<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
CNA FINANCIAL CORPORATION
--------------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
CNA FINANCIAL CORPORATION
-----------------
NOTICE OF ANNUAL MEETING--MAY 3, 1995
TO THE STOCKHOLDERS OF
CNA FINANCIAL CORPORATION:
You are hereby notified that pursuant to the By-Laws of CNA Financial
Corporation, a Delaware corporation, the annual meeting of Stockholders will be
held at CNA Plaza (333 South Wabash Avenue), Room 308, Chicago, Illinois, on
Wednesday, May 3, 1995 at 11:00 a.m., Chicago time, for the following purposes:
(1) To elect ten Directors;
(2) To ratify the appointment of Deloitte & Touch LLP as independent
auditors for the Company; and
(3) To transact such other business as may properly come before the meeting.
Only Stockholders of record at the close of business on March 10, 1995 are
entitled to notice of, and to vote at, this meeting.
It is desired that as many Stockholders as practicable be represented at the
meeting. Consequently, whether or not you now expect to be present, you are
requested to date and sign the enclosed proxy and return it promptly to the
Company. You may revoke the proxy at any time before the authority granted
therein is exercised.
By the order of the Board of
Directors,
DONALD M. LOWRY
SENIOR VICE PRESIDENT,
SECRETARY
AND GENERAL COUNSEL
Chicago, Illinois
March 29, 1995
<PAGE>
CNA FINANCIAL CORPORATION
ADMINISTRATIVE OFFICES: CNA PLAZA, CHICAGO, ILLINOIS 60685
-------------------
PROXY STATEMENT
ANNUAL MEETING--MAY 3, 1995
The Board of Directors of CNA Financial Corporation ("CNA" or the "Company")
submits this statement in connection with the solicitation of proxies from the
Stockholders in the form enclosed.
The persons named in this statement as nominees for election as Directors
have been designated by the Board of Directors.
Any Stockholder giving a proxy has the power to revoke it at any time before
it is exercised. A subsequently dated proxy, duly received, will revoke an
earlier dated proxy. A Stockholder may also revoke his proxy and vote in person
at the Annual Meeting. Proxies will be voted in accordance with the
Stockholder's specifications and, if no specification is made, proxies will be
voted in accordance with the Board of Directors' recommendations. The
approximate date of mailing of this Proxy Statement is March 29, 1995.
On March 10, 1995, the Company had outstanding 61,798,262 shares of common
stock ("Common Stock"). The holders of Common Stock have one vote for each share
of stock held. Stockholders of record at the close of business on March 10, 1995
will be entitled to notice of, and to vote at, this meeting. The holders of a
majority of Common Stock issued and outstanding and entitled to vote when
present in person or represented by proxy constitute a quorum at all meetings of
Stockholders.
In accordance with the Company's by-laws and applicable law, the election of
Directors will be determined by a plurality of the votes cast by the holders of
shares present in person or by proxy and entitled to vote. Consequently, the ten
nominees who receive the greatest number of votes cast for election as Directors
will be elected as Directors of the Company. Shares present which are properly
withheld as to voting with respect to any one or more nominees, and shares
present with respect to which a broker indicates that it does not have authority
to vote ("broker non-votes") will not be counted. The affirmative vote of shares
representing a majority of the votes cast by the holders of shares present and
entitled to vote is required to approve the other matter to be voted on at the
Annual Meeting. Shares which are voted to abstain will be considered present at
the meeting, but since they are not affirmative votes for the matter they will
have the same effect as votes against the matter. Broker non-votes are not
counted as present.
2
<PAGE>
The following table contains certain information as to all entities which,
to the knowledge of the Company, were the beneficial owners of 5% or more of the
outstanding shares of Common Stock. Except as noted below, each such entity has
sole voting and investment power with respect to the shares set forth.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED PERCENT OF CLASS
------------------------------------------------------------------------------- ----------------- -----------------
<S> <C> <C>
Loews Corporation ("Loews") (1)................................................ 51,994,360 84%
667 Madison Avenue
New York, New York 10021
The Equitable Companies Incorporated........................................... 4,346,367 7%
("Equitable") (2)
787 Seventh Avenue
New York, New York 10019
<FN>
------------------------
(1) This information is as of January 26, 1995.
(2) This information is as of December 31, 1994 and is based on a report
filed with the Securities and Exchange Commission. According to the report the
shares were acquired for investment purposes and may be deemed to be
beneficially owned by certain subsidiaries of Equitable. Equitable states in
such report that it may be deemed to have sole voting power with respect to
4,340,300 shares, shared voting power with respect to 1,400 shares and sole
dispositive power with respect to 4,346,367 shares. The report states that it
has been filed jointly on behalf of AXA, and five French mutual insurance
companies, as a group, as parent holding companies.
</TABLE>
Since Loews holds more than a majority of the outstanding Common Stock of
CNA, Loews has the power to approve matters submitted for consideration at the
Annual Meeting without regard to the votes of the other Stockholders. Loews
intends to vote FOR the election of management's nominees for the Board of
Directors' and FOR the ratification of the appointment of Deloitte & Touch LLP
as the Company's independent auditors. There are no agreements between CNA and
Loews with respect to the election of CNA Directors or Officers or with respect
to the other matters which may come before the meeting.
3
<PAGE>
The following table sets forth certain information as to the shares of
Common Stock beneficially owned by each Director and nominee, and each Executive
Officer named in the Summary Compensation Table below, and by all Executive
Officers and Directors of the Company as a group as of February 23, 1995, based
on data furnished by them.
<TABLE>
<CAPTION>
SHARES OF THE COMPANY'S
COMMON STOCK BENEFICIALLY
OWNED DIRECTLY OR
NAME INDIRECTLY
---------------------------------------------------------- ---------------------------
<S> <C>
Antoinette Cook Bush...................................... 0
Dennis H. Chookaszian..................................... 1,000(a)
Philip L. Engel........................................... 400
Robert P. Gwinn........................................... 307
Carolyn L. Murphy......................................... 2,000
Edward J. Noha............................................ 450(a)
Richard L. Thomas......................................... 1,700(b)
James S. Tisch............................................ 0(a)
Laurence A. Tisch......................................... 0(c)
Preston R. Tisch.......................................... 0(c)
Jae L. Wittlich........................................... 0
Marvin Zonis.............................................. 0
All Officers and Directors as a group (14 persons
including those listed above)............................ 5,857
</TABLE>
Each holding represents less than 1% of the outstanding shares of Common
Stock. For information with respect to the stock holdings of Loews, see page 2.
(a) James S. Tisch owns 40,000 shares of Loews Common Stock which is less
than 1% of the outstanding stock of Loews. He is the son of Laurence A. Tisch.
Dennis H. Chookaszian owns 2,000 shares of Loews Common Stock. Edward J. Noha
owns 750 shares of Loews Common Stock.
(b) Mr. Thomas' wife owns 1,100 shares of CNA Common Stock and 1,500 shares
of Loews Common Stock in which he disclaims any beneficial interest. Mr. Thomas
owns 1,700 shares of Loews Common Stock.
(c) Laurence A. Tisch, and his brother, Preston R. Tisch, are the beneficial
owners of an aggregate of approximately 32% of the outstanding stock of Loews.
ELECTION OF DIRECTORS
The By-Laws provide that the number of Directors which shall constitute the
whole Board shall be ten. The Directors shall be elected at the Annual Meeting
of Stockholders and each Director elected shall hold office until the next
annual meeting of Stockholders and until his successor is elected and qualified.
Directors need not be Stockholders. Unless authority to do so is withheld, the
persons named in the enclosed proxy intend to vote the shares represented by the
proxies given to them for the ten nominees hereinafter named. All Directors were
elected at the last Annual Meeting of Stockholders.
Should any nominee or nominees become unavailable, the proxy holders will
vote for the nominee or nominees designated by the Board of Directors. The Board
of Directors has no reason to believe that any of the nominees will become
unavailable.
Set forth below is the name, principal occupation and business experience
during the past five years and certain other information for each nominee.
4
<PAGE>
ANTOINETTE COOK BUSH, Partner, Skadden, Arps, Slate, Meagher & Flom,
Washington, D. C. since 1993. Ms. Bush was Senior Counsel of the United States
Senate Committee on Commerce, Science and Transportation-Majority Staff from
January 1991 to October 1993. She was Staff Counsel of the Committee from March
1987 to December 1990. She has been a Director since 1993. She is a member of
the Executive, Finance and Audit Committees. Age 38.
DENNIS H. CHOOKASZIAN, Chairman of the Board and Chief Executive Officer of
the CNA Insurance Companies since September 1992. From November 1990 to
September 1992, Mr. Chookaszian was President and Chief Operating Officer of the
CNA Insurance Companies. Prior thereto, he was Vice President and Controller of
the Company and its insurance subsidiaries since 1975. He serves on the
Executive and Finance Committees. Mr. Chookaszian has served as a Director since
1990. Age 51.
PHILIP L. ENGEL, President of the CNA Insurance Companies since September
1992. From November 1990 until September 1992 he was Executive Vice President of
the CNA Insurance Companies. He serves on the Executive and Finance Committees.
Mr. Engel has served as a Director since 1992. Age 54.
ROBERT P. GWINN, Retired Chairman of the Board and Chief Executive Officer
of Encyclopaedia Britannica, Chicago, Illinois. He is a member of the Executive,
Finance and Audit Committees. Mr. Gwinn has served as a Director since 1967. Age
87.
EDWARD J. NOHA, Chairman of the Board of CNA since September 1992. Prior to
that time and since February 1975, Mr. Noha was Chairman of the Board and Chief
Executive Officer of the CNA Insurance Companies. Mr. Noha serves on the board
of Loews and Eagle Finance Corp. He is a member of the Executive and Finance
Committees. Mr. Noha has served as a Director since 1975. Age 67.
RICHARD L. THOMAS, Chairman and Chief Executive Officer of The First
National Bank of Chicago ("FNBC") and First Chicago Corporation. He also serves
on the board of Sara Lee Corporation. He serves on the Finance and Executive
Committees and is Chairman of the Audit Committee. Mr. Thomas has served as a
Director since 1970. Age 64.
JAMES S. TISCH, President and Chief Operating Officer of Loews since October
1994. Prior to that, he was Executive Vice President of Loews. He is a Director
of Loews and Champion International Corporation. He is Chairman of the Finance
Committee and serves on the Executive Committee. Mr. Tisch has served as a
Director since 1985. Age 42.
LAURENCE A. TISCH, Co-Chairman of the Board and Co-Chief Executive Officer
of Loews and Chairman, President and Chief Executive Officer of CBS Inc.
("CBS"). He is the Chief Executive Officer of CNA. He is a director of Automatic
Data Processing, Inc., CBS, Bulova Corporation ("Bulova"), a 97% owned
subsidiary of Loews, Petrie Stores Corporation and Federated Department Stores,
Inc. He serves on the Executive and Finance Committees. Mr. Tisch has served as
a Director since 1974. Age 72.
PRESTON R. TISCH, Co-Chairman of the Board and Co-Chief Executive Officer of
Loews. Prior to October 1994, he had been President and Co-Chief Executive
Officer of Loews since March 1988. He was Postmaster General of the United
States from August 1986 to February 1988. Prior thereto he had served as
President and Chief Operating Officer of Loews since 1969 and a Director since
1960. He is a director of CBS, Bulova, Hasbro, Inc., and Rite Aid Corporation.
He is Chairman of the Executive Committee and serves on the Finance Committee.
Mr. Tisch served as a Director of CNA from 1974 to 1986 and was reelected a
Director in May of 1988. Age 68.
5
<PAGE>
MARVIN ZONIS, Professor of international political economy at the Graduate
School of Business at the University of Chicago. He has been a Director since
1993. He is a member of the Executive, Finance and Audit Committees. Age 58.
COMMITTEES AND MEETINGS
The Audit Committee is a standing committee and is charged with the
responsibility of administering corporate policy in matters of accounting and
control. The Audit Committee functions as the liaison with the Company's
independent auditors. The members of the Audit Committee are: Richard L. Thomas
(Chairman), Antoinette Cook Bush, Robert P. Gwinn and Marvin Zonis.
The Company does not have standing nominating or compensation committees.
The functions normally assigned to these committees are performed by the
Executive Committee or by the full Board.
The Board of Directors met five times in 1994. The Finance Committee met
four times and the Audit Committee met two times in 1994. All of the current
Directors, except Richard L. Thomas and Preston R. Tisch, attended at least 75%
of the Board and Committee meetings.
COMPENSATION OF EXECUTIVE OFFICERS
The following table includes compensation paid by the Company and its
subsidiaries for services rendered in all capacities for the years indicated for
the Chief Executive Officer and the four most highly compensated Executive
Officers of the Company as of December 31, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------- ALL OTHER
BONUS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY (B) (C)
----------------------------------------- ---- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Laurence A. Tisch (a) 1994 -- -- $ 26,000 (d)
Chief Executive Officer of 1993 -- -- 21,500
CNA Financial Corporation 1992 -- -- 21,500
Dennis H. Chookaszian (e) 1994 $1,242,091 -- 51,939
Chairman of the Board 1993 1,132,716 $350,000(f) 51,984
Chief Executive Officer 1992 738,333 70,000 31,010
CNA Insurance Companies
Philip L. Engel (g) 1994 825,539 -- 34,661
President 1993 760,171 90,000 36,397
CNA Insurance Companies 1992 605,833 70,000 25,445
Carolyn L. Murphy 1994 558,333 -- 23,380
Senior Vice President 1993 528,333 180,000 22,190
CNA Insurance Companies 1992 525,000 70,000 22,050
Jae L. Wittlich 1994 464,842 -- 18,900
Senior Vice President 1993 438,333 140,000 18,410
CNA Insurance Companies 1992 412,500 60,000 17,325
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
<FN>
(a) Mr. Tisch does not receive a salary from the Company. CNA reimburses Loews
for the services of Mr. Tisch and other officers and executives of Loews
pursuant to the Services Agreement described under "Certain Transactions"
above. The reimbursement for 1994 included approximately $57,700 in relation
to Mr. Tisch's services to CNA.
(b) Represents amounts awarded under the Long Term Award Plan for the respective
years. The Long Term Award Program was instituted in 1990 to provide cash
awards to key executives in recognition of individual performance and
contribution to long term results. Awards were made on a discretionary basis
and were approved by the Chairman and Chief Executive Officer of the CNA
Insurance Companies. The amounts shown include both the 1992 and 1993 Awards
granted in April 1993 and December 1993, respectively. The Awards granted to
Messrs. Chookaszian and Engel recognized services rendered prior to October
1, 1992. These and all previously awarded but unpaid amounts were paid in
1993 when the Plan was terminated.
(c) Represents amounts contributed or accrued for fiscal 1994, 1993 and 1992 for
the named officers under the Company's savings plan and related supplemental
savings plan.
(d) Entirely represents only director's fees paid to Mr. Tisch in 1994, 1993 and
1992. No contributions are made to the Company's savings plan or related
supplemental savings plan on behalf of Mr. Tisch.
(e) Mr. Chookaszian became Chairman of the Board and Chief Executive Officer of
the CNA Insurance Companies on September 30, 1992. He had previously been
President and Chief Operating Officer.
(f) Includes a $250,000 bonus paid to Mr. Chookaszian in 1993.
(g) Mr. Engel became President of the CNA Insurance Companies on September 30,
1992. He had previously been Executive Vice President.
</TABLE>
EMPLOYMENT CONTRACTS
An employment agreement with Mr. Chookaszian effective October 1, 1992 and
expiring on September 30, 1995, provides for a base salary of $1.1 million in
the first year; $1.2 million in the second year and $1.3 million in the third
year. An employment agreement with Mr. Engel effective October 1, 1992 and
expiring on September 30, 1995, provides for a base salary of $740,000 in the
first year; $800,000 in the second year; and $870,000 in the third year. Each of
the agreements requires the Company to provide long term disability insurance
and permits the employee to participate in other benefit programs offered by the
Company to its employees. The Company may terminate each agreement without cause
at any time, in which event the Company would be required to continue to make
payments to the employee for a period of three years from the date of
termination at the rate per year in effect at the time of such termination. The
fixed salary amounts were negotiated between the parties in 1992 and payment
thereof is independent of any corporate performance factors.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The Company has no compensation committee. The compensation of the Chairman
and Chief Executive Officer and of the President of the CNA Insurance Companies,
Dennis H. Chookaszian and Philip L. Engel respectively, was reviewed and
approved by the Board of Directors of the Company. Mr. Chookaszian and Mr. Engel
abstained from the vote of the Board. The compensation of the other executive
officers of the CNA Insurance Companies is established by Mr. Chookaszian as
Chairman and Chief Executive Officer of the CNA Insurance Companies. The
Company's executive compensation consists of a base salary and an incentive
bonus program. Executive officers may also participate in the Company's
Employees' Savings Plan, Supplemental Savings Plan, Retirement Plan and
Supplemental Retirement Plan
7
<PAGE>
with other salaried employees. There is no stock option program. Any bonus
amounts paid to Mr. Chookaszian are determined by the Chief Executive Officer
based on his review and appraisal of the overall performance of the executive in
the prior year.
Under an amendment to the Internal Revenue Code which became effective in
1994, compensation in excess of $1,000,000 per year to certain executive
officers of public companies may not be taken as a tax deduction unless that
compensation is paid pursuant to a performance based plan meeting requirements
established under the tax code. The compensation payable under the employment
agreement with Mr. Chookaszian will exceed the tax code deductibility limit. No
formula derived compensation plan has been adopted with respect to Mr.
Chookaszian.
The Company's compensation program is designed to recognize individual
performance and contribution to CNA. This pay-for-performance philosophy is used
to reward employees whose work meets or exceeds CNA's standards of quality and
value-added customer service. It is CNA's objective to have a compensation
policy which is internally equitable and externally competitive, rewards
executives for long term strategic management, supports a performance-oriented
environment that rewards individuals with respect to attainment of corporate
goals and individual expectations, and attracts and retains key executives
critical to the Company's long term success.
The Chairman and Chief Executive Officer of the CNA Insurance Companies
establishes the compensation for the other executives following a systematic
process to establish an annual salary plan for the Company's senior executives.
He is assisted in developing the plan by the Company's Human Resources staff.
The plan is based on insurance industry, general industry and nationally
published and customized surveys of total annual compensation (salary plus
incentive bonus payments). Such surveys include large financial, manufacturing
and service organizations. Three of such surveys include two of the four
companies included in the Standard & Poor's Multi-Line Insurers Index (see
"Stock Price Performance Graph" below). These companies represent the
organizations with which CNA competes for talent in non-insurance positions.
This information, in conjunction with performance judgments as to past and
expected future contributions of the individual executive, is used to develop an
annual salary plan. The objective of CNA's plan is to set base salary levels to
be competitive with the average total annual compensation (base salary plus
incentive bonus payments) levels reported in the surveys. In addition, the Human
Resources staff periodically reviews with independent compensation consultants
the overall competitiveness of the salary plan. Because CNA uses this market
pricing approach to determine appropriate executive pay levels, CNA does not use
formal salary ranges, with attendant minimums, midpoints and maximums to
determine pay levels or annual increase amounts. Generally, the actual total
annual compensation level for executive officers for the last fiscal year were
consistent with the policy. On an individual basis the actual total annual
compensation may be greater or less than the total annual compensation reported
in the surveys as incentive bonus payments for survey companies fluctuate from
year to year based on business results.
As noted in the Summary Compensation Table, Laurence A. Tisch, the Company's
Chief Executive Officer, does not receive compensation from the Company. Mr.
Tisch is compensated by Loews, of which he is Chairman of the Board and Co-Chief
Executive Officer. CNA reimburses Loews for services of Mr. Tisch and other
officers and executives of Loews pursuant to the Services Agreement described
under "Certain Transactions," below.
<TABLE>
<S> <C> <C> <C>
By the Board of
Directors: Antoinette Cook Bush Edward J. Noha Laurence A. Tisch
Dennis H. Chookaszian Richard L. Thomas Preston R. Tisch
Philip L. Engel James S. Tisch Marvin Zonis
Robert P. Gwinn
</TABLE>
8
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. L. A. Tisch, D. H. Chookaszian, and P. L. Engel, each of whom are
Directors of the Company, also serve as officers of the Company or its
subsidiaries. In addition, Mr. Noha, a Director of the Company, formerly served
as an officer of the Company or its subsidiaries. Mr. L. A. Tisch, Director and
Chief Executive Officer of the Company, also serves as a Director and Co-Chief
Executive Officer of Loews. See "Certain Transactions," below, for information
with respect to transactions between the Company and its subsidiaries, and
certain individuals and entities with which they are affiliated.
CERTAIN TRANSACTIONS
During 1994 CNA paid FNBC $643,217 for various trust and banking services,
including services as transfer agent and registrar for the Company's Common
Stock. FNBC and certain affiliates paid premiums, at standard rates, and
administrative service fees to Continental Casualty Company and Continental
Assurance Company and their subsidiaries aggregating approximately $2,173,415
(of which $313,442 represented contributions by employees) in 1994.
Loews makes available to CNA the services of certain officers and executives
of Loews. In February 1975 CNA entered into a management services agreement (the
"Services Agreement") with Loews which provides that Loews will make available
to CNA these services, together with general corporate services, including
financial, administrative and management consulting services. Loews is
reimbursed on the basis of an allocation of a portion of the salaries and
related payroll taxes and benefits of the officers and executives performing the
services, in addition to travel and similar expenses incurred. The allocation
may be adjusted in the event of any substantial change in the services performed
and the Services Agreement may be terminated by CNA or Loews on the last day of
any month. The Services Agreement has been reviewed each year since 1975 by
CNA's Audit Committee. The last such review took place in February 1995 and the
Audit Committee recommended renewal of the Services Agreement for the ensuing
fiscal year, calling for a reimbursement allocation of approximately $140,000
per month, which recommendation was accepted by the Board of Directors. Under
the Services Agreement CNA reimbursed Loews $1,680,000 for services performed
during 1994, and $44,000 for travel and similar expenses incurred during that
period. During 1994 Loews paid premiums on insurance and administrative services
to the CNA Insurance Companies at standard rates aggregating approximately
$5,721,420.
In January 1980 the Loews ownership of the voting securities of CNA exceeded
80% which required the inclusion of CNA and its eligible subsidiaries in the
consolidated federal income tax returns filed by Loews for 1980 and subsequent
years. In February 1980, following approval by CNA's Audit Committee and Board
of Directors, CNA and Loews entered into a tax allocation agreement which
provides that CNA will (i) be paid by Loews the amount, if any, by which the
Loews consolidated federal income tax liability is reduced by virtue of the
inclusion of CNA and its subsidiaries in the Loews consolidated federal income
tax return, or (ii) pay to Loews an amount, if any, equal to the federal income
tax which would have been payable by CNA if CNA and its subsidiaries had filed a
separate consolidated return. In the event that Loews should have a net
operating loss in the future computed on the basis of filing a separate
consolidated tax return without CNA and its eligible subsidiaries, CNA may be
required to repay tax recoveries previously received from Loews. This agreement
may be cancelled by CNA or Loews upon thirty days' prior written notice. In
1994, the inclusion of CNA and its eligible subsidiaries in the consolidated
federal tax return of Loews resulted in reduced federal income tax liability for
Loews. Accordingly, CNA has received or will receive approximately $84 million
from Loews under the tax allocation agreement.
9
<PAGE>
CNA has reimbursed to Loews approximately $6,590,000 for expenses
(consisting primarily of salaries and benefits and other out-of-pocket costs)
incurred by Loews during 1994 in maintaining New York City investment facilities
and services for CNA at the Loews offices.
From time to time insurance subsidiaries of CNA have made media expenditures
for advertising on CBS owned and affiliated stations. Such expenditures
aggregated approximately $2,909,550 during 1994. In 1990 CBS selected, pursuant
to a competitive bidding process, CNA to be the carrier for a basic and
supplemental group life insurance program for both active employees and
retirees. In 1994 premiums paid to CNA for this program were $2,828,470 for
active employees and $713,740 for retirees. Also, CBS paid premiums to insurance
subsidiaries of CNA in the amount of $257,508 in 1994 for certain property and
casualty insurance coverage and surety bonds. In 1994, CNA provided CBS with
group long-term care insurance, the full cost (aggregating approximately
$273,257 in premium) of which was paid by participants. CNA also provides CBS
with group long term disability and accidental death and dismemberment
insurance. Total premium paid for these policies in 1994 was 497,880. Loews owns
approximately 18% of the common stock of CBS.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
A report required under the Securities Exchange Act of 1934 relating to the
purchase in 1994 of shares of Common Stock by Carolyn Murphy, an executive
officer of the Company, was filed in an untimely manner.
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the total return of the Company's Common Stock,
the Standard & Poor's 500 Composite Stock Index ("S & P 500") and the Standard &
Poor's Multi-Line Insurance Index for the five years ended December 31, 1994.
The graph assumes that the value of the investment in the Company's Common Stock
and each Index was $100 on December 31, 1989 and that dividends were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CNA S&P 500 MULTI-LINE INSURANCE
<S> <C> <C> <C>
89 100 100 100
90 70.03 96.89 82.3
91 100 126.42 109.84
92 100 136.05 125.39
93 79.08 149.76 140.23
94 66.2 151.74 147.5
</TABLE>
RETIREMENT PLAN
CNA provides a funded, tax qualified, non-contributory retirement plan for
all salaried employees, including executive officers (the "Retirement Plan") and
an unfunded, non-qualified, non-contributory benefits equalization plan (the
"Supplemental Retirement Plan") which provides for the accrual and
10
<PAGE>
payment of benefits which are not available under tax qualified plans such as
the Retirement Plan. The following description of the Retirement Plan gives
effect to benefits provided under the Supplemental Retirement Plan.
The Retirement Plan provides for retirement benefits based upon average
final compensation (i.e., based upon the highest average sixty consecutive
months compensation and years of credited service with CNA). Compensation under
the Retirement Plan consists of salary paid by the Company and its subsidiaries
included under "Salary" in the Summary Compensation Table above. The following
table shows estimated annual benefits payable upon retirement under the
Retirement Plan for various compensation levels and years of credited service,
based upon normal retirement in 1994 and a straight life annuity form of
benefit. In addition to a straight life annuity, the Plan also allows the
participant to elect payment to be made in a joint and contingent (or survivor)
annuitant form where the contingent (or survivor) annuitant would receive
payment at 50%, 66 2/3% or 100% of the participant's benefit amount.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
NORMAL RETIREMENT IN 1995
ESTIMATED ANNUAL PENSION FOR
REPRESENTATIVE YEARS OF CREDITED SERVICE
----------------------------------------------------------
AVERAGE ANNUAL COMPENSATION 15 20 25 30 35
--------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 400,000 $ 116,979 $ 155,971 $ 194,964 $ 207,291 $ 219,618
500,000 146,979 195,971 244,964 260,625 276,285
600,000 176,979 235,971 294,964 313,958 332,952
700,000 206,979 275,971 344,964 367,292 389,619
800,000 236,979 315,971 394,964 420,625 446,286
900,000 266,979 355,971 444,964 473,959 502,953
1,000,000 296,979 395,971 494,964 527,292 559,620
1,100,000 326,979 435,971 544,964 580,626 616,287
1,200,000 356,979 475,971 594,964 633,959 672,954
1,300,000 386,979 515,971 644,964 687,293 729,621
</TABLE>
The amounts in the table reflect deductions for estimated Social Security
payments.
Mr. Chookaszian, Mr. Engel, Ms. Murphy and Mr. Wittlich have 19, 29, 17 and
17 years of credited service, respectively.
DIRECTOR COMPENSATION
CNA directors who are not employees of CNA or any of its subsidiaries
received an annual retainer in 1994 of $20,000. In addition, members of
committees received the following annual retainers: Finance $3,000; Executive
$3,000; and Audit $1,500. Messrs. Chookaszian and Engel, as employees of CNA, do
not receive director retainer fees. Directors are reimbursed for necessary and
reasonable travel expenses incurred in attending meetings.
In February 1991 Mr. Noha entered into a Continuing Service Agreement with
CNA under which Mr. Noha's employment status with CNA was converted on October
1, 1992 (the "Commencement Date") to that of an independent contractor providing
consulting and other specified services to CNA. The Continuing Service Agreement
contemplates that Mr. Noha will serve as Chairman of the Board of Directors, but
not as an officer, of CNA following the Commencement Date. Pursuant to the
Agreement, which will expire on September 20, 2002, Mr. Noha (or his estate in
the event of his death) will be paid a fee at the rate of $1,570,000 per annum
reduced by the retirement benefits payable to Mr. Noha under his Employment
Agreement and CNA's Retirement Plan and Supplemental Retirement Plan. During the
last
11
<PAGE>
fiscal year, services provided by Mr. Noha under this Agreement consisted of
providing the assistance and advice as delineated in the Agreement and promoting
and assisting the Company with respect to its position in the Chicago business
community. In this regard, Mr. Noha served as a member of numerous organizations
including the Chicago Manufacturing Center, the Illinois Business Roundtable and
Chairman of the Economic Development Commission of the City of Chicago.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Deloitte & Touch LLP was CNA's independent auditing firm for the fiscal year
1994 and has been recommended by the Audit Committee to perform the audit for
the 1995 fiscal year. This recommendation has been accepted and approved by the
Board of Directors, subject to ratification by the Stockholders. Deloitte &
Touch LLP and its predecessors have served as the Company's independent auditors
since 1976. The Board of Directors recommends that the appointment of Deloitte &
Touch LLP be ratified by the Stockholders. If the appointment of the firm of
Deloitte & Touch LLP is not approved or if that firm shall decline to act or
their employment be otherwise discontinued, the Board of Directors will appoint
other independent auditors. Representatives of Deloitte & Touch LLP will be
present at the Annual Meeting and will be extended the opportunity to make a
statement if they so desire and will respond to appropriate questions raised at
the Meeting.
OTHER MATTERS
The Company does not know of any other business to come before the meeting.
However, if any other matters come before the meeting, the persons named in the
proxies will act on behalf of the Stockholders they represent according to their
best judgment.
The cost of this solicitation of proxies will be borne by the Company.
Solicitation will be made primarily through use of the mails, but regular
employees of the Company may solicit proxies personally, by telephone or
telegram. Such employees will receive no special compensation for such
solicitation. Brokers and nominees will be requested to obtain voting
instructions of beneficial owners of stock registered in their names and will be
reimbursed for their out of pocket expenses and reasonable clerical expenses.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Stockholder proposals for inclusion in proxy materials for the 1996 Annual
Meeting should be addressed to the Company's Senior Vice President, Secretary
and General Counsel, CNA Plaza, 43S, Chicago, Illinois 60685, and must be
received before November 30, 1995.
By order of the Board of Directors,
DONALD M. LOWRY
SENIOR VICE PRESIDENT,
SECRETARY
AND GENERAL COUNSEL
Chicago, Illinois
March 29, 1995
12
<PAGE>
PROXY
CNA FINANCIAL CORPORATION PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING, MAY 3, 1995, CHICAGO, ILLINOIS
The undersigned hereby appoints L.A. Tisch, J.S. Tisch, and D.H.Chookaszian, or
any of them, with full power of substitution, to represent and to vote the
Common Stock of the undersigned at the annual meeting of stockholders of CNA
Financial Corporation, to be held at CNA Plaza, (333 South Wabash Avenue),
Chicago, Illinois, on May 3, 1995, at 11:00 A.M., or at any adjournment thereof
as follows:
Election of Directors. Nominees:
Antoinette Cook Bush, Dennis H. Chookaszian,
Philip L. Engel, Robert P. Gwinn, Edward J. Noha,
Richard L. Thomas, James S. Tisch, Laurence A. Tisch,
Preston R. Tisch, Marvin Zonis.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXY COMMITTEE CANNOT VOTE
YOUR SHARE UNLESS YOU SIGN AND RETURN THIS CARD.
----------------
SEE REVERSE SIDE
----------------
<PAGE>
/X/ PLEASE MARK YOUR 4952
VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF
DIRECTORS AND FOR PROPOSAL 2.
--------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR the Election of Directors
and proposal 2.
--------------------------------------------------------------------------------
1. Election of Directors FOR / / WITHHELD / /
(see reverse)
2. Approval of FOR / / AGAINST / / ABSTAIN / /
independant
accountants
For, except vote withheld from the following nominee(s):
------------------------
SIGNATURE(S) DATE
------------------------------- ---------------
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.
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
