<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /x/
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 Section 240.14a-11(c) or Section
240.14a-12
WASHINGTON NATIONAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
WASHINGTON NATIONAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / 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 transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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:
------------------------------------------------------------------------
<PAGE>
[LOGO]
TO THE STOCKHOLDERS OF
Washington National Corporation:
The annual meeting of stockholders of Washington National Corporation will
be held on Thursday, June 16, 1994. The official notice of this meeting,
together with the proxy statement and form of proxy, is enclosed. You should
have already received a copy of the 1993 annual report to stockholders. If you
have not received the annual report, please call the financial reporting
department at (708) 793-3053.
At the annual meeting, you will have the opportunity to vote upon the
election of five directors of the Corporation. Directors and officers of the
Corporation will be present at the annual meeting to respond to any questions
that you may have.
We hope you will be able to attend the annual meeting. In the event you will
not be able to do so, please review the enclosed form of proxy carefully. After
voting, please sign and return it promptly to assure that your shares will be
voted at the meeting. If you attend, you may revoke your proxy and vote in
person.
Sincerely,
Robert W. Patin
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
<PAGE>
[LOGO]
Dated: April 21, 1994
TO THE STOCKHOLDERS OF
Washington National Corporation:
The annual meeting of stockholders of Washington National Corporation, a
Delaware corporation, will be held at the Corporation's Home Office, 300 Tower
Parkway, Lincolnshire, Illinois, on Thursday, June 16, 1994, at 10:30 a.m.,
central daylight savings time, for the following purposes:
1. To elect four class A directors to serve for a term of three years;
2. To elect one class C director to serve for a term of two years; and
3. To transact such other business as may properly come before the meeting.
The board of directors has fixed the close of business on April 5, 1994 as
the record date for determining the stockholders entitled to notice of and to
vote at the annual meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE VOTE, SIGN
AND DATE THE ENCLOSED PROXY, AND RETURN IT IN THE POSTAGE-PAID ENVELOPE
PROVIDED.
By order of the board of directors,
Craig R. Edwards
CORPORATE SECRETARY
<PAGE>
Dated: April 21, 1994
WASHINGTON NATIONAL CORPORATION
300 Tower Parkway
Lincolnshire, Illinois 60069
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 16, 1994
This proxy statement is furnished in connection with the solicitation of
proxies by the board of directors of Washington National Corporation ("WNC") for
use at the annual meeting of stockholders to be held on Thursday, June 16, 1994
and all adjournments thereof, for the purposes set forth in the accompanying
notice. Proxy materials are being mailed to stockholders of WNC on or about
April 21, 1994. The cost of the solicitation will be borne by WNC. In addition
to solicitation of proxies by mail, certain officers and employees of WNC may
solicit proxies by telephone, telegraph, or in person, but they will not be
compensated for doing so. WNC may agree to pay banks, brokers, nominees and
other fiduciaries their reasonable charges and expenses incurred in forwarding
the proxy material to the beneficial owners of WNC stock.
The holders of record of the common stock and the $2.50 convertible
preferred stock ("preferred stock") of WNC at the close of business on Tuesday,
April 5, 1994, will be entitled to vote at the meeting. As of such record date,
there were outstanding 12,140,816 shares of common stock (excluding 3,383,473
shares held by WNC as treasury stock, which will not be voted), and 144,607
shares of preferred stock. Each stockholder of record will be entitled to one
vote for every share of stock standing in his or her name on the books of WNC on
the record date.
Any stockholder entitled to vote may vote his or her shares either in person
or by his or her duly authorized proxy. Any proxy solicited herewith may be
revoked by the stockholder by written notice to the corporate secretary of WNC
at any time prior to the voting thereof, but a revocation will not be effective
until notice thereof has been received by the corporate secretary prior to such
voting. All shares represented by properly executed proxies received by WNC will
be voted at the meeting and all adjournments thereof in accordance with the
instructions reflected in the proxies. Absent any voting instructions to the
contrary, shares represented by properly executed proxies will be voted FOR the
election of directors.
A quorum of stockholders is necessary to take action at the annual meeting.
The presence, in person or by proxy, of the holders of record of a majority of
outstanding shares of stock entitled to be voted at the annual meeting shall
constitute a quorum. Votes cast by proxy or in person at the annual meeting will
be tabulated by the inspectors of election appointed for the meeting. The
inspectors will treat abstentions as shares that are present and entitled to
vote for purposes of determining the presence of a quorum. If a broker indicates
on the proxy that it does not have discretionary authority as to certain shares
to vote on a particular matter, those shares will not be considered present and
entitled to vote on that matter.
1
<PAGE>
ELECTION OF DIRECTORS
WNC's certificate of incorporation and by-laws currently provide that the
board of directors shall consist of not less than twelve nor more than sixteen
directors, with the exact number to be determined by a resolution of the board
of directors. The certificate of incorporation and by-laws also stipulate that
the board shall be divided into three classes which shall be as nearly equal in
number as possible. The WNC board adopted a resolution establishing the number
of its members at twelve, consisting of four class A directorships, four class B
directorships and four class C directorships.
At each annual meeting, successors of the class whose term of office expires
in that year are elected for three-year terms or until the election and
qualification of their successors. The terms of the four class A directors,
Frederick R. Blume, Elaine R. Bond, Stanley P. Hutchison and Robert W. Patin,
expire this year and each has been nominated for reelection to the board. In
addition, Lee M. Mitchell was elected by the board as a class C director in
September 1993 and stands for election to the remainder of a two-year term. If
the four class A nominees are elected, they will serve the full three-year term
or until the election and qualification of their successors. Unless directed to
the contrary by the stockholders, the proxies received as a result of this
solicitation will be voted FOR election of all nominees. In case any nominee
should be unwilling or unable to accept nomination for election, which is not
now anticipated, the persons named in the proxy will vote for the election of
such other persons as they shall determine. A plurality of shares of common
stock and preferred stock, present in person or represented by proxy at the
annual meeting, is required for the election of directors.
THE FOLLOWING SETS FORTH CERTAIN INFORMATION ABOUT THE NOMINEES AND OTHER
DIRECTORS WHOSE TERMS CONTINUE AFTER THE MEETING:
CLASS A--TO BE ELECTED FOR A TERM OF THREE YEARS, EXPIRING IN 1997:
FREDERICK R. BLUME--MANAGING PARTNER, CAPITAL HEALTH VENTURE PARTNERS,
CHICAGO, ILLINOIS
Frederick R. Blume, age 51, was elected by the board as a director of WNC in
November, 1993, and he serves on the audit and compensation committees. Mr.
Blume is founder and managing partner of Capital Health Venture Partners, a
Chicago-based venture capital management company established in 1985.
Previously, Mr. Blume was a managing director of PaineWebber Capital Markets
and has also been vice-president of corporate finance for A.G. Becker &
Company and Kidder, Peabody & Co., Inc. Mr. Blume also serves as a director
of MicroHealth Systems, Inc., Cytyc Corporation and Oculon Corporation.
ELAINE R. BOND--CHASE MANHATTAN BANK FELLOW, THE CHASE MANHATTAN BANK, N.A.,
NEW YORK, NEW YORK
Ms. Bond, age 58, was elected a director of WNC in March 1992, and she
serves on the audit and nominating committees. Ms. Bond has been associated
with The Chase Manhattan Bank, N.A. since 1981 as senior vice president and
corporate staff head for the use of technology in the bank. In 1993 she
became a Chase Manhattan Bank Fellow and Senior Consultant and is
responsible for overseeing research projects, consulting with executives of
the bank, and influencing industry directions. From 1957 to 1981, Ms. Bond
was associated with IBM Corporation where she served in a number of
capacities, including the position of director of information services. Ms.
Bond also serves as a director of Novell, Inc.
2
<PAGE>
STANLEY P. HUTCHISON--FORMER CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER, WNC AND WASHINGTON NATIONAL INSURANCE COMPANY, LINCOLNSHIRE,
ILLINOIS
Mr. Hutchison, age 70, was elected a director of WNC in 1968, and he serves
on the audit and nominating committees. In 1988, he retired as chairman of
the board and chief executive officer of WNC, positions he held since 1983
and 1978 respectively. From 1976 until his retirement, he also was chairman
of the board and chief executive officer of Washington National Insurance
Company.
ROBERT W. PATIN--CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, WNC AND WASHINGTON NATIONAL INSURANCE COMPANY, LINCOLNSHIRE,
ILLINOIS
Mr. Patin, age 51, was elected chairman of the board of directors of WNC and
chairman of the executive and nominating committees in July 1988. At that
time, he also assumed the position of chairman of the board of Washington
National Insurance Company. Mr. Patin was elected president of WNC and
Washington National Insurance Company in May 1990 and February 1991,
respectively. He also is a director of certain affiliated companies of WNC,
including United Presidential Corporation and United Presidential Life
Insurance Company. From 1986 through 1988, Mr. Patin was managing general
partner of The Harbor Group, a management consulting firm in East Greenwich,
Rhode Island. From 1980 through 1986, he was employed by General Electric
Capital Corporation in Stamford, Connecticut, where he held the position of
president of the insurance operations. Between 1964 and 1980, Mr. Patin was
employed by Connecticut General Life Insurance Company. Mr. Patin also is a
director of Evanston Hospital Corporation.
CLASS C--TO BE ELECTED FOR A TERM OF TWO YEARS, EXPIRING IN 1996:
LEE M. MITCHELL--PARTNER, SIDLEY & AUSTIN, CHICAGO, ILLINOIS
Lee M. Mitchell, age 51, was elected by the board as a director of WNC in
September 1993, and he serves on the audit and compensation committees. Mr.
Mitchell is a partner in the law firm of Sidley & Austin where he maintains
a corporate and federal regulatory practice. He previously served as
president and chief executive officer of The Field Corporation and, prior
thereto, Field Enterprises, Inc., diversified holding companies with
interests in communications, manufacturing and real estate. Mr. Mitchell
also serves as a director of Paging Network, Inc., Northwestern Memorial
Management Corporation and Koll/CC&F Management Services.
The seven persons named below will continue to serve as directors for the
terms indicated.
CLASS B--TERMS EXPIRING IN 1995:
LEE A. ELLIS--FORMER SENIOR VICE PRESIDENT FOR BUSINESS AND FINANCE,
NORTHWESTERN UNIVERSITY, EVANSTON, ILLINOIS
Mr. Ellis, age 64, was elected a director of WNC in 1982, and he serves on
the executive, finance, nominating and audit committees, the latter of which
he serves as chairman. He was associated with Northwestern University, a
private institution of higher education, as senior vice president for
business and finance, from 1976 until his retirement in 1990.
JOHN R. HAIRE--CHAIRMAN, COMMITTEE OF INDEPENDENT DIRECTORS, DEAN WITTER
GROUP OF INVESTMENT COMPANIES, NEW YORK, NEW YORK
Mr. Haire, age 69, has been a director of WNC since 1969, and he serves on
the executive, compensation and finance committees, the latter of which he
serves as chairman. In 1989, he was elected chairman of
3
<PAGE>
the Committee of Independent Directors of the Dean Witter Group of
Investment Companies. Between 1978 and 1989 he was president and chief
executive officer of the Council for Aid to Education, Inc., a
not-for-profit corporation promoting financial aid to higher education. Mr.
Haire also is a director of Bowne & Company, Inc. and the Dean Witter Group
of Mutual Funds.
GEORGE P. KENDALL, JR.--FORMER VICE CHAIRMAN, WNC, AND FORMER PRESIDENT,
WASHINGTON NATIONAL INSURANCE COMPANY, LINCOLNSHIRE, ILLINOIS
Mr. Kendall, age 59, was elected a director of WNC in 1974, and he serves on
the audit, nominating and finance committees. He retired in January 1991 as
vice chairman of WNC, a position he held since 1984. After holding various
positions at Washington National Insurance Company for 16 years, Mr. Kendall
was elected its president and a director in 1983, serving as a member of the
executive committee and as chairman of the finance committee of the board of
directors until his retirement in January 1991.
REX READE--FORMER CHAIRMAN OF THE BOARD, RUST-OLEUM CORPORATION, VERNON
HILLS, ILLINOIS
Mr. Reade, age 69, was elected a director of WNC in 1983, and he serves on
the executive, finance and compensation committees, the latter of which he
serves as chairman. He was associated with Rust-Oleum Corporation, a
manufacturer of rust-preventive coatings, since 1959 and he was chairman of
that company until his retirement in 1988. Mr. Reade is also a director of
Fire & Thermal Protection, Inc.
CLASS C--TERMS EXPIRING IN 1996:
RONALD L. BORNHUETTER--CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF
NAC RE CORPORATION, GREENWICH, CONNECTICUT
Mr. Bornhuetter, age 61, was elected a director of WNC in 1992, and he
serves on the compensation and finance committees. Mr. Bornhuetter is
chairman, president, chief executive officer and a director of NAC Re
Corporation, a publicly held property and casualty reinsurance company.
Prior to his assignment with NAC Re Corporation, Mr. Bornhuetter was
associated with General Re Corporation from 1966 to 1985 where he served in
a number of capacities, including the position of chief financial officer.
Mr. Bornhuetter also is a trustee of the College of Wooster, Wooster, Ohio.
FRANK L. KLAPPERICH, JR.--PRESIDENT, CHARTER CAPITAL CORPORATION, CHICAGO,
ILLINOIS
Mr. Klapperich, age 59, was elected a director of WNC in 1991, and he serves
on the nominating and finance committees. He is president of Charter Capital
Corporation, a private investment company. Prior to his retirement in 1990,
Mr. Klapperich had a 29-year investment banking career with Kidder Peabody &
Co., Inc. and was a senior vice president of that firm at the time of his
retirement. Mr. Klapperich also serves as a director of TC Manufacturing
Co., Inc. and Newcor, Inc.
PATRICIA Y. TSIEN--SENIOR PARTNER, THE HAMPTON GROUP, NEW YORK, NEW YORK
Ms. Tsien, age 47, was elected a director of WNC in 1993 and she serves on
the audit and compensation committees. In November 1989, Ms. Tsien
established The Hampton Group, a consulting firm which serves a variety of
financial institutions. As The Hampton Group's founder and senior partner,
Ms. Tsien advises her clients on cost-effective management approaches and
methods to create a high performance workplace. Prior to establishing The
Hampton Group, Ms. Tsien was employed by KPMG Peat Marwick from 1985 through
1989, where she held the position of partner-in-charge of trust and
investment services consulting.
4
<PAGE>
BOARD OF DIRECTORS AND ITS COMMITTEES
The board of directors held six meetings during 1993. The board has
established several standing committees whose principal functions are described
below. During 1993, all WNC directors attended at least 75% of the total number
of board meetings and meetings of committees on which they served.
The executive committee met five times in 1993. Its function is to exercise,
between meetings of the board of directors, all of the powers and authority of
the board in the management of WNC to the extent permitted by law or as
otherwise restricted by the board. Robert W. Patin, Chairman, Lee A. Ellis, John
R. Haire and Rex Reade currently serve on the executive committee, which
consists of the chairman of the board and the chairmen of the board's standing
committees.
The audit committee met five times in 1993. Its function is to recommend to
the board the appointment of independent auditors each year; to review financial
statements with such independent auditors prior to their presentation to the
board of directors; and to determine the effectiveness and integrity of the
audit effort and of internal accounting controls for WNC and each of its
subsidiaries. Lee A. Ellis, Chairman, Frederick R. Blume, Elaine R. Bond,
Stanley P. Hutchison, George P. Kendall, Jr., Lee M. Mitchell and Patricia Y.
Tsien currently serve on the audit committee.
The compensation committee met five times in 1993. Its function is to review
and approve basic and incentive compensation plans for WNC and its subsidiaries;
to set the salaries of the executive officers of WNC and its subsidiaries; to
administer any existing stock option plans; and to act, together with WNC's
chief executive officer, in an advisory capacity to the board with respect to
matters of management succession. Rex Reade, Chairman, Frederick R. Blume,
Ronald L. Bornhuetter, John R. Haire, Lee M. Mitchell and Patricia Y. Tsien
currently serve on the compensation committee.
The finance committee met eight times in 1993. Its function is to review
quarterly financial results and trends in depth to determine adequate financial
results and progress; to review and approve corporate and subsidiary investment
philosophies, strategies and guidelines; to approve items significantly
affecting capital structure; to review and recommend to the board actions
related to mergers, acquisitions or divestitures; to review and recommend to the
board the annual budget and profit plan; and to monitor asset utilization to
insure that management is able to identify and deploy assets that are
undervalued or utilized in unprofitable operations. John R. Haire, Chairman,
Ronald L. Bornhuetter, Lee A. Ellis, George P. Kendall, Jr., Frank L.
Klapperich, Jr. and Rex Reade currently serve on the finance committee.
The nominating committee met five times in 1993. Its function is to search
for, screen and recommend to the board, for nomination, persons for election or
reelection to the board of directors; to monitor the board's retirement policy;
and to recommend to the board the type, function and membership of board
committees. The nominating committee will consider nominations for directorships
submitted in writing by stockholders to the corporate secretary, in accordance
with the procedures set forth in article seventh of WNC's certificate of
incorporation. Robert W. Patin, Chairman, Elaine R. Bond, Lee A. Ellis, Stanley
P. Hutchison, George P. Kendall, Jr. and Frank L. Klapperich, Jr. currently
serve on the nominating committee.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934.
Based solely on WNC's review of Forms 3 and 4 and amendments thereto
furnished to it pursuant to Rule 16a-e3(e) during its most recent fiscal year
and Form 5 and amendments thereto furnished to WNC with respect to its most
recent fiscal year, with the exceptions of Mr. Stanley P. Hutchison who filed a
Form 4 late on March 15, 1994 and Ms. Patricia Tsien who filed her Form 3 late
on April 12, 1993, no person who, at
5
<PAGE>
any time during the fiscal year, was a director, officer or beneficial owner of
more than ten percent of any class of equity securities of WNC registered
pursuant to Section 12 of the Exchange Act, failed to file on a timely basis, as
disclosed in the above forms, reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year.
STOCK OWNERSHIP
The following table sets forth the stock ownership of all persons known by
WNC to be the beneficial owners of more than 5% of each class of the outstanding
voting stock of WNC (exclusive of treasury stock) as of April 5, 1994.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED (1)
------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENTAGE
- ------------------------------------------ ---------- ------------
<S> <C> <C>
NBD Bank(2)
1603 Orrington Avenue
Evanston, IL 60201 2,812,234 23.16%
George P. Kendall, Jr.(3)
300 Tower Parkway
Lincolnshire, IL 60069 1,553,757 12.80%
Shufro, Rose & Ehrman(4)
745 Fifth Avenue
New York, NY 10151 673,375 5.55%
<FN>
(1) The table includes common stock which could be acquired within 60 days by
exercise of a stock option. The table does not include the beneficial
ownership of WNC's preferred stock. The only person known to the Company to
own beneficially more than 5% of the outstanding shares of the preferred
stock is Melvin S. Cutler, Cutler Associates Investments, Inc., P.O. Box
15049, Worcester, Massachusetts 01615, who beneficially owned, as of July
23, 1993, 16,400 shares, or 11.34%, of the preferred stock according to a
Schedule 13G filed with the Securities and Exchange Commission on such
date. Such shares, if fully converted into shares of common stock, would
constitute less than 1% of the outstanding shares of common stock.
(2) According to a Schedule 13G filed with the Securities and Exchange
Commission on February 11, 1994 by its parent company, NBD Bancorp, Inc.,
NBD Bank beneficially owned on such date 2,812,234 shares of common stock.
NBD Bank indicated that on such date it had sole voting power over
1,742,105 shares, shared voting power over 1,070,129 shares, sole
investment power over 1,429,990 shares and shared investment power over
1,381,244 shares. Included in NBD Bank's beneficial ownership total are
1,246,841 shares held by the H. R. Kendall Foundation and Trust over which
NBD Bank has sole voting and investment power in its capacity as sole
trustee, and 545,169 shares held by the G. R. Kendall Foundation and Trust
over which NBD Bank shares voting and investment power in its capacity as
co-trustee with, among others, George P. Kendall, Jr., a director of WNC.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
(3) George P. Kendall, Jr. beneficially owns 1,553,757 shares of common stock,
including 1,340,693 shares reported above under NBD Bank's beneficial
ownership total. The 1,340,693 shares are held by various trusts (including
the G. R. Kendall Foundation and Trust) with respect to which George P.
Kendall, Jr. and NBD Bank, as well as other members of the Kendall family,
share voting and investment power as co-trustees of such trusts. Excluding
these 1,340,693 shares, George P. Kendall, Jr. beneficially owns 214,264
shares, or 1.77% of the outstanding shares. Based on information provided
to WNC, WNC believes that NBD Bank and members of the Kendall family
(including George P. Kendall, Jr.) together beneficially own an aggregate
of approximately 27% of the outstanding shares of common stock.
(4) According to its Schedule 13G filed with the Securities and Exchange
Commission on February 14, 1994, Shufro, Rose & Ehrman beneficially owned
on such date 673,375 shares of common stock. Shufro, Rose & Ehrman
indicated that on such date it had sole voting power over 70,590 shares and
sole investment power over 673,375 shares.
</TABLE>
The following table sets forth the beneficial ownership of WNC stock by each
director, each director nominee, each executive officer named in the Summary
Compensation Table located elsewhere in this Proxy Statement, and all executive
officers and directors as a group, as of April 5, 1994.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED
--------------------------------
NAME OF PERCENTAGE
BENEFICIAL OWNER TITLE OF CLASS NUMBER (1) (2)
- ---------------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
F. R. Blume common stock 950
E. R. Bond common stock 3,750(3)
R. L. Bornhuetter common stock 9,250(3)
W. G. Brown common stock 4,021(3)
L. A. Ellis common stock 6,894(3)
C. L. Fuhrmann common stock 29,600(3)
K. A. Grubb common stock 7,095(3)
J. R. Haire common stock 7,400(3)
S. P. Hutchison common stock 10,588(3)
preferred stock 100
G. P. Kendall, Jr. common stock 1,553,757(3)(4) 12.80%
preferred stock 2,300 1.59%
F. L. Klapperich, Jr. common stock 5,750(3)
L. M. Mitchell common stock 1,000
R. W. Patin common stock 108,703(3)
J. N. Plato common stock 15,430(3)
T. Pontarelli common stock 33,484(3)
R. Reade common stock 4,500(3)
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED
--------------------------------
NAME OF PERCENTAGE
BENEFICIAL OWNER TITLE OF CLASS NUMBER (1) (2)
- ---------------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
T. C. Scott common stock 42,100(3)
P. Y. Tsien common stock 3,100(3)
D. L. Wilhelm common stock 39,000(3)
All Executive Officers and common stock 1,886,371(5) 15.54%
Directors as a Group (19 preferred stock 2,400 1.66%
persons)
<FN>
(1) Unless otherwise indicated by footnote, persons owning the indicated shares
are deemed to have sole voting and investment power over such shares.
(2) The percentage of ownership of the common stock assumes conversion of
preferred stock only by the person or officers and directors as a group
holding such stock and not by all other holders of preferred stock. It also
includes common stock which could be acquired within 60 days by exercise of
a stock option. Unless otherwise indicated, the percentage of ownership of
each class of stock is less than one percent.
(3) Includes shares of common stock issuable pursuant to stock options
exercisable within 60 days after April 5, 1994, as follows: Ms. Bond, 2,600
shares; Mr. Bornhuetter, 2,600 shares; Mr. Brown 4,000 shares; Mr. Ellis,
3,950 shares; Mr. Fuhrmann, 29,000 shares; Mr. Grubb, 7,000 shares; Mr.
Haire, 3,950 shares; Mr. Hutchison, 3,950 shares; Mr. G. P. Kendall, Jr.,
3,200 shares; Mr. Klapperich, 2,600 shares; Mr. Patin, 85,000 shares; Mr.
Plato, 12,517 shares; Mr. Pontarelli, 32,000 shares; Mr. Reade, 3,950
shares; Mr. Scott, 32,000 shares; Ms. Tsien, 2,000 shares; Mr. Wilhelm,
34,000 shares; and all executive officers and directors as a group, 266,117
shares.
(4) See footnote (3) on page 7 for information relating to Mr. G.P. Kendall's
beneficial ownership.
(5) The 1,886,371 shares of common stock shown include 1,340,693 shares
beneficially owned by George P. Kendall, Jr. that are reported above under
both George P. Kendall, Jr.'s and NBD Bank's beneficial ownership totals.
</TABLE>
EXECUTIVE COMPENSATION
REPORT OF WASHINGTON NATIONAL CORPORATION COMPENSATION COMMITTEE
Decisions on compensation of WNC's executives generally are made by the
compensation committee of the board. Each member of the compensation committee
is a non-employee director, although Mr. Haire was an executive officer of a WNC
subsidiary from 1969 to 1978.
WNC believes that stockholders should be provided meaningful information
relating to how it compensates its executives. To that end and consistent with
Securities and Exchange Commission rules, set forth below is a report submitted
by Messrs. Blume, Bornhuetter, Haire, Mitchell, and Reade and Ms. Tsien in their
capacity as the board's compensation committee addressing WNC's compensation
policies for 1993 as they affected WNC's executive officers: Mr. Brown, Mr.
Fuhrmann, Mr. Grubb, Mr. Patin, Mr. Plato, Mr. Pontarelli, and Mr. Scott.
8
<PAGE>
COMPENSATION POLICIES TOWARD EXECUTIVE OFFICERS
The stated objectives of WNC's executive compensation program are:
(a) to reinforce and guide executives to align thinking and behavior with
the long-term interests of stockholders;
(b) to attract and retain key executives by providing a total compensation
package which rewards executives for adding value for stockholders and
meeting and exceeding performance objectives; and
(c) to enhance profitable business performance based on long-term
decision-making.
The compensation committee's executive compensation policies are designed to
provide competitive levels of compensation that integrate pay with WNC's annual
and long-term performance goals, significantly reward above-average corporate
performance and increases in stockholder value, and recognize individual
initiative and achievements taking into account the value received for the
resources expended. Target levels of the executive officers' overall
compensation are intended to be consistent with those maintained by other
comparably sized publicly held life and health insurance companies, but are
increasingly being weighted toward programs contingent upon WNC's business
performance as described below. Competitive base and incentive compensation
levels are monitored through analysis of compensation surveys of leading
compensation consultants. The committee views the 60th percentile as
"competitive," and sets its base and target incentive compensation at that
level.
For 1993, approximately one-half of each executive officer's total
compensation was targeted to be in the form of base or fixed compensation, with
the remainder being variable pay or "pay-at-risk" (the receipt of which is
subject to the satisfaction of certain performance conditions, as described
below). Such pay-at-risk included long-term stock based compensation and both
annual and long-term pay-at-risk cash compensation. As a result of the increased
emphasis on tying executive compensation to corporate and individual
performance, in any particular year, WNC's executive officers may be paid more
or less than the executives of WNC's competitors, depending upon WNC's
performance, increases in stockholder values and individual performance.
The compensation committee believes that stock-based compensation
arrangements are very important in aligning management and stockholder interests
in improvement of stockholder value. For this reason, the committee has utilized
nonqualified stock option grants in the past to compensate WNC's executive
officers, and the committee intends to continue to utilize such option grants in
the future to provide the bulk of its executive officer long-term compensation.
RELATIONSHIP BETWEEN CORPORATE PERFORMANCE AND EXECUTIVE COMPENSATION
Compensation paid to WNC's executive officers in 1993, as reflected in the
following tables, primarily consisted of base compensation and annual
pay-at-risk compensation. During early 1993, the committee established target
payout and performance levels for the 1993 Annual Pay-at-Risk Plan. The Annual
Pay-at-Risk Plan is a cash bonus plan which in 1993 covered officers and key
management employees of WNC and its subsidiaries. Payout targets are set at 40%
of base compensation for all executive officers other than the chief executive
officer, who has a 50% target. The Plan's objective is to reward achievement of
certain annual financial, operational and strategic goals. The participant is
"at risk" as to this compensation in that 90% of the payout pool for 1993 is
based on the achievement of certain pre-established WNC, subsidiary, and
divisional pre-tax operating income goals approved by WNC's board.
9
<PAGE>
In order to insure that individual performance is differentiated and that
truly outstanding performance is rewarded, individual awards under the Annual
Pay-At-Risk Plan are variable based on the individual performance of each
executive officer and the degree to which individual and team or unit goals were
met during the year. The key WNC, subsidiary and divisional goals are the
achievement of board approved annual business plans which include specific
pre-tax operating income, revenue and expense control targets. In addition,
goals also include specific managerial and personal initiatives and projects not
directly related to financial performance. Although important, these goals play
a lesser weight in the setting of actual awards levels than the financial goals
of the unit for which the executive officer is responsible.
In March of 1993, the committee and the board approved a Long-Term
Pay-At-Risk Plan for certain elected officers of WNC and its subsidiaries. This
plan uses two vehicles, non-qualified stock options and cash to provide market
based and performance based incentives. As reflected in the stock option grant
table below, stock options were granted in March of 1993 at an exercise price
equal to the market value of the common stock on the date of grant, with a ten
year term, and will vest in equal annual installments over a five year period.
By providing value to the executive as stockholder value is created, the option
grants align the interest of executives with those of the stockholders.
The size of the 1993 stock option (10,000 shares for each executive officer
and 25,000 shares for the chief executive officer) was determined by placing a
value on each option share utilizing a option valuation model. The committee
established a target of approximately 50% of total compensation being in the
form of variable or "at risk" pay. Since the other pay compensation components
(base compensation, target Annual Pay-At-Risk, and the cash portion of the
Long-Term Pay-At-Risk Plan) had been previously set by the committee, the size
of the options were set to meet the committee's pay mix target for "at-risk"
pay. The committee intends to annually set the number of shares in each option,
utilizing this approach and taking into consideration price movement in WNC
stock.
The Long-Term Pay-At-Risk Plan also provides for cash-based incentives
through achievement of rolling three year plans under which an executive officer
earns a percentage of base compensation (5% for the chief executive officer, 4%
for other executive officers) for each year in the three year plan. For 1993,
awards were earned by measuring corporate and divisional pre-tax operating
income performance versus plan and general financial performance versus the
industry, as determined by the subjective judgment of the committee. During
1994, the compensation committee intends to study other possible measurement
standards for the cash portion of the Long-Term Pay-At-Risk Plan.
The compensation committee believes that operating performance criteria are
more appropriate for annual pay-at-risk plans than criteria based on the market
price of WNC's common stock, and that common stock performance criteria are more
appropriate for long-term pay-at-risk arrangements. This belief is based on the
committee's view that, while over time the common stock's performance should
track WNC's overall performance, this relationship is not sufficiently strong on
an intra-year basis such that annual compensation should be so closely tied to
the vagaries of the stock market. It is the committee's intention that future
payouts under its pay-at-risk programs be predicated on the achievement of
aggressive performance targets, contingent on a high results threshold designed
to provide attractive rewards for exceptional performance and flexible enough to
allow discretion in assessing individual performance achievement.
CORPORATE PERFORMANCE AND CEO COMPENSATION
The compensation committee's approach in setting Mr. Patin's target total
compensation is to seek to be competitive with comparable life and health
insurance companies, but to have a large percentage of his
10
<PAGE>
target total compensation "at risk" based on objective short and long-term
performance criteria. This balanced approach provides incentive to achieve
annual and long-term goals while also providing Mr. Patin some certainty in the
level of his compensation through the base salary component.
Mr. Patin is eligible to participate in the same executive compensation
plans as WNC's other executive officers. Mr. Patin's base compensation was
established in 1988 when he was recruited to join WNC, based upon a compensation
consultant's recommendation relating to competitive base pay levels (60th
percentile) for chief executive officers of life and health insurance companies
of comparable size in terms of assets, revenues, and with a similar scope of
operations. Since that time, Mr. Patin has received annual merit increases to
his base compensation based on the compensation committee's assessment of his
performance.
The compensation committee established Mr. Patin's annual pay-at-risk target
at 50% of his base compensation for 1993. Mr. Patin was paid 127.5% of this
target because WNC exceeded its profit plan goals, including its pre-tax
operating income and revenue targets. These were primary factors in assessing
Mr. Patin's performance. In addition, the committee considered and rewarded Mr.
Patin's performance in achieving certain other goals including a successful
raising of new capital, attractive total shareholder return (9.11%) versus the
Dow Jones Life Insurance Group (6.74%), the successful merger of WNIC's
Individual Health and Employee Benefits Divisions, continued strengthening of
WNC's balance sheet, successful business process re-engineering efforts and
increased trading volume in WNC's common stock. As a result of WNC's achievement
of its 1993 pre-tax operating income target, Mr. Patin also vested in the 1993
segment of the 1993-1995 cycle of the Long-Term Pay-At-Risk Plan. If he is still
employed by WNC in 1996, Mr. Patin will receive an additional 5% of his 1995
base compensation in the Spring of 1996.
In March 1993, the committee granted Mr. Patin an option to purchase 25,000
shares of WNC's common stock at 100% of the then market price of $26.57. This
option has a ten year term and vests in equal installments over five years.
The internal revenue code has been amended for 1994 to provide limitations
on the deductibility of certain compensation in excess of one million dollars
annually. Mr. Patin is the only executive officer who could potentially approach
this compensation level in 1994 (owing in part to the value of currently
unexercised stock options). The committee intends to study this issue in 1994 in
order to determine the advisability of altering its compensation programs in
order to insure deductibility of all compensation paid.
This report shall not be deemed incorporated by reference into any filing
under the Securities Act of 1933 or under the Securities Exchange Act of 1934,
except to the extent that WNC specifically incorporates this information by
reference, and it shall not otherwise be deemed filed under such Acts.
COMPENSATION COMMITTEE OF THE WASHINGTON NATIONAL CORPORATION
BOARD OF DIRECTORS
Rex Reade, Chairman
Frederick R. Blume
Ronald L. Bornhuetter
John R. Haire
Lee M. Mitchell
Patricia Y. Tsien
11
<PAGE>
The following tables set forth the compensation information for the years
1991 through 1993 with respect to WNC's chief executive officer and the seven
most highly compensated executive officers of WNC whose cash compensation
exceeded $100,000 in 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPEN-
SATION
-------------
AWARDS
ANNUAL COMPENSATION -------------
---------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND COMPEN- OPTIONS COMPEN-
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) SATION ($) (#) SATION ($)
- ---------------------------------------- --------- ----------- ----------- -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
R. W. Patin 1993 $ 494,748 $ 312,375 $ 47,172(3) 25,000 $ 91,458(6)(7)
Chairman of the Board, 1992 $ 459,160 $ 275,000 $ 70,646 0 $ 75,701
President and Chief Executive Officer 1991 $ 422,963 $ 171,800 NR 30,000 NR
WNC and Washington National
Insurance Company
W. G. Brown 1993 $ 87,500(1) $ 60,000 $ 24,492(4) 20,000 $ 3,938(7)
Executive Vice President and
Chief Information Officer
WNC and Washington National
Insurance Company
C. L. Fuhrmann 1993 $ 257,937 $ 137,500 $ 33,678(3) 15,000 $ 42,275(6)(7)
President 1992 $ 214,293 $ 109,000 $ 20,213 0 $ 31,820
Health Division 1991 $ 195,050 $ 61,900 NR 12,000 NR
Washington National Insurance Company
K. A. Grubb 1993 $ 193,874 $ 92,750 $ 54,109(3)(5) 10,000 $ 18,781(7)
President 1992 $ 92,914(2) $ 45,000 $ 29,769 20,000 $ 618
Education Division
Washington National Insurance Company
J. N. Plato 1993 $ 183,476 $ 102,500 $ 26,362(3) 25,000 $ 21,704(7)
President and Chief Executive Officer
United Presidential Life Insurance
Company
T. Pontarelli 1993 $ 210,780 $ 105,500 $ 25,118(3) 10,000 $ 33,128(6)(7)
Executive Vice President 1992 $ 197,928 $ 85,000 $ 21,971 0 $ 29,079
Law and Administration 1991 $ 180,530 $ 57,200 NR 12,000 NR
WNC and Washington National Insurance
Company
T. C. Scott 1993 $ 212,974 $ 102,500 $ 17,836(3) 10,000 $ 34,048(6)(7)
Executive Vice President and 1992 $ 200,157 $ 88,000 $ 22,860 0 $ 29,626
Chief Financial Officer 1991 $ 188,225 $ 57,500 NR 12,000 NR
WNC and Washington National Insurance
Company
D. L. Wilhelm 1993 $ 230,695 $ 90,000 $ 2,687 10,000 $ 38,081(6)(7)
President and Chief Executive Officer, 1992 $ 212,000 $ 53,300 $ 11,829 0 $ 0
Retired 1991 $ 198,166 $ 0 NR 12,000 NR
United Presidential Life Insurance
Company
<FN>
NR indicates no information is required.
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
(1) Mr. Brown joined WNC and Washington National Insurance Company ("WNIC") in
June 1993 at an annual base salary of $150,000.
(2) Mr. Grubb joined WNC and WNIC in June 1992 at an annual base salary of
$175,000.
(3) Includes $12,894, $10,374, $4,220, $8,361, $8,569 and $10,037 paid to
Messrs. Patin, Fuhrmann, Grubb, Plato, Pontarelli and Scott for payment of
taxes incurred in connection with company-provided automobiles and
company-related travel.
(4) This amount includes $24,127 reimbursement for relocation expenses.
(5) This amount includes $28,216 reimbursement for relocation expenses and
$21,257 incurred in connection with a company-provided automobile.
(6) Includes $68,725, $20,298, $11,510, $12,133 and $4,572 in contributions
made pursuant to WNC's Supplemental Executive Retirement Plan to Messrs.
Patin, Fuhrmann, Pontarelli, Scott and Wilhelm, respectively.
(7) Includes $21,006, $2,625, $21,006, $17,173, $18,850, $21,006, $21,006 and
$21,006 in contributions made pursuant to WNC's defined contribution plans
to Messrs. Patin, Brown, Fuhrmann, Grubb, Plato, Pontarelli, Scott and
Wilhelm, respectively.
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
NUMBER OF ------------------------------- POTENTIAL REALIZABLE VALUE
SECURITIES % OF TOTAL AT ASSUMED ANNUAL RATES
UNDERLYING OPTIONS OF STOCK PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERM (3)
GRANTED EMPLOYEES IN BASE PRICE ($) EXPIRATION --------------------------------
NAME (#)(1) FISCAL YEAR ($/SH)(2) DATE 5% ($) 10% ($)
- ------------------------ ------------ --------------- -------------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
R. W. Patin 25,000 11.55% $ 26.57 03/12/03 $ 417,743 $ 1,058,643
W. G. Brown 20,000 9.24% $ 25.16 06/01/03 $ 316,460 $ 801,971
C. L. Fuhrmann 10,000 4.62% $ 26.57 03/12/03 $ 167,097 $ 423,457
5,000 2.31% $ 24.06 10/14/03 $ 75,656 $ 191,727
K. A. Grubb 10,000 4.62% $ 26.57 03/12/03 $ 167,097 $ 423,457
J. N. Plato 15,000 6.93% $ 22.54 01/01/03 $ 212,629 $ 538,844
10,000 4.62% $ 26.57 03/12/03 $ 167,097 $ 423,457
T. Pontarelli 10,000 4.62% $ 26.57 03/12/03 $ 167,097 $ 423,457
T. C. Scott 10,000 4.62% $ 26.57 03/12/03 $ 167,097 $ 423,457
D. L. Wilhelm 10,000 4.62% $ 26.57 03/12/03 $ 167,097 $ 423,457
<FN>
(1) Twenty percent of the options granted may be exercised each year beginning
on the first year anniversary of the date of grant.
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
(2) All options were granted at the then current market price of a share of
WNC's common stock.
(3) This amount assumes exercise of 20% of the option on each anniversary of
the date of grant, the earliest possible date for exercise, using the
annual increase in the value of the price of one share of WNC's common
stock at the rate indicated at the top of the column.
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT
OPTIONS AT FISCAL YEAR-END ($)
VALUE FISCAL YEAR-END (#) -----------------------------
SHARES ACQUIRED REALIZED -------------------------------- EXERCISABLE
NAME ON EXERCISE (#) ($)(1) EXERCISABLE UNEXERCISEABLE (2) UNEXERCISEABLE
- ----------------------- ----------------- -------------- ----------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. W. Patin 0 70,000 45,000 $ 196,150 $ 249,250
W. G. Brown 0 0 20,000 $ 0 $ 0
C. L. Fuhrmann 3,000 $ 52,995 23,000 23,000 $ 9,510 $ 99,700
K. A. Grubb 0 5,000 25,000 $ 21,300 $ 63,900
J. N. Plato 800 $ 11,832 4,617 28,583 $ 23,843 $ 58,035
T. Pontarelli 0 26,000 18,000 $ 50,880 $ 99,700
T. C. Scott 0 26,000 18,000 $ 50,880 $ 99,700
D. L. Wilhelm 0 28,000 18,000 $ 78,460 $ 99,700
<FN>
(1) This amount represents the difference in the market value of one share of
WNC's common stock on the date of exercise and the exercise price times the
number of shares.
(2) This amount represents the difference in the market value of one share of
WNC's common stock on December 31, 1993 and the exercise price times the
number of shares.
</TABLE>
14
<PAGE>
PERFORMANCE GRAPH
WASHINGTON NATIONAL CORPORATION (WNC)
TOTAL RETURNS -- DIVIDENDS REINVESTED
12/31/88 TO 12/31/93
The following graph compares WNC's stock price performance with the Standard
& Poor's 500 Index (a broad-based, multi-industry measure of the stock market)
and the Dow Jones Life Insurance Index. The latter index is comprised of ten
mid-size life and health insurance companies. The graph shows the yearly change
in total stockholder return during the period from December 31, 1988 through
December 31, 1993, assuming the investment of $100 on December 31, 1988 and the
reinvestment of dividends.
[GRAPHIC--Being filed under Form SE]
WNC's stock price outperformed both the Dow Jones Life Insurance Index (by
43%) and the Standard & Poor's 500 Index (by 197%) from December 31, 1990 to
December 31, 1993. During this time, WNC substantially completed its
restructuring and reported consistently improving operating results.
COMPENSATION OF DIRECTORS
Directors who are not employees of WNC or its subsidiaries earn an annual
fee of $20,000, paid in quarterly installments, and $1,000 for attendance at
each meeting of the board of directors and its committees. Directors who chair a
committee also receive a $2,500 annual fee. Directors are not paid for
telephonic
15
<PAGE>
meetings. Directors employed by WNC or its subsidiaries do not earn fees for
their services as directors. WNC directors may elect to defer payment of a
portion of their director compensation. The terms of the deferred compensation
agreements vary and the agreements may be amended on an annual basis.
Following six years of service on the board, a director is entitled to a
retirement benefit for a period of the earlier to occur of five years from the
payment commencement date and the deaths of the director and his or her spouse.
The retirement benefit is equal to ten percent of the amount of the annual
director's retainer at the time of termination for each year of independent
(non-employee) director service to a maximum of 100% of such amount.
Pursuant to the current terms of the WNC Stock Benefit Plan, each
non-employee director of WNC automatically receives a non-qualified stock option
to purchase 2,000 shares of common stock on the day following the annual meeting
of the board of directors in each calendar year that the plan is in existence.
The option may be exercised in whole or in part at any time after the date of
grant and shall expire 10 years after the date of grant.
WASHINGTON NATIONAL RETIREMENT PLAN
WNC, Washington National Insurance Company and Washington National
Development Company are sponsoring employers of a tax-qualified,
non-contributory defined benefit retirement plan entitled the Washington
National Retirement Plan (the "Retirement Plan"). Effective December 31, 1990,
the Retirement Plan was amended, resulting in no further accrual of benefits
beyond that date. The Retirement Plan will continue to be maintained and the
previously accrued benefits of each participant will be paid upon termination of
employment, death or retirement.
As of December 31, 1993, Messrs. Patin, Pontarelli and Scott had
respectively 1, 16 and 16 years of credited benefit service under the Retirement
Plan and have accrued a frozen annual benefit of $8,771, $35,985, and $32,481,
respectively, payable at age 65 and ending at their death without survivor
benefits. W.G. Brown, C.L. Fuhrmann, and K. A. Grubb were not eligible to
participate in the plan prior to the date on which the plan was amended.
UNITED PRESIDENTIAL CORPORATION'S RETIREMENT PLAN
United Presidential Life Insurance Company sponsors a tax-qualified,
non-contributory defined benefit retirement plan entitled the United
Presidential Corporation Employees' Retirement Plan (the "UPC Retirement Plan").
The UPC Retirement Plan was amended, effective March 31, 1993, resulting in no
further accrual of benefits beyond that date. The UPC Retirement Plan will
continue to be maintained and the previously accrued benefits of each
participant will be paid upon termination of employment, death or retirement. As
of April 1, 1993, Mr. Wilhelm had 31 years of credited benefit service under the
UPC Retirement Plan and accrued a frozen annual benefit of $93,729, payable at
age 65 and ending at his death without survivor benefits.
EMPLOYMENT CONTRACTS
W. G. Brown, C. L. Fuhrmann, K. A. Grubb, R. W. Patin, J.N. Plato, T.
Pontarelli and T. C. Scott have employment agreements with WNC and/or its
wholly-owned subsidiaries, Washington National Insurance Company and United
Presidential Life Insurance Company (collectively referred to herein as the
"Employer"), which provide for continued employment during the two-year period
following the dates of the agreements, subject to automatic extensions of one
day for each day served during the terms of the agreements and base compensation
of at least $170,000, $266,250, $196,630, $520,000, $241,350, $216,000, and
$217,150, respectively, plus any bonus payable under the annual pay-at-risk
plan. The agreements
16
<PAGE>
further provide that base compensation is subject to annual review by the
compensation committee of WNC's board of directors but may not be reduced in any
year without the consent of the executive officer. The Employer or the executive
officer may terminate the agreement for any reason; however, if the Employer
terminates the employment of the executive officer for other than "good cause"
or if the executive officer terminates his or her employment for "good reason,"
then the Employer shall make a lump sum payment to the executive officer in an
amount equal to two years' salary and bonuses for both years under the annual
pay-at-risk plan (prorated for any partial year) that is at least equal to the
most recently paid bonus.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Haire, a member of the Compensation Committee, was, prior to 1978, the
Chairman of the Board and Chief Executive Officer of one of WNC's subsidiaries.
TRANSACTIONS WITH MANAGEMENT
On March 7, 1990, WNC made a mortgage loan to C. L. Fuhrmann in connection
with his purchase of a residence in Illinois. The mortgage loan, in the amount
of $101,980, calls for interest-only payments, provides for a floating rate of
interest which bore interest at a rate of 4.16% during 1993 and is secured by a
mortgage on his Illinois residence and by amounts payable under his employment
agreement. During 1993, Mr. Fuhrmann made interest payments of $3,322 and
principal payments of $16,678, and, as of December 31, 1993, a principal balance
of $47,176 remains outstanding. The largest principal balance outstanding during
1993 was $63,855.
On November 15, 1993, WNC made a mortgage loan to K. A. Grubb, in the amount
of $100,000, in connection with his purchase of a residence in Illinois. The
mortgage loan has a 10-year term, a 25-year amortization schedule and annual
principal and interest payments due each year on December 31, except during the
last year of the term during which the principal and all accrued interest are
due and payable on April 30, 2003. The loan provides for a floating rate of
interest which bore interest at a rate of 4.16% during 1993 and is secured by a
mortgage on his Illinois residence and by amounts payable under his employment
agreement. During 1993, no interest payments were made. The largest principal
balance outstanding during 1993 was $100,000.
On October 10, 1991, WNC made a mortgage loan to R. W. Patin, in the amount
of $250,000, in connection with his purchase of a residence in Illinois. This
loan calls for a 10-year term, a 25-year amortization schedule and annual
principal and interest payments due on April 1 of each year of the loan. The
loan bears an interest rate of 7.93% per annum and is secured by a mortgage on
his Illinois residence and by amounts payable under his employment contract.
During 1993, Mr. Patin made principal payments of $3,432 and interest payments
of $19,694 and, as of December 31, 1993, a principal balance of $244,913 remains
outstanding. The largest principal balance outstanding during 1993 was $248,345.
AUDITORS
The independent public accounting firm of Ernst & Young has audited WNC's
1993 consolidated financial statements as well as the individual financial
statements of certain subsidiary companies.
Ernst & Young has been selected by the board of WNC to serve as its
independent auditor for the year 1994. A representative from Ernst & Young will
be present at the annual meeting and will have the opportunity to make a
statement and to respond to appropriate questions.
17
<PAGE>
STOCKHOLDER PROPOSALS
If a stockholder desires to have a proposal considered for inclusion in the
proxy materials relating to the 1995 annual meeting of stockholders, such
proposal must be marked to the attention of the corporate secretary and received
at WNC's principal executive offices not later than February 16, 1995.
OTHER BUSINESS
The board of directors knows of no business which will be presented for
consideration at the annual meeting other than that stated in the notice of the
meeting. However, if any other business shall properly come before the meeting,
shares represented by the enclosed proxy will be voted with respect to such
business in accordance with the best judgment of the person or persons acting
under the proxy.
By order of the board of directors,
Craig R. Edwards
CORPORATE SECRETARY
Lincolnshire, Illinois
18
<PAGE>
P
R WASHINGTON NATIONAL CORPORATION
O 300 Tower Parkway
X Lincolnshire, Illinois 60069
Y
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints L. A. Ellis, J. R. Haire, G. P. Kendall, Jr.,
and F. L. Klapperich, Jr. as Proxies, each with the power to appoint his
substitute, and hereby authorizes them or any of them to represent and vote, as
designated below, all the shares of common stock and preferred stock of
Washington National Corporation held of record by the undersigned as of the
close of business on April 5, 1994, at the annual meeting of stockholders to be
held on June 16, 1994, or any adjournment thereof.
CLASS A DIRECTORS: Frederick R. Blume, Elaine R. Bond,
Stanley P. Hutchison, and Robert W. Patin.
CLASS C DIRECTOR: Lee M. Mitchell
You are encouraged to specify your choices by marking the appropriate box, SEE
REVERSE SIDE, but you need not mark any box if you wish to vote in accordance
with the Board of Directors' recommendations. The Proxies cannot vote your
shares unless you sign and return this card.
-----------
See Reverse
Side
-----------
<PAGE>
/X/ Please mark, sign, date 3092
and mail this proxy in
the envelope provided.
<TABLE>
<S><C>
This proxy, when properly executed will be voted in the manner directed herein by the undersigned stockholder(s).
If no direction is made, this proxy will be voted "FOR" the election of the nominees for director:
- ----------------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote "FOR" proposal
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FOR Withheld as to all nominees FOR AGAINST ABSTAIN
1. Election of / / / / To withhold authority to 2. In their discretion, the / / / / / /
Directors vote for any individual Proxies are authorized to
nominee(s), write the name vote upon such other
of each such nominee with business as may properly
respect to which you intend come before the meeting.
to withhold authority to vote
on the line provided below.
</TABLE>
<TABLE>
<S> <C>
- ------------------------------------
Please check the box if you plan / /
to attend the annual meeting on
June 16, 1994.
Please date and sign as name appears hereon. If shares are
held jointly or by two or more persons, each shareholder
named should sign. When signing as an attorney, as executor,
administrator, trustee, or guardian, please give full title
as such. If the signer is a corporation, please sign full
corporate name by President or other authorized officer.
If a partnership, please sign in partnership name by
authorized person.
-----------------------------------------------------------
SIGNATURE
-----------------------------------------------------------
SIGNATURE Date
</TABLE>
