South Jersey Industries
1 South Jersey Plaza, Folsom, New Jersey 08037
Tel. (609) 561-9000 * Fax (609) 561-8225 * TDD ONLY 1-800-547-9085
Notice of Annual Meeting of Shareholders
April 17, 2003
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 17, 2003, at
10:00 a.m., Eastern Time, for the following purposes:
1. To elect four Directors:
a. Three Class II Directors (Term expiring in 2006).
b. One Class III Director (Term expiring in 2004).
2. To approve the action of the Board of Directors in appointing
Deloitte & Touche LLP as auditors for 2003.
3. To transact such other business that may properly come before the
meeting.
The Board of Directors has fixed the close of business on February 27, 2003
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 the Internet. Please refer to the
enclosed proxy card for instructions on how to use these options. Should you
attend the meeting, you may revoke your proxy and vote in person.
By Order of the Board of Directors,
Richard H. Walker, Jr.
Corporate Secretary & Corporate Counsel
Folsom, NJ
March 14, 2003
--------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
PLEASE VOTE, SIGN, DATE, AND PROMPTLY RETURN YOUR PROXY IN THE
ENCLOSED ENVELOPE OR VOTE BY TELEPHONE OR BY THE INTERNET.
- Title Page -
SOUTH JERSEY INDUSTRIES, INC.
PROXY STATEMENT
This statement is furnished on behalf of the Company's Board of Directors
to solicit proxies for use at its Annual Meeting of Shareholders. The meeting is
scheduled for Thursday, April 17, 2003, 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 14, 2003.
The Company bears the cost of this solicitation, which is primarily made by
mail. However, the Secretary or employees of the Company may solicit proxies by
phone, telegram, fax, e-mail or in person. The Company may also use a
proxy-soliciting firm at a cost not expected to exceed $2,500, plus expenses, to
distribute to brokerage houses and other custodians, nominees, and fiduciaries
additional copies of the proxy materials and Annual Report to Shareholders for
beneficial owners of our stock.
Only shareholders of record at the close of business on February 27, 2003
may vote at the meeting. On that date, the Company had 12,241,272 shares of
Common Stock outstanding. Shareholders are entitled to one vote per share on
each matter to be acted upon.
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. The approval of
the Company's auditors and other matters that come before the meeting require
the affirmative vote of a majority of the votes cast at the meeting. 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 director elections
or the approval of the appointment of the independent auditors.
Properly signed proxies received by the Company will be voted at the
meeting. If a proxy contains a specific instruction as to any matter to be acted
on, the shares represented by the proxy will be voted in accordance with those
instructions. If you sign and return your proxy but do not indicate how to vote
for a particular matter, your shares will be voted "For" the election of the
nominated slate of directors and "For" approval of the appointment of Deloitte &
Touche LLP as the Company's independent auditors. A shareholder who returns a
proxy may revoke it at any time before it is voted. If you attend the meeting
and wish to revoke your proxy, you must notify the meeting's secretary in
writing prior to the voting of the proxy. 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.
DIRECTOR ELECTIONS
At the Annual Meeting, four directors are to be elected to the Board of
Directors. Three nominees are to be elected as Class II Directors to hold office
for a term of three years and one nominee is to be elected as a Class III
Director for a one-year term. As designated on the proxy card, unless otherwise
instructed, proxy votes will be cast for the following persons as directors:
Class II (term expiring in 2006) -- Shirli M. Billings, Ph.D., Sheila
Hartnett-Devlin, CFA, and Frederick R. Raring; Class III (term expiring in 2004)
-- Clarence D. McCormick. The Board of Directors currently consists of nine
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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The Company is saddened to report that longtime and valued director Thomas
L. Glenn, Jr. passed away on January 16, 2003. In consideration of this
unexpected loss, the Board of Directors has decided to waive its mandatory
retirement policy to permit Clarence D. McCormick, currently a Class II Director
whose term is expiring at the annual meeting, to stand for election for a
one-year term in place of Mr. Glenn.
NOMINEES
Class II
Term Expires in 2006
Shirli M. Billings, Ph.D. has been a director since 1983. Age 62. 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 (1990 to date), New Albany, OH,
a human resource consulting firm; former President, Leadership Learning Academy
(1999 - 2001), Lakeland, FL, a human resource development agency; Superintendent
of Schools (1994 - 1997), Oberlin, OH; Vice President, Human Resource
Development (1985-1990), Honeywell, Inc., Minneapolis, MN; trustee, Scholarship
America, Saint Peter, MN.; director, South Jersey Gas Company.
Sheila Hartnett-Devlin, CFA has been a director since 1999. Age 44. Member of
the Audit Committee, the Compensation/Pension Committee and the Nominating and
Governance Committee. Executive Vice President (1998 to date), Senior Vice
President (1995 - 1998), Vice President (1993 - 1995), Chair, Global Investment
Committee (1996 to date), Member, Investment Policy Committee (1995 to date),
Fiduciary Trust Company International, New York, NY; director, Fiduciary Trust
Company of California, Los Angeles, CA; Member, New York Society of Security
Analysts; director, South Jersey Gas Company.
Frederick R. Raring has been a director since 1995. Age 65. Member of the Audit
Committee, the Environmental Committee and the Nominating and Governance
Committee. President, Seashore Supply Company, (1990 to date), Ocean City, NJ,
a major distributor of plumbing and heating supplies and materials; director,
South Jersey Gas Company.
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NOMINEES (continued)
Class III
Term Expires in 2004
Clarence D. McCormick has been a director since 1979. Age 73. Member of the
Executive Committee, the Nominating and Governance Committee and Chairman of the
Compensation/Pension Committee. Retired Chairman and CEO (1995 - 1999),
Chairman, President and CEO (1988 - 1995), The Farmers and Merchants National
Bank of Bridgeton, NJ; Chairman and President, Southern Jersey Bancorp of
Delaware (1989 - 1999); director, Cumberland Mutual Insurance Company; director,
American Automobile Association of Southern New Jersey; director, South Jersey
Gas Company.
DIRECTORS CONTINUING IN OFFICE
Class III
Term Expires in 2004
Herman D. James, Ph.D. has been a director since 1990. Age 59. 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; trustee, Mt. Ida College, Newton Centre,
MA.
Ambassador William J. Hughes has been a director since 2002. Age 70. 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 date), 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.
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DIRECTORS CONTINUING IN OFFICE
Class I
Term Expires in 2005
Charles Biscieglia has been a director since 1998. Age 58. Chairman of the
Executive Committee, member of the Environmental Committee and the Management
Development Committee. Chairman and Chief Executive Officer (2000 to date),
President and Chief Executive Officer (1998 - 1999) 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; director, New Jersey State
Chamber of Commerce, Trenton, NJ; Treasurer, New Jersey Utilities Association,
Trenton, NJ; Vice Chairman, Board of Trustees, Shore Memorial Hospital, Somers
Point, NJ; director, United Way of Atlantic County, NJ; director, South Jersey
Gas Company.
Keith S. Campbell has been a director since 2000. Age 48. Member of the
Environmental Committee, the Nominating and Governance Committee and the
Management Development Committee. Chairman of the Board, Mannington Mills, Inc.,
(1995 to date), Salem, NJ, a leading manufacturer of hard and soft surface
flooring; Chairman, Board of Trustees, Rowan University, Glassboro, NJ.
W. Cary Edwards has been a director since September 1993 and was also a director
from April 1990 - January 1993. Age 58. Member of the Environmental Committee,
the Executive Committee, the Compensation/Pension Committee and the Management
Development Committee. Commissioner, N.J. State Commission on Investigation
(1997 to date); Managing Partner, Edwards & Caldwell, LLC (1993 to date); Of
Counsel (1993) and New Jersey Managing Partner (1990 - 1993), law firm, Mudge
Rose Guthrie Alexander & Ferdon; Attorney General, State of New Jersey (1986 -
1989); Chief Legal Counsel - Governor of New Jersey (1982 - 1986).
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SECURITY OWNERSHIP
Directors and Management
The following table sets forth certain information with respect to the
beneficial ownership, as of February 14, 2003, of (a) each continuing director
and nominee for director, (b) our chief executive officer and the four other
most highly compensated executive officers during 2002 (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 ................... 7,321 (2) *
Charles Biscieglia ................... 25,448 *
Keith S. Campbell .................... 760 (2) *
W. Cary Edwards ...................... 3,906 (2) *
Sheila Hartnett-Devlin................ 3,931 (2) *
William J. Hughes .................... 842 (2) *
Herman D. James ...................... 4,892 (2) *
Clarence D. McCormick................. 11,471 (2) *
Frederick R. Raring .................. 26,999 (2) *
Edward J. Graham ..................... 9,144 *
David A. Kindlick .................... 14,513 *
Albert V. Ruggiero ................... 3,319 *
Richard H. Walker, Jr................. 3,163 *
All continuing directors, nominees
for director and executive officers
as a group (16 persons)............... 125,462 1.0
* 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 interest of management of the Company and its principal
subsidiaries with that of the Company's shareholders. Therefore, 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;
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* 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 Long- Term Incentive Program 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
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, within specified monthly and annual due
dates, relating to their ownership of and transactions in the Company's Common
Stock. Based on our records and other information, the Company believes that all
Section 16(a) filing requirements were met for 2002.
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information, as of February 14,
2003, as to each person known to the Company, based on their filings with the
SEC, who beneficially owns 5% or more of the Common Stock. The Shareholder named
below has sole voting and investment power with respect to such shares, unless
otherwise indicated.
Name and Address of Shares Beneficially
Beneficial Owner Owned Percent of Class
Dimensional Fund Advisors, Inc. 706,207 5.8%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401-1005
THE BOARD OF DIRECTORS
Meetings of the Board of Directors and its Committees
The Board of Directors met six times in 2002. Each director attended 93% 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, except for Ms.
Hartnett-Devlin, who attended 73% of such meetings. Ms. Hartnett-Devlin's
attendance was affected by increased work requirements associated with September
11th's tragic impact on her firm. During 2002, each of the directors of the
Company also served on the Boards of one or more of South Jersey Gas Company,
South Jersey Energy Company, 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.
The Audit Committee of the Board of Directors, which met four times during
2002, is comprised of four "independent" directors as that term is defined in
the listing standards of the New York Stock Exchange: Dr. Herman D. James,
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Chairman; Sheila Hartnett-Devlin; William J. Hughes; and Frederick R. Raring.
The Audit Committee: (1) annually recommends to the Board a firm of independent
public accountants for appointment, subject to shareholder approval, as auditors
of the Company; (2) reviews with the independent auditors the scope and results
of each annual audit; (3) reviews with the independent auditors, the Company's
internal auditors and management, the quality and adequacy of the Company's
internal controls and the internal audit function's organization,
responsibilities, budget and staffing; and (4) considers the possible effect on
the objectivity and independence of the independent auditors of any non-audit
services to be rendered to the Company. The Audit Committee's activities and the
scope of its responsibilities as adopted by the Company's Board of Directors are
more fully described in the Audit Committee Report (at page 14). The Board of
Directors has adopted a written charter for the Audit Committee.
The Compensation/Pension Committee of the Board of Directors, which met
four times during 2002, is comprised of five non-employee directors: Clarence D.
McCormick, Chairman; Dr. Shirli M. Billings; Sheila Hartnett-Devlin; W. Cary
Edwards; and Dr. Herman D. James. 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.
The Environmental Committee of the Board of Directors, which did not meet
during 2002, is comprised of four directors: Charles Biscieglia; Keith S.
Campbell; W. Cary Edwards; and Frederick R. Raring. The Environmental Committee:
(1) reviews and evaluates management activities with respect to environmental
remediation of the Company's and its subsidiaries' current and former
properties; and (2) oversees litigation against the Company's insurance carriers
for the recovery of remediation costs.
The Executive Committee of the Board of Directors, which met five times
during 2002, is comprised of five directors: Charles Biscieglia, Chairman; Dr.
Shirli M. Billings; W. Cary Edwards; Dr. Herman D. James; and Clarence D.
McCormick. The Executive Committee: (1) formulates policies to be followed in
planning and conducting the business and affairs of the Company; and (2) may act
on behalf of the Board of Directors during intervals between meetings of the
Board in managing the business and affairs of the Company.
The Nominating and Governance Committee of the Board of Directors, which
met one time during 2002, was comprised of seven directors: Dr. Shirli M.
Billings, Chairman; Charles Biscieglia; Keith S. Campbell; Sheila
Harnett-Devlin; William J. Hughes; Clarence D. McCormick; and Frederick R.
Raring. Among its functions, the Nominating Committee: (1) maintains a list of
prospective candidates for director, including those recommended by
shareholders; (2) reviews the qualifications of candidates for director; (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. Mr. Biscieglia resigned as a member of the Nominating and
Governance Committee as of December 1, 2002. Henceforth, all of the members of
the Committee are expected to be "independent" directors as that term is defined
in the listing standards of the New York Stock Exchange.
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The Management Development Committee of the Board of Directors, which met
once during 2002, is comprised of five directors: Charles Biscieglia, Chairman;
Dr. Shirli M. Billings; Keith S. Campbell; W. Cary Edwards; 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
During 2002, non-employee directors received shares of restricted stock
with a market value of $8,000. In addition, they receive $1,000 for each meeting
of the Board of the Company or its subsidiaries attended, except that the
maximum fee paid to any person for attendance at one or more meetings of these
boards held on the same day is $1,000. 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. During 2002, chairmen of each
committee were paid an additional $200 for each meeting of their committee that
they attend. During 2002, non-employee members of the Executive Committee were
paid an annual retainer of $13,600, and all other non-employee Board members
received an annual retainer of $11,100. The Company has established a policy to
recognize exceptional service to the Company beyond the service normally
provided by a Board member. In 2002, no payments were made under this policy.
Directors who are also officers of the Company receive no separate compensation
for serving on the Board. The Company has established a plan whereby directors
may elect to defer the receipt of fees until a specified date or until
retirement from the Board. The deferred amount, together with interest, may be
paid in a lump sum or in equal annual installments as the director elects.
Effective January 1, 2003, non-employee directors receive annually shares
of restricted stock with a market value of $9,000. Non-employee members of the
Executive Committee are paid an annual retainer of $16,600 and all other
non-employee directors are paid an annual retainer of $14,100. Chairmen of each
committee are paid an additional $300 per meeting. Non-employee directors who
participate telephonically in a Board or Committee meeting receive $500.
COMPENSATION/PENSION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation/Pension Committee consists of five non-employee directors.
Among other responsibilities, the Committee makes recommendations to the Board
about the Company's executive compensation policies, practices and objectives;
administers the Company's Stock-Based Compensation Plan; and grants awards to
selected key employees at its discretion in consultation with the Company's
Chief Executive Officer (other than awards to the Chief Executive Officer).
The current structure emerged from a 1998 comprehensive review which
examined the Company's executive compensation philosophy and approach. That
study drew upon the experience and knowledge of Committee members in
consultation with their independent compensation consultant. In November 2002,
the Committee revisited executive compensation to ensure that the key components
of the existing structure remained consistent with contemporary compensation
methods and tools. The Committee determined that the compensation components
currently in place support the mission of the Company's compensation policies,
which is to attract and retain qualified executive management. Moreover, the
Committee believes that the existing structure maintains an approach which
aligns the interest of Company shareholders with the financial incentives of
executives on a short-term and long-term basis.
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At the direction of the Committee, in November 2002, the compensation
consultant prepared and presented an updated comprehensive report which
reexamined both the components of executive compensation as currently applied at
the Company and how executives' base salary, annual cash and long-term
compensation compared to those of energy and general business companies. The
consultant's report analyzed 16 industry peer companies with revenues comparable
to those of the Company. The study, which uses a variety of executive
compensation data sources, found that, overall, Company executives' base salary
and annual total cash compensation levels were competitive at 97% and 94% of the
market median, respectively. When long-term compensation was included,
compensation levels were reported at the 75th percentile of the competitive
market median. Using those same data sources, the total annual direct
compensation of Mr. Biscieglia, our Chief Executive Officer, was reported at
approximately 57% of the competitive market median.
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, including that of Mr. Biscieglia, were
increased in January 2002 to provide a 4.7% adjustment, which was the market
adjustment recommended by the Committee's consultant. The base salary of several
executives remained unchanged since they were at or above the 50th percentile of
the competitive market median.
In January 2002, long-term incentive grants were provided to executives,
including Mr. Biscieglia, in the form of restricted stock. The performance
period for this long-term incentive is the three-year period ending December 31,
2004. 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. Grants are detailed in the
Summary Compensation Table. Also, on December 31, 2002, performance-based
restricted stock grants provided in January 2000 vested and were awarded to
executives, including Mr. Biscieglia. Awards are detailed in the Summary
Compensation Table.
In January 2003, annual cash awards with respect to fiscal 2002 were
provided to executives, including Mr. Biscieglia, 75% of which were based upon a
predetermined earnings per share target from continuing operations for 2002, and
the remaining 25% based upon individual performance goals. Awards are detailed
in the Summary Compensation Table.
The Committee believes that the Company's performance over the past four
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, stock-based incentive
strongly encourages management to conduct the business of the Company in ways
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that advance both the market value of its stock and its ability to continue to
provide a competitive dividend to shareholders over time. The alignment of
interests is desirable and works to the benefit of Company shareholders.
Compensation/Pension Committee
Clarence D. McCormick, Chairman
Dr. Shirli M. Billings
Sheila Hartnett-Devlin
W. Cary Edwards
Dr. Herman D. James
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation paid to or earned by each of the
Named Executives during the past three fiscal years.
EXECUTIVE COMPENSATION
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------------------------- ------------
(a) (b) (c) (d) (e) (f) (i)
Name Other
and Annual Restricted All Other
Principal Base Annual Compen- Stock Compen-
Position(s) Year Salary Cash sation(3) Awards(4) sation(5)
---------------------------------- ---- --------- --------- --------- ----------- ---------
Charles Biscieglia 2002 $ 367,780 $110,335 $ 9,874 $ 183,890 $ 11,945
Chairman & CEO; CEO 2001 351,020 108,155 4,436 175,634 11,365
of South Jersey Gas 2000 338,250 73,870 11,842 164,994 11,236
Company
Edward J. Graham 2002 225,110 45,021 2,237 90,044 6,229
President and Chief Operating 2001 214,314 44,132 4,467 86,000 3,666
Officer and President of South 2000 179,380 39,180 752 70,013 5,472
Jersey Gas Company (1)
David A. Kindlick 2002 195,050 39,009 627 78,020 6,121
Vice President, Treasurer and 2001 186,060 38,238 592 74,516 5,685
Chief Financial Officer; Executive 2000 174,250 38,030 731 67,994 5,640
Vice President and Chief
Financial Officer of South Jersey
Gas Company
Albert V. Ruggiero 2002 195,050 39,009 627 78,020 6,452
Vice President; Executive Vice 2001 186,158 38,238 3,871 74,516 4,047
President and Chief 2000 179,380 39,180 752 70,013 5,956
Administrative Officer of
South Jersey Gas Company
Richard H. Walker, Jr. 2002 140,000 28,000 - 19,632 6,135
Corporate Secretary & Corporate 2001 125,000 19,243 - 18,750 6,066
Counsel (2); Corporate Secretary 2000 107,630 16,140 - 15,750 5,969
& Corporate Counsel of South
Jersey Gas Company
Footnotes to Summary Compensation Table
(1) Elected to this office effective January 1, 2003.
(2) Elected to this office effective April 18, 2002.
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(3) 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.
(4) The dollar values of restricted shares expressed are based on market price
at the time of the grant. On December 31, 2002, restricted stock grants
reflected as 1999 Long-term Compensation in the proxy statement for the 2002
Annual Meeting vested. Shares vested and awarded for the Named Executives and
their aggregate value as of December 31, 2002 were as follows: Mr. Biscieglia -
8,091/$267,165; Mr. Graham - 3,627/$119,764; Mr. Kindlick - 3,523/$116,330; Mr.
Ruggiero - 3,627/$119,764; Mr. Walker - 1,035/$34,176. 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 three years from their respective date of grant. All restricted
stock grants carry a risk of forfeiture and awards for the 2001 and 2002 grants
will depend upon the Company achieving certain performance goals as measured
against its peer group.On March 1, 2003, restricted stock grants reflected as
2000 Long-term Compensation also vested with the Company achieving total
shareholder return for the three-year period ended December 31, 2002 at the
47.9th percentile of its predefined peer group of companies.
(5) Includes employer contributions to the Company's 401(k) Plan, the income
value of group life insurance and the increase in vested benefit level of
deferred compensation contract. The 2002 values for these items are listed
below:
Biscieglia Graham Kindlick Ruggiero Walker
401(k) Plan $ 5,500 $ 5,500 $ 5,500 $ 5,500 $ 5,500
Group Life Insurance 3,560 729 621 952 635
Deferred Compensation 2,885 - - - -
------- ------- ------- ------- -------
Total Value $11,945 $ 6,229 $ 6,121 $ 6,452 $ 6,135
======= ======= ======= ======= =======
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
(a) (b) (c) (d) (e)
Value
Number of Securities of Unexercised
Shares Underlying Unexercised In-The-Money
Acquired Value Options at Options at
Name on Exercise Realized Fiscal Year-End Fiscal Year-End
Charles Biscieglia - - - -
Edward J. Graham - - - -
David A. Kindlick 1,000 $ 11,253 - -
Albert V. Ruggiero - - - -
Richard H. Walker, Jr. - - - -
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides information as of December 31, 2002 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.
- 11 -
Equity Compensation Plan Information
(a) (b) (c)
Number of securities
Number of securities remaining available
To be issued upon Weighted average for future issuance
exercise of outstanding exercise price of under equity compensation
options warrants outstanding options, plans excluding securities
Plan Category and rights warrants and rights reflected in column (a)
(#) ($) (#)
Equity Compensation
Plans approved by
security holders(1) 111,497 - (3) 156,024
Equity compensation
plans not approved
by security
holders(2) 26,000 - (3) - (4)
------- -------
Total 137,497 156,024
(1) These plans include the Company's Officers.
(2) These plans include the Company's Directors.
(3) Consists only of Restricted Stock.
(4) Director's Restricted Stock Plan does not specify the number of shares that
may be issued thereunder.
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
- 12 -
years of age or older are also covered by an unfunded supplemental retirement
plan that is designed in general to provide the officer with a minimum
retirement benefit from the salaried employee pension plan and the supplemental
plan that aggregates 2% of the average of the highest three of the final six
years' salary (as defined in the plan), for each year of service, plus 5%.
Assuming continued employment and retirement at age 60, Messrs. Biscieglia,
Graham, Kindlick, Ruggiero and Walker will have, respectively, 36, 36, 35, 19
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. Biscieglia's employment agreement is for the period ending January 31, 2004.
The other Named Executives have agreements for a three-year period 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, 2002 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, 1997 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
7.0%. This compares with -0.6% for the S&P 500 and -4.0% for the S&P Utility
Index.
Indexed Total Return Over 5 Years Assuming Dividends Reinvested
(Chart)
1997 1998 1999 2000 2001 2002
S&P 500 100 128.6 155.6 141.5 124.6 97.1
S&P UTIL 100 114.8 104.6 167.0 116.2 81.3
SJI 100 91.0 104.5 115.1 132.3 140.2
- 13 -
AUDIT COMMITTEE REPORT
In accordance with its charter adopted by the Board of Directors, the Audit
Committee assists the Board in fulfilling its responsibility for oversight of
the quality and integrity of the accounting, auditing and financial reporting
practices of the Company. Management has the responsibility for the preparation
of the Company's financial statements and the independent auditors have the
responsibility for the examination of those statements.
The Audit Committee reviewed the audited financial statements of the
Company for the fiscal year ended December 31, 2002 with management and with
Deloitte & Touche LLP, the Company's independent auditors. The Audit Committee
discussed with the independent auditors the matters required to be discussed by
Statement on Auditing Standards No. 61, "Communication with Audit Committees,"
relating to the conduct of the audit. The Audit Committee also received written
disclosures from Deloitte & Touche LLP regarding its independence from the
Company as required by Independence Standards Board Standard No. 1,
"Independence Discussions with Audit Committees," and has discussed with
Deloitte & Touche LLP the independence of that firm.
Based on the above-mentioned review and discussions with management and the
independent auditors, the Audit Committee recommended to the Board that the
Company's audited financial statements be included in its Annual Report of Form
10-K for the fiscal year ended December 31, 2002, for filing with the Securities
and Exchange Commission.
Audit Committee
Dr. Herman D. James, Chairman
Sheila Hartnett-Devlin
William J. Hughes
Frederick R. Raring
APPOINTMENT OF AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors,
subject to the approval of the shareholders, has reappointed Deloitte & Touche
LLP, independent public accountants, as the auditors of the Company for 2003.
Unless otherwise directed, proxies will be voted "FOR" approval of this
appointment. If the 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 Board upon recommendation of the Audit Committee.
Deloitte & Touche LLP served as the auditors of the Company during 2002.
During 2002, the audit services performed by that firm for the Company consisted
of the audits of the financial statements of the Company and its subsidiaries
and the preparation of various reports based on those audits, services related
to filings with the Securities and Exchange Commission, the New York Stock
Exchange, and audits of employee benefit plans as required by the Employee
Retirement Income Security Act. A representative of Deloitte & Touche LLP is
expected to be present at the Annual Meeting and will have the opportunity to
make a statement, if he desires to do so, and to respond to appropriate
questions from shareholders.
Fees Paid to Auditors
As part of its duties, the Audit Committee also considered whether the
provision of services other than the audit services by the independent auditors
to the Company is compatible with maintaining the accountants' independence. The
fees for all services provided by the independent auditors to the Company during
2002 are as follows:
- 14 -
Audit Fees
Amounts billed by Deloitte & Touche LLP for services rendered in connection
with the audit of the Company's consolidated financial statements for the fiscal
year ended December 31, 2002 and the reviews of the quarterly financial
statements filed in our Quarterly Reports on Form 10-Q were $240,500.
Financial Information Systems Design and Implementation Fees
Deloitte & Touche LLP provided no information technology services relating
to financial information systems design and implementation during 2002.
All Other Fees
Amounts billed by Deloitte & Touche LLP for all other professional services
rendered to the Company in 2002 were $41,500. These fees relate to non-audit
services including tax consultation and compliance services as well as
audit-related fees consisting of employee benefit plan, transfer agent and
registrar audits and consents and comfort letters related to security offerings.
ANNUAL REPORT AND FINANCIAL INFORMATION
A copy of the Company's Annual Report to Shareholders for the year ended
December 31, 2002 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 2002, as filed with the
Securities and Exchange Commission. Requests for this report should be directed
to Richard H. Walker, Jr., Corporate Secretary and Corporate Counsel, 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 2004 Annual Meeting of Shareholders that is received by the
Company after November 17, 2003 will not be eligible for inclusion in the
Company's proxy statement and form of proxy for that meeting. To be a qualified
shareholder, a shareholder must have owned at least $2,000 in market value of
the Company's securities for at least one year before the date of submission of
the proposal to the Company. In compliance with the Company's bylaws,
shareholders must provide the Company with at least 60 days, but no more than 90
days, notice prior to an announced annual meeting date of (i) business the
shareholder wishes to raise at the meeting and (ii) persons, if any, the
shareholder wishes to nominate for election as directors at that meeting.
The Board of Directors knows of no matters other than those set forth in
the Notice of Annual Meeting of Shareholders to come before the 2003 Annual
Meeting.
By Order of the Board of Directors,
Richard H. Walker, Jr.
Corporate Secretary and Corporate Counsel
March 14, 2003
- 15 -
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.
- Back Cover -
Proxy Card
___________________________________________
VOTE BY TELEPHONE
___________________________________________
Have your proxy card available when you call
the Toll-Free number 1-800-542-1160 using a
touch-tone telephone. You will be prompted
South Jersey Industries to enter your Control Number. Please follow
1 South Jersey Plaza the simple prompts that will be presented to
Folsom, NJ 08037 you to record your vote.
_______________________ ____________________________________________
VOTE BY INTERNET
____________________________________________
Have your proxy card available when you
access the website http://www.votefast.com.
You will be prompted to enter your Control
Number. Please follow the simple prompts
that will be presented to you to record your
vote.
___________________________________________
VOTE BY MAIL
___________________________________________
Please mark, sign and date your proxy card
and return it in the postage-paid envelope
provided or return it to: Corporate Election
Services, P.O. Box 1150, Pittsburgh, PA
15230-1150.
Vote by Telephone Vote by Internet Vote by Mail
Call Toll-Free using a Access the Website and Return your proxy
Touch-Tone phone: Cast your vote: in the postage-paid
1-800-542-1160 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 16, 2003 to be counted in the final tabulation
Your control number is:
Proxy must be signed and dated below.
Please fold and detach card at perforation before mailing
________________________________________________________________________________
SOUTH JERSEY INDUSTRIES, INC. BOARD OF DIRECTORS PROXY
________________________________________________________________________________
This proxy is solicited on behalf of the Board of Directors for the Annual
Meeting of Shareholders on April 17, 2003.
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:_________________ , 2003
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
Proxy must be signed and dated on the reverse side.
Please fold and detach card at perforation before mailing.
_______________________________________________________________________________
SOUTH JERSEY INDUSTRIES, INC. PROXY
_______________________________________________________________________________
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 17, 2003, 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 four Directors:
Class II Term expiring in 2006 (01) Shirli M. Billings, PH.D
(02) Sheila Hartnett-Devlin, CFA
(03) Frederick R. Raring
Class III Term expiring in 2004 (04) Clarence D. McCormick
// FOR all nominees listed above. // WITHHOLD AUTHORITY
(except as shown to the contrary below) 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 the action of the Board of Directors in appointing Deloitte &
Touche LLP as auditors of the Company for the year 2003.
// FOR // AGAINST // ABSTAIN
3. To act upon such other business as may properly come before the meeting or
any adjournment or adjournments thereof.
PROXY TO BE SIGNED AND DATED ON THE REVERSE SIDE