<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
- --------------------------------------------------------------------------------
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO
To the Shareholders of
Washington National Corporation:
The annual meeting of shareholders of Washington National Corporation (the
"Corporation") will be held on Thursday, June 6, 1996. 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 Corporation's 1995
annual report to shareholders. If you have not received the annual report,
please call the financial reporting department at (847) 793-3053.
At the annual meeting, you will have the opportunity to vote upon the
election of four directors of the Corporation. Directors and officers of the
Corporation, as well as the Corporation's independent public accountants, 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,
/s/ Robert W. Patin
Robert W. Patin
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
LOGO
April 17, 1996
To the Shareholders of
Washington National Corporation:
The annual meeting of shareholders of Washington National Corporation, a
Delaware corporation (the "Corporation"), will be held at the Corporation's
home office, 300 Tower Parkway, Lincolnshire, Illinois, on Thursday, June 6,
1996, at 10:30 a.m., central daylight savings time, for the following
purposes:
1. To elect four class C directors to serve for a term of three years;
2. To transact such other business as may properly come before the meeting
and any adjournment or postponement thereof.
The board of directors has fixed the close of business on April 8, 1996 as
the record date for determining the shareholders entitled to notice of and to
vote at the annual meeting or any adjournment or postponement thereof.
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. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE YOUR SHARES IN PERSON
EVEN IF YOU HAVE PREVIOUSLY SUBMITTED A PROXY.
By order of the board of directors,
/s/ Craig R. Edwards
Craig R. Edwards
Corporate Secretary
<PAGE>
WASHINGTON NATIONAL CORPORATION
300 Tower Parkway
Lincolnshire, Illinois 60069
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 6, 1996
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 shareholders to be held on Thursday, June 6,
1996 and all adjournments or postponements thereof (the "annual meeting"), for
the purposes set forth in the accompanying notice. Proxy materials are being
mailed to shareholders of WNC on or about April 17, 1996. 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
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, par value $5 per share ("common
stock"), and the $2.50 convertible preferred stock ("preferred stock") of WNC
at the close of business on Monday, April 8, 1996 will be entitled to vote on
all matters which properly come before the annual meeting. As of such record
date, there were outstanding 12,242,058 shares of common stock (excluding
3,383,473 shares held by WNC as treasury stock, which will not be voted) and
144,506 shares of preferred stock. Each shareholder of record of common stock
and preferred stock will be entitled to one vote for every share of stock
standing in his name on the books of WNC on the record date.
Any shareholder entitled to vote may vote his shares either in person or by
his duly authorized proxy. Any proxy solicited herewith may be revoked by the
shareholder 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 annual meeting and all adjournments thereof in accordance
with the instructions reflected in the proxies. Absent any instructions to the
contrary, shares represented by properly executed proxies will be voted FOR
the election of directors.
A quorum of shareholders 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 class C directors, Ronald
L. Bornhuetter, Lee A. Ellis, Frank L. Klapperich, Jr., and Lee M. Mitchell,
expire this year and each has been nominated for reelection to the board. If
the four class C nominees are elected, they will serve the full three-year
term or until the election and qualification of their successors. 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. Unless directed to the
contrary by the shareholders, the proxies received as a result of this
solicitation will be voted FOR election of all nominees. 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:
NOMINEES
CLASS C--TERMS EXPIRING IN 1999:
RONALD L. BORNHUETTER--Chairman, President and Chief Executive Officer of
NAC Re Corporation, Greenwich, Connecticut
Mr. Bornhuetter, age 63, was elected a director of WNC in 1992, and he
serves on the executive, finance and compensation committees, the last of
which he serves as chairman. 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 employment 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.
LEE A. ELLIS--Former Senior Vice President for Business and Finance,
Northwestern University, Evanston, Illinois
Mr. Ellis, age 66, was elected a director of WNC in 1982, and he serves on
the compensation, executive, finance and board affairs committees, the last
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.
FRANK L. KLAPPERICH, JR.--President, Charter Capital Corporation, Chicago,
Illinois
Mr. Klapperich, age 61, was elected a director of WNC in 1991, and he
serves on the compensation, executive and finance committees, the last of
which he serves as chairman. 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.
2
<PAGE>
LEE M. MITCHELL--Principal, Golder, Thoma, Cressey, Rauner, Inc., Chicago,
Illinois
Lee M. Mitchell, age 53, was elected a director of WNC in 1993, and he
serves on the audit, compensation and board affairs committees. Mr.
Mitchell is a principal in the private equity investment firm of Golder,
Thoma, Cressey, Rauner, Inc., ("GTCR"), which specializes in the
acquisition or recapitalization of companies in fragmented, consolidating
industries in partnership with leading executives. Prior to joining GTCR in
1994, Mr. Mitchell was the president and CEO of The Field Corporation and
its predecessor, Field Enterprises, Inc., private management and holding
companies with interests in publishing, communications, paper manufacturing
and commercial real estate. Mr. Mitchell also was a partner in the law firm
of Sidley & Austin, where he maintained a corporate and federal regulatory
practice. He serves as a member of the Board of Governors of The Chicago
Stock Exchange and as a director of Paging Network, Inc. and a number of
private companies.
The eight persons named below will continue to serve as directors for the
terms indicated.
CONTINUING DIRECTORS
CLASS A--TERMS EXPIRING IN 1997:
FREDERICK R. BLUME--Managing Partner, Founder, Capital Health Venture
Partners, Denver, Colorado
Frederick R. Blume, age 53, was elected a director of WNC in 1993, and he
serves on the audit and compensation committees. Mr. Blume is founder and
managing partner of Capital Health Venture Partners, a Denver-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. In addition to being on the faculty of Carroll Graduate
School of Management, Boston College, Mr. Blume also serves as a director
of US Servis, Inc. and Cytyc Corporation.
ELAINE R. BOND--Former Senior Consultant and Chase Manhattan Bank Fellow,
The Chase Manhattan Bank, N.A., New York, New York
Ms. Bond, age 60, was elected a director of WNC in 1992, and she serves on
the audit and compensation committees. Ms. Bond was associated with The
Chase Manhattan Bank, N.A. from 1981 as senior vice president and corporate
staff head for the use of technology in the bank, until her retirement in
December 1994. In 1993, she became a Chase Manhattan Bank Fellow and Senior
Consultant and was 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.
STANLEY P. HUTCHISON--Former Chairman of the Board and Chief Executive
Officer, WNC and Washington National Insurance Company, Lincolnshire,
Illinois
Mr. Hutchison, age 72, was elected a director of WNC in 1968, and he serves
on the audit and finance 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 53, was elected chairman of the board and chief executive
officer of WNC and chairman of the executive committee 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. Mr. Patin also is a director of Evanston Hospital
Corporation.
3
<PAGE>
CLASS B--TERMS EXPIRING IN 1998:
W. FRANCIS BRENNAN--Former Executive Vice President, UNUM Corporation,
Portland, Maine
Mr. Brennan, age 59, was elected by the board as a director of WNC in 1995,
and he serves on the finance and board affairs committees. He retired from
UNUM Corporation in December 1994 as executive vice president, a position
he held since 1991. In his 10 years with UNUM, Mr. Brennan developed and
executed the company's corporate development and international expansion
strategies. Mr. Brennan also serves as a director on The President's
Council of Visitors at the University of Southern Maine.
JOHN R. HAIRE--Chairman, Committee of Independent Directors, Dean Witter
Group of Investment Companies, New York, New York
Mr. Haire, age 71, has been a director of WNC since 1969, and he serves on
the finance and board affairs committees. In 1989, he was elected chairman
of 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
is also a director of 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 61, was elected a director of WNC in 1974, and he serves
on the executive, board affairs and audit committees, the last of which he
serves as chairman. 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 71, was elected a director of WNC in 1983, and he serves on
the audit and board affairs committees. He was associated with Rust-Oleum
Corporation, a manufacturer of rust-preventive coatings, since 1959 and was
chairman of that company until his retirement in 1988.
BOARD OF DIRECTORS AND ITS COMMITTEES
The board of directors held five meetings during 1995. The board has
established five standing committees whose principal functions are described
below. During 1995, with the exception of Mr. Bornhuetter, 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 four times in 1995. 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, Ronald L.
Bornhuetter, Lee A. Ellis, George P. Kendall, Jr. and Frank L. Klapperich, Jr.
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 1995. 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. George P. Kendall, Jr., chairman, Frederick R.
Blume, Elaine R. Bond, Stanley P. Hutchison, Lee M. Mitchell and Rex Reade
currently serve on the audit committee.
The compensation committee met five times in 1995. Its function is to review
and approve basic and incentive compensation plans and budgets for WNC and its
subsidiaries; to evaluate the performance and determine compensation for the
chief executive officer and those reporting directly to him; to administer any
existing stock option plans; to review board compensation matters and to
provide an annual report on executive
4
<PAGE>
compensation to be included in the proxy statement for WNC's annual meeting of
shareholders. Ronald L. Bornhuetter, chairman, Frederick R. Blume, Elaine R.
Bond, Lee A. Ellis, Frank L. Klapperich, Jr. and Lee M. Mitchell currently
serve on the compensation committee.
The finance committee met five times in 1995. 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. Frank L.
Klapperich, Jr., chairman, Ronald L. Bornhuetter, W. Francis Brennan, Lee A.
Ellis, John R. Haire and Stanley P. Hutchison currently serve on the finance
committee.
The board affairs committee met four times in 1995. 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 board affairs committee will consider
nominations for directorships submitted in writing by shareholders to the
corporate secretary. Lee A. Ellis, chairman, W. Francis Brennan, John R.
Haire, George P. Kendall, Jr., Lee M. Mitchell and Rex Reade currently serve
on the board affairs committee.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely on WNC's review of Reports on Forms 3, 4 and 5 and amendments
thereto furnished to it pursuant to Rule 16a-3(e) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), during its most recent fiscal
year, no person who, at 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 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 the outstanding shares of
common stock of WNC (exclusive of treasury stock) as of April 8, 1996.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED(1)
------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENTAGE
------------------------------------ --------- ----------
<S> <C> <C>
George P. Kendall, Jr.(2)
300 Tower Parkway
Lincolnshire, IL 60069 1,484,592 12.13%
NBD Bancorp, Inc.(3)
611 Woodward Avenue
Detroit, MI 48226 1,361,039 11.12%
Shufro, Rose & Ehrman(4)
745 Fifth Avenue
New York, NY 10151 722,170 5.90%
SunTrust Banks, Inc.(5)
25 Park Place, N. E.
Atlanta, GA 30303 1,560,450 12.75%
</TABLE>
(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 WNC 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
5
<PAGE>
owned, as of May 25, 1995, 30,100 shares or 21.0% 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) George P. Kendall, Jr. beneficially owns 1,484,592 shares of common stock,
including 1,263,003 shares which are also reported under NBD Bancorp,
Inc.'s beneficial ownership total. The 1,263,003 shares are held by
various trusts (including the G. R. Kendall Foundation and Trust) with
respect to which George P. Kendall, Jr. and NBD Bancorp, Inc., as well as
other members of the Kendall family, share voting and investment power as
co-trustees of such trusts. Excluding these 1,263,003 shares, George P.
Kendall, Jr. beneficially owns 221,589 shares or 1.81% of the outstanding
shares.
(3) According to its Schedule 13G filed with the Securities and Exchange
Commission on February 13, 1996, NBD Bancorp, Inc. beneficially owned
1,361,039 shares of common stock on such date. NBD Bancorp, Inc. indicated
that it had sole voting power over 43,459 shares, shared voting power over
1,317,580 shares, sole investment power over 20,906 shares and shared
investment power over 1,299,254 shares. Included in NBD Bancorp, Inc.'s
beneficial ownership total are 510,169 shares held by the G. R. Kendall
Foundation and Trust over which NBD Bancorp, Inc. shares voting and
investment power in its capacity as co-trustee with, among others, George
P. Kendall, Jr., a director of WNC.
(4) According to its Schedule 13G filed with the Securities and Exchange
Commission on February 14, 1996, Shufro, Rose & Ehrman beneficially owned
on such date 722,170 shares of common stock. Shufro, Rose & Ehrman
indicated that it had sole voting power over 72,350 shares and sole
investment power over 722,170 shares.
(5) According to its Schedule 13G filed with the Securities and Exchange
Commission on January 23, 1996, SunTrust Banks, Inc. beneficially owned
1,560,450 shares of common stock on such date. SunTrust Banks, Inc.
indicated that it had sole voting power over 545,750 shares, sole
investment power over 1,559,700 shares and shared investment power over
750 shares.
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, and all executive officers and directors as a group as of
April 1, 1996.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
NAME OF BENEFICIAL BENEFICIALLY
OWNER TITLE OF CLASS OWNED(1) PERCENTAGE(2)
------------------ -------------- ------------ -------------
<S> <C> <C> <C>
F. R. Blume common stock 4,950(3)
E. R. Bond common stock 7,150(3)
R. L. Bornhuetter common stock 13,250(3)
W. F. Brennan common stock 3,400(3)
W. G. Brown common stock 14,021(3)
L. A. Ellis common stock 11,131(3)
C. L. Fuhrmann common stock 45,600(3)
K. A. Grubb common stock 27,095(3)
J. R. Haire common stock 11,400(3)
S. P. Hutchison common stock 14,588(3)
preferred stock 100
G. P. Kendall, Jr. common stock 1,484,592(3)(4) 12.13%
preferred stock 2,300 1.59%
F. L. Klapperich, Jr. common stock 9,750(3)
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
NAME OF BENEFICIALLY
BENEFICIAL OWNER TITLE OF CLASS OWNED(1) PERCENTAGE(2)
---------------- -------------- ------------ -------------
<S> <C> <C> <C>
L. M. Mitchell common stock 5,000(3)
R. W. Patin common stock 144,061(3) 1.18%
J. N. Plato common stock 32,910(3)
T. Pontarelli common stock 47,566(3)
R. Reade common stock 8,500(3)
T. C. Scott common stock 56,100(3)
All Executive Officers
and common stock 1,941,063(3)(5) 15.86%
Directors as a preferred stock 2,400 1.66%
Group (18 persons)
</TABLE>
(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 March 1, 1996, as follows: Mr. Blume,
4,000; shares; Ms. Bond, 6,000 shares; Mr. Bornhuetter, 6,750 shares; Mr.
Brennan, 2,000; Mr. Brown, 14,000 shares; Mr. Ellis, 8,250 shares; Mr.
Fuhrmann, 45,000 shares; Mr. Grubb, 27,000 shares; Mr. Haire, 8,250
shares; Mr. Hutchison, 8,250 shares; Mr. Kendall, 6,750 shares; Mr.
Klapperich, 6,750 shares; Mr. Mitchell, 4,000 shares; Mr. Patin, 120,000
shares; Mr. Plato, 28,183 shares; Mr. Pontarelli, 46,000 shares; Mr.
Reade, 8,250 shares; Mr. Scott, 46,000 shares; and all executive officers
and directors as a group, 1,941,063 shares.
(4) See footnote (2) on page 6 for information relating to Mr. Kendall's
beneficial ownership.
(5) The 1,941,063 shares of common stock shown include 1,263,003 shares
beneficially owned by George P. Kendall, Jr. that are reported above under
both George P. Kendall, Jr.'s and NBD Bancorp, Inc.'s beneficial ownership
totals.
EXECUTIVE COMPENSATION
REPORT OF WASHINGTON NATIONAL CORPORATION COMPENSATION COMMITTEE
The compensation committee reviews and approves the compensation of WNC's
executive officers, including the named executive officers in the Summary
Compensation Table. It also reviews overall compensation policies and levels
for all other executives.
WNC believes that shareholders 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, Ellis, Klapperich and Mitchell and
Ms. Bond in their capacity as the board's compensation committee addressing
WNC's compensation policies for 1995 as they affected WNC's executive
officers: Messrs. Brown, Fuhrmann, Grubb, Patin, Plato, Pontarelli and Scott.
Each member of the compensation committee is a non-employee director.
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<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 shareholders;
(b) to attract and retain key executives by providing a total compensation
package which rewards executives for adding value for shareholders 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 shareholder 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 compensation committee and its compensation
consultant last conducted a study in 1994 to analyze the continued
competitiveness of WNC's compensation program for its executive officers. The
committee views the 60th percentile as "competitive" and sets its base and
target incentive compensation at that level.
For 1995, 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 both annual pay-at-risk compensation and
long-term pay-at-risk cash and stock-based compensation. The compensation
committee believes that stock-based compensation arrangements are very
important in aligning management and shareholder interests in improvement of
shareholder value. For this reason, the committee has utilized non-qualified
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 a large percentage of its executive officer long-term 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 shareholder value and
individual performance.
RELATIONSHIP BETWEEN CORPORATE PERFORMANCE AND EXECUTIVE COMPENSATION
Compensation paid to WNC's executive officers for 1995, as reflected in the
following tables, primarily consisted of base compensation, and compensation
pursuant to the terms of the 1995 Annual Pay-At-Risk and the 1993-1995 Long-
Term Pay-At-Risk Plans. In early 1995, the compensation committee established
target payout and performance levels for the Annual Pay-at-Risk Plan. The
Annual Pay-at-Risk Plan is a cash bonus plan which in 1995 covered virtually
all 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 the payout pool is totally based
on the achievement of certain pre-established WNC, subsidiary and divisional
pretax operating income goals approved by WNC's board.
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 corporate or
divisional goals are met during the year. The key WNC, subsidiary and
divisional goals are the achievement of board approved annual business plans
which include specific pretax operating income, revenue and expense control
targets. In addition, individual goals include specific managerial and
personal initiatives and projects not directly related to
8
<PAGE>
financial performance. Although important, these individual goals are given 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 1993, WNC implemented 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 1995 to the named executive officers at an
exercise price equal to the market value of the common stock on the date of
grant. These options may be exercised over ten years and will vest in equal
annual installments over a five year period. By providing value to the
executive as shareholder value is created, the option grants align the
interest of executives with those of the shareholders. The size of the 1995
stock option was determined by placing a value on each option share utilizing
an option valuation model and taking into account the nature and size of the
other elements of compensation paid to the named executive officers. 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 was set to meet the committee's pay mix
target for "at-risk" pay.
The Long-Term Pay-At-Risk Plan has provided for cash-based incentives for
achievement of rolling three year cycles 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 the
1993-1995 and 1994-1996 cycles, awards were earned by measuring corporate and
divisional pretax operating income performance versus plan and general
financial performance versus the industry, as determined by the subjective
judgment of the committee. The 1993-1995 and 1994-1996 Long-Term Pay-At-Risk
Plans each have three separate components based on performance during a given
fiscal year. Once performance standards during a fiscal year are achieved,
that year's component is not affected by subsequent years' performance. Plans
that operate in this manner are considered "annual" and not "long-term"
compensation plans under relevant Securities and Exchange Commission Rules.
Therefore, disclosure of payouts under each of these Plans is included in the
Bonus column under the heading "Annual Compensation" in the Summary
Compensation Table.
During 1994, the compensation committee studied possible measurement
standards other than pretax operating income for the cash portion of the Long-
Term Pay-At-Risk Plan. As a result, performance measures for the 1995-1997 and
future cycles of the Long-Term Pay-At-Risk Plan have been revised to
incorporate return on shareholder equity targets and total shareholder return
measured against both a broad group of publicly held life and health insurance
companies and the Standard & Poor's SmallCap 600 index. Use of these new
measures should contribute to better balance in WNC's pay-at-risk compensation
between internal corporate performance and performance relative to the
insurance industry and the investment marketplace in general. In addition, the
percentage of base compensation to be earned for these cycles was increased to
30% for the chief executive officer (as compared to 15% for previous cycles)
and 25% for other executive officers (as compared to 12% for previous cycles.)
This increase was the result of the 1994 study which indicated that an
increase in long-term cash incentive pay was appropriate in order to remain
competitive as compared to a peer group of life and health insurance
companies. The compensation committee continues to believe that operating
performance criteria are appropriate for annual pay-at-risk plans while common
stock market price, return on shareholder equity and total shareholder return
relative to the market are appropriate measures for long-term rewards.
The compensation committee intends to continue structuring its pay-at-risk
programs on the achievement of aggressive corporate and individual performance
goals designed to provide appropriate incentives, while retaining sufficient
flexibility to assess and reward individual performance achievement.
CORPORATE PERFORMANCE AND CEO COMPENSATION
Consistent with its approach for executive officers, 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 target total compensation "at-risk"
based on objective short
9
<PAGE>
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 compensation
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. With input from a
compensation consultant, the compensation committee set Mr. Patin's base
compensation at the 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 WNC's and his performance. The appropriateness of
Mr. Patin's base compensation and total compensation opportunities was
reaffirmed in the previously mentioned market study undertaken by the
compensation committee in 1994.
The compensation committee established Mr. Patin's annual pay-at-risk target
at 50% of his base compensation for 1995. Mr. Patin was paid 121% of this
target primarily because WNC exceeded its profit plan goals, including its
pretax operating income and revenue targets. In addition, the compensation
committee considered and rewarded Mr. Patin's performance in achieving certain
personal performance goals in 1995. As a result of WNC's achievement of its
1995 pretax operating income target, Mr. Patin also vested in the 1995 segment
of the 1993-1995 and the 1994-1996 performance periods of the Long-Term Pay-
At-Risk Plan. In March 1996, Mr. Patin received $81,510 representing 15% of
his 1995 base compensation as a result of the achievement of all targets in
the 1993-1995 cycle. Moreover, if he is still employed by WNC in 1997, Mr.
Patin will receive 10% of his 1996 base compensation in March 1997, as a
result of the vested portion of the 1994-1996 performance period. In March
1995, the committee granted Mr. Patin an option to purchase 25,000 shares of
WNC's common stock under the stock-based portion of the Long-Term Pay-At-Risk
Plan at 100% of the then market price of $18.38. This option has a ten year
term and vests in equal installments over five years.
The Internal Revenue Code was amended to limit the deductibility of certain
compensation in excess of $1,000,000 annually. Mr. Patin is the only executive
officer who could potentially approach this compensation level in 1996. The
compensation committee continues to study this issue with an intent to
maximize deductibility without hindering its discretion to compensate
executives commensurate with performance and comparative compensation
information.
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
Ronald L. Bornhuetter, Chairman
Frederick R. Blume
Elaine R. Bond
Lee A. Ellis
Frank L. Klapperich, Jr.
Lee M. Mitchell
10
<PAGE>
The following tables set forth the compensation information for the years
1993 through 1995 with respect to WNC's chief executive officer and the six
most highly compensated executive officers of WNC whose cash compensation
exceeded $100,000 in 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------ -------------------
AWARDS
(SECURITIES
OTHER ANNUAL UNDERLYING- ALL OTHER
NAME AND BONUS COMPENSATION OPTION/ PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) ($) SARS (#)) ($)(3) ($)(4)(5)
- ------------------ ---- -------- ----- ------------ ----------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
R. W. Patin 1995 $546,990 $330,000 $ 14,886(1) 25,000 $81,510 $81,486
Chairman of the Board, 1994 $521,398 $275,000 $ 16,703 25,000 $81,210
President and CEO 1993 $494,748 $312,375 $ 12,894 25,000 $91,458
WNC and Washington
National Insurance Company
("WNIC")
W. G. Brown 1995 $183,927 $ 88,000 $ 84,772(1)(2) 10,000 $21,318 $30,947
Executive Vice 1994 $178,773 $ 77,500 $110,637 10,000 $20,472
President and Chief 1993 $ 87,500 $ 60,000 $ 24,492 20,000 $ 3,938
Information Officer, WNC and WNIC
C. L. Fuhrmann 1995 $285,310 $138,000 $ 11,167(1) 10,000 $33,390 $42,706
President 1994 $247,737 $114,000 $ 8,227 10,000 $40,108
Health Division 1993 $257,937 $137,500 $ 10,374 15,000 $42,275
WNIC
K. A. Grubb 1995 $211,930 $ 70,000 $ 36,881(1)(2) 10,000 $18,237 $27,016
President 1994 $203,084 $ 19,000 $ 61,783 10,000 $33,536
Education Division 1993 $193,874 $ 92,750 $ 54,109 10,000 $18,781
WNIC
J. N. Plato 1995 $259,868 $135,000 $ 40,251(1)(2) 10,000 $30,402 $40,526
Chairman of the Board, 1994 $235,300 $111,000 $ 10,163 10,000 $38,867
President and CEO 1993 $183,476 $102,500 $ 0 15,000 $21,704
United Presidential Life Insurance
Company
T. Pontarelli 1995 $233,428 $115,500 $ 10,407(1) 10,000 $27,090 $36,417
Executive Vice President 1994 $222,190 $ 96,000 $ 11,519 10,000 $34,784
Law and Administration, WNC and 1993 $210,780 $105,500 $ 8,569 10,000 $33,128
WNIC
T. C. Scott 1995 $234,832 $113,500 $ 36,421(1)(2) 10,000 $27,234 $36,273
Executive Vice 1994 $223,132 $ 93,000 $ 4,049 10,000 $34,743
President and Chief 1993 $212,974 $102,500 $ 10,037 10,000 $34,048
Financial Officer, WNC and WNIC
</TABLE>
(1) Includes $14,886, $60,061, $11,167, $12,267, $13,910, $10,407 and $4,653
paid to Messrs. Patin, Brown, Fuhrmann, Grubb, Plato, Pontarelli and
Scott, respectively, for payment of taxes incurred primarily in connection
with relocation expenses, company-provided automobiles and company-related
travel.
(2) Includes $24,711, $23,285, $26,341 and $31,768 incurred in connection with
company-provided automobiles.
(3) Paid to Messrs. Patin, Brown, Fuhrmann, Grubb, Plato, Pontarelli and
Scott, respectively, under the 1993-1995 Long-Term Pay-At-Risk Plan.
(4) Includes $63,594, $12,113, $25,498, $8,476, $20,902, $19,209 and $19,065
in contributions made pursuant to WNC's Supplemental Executive Retirement
Plan to Messrs. Patin, Brown, Fuhrmann, Grubb, Plato, Pontarelli and
Scott, respectively.
(5) Includes $16,164 in contributions made pursuant to WNC's defined
contribution plans to each of Messrs. Patin, Brown, Fuhrmann, Grubb,
Plato, Pontarelli and Scott.
11
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
NUMBER OF ---------------------- -----------------
SECURITIES % OF TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#)(1) FISCAL YEAR ($/SH)(2) DATE 5% ($) 10% ($)
- ---- ---------- ------------ --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
R. W. Patin 25,000 16.39% $18.38 3/02/05 $288,977 $732,325
W. G. Brown 10,000 6.56% $18.38 3/02/05 $115,591 $292,930
C. L. Fuhrmann 10,000 6.56% $18.38 3/02/05 $115,591 $292,930
K. A. Grubb 10,000 6.56% $18.38 3/02/05 $115,591 $292,930
J. N. Plato 10,000 6.56% $18.38 3/02/05 $115,591 $292,930
T. Pontarelli 10,000 6.56% $18.38 3/02/05 $115,591 $292,930
T. C. Scott 10,000 6.56% $18.38 3/02/05 $115,591 $292,930
</TABLE>
(1) Twenty percent of the options granted may be exercised each year beginning
on March 2, 1996.
(2) All options were granted at the then current market price of a share of
WNC's common stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE YEAR-END (#) AT FISCAL YEAR-END ($)
EXERCISE REALIZED ------------------------- ----------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE(2) UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. W. Patin 0 -- 120,000 45,000 $622,100 $244,200
W. G. Brown 0 -- 14,000 26,000 $ 0 $123,080
C. L. Fuhrmann 0 -- 45,000 21,000 $155,940 $108,390
K. A. Grubb 0 -- 27,000 23,000 $ 0 $137,130
J. N. Plato 1,000 $9,165 21,750 25,817 $ 37,081 $116,768
T. Pontarelli 0 -- 46,000 18,000 $214,000 $ 97,680
T. C. Scott 0 -- 46,000 18,000 $214,000 $ 97,680
</TABLE>
(1) This amount represents the difference between 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 between the market value of one
share of WNC's common stock on December 29, 1995 ($27.63) and the exercise
price times the number of shares.
12
<PAGE>
LONG TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
POSSIBLE 1998 PAYMENTS AS A PERCENTAGE OF 1997 ANNUAL BASE COMPENSATION
<TABLE>
<CAPTION>
PERFORMANCE
NAME PERIOD THRESHOLD TARGET MAXIMUM
- ---- ------------------ --------- ------ -------
<S> <C> <C> <C> <C>
R. W. Patin 1/95 through 12/97 0% 30% 75.0%
W. G. Brown 1/95 through 12/97 0% 25% 62.5%
C. L. Fuhrmann 1/95 through 12/97 0% 25% 62.5%
K. A. Grubb 1/95 through 12/97 0% 25% 62.5%
J. N. Plato 1/95 through 12/97 0% 25% 62.5%
T. Pontarelli 1/95 through 12/97 0% 25% 62.5%
T. C. Scott 1/95 through 12/97 0% 25% 62.5%
</TABLE>
The table shows the percentage of annual base compensation in effect on
December 31, 1997 that would be payable as an incentive award if WNC achieved
certain return on equity and total shareholder return goals set by the
compensation committee for the 1995-1997 performance period. The compensation
committee established a range of possible payments, including threshold,
target and maximum payments, based upon WNC's three-year average return on
equity and its three-year total shareholder return relative to the Standard &
Poor's SmallCap 600 and a peer group of life and health insurance companies.
No awards will be made if either of WNC's insurance subsidiaries do not
maintain an A- Best rating or higher during the three-year performance period.
If earned, awards would be payable in cash in 1998.
PERFORMANCE GRAPH
WASHINGTON NATIONAL CORPORATION
TOTAL RETURNS--DIVIDENDS REINVESTED
12/31/90 TO 12/31/95
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 (Peer Group). The latter index is
comprised of twelve life and health insurance companies. The graph shows the
yearly change in total shareholder return as of each calendar year end during
the period from December 31, 1990 through December 31, 1995, assuming the
investment of $100 on December 31, 1990 and the reinvestment of dividends.
<TABLE>
[GRAPH APPEARS HERE]
<CAPTION>
Measurement Period Washington Peer S&P 500
(Fiscal Year Covered) National Group Index
- ------------------- ---------- ------- -------
<S> <C> <C> <C>
Measurement Pt-
1990 100.000 100.000 100.000
1991 157.000 155.433 130.335
1992 239.676 203.234 140.251
1993 261.513 216.551 154.324
1994 217.601 193.854 156.419
1995 332.133 267.397 214.990
</TABLE>
13
<PAGE>
COMPENSATION OF DIRECTORS
Effective January 1, 1995, directors who are not employees of WNC or its
subsidiaries earn an annual fee of $25,000, 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 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 (i) five years from
the payment commencement date and (ii) the deaths of the director and his or
her spouse. The annual retirement benefit is equal to ten percent of the
amount of the director's annual 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, 1995, 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. Messrs. Brown, Fuhrmann, Grubb and Plato were not eligible
to participate in the Retirement Plan prior to the date on which the
Retirement Plan was amended and therefore are not entitled to any benefits
thereunder.
EMPLOYMENT CONTRACTS
Messrs. Brown, Fuhrmann, Grubb, Patin, Plato, Pontarelli and 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 $185,650,
$290,750, $209,130, $567,853, $303,350, $237,050 and $237,150, respectively,
plus any bonus payable under the Annual Pay-At-Risk Plan. The agreements
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.
14
<PAGE>
TRANSACTIONS WITH MANAGEMENT
On November 15, 1993, WNC made a mortgage loan to Mr. Grubb in the amount of
$100,000, in connection with his purchase of a residence in Illinois. This
mortgage loan was amended in April 1995 to provide for a fixed interest rate
of 5.84% and payments due each year on March 31. The mortgage loan has a 10-
year term and a 25-year amortization schedule. The loan is secured by a
mortgage on his Illinois residence and by amounts payable under his employment
agreement. As of December 31, 1995, a principal balance of $93,989 remains
outstanding. The largest amount outstanding during 1995 was $96,081.
On October 10, 1991, WNC made a mortgage loan to Mr. Patin in the amount of
$250,000, in connection with his purchase of a residence in Illinois. This
loan has 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 agreement. As
of December 31, 1995, a principal balance of $82,982 remains outstanding. The
largest amount outstanding during 1995 was $191,046.
In 1994, WNC made a mortgage loan to Mr. Brown in the amount of $100,000, in
connection with his purchase of a residence in Illinois. This loan has a 10-
year term and 25-year amortization schedule. The loan bears an interest rate
of 6.35% per annum and is secured by a mortgage on his Illinois residence and
by amounts payable under his employment agreement. As of December 31, 1995, a
principal balance of $98,561 remains outstanding. The largest amount
outstanding during 1995 was $100,000.
AUDITORS
The independent public accounting firm of Ernst & Young LLP has audited
WNC's 1995 consolidated financial statements as well as the individual
financial statements of certain subsidiary companies.
Ernst & Young LLP has been selected by the board of WNC to serve as its
independent auditor for the year 1996. A representative from Ernst & Young LLP
will be present at the annual meeting and will have the opportunity to make a
statement and to respond to appropriate questions.
SHAREHOLDER PROPOSALS
If a shareholder desires to have a proposal considered for inclusion in the
proxy materials relating to the 1997 annual meeting of shareholders, such
proposal must be marked to the attention of the corporate secretary and
received at WNC's principal executive offices not later than January 1, 1997.
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,
/s/ Craig R. Edwards
Craig R. Edwards
Corporate Secretary
Lincolnshire, Illinois
15
<PAGE>
- --------------------------------------------------------------------------------
P R O X Y
WASHINGTON NATIONAL CORPORATION
300 TOWER PARKWAY
LINCOLNSHIRE, ILLINOIS 60069
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints G. P. Kendall, Jr. and R. W. Patin 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 com-
mon stock and preferred stock of Washington National Corporation held of record
by the undersigned as of the close of business on April 8, 1996, at the annual
meeting of shareholders to be held on June 6, 1996, or any adjournment thereof.
ELECTION OF DIRECTORS:
CLASS C DIRECTORS: Ronald L. Bornhuetter, Lee A. Ellis,
Frank L. Klapperich, Jr., and 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
-----------
. FOLD AND DETACH HERE .
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE
ANNUAL MEETING WHETHER OR NOT YOU PLAN TO ATTEND IN
PERSON. WE URGE YOU TO COMPLETE AND MAIL YOUR PROXY CARD
IN THE ENCLOSED ENVELOPE.
<PAGE>
[X] Please mark, sign, date
and mail this proxy in
the envelope provided.
3092
THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR. IN THEIR DISCRETION, THE
PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
- --------------------------------------------------------------------------------
Election of Directors FOR
-----
| |
-----
To withhold authority to vote for any individual WITHHELD AS TO ALL NOMINEES
nominee(s), mark the "FOR" box and write the name -----
of each such nominee with respect to which you | |
intend to withhold authority to vote on the line -----
provided below.
- --------------------------------------------------------------------------------
Please check the box if you plan to attend the annual meeting on June 6, 1996
-----
| |
-----
Please date and sign as name appears hereon. If shares are held jointly by two
or more persons, each shareholder named should sign. When signing as an attor-
ney, executor, administrator, trustee, or guardian, please give full title as
such. If the signer is a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in part-
nership name by authorized person.
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SIGNATURE
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SIGNATURE DATE
. FOLD AND DETACH HERE .
