SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [ ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
FBL FINANCIAL GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
[LOGO]
FBL FINANCIAL GROUP, INC.
5400 UNIVERSITY AVENUE
WEST DES MOINES, IOWA 50266
March 31, 1997
Dear Stockholder:
You are cordially invited to attend the Company's 1997 annual meeting to be held
on Wednesday, May 21, 1997 at 9:00 a.m. central time, in the auditorium of the
Company's home office building, 5400 University Avenue, West Des Moines, Iowa.
We are excited to be hosting this meeting, our first annual meeting since
becoming a publicly held company last summer.
The notice of meeting and proxy statement following this letter describe the
business expected to be transacted at the meeting. During the meeting we will
also report on the current activities of the Company, and you will have an
opportunity to ask questions.
Whether or not you plan to attend this meeting, we urge you to sign and date the
enclosed proxy card and return it as soon as possible so that your shares will
be represented. The vote of every stockholder is important. Please note that
mailing your completed proxy will not prevent you from voting in person at the
meeting if you wish to do so.
Your Board of Directors and management look forward to greeting personally those
stockholders who are able to attend.
Sincerely,
/s/ Edward M. Wiederstein /s/ Thomas R. Gibson
Edward M. Wiederstein Thomas R. Gibson
CHAIRMAN OF THE BOARD CHIEF EXECUTIVE OFFICER
[LOGO]
FBL FINANCIAL GROUP, INC.
5400 UNIVERSITY AVENUE
WEST DES MOINES, IOWA 50266
MARCH 31, 1997
Richard D. Harris
Senior Vice President,
Treasurer and Secretary
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of stockholders of FBL Financial Group, Inc. (the "Company"),
will be held in the auditorium of the Company's home office building, 5400
University Avenue, West Des Moines, Iowa 50266 on Wednesday, May 21, 1997, at
9:00 a.m. central time, for the following purposes:
1. For the holders of Class A Common Stock and Preferred Stock, Series A,
voting as a single class, to elect three Class A directors;
2. For the holders of Class B Common Stock to elect 18 Class B directors;
3. For all holders of Class A Common Stock, Class B Common Stock and
Preferred Stock, Series A to vote on the recommendation of the Board
of Directors that Ernst & Young LLP be appointed auditors of the
Company for 1997; and
4. To transact such other business as may properly come before the
meeting.
By Order of the Board of Directors
/s/ Richard D. Harris
Richard D. Harris
SECRETARY
[LOGO]
FBL FINANCIAL GROUP, INC.
PROXY STATEMENT
MARCH 31, 1997
This proxy statement is furnished in connection with the solicitation of proxies
on behalf of the Board of Directors of FBL Financial Group, Inc. for the annual
meeting of stockholders to be held on May 21, 1997. Only stockholders of record
at the close of business on March 21, 1997 are entitled to notice of and to vote
at the meeting. There were 17,666,810 Class A Common Shares, 1,192,990 Class B
Common Shares and 5,000,000 Preferred Shares, Series A, outstanding and entitled
to vote on that date. Each stockholder will be entitled to one vote per share on
each matter to be voted on, except that the holders of Class A Common Shares and
Preferred Shares, Series A, vote together as a group to elect Class A Directors,
and the holders of Class B Common Shares vote to elect Class B Directors. The
holders of a majority of the total number of shares entitled to vote, present in
person or represented by proxy, constitute a quorum for the transaction of
business.
The Company is mailing its annual report for the year ended December 31, 1996
together with this proxy statement and the enclosed proxy on or about March 31,
1997, to stockholders entitled to vote at the annual meeting.
When you sign and return the enclosed proxy, the shares represented thereby will
be voted for the nominees for director of the respective class listed in this
proxy statement, and for the proposal set forth in Item 2 in the Notice of
Meeting, unless otherwise indicated on the proxy. Returning your completed proxy
will not prevent you from voting in person at the meeting should you be present
and wish to do so. In addition, you may revoke your proxy any time before it is
voted by sending notice to the Secretary of the Company prior to the meeting. If
you submit more than one proxy, each later-dated proxy will revoke all previous
proxies.
The Board of Directors expects all nominees named below to be available for
election. In case any nominee is not available, the proxy holders may vote for a
substitute. Regulations of the Securities and Exchange Commission permit the
proxies solicited pursuant to the proxy statement to confer discretionary
authority with respect to matters on which the Company did not know a reasonable
time before the meeting, or which were omitted from the proxy statement and form
of proxy pursuant to Securities and Exchange Commission rules. Accordingly, the
proxy holders may use their discretionary authority to vote with respect to any
such matter pursuant to the proxy solicited hereby.
Directors will be elected at the annual meeting by a majority of the votes cast
at the meeting by the holders of shares represented in person or by proxy and
entitled to vote. Approval of the appointment of auditors requires the
affirmative vote of the holders of a majority of shares represented in person or
by proxy at the meeting and entitled to vote. With respect to the election of
directors, votes may be cast in favor of or withheld from each nominee; votes
that are withheld or abstained, and broker non-votes, will be excluded entirely
from the vote and will have no effect except to determine the existence of a
quorum. Abstentions may be specified on all other proposals and will be counted
as shares present for determination of a quorum, and will have the effect of a
negative vote on the item voted upon. Broker non-votes with respect to approval
of the appointment of auditors will not be counted in determining the amount of
shares voted on such item and will have no effect on the outcome of the vote on
the item.
ITEM 1:
ELECTION OF DIRECTORS
Jerry L. Chicoine, John W. Creer and John E. Walker were elected as Class A
Directors by the Board of Directors to fill vacancies created by increasing the
size of the Board and splitting the directors into two classes, effective at the
date of the Company's initial public offering in July 1996, as were Class B
Directors Thomas R. Gibson, Richard D. Harris and Stephen M. Morain. All are
standing for election by the Company's stockholders for the first time. Each
other nominee was previously elected by the stockholders at the Company's 1996
Annual Meeting on March 12, 1996, and has served continuously as a director for
the period succeeding the date of his or her election. The terms of all
directors will expire at this Annual Meeting. No person, other than the
directors of the Corporation acting solely in that capacity, is responsible for
the naming of the nominees for Class A Director. Nomination and election of the
Class B Directors by the holders of the Class B shares is subject to the
provisions of the Class B Common Stockholder Agreement. A person who is an
employee, officer or director of a holder of Class B shares or of any other Farm
Bureau organization is not eligible to be elected as a Class A Director. The
Class B Common Stockholder Agreement obligates the holders of Class B shares to
elect the Presidents of the 15 state Farm Bureau federations in the states in
which the Company's operations are conducted as Class B Directors. The Class B
Common Stockholder Agreement also obligates the holders of Class B shares
to cause the election of the President of the Iowa Farm Bureau Federation as
Chairman of the Board and to elect the Chief Executive Officer of the Company
and two other officers of the Company nominated by the Chairman of the Board as
Class B Directors.
Information as to each nominee follows. Unless otherwise indicated, each nominee
has served for at least five years in the business position currently or most
recently held.
NOMINEES FOR CLASS A DIRECTOR
JERRY L. CHICOINE is a Class A Director of the Company. He is Senior Vice
President and Chief Financial Officer of Pioneer Hi-Bred International, Inc.
(seed corn business), a position he has held since 1988. Mr. Chicoine was Senior
General Counsel of Pioneer Hi-Bred International, Inc. from 1986 to 1988. Prior
thereto he was a partner in the accounting firm of McGladrey & Pullen from 1969
to 1986. Mr. Chicoine is a lawyer and a certified public accountant. He is also
a member of the board of directors of AmerUs Bank and Edge Technologies, Inc.
MEMBER: Audit, Budget, and Compensation Committees
DIRECTOR SINCE 1996 AGE: 54
JOHN W. CREER is a Class A Director of the Company. Since 1980, he has been
President and Chief Executive Officer of the Farm Management Company, the
agricultural real estate holding and management company wholly owned by the
Church of Jesus Christ of Latter-day Saints (Mormon). As such he is responsible
for management of a substantial multi-national resource. He is also Secretary of
the worldwide church's Investment Policy Committee. Mr. Creer is a lawyer and
received a doctorate of laws degree from the University of Munich.
MEMBER: Audit, Class A Nominating, and Compensation Committees
DIRECTOR SINCE 1996 AGE: 57
JOHN E. WALKER is a Class A Director of the Company. Mr. Walker retired January
1, 1996 from Business Men's Assurance (BMA), Kansas City, Missouri, where he had
been the Managing Director of Reinsurance Operations since 1979. He had been a
member of the board of directors of BMA for 11 years before his retirement, and
a member of its executive committee. Mr. Walker is also a director and member of
the Audit Committee of Lab One, Inc., Lenexa, Kansas, a publicly traded blood
and urine testing business.
MEMBER: Audit, Budget, and Class A Nominating Committees
DIRECTOR SINCE 1996 AGE: 58
NOMINEES FOR CLASS B DIRECTOR
EDWARD M. WIEDERSTEIN is the Chairman of the Board and a Class B Director of the
Company. He has been a director of the Iowa Farm Bureau Federation since 1986
and in 1995 was elected President of the Iowa Farm Bureau Federation. He is also
a director and president of Farm Bureau Mutual Insurance Company (Farm Bureau
Mutual) and Farm Bureau Life Insurance Company (Farm Bureau Life), and a
director of Western Agricultural Insurance Company (Western Ag) and Western Farm
Bureau Life Insurance Company (Western Life). Mr. Wiederstein owns and operates
a 1,200 acre farm near Audubon, Iowa where he has been engaged in the business
of cattle and hog feeding and grain farming since 1973. He is also a director of
IASD Health Services Corporation.
MEMBER: Executive and Compensation Committees
DIRECTOR SINCE 1995 AGE: 48
THOMAS R. GIBSON, FSA, CLU, FLMI, is the Chief Executive Officer of the Company
and of its major operating subsidiaries and a Class B Director of the Company.
Mr. Gibson has been employed by the Company and its affiliates since 1966.
MEMBER: Executive and Investment Committees
DIRECTOR SINCE 1996 AGE: 52
RICHARD D. HARRIS is Senior Vice President, Secretary and Treasurer of the
Company and its major operating subsidiaries and a Class B Director of the
Company. He is Executive Director, Secretary and Treasurer of the Iowa Farm
Bureau Federation; Senior Vice President and Assistant Secretary and Treasurer
of South Dakota Mutual Insurance Company (South Dakota Mutual), and Vice
President and Treasurer of Farm Bureau Management Corporation (Management
Corp.), a subsidiary of the Iowa Farm Bureau Federation. He was elected to all
of those positions effective September 1, 1996. Mr. Harris has been employed by
the Company and its affiliates since 1996, and by the Iowa Farm Bureau
Federation since 1968.
MEMBER: Executive and Investment Committees
DIRECTOR SINCE 1996 AGE: 52
STEPHEN M. MORAIN is Senior Vice President and General Counsel of the Company
and a Class B Director. He also serves as General Counsel and Assistant
Secretary of the Iowa Farm Bureau Federation; General Counsel, Secretary and
director of Management Corp.; and Senior Vice President and General Counsel of
the Company's major operating subsidiaries. Mr. Morain is also a director of
Computer Aided Design Software, Inc., a director of Iowa Business Development
Finance Corporation, and chairman and a director of Edge Technologies, Inc. Mr.
Morain has been employed by the Company and its affiliates since 1977.
MEMBER: Executive and Investment Committees
DIRECTOR SINCE 1996 AGE: 51
V. THOMAS GEARY is the First Vice Chair and a Class B Director of the Company.
He has been the President of the Idaho Farm Bureau Federation since 1983, and a
director and President of Western Life since 1986. Mr. Geary has owned and
operated Morningstar Farms near Burley, Idaho since 1954, which includes a
cow-calf ranch and a mink ranch. He is also President and a director of Idaho
Farm Bureau Mutual Insurance Company, Farm Bureau Insurance Service Company of
Idaho and Farm Bureau Finance Company and a director of Western Ag.
MEMBER: Class B Directors Nominating Committee
DIRECTOR SINCE 1994 AGE: 68
ROGER BILL MITCHELL is a Class B Director and the Second Vice Chair of the
Company. He has been President of the Colorado Farm Bureau since November 1988.
Mr. Mitchell is also a director of Western Ag, a director and President of
Colorado Farm Bureau Mutual Insurance Company and a member of the Colorado Water
Quality Control Commission. Mr. Mitchell is managing general partner of Mitchell
Ag Production, a family limited partnership with his two sons, which is a ten
quarter potato and barley farming operation in the San Luis Valley of south
central Colorado.
MEMBER: Budget Committee
DIRECTOR SINCE 1994 AGE: 52
KENNETH R. ASHBY is a Class B Director of the Company and has been the President
of the Utah Farm Bureau Federation since November 1986. He has been a director
and Vice President of Utah Farm Bureau Insurance Company and a director of Farm
Bureau Life. Mr. Ashby has been President and General Manager of Ashby's Valley
View Farms since September 1966.
MEMBER: Class A Directors Nominating Committee
DIRECTOR SINCE 1994 AGE: 56
AL CHRISTOPHERSON is a Class B Director of the Company. He has been President of
the Minnesota Farm Bureau Federation since December 1988 and is also a director
of Farm Bureau Mutual and American Ag. Mr. Christopherson is also a director of
the American Farm Bureau Federation and serves on a number of agricultural
boards including the Agricultural Utilization and Research Institute. Mr.
Christopherson is a diversified grain and livestock farmer from Pennock,
Minnesota, where he operates nearly 1,800 acres on the family farm, raising
hogs, corn, soybeans, and wheat.
DIRECTOR SINCE 1994 AGE: 56
KENNY J. EVANS is a Class B Director of the Company. He is President and a
director of the Arizona Farm Bureau Federation. Mr. Evans, a farmer, corporate
executive and business owner, is also a former Chairman of the National
Agricultural Labor Advisory Committee and a former Chairman of the Arizona
Commission of Agriculture and Horticulture. He is a director of Western Life and
a director and president of Western Ag.
MEMBER: Budget and Compensation Committees
DIRECTOR SINCE 1994 AGE: 51
GARY HALL is a Class B Director of the Company. He has been the President of the
Kansas Farm Bureau Federation and affiliated companies, including Kansas Farm
Bureau Life Insurance Company and Kansas Farm Bureau Mutual Insurance Company,
since 1994. Mr. Hall is also a director of Western Ag. He has been a
self-employed farmer and stockman since 1974, and he served as Kansas Secretary
of Agriculture in 1990 and 1991.
DIRECTOR SINCE 1995 AGE: 46
KAREN J. HENRY is a Class B Director of the Company. She was elected as
President of the Wyoming Farm Bureau Federation in 1994, after having served as
a director since 1992. Ms. Henry is a director and President of Mountain West
Farm Bureau Mutual Insurance Company and a director of Western Life and of
Western Ag. She is involved in a family ranch and cattle operation.
DIRECTOR SINCE 1995 AGE: 49
RICHARD KJERSTAD is a Class B Director of the Company. He and his family have
extensive farming and cattle ranching operations in western South Dakota. Mr.
Kjerstad was elected President of the South Dakota Farm Bureau Federation in
1995. He is also President and a director of South Dakota Mutual and a director
of Farm Bureau Life.
DIRECTOR SINCE 1995 AGE: 54
DAVID L. MCCLURE is a Class B Director of the Company. He is a farmer-rancher
raising wheat, barley, hay, and cattle in the Lewistown, Montana area. Mr.
McClure has been President of the Montana Farm Bureau Federation since 1987 and
is also a director and Vice President of Mountain West Farm Bureau Mutual
Insurance Company, a director of American Ag and Western Ag and a director and
Vice President of Western Life. He was a member of the board of directors of the
American Farm Bureau Federation from 1993 through 1996.
MEMBER: Class A Directors Nominating Committee
DIRECTOR SINCE 1994 AGE: 57
H. ELDON MERKLIN is a Class B Director of the Company. He has been President of
the Oklahoma Farm Bureau Federation, and of the Oklahoma Farm Bureau Mutual
Insurance Company since November 1993 and served on the Oklahoma Farm Bureau
board of directors since 1975. Mr. Merklin was elected to the board of directors
of the American Farm Bureau Federation in 1995. He is a director of American Ag,
Western Ag and Western Life. In 1986, United States Secretary of Agriculture
Richard Lyng appointed Mr. Merklin to the national Cattlemen's Beef Promotion
and Research Board, where he served for seven years. Mr. Merklin resides near
Mutual, Oklahoma, where he raises wheat and alfalfa, and stocker cattle and an
Angus cow-calf herd.
MEMBER: Class A Directors Nominating Committee
DIRECTOR SINCE 1994 AGE: 63
BRYCE P. NEIDIG is a Class B Director. He has been President of the Nebraska
Farm Bureau Federation and of Farm Bureau Insurance Company of Nebraska since
1981. He is also a director of Farm Bureau Life, American Ag and Western Ag. Mr.
Neidig is also a director of the American Farm Bureau Federation and a director
of Nebraska Blue Cross Blue Shield. He raises irrigated and dry land corn as
well as soybeans and alfalfa on his Madison County farm.
MEMBER: Compensation Committee
DIRECTOR SINCE 1994 AGE: 65
HOWARD D. (DAN) POULSON, a Class B Director of the Company, has been President
and Administrator of the Wisconsin Farm Bureau Federation and President of its
affiliated companies, including Rural Mutual Insurance Company, since August
1991. He has served on the board of directors of Wisconsin Farm Bureau since
1969. He was appointed to the State of Wisconsin Department of Natural Resources
Board in October 1995. Mr. Poulson is also a director of Farm Bureau Life. He
and his wife operate a 250 acre hog and grain farm near Palmyra in Jefferson
County, Wisconsin.
MEMBER: Budget Committee
DIRECTOR SINCE 1994 AGE: 60
HOWARD G. SCHMID is a Class B Director of the Company. He has been a director of
the North Dakota Farm Bureau and Nodak Mutual Insurance Company since 1988 and
was elected President of both organizations in 1990. Mr. Schmid is a director of
Western Life and Western Ag. He and his wife have owned and operated a farm at
Oberon, which is in north central North Dakota, since 1958, raising Durham
wheat, hard red spring wheat, barley, sunflowers, and canola.
DIRECTOR SINCE 1994 AGE: 60
JOHN J. VAN SWEDEN is a Class B Director of the Company. Mr. Van Sweden is
President and a director of the New Mexico Farm and Livestock Bureau, President
and a director of Western Farm Bureau Mutual Insurance Company (Western Mutual),
Chairman of Western Farm Bureau Management Corp. and a director of Western Life
and Western Ag. He is also President of V7 Ranch Co., Inc., which has been in
his family for five generations since 1868. This is a cow/calf/yearling and
ranch operation, producing approximately 650 tons of hay per year, in the area
of Raton, New Mexico.
MEMBER: Budget Committee
DIRECTOR SINCE 1994 AGE: 49
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information as to shares of voting stock
of the Company beneficially owned by each director and nominee, each executive
officer named in the Summary Compensation Table below, and by all executive
officers and directors of the Company as a group, including shares subject to
employee and non-employee directors stock options exercisable on or prior to
April 29, 1997. The percentage of Company shares beneficially owned by any
Company director or nominee or by all directors and officers of the Company as a
group, does not exceed 1%. Unless indicated otherwise in the footnotes below,
all shares are directly owned as of February 28, 1997.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
SHARES
BENEFICIALLY
NAME OWNED
---- ------------
Kenneth R. Ashby 2,000(a)
Jerry L. Chicoine 2,500(a)
Al Christopherson 2,000(a)
John W. Creer 2,000(a)
Kenny J. Evans 2,000(a)
V. Thomas Geary 2,000(a)
Thomas R. Gibson 2,828(c)
Gary Hall 2,000(a)
Richard D. Harris 860(c)
Karen J. Henry 2,000(a)
Timothy J. Hoffman 848(c)
Richard Kjerstad 5,000(a)
David L. McClure 2,000(a)
H. Eldon Merklin 2,000(a)
Roger Bill Mitchell 2,000(a)
Stephen M. Morain 3,006(c)
Bryce P. Neidig 2,150(a)
James W. Noyce 2,073(c)
William J. Oddy 4,583(c)
Howard D. Poulson 2,000(a)
Howard G. Schmid 2,000(a)
John J. Van Sweden 2,000(a)
John E. Walker 2,300(a)
Richard D. Warming 2,515(c)
Edward M. Wiederstein 0
All directors and executive officers
as a group (33 persons) 61,448(b)(c)
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(a) Includes 2,000 Company shares subject to options exercisable within 60
days.
(b) Includes 34,000 Company shares subject to options exercisable within 60
days.
(c) Includes shares held in Company 401(k) Savings Plan by the following
named executive officers: Gibson, 1,728; Harris, 860; Hoffman, 848;
Morain, 2,006; Noyce, 2,073; Oddy, 4,583; Warming, 2,515; all directors
and executive officers as a group, 19,448.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS(a)
<TABLE>
<CAPTION>
NATURE OF
BENEFICIAL PERCENT
TITLE OF CLASS BENEFICIAL OWNER(b) OWNERSHIP(c) OF CLASS
- -------------- ------------------- ------------ --------
<S> <C> <C> <C>
Class A Common Iowa Farm Bureau Federation 9,475,245 53.6
Class B Common Iowa Farm Bureau Federation 761,855 63.9
Series A Preferred Iowa Farm Bureau Federation 5,000,000 100.0
Class B Common Farm Bureau Mutual Insurance Company 186,866 15.7
</TABLE>
- ----------------------
(a) No other person to the knowledge of the Company was the beneficial
owner of 5% or more of the outstanding shares of any class of Company
stock.
(b) The address of the Iowa Farm Bureau Federation and Farm Bureau Mutual
Insurance Company is 5400 University Avenue, West Des Moines, Iowa
50266.
(c) The named beneficial owners have sole dispositive and voting power with
respect to the shares owned by them.
FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors held seven meetings during 1996. Each director attended
at least 75% of the Board meetings and meetings of committees of which he or she
is a member. The standing committees of the Board of Directors and the number of
meetings held by each such committee in 1996 were as follows:
NUMBER OF MEETINGS
COMMITTEE NAME HELD DURING 1996
-------------- ------------------
Executive Committee 11
Audit Committee 2
Budget Committee 1
Compensation Committee 1
Class A Nominating Committee 0
The Company has established an Executive Committee composed of Messrs.
Wiederstein (Chairman), Gibson, Harris and Morain. The Executive Committee may
exercise all powers of the Board of Directors during intervals between meetings
of the Board, except for matters reserved to the Board by the Iowa Business
Corporation Act, and except for removal or replacement of the Chairman or Chief
Executive Officer.
The Company has established an Audit Committee composed of Class A Directors
Messrs. Chicoine, Creer and Walker, with Mr. Chicoine serving as Chairman. The
Audit Committee must include only Class A Directors who are independent of
management and free from any relationships that would interfere with the
exercise of independent judgment. The Audit Committee reviews the professional
services to be provided by the Company's independent auditors and the
independence of such auditors from management of the Company. The Audit
Committee also reviews the scope of the audit by the Company's independent
auditors, the annual financial statements of the Company, the Company's system
of internal accounting controls and such other matters with respect to the
accounting, auditing and financial reporting practices and procedures of the
Company as it may find appropriate or as may be brought to its attention, and
meets from time to time with members of the Company's internal audit staff. In
addition to the usual and customary functions of an Audit Committee governed by
the requirements of the New York Stock Exchange, the Audit Committee is required
to review with the auditors and management any material transaction or series of
similar transactions to which the Company was, within the past year, or is
currently expected to be, a party, and with respect to which a director,
executive officer, or holder of more than five percent of any class of stock of
the Company is a party. If the Audit Committee determines that any transaction
or proposed transaction between the Company and Farm Bureau Mutual is unfair to
the Company, the Company is required to submit the matter to a coordinating
committee for resolution.
The Company has established a Class A Directors Nominating Committee which
nominates candidates for election to the Board of Directors as Class A
Directors. The Committee members are nominated by the Chairman of the Board, and
include Messrs. Merklin, Ashby, McClure, Walker and Creer, with Mr. Merklin
serving as Chairman of the Committee. The Committee must include at least
two-thirds of the Class A Directors and may consist of up to five members of the
Board nominated by the Chairman of the Board. Any action of the Class A
Directors Nominating Committee requires the concurrence of at least 50% of the
Class A Directors who are members of the Committee. The Committee will consider
a nominee for election as a Class A Director recommended by a stockholder if the
stockholder submits the nomination to the Committee. Stockholders may submit
such nominations by addressing a letter to the Chairman of the Class A Directors
Nominating Committee, FBL Financial Group, Inc., 5400 University Avenue, West
Des Moines, Iowa 50266. Under the Company's By-Laws a stockholder must provide
advance notice to the Company in order for such stockholder to place into
nomination a director at the annual meeting. Such notice must be received by the
Secretary at the above address not less than 90 days prior to the first
anniversary date of the preceding year's annual meeting, and must set forth the
name, age, principal occupation, number of shares of Company stock beneficially
owned, and the business and residence addresses of both the proposed nominee and
the stockholder proposing to make such nomination.
The Company has established a Compensation Committee of the Board of Directors
which has oversight responsibility with respect to compensation matters
involving executive officers of the Company. The Compensation Committee is
composed of Messrs. Wiederstein, Evans, Neidig, Chicoine and Creer, with Mr.
Wiederstein serving as the Chairman of the Committee.
The Company has established a Budget Committee designated by the Chairman of the
Board and composed of Messrs. Poulson, Mitchell, Van Sweden, Chicoine and
Walker, with Mr. Poulson as Chairman. The Budget Committee reviews all budgets
proposed by management and makes recommendations thereon to the Board of
Directors.
The Company has also established an Investment Committee, a Class B Directors
Nominating Committee and an Advisory Committee, and may establish other
committees in its discretion. The Advisory Committee is composed of the general
managers of the Farm Bureau affiliated property-casualty insurance companies in
the Company's market territory.
DIRECTORS' COMPENSATION AND BENEFITS
All non-employee Class B Directors receive an annual retainer of $2,000. Class A
Directors receive an annual retainer of $13,333. Additionally, all non-employee
Directors receive a fee of $1,000 for each board meeting attended in person and
a fee of $500 for each committee meeting attended in person. A fee of one half
those respective amounts is paid for telephonic meetings or telephonic
participation in a regular meeting, except that no compensation is paid for
telephonic board or committee meetings of less than one-half hour. All Directors
will be reimbursed for travel expenses incurred in attending board or committee
meetings. In conjunction with the Company's initial public offering in 1996, all
non-employee Directors received an option to purchase 2,000 shares of Class A
Common Stock. Each new non-employee Director will receive an option to purchase
2,000 shares of Class A Common Stock of the Company upon initial election to the
Board of Directors of the Company.
EXECUTIVE OFFICERS
The current executive officers of the Company are as follows:
NAME AGE POSITION
- ---- --- --------
Edward M. Wiederstein 48 Chairman of the Board and Director
Thomas R. Gibson 52 Chief Executive Officer and Director
Richard D. Harris 52 Senior Vice President, Secretary and Treasurer
and Director
Stephen M. Morain 51 Senior Vice President and General Counsel and
Director
William J. Oddy 52 Chief Operating Officer
Timothy J. Hoffman 46 Chief Property-Casualty Officer
Richard D. Warming 63 Chief Investment Officer and Assistant Treasurer
James W. Noyce 41 Chief Financial Officer
Thomas E. Burlingame 52 Vice President, Associate General Counsel
Barbara J. Moore 45 Vice President, Property-Casualty Operations
Monte R. Roumpf 57 Vice President, Corporate Administration
JoAnn W. Rumelhart 44 Vice President, Life Operations
Robert L. Tatge 50 Vice President, Property-Casualty Operations
F. Walter Tomenga 50 Vice President, Corporate Affairs and Marketing
Services
Lynn E. Wilson 47 Vice President, Life Sales
Set forth below is a description of the business experience, principal
occupation and employment during the last five years of the executive officers
of the Company:
Biographical information for Messrs. Wiederstein, Gibson, Harris and Morain
is set forth above under "Election of Directors."
William J. Oddy, FSA, MAAA, is Chief Operating Officer of the Company; in March
1997 he was also named as Executive Vice President and General Manager of the
Company's life insurance subsidiaries. He is a member of the Investment
Committee. Mr. Oddy has been employed by the Company and its affiliates since
1968.
Timothy J. Hoffman, FSA, CLU, ChFC, FLMI, LLIF, MAAA, was named Chief
Property-Casualty Officer of the Company and Executive Vice President and
General Manager of the Company's property-casualty subsidiaries in March 1997.
He had been Chief Marketing Officer since 1993. He is a member of the Investment
Committee. Mr. Hoffman has been employed by the Company and its affiliates since
1971.
Richard D. Warming is Chief Investment Officer and Assistant Treasurer of the
Company and of the major operating subsidiaries. He is chairman of the
Investment Committee of each of the companies. Mr. Warming has been employed
by the Company and its affiliates since 1959.
James W. Noyce, CPA, FCAS, ASA, FLMI, MAAA, is Chief Financial Officer of the
Company and its major operating subsidiaries. He was named CFO in December 1995,
having served as Vice President- Controller since January 1991. He is a member
of the Investment Committee, and Chairman of the Benefits Administration
Committee for each of the companies and Chairman of the Asset Liability
Management Committee of the Life companies. Mr. Noyce has been employed by the
Company and its affiliates since 1985.
Thomas E. Burlingame is Vice President, Associate General Counsel of the
Company and its major operating subsidiaries. Mr. Burlingame has been
employed by the Company and its affiliates since 1980.
Barbara J. Moore, CPCU, AIM, Are, AAM, became Vice President,
Property-Casualty Operations for the Company and its major operating
subsidiaries in January 1997. Ms. Moore has also been Senior Vice President
of Property-Casualty Operations for Western Ag and Western Mutual since 1991.
Ms. Moore has been employed by the Company and its affiliates since 1978.
Monte R. Roumpf, CPCU, FLMI, has been employed by the Company since 1968 and had
served as its Vice President, Information Technology since 1991, before being
named Vice President, Corporate Administration in January 1997.
JoAnn W. Rumelhart, FSA, MAAA, became Vice President - Life Operations of the
Company and its major operating subsidiaries in July 1994. She began working for
the Company in 1978, and served as Vice President - Client Services from January
1991.
Robert L. Tatge, FCAS, MAAA, CLU, ChFC, became Vice President -
Property-Casualty Operations for the Company and its major operating
subsidiaries in July 1994. He has been employed by the Company since 1968 and
previously served as Vice President - Underwriting and Claims from 1991.
F. Walter Tomenga, MPA, is the Company's Vice President, Corporate Affairs and
Marketing Services. He was Vice President, Corporate Affairs from June 1994 to
March 1997. He has been employed by the Company since 1989, previously serving
as Member Health Services Vice President and as Vice President - Research and
Development.
Lynn E. Wilson, CLU, CHFC, MSFS, was named Vice President, Life Sales in March
1997, after serving as Vice President, Multi-State Sales since July 1994. From
1989 to July 1994 he was Senior Vice President of Marketing for Western Life. He
was an agent, and an agency manager for the Company from 1973 to 1985.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid by the Company and certain
affiliates to the Chief Executive Officer and to the Company's five most highly
compensated executive officers, other than the Chief Executive Officer, who were
serving on December 31, 1996, for services rendered to the Company and these
affiliates in all capacities during the fiscal year ended December 31, 1995 and
1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
NAME AND ---------------------------- ------------ ALL OTHER(c)
PRINCIPAL POSITION(a) YEAR SALARY BONUS OPTIONS(#)(b) COMPENSATION
- --------------------- ---- ------ ----- ------------- ------------
<S> <C> <C> <C> <C> <C>
Thomas R. Gibson 1995 $275,000 $73,123 0 $24,662
Chief Executive Officer 1996 294,000 86,707 67,200 26,483
Stephen M. Morain 1995 235,000 25,216 0 14,683
Senior Vice President 1996 251,215 55,567 43,065 14,490
and General Counsel
William J. Oddy 1995 227,000 60,360 0 22,581
Chief Operating Officer 1996 241,000 71,076 55,086 25,660
Timothy J. Hoffman 1995 171,000 32,478 0 15,879
Chief Property-Casualty Officer 1996 181,000 40,036 31,029 16,272
Richard D. Warming 1995 163,000 30,959 0 30,360
Chief Investment Officer 1996 173,000 38,266 29,657 35,418
and Assistant Treasurer
James W. Noyce 1995 145,500 22,568 0 22,796
Chief Financial Officer 1996 171,000 37,824 29,314 18,818
</TABLE>
- -----------------------
(a) In 1995, each person named was employed by Management Corp., a
subsidiary of the Iowa Farm Bureau Federation, and, in addition to
providing services to the Company, also provided services to affiliates
of the Company such as Farm Bureau Mutual, South Dakota Mutual, and the
Iowa Farm Bureau Federation, the financial results of which are not
included in the Company's consolidated financial statements. The
compensation expenses for these executives were allocated among the
Company and each of the affiliates to which services were provided
based primarily on the amount of time the executive devoted to each
entity's affairs. For 1995, for each of the named persons, the portion
of such executive's total compensation allocated to the Company was as
follows: Gibson, 70.8%; Morain, 51.7%; Oddy, 63.6%; Hoffman, 77.0%;
Warming, 98.2%; and Noyce, 59.0%. In 1996, these executives became
employees of the Company and, accordingly, receive their total
compensation from the Company (except for Mr. Morain who is an employee
of the Company [as to approximately 40% of his 1996 compensation] and
of Management Corp.). The Company charges a management fee for services
provided by these executives to the Company's affiliates. See "Certain
Transactions and Relationships -- Service Agreement with Farm Bureau
Management Corporation."
(b) Awards comprised of qualified and nonqualified stock options. All
options were granted at the time of the Comany's initial public
offering in July 1996 with an exercise price equal to the initial
offering price. The options have vesting periods as described in
"Option Grants in Last Fiscal Year" table. Unvested options are
forfeited upon voluntary termination of employment with the Company.
All options will vest in the event of a change of control of the
Company.
(c) All other compensation includes such items as the cost of life
insurance coverage, the value of personal use of a company fleet
automobile, a company flex cash (cafeteria) account, and educational
bonus.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock options
during the last fiscal year to the named executive officers under the Company's
1996 Class A Common Stock Compensation Plan. No stock options, freestanding
stock appreciation rights (SARs) or other equity-based awards were granted to
any executive officer or other persons by the Company prior to 1996.
<TABLE>
<CAPTION>
PERCENT OF TOTAL
NUMBER OF OPTIONS GRANTED TO
SECURITIES UNDERLYING EMPLOYEES IN EXERCISE OR EXPIRATION GRANT DATE
OPTIONS GRANTED(a) FISCAL YEAR BASE PRICE($/sh) DATE PRESENT VALUE(b)
--------------------- ------------------ ---------------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Thomas R. Gibson 67,200 9.4% $17.50 7/19/06 $237,216
Stephen M. Morain 43,065 6.0% 17.50 7/19/06 152,019
William J. Oddy 55,086 7.7% 17.50 7/19/06 194,454
Timothy J. Hoffman 31,029 4.3% 17.50 7/19/06 109,532
Richard D. Warming 29,657 4.1% 17.50 7/19/06 104,689
James W. Noyce 29,314 4.1% 17.50 7/19/06 103,478
</TABLE>
- ----------------------
(a) All options were granted in conjuntion with the Company's initial
public offering July 19, 1996, and the exercise price of the options
equals the initial offering price. Each of these options has a term of
up to 10 years and becomes exercisable in five approximately equal
annual installments on each of the first, second, third, fourth and
fifth anniversaries of the date of grant. Unvested options are
forfeited upon a voluntary termination of employment with the Company.
Options vest in the event of a change of control of the Company. The
options granted are incentive stock options to the extent permitted
under the Plan and the Internal Revenue Code, and the remainder are
nonqualified stock options.
(b) The grant date present value of these options was estimated using a
Black-Scholes option pricing model with the following weighted average
assumptions: risk-free interest rate of 6.5%; dividend yield of 1.6%;
volatility factor of the expected market price of the Company's Class A
Common Stock of 0.12, and a weighted average life expectancy of the
options of 5.1 years. The weighted average grant date fair value of the
options granted during 1996 was $3.53 per share. The actual value, if
any, an executive may realize will depend on the excess of the stock
price over the exercise price on the date the option is exercised,
giving no assurance that the value realized by a named individual will
be at or near the value extimated by the Black-Scholes model.
(c) In 1996 options for the purchase of a total of 821,232 shares of Class
A Common Stock were granted, leaving approximately 928,768 shares of
Class A Common Stock available for grant as additional Awards under the
Plan. To date, no grants of SARs or stock bonuses have been made under
the Plan.
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
The following table provides information with respect to the named executive
officers, concerning the exercise of options during the last fiscal year and
value of unexercised options held as of the end of the fiscal year:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
SHARES UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS/SARS AT FY-END(#) OPTIONS/SARS AT FY-END($)
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(a)
- ---- ----------- -------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Thomas R. Gibson 0 0 0/67,200 0/495,600
Stephen M. Morain 0 0 0/43,065 0/317,604
William J. Oddy 0 0 0/55,086 0/406,259
Timothy J. Hoffman 0 0 0/31,029 0/228,838
Richard D. Warming 0 0 0/29,657 0/218,720
James W. Noyce 0 0 0/29,314 0/216,191
</TABLE>
- ------------------------
(a) Value determined from market price at fiscal year end ($24.875) less
exercise price. The actual value, if any, that an executive may realize
will depend on the stock price on date of exercise of an option, so
there is no assurance the value stated will be equal to the value
realized by the executive.
PENSION BENEFITS
Employees are generally covered under the Iowa Farm Bureau Federation and
Affiliated Companies Retirement Plan, the Supplemental Retirement Plan and the
Iowa Farm Bureau Federation Affiliates Supplemental Retirement Plan (Pension
Plans). The three plans operate as a single plan to provide total benefits to
all participants. The former two are qualified plans under Section 401(a) and
the latter plan is a nonqualified plan which provides benefits according to the
overall plan formulas, but includes compensation exceeding $150,000 under
Section 401(a)(1) and provides benefits provided by the formula which are
otherwise limited by Section 415 of the Internal Revenue Code. The Pension Plans
are generally available to all employees and officers and provide for the same
method of allocation of benefits between management and non-management
participants. Active participants include employees over age 21 who have worked
at least one year and provided at least 1,000 hours of service during that year.
The pension table below reflects the total pension benefits provided according
to remuneration and completed years of service.
ANNUAL PENSION PLAN BENEFITS
<TABLE>
<CAPTION>
ASSUMED HIGH YEARS OF SERVICE
36 MONTH AVERAGE --------------------------------------------------------
ANNUAL SALARY 15 20 25 30 35
- ---------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 40,625 $ 56,250 $ 71,875 $ 87,500 $ 87,500
150,000 48,750 67,500 86,250 105,000 105,000
175,000 56,875 78,750 100,625 122,500 122,500
200,000 65,000 90,000 115,000 140,000 140,000
225,000 73,125 101,250 129,375 157,500 157,500
250,000 81,250 112,500 143,750 175,000 175,000
300,000 97,500 135,000 172,500 210,000 210,000
350,000 113,750 157,500 201,250 245,000 245,000
</TABLE>
The credited years of service as of December 31, 1996 for Messrs. Gibson,
Morain, Oddy, Hoffman, Warming, and Noyce were 30, 19, 28, 25, 37, and 11,
respectively.
The plan is a defined benefit plan which provides monthly income to retirees who
have worked for at least 10 years and attained age 55. The amount provided is a
percentage of the high 36 consecutive month average salary calculated according
to the following formula: 2% per year for the first 10 years of service, plus 2
1/2 % for each year above 10 years of service up to 30 years of service.
Unreduced early retirement benefits are provided after 30 years of service or
upon attainment of 85 age plus service points.
Years of service include all years in which an individual first exceeds 1,000
hours of service and any year thereafter in which he exceeds 500 hours of
service.
The plan formula provides a monthly benefit for life with a guarantee of 120
monthly payments. Other options, including lump sum, are available to the
retiree on an actuarially equivalent basis.
The compensation covered by the Pension Plan is calculated based upon total
salary and bonuses paid to the participant during the given year. The Company
does not make any matching 401(k) salary reduction contributions.
The annual benefits shown in the above table are not reduced to reflect the
limitations imposed by federal tax laws, which place upper limits on the
benefits which may be provided to any individual by tax qualified pension plans.
The Iowa Farm Bureau Affiliates Supplemental Retirement Plan is an unfunded,
non-qualified plan, which provides that it will pay directly the difference
between the retirement benefit normally calculated under the Iowa Farm Bureau
Federation and Affiliated Companies Retirement Plan and the Supplemental
Retirement Plan, consistent with federal tax law. In 1996, Messrs. Gibson,
Morain, Oddy, Hoffman, Warming, and Noyce received allocations under the
Supplemental Plan for services provided to the Company of $81,392, $40,542,
$63,557, $14,914, $127,638, and $7,563, which amounts are not included in the
Summary Compensation Table set forth above.
OTHER COMPENSATION PLANS
Farm Bureau Mutual sponsors a bonus plan for all employees, which includes a
management performance (bonus) plan in which executives, department heads and
managers of Farm Bureau Mutual and its affiliates, including the Company and its
subsidiaries, participate. On an annual basis, the Company establishes various
and distinct goals for its executives, division heads and managers. Goals
generally relate to such matters as life insurance and property-casualty new
business production, expense levels and earnings. Attainment of goals can result
in payment of cash bonuses ranging up to 50% of base salary for Mr. Gibson and
Mr. Oddy and up to 12% for managers. Payment of the performance incentive is
made annually in a single, separate lump sum payment on or before February 14th
of the ensuing year.
BOARD COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company (the
"Committee") is responsible for oversight of compensation policies which govern
annual compensation and stock ownership programs for the executive officers as
well as other employees of the Company and its subsidiaries. However, the
Company's 1996 Class A Common Stock Compensation Plan is administered by the
Board of Directors as a whole. The Compensation Committee was established in
July 1996 at the time of the Company's initial public offering. It has initially
affirmed the Company's historical compensation framework and expects to continue
examining the relationship of the compensation criteria to existing systems and
incentives.
COMPENSATION CRITERIA
In making compensation determinations, the Committee considers and endeavors to
attain the following goals:
1) attract and retain highly qualified and motivated executive
officers and employees,
2) encourage and reward achievement of annual and long-term
financial goals and operating plans of the Company, and
3) encourage executive officers and employees to become
stockholders with interests aligned with those of other
stockholders.
The Committee's policy with regard to the compensation of executive officers is
to meet the foregoing goals through a combination of base salary, annual bonus,
stock ownership, and other benefits with a focus on encouraging executive
officers to attain performance goals that are designed to favorably impact
overall Company performance.
COMPENSATION COMPONENTS
The basic components of compensation for executive officers, including those
individuals listed in the Summary Compensation Table, are in four areas:
BASE SALARY: The Committee sets salary ranges annually which are intended to
reflect the median level of base pay for comparable positions at companies of
similar size and complexity. The Committee reviews salary survey data provided
by independent survey consultants. Based on the scope and responsibility of the
position in the survey compared to the scope and responsibility of the position
at the Company, the Committee determines whether the officer's salary range
should be set above or below the median level of the industry. To determine the
level of a specific salary within its range, the Committee considers management
input regarding the officer's length of service in the position, experience, and
management skills in handling short and long range issues. In addition, the
Committee reviews the officer's performance during the prior year measured
against predetermined corporate and individual plans and objectives set by
management.
ANNUAL BONUS: The Committee believes that a significant portion of annual cash
compensation for the executive officers should be variable ("at risk") and tied
to the Company's financial results. The Company annually establishes profit,
growth, and other goals. Depending upon attainment of the goals, certain
executive officers may receive a bonus amount of up to 50% of base salary.
STOCK OWNERSHIP: The Committee believes that a fundamental goal of executive
compensation is to encourage and create opportunities for long-term executive
stock ownership. The Committee expects that over time, executive officers will
establish ownership positions that are of significant value as a percentage of
the annual salary of such officers.
The Employee Stock Option Plan provides for the award of stock options
(nonqualified and incentive stock options), stock appreciation rights ("SARs"),
and shares of restricted stock. The Board of Directors encourages ownership of
Company stock through the grant of options to participants in the Plan. To
determine who will participate and the amount of awards, the Company adopted a
formula which covers key management employees, and bases awards on their
position, salary, and previous grants. Generally, the amount increases with the
level of position. The Committee and the Board of Directors intends to make
grants of options on an annual basis and establish a vesting schedule at each
grant date. The options granted in 1996 in conjunction with the initial public
offering were "front end loaded" to represent the bulk of grants to be made
under the formula during the first four years of the plan. The 1996 options vest
in 20% increments on the first, second, third, fourth, and fifth anniversary of
the grant date. In 1996, a total of 821,232 options were awarded to 100
participants.
EMPLOYEE BENEFITS: The Company offers benefit plans such as vacation, medical,
life and disability insurance to executive officers on the same basis as offered
to all employees.
CEO COMPENSATION: The compensation of Mr. Gibson includes the above four
factors. Mr. Gibson has been Chief Executive Officer of the Company since its
formation in 1993, and chief executive officer of its major operating
subsidiaries since 1991. His base salary has been set based on market factors,
his prior performance and in part in recognition of his additional
responsibilities with formation of the Company and its growth. Under Mr.
Gibson's leadership, the Company has grown both internally and by combining
other Farm Bureau insurance entities either under management agreements or as
subsidiaries. The Company has become positioned as a consolidator of Farm Bureau
insurance companies and believes it is well positioned to continue its internal
growth due to its geographic spread, growth of exclusive agency force and
ability to cross sell its various products to its existing customers. Mr.
Gibson's base salary was increased by 7% in 1996 to $294,000, and he earned a
bonus equal to 29% of that base salary based on 1996 Company performance of
established goals. Mr. Gibson was awarded options for 67,200 shares of Class A
Common Stock in 1996, which is 9.4% of the awards granted to all employees in
the year.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code (the "Code") generally limits to $1
million per individual per year the federal income tax deduction for
compensation paid by a publicly-held company to the company's chief executive
officer and its other four highest paid executive officers. Compensation that
qualifies as performance-based compensation for purposes of Section 162(m) is
not subject to the $1 million deduction limitation. Options and stock
appreciation rights granted under the Stock Option Plan satisfy the requirements
for performance-based compensation. The Committee currently does not anticipate
that any executive officer will be paid compensation from the Company in excess
of $1 million in any year (including amounts that do not qualify as
performance-based compensation under the Code), and accordingly, the Committee
anticipates that all amounts paid as executive compensation will be deductible
by the Company for federal income tax purposes.
COMPENSATION COMMITTEE
Edward Wiederstein, CHAIRMAN
Jerry Chicoine
John Creer
Kenny J. Evans
Bryce Neidig
PERFORMANCE GRAPHS
The following performance graph compares the performance of the Company's Class
A Common Stock since its initial public offering on July 19, 1996 with the
performance of the S & P 500 index and with the performance of the Value Line
Insurance: Life Index. The graph plots the changes in value of an initial $100
investment over the indicated time periods, assuming all dividends are
reinvested.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
FBL Financial Group, Inc., Standard & Poors 500 and
Value Life Insurance: Life Index
(Performance Results Through 12/31/96)
[PLOT POINTS GRAPH]
FBL FINANCIAL GROUP, INC. $138.59
Standard & Poors 500 $126.97
Insurance: Life Index $117.01
Assumes $100 invested at the open of trading (07/19/96) in FBL Financial
Group, Inc. Class A Common Stock, Standard & Poors 500 and the Value Line
Insurance: Life Index.
SOURCE: VALUE LINE, INC.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ORGANIZATION OF THE COMPANY
FBL Financial Group, Inc. was incorporated as an Iowa corporation in 1993. In
March 1996, the Company's shareholders approved a restatement of its articles of
incorporation and each share of outstanding common stock was split into 1,900
shares of Class A Common Stock and 100 shares of Class B Common Stock, in
preparation for the Company's initial public offering.
In December 1995, the stock of Utah Farm Bureau Insurance Company (Utah
Insurance) was transferred by its owner, FBL Financial Services, Inc. through
Farm Bureau Life, and Utah Insurance thereby became a direct subsidiary of the
Company. At June 30, 1996, the Farm Bureau Mutual reinsurance pool was revised
to increase the percentage of the pool attributable to Utah Insurance from 8% to
20% with an effective date retroactive to January 1, 1996. Farm Bureau Life in
1996 transferred the stock of FBL Financial Services, Inc., which thereby became
a direct subsidiary of the Company.
Contemporaneously with the initial public offering, Iowa Farm Bureau Federation
exchanged 5,000,000 shares of Class A Common Stock for 5,000,000 shares of
Preferred Stock, Series A.
SERVICES AGREEMENT WITH FARM BUREAU MANAGEMENT CORPORATION
The Company is a party to a Services Agreement (Services Agreement) with
Management Corp. which extends through December 31, 2005. Under the Services
Agreement, Management Corp. provides to the Company certain management services.
The Company provides to Management Corp. most of the personnel used by
Management Corp. in its operations, as well as human resources services, legal
services, and the use of certain property and equipment. The Services Agreement
is terminable by either party upon 180 days prior written notice to the other
party, or immediately in the event of certain insolvency events with respect to
either party. The services provided by Management Corp. are to be provided in
accordance with policies, directives, and final approval authority of the Board
of Directors of the Company. For such services the Company or Management Corp.,
as the case may be, is reimbursed for all expenses incurred in providing such
services (billed quarterly in advance based on Management Corp.'s current fiscal
year budget and payable within 15 days of the beginning of the quarter) and the
Company receives a fee equal to one-half of one percent of all such expenses.
The Company provides similar services to its subsidiaries and to Farm Bureau
Mutual and South Dakota Mutual, pursuant to similar service agreements which
provide for cost reimbursement and a fee of one-half of one percent thereof to
be paid to the Company.
The services described above together with substantial additional services were
provided to the Company and its subsidiaries by Management Corp. prior to
January 1, 1996 pursuant to the provisions of management services agreements
which were terminated by agreement of the parties during 1996. During 1995 all
of the personnel providing services to the Company and its subsidiaries were
employees of Management Corp. In 1996 most of these employees (approximately
1,100) became employees of the Company. The cost of the services provided to the
Company by Management Corp. prior to January 1, 1996 was allocated based on time
and other factors, and 100% of the expenses incurred by Management Corp. on
behalf of the Company or its subsidiaries was paid to Management Corp. During
the years ended December 31, 1996, 1995 and 1994 such payments to Management
Corp. (inclusive of wage and salary reimbursement of the transferred employees)
were $2.6 million, $29.7 million, and $3.1 million, respectively. During 1996,
Farm Bureau Mutual paid approximately $176,000 to the Company under a management
contract.
FARM BUREAU MUTUAL POOL
Utah Insurance participates in the Farm Bureau Mutual pool with Farm Bureau
Mutual and South Dakota Mutual pursuant to reinsurance agreements, with all
three companies operating under the common management of the Company. All
retained insurance business of Utah Insurance and South Dakota Mutual is assumed
by Farm Bureau Mutual. The combined business is then assumed by the three
property-casualty companies, in specified proportions, not in excess of an
amount that would create a net written premium to surplus ratio that exceeds
acceptable industry standards.
In the pool, all premiums, losses, loss adjustment expenses, acquisition and
other underwriting and administrative expenses are combined and distributed
proportionately to each property-casualty company, thus providing the three
companies with substantially the same underwriting results for any given
accident year. The overall operating results of the three companies differ based
on their respective investment income, changes in the companies' level of
participation in the pool and other miscellaneous items.
In addition, effective January 1, 1996, Farm Bureau Mutual entered into a loss
pooling agreement with Western Ag, which in turn quota share reinsures business
of Western Mutual. Western Ag and Western Mutual are Farm Bureau affiliated
companies in Arizona and New Mexico, respectively, that are also managed by the
Company. Under the loss pooling agreement all direct and assumed premiums,
losses and allocated loss adjustment expenses (but not acquisition and other
general underwriting expenses) of Farm Bureau Mutual, Utah Insurance and South
Dakota Mutual are pooled with these same items for Western Ag and Western
Mutual. Effective January 1, 1997, Western Ag and Western Mutual became full
participants in the Farm Bureau Mutual pool. Accordingly, acquisition and
general underwriting expenses as well as premiums, losses and loss adjustment
expenses of these companies are pooled.
STOCKHOLDERS' AGREEMENT REGARDING MANAGEMENT AND TRANSFER OF SHARES OF CLASS B
COMMON STOCK
All of the Class B Common Stock of the Company is owned by Farm Bureau
organizations. As holders of all of the Class B Common Stock of the Company,
these organizations have entered into the Stockholders' Agreement regarding
management and the transfer of the Class B Common Stock (Stockholders'
Agreement).
The Stockholders' Agreement provides that the holders of the Class B Common
Stock will vote for the election, as Class B Directors of the Company, of (i)
the Presidents of each of the 15 state Farm Bureau Federations which own or are
affiliated with the owners of the Class B Common Stock and (ii) the Chief
Executive Officer of the Company and two additional officers of the Company
nominated by the Chairman of the Board. The Stockholders' Agreement also
provides that as long as a single state Farm Bureau Federation and its
affiliates own in excess of 50% of the outstanding shares of Class B Common
Stock (the Iowa Farm Bureau Federation owns approximately 63.9% of the Class B
Common Stock), the Class B Common Stockholders will direct the Class B Directors
to elect the President of such state Farm Bureau Federation as the Chairman of
the Board, and to elect persons nominated by the Chairman to serve as Chief
Executive Officer, Secretary and Treasurer.
In the event that a Class B Director chooses to vote other than as directed
pursuant to the requirements of the Shareholders' Agreement, the holders of not
less than 10% of the Class B Common Stock may request a special meeting of the
Class B Common Stockholders, for the purpose of removing the Class B Director,
and either replacing such director with a qualified person or leaving the
position vacant.
The holders of Class B Common Stock may not transfer the stock to any person
which is not a Farm Bureau organization, and any attempted transfer in violation
of the Stockholder's Agreement causes the Class B Common Stock so transferred to
automatically be converted to Class A Common Stock.
The holders of 90% of the Class B Common Stock, together with the Company, may
amend the Stockholders' Agreement.
RELATIONSHIP WITH FARM BUREAU ORGANIZATIONS
American Farm Bureau Federation is a national federation of member organizations
having as a major objective and purpose to promote, protect and represent the
business, economic, social and educational interests of farmers and ranchers of
the nation, and to develop agriculture, and a further objective to correlate
Farm Bureau activities and strengthen member state Farm Bureau Federations.
Through a membership agreement the Iowa Farm Bureau Federation (the Company's
principal stockholder) and similar state Farm Bureau Federations throughout the
country agree to cooperate in reaching these objectives.
American Farm Bureau Federation is the owner of the "Farm Bureau" and "FB" trade
names and related trademarks and service marks including "FB design" which has
been registered as a service mark with the U.S. Patent and Trademark Office.
Under the state membership agreements, use of such trade names and marks in each
state is restricted to members of the federation and their approved affiliates.
The Company is licensed by the Iowa Farm Bureau Federation to use the "Farm
Bureau" and "FB" designations in Iowa, and pursuant thereto royalties of
$491,000, $299,000 and $300,000, respectively, were paid to the Iowa Farm Bureau
Federation for the years ended December 31, 1996, 1995 and1994. The Company's
subsidiaries have similar arrangements with Farm Bureau organizations in the
other states of the market territory. Total royalties paid to Farm Bureau
organizations other than the Iowa Farm Bureau Federation in 1996, 1995 and 1994
were $868,000, $620,000 and $693,000, respectively. Royalty payments in excess
of $60,000 were made to Farm Bureau organizations in Colorado (1996 - $65,000),
Idaho (1996 - $76,000), Minnesota (1996 - $167,000, 1995 - $148,000 and 1994 -
$177,000), Nebraska ($1996 - $66,000 and 1994 - $78,000), Oklahoma (1996 -
$109,000, 1995 - $94,000 and 1994 - $98,000), South Dakota (1994 - $66,000),
Utah (1996 - $85,000), and Wisconsin (1996 - $63,000).
HOME OFFICE BUILDING AND CERTAIN OTHER EXPENSE ALLOCATIONS AND TRANSACTIONS
The Company shares home office facilities, as well as certain management
personnel, with the Iowa Farm Bureau Federation and certain of its affiliates,
including Farm Bureau Mutual and various service companies. Costs are allocated
by factors such as the amount of space used for functions of the various
companies, and time studies and estimates of time spent by personnel for each of
the companies. Costs allocated to life insurance activities are further divided
proportionately between Farm Bureau Life and Western Life based on relative
amounts of direct written premiums attributable to each. The allocations are
reviewed and approved by the boards of directors of the respective companies.
The Company and its subsidiaries provide a number of services to, and receive
certain services from, other Farm Bureau organizations, including the Company's
two largest stockholders, the Iowa Farm Bureau Federation and Farm Bureau
Mutual. The company providing such services is reimbursed based on an allocation
of the cost of providing such services.
The Company's home office facilities are owned by Farm Bureau Life which leases
a portion of such facilities to the Iowa Farm Bureau Federation and Farm Bureau
Mutual. In 1996, 1995 and 1994, the Iowa Farm Bureau Federation paid Farm Bureau
Life rent of approximately $60,000, $61,000 and $62,000, respectively. In 1996,
1995 and 1994, Farm Bureau Mutual paid Farm Bureau Life approximately
$1,323,000, $1,468,000 and $1,413,000, respectively, in rent.
Farm Bureau Life owns aircraft which are available for use by the Company's
affiliates. In 1996, 1995 and 1994, Farm Bureau Mutual paid the Company
approximately $113,000, $78,000 and $73,000, respectively, for use of such
aircraft. In 1996, the Iowa Farm Bureau Federation paid the Company
approximately $94,000 for use of such aircraft.
Through its subsidiary, FBL Leasing Services, Inc., the Company owns and leases
computer equipment, furniture and automobiles to other Farm Bureau
organizations. In 1996, 1995 and 1994, the Iowa Farm Bureau Federation paid
approximately $314,000, $339,000 and $354,000, respectively, in aggregate
leasing fees. Farm Bureau Mutual paid aggregate leasing fees of approximately
$2,034,000, $1,984,000 and $1,857,000, respectively.
Through its investment advisor subsidiary, FBL Investment Advisory Services,
Inc., the Company provides investment advice and related services. Farm Bureau
Mutual paid the Company approximately $288,000, $275,000 and $232,000 for such
services in 1996, 1995 and 1994, respectively.
During 1996 the Company, through its subsidiaries, sold investments to Farm
Bureau Mutual as follows: (a) FBL Ventures of South Dakota, Inc. sold 13 private
equity securities for $6,000,000; (b) Farm Bureau Life sold 33.3% of its
investment in a limited partnership for $448,000; and (c) Farm Bureau Life sold
600,000 common shares of one equity investment for $12,989,000. These sales were
made at the estimated fair market values of the securities being sold on the
respective dates of the transactions.
Effective January 1, 1996, the Company entered into marketing agreements with
the property-casualty companies operating within its marketing territory,
including Farm Bureau Mutual and other affiliates. Under the marketing
agreements, the property-casualty companies assumed responsibility for
development and management of the Company's agency force for a fee equal to a
percentage of commissions on first year life insurance premiums and annuity
deposits. In addition, a service fee commission is paid to the property-casualty
companies operating in the multi-line states equal to 30% of commissions on
renewal premiums. The Company paid $2,505,000 to Farm Bureau Mutual under these
arrangements during the year ended December 31, 1996.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act generally requires the officers and
directors of a public company, and persons who own more than ten percent of a
registered class of a public company's equity securities, to file reports of
beneficial ownership and changes in beneficial ownership with the Securities and
Exchange Commission. Based solely on its review of the copies of such reports
received by it, or upon written representations received from certain reporting
persons, the Company believes that, during 1996, all section 16(a) filing
requirements applicable to its officers, directors and ten-percent shareholders
were complied with.
ITEM 2:
APPROVAL OF AUDITORS
Item 2 concerns the recommendation of the Audit Committee and the Board of
Directors that Ernst & Young LLP be appointed auditors for 1997, which is being
presented to stockholders for approval. Representatives of Ernst & Young LLP
will be present at the meeting, will be available to respond to questions and
may make a statement if they so desire.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPOINTMENT OF
ERNST & YOUNG LLP AS AUDITORS FOR 1997, AS PROPOSED IN ITEM 2.
STOCKHOLDER PROPOSALS
Proposals which stockholders intend to present at the 1998 annual meeting of
stockholders must be received by the Secretary of the Company, Richard D.
Harris, FBL Financial Group, Inc., 5400 University Avenue, West Des Moines, Iowa
50266 by November 30, 1997, and must otherwise comply with rules promulgated by
the Securities and Exchange Commission in order to be eligible for inclusion in
the proxy material for the 1998 annual meeting. In addition, under the Company's
By-Laws a stockholder must provide advance notice to the Company in order for
such stockholder to bring any business before the annual meeting. Such notice
must be received by the Secretary at the above address not less than 90 days
prior to the first anniversary date of the preceding year's annual meeting, and
must describe the business proposed to be brought before the annual meeting, the
reasons for bringing it, any material interest of the stockholder in such
business, the stockholder's name and address and the number of shares of Company
stock beneficially owned by the stockholder.
OTHER MATTERS
Officers and other employees of the Company and its subsidiaries may solicit
proxies by personal interview, telephone and telegram, in addition to the use of
the mails. None of these individuals will receive special compensation for these
services which will be performed in addition to their regular duties, and some
of them may not necessarily solicit proxies. The Company has also made
arrangements with brokerage firms, banks, nominees and other fiduciaries to
forward proxy solicitation materials for shares held of record by them to the
beneficial owners of such shares. The Company will reimburse them for reasonable
out-of-pocket expenses. The Company will pay the cost of all proxy
solicitation.
By order of the Board of Directors,
/s/ Richard D. Harris
Richard D. Harris
SECRETARY
Dated: March 31, 1997
[LOGO]
FBL FINANCIAL GROUP, INC.
March 31, 1997
Dear Shareholder:
The annual meeting of Stockholders of FBL Financial Group, Inc. will be held at
the principal executive offices of the Corporation at 5400 University Avenue,
West Des Moines, Iowa at 9:00 a.m. on Wednesday, May 21, 1997. At the meeting
Class A Stockholders will elect three directors, Class B Stockholders will elect
18 directors, and the stockholders will act on a proposal to ratify the
selection of Ernst & Young LLP as independent auditors.
It is important that your shares are represented at this meeting. Whether or not
you plan to attend the meeting, please review the enclosed proxy materials,
complete the attached proxy form below, and return it promptly in the envelope
provided.
Detach Proxy Form Here
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PROXY
CLASS A COMMON SHAREHOLDERS
FBL FINANCIAL GROUP, INC.
ANNUAL MEETING MAY 21, 1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE CORPORATION
The undersigned Class A shareholder of FBL Financial Group, Inc., an Iowa
corporation, appoints Edward M. Wiederstein and Thomas R. Gibson, or either of
them, with full power to act alone, the true and lawful attorneys-in-fact of the
undersigned, with full power of substitution and revocation, to vote all shares
of stock of said Corporation which the undersigned is entitled to vote at the
annual meeting of its shareholders to be held at the principal executive offices
of the Corporation at 5400 University Avenue, West Des Moines, Iowa, on May 21,
1997, at 9:00 a.m. and at any adjournment thereof, with all powers the
undersigned would possess if personally present, as follows:
1. Election of Class A Directors:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below
Jerry L. Chicoine, John W. Creer, John E. Walker
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME IN THE SPACE BELOW.
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2. Proposal to ratify the appointment of Ernst & Young LLP as independant
auditors for the Company:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. On any other matter that may be submitted to a vote of shareholders.
(YOU ARE REQUESTED TO COMPLETE, SIGN, AND RETURN THIS PROXY PROMPTLY)
(Detach Proxy Form Here)
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2 IF NO INSTRUCTION TO THE CONTRARY
IS INDICATED. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL
BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF MANAGEMENT.
Dated ________________________, 1997
____________________________________
____________________________________
Please sign name or names as
appearing on this proxy. If signing
as a representative, please indicate
capacity.
