subject to the terms and restrictions
contained in the Articles of Incorporation of the Parent Company, as amended
from time to time. Among other things, the Optionee or Holder may be required to
deliver an invest-ment representation to the Company in connection with any
exercise of an Option or SAR, or in connection with the receipt of Shares
pursuant to a Restricted Stock Award, or to agree to refrain from selling or
otherwise disposing of the Shares required for a specified period of time or on
specified terms.
21. Indemnification
Service on the Committee shall constitute service as a member of the Board.
Each member of the Committee shall be entitled, without further act on his or
her part, to indemnity from the Parent Company and limitation of liability to
the fullest extent provided by applicable law and by the Parent Company's
Articles of Incorporation and/or By laws in connection with or arising out of
any action, suit or proceeding with respect to the administration of the Plan or
the granting of Awards hereunder in which he or she may be involved by reason of
his or her being or having been a member of the Committee, whether or not he or
she continues to be such member of the Committee at the time of the action,
suit or proceeding.
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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.
South Jersey Industries
1 South Jersey Plaza, Folsom, NJ 08037
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VOTE BY TELEPHONE VOTE BY INTERNET VOTE BY MAIL
- ------------------------------------------------------------------------------
Have your proxy Have your proxy Please mark,
card available when card available when sign and date
you call the Toll-Free you access the website your proxy card
number 1-800-542-1160 http://www.votefast.com and return it in
using a touch-tone and follow the simple the postage-paid
telephone and directions presented envelope
follow the simple to record your vote. provided or
directions presented return it to:
to record your vote. Corporate Election
Services,
P.O. Box 1150,
Pittsburgh, PA
15230-1150.
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Vote by Telephone Vote by Internet Vote by Mail
Call Toll-Free using a Access tje Websote and Return your proxy
Touch-Tone phone: Cast your vote: in the postage-paid
1-800-542-1160 http://www.votefast.com envelope provided
- --------------------------------------------------------------------------------
Vote 24 hours a day, 7 days a week!
Your telephone or Internet vote must be received by 11:59 p.m.
Eastern Daylight Time on April 20, 2005 to be counted in the final tabulation.
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SOUTH JERSEY INDUSTRIES, INC. BOARD OF DIRECTORS PROXY
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This proxy is solicited on behalf of the Board of Directors for the Annual
Meeting of Shareholders on April 21, 2005.
The shares represented by this Proxy will be voted as directed by the
shareholder. If no direction is given, they will be voted in favor of the
election of the listed nominees as a group and in favor of proposal 2.
Signature
Signature
Date: , 2005
--------------------------------
Please sign exactly as name is shown
to the left. When shares are held by
joint tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
VOTING INSTRUCTIONS ON REVERSE SIDE
~/ Please fold and detach card at perforation before mailing. ~/
- --------------------------------------------------------------------------------
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Proxy must be signed and dated on the reverse side.
~/ Please fold and detach card at perforation before mailing. ~/
- --------------------------------------------------------------------------------
SOUTH JERSEY INDUSTRIES, INC.
PROXY
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The undersigned shareholder hereby appoints C. Biscieglia and R.H. Walker, Jr.,
and each of them, attorneys and proxies with full power of substitution and
revocation to vote the number of shares of Common Stock the undersigned would be
entitled to vote if personally present at the Annual Meeting of Shareholders of
South Jersey Industries, Inc. on Thursday, April 21, 2005, and at any
adjournments thereof, as indicated below and in accordance with the judgment of
said attorneys and proxies on any other business which may come before the
meeting or any adjournments, all as set forth in the accompanying notice and
proxy statement, the receipt of which the undersigned acknowledges.
1. For the election of three Directors:
Class I Term expiring in 2008
(01) Charles Biscieglia
(02) Keith S. Campbell
(03) W. Cary Edwards
|_| FOR all nominees listed above. (except as shown to the contrary below)
|_| WITHHOLD AUTHORITY to vote for all nominees listed above.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name or number on the line below:)
2. To approve a proposal to amend our Certificate of Incorporation to increase
the number of shares of Common Stock authorized for issuance from
20,000,000 shares to 60,000,000 shares to, among other things permit a
stock split.
|_| FOR |_| AGAINST |_| ABSTAIN
3. To approve an amendment and restatement of our 1997 Stock-Based
Compensation Plan to, among other things, increase the number of shares
authorized under the plan, extend its term and permit non-employee
directors to participate in the plan.
|_| FOR |_| AGAINST |_| ABSTAIN
4. To ratify the appointment of Deloitte & Touche LLP as independent
registered public accounting firm.
|_| FOR |_| AGAINST |_| ABSTAIN
5. To transact such other business that may properly come before the meeting.
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