SJI is governed by a Board of Directors, all of whom with the exception of one member are not SJI employees. Our Board of Directors, elected by the shareholders, is the Company’s ultimate decision-making entity, except with respect to matters reserved for shareholder consideration. The current board includes Michael J. Renna (SJI President and CEO), Walter M. Higgins III (Chairman), Sarah M. Barpoulis, Thomas A. Bracken, Keith S. Campbell, Victor A. Fortkiewicz, Sheila Hartnett-Devlin, Sunita Holzer, Joseph H. Petrowski, Joseph M. Rigby, and Frank L. Sims.

The board maintains five standing committees: the Audit Committee, the Compensation Committee, the Corporate Responsibility Committee, the Executive Committee, and the Governance Committee.

SJI received the Corporate Board Gender Diversity Award in 2015 from Executive Women of New Jersey (EWNJ) for leading the way in boardroom gender diversity. In October 2016, the Forum of Executive Women recognized SJI and other companies where women directors comprise at least 25 percent of the Board.

The Board is currently comprised of: ten independent directors; our President and Chief Executive Officer is also a member of the Board. The following table provides summary information about each of the 10 director nominees, including whether

the Board considers the nominee to be independent under the New York Stock Exchange’s independence standards and our Corporate Governance Guidelines. Each director is elected annually by a plurality of votes cast.

This statement is furnished on behalf of SJI’s Board of Directors to solicit proxies for use at its 2017 Annual Meeting of Shareholders. The meeting is scheduled for Friday, April 21, 2017, at 9:00 a.m. at The Westin Mount Laurel, 555 Fellowship Road, Mount Laurel, New Jersey. The approximate date proxy

materials will be made available to shareholders is March 21, 2017. Copies of the proxy statement, proxy card and 2016 Performance Summary are available on our website at www.sjindustries.com under the heading “Investors”.

The Company bears the cost of this solicitation, which is primarily made by mail. However, the Corporate Secretary or company employees may solicit proxies by phone, fax, e-mail or in person, but they will not be separately compensated for these 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 2016 Performance Summary for beneficial owners of our stock.

Only shareholders of record at the close of business on February 21, 2017 may vote at the meeting. On that date, the Company had 79,516,552 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 meeting’s business. This means 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. Shareholders elect Directors by a majority vote of all votes cast at the meeting. The other actions proposed herein require the affirmative vote of a majority of the votes cast at the meeting. The vote required to approve any other matter that may be properly brought before the Annual Meeting will be determined in accordance with the New Jersey

Business Corporation Act. 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.

Properly signed proxies received by the Company will be voted at the meeting. If a proxy contains a specific instruction about any matter to be acted on, the shares represented by the proxy will be voted according to 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 proxy voting. If any other matters or motions properly come before the meeting, including any matters dealing with the conduct of the meeting, the persons named in the accompanying proxy card intend to vote the proxy according to their judgment. The Board of Directors is not aware of any such matters other than those described in this proxy statement.

Certain banks, brokers, broker-dealers and other similar organizations acting as nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of this proxy statement and the Company’s 2016 Performance Summary may have been sent to multiple shareholders in your household. If you would prefer to receive separate copies of a proxy statement or annual report for other shareholders in your household, either now or in the future, please contact your bank, broker, broker-dealer or other similar organization serving as your nominee.

Upon written or oral request to the Corporate Secretary at 1 South Jersey Plaza, Folsom, New Jersey 08037, the Company will promptly provide separate copies of the 2016 Performance Summary and/or this proxy statement. Shareholders sharing an address who are receiving multiple copies of this proxy statement and/or the 2016 Performance Summary and who wish to receive a single copy of these materials in the future will need to contact their bank, broker, broker-dealer or other similar organization serving as their nominee to request that only a single copy of each document be mailed to all shareholders at the shared address in the future.

Any proposal that 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 2018 Annual Meeting of Shareholders that is received by the Company after November 11, 2017 will not be eligible for inclusion in the Company’s proxy statement and form of proxy for that meeting. To be included, proposals can be mailed to the Corporate Secretary at 1 South Jersey Plaza, Folsom, New Jersey 08037. 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 the proposal’s submission to the Company. A shareholder of the Company may wish to have a proposal presented at the 2018 Annual Meeting of Shareholders, but not to have such proposal included in the Company’s proxy

statement and form of proxy relating to that meeting. In compliance with the Company’s bylaws, notice of any such proposal must be received by the Company between January 21, 2018 and February 20, 2018. If it is not received during this period, such proposal shall be deemed “untimely” for purposes of Rule 14a-4(c) under the Exchange Act, and, therefore, the proxies will have the right to exercise discretionary voting authority with respect to such proposal. Any such proposal must be submitted in writing to the Corporate Secretary at the address previously provided in this section.

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 2017 Annual Meeting.

In accordance with its Charter, the Governance Committee reviewed the education, experience, judgment, diversity and other applicable and relevant skills of each nominee,

and determined that each nominee possesses skills and characteristics that support the Company’s strategic vision. The Governance Committee determined that the key areas of expertise include: corporate governance; enterprise leadership; financial (including accounting, finance, and “financial experts” as defined by the SEC); governmental and regulatory; human resources; public/shareholder relations; risk assessment/management; strategy formation/execution and technical/industry. The Governance Committee concluded that the nominees possess expertise and experience in these areas, and the Board approved the slate of nominees. Based on their expertise and experience, the Governance Committee determined the following directors should be elected for the 2017 - 2018 term.

The Company’s executive compensation policies and procedures are designed to attract and retain highly qualified named executive officers while linking Company performance to named executive officer compensation. The Compensation Committee has a strong pay for performance philosophy; and, as a result, the compensation paid to our named executive officers is generally designed to be aligned with the Company’s performance on both a short-term and a long-term basis. Our performance over the last 10 years provides evidence that our executive compensation policies and procedures were effective in furthering these objectives. We have outperformed the S&P 500 index in 5 of the last 10 years, and have outperformed both the S&P 500 Index and the S&P Utilities Index in terms of the 10 year compound annual growth rate. We have also outperformed the median of the Company’s peer group used to benchmark long-term incentive compensation in terms of total shareholder return in 5 of the last 10 three-year cycles. More recently, our performance was below our peer group and our long-term incentive plans for performance cycles ended fiscal 2014 and 2015 did not pay out, while the performance cycle ended fiscal 2016 paid out well below target.

For 2016, the executive compensation policies and procedures for our named executive officers consisted of three parts: base salary, annual incentive awards and long-term incentive compensation. The annual incentive awards and long-term incentive compensation were again directly linked to the achievement of predefined short-term and long-term performance as follows:

We believe these components of compensation for our named executive officers provide the proper incentives to align compensation with the Company’s performance while enhancing shareholder value. Specifically, if the Company’s performance

results meet or exceed pre-established performance targets, named executive officers have an opportunity to realize significant additional compensation through annual incentive awards and long-term equity awards. In addition, the Company’s stock ownership guidelines require our named executive officers to own shares of Company stock, which aligns with shareholder interests. We believe this pay for performance philosophy is integral to the Company’s performance and will drive shareholder value over the long term.

Please see the “Compensation Discussion and Analysis” beginning on page 24 of this Proxy statement for a more detailed discussion of executive compensation policies and procedures for our named executive officers.

Pursuant to Section 14A(a)(1) of the Exchange Act, we are required to provide shareholders with a separate non-binding shareholder vote to approve the compensation of our named executive officers, including the “Compensation Discussion and Analysis”, the compensation tables, and any other narrative disclosure in this Proxy statement. Such a proposal, commonly known as a “say-on-pay” proposal, gives shareholders the opportunity to endorse or not endorse our executive compensation policies and procedures as described in this Proxy statement. Shareholders may also abstain from voting.

Accordingly, shareholders are being asked to approve the following non-binding resolution:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby APPROVED.”

Because your vote is advisory, it will not be binding on the Board and may not be construed as overruling any decision by the Board. However, the Compensation Committee values the opinions expressed by shareholders and expects to take into account the outcome of the vote when considering future executive compensation decisions.

The Board of Directors unanimously recommends a vote “FOR” the non-binding resolution approving the compensation paid to the named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion.

Pursuant to Section 14A(a)(2) of the Exchange Act, we are required to provide shareholders with a separate non-binding shareholder vote on the frequency of the say-on-pay proposal which is required by Section 14A(a)(1) of the Exchange Act (and as presented in Proposal 2 of this Proxy statement). Shareholders may indicate whether they would prefer a say-on-pay advisory vote every one, two or three years. Shareholders may also abstain from voting. Accordingly, shareholders are being asked to approve the following resolution:

RESOLVED, that the shareholders of the Company approve that the frequency of the non-binding say-on-pay vote be held:

This vote will not be binding on the Board or the Compensation Committee and may not be construed as overruling a decision by the Board or the Compensation Committee nor create or imply any additional fiduciary duty on the Board. Further, it will not affect any compensation paid or awarded to any named executive officer. However, the Compensation Committee

and the Board recognize the importance of receiving input from our shareholders on important issues such as executive compensation and expect to take into account the outcome of the vote when considering the frequency with which future say-on-pay votes will be held.

The Board of Directors believes an annual frequency (i.e., every year) is the optimal frequency for the say-on-pay vote. A vote every year provides shareholders and advisory firms the opportunity to evaluate the Company’s compensation policies and procedures on a regular and more frequent basis. Specifically, because the Company makes its compensation decisions on an annual basis we believe our shareholders should have an annual opportunity to approve these decisions. We also believe that an annual frequency vote provides the highest level of accountability and direct communication with our shareholders. The Board believes a biennial and triennial say-on-pay vote would make it difficult to create the meaningful and coherent communications that the votes are intended to provide because of all the compensation actions that would occur between the votes.

Our Board of Directors unanimously recommends that shareholders vote “FOR” an annual say-on-pay non-binding advisory vote.

On March 6, 2017, the Compensation Committee of the Board of Directors (the “Committee”) adopted the South Jersey Industries 2017 Cash Incentive Compensation Plan (“Plan”), effective as of January 1, 2017, subject to shareholder approval at the Annual Meeting. The Plan is a cash incentive plan designed to incentivize employees of South Jersey Industries (the “Company”) and replaces the Company’s 2012 Annual Incentive Compensation Plan (the “Prior Plan”).

Purpose of the Proposal

The Plan is intended to permit the Company to award performance-based compensation that is fully deductible by the Company for federal income tax purposes under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) and the related regulations (referred to as “Performance-Based Compensation”). Section 162(m) of the Code generally does not allow a publicly held company to obtain tax deductions for compensation of more than $1 million paid to the Chief Executive Officer and the Company’s three other most highly paid executive officers, other than our Chief Financial Officer (referred to as our “covered employees”). Payments that qualify as Performance-Based Compensation are exempt from this limitation.

One of the requirements of Section 162(m) of the Code is that shareholders approve the material terms of the performance goals pursuant to which the compensation is to be paid at least once every five years. Accordingly, we are asking our shareholders to approve the material terms of the performance goals under the Plan in accordance with Section 162(m) of the Code. If shareholders approve the material terms of the performance goals under the Plan, assuming that all other requirements under Section 162(m) of the Code are met, the Company may be able to obtain tax deductions with respect to awards issued to our “covered employees” without regard to Section 162(m) of the Code limitations. Shareholder approval is being sought so that compensation attributable to awards under the Plan may qualify as Performance-Based Compensation.

The Committee recommends that the shareholders approve the Plan.

Description of Principal Changes to the Plan

The Board has approved certain principal changes that are reflected in the Plan, which changes are subject to shareholder approval. As adopted, in order to provide the Committee with flexibility to design awards that they believe are in the best interest of the Company and its shareholders, the Plan amends and modifies various provisions from the Prior Plan, including:

Description of the Plan

The principal provisions of the Plan are summarized below. This summary does not purport to be a complete description of all the provisions of the Plan. This summary is qualified in its entirety by the actual text of the Plan, which is attached as Exhibit A.

Effective Date: The Plan will be effective January 1, 2017, subject to the approval of the Plan by the Company’s shareholders.

Purpose of the Plan: The purpose of the Plan is to provide a link between compensation and performance, to motivate participants to achieve corporate performance objectives, to enable the Company to attract and retain high quality eligible employees and to enable the Company to provide compensation that will not fail to be deductible by reason of Section 162(m) of the Code.

Awards: The Plan provides for cash incentive awards (“Cash Incentives”) that are payable based on the achievement of certain performance goals, as described in more detail below.

Administration: The Committee will administer the Plan and will have the authority to construe and interpret the Plan and Cash Incentives awarded under the Plan. The Committee also has the discretion to:

All Cash Incentives are awarded conditional on the participant’s acknowledgement, by participation in the Plan, that all decisions and determinations of the Committee are final and binding on the participant and all other persons having or claiming an interest in such Cash Incentive.

Eligibility for Participation: Employees of the Company, a subsidiary or an affiliate are eligible to participate in the Plan, as selected by the Committee to participate in the Plan.

Cash Incentives: The Committee will award Cash Incentives to participants if the performance goals established by the Committee are met. At the beginning of each performance period, the Committee will establish each participant’s potential Cash Incentive, the performance goals applicable to the Cash Incentive, and such other conditions as the Committee deems appropriate. The performance goals may provide for differing amounts to be paid based on differing levels of performance. The performance goals for Cash Incentives that are intended to be Performance-Based Compensation will be based on pre-established performance goals, as described below.

Pre-Established Performance Goals for Performance-Based Compensation: Payment of Cash Incentives that are intended to be Performance-Based Compensation will be based on the attainment of one or more pre-established, objective performance goals over the designated performance period. The Committee will establish the performance goals (based on the performance goals set forth below) in writing no later than the earlier of (a) 90 days after the commencement of the performance period to which the performance goals relate or (b) the date on which 25% of such performance period has been completed (or such other date as may be required or permitted under Section 162(m) of the Code), provided that the outcome of the performance goals must be substantially uncertain at the time of their establishment.

Performance Goals: The performance goals established by the Committee may be based on any one or more of the following: annual consolidated earnings per share; share price; the market share of the Company (or any business unit thereof); sales by the Company (or any business unit thereof); return factors (including, but not limited to return on equity, capital employed, or investment; risk adjusted return on capital; return on investors’ capital; return on average equity; return on assets; and return on net assets); costs of the Company (or any business unit thereof); the Company’s total shareholder return; revenues; debt level; cash flow; capital expenditures; net income or gross income; operating income; expenses; net borrowing; goals related to mergers, acquisitions, dispositions or similar business transactions; assets; regulatory compliance; employee retention/attrition rates; individual business objectives; risk management activities; corporate value measures which may be objectively determined (including ethics, compliance, environmental, diversity commitment and safety); or implementation or completion of critical projects or processes; cost reduction targets; interest-sensitivity gap levels; weighted average cost of capital; working capital; operating or profit margin; pre-tax margin; contribution margin; book value; operating expenses (including, but not limited to lease operating expenses, severance taxes and other production taxes, gathering and transportation and general and administrative costs); unit costs; EBIT; EBITDA; debt to EBIT or EBITDA; interest coverage; comparative shareholder return; book value per share; net asset value per share; growth measures; debt to total capitalization ratio; asset quality levels; investments; economic value added; stock price appreciation; market capitalization; accounts receivables day sales outstanding; accounts receivables to sales; achievement of balance sheet or income statement objectives; assets; asset sale targets; non-performing assets; satisfactory internal or external audits; improvement of financial ratings; charge-offs; amount of the gas reserves; costs of finding gas reserves; reserve replacement ratio, reserve additions, or other reserve level measures; drilling results; natural gas production, production and reserve growth; production volume; sales volume; production efficiency; inventory to sales; and inventory turns; and any other goal that is established at the discretion of the Committee other than with respect to Cash Incentives intended to be Performance-Based Compensation.

The performance goals may be particular to a participant or the division, department, branch, line of business, subsidiary or other unit in which the participant works. The performance goals may also be based on attaining a specified absolute level of the performance goals or a percentage increase or decrease in the performance goal compared to a pre-established target, previous years’ results or designated market index or comparison

group. The performance goals do not need to be uniform among participants.

Authorized Adjustments: To the extent permitted by Section 162(m) of the Code, in setting the performance goals within the time period described above, the Committee may provide for appropriate adjustments for certain corporate events as it deems appropriate, as described in more detail in the Plan.

Award Payments: As soon as administratively practicable after the end of the applicable performance period, the Committee will certify the actual levels of performance attained for the period and the amount to be paid to each participant for the performance period. The Committee’s certification will be final, conclusive and binding on participants and all other persons.

The Committee has the discretion to reduce or eliminate the Cash Award that would otherwise be payable to a participant. However, the Committee may not award a Cash Incentive in excess of the dollar amount determined on the basis of the potential established for the particular level of performance attained. With respect to Cash Awards intended to be Performance-Based Compensation, the Committee will not waive any performance goal applicable to a participant’s Cash Incentive, except in the case of the participant’s death or disability, or under such circumstances as the Committee deems appropriate in the event of a Change in Control (as defined in the Company’s 2015 Omnibus Equity Compensation Plan, as amended from time to time).

Maximum Payment: The maximum amount of any Cash Incentive intended to be Performance-Based Compensation that may be paid to any participant is $5,000,000 for each 12-month period (or portion thereof) included within the applicable performance period.

Payment Date: Cash Incentives earned will be paid as soon as administratively practicable after the end of the applicable performance period, but in no event later than 2 ½ months after the end of the performance period. A participant will not accrue any right to receive a Cash Incentive award unless the participant remains employed until the payment date for that Cash Incentive, except as described above.

Transferability of Cash Incentives: A participant’s interest under the Plan may not be transferred, except that if a participant dies before payment is made of the actual Cash Incentive to which the participant has become entitled, then that Cash Incentive will be paid to the executor or other legal representative of the participant’s estate.

No Employment Rights: Nothing in the Plan may be construed to grant any person the right to remain in employee status for any period of specific duration, and each participant will at all times remain an employee at-will and may be discharged at any time, with or without cause.

Company Policies: All Cash Incentives under the Plan are subject to any applicable Company policies adopted from time to time by the Board.

Federal Income Tax Consequences: A participant generally will not recognize income upon the grant of an award under the Plan. Upon payment of the award, the participant will recognize ordinary income in an amount equal to the cash received. When the participant recognizes ordinary income upon payment of an award, we expect that the Company will generally be entitled to a tax deduction in the same amount.

Although the Plan is designed so that awards may be Performance-Based Compensation, the Committee reserves the right to grant awards that do not qualify for this exception, and, in some cases, the exception may cease to be available for some or all awards that otherwise so qualify. Thus, it is possible that Section 162(m) of the Code may disallow compensation deductions that would otherwise be available to the Company.

Amendment and Termination: The Committee may at any time amend, suspend or terminate the Plan, but no amendment will be effective without shareholder approval if such approval is required to satisfy the requirements of Section 162(m) of the Code or other applicable law or regulation.

New Plan Benefits: Any awards made under the Plan will be at the discretion of our Committee. Therefore, it is not possible at present to determine awards or amounts of awards that will be granted to any person in the future. As to awards that are currently outstanding under the Plan, the amounts payable thereunder are not determinable at this time since any amounts payable thereunder are wholly dependent upon the achievement of annual performance goals, the achievement of which will not be determined until the first quarter of 2018.

The Committee unanimously recommends a vote “FOR” the approval of the South Jersey Industries 2017 Cash Incentive Compensation Plan. 

The Audit Committee and the Board of Directors, subject to the approval of the shareholders, reappointed Deloitte & Touche LLP, as the Company’s independent registered public accounting firm for 2017. 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 Audit Committee.

Deloitte & Touche LLP served as the Company’s independent registered public accounting firm during 2016. During 2016, the audit services performed for the Company consisted of audits of the Company’s and its subsidiaries’ financial statements 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 such representative desires to do so, and to respond to appropriate questions from shareholders.

The Board of Directors unanimously recommends a vote “FOR” the ratification of the appointment of the Independent Registered Public Accounting Firm.

The following table sets forth certain information with respect to the beneficial ownership of our common stock, as of February 21, 2017, of: (a) each current director and nominee for director; (b) our principal executive officer, principal financial officer, the

three other most highly compensated executive officers during 2016 (collectively, the “Named Executive Officers”); and (c) all of the directors and executive officers as a group.

Director of the Company, inadvertently filed an untimely report of the beneficial ownership on a Form 4. Based on our records and other information, the Company believes that all other Section 16(a) filing requirements were met for 2016.

of the Company’s Common Stock. Based on filings made with the SEC, each shareholder named below has sole voting and investment power with respect to such shares. 

In the role, Mr. Higgins:

For 2016, the Board determined that Directors Barpoulis, Bracken, Campbell, Fortkiewicz, Hartnett-Devlin, Higgins, Holzer, Petrowski, Rigby, and Sims, constituting all of the non-employee Directors, meet the New York Stock Exchange standards and our own standards noted above for independence and are, therefore, considered to be Independent Directors. Accordingly, all but one of the Company’s Directors was considered to be “Independent.” Mr. Renna is not considered independent by virtue of his employment with the Company.

The Governance Committee is responsible for implementing the Board Evaluation Process on an annual basis. The Governance Committee engages an independent, third-party facilitator and uses surveys and interviews to ensure robust feedback that can be used to enhance Board processes. In 2016, the process

included the evaluation of the Board and its committees, and self and peer evaluations. In addition to the Directors, the Executive Officers participated in the process. The Governance Committee is responsible for implementing the recommendations generated from the evaluation results.

The Board of Directors met 14 times in 2016. Each Director attended 75 percent or more of the total number of Board meetings and the Board committee meetings on which he or she served. It is the Board’s policy that the Independent Directors meet in Executive Session following every in-person meeting of the Board or its Committees. The Independent Directors met seven times during 2016 at the conclusion of SJI Board meetings. Topics of these sessions included CEO and Officer performance and compensation, succession planning, strategy and discussions of corporate governance. Director Higgins, Chairman of the Board, chaired the meetings of the Independent Directors. All current Board members and all nominees for election to the Company’s Board of Directors are required to attend the Company’s Annual Meetings of

Shareholders unless unique personal circumstances affecting the Board member or Director nominee make his or her attendance impracticable. All of the Directors attended the 2016 Annual Meeting of Shareholders. During 2016, each of the Company’s Directors also served on the Boards or Executive Committees of one or more of South Jersey Gas Company, South Jersey Energy Company, South Jersey Energy Solutions, LLC, Marina Energy, LLC, South Jersey Resources Group, LLC, South Jersey Energy Service Plus, LLC, Energy & Minerals, Inc., R&T Group, Inc., and SJI Midstream, LLC, all of which are Company subsidiaries.

There are five standing committees of the Board: the Audit Committee; the Compensation Committee; the Corporate Responsibility Committee; the Executive Committee; and the Governance Committee.

At each Audit Committee meeting, management presents an update of the Company’s risk management activities. The Company has two internal Risk Committees that report to the Audit Committee at least quarterly. The SJI Risk Management Committee (RMC), established by the SJI Audit Committee in 1998, is responsible for overseeing the energy transactions and the related risks for all of the SJI companies. Annually, the Board approves the RMC members. Committee members include management from key Company areas such as finance, risk management, legal and business operations.

The RMC establishes a general framework for measuring and monitoring business risks related to both financial and physical energy transactions, approves all methodologies used in risk measurement, ensures that objective and independent controls are in place, and presents reports to the Audit Committee reflecting risk management activity.

A South Jersey Gas Company RMC is responsible for gas supply risk management. Annually, the Board approves the RMC members. Committee members include management from key Company areas such as finance, risk management, legal and gas supply. This RMC meets at least quarterly. 

The Committee also oversees the production of the Company’s annual Corporate Sustainability Report, which conveys how the Company links the business with sustainable practices. The 2016 report is available on our website at www.sjindustries.com or you may obtain a copy by writing to the Corporate Secretary, South Jersey Industries Board of Directors, South Jersey Industries, Inc., 1 South Jersey Plaza, Folsom, New Jersey 08037.

The Governance Committee reviews with the Board on an annual basis the appropriate skills and characteristics required of Board members in the context of the current Board make-up and the Company’s strategic forecast. This assessment includes issues of industry experience, education, general business and leadership experience, judgment, diversity, age, and other applicable and relevant skills as determined by an assessment of the Board’s needs. The diversity assessment includes a review of Board composition with regard to race, gender, age and geography.

The 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 Corporate Secretary of the Company. Any shareholder wishing to propose a nominee should submit a recommendation in writing to the Company’s Corporate Secretary at 1 South Jersey Plaza, Folsom, New Jersey 08037, indicating the nominee’s qualifications and other relevant biographical information and providing confirmation of the nominee’s consent to serve as a Director.

The results of the management enterprise risk management process are presented to the full Board on an annual basis. To ensure successful implementation of the risk oversight process,

the Governance Committee reviews the Charters and Corporate Governance Guidelines to ensure that the documents reflect the risk monitoring allocation approved by the Board.

The Board’s Audit Committee comprises five directors, each of whom is independent as defined under the listing standards of the New York Stock Exchange and satisfies the additional independence criteria applicable to Audit Committee members. The Board has determined that each member of the Committee is an “audit committee financial expert” 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 “Investors”.

independence, and 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, 2016, for filing with the Securities and Exchange Commission.

Audit Committee

Sheila Hartnett-Devlin, Chairman
Sarah M. Barpoulis
Joseph H. Petrowski
Joseph M. Rigby
Frank L. Sims

The fees for all services provided by the independent registered public accounting firm to the Company during 2016 and 2015 are as follows:

Since 2011, the Board has engaged Frederic W. Cook (Cook) as its consultant to review the Company’s Director Compensation Program (Program) to ensure that the Board attracts and retains highly qualified Directors. Each year, Cook evaluates total compensation and the structure of the Program.

For the 2015 study, reference points were the Director compensation for the following peer companies, consistent with the group used to assess the competitiveness of the Executive Compensation Program: Avista Corp., Black Hills Corp., Energen Corp., Laclede Group Inc., New Jersey Resources Corp., Northwestern Corp., Northwest Natural Gas Co., Piedmont Natural Gas Co., Questar Corp., Southwest Gas Corp., UIL Holdings Corp., Vectren Corp. and WGL Holdings Inc. In a study presented in November 2015, Cook found as follows:

Based on Cook’s findings and recommendations, in 2016 the Company paid non-employee Directors as follows:

an additional retainer would be paid for independent directors who serve as Chairman of the Board of SJI and its subsidiaries. Commencing May 2012, an $8,000 annual retainer was paid to the Chairman of the SJES Executive Committee.

Mr. Campbell is Chairman of Mannington Mills, Inc., which purchases natural gas from Company subsidiaries. Commencing January 2004, as a result of winning a competitive

bid, another Company subsidiary operates a cogeneration facility that provides electricity to Mannington Mills, Inc.

Keith S. Campbell, Chairman
Sheila Hartnett-Devlin
Sunita Holzer
Joseph H. Petrowski

Successful execution. Capitalizing on favorable market conditions, SJI executed a highly successful secondary equity offering in May 2016 that generated net proceeds of $203 million. The offering, which was 5 times oversubscribed, also generated significant post-offering demand as our stock price went up 7.3% the day after the transaction closed. The funds are intended to support capital investments concentrated within our regulated businesses.

Commitment to Progress. Accomplishments in 2016 evidenced progress in support of our five-year corporate strategic objective to achieve $150 million of Economic Earnings in 2020. Economic Earnings of $102.8 million reflect a nearly 4% improvement over the prior year, as we work toward an earnings composition that relies upon our regulated businesses to provide approximately 70% of earnings.

2016 Performance.

The compensation program for the NEOs during fiscal 2016 consisted of the following pay elements:

The Company’s executive compensation program applies to all Company Officers, including NEOs and is designed to aid in achieving the Company’s strategic plan while increasing shareholder value. Executive compensation program decisions were made based on the following principles:

The Company’s executive compensation structure consists of base salary, AIP and LTI. AIP and LTI are directly linked to achieving predefined short-term and long-term performance goals.

Descriptions of each component of the compensation program for the NEOs are set forth below: 

The AIP drives and rewards short-term performance. The performance metrics used for the NEOs for 2016 were based on various metrics, including SJI core earnings, South Jersey Gas (“SJG”) core earnings, and individual balanced scorecard

objectives. Performance and resulting payouts for each metric were assessed independently. Specific metrics and weightings vary by individual based on role and responsibility as set forth below:

For SJI core earnings, the goals and payout scales, and actual results for 2016 were as follows: