<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
StanCorp Financial Group, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
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was paid previously. Identify the previous filing by registration statement
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<PAGE>
[LOGO OF STANCORP FINANCIAL GROUP, INC.]
March 29, 2000
Dear Fellow Shareholder:
On behalf of your board of directors, I have the pleasure of inviting you to
attend our first Annual Meeting of shareholders. The meeting will be held on
Monday, May 1, 2000, at 11:00 a.m. Pacific Time in the auditorium of the World
Trade Center, Building 2, 25 SW Salmon Street, Portland, Oregon. I hope that
you will participate in the annual meeting. You can do so by attending the
meeting and voting in person. Alternatively, you may vote by completing the
enclosed proxy card and returning it as promptly as possible. You may also
complete your proxy by telephone or over the Internet.
Included with this mailing, you will find our Annual Report to Shareholders,
which includes our Annual Report on Form 10-K. The Annual Report includes
audited financial statements for our fiscal year, which ended on December 31,
1999. Your will also find our proxy statement. The proxy statement outlines
the items of business that will be discussed and voted upon at the Annual
Meeting. I urge you to read the Annual Report and the proxy statement
carefully as they contain information about us that you may find important.
I hope to see you at the Annual Meeting. If you are unable to attend, I
again ask that you complete your proxy and return it by mail, telephone, or
over the Internet as soon as possible.
Sincerely,
/s/ Ronald E. Timpe
-------------------
Ronald E. Timpe
Chairman, President and
Chief Executive Officer
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Topic Page
----- ----
<C> <S> <C>
NOTICE OF ANNUAL MEETING
GENERAL INFORMATION....................................................... 1
Voting Rights.................................................... 1
Voting by Proxy.................................................. 1
Votes Required................................................... 2
Cost of Proxy Solicitation....................................... 2
ITEM 1. ELECTION OF DIRECTORS............................................ 2
Nominees for Election at the Annual Meeting...................... 2
Directors in Classes............................................. 3
Nominees for Election............................................ 3
Continuing Directors............................................. 4
CORPORATE GOVERNANCE...................................................... 5
Committees of the Board.......................................... 5
Directors' Compensation.......................................... 5
SHARE OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN
SHAREHOLDERS............................................................. 6
CERTAIN SHAREHOLDERS...................................................... 7
REPORT OF THE ORGANIZATION AND COMPENSATION COMMITTEE..................... 7
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION............... 10
COMPENSATION OF EXECUTIVE OFFICERS........................................ 11
Summary Compensation Table....................................... 11
Stock Options.................................................... 12
Options Exercised................................................ 12
1999 Long-Term Incentive Plan Awards............................. 12
Standard Retirement Program...................................... 14
Certain Relationships and Related Transactions................... 14
Performance Graph................................................ 16
ITEM 2. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS.......... 16
ITEM 3. OTHER MATTERS.................................................... 16
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE................... 17
SHAREHOLDER NOMINATIONS AND PROPOSALS..................................... 17
</TABLE>
i
<PAGE>
STANCORP FINANCIAL GROUP, INC.
1100 SW Sixth Avenue
Portland, Oregon 97204
----------------
Notice of Annual Meeting of Shareholders
----------------
Notice is hereby given that the Annual Meeting of Shareholders of StanCorp
Financial Group, Inc., an Oregon corporation, will be held in the auditorium
of the World Trade Center, Building 2, 25 SW Salmon Street, Portland, Oregon,
on May 1, 2000, at 11:00 a.m. Pacific Time, for the following purposes:
1. To elect four directors to serve for three-year terms expiring in
2003;
2. To ratify the appointment of Deloitte & Touche LLP as StanCorp's
independent auditors for the year 2000; and
3. To transact any other business that may properly come before the
Annual Meeting.
The close of business on March 2, 2000 has been fixed as the record date for
determination of shareholders entitled to notice of, and to vote at, the
Annual Meeting.
Shareholders may vote by written proxy, by telephone, or over the Internet.
Instructions for voting by telephone and over the Internet are printed on the
proxy card. If you attend the meeting and intend to vote in person, please
notify our personnel of your intent as you sign in for the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Dwight L. Cramer
Vice President, General Counsel
and Corporate Secretary
<PAGE>
STANCORP FINANCIAL GROUP, INC.
1100 SW Sixth Avenue
Portland, Oregon 97204
----------------
PROXY STATEMENT
----------------
GENERAL INFORMATION
This proxy statement concerns the Annual Meeting of Shareholders of StanCorp
Financial Group, Inc. ("StanCorp," "we," "us," "our") to be held on May 1,
2000 ("Annual Meeting"). The Annual Meeting will be held at 11:00 a.m. Pacific
Time in the auditorium of the World Trade Center, Building 2, 25 SW Salmon
St., Portland, Oregon. This is our first Annual Meeting as a publicly traded
company. Our shares began trading on the New York Stock Exchange under the
ticker symbol "SFG" at our initial public offering on April 16, 1999. We have
only one class of common stock that is eligible to vote. As of March 2, 2000,
we had 32,480,828 outstanding shares of common stock ("Common Stock").
Our board of directors is soliciting your proxy for use at the Annual
Meeting and at any adjournment of the meeting. You will be asked to vote upon
two items: Item 1. Election of Directors and Item 2. Approval of Deloitte &
Touche LLP as our independent auditors. Your proxy will also permit a vote on
any other matter that may legally come before the Annual Meeting. We are
currently not aware of any other item that will require a shareholder vote.
We have included in this packet a copy of the 1999 Annual Report to
Shareholders, which includes our Annual Report on Form 10-K. The Annual Report
includes audited financial statements for our fiscal year, which is a calendar
year, January 1 through December 31. You may wish to review the Annual Report
carefully. It contains detailed information about our business and about us.
We are mailing this proxy statement and the accompanying forms of proxy and
voting instructions on or about March 29, 2000 to holders of our Common Stock
on the record date for the Annual Meeting.
Voting Rights
Each share of our Common Stock is entitled to one vote on each proposal and
with respect to each director position to be filled. Cumulative voting does
not apply. In order to be eligible to vote on matters coming before the Annual
Meeting, you must own at least one share of our stock on the record date. The
board of directors has set the record date as close of our business day on
March 2, 2000 ("Record Date"). If you do own shares as of the Record Date, you
may vote them either in person at the Annual Meeting or by proxy. You may vote
by proxy by completing a proxy card and mailing it in the postage paid
envelope, by using a toll-free telephone number, or by voting over the
Internet. Please refer to your proxy card or the information forwarded to you
by your bank, broker, or other holder of record to see which options are
available to you. Your ability to vote by telephone or by the Internet will
close at 12:01 a.m. Eastern Time on May 1, 2000.
Voting by Proxy
We have included a proxy in this packet. Our board of directors is
soliciting this proxy from you. The proxyholder(s) (the person(s) designated
in the proxy to cast your vote, also known as "proxies") will vote your shares
according to your instructions. If you return your proxy signed, but without
directions, the proxyholder will vote your shares in accordance with the
recommendations of our board of directors with regard to Items 1. and 2. If
other matters come before the Annual Meeting that require a shareholder vote,
the proxyholder will vote your shares in accordance with the recommendations
of our management.
You have the right to revoke your proxy at any time up to the time the
proxyholder votes your shares. You have three ways to revoke your proxy.
First, you may do so in writing. Please send your revocation to our
<PAGE>
Corporate Secretary, P. O. Box 711, Portland, OR 97207. Your written
revocation must actually be received by April 28, 2000. Secondly, you can cast
another valid proxy in writing, by telephone, or over the Internet. Your vote
will be cast in accordance with the latest valid proxy. Thirdly, you can
revoke your proxy by voting in person at the Annual Meeting. If you choose to
vote in person, please let our personnel know that you are revoking a
previously given proxy and are now voting in person.
Votes Required
As required by Oregon law and our Bylaws, in order to elect nominees to our
board of directors at the Annual Meeting, the meeting must have a quorum and
the four nominees receiving the highest number of votes cast will be elected.
In order for a proposal to pass at the Annual Meeting, the meeting must have a
quorum and the proposal must receive more votes in its favor than are cast
against it. Broker nonvotes and abstentions will be treated as if the shares
were present at the Annual Meeting, but not voting.
Cost of Proxy Solicitation
We will pay the cost of soliciting proxies. Our directors, officers, or
employees may solicit proxies on our behalf in person or by telephone,
facsimile, or other electronic means. We have also engaged the firm of Beacon
Hill Partners, Inc. to assist us in the distribution and solicitation of
proxies. We have agreed to pay Beacon Hill Partners, Inc. a fee of $3,500 plus
expenses for their services.
In accordance with the regulations of the Securities and Exchange Commission
and the New York Stock Exchange, we will also reimburse brokerage firms and
other custodians, nominees, and fiduciaries for their expenses incurred in
sending proxies and proxy materials to beneficial owners of StanCorp.
ITEM 1. ELECTION OF DIRECTORS
Under Oregon law and pursuant to our Articles of Incorporation and Bylaws,
StanCorp's business, property, and affairs are managed under the direction of
our board of directors. Members of our board of directors are kept informed of
our business through discussions with our Chairman, President, and Chief
Executive Officer and other officers, by reviewing materials provided to them,
and by participating in meetings of the board and its committees.
Since March, 1999, we have had fifteen directors. Our board of directors is
divided into three classes of an equal number of directors. Each class serves
a three-year term in office. At this Annual Meeting, you will be requested to
elect Class I directors. Class I currently consists of five directors.
However, one director, Mr. Benjamin R. Whiteley, will retire from the board
this year. The board of directors has decided to nominate only the four
incumbent directors in Class I. This will reduce the size of Class I to four
directors and the size of the board of directors to fourteen directors. Class
I directors, if elected, will serve until the annual meeting of shareholders
in 2003. There are five Class II directors, and their term will expire at the
annual meeting of shareholders in 2001. There are five Class III directors,
and their term will expire at the annual meeting of shareholders in 2002. If
any director resigns, dies, or is otherwise unable to serve, the board of
directors may fill the vacancy for the unexpired term.
Our board of directors thanks Mr. Whiteley for his many years of service to
us and to our subsidiaries.
Our board of directors also serves as the board of directors of our
principal subsidiary, Standard Insurance Company ("The Standard"). Unless
otherwise noted in the biographical information below, our directors serve on
the same board committees of The Standard as they do for StanCorp.
Nominees for Election at the Annual Meeting
The board of directors has proposed for election at this Annual Meeting the
following: Barry J. Galt, Richard Geary, Peter T. Johnson, and William
Swindells, all of whom are current directors. If elected, these directors will
serve a three-year term of office to expire at the annual meeting of 2003 and
until their successors are elected and qualified.
2
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If any nominee should become unable to serve, the proxyholder will vote for
the person or persons the board of directors recommends, if any. We have no
reason to believe that any of the nominees is not available or would be unable
to serve if elected.
Directors in Classes
We have set forth below information, as of December 31, 1999, about each
nominee and continuing director. This information includes the director's age,
positions held with us, principal occupation, business history for at least
the last five years, committees of our board on which the director serves, and
other directorships held.
<TABLE>
<CAPTION>
Director Term
Name Age Since(1) Position Held Expires
---- --- -------- ------------- -------
<S> <C> <C> <C> <C>
Barry J. Galt.................... 66 1988 Director 2000
Richard Geary.................... 64 1991 Director 2000
Peter T. Johnson................. 67 1987 Director 2000
William Swindells................ 69 1988 Director 2000
Virginia Anderson................ 52 1989 Director 2001
Jerome J. Meyer.................. 61 1995 Director 2001
Ralph R. Peterson................ 55 1992 Director 2001
E. Kay Stepp..................... 54 1997 Director 2001
Michael G. Thorne................ 59 1992 Director 2001
Frederick W. Buckman............. 53 1996 Director 2002
John E. Chapoton................. 63 1996 Director 2002
Peter O. Kohler, MD.............. 61 1990 Director 2002
Ronald E. Timpe.................. 60 1993 Chairman, President & 2002
Chief Executive Officer
Franklin E. Ulf.................. 68 1987 Director 2002
</TABLE>
- --------
(1) The year in which the director was elected to Standard Insurance
Company's board of directors. All directors were elected to serve on
StanCorp's board of directors in March of 1999, just prior to The
Standard's reorganization.
Nominees for Election
Barry J. Galt--From 1983 to 1998, Mr. Galt was the chairman and chief
executive officer of Seagull Energy Corporation, a diversified energy company,
located in Houston, Texas. In 1998, Mr. Galt was Chairman of Seagull Energy
Corporation, and in September 1998, he was elected Vice Chairman. Mr. Galt
retired in March, 1999. Mr. Galt serves on the Finance and Operations
Committee and the Organization and Compensation Committee. Mr. Galt is a
member of the board of directors of Ocean Energy, Inc. (formerly Seagull
Energy Corporation), Trinity Industries, Inc. and Friede Goldman Halter, Inc.
Richard Geary--From 1984 to 1998, Mr. Geary was president of Kiewit Pacific
Company (Vancouver, Washington), a subsidiary of Peter Kiewit Sons', Inc., a
diversified construction company located in Omaha, Nebraska. From 1998, Mr.
Geary has been a consultant to Peter Kiewit Sons', Inc. Mr. Geary serves on
the Executive Committee and the Finance and Operations Committee.
Peter T. Johnson--Mr. Johnson of McCall, Idaho has been a private investor
since retiring in 1986 as administrator of the Bonneville Power
Administration, a federal power marketing and generation agency. Mr. Johnson
serves on the Executive Committee and the Audit Committee. Mr. Johnson is a
member of the board of directors of IDACORP, Inc. and its wholly owned
subsidiary, IDA-WEST Corporation.
William Swindells--Since 1985, Mr. Swindells has been chairman of the board
of directors of Willamette Industries, Inc., a diversified, integrated forest
products company, located in Portland, Oregon. From 1997 to
3
<PAGE>
1998, Mr. Swindells was also the chief executive officer of Willamette
Industries, a position he also held from 1985 to 1995. Mr. Swindells serves on
the Audit Committee. In addition to Willamette Industries, Inc., Mr. Swindells
is a member of the board of directors of Airborne Express and Oregon Steel
Mills.
The Board of Directors recommends a vote for the above nominees for election
as directors.
Continuing Directors
Virginia L. Anderson--Since 1988, Ms. Anderson has been the director of the
Seattle Center, a 74-acre, 31 facility urban civic center, located in Seattle,
Washington. Ms. Anderson serves on the Audit Committee and the Nominating and
Corporate Governance Committee.
Frederick W. Buckman--From 1992 to 1994, Mr. Buckman served as the President
and Chief Executive Officer of Consumers Power Company. From 1994 to 1998, Mr.
Buckman was president, chief executive officer, and director of PacifiCorp, a
holding company of diversified businesses, including an electric utility,
based in Portland, Oregon. From 1999, Mr. Buckman has been president of
Frederick Buckman, Inc., a consulting firm located in Portland, Oregon. Mr.
Buckman serves as the Chair of the Finance and Operations Committee and serves
on the Audit Committee.
John E. Chapoton--Since 1984, Mr. Chapoton has been a partner of the
Washington D. C. office of the law firm of Vinson & Elkins. Mr. Chapoton
serves as the chair of the Audit Committee.
Peter O. Kohler, MD--Since 1988, Dr. Kohler has been president of the Oregon
Health Sciences University, located in Portland, Oregon. Dr. Kohler serves as
chair of the Nominating and Corporate Governance Committee and serves on the
Executive Committee.
Jerome J. Meyer--From 1990 to 1999, Mr. Meyer was chairman of the board of
directors and chief executive officer of Tektronix, Inc., a high technology
company located in Wilsonville, Oregon. From January, 2000, Mr. Meyer has been
the chairman of the board of Tektronix, Inc. Mr. Meyer serves as the chair of
the Organization and Compensation Committee and serves on the Finance and
Operations Committee. In addition to Tektronix, Inc., Mr. Meyer is a member of
the board of directors of Enron Corporation, and CenterSpan Communications,
Inc.
Ralph R. Peterson--Since 1991, Mr. Peterson has been president and chief
executive officer of CH2M Hill Companies, Ltd., an engineering, design, and
consulting firm located in Denver, Colorado. Mr. Peterson serves on the
Nominating and Corporate Governance Committee and on the Organization and
Compensation Committee. Mr. Peterson also serves on the board of CH2M Hill
Companies, Ltd.
E. Kay Stepp--Since 1994, Ms. Stepp has been principal and owner of
Executive Solutions, a management consulting firm in Portland, Oregon. From
1989 to 1992, Ms. Stepp was president and chief operating officer of Portland
General Electric, an electric utility. Ms. Stepp serves on the Nominating and
Corporate Governance Committee and on the Organization and Compensation
Committee. Ms. Stepp is a member of the board of directors of Gardenburger,
Inc., Planar Systems, Inc. and Franklin Covey Company.
Ronald E. Timpe, FSA, CLU--Mr. Timpe has been Chairman, President and Chief
Executive Office of StanCorp since its incorporation. Mr. Timpe has been
President and Chief Executive Officer of our principal subsidiary, The
Standard, since 1994 and became chairman of its board of directors in 1998.
Mr. Timpe is the chair of the Executive Committee of StanCorp.
Michael G. Thorne--Since 1991, Mr. Thorne has been executive director of the
Port of Portland, Oregon, a public corporation whose primary business is
providing facilities and services to move cargo and people. Mr. Thorne serves
on the Executive Committee and the Finance and Operations Committee.
Franklin E. Ulf--From 1983 to 1997, Mr. Ulf was chief executive officer of
U.S. Trust Company, N.A., a national bank located in Los Angeles, California.
Since 1997, Mr. Ulf has been chairman of the same organization. Mr. Ulf serves
on the Executive Committee and the Finance & Operations Committee.
4
<PAGE>
CORPORATE GOVERNANCE
Since we became a public company in April of 1999, our board has met five
times and committees of the board have held ten meetings. The average
attendance in the aggregate of all board and committee meetings was 95%.
Committees of the Board
Our board of directors has established five on-going committees. They are
the Executive Committee, the Audit Committee, the Nominating and Corporate
Governance Committee, the Finance and Operations Committee, and the
Organization and Compensation Committee. The function of each committee is
discussed below.
Executive Committee--The Executive Committee has not met since we became a
publicly traded company. Except as otherwise provided in Oregon law, our
Articles of Incorporation, or Bylaws, the Executive Committee exercises the
full authority of our board of directors during those periods in which our
full board of directors is not scheduled to meet.
Audit Committee--The Audit Committee has met three times from April, 1999 to
December 31, 1999. The duties of the Audit Committee include: determine the
firm of independent public accountants to recommend to the board; review the
quality of the public accountants' work; assure the independence of the public
accountants; review the audit scope and plan; review and discuss with the
public accountants' their annual audit report and accompanying management
letter and quarterly financial reviews; and oversee the adequacy of the
internal control structure.
Finance and Operations Committee--The Finance and Operations Committee met
three times from April, 1999 to December 31, 1999. The duties of the Finance
and Operations Committee include: oversee the appropriate capital structure of
StanCorp; approve operational plans and budgets; oversee the investment policy
and review and approve investment reports and significant acquisitions; make
periodic recommendations regarding dividends; counsel the board regarding
acquisitions, divestitures, and other business combinations; and review
financial information that will be released.
Nominating and Corporate Governance Committee--The Nominating and Corporate
Governance Committee met once from April, 1999 to December 31, 1999. The
duties of the Nominating and Corporate Governance Committee include: review of
the organization and structure of the board; review of the qualifications and
recommend candidates for the board and its committees; review the
effectiveness of the board; recommend directors' compensation; and oversee the
compliance program.
Organization and Compensation Committee--The Organization and Compensation
Committee met three times from April, 1999 to December 31, 1999. The duties of
the Organization and Compensation Committee include: review of executive
compensation and recommend changes, as appropriate; develop and administer an
overall compensation policy; monitor the performance of the chief executive
officer; oversee succession planning; oversee stock option and stock purchase
plans; and review organizational changes recommended by the chief executive
officer.
Directors' Compensation
Each director, who is not an employee of StanCorp or The Standard, receives
an annual retainer fee of $20,000 and $1,000 meeting fee for each board and
committee meeting attended. Each chair of a board committee receives an
additional annual retainer of $3,000. The retainers are paid one-half in cash
and one-half in StanCorp stock. Additionally, each director receives an annual
grant of 1,500 options of StanCorp stock at fair market value on the date of
grant. We reimburse all directors for travel and other expenses. Our directors
receive only one retainer for serving on StanCorp's and The Standard's boards
and one meeting fee for joint meetings of StanCorp's and The Standard's
boards.
5
<PAGE>
SHARE OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERSAND CERTAIN SHAREHOLDERS
The following table sets forth information regarding the beneficial
ownership, as of March 2, 2000, of our common stock by each director, nominee,
and executive officer, and by directors, nominees, and executive officers as a
group. Except as otherwise noted, the named individual or family members had
sole voting and investment power with respect to such securities. No director,
nominee, or executive officer or directors, nominees, and executive officers
as a group beneficially own 1% or more of StanCorp's outstanding shares of
Common Stock.
<TABLE>
<CAPTION>
Common Stock
Beneficially
Name Owned
---- ------------
<S> <C>
Virginia L. Anderson............................... 823
Frederick W. Buckman............................... 5,537
John E. Chapoton................................... 537
Barry J. Galt...................................... 1,473
Richard Geary...................................... 40,473
Peter T. Johnson................................... 1,759
Peter O. Kohler.................................... 537
Jerome J. Meyer.................................... 2,730
Ralph R. Peterson.................................. 525 (1)
E. Kay Stepp....................................... 488
William Swindells.................................. 5,473
Michael G. Thorne.................................. 1,473
Ronald E. Timpe.................................... 30,685 (2)(3)
Franklin E. Ulf.................................... 473
Benjamin R. Whiteley............................... 4,421 (4)
E. Wayne Atteberry................................. 9,548 (3)
Kim W. Ledbetter................................... 26,336 (2)(3)(5)(6)
Douglas T. Maines.................................. 39,484 (3)(6)
Eric E. Parsons.................................... 39,431 (3)(6)
Executive Officers and Directors as a Group........ 263,871 (2)
</TABLE>
- --------
(1) Includes 52 shares owned by Mr. Peterson's spouse.
(2) Not included are 34,659 shares owned, as of December 31, 1999, by the
Standard Defined Contribution Plan Trust for Home Office Employees. The
trust is a unitized trust that matches 3% of employees' contributions
with StanCorp stock. The purchase and sale of StanCorp stock are
determined by the terms of the plan and are carried out by the
administrator. Mr. Timpe and Mr. Ledbetter and another executive officer
are co-trustees of the trust. The co-trustees have voting power over the
shares owned in trust, but do not have investment or dispositive power
over the shares. The co-trustees cannot withdraw shares from the trust
and, upon retirement, neither the co-trustees nor any other employee
participant receive distributions in stock from the plan.
(3) Includes 23,612; 5,090; 8,920; 9,381; and 11,019 shares of restricted
stock for Messrs. Timpe, Atteberry, Ledbetter, Maines, and Parsons,
respectively. Each has voting power over their respective shares. The
restricted shares will vest if each officer is an employee of The
Standard through December 31, 2000 except for Mr. Maines who must be an
employee of The Standard through September 30, 2001.
(4) Includes 1,000 shares owned by Mr. Whiteley's spouse.
(5) Includes 52 shares owned by Mr. Ledbetter's spouse and 176 shares owned
by Mr. Ledbetter's mother's living trust of which Mr. Ledbetter is a
trustee and beneficiary.
(6) Includes 25,000 performance based shares of restricted stock for Mr.
Maines and Mr. Parsons and 12,500 shares of restricted stock for Mr.
Ledbetter. The restricted stock vests in four years upon the performance
of predetermined objectives.
6
<PAGE>
CERTAIN SHAREHOLDERS
The following table sets forth those persons known to us as of March 2, 2000
to be beneficial owners of more than five percent of our Common Stock. In
furnishing this information, we relied on information filed by the beneficial
owners with the Securities and Exchange Commission or information currently
available to us.
<TABLE>
<CAPTION>
Amount and
Nature
of Beneficial
Name and Address of Beneficial Owner Ownership %
- ------------------------------------ ------------- ----
<S> <C> <C>
Janus Capital Corp. ........................................ 1,668,775(1) 5.11
100 Fillmore St.
Denver, Co. 80206
</TABLE>
- --------
(1) Janus Capital Corp. ("Janus") exceeds the 5% beneficial ownership limit
due to a stock repurchase program instituted by our board of directors in
November, 1999. Under Oregon law, no individual or group of individuals
may own 5% or more of our voting shares for the first five years from the
effective date of our reorganization, unless they first receive
permission to do so from the Director of the Oregon Department of
Consumer and Business Affairs ("Director"). Based upon the fact that
Janus exceeded this limitation through the operation of our stock
repurchase program, as opposed to making additional purchases of our
stock, the Director granted permission to Janus to exceed the 5%
statutory limitation. Janus must receive permission from the Director to
purchase additional shares.
REPORT OF THE ORGANIZATION AND COMPENSATION COMMITTEE
The Organization & Compensation Committee (the "Committee") of the Board of
Directors is responsible for developing an executive compensation philosophy
for StanCorp Financial Group, Inc. and its subsidiaries. It is the duty of the
Committee to administer the philosophy and its components as evidenced by the
compensation paid to the chief executive officer and each of the other senior
executives.
In this role, the Committee is dedicated to ensuring that the company's
compensation policies and practices are used effectively to support the
achievement of the company's short and long-term business objectives. All
members of the Committee are outside directors as defined under the Internal
Revenue Code (the "Code") and non-employee directors as defined under Rule
16b-3 under the Securities Exchange Act of 1934.
There are several underlying philosophical principles that guide the
Committee in its decision-making process. The Committee:
. Adheres to a pay-for-performance philosophy ensuring that aggregate
total compensation levels paid to senior executives reflect the extent
to which the company's key operating goals are achieved.
. Reinforces the central importance of creating shareholder value by
relying heavily on compensation programs that deliver value to senior
executives only when shareholders realize a corresponding gain.
. Establishes senior executive compensation levels that are competitive in
relation to the pay rates that are offered by companies with which the
company competes for senior management talent.
. Maintains a total compensation perspective on senior executives' pay
when judging the appropriateness of total awards for the company's
senior executives.
. Encourages the acquisition of Common Stock by senior executives with the
objective of strengthening the common interests of management and
shareholders, thereby promoting maximum shareholder value.
7
<PAGE>
TOTAL COMPENSATION
All decisions regarding executive compensation are made based upon actual
performance achieved as well as competitive practices measured by utilizing
multiple compensation surveys. Each year, StanCorp conducts an executive
compensation study covering executives in the top management positions. The
Committee utilizes the services of Towers Perrin, a consulting firm
experienced in executive compensation, to conduct the study. Compensation
studies evaluate total direct compensation--which is defined as base salary
plus most recent annual incentive (or short term pay) earned, plus the
estimated annualized present value of long term incentive grants.
Competitive compensation rates are developed using compensation survey
sources. Data from the sources represents similar positions in the financial
services industry and in industry-specific organizations as appropriate. The
data are reflective of job level and job type and are generally regressed on
corporate or business-unit revenues and/or assets.
Executives generally have the opportunity to earn total compensation above
the 50th percentile, subject to obtaining superior performance results. Higher
achievement provides higher value, while lesser performance decreases total
compensation.
BASE SALARY
Base salaries for all positions are targeted at approximately the median of
the respective markets. In addition, base pay as well as other compensation
components are also reflective of an individual incumbent's performance.
Finally, in considering salary actions, the Committee also reviews internal
compensation equity as well as the senior executive's level of responsibility,
experience, and expertise.
VARIABLE COMPENSATION
Variable compensation reinforces the company's pay-for-performance
philosophy. Variable compensation includes an annual short term incentive
program and long term incentive compensation opportunities. Short term
incentive compensation is designed to deliver a percentage of base salary for
all senior executives, dependent upon achievement of predetermined objectives.
Long term incentive compensation, generally composed of stock options and/or
restricted stock grants, is targeted to provide an additional percentage of
base salary for all senior executives based upon the attainment of long term
financial goals.
The Committee does not consider levels of share ownership or past option or
restricted stock grants in making current stock option or restricted stock
awards. The long term compensation program also facilitates senior executives'
acquisition of company stock, thereby promoting an alignment of interests
between management and shareholders.
Short Term Incentive Plan
Each year the Committee will reach agreement with management on performance
goals, the achievement of which will enhance the company's overall value. The
Committee will also review and approve with respect to each senior executive,
annual short term incentive payment levels in the event performance goals are
achieved. Actual short term incentive payments vary with performance relative
to achievement of goals. Better performance generates larger awards and lesser
results yield smaller awards.
Under the terms of the short term incentive plan, no payout is possible
unless certain threshold goals are satisfied. While the individual performance
goals are unique to each senior executive, threshold goals are all corporate-
level goals. These goals are related to minimum annual revenue growth, risk-
based capital levels, and return on equity. Individual goals are related to an
individual's performance within a senior executive's area of responsibility.
8
<PAGE>
Long Term Incentive Plan
The ongoing long term incentive program is designed to tie executive
performance directly to the creation of stockholder value. The Committee has
utilized non-qualified stock options and restricted stock with performance-
based vesting. The value of a StanCorp stock option is determined based upon
the value of StanCorp stock at the time of the grant and other factors,
including stock price volatility, dividend rate, option term, vesting
schedule, termination provisions, and long term interest rates. The
compensation consultant derives the value which is then approved by the
Committee. Currently, stock options are granted with a ten-year term, vesting
33% upon each of the first three anniversaries following the date of the
grant. Restricted stock awards vest based upon the performance of
predetermined objectives, such as attainment of ROE targets.
The last cash-based long term incentive plan, which was established while
still a mutual company, matured on December 31, 1999. Under the terms of this
three-year plan covering the performance period of 1997-1999, awards were
based on three key components. The key components included overall company
revenues and/or asset growth, expense control and level of risk-based capital.
One remaining plan is still effective for the 1998-2000 period. It will mature
on December 31, 2000, and any payout will be in 60% StanCorp stock and 40% in
cash. No other such long term incentive plans are contemplated.
Compliance with Section 162(m) of the Internal Revenue Code of 1986 as
amended, generally denies a publicly-traded company federal income tax
deductions for compensation in excess of $1 million paid to certain of its
executive officers unless the amount of any such excess is payable based
solely upon the attainment of objective performance criteria. The Committee
believes that tax deductibility of compensation is an important factor, but
not the sole factor to be considered in setting executive compensation policy.
Accordingly, the Committee generally intends to take such reasonable steps as
are required to avoid the loss of a tax deduction due to Section 162(m)
requirements; however, the Committee reserves the right to pay out amounts
which are not deductible in circumstances deemed appropriate by the Committee.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
As part of an annual review, the Committee applies the previously stated
philosophy to the total compensation package of the CEO and other senior
executives. Effective January 1, 1999 the Committee approved a base salary of
$518,000 for Mr. Timpe, which salary approximated the market median.
During 1998 Mr. Timpe was a participant in the Company's short term
incentive program, which was paid in 1999. Payout under this program is
composed of two factors. The first factor is derived from the achievement of
subordinates goals, the achievement of which will enhance the overall value of
the Company. The second factor is based upon the Committee's review of Mr.
Timpe's performance, overall progress toward achievement of goals, and a
review of Company financial performance.
The Committee classified Mr. Timpe's overall performance as "consistently
exceeds expectations." In addition, the Committee recognized overall company
results and the progress toward demutualization during 1998. Based upon these
factors, the Committee awarded a short term incentive payment of $166,060 to
Mr. Timpe in 1999.
A remaining cash-based long term incentive plan, which was established while
still a mutual company, matured on December 31, 1998. Under the terms of this
three-year plan covering the performance period 1996-1998, awards were based
on three key components. The key components included overall company revenues
and/or asset growth, expense control, and level of risk-based capital. Based
upon achievement during the 1996-1998 plan period, the Committee awarded a
long term incentive payment in cash of $156,555 to Mr. Timpe in 1999.
Finally, as part of the ongoing long term incentive program, Mr. Timpe
received a grant of 140,000 non-qualified stock options on October 19, 1999.
The options were granted at the fair market value on the date of the
9
<PAGE>
grant, have a ten year term, and become exercisable at the cumulative rate of
one-third per year for the first three years from the date of the grant.
SUMMARY
The Committee is responsible for the overall review, monitoring and approval
of all compensation decisions affecting the company's senior executives. The
Committee expects that all compensation paid to senior executives will be
consistent with the company's interest in providing market competitive
compensation opportunities within the context of a pay-for-performance
philosophy in a manner that is supportive of the company's overall business
mission and the creation of shareholder value. The Committee will actively
monitor the effectiveness of the company's pay programs and make modifications
as deemed appropriate.
<TABLE>
<S> <C>
Jerome J. Meyer, Chair Barry J. Galt
Ralph R. Peterson E. Kay Stepp
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All directors who are members of the Organization and Compensation Committee
were independent directors within the meaning of the Securities Exchange Act
of 1934 and its regulations. There were no "interlocks" within the meaning of
the same act and its regulations.
10
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The information set forth below describes the components of total
compensation of the Chief Executive Officer and the four other most highly
compensated executive officers (collectively, the "Named Executives"). We have
included executive officers of StanCorp and The Standard in determining the
Named Executives. With the exception of restricted stock, all compensation was
paid by The Standard. The table includes a two-year comparison, as permitted
by the rules of the Securities and Exchange Commission.
<TABLE>
<CAPTION>
Long Term
Compensation
------------------
Annual Compensation Awards Payouts
---------------------------- ---------- -------
Restricted
Other Annual Stock LTIP All Other
Name and Principal Salary Bonus Compensation Awards Payouts Compensation
Position Year ($) ($) ($) ($)(1) ($)(2) ($)(3)
------------------ ---- ------- ------- ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald E. Timpe........ 1999 518,000 166,060 647 525,367 156,555 6,181
Chairman of the Board, 1998 450,000 142,419 150 -- 126,492 4,350
President and Chief
Executive Officer (4)
Eric E. Parsons........ 1999 250,000 72,332 5,757 245,173 51,018 4,939
Senior Vice President,
Chief 1998 220,000 42,583 4,524 -- 39,847 4,656
Financial Officer (4)
Douglas T. Maines...... 1999 240,000 24,500 108 208,727 -- 1,213
Senior Vice President,
Group 1998 62,769 48,000 151,362(7) -- -- 180
Insurance (5)
E. Wayne Atteberry..... 1999 200,000 43,413 90 113,253 44,989 3,537
Senior Vice President, 1998 194,000 38,763 163 -- 38,220 4,559
Investments (6)
Kim W. Ledbetter....... 1999 180,000 35,531 1,223 198,470 39,423 1,832
Senior Vice President, 1998 170,000 19,582 391 -- 26,937 1,614
Individual Insurance
and Retirement Plans
</TABLE>
- --------
(1) Amounts calculated at $22.25 per share, the closing price of the shares
of our common stock on the New York Stock Exchange as of the date of the
grant, October 19, 1999. The shares vest if the Named Executive Officer
is in the employ of The Standard through December 31, 2000, except for
Mr. Maines, whose shares will vest if he is in the employ of The Standard
through September 30, 2001. Restricted shares were granted to the Named
Executive Officers and others in consideration for their agreement to
terminate the Retention Agreement and are in lieu of any payment under
that agreement. (See Certain Relationships and Related Transactions for
further discussion.) Dividends, if declared, will be paid to the holders
of the restricted stock. The aggregate total shares of restricted stock
granted by StanCorp for the fiscal year was 67,704 ($1,705,328 as of
December 31, 1999).
(2) Amounts shown are cash amounts paid in the first quarter of each year
with respect to a three year LTIP program covering, 1996-1998 and 1995-
1997, respectively. The LTIP is based on achievement of certain
performance objectives.
(3) Amounts shown include matching contributions credited to the accounts of
the Named Executives under The Standard's nonqualified Supplemental
Executive Compensation Plan and imputed income from The Standard's Group
Life Insurance Plan for Home Office Employees. Amounts of imputed income
for 1999 for group term life contributions are: $4,888; $1,588; $997;
$3,357; and $648 for Messrs. Timpe, Parsons, Maines, Atteberry, and
Ledbetter, respectively. Amounts contributed to the nonqualified plan in
1999 are: $1,293; $3,351; $216; $180; and $1,184, respectively.
11
<PAGE>
(4) Mr. Timpe and Mr. Parsons hold their respective positions for both
StanCorp and The Standard. All other Named Executives are employed only
by The Standard.
(5) Mr. Maines became an employee of The Standard during the fourth quarter
of 1998. Mr. Maines does not participate in the LTIP.
(6) Mr. Atteberry retired from active management on December 31, 1999.
(7) Includes income tax allowance on non-deductible moving expenses and
relocation allowance for Mr. Maines.
Stock Options
<TABLE>
<CAPTION>
Potential Realized
Individual Grants Value at Assumed
--------------------------------------------------- Annual Rates of
Number of % of Total Stock Price
Securities Options Appreciation for
Underlying Granted to Exercise Option Term (2)
Options Employees in Price Expiration -------------------
Name granted(#)(1) Fiscal Year ($/per share) Date 5%($) 10%($)
---- ------------- ------------ ------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ronald E. Timpe......... 140,000 19 22.125 10/19/09 1,948,001 4,936,617
Eric E. Parsons......... 44,000 6 22.125 10/19/09 612,229 1,551,508
Douglas T. Maines....... 42,000 6 22.125 10/19/09 584,400 1,480,985
E. Wayne Atteberry...... 35,000 5 22.125 10/19/09 487,000 1,234,154
Kim W. Ledbetter........ 32,000 4 22.125 10/19/09 445,257 1,128,370
</TABLE>
Option/SAR Grants in the Last Fiscal Year
- --------
(1) Options to the Named Executives were granted on October 19, 1999 based on
the opening price of StanCorp's stock on that date. One third of the
options vest annually starting on October 19, 2000. The exercise period
is 10 years.
(2) Potential realized value at expiration is based on an assumption that the
share price of our Common Stock appreciates at the rate shown (compounded
annually) from the date of the grant until the end of the ten-year term.
Options Exercised
1999 Option Exercises and 1999 Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at FY-End(#) FY-End($)(2)
Acquired on Value ------------------------------- -------------------------
Name Exercise(#) Realized($) Exercisable(1) Unexercisable(1) Exercisable Unexercisable
---- ----------- ----------- -------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald E. Timpe......... -0- -0- -0- 140,000 -0- 428,820
Eric E. Parsons......... -0- -0- -0- 44,000 -0- 134,772
Douglas T. Maines....... -0- -0- -0- 42,000 -0- 128,646
E. Wayne Atteberry...... -0- -0- -0- 35,000 -0- 107,205
Kim W. Ledbetter........ -0- -0- -0- 32,000 -0- 98,016
</TABLE>
- --------
(1) Options to the Named Executives were granted on October 19, 1999 based on
the opening price of StanCorp's stock on that date. One third of the
options vest annually starting on October 19, 2000. The exercise period
is 10 years. No options are currently exercisable.
(2) Potential unrealized value is (i) the fair market value of our shares at
December 31, 1999 ($25.188) less the option exercise price times (ii) the
number of shares acquired upon the exercise of the options.
Long-Term Incentive Plan Awards
Certain of the Named Executives and such other officers as may be selected
by the board of directors are participants in the Long Term Incentive
Compensation Plan (the "LTIP"). The LTIP's were established while The Standard
was still a mutual company. The LTIP operates during successive three-year
periods, with one LTIP (1997-1999) ending on December 31, 1999 and the final
LTIP (1998-2000) scheduled to end on December 31, 2000. The LTIP provides a
payment to each participant if certain designated performance
12
<PAGE>
objectives, based on the success of StanCorp and its subsidiaries, are
achieved. These objectives include growth in StanCorp's and its subsidiaries'
revenues, control of expenses, and The Standard's financial strength based on
its risk-based capital ratio. The 1997-1999 LTIP was paid in cash in February,
2000. The target for this plan was 30% of 1999 base salary for Mr. Timpe and
20% of 1999 base salary for all other participants. The 1998-2000 LTIP
contains identical targets of 2000 base salary. However, a minimum of 40% of
the award will be paid in cash, with up to 60% payable in shares of StanCorp
Common Stock. No other LTIP's are currently contemplated.
Long Term Incentive Plans--Awards (1998-2000 Plan)
<TABLE>
<CAPTION>
Estimated Future
Payments under
Performance or Non-Stock Price-
Other Period Based Plans
Until Maturation --------------------
Name(1) or Payout Target($) Maximum($)
- ------- ----------------- --------- ----------
<S> <C> <C> <C>
Ronald E. Timpe.......................... December 31, 2000 168,000 336,600
Eric E. Parsons.......................... December 31, 2000 52,000 104,000
E. Wayne Atteberry(2).................... December 31, 2000 26,680 53,360
Kim W. Ledbetter......................... December 31, 2000 38,000 76,000
</TABLE>
- --------
(1) Mr. Maines became an employee of Standard after the 1998-2000 LTIP Plan
commenced. He is not a participant in the current plan.
(2) Mr. Atteberry retired on December 31, 1999. His target and maximum
amounts are two thirds of the amounts established by the LTIP Plan.
13
<PAGE>
Standard Retirement Program
Each of the Named Executives participates in both the Standard Retirement
Plan for Home Office Personnel (the "Retirement Plan") and the Supplemental
Retirement Plan for Senior Executives (the "Supplemental Retirement Plan").
The following table sets forth the benefits payable, assuming retirement at
age 65, to participants in the Retirement Plan and the Supplemental Retirement
Plan (the "Retirement Plans") at the levels of compensation and the periods of
service contained therein.
Annual Retirement Plan Benefits
<TABLE>
<CAPTION>
Annual Benefit at Age 65 for Years of Service(1)
High 5 Yr Ave. --------------------------------------------------------------
Remuneration 15 20 25 30 35
-------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 29,325 $ 39,100 $ 48,875 $ 58,650 $ 68,425
$150,000 $ 35,325 $ 47,100 $ 58,875 $ 70,650 $ 82,425
$175,000 $ 41,325 $ 55,100 $ 68,875 $ 82,650 $ 96,425
$200,000 $ 47,325 $ 63,100 $ 78,875 $ 94,650 $110,425
$225,000 $ 53,325 $ 71,100 $ 88,875 $106,650 $124,425
$250,000 $ 59,325 $ 79,100 $ 98,875 $118,650 $138,425
$300,000 $ 71,325 $ 95,100 $118,875 $142,650 $166,425
$350,000 $ 83,325 $111,100 $138,875 $166,650 $194,425
$400,000 $ 95,325 $127,100 $158,875 $190,650 $222,425
$450,000 $107,325 $143,100 $178,875 $214,650 $250,425
$500,000 $119,325 $159,100 $198,875 $238,650 $278,425
$550,000 $131,325 $175,100 $218,875 $262,650 $306,425
$600,000 $143,325 $191,100 $238,875 $286,650 $334,425
$650,000 $155,325 $207,100 $258,875 $310,650 $362,425
$700,000 $167,325 $223,100 $278,875 $334,650 $390,425
$750,000 $179,325 $239,100 $298,875 $358,650 $418,425
</TABLE>
- --------
(1) Maximum service under the plan is 35 years.
The benefits shown in the above table are payable in the form of a straight
life annuity with annualized cost of living increases not to exceed a
cumulative limit of 3% of the original benefit amount for each year after
retirement. Benefits payable under the Retirement Plans are not subject to
offset for Social Security benefits. Compensation taken into account under the
Retirement Plans is the average monthly compensation paid to a participant
during the consecutive 60-month period over the most recent 120-month period
that produces the highest average compensation. For this purpose, compensation
is the total of base salary and short-term incentive bonus in the year
accrued.
As of December 31, 1999, the estimated highest five year average
remuneration and credited years of service for each of the Named Executives
under the Retirement Plans was: Mr. Timpe, $591,462 and 31 years; Mr. Maines,
$317,871 and 1 year; Mr. Parsons, $259,332 and 9 years; Mr. Atteberry,
$223,491 and 31 years; and Mr. Ledbetter, $175,647 and 25 years.
Certain Relationships and Related Transactions
Retention Agreement. As part of The Standard's demutualization, The Standard
entered into a Retention Agreement with each Named Executive and certain other
executive officers (each, an "executive"). Under the Retention Agreement, The
Standard agreed to pay the executive a retention bonus, provided that the
executive remained continuously employed by The Standard through December 31,
2000, except Mr. Maines, who was required to remain continuously employed
through September 30, 2001. Certain other conditions were also
14
<PAGE>
required to be met. The Retention Agreement was terminated by mutual consent
during the fourth quarter of 1999 in consideration for a grant of restricted
stock, which grant was substantially equivalent to the amount payable under
the Retention Agreement had it terminated during the fourth quarter of 1999.
Such grant is in lieu of any further payment under the Retention Agreement.
Change of Control Agreement. The Standard has also entered into Change of
Control Agreements with each of the Named Executives and other executive
officers of The Standard (each, an "executive"). The provisions of these
agreements become effective if and when there is a Change of Control (as
defined below) of StanCorp or The Standard. The Change of Control Agreements
will continue in effect through December 31, 2001. The agreements will be
automatically renewed for successive one-year terms unless we give notice to
the executive that we will not extend the expiration date (provided that no
such notice can be given during the pendency of a potential Change of
Control). If a Change of Control occurs, the expiration date is automatically
extended for twenty-four months beyond the month in which the Change of
Control occurs.
Under the Change of Control Agreements, we will provide the executive with
the following benefits in the event of termination by us or The Standard
within twenty-four months of a Change of Control other than for cause.
. a lump-sum payment in an amount equal to three times the sum of (a) the
executive's annual base salary in effect at the time the Change of
Control occurs and (b) target incentive compensation payable to the
executive under The Standard's short term incentive plan;
. an amount equal to the target bonus payable under any cash long term
incentive plan in effect immediately prior to the Change of Control;
. outstanding stock options, stock bonuses, or other stock awards shall
become immediately vested, become exercisable in full and all
outstanding stock options shall remain exercisable; and
. immediate vesting of all benefits to which the executive is entitled
under The Standard's retirement plans and a 30 month continuation of
certain welfare plans.
The Change of Control Agreements also provide that, to the extent any
payments to the executives would be subject to "golden parachute" excise taxes
under Section 4999 of the Code, the executives will receive "gross-up"
payments in order to make them whole with respect to such taxes and any
related interest and penalties.
For the purposes of the Change of Control Agreements, a "Change of Control"
is defined generally to include:
. an acquisition of 30% or more of the voting stock of us or The Standard;
. a change in the majority of the members of our or The Standard's board
within a twelve-month period that is not supported by two-thirds of the
incumbent directors;
. approval by the shareholders of a merger or reorganization in which our
or The Standard's shareholders do not own at least 51% of the voting
securities of the resulting entity;
. a sale of all or substantially all of our assets or those of The
Standard;
. a tender or exchange offer which results in at least 30% of our voting
securities or those of The Standard being purchased by an offeror; or
. adoption by our or The Standard's board of directors of a resolution to
the effect that a Change of Control has occurred.
Acquisition by an executive, or a group of persons including an executive,
of 25% or more of the voting securities of StanCorp or The Standard does not
constitute a Change of Control under the Change of Control Agreements.
15
<PAGE>
Performance Graph
The graph below provides an indicator of cumulative price changes for us as
compared with the S&P 500 Stock Index and the S&P Life Insurance Company Index
weighted by market value at each measurement point.
This graph covers the period of time beginning on April 16, 1999, when our
shares were first traded on the New York Stock Exchange, through December 31,
1999.
[PERFORMANCE CHART]
StanCorp Financial Group Cumulative Price Change
Relative to S&P 500 and S&P Life Insurance Indices
<TABLE>
<CAPTION>
SFG S&P Life S&P 500
----------- --------- ----------
<S> <C> <C> <C>
04/16/1999 0 0 0
04/30/1999 (0.52%) 5.86% 1.23%
05/31/1999 3.10% 5.90% (1.30%)
06/30/1999 24.03% 6.96% 4.07%
07/30/1999 4.39% 4.24% 0.74%
08/31/1999 (2.07%) (12.83%) 0.11%
09/30/1999 (7.49%) (26.37%) (2.75%)
10/29/1999 4.39% (11.77%) 3.33%
11/30/1999 14.21% (18.87%) 5.30%
12/31/1999 4.13% (22.55%) 11.39%
</TABLE>
ITEM 2. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
Our board of directors, on the recommendation of the Audit Committee, has
appointed Deloitte & Touche LLP as independent auditors for the year 2000.
Although not required, our board has determined that it is desirable to
request ratification of this appointment by our shareholders. If ratification
is not obtained, the board will reconsider the appointment.
We have been advised that representatives of Deloitte & Touche LLP will be
present at the Annual Meeting. They will be afforded the opportunity to make a
statement, should they desire to do so, and to respond to appropriate
questions.
Deloitte & Touche LLP and its predecessor firms have served as our
independent auditors for over 50 years.
Our board of directors unanimously recommends that you vote for this
proposal.
ITEM 3. OTHER MATTERS
Our board of directors knows of no other matters to be brought before the
Annual Meeting. If other matters are presented, the persons named as proxies
will vote on such matters as recommended by management.
16
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers to file reports of holdings and transactions in our
stock with the Securities and Exchange Commission and the New York Stock
Exchange. Based on our records and other information, we believe that, with
one exception, all Securities and Exchange Commission filing requirements
applicable to our directors and executive officers with respect to fiscal year
1999 have been met. Mr. J. Gregory Ness, our Vice President and Corporate
Secretary, made one late filing due to a clerical oversight.
SHAREHOLDER NOMINATIONS
Shareholders who wish to submit names to the Nominating and Corporate
Governance Committee for consideration for election to the Board of Directors
should do so in writing between February 16, 2001 and March 13, 2001,
addressed to the Nominating and Corporate Governance Committee, c/o Corporate
Secretary, StanCorp Financial Group, Inc., P. O. Box 711, Portland, Or. 97207.
The notice should set forth as to each nominee whom the shareholder proposes
to nominate for election or reelection as director the following:
. the name, age, business and residence addresses of the nominee;
. the principal occupation or employment of the nominee;
. the number of shares of Common Stock beneficially owned by the nominee;
and
. any other information concerning the nominee that would be required to
appear in a proxy statement for the election of such nominee under the
rules of the Securities and Exchange Commission.
The shareholder giving notice must also provide his or her name and record
address and the number of shares of Common Stock owned by the shareholder.
SHAREHOLDER PROPOSALS
Under our bylaws, shareholders who wish to present proposals for action at
an annual meeting must give timely notice of the proposed business to our
Corporate Secretary. To be timely, a shareholder's notice must be in writing,
delivered to, or mailed and received at, our principal office in Portland,
Oregon not less than 50 days nor more than 75 days prior to that year's annual
meeting. However, if we have not provided shareholders notice of, or otherwise
publicly disclosed, the date of the annual meeting within 65 days of the
meeting date, notice must be received not later than the close of business on
the 15th day following the date on which such notice was mailed or public
disclosure was made. Our 2001 annual meeting is scheduled to be held on May 7,
2001. Therefore, a notice, to be timely, must be received by us between
February 16, 2001 and March 13, 2001. If received after that date, the
proposal, when and if raised at the 2001 annual meeting, will be subject to
the discretionary vote of the proxyholder as described earlier in this
material.
Please note that these rules govern raising proposals at the annual meeting.
In order for a shareholder's proposal to be considered for inclusion in our
2001 proxy statement, under rules of the Securities and Exchange Commission,
we must receive the proposal by November 29, 2000. Shareholders should mail
their proposal to our Corporate Secretary, P. O. Box 711, Portland, OR 97207.
In order to make a proposal, the shareholder must also provide us with a
brief description of the matter to be brought before the meeting and the
reasons for the proposal. The shareholder must also provide us with his or her
name and record address, the number of shares of Common Stock that the
shareholder owns, and any interest that the shareholder may have in the
proposal.
/s/ Dwight L. Cramer
Dwight L. Cramer
Vice President, General Counsel
and Corporate Secretary
March 29, 2000
17
<PAGE>
- --------------------------------------------------------------------------------
[LOGO OF STANCORP FINANCIAL GROUP]
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
STANCORP FINANCIAL GROUP, INC.
The undersigned hereby appoints Ronald E. Timpe, Eric E. Parsons and J. Gregory
Ness as proxies, with power to act without the other and with power of
substitution, and hereby authorizes them to represent and vote, as designated on
the other side, all the shares of stock of StanCorp Financial Group, Inc. held
in the name of the undersigned with all powers which the undersigned would
possess if present at the Annual Meeting of Shareholders of the Company to be
held May 1, 2000 or any adjournment thereof. If this Proxy is returned signed
but without a clear voting designation, the proxies will vote in accordance with
the Board's recommendations. If other matters come properly before the meeting,
the proxies will vote in accordance with management's recommendations.
(Continued, and to be marked, dated and signed, on the other side)
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
YOUR VOTE IS IMPORTANT!
You can vote in one of three ways:
1. Vote by Internet at our Internet Address: http://www.eproxy.com/sfg
or
--
2. Call toll-free 1-800-840-1208 on a Touch-Tone Telephone.
or
--
3. By mail - by promptly returning your completed proxy card in the enclosed
envelope.
If you wish to access future Annual Reports and Proxy Statements electronically
via the Internet and no longer receive the printed materials, please provide
your consent with your proxy vote.
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
This Proxy when properly executed will be voted by the proxies in the manner Please mark
designated below. If this Proxy is returned signed but without a clear your votes as [X]
voting designation, the proxies will vote FOR Items 1 and 2. indicated in
this example
The Board of Directors recommends a vote FOR Items 1 and 2.
Item 1. ELECTION OF CLASS 1 DIRECTORS FOR AGAINST ABSTAIN
Item 2 -- RATIFICATION OF [_] [_] [_]
Nominees: THE APPOINTMENT
01 Barry J. Galt WITHHELD OF INDEPENDENT
02 Richard Geary FOR FOR ALL ACCOUNTANTS
03 Peter T. Johnson [_] [_]
04 William Swindells
WITHHELD FOR: (Write that nominee's name in the space
provided below).
By checking the box to the right, I consent to future access of the
___________________________________________________ Annual Report, Proxy Statements, Prospectuses and other communications
electronically via the Internet. I understand that StanCorp Financial
Group, Inc. (the "Company") may no longer distribute printed materials to
me for any future shareholder meeting until such consent is revoked. I
understand that I may revoke my consent at any time by contacting the
Company's transfer agent, ChaseMellon Shareholder Services, L.L.C.,
Ridgefield Park, NJ. I also understand that costs normally associated [_]
with electronic access, such as usage and telephone charges, will be my
responsibility.
Signature ____________________________________________ Signature ____________________________________________ Date: __________, 2000
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
. FOLD AND DETACH HERE AND READ THE REVERSE SIDE .
[PICTURE] YOUR VOTE IS IMPORTANT [PICTURE]
YOU CAN VOTE IN ONE OF THREE WAYS:
================================================================================
VOTE BY INTERNET
24 hours a day, 7 days a week
Follow the instructions at our Internet Address: http://www.eproxy.com/sfg
================================================================================
or
================================================================================
VOTE BY PHONE
HAVE YOUR PROXY CARD IN HAND.
Call toll-free 1-800-840-1208 on a touch tone telephone 24 hours a day, 7 days a
week
There is NO CHARGE to you for this call.
You will be asked to enter your 11-digit Control Number, which is located in the
lower right hand corner of this form. Follow the recorded instructions
================================================================================
or
================================================================================
VOTE BY PROXY CARD
Mark, sign and date your proxy card and return promptly in the enclosed
envelope.
================================================================================
================================================================================
If you wish to access future Annual Reports and Proxy Statements electronically
via the Internet and no longer receive the printed materials, please provide
your consent with your proxy vote.
================================================================================
NOTE: If you voted by Internet or telephone, THERE IS NO NEED TO MAIL BACK your
proxy card.
THANK YOU FOR VOTING.
