SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [x]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
EQUITABLE OF IOWA COMPANIES
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_______________________________________________________________
2) Aggregate number of securities to which transaction applies:
_______________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
_______________________________________________________________
4) Proposed maximum aggregate value of transaction:
_______________________________________________________________
[ ] 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:
_______________________________________________________________
EQUITABLE OF IOWA COMPANIES
PROXY STATEMENT
Annual Meeting of Shareholders, April 25, 1996
GENERAL INFORMATION
The enclosed proxy is solicited by the Board of Directors of EQUITABLE
OF IOWA COMPANIES (the "Company"), 604 Locust Street, Des Moines, Iowa,
50309, for use at the Annual Meeting of Shareholders to be held
April 25, 1996, and any adjournment thereof (the "Meeting"). When
such proxy is properly executed and returned, the shares it represents
will be voted at the Meeting in accordance with the instructions
contained therein. If no direction is given, proxies will be voted in
favor of election of the three director nominees named herein, approval
of the 1996 Non-Employee Directors' Stock Option Plan, and approval of
Ernst & Young LLP as auditors for 1996. Any shareholder furnishing a
proxy may revoke it at any time before it is voted either by voting in
person or by delivering a revocation or later dated proxy to the
Secretary of the Company. The Proxy Statement and the accompanying
Proxies will be first mailed to shareholders on or about March 22, 1996.
The cost of the solicitation of the Proxies will be borne by the
Company. Proxies may be solicited by the Board of Directors or
management personally, by telephone or by facsimile.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH OF THE
PROPOSALS DESCRIBED IN THIS PROXY STATEMENT.
VOTING SECURITIES
Only shareholders of record as of the close of business on March 7,
1996, will be entitled to the notice of and to vote at the Meeting. The
Company has a single class of Common Stock without par value ("Common
Stock"), of which 31,859,149 shares were outstanding and entitled to
vote on such date. Shares present in person or represented by proxy at
the Meeting will be tabulated for determination of whether or not a
quorum is present. A quorum will be present if a majority of the votes
entitled to be cast on a matter are represented for any purpose at
the Meeting. Votes withheld for any director, abstentions and broker-
dealer non-votes represented at the Meeting will be counted for quorum
purposes, but will not be counted as votes cast with respect to any
matter to come before the Meeting and will not affect the outcome of any
matter. If a quorum exists, directors will be elected by a majority of
the votes cast by the shares entitled to vote in the election and action
on other matters, including appointment of auditors, will be approved if
the votes cast favoring the action exceed the votes cast opposing the
action. Holders of Common Stock are entitled to cumulative voting in
the election of directors which means that each shareholder is entitled
to as many votes as shall equal the number of votes which such
shareholder would be entitled to cast multiplied by the number of
directors to be elected, and such shareholder may cast all such votes
for a single director, or distribute them among the number to be voted
for, or any two or more of them, as such shareholder may see fit. The
Board of Directors unanimously recommends election of the nominees named
herein and a vote "For" each of the other matters to be considered at
the Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following sets forth, as of March 7, 1996, security ownership with respect
to beneficial owners of more than five percent of the Company's Common Stock.
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent of Class
________________________ ________________ ________________
<S> <C> <C>
Helen Hubbell Ingham(1) 3,012,486 9.5%
1429 North Federal Hwy.
Ft. Lauderdale, FL 33304
FMR Corp.(2) 2,293,000 7.2%
82 Devonshire Street
Boston, MA 02109-3614
Hans F. E. Wachtmeister 1,924,671 6.0%
Belmont Hill School
Belmont, MA 02178
<FN>
(1) All shares held in a revocable trust. Excludes 15,905 shares held
by her husband, Richard S. Ingham.
(2) Based on a Statement on Schedule 13G dated February 14, 1996. The
filing indicates that FMR Corp. has sole voting power with respect to
54,800 shares and sole dispositive power with respect to 2,293,000
shares. FMR Corp. is the parent of Fidelity Management Trust
Company and Fidelity Management & Research Company, an investment
adviser to various investment companies.
</TABLE>
ELECTION OF DIRECTORS
The Board of Directors may consist of not less than 9 nor more than 15
members, divided into three classes. At each annual meeting of
shareholders, the number of directors equal to the number of the class
whose term expires at the time of such meeting shall be elected to hold
office until the third succeeding annual meeting and until their
successors are elected and qualified. There are presently ten directors
with the terms of three expiring at the Meeting. Messrs. Rehm,
Wachtmeister, and White have been nominated by the Board of Directors
for election by the shareholders for terms ending in 1999, and all are
presently directors of the Company.
Although the Board anticipates that all nominees will be able to serve,
in the event any one or more should be unable to do so, proxies will be
voted for such substitute nominee or nominees as the Board in its
discretion may recommend. Proxies will be voted for the election of the
nominees unless the stockholder giving the proxy withholds such
authority.
The following information is furnished for each continuing director:
<TABLE>
<CAPTION>
Name; (Age);
Principal Occupation
During Last Five Years; Year First Year
Directorships in Other Elected Term
Public Companies Director Expires
______________________ __________ _______
<S> <C> <C>
Richard B. Covey (66), Partner in law firm 1971(a) 1998
of Carter Ledyard & Milburn.
Doris M. Drury (69), John J. Sullivan 1986 1997
Professor of Economics, Regis University,
Denver, Colorado; President and Chief
Executive Officer, Center for Business and
Economic Forecasting, Inc.; previously
Professor of Economics, University of Denver;
Director, Public Service Company of Colorado,
Inc. and Colorado National Bankshares, Inc.
James L. Heskett (62), Professor, Harvard 1985 1998
University Graduate School of Business
Administration; Director, Cardinal Health, Inc.
Fred S. Hubbell (44), Chairman (since April, 1987 1997
1993), President, and Chief Executive
Officer of the Company, Equitable American
Insurance Company ("Equitable American")
(since January, 1993), and Equitable Life
Insurance Company of Iowa ("Equitable Life")
(since May, 1992), and USG Annuity & Life
Company ("USG") (since December, 1995) and
Chairman of Equitable Investment Services,
Inc. ("EISI"); Director, Pioneer Hi-Bred
International, Inc. and The Macerich Company.
</TABLE>
<TABLE>
<CAPTION>
Name; (Age);
Principal Occupation
During Last Five Years; Year First Year
Directorships in Other Elected Term
Public Companies Director Expires
______________________ __________ _______
<S> <C> <C>
Richard S. Ingham, Jr. (50), Vice President 1994 1997
and Controller, Asterisk, Inc. (diversified
media, real estate and retail holding
company).
Robert E. Lee (60), Executive Director, The 1981 1998
Denver Foundation (community foundation);
Director, Meredith Corporation and
Storage Technology Corporation.
Jack D. Rehm (63), Director, Chairman (since 1988 1996
July, 1992), President (until July, 1994)
and Chief Executive Officer, Meredith
Corporation (diversified media company);
Director, The Vernon Company and
International Multifoods, Inc.
Thomas N. Urban (61), Senior Lecturer, 1979 1997
Harvard University Graduate School of
Business Administration (since August,
1995); Chairman and President (until
March, 1995), Chief Executive Officer
(March to August, 1995), and Director of
Pioneer Hi-Bred International, Inc.
(hybrid seed corn business); Director,
Sigma Aldrich Corp. and Case Corporation
Hans F. E. Wachtmeister (51), Teacher, 1981 1996
Belmont Hill School, Belmont, Massachusetts.
Richard S. White (58), General Manager of the 1993 1996
John Deere Des Moines Works of Deere & Company.
<FN>
(a) Includes period in which served as director of Equitable Life, which,
in a 1977 reorganization, became a wholly-owned subsidiary of the Company.
</TABLE>
Committees of the Board of Directors
The Board of Directors has standing Compensation and Audit Committees
and does not have a standing Nominating Committee. The Compensation
Committee administers the executive compensation and benefit programs of
the Company and its subsidiaries. It is composed of four directors, Dr.
Drury, Messrs. Covey, Lee, and Rehm, who are not employees of the
Company. The Committee met two times during 1995 to evaluate the
executive compensation programs. The Committee sometimes seeks advice
from outside consultants in evaluating compensation levels and benefit
programs. The Committee each year reviews and approves salaries for the
Company's Board of Directors and executive personnel and administers
incentive compensation programs. The report of the Compensation
Committee on these compensation and benefit programs is provided below.
The Audit Committee is composed of four directors, Messrs. Heskett,
Ingham, Jr., Urban, and White, who are not Company employees. The
Committee met three times in 1995 with the Company's independent
auditors, internal auditors, and other personnel to review internal
financial controls, the principles and practices of financial reporting,
contingencies which might affect the Company's financial position, the
impact of regulatory requirements, and the adequacy of the Company's
disclosure. The Committee reviews the application of accounting
principles and practices, including adequacy of disclosure, and the work
of internal auditors and comments and recommendations of the independent
auditors. The Committee also nominates the independent auditors,
reviews the independent auditors' examination and reports and the
Company's system of internal controls, and determines whether the
independent auditors have access to all necessary data.
The Board also has an Executive Committee whose members are Messrs.
Covey, Heskett, Hubbell, Ingham, Jr., Lee, and Urban.
Compensation of the Board of Directors
The Board of Directors held four meetings during 1995. All members
attended at least 75% of the total number of meetings of the Board and
committees of the Board on which they served, except Mr. Wachtmeister.
In 1995 compensation of the non-employee directors of the Company
consisted of an annual fee of $16,000 and $1,000 for each Board and $750
for each Committee meeting attended, and an additional $750 was paid to
the Chair of each Committee. The Company has a program by which non-
employee directors may receive restricted stock in lieu of their annual
fees. The restricted stock vests prorata at the end of each year of
service on the Board of Directors and entitles the director to all
incidents of ownership including the payment of dividends. All eligible
directors have elected to participate in this program. The Non-Employee
Directors' Stock Option Plan described on Page 19 may provide the
opportunity for additional compensation based on the performance of the
Company's Common Stock.
Executive Officers of the Company
Executive officers of the Company do not have fixed terms but serve
until removed by the Board of Directors. The principal occupations of
each of the persons named below are their respective offices with the
Company or its subsidiaries for more than the past five years unless
otherwise noted. The executive officers of the Company are:
Lawrence V. Durland, Jr. Age 49. Senior Vice President of the
Company, Equitable American and Equitable Life.
Fred S. Hubbell. Age 44. Chairman, President and Chief Executive
Officer of the Company, Equitable American, Equitable Life, and USG and
Chairman of EISI.
Susan M. Jordan. Age 38. Vice President and Chief Information Officer
of the Company (since July, 1994); Assistant Vice President of Chicago
Board of Options Exchange (August, 1987 to July, 1994).
Paul E. Larson. Age 43. Executive Vice President, Treasurer and Chief
Financial Officer of the Company, Equitable American and USG, and
Executive Vice President and Chief Financial Officer of Equitable Life.
Thomas L. May. Age 47. Senior Vice President of Marketing for
Equitable Life and USG.
John A. Merriman. Age 53. Secretary and General Counsel of the
Company, Equitable American, Equitable Life, and USG.
Beth B. Neppl. Age 38. Vice President of Human Resources of the
Company.
Paul R. Schlaack. Age 49. President and Chief Executive Officer of
EISI, the Company's investment management subsidiary.
David A. Terwilliger. Age 38. Vice President and Controller of the
Company, Equitable American, EISI, Equitable Life, and USG.
Security Ownership of Management
The following sets forth, as of March 7, 1996, the beneficial security
ownership of the Company's Common Stock by the directors and named
executive officers individually and the directors and executive officers
as a group:
<TABLE>
<CAPTION>
Name Number of Shares(1) Percent of Class (2)
__________________________________________________________________
<S> <C> <C>
Mr. Covey 20,468 *
Dr. Drury 9,628 *
Mr. Heskett 12,428 *
Mr. Hubbell 709,330 2.2%
Mr. Ingham, Jr. 22,343 *
Mr. Lee 5,982 *
Mr. Rehm 16,610 *
Mr. Urban 3,128 *
Mr. Wachtmeister 1,924,671 6.0%
Mr. White 1,565 *
Mr. Durland, Jr. 84,819 *
Ms. Jordan 3,087 *
Mr. Larson 107,267 *
Mr. May 28,788 *
Mr. Merriman 109,399 *
Ms. Neppl 7,259 *
Mr. Schlaack 251,108 *
Mr. Terwilliger 15,860 *
All directors
and executive
officers as a
group (18) 3,333,740 10.5%
<FN>
(1) Included are shares held beneficially or of record by spouses and
shares held by a fiduciary, but the individuals disclaim beneficial
ownership of such shares as follows: Hubbell, 160,717; and
Wachtmeister, 1,840,701. Beneficial owners have sole voting and
investment power with respect to all shares except for those held by
trustees. Includes shares subject to exercisable options: Durland,
Jr., 8,000; Hubbell, 149,900; Larson, 44,000; May, 15,100; Merriman,
9,800; Neppl, 480; Schlaack, 19,600; Terwilliger, 3,500; and all
directors and executive officers as a group, 250,380. Includes shares
held in Company 401(k) Savings Plan by the following persons:
Durland, Jr., 12,464; Hubbell, 19,975; Jordan, 54; Larson, 8,457; May,
3,956; Merriman, 14,459; Neppl, 3,433; Schlaack, 20,312; Terwilliger,
6,233; and all directors and executive officers as a group, 89,343.
(2) An (*) indicates that the individual's ownership interests of the
Company's Common Stock is less than one percent.
</TABLE>
EXECUTIVE COMPENSATION AND BENEFITS
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries for the
last three fiscal years with respect to Mr. Hubbell, as the Company's
Chief Executive Officer, and each of the next five most highly
compensated executive officers (the "named executive officers"):
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
Name and Principal
Position Year Salary($) Bonus($)
__________________________________________________________
<S> <C> <C> <C>
Fred S. Hubbell 1995 511,667 247,200
President & CEO 1994 468,750 408,500
1993 395,833 320,000
Paul R. Schlaack 1995 311,750 165,890
President & CEO 1994 296,583 265,220
EISI 1993 279,917 281,000
Paul E. Larson 1995 242,833 70,760
Executive V.P. 1994 227,917 119,600
Treas. & CFO 1993 193,583 85,950
Lawrence V. Durland, Jr. 1995 196,667 47,280
Sr. V.P. 1994 192,667 82,990
1993 188,333 75,600
John A. Merriman, 1995 170,625 41,088
General Counsel/ 1994 163,525 70,649
Secretary 1993 154,500 62,000
Jon P. Newsome 1995 322,422 0
President & CEO 1994 298,333 156,000
USG (5) 1993 266,547 119,250
</TABLE>
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
Awards Payouts
Restricted
Name and Principal Stock LTIP All Other
Position Year Awards Options Payouts Compensation
($)(1) (#)(2) ($)(3) ($)(4)
_____________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Fred S. Hubbell 1995 -0- 44,000 -0- 14 650
President & CEO 1994 339,600 30,000 -0- 13,000
1993 267,600 34,000 27,073 14,497
Paul R. Schlaack 1995 19,594 23,000 38,919 15,000
President & CEO 1994 264,074 18,000 39,345 13,000
EISI 1993 223,000 18,000 34,330 14,497
</TABLE>
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
Awards Payouts
Restricted
Name and Principal Stock LTIP All Other
Position Year Awards Options Payouts Compensation
($)(1) (#)(2) ($)(3) ($)(4)
_____________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Paul E. Larson 1995 73,396 20,000 55,195 15,000
Executive V.P. 1994 55,256 15,000 4,500 13,000
Treas. & CFO 1993 78,998 21,000 11,018 14,497
Lawrence V. Durland, 1995 146,500 8,500 20,531 8,033
Jr., Sr. V.P. 1994 54,831 6,000 -0- 3,000
1993 68,294 8,000 -0- 4,283
John A. Merriman, 1995 175,800 12,000 38,412 9,000
General Counsel/ 1994 47,685 9,000 62,351 8,000
Secretary 1993 96,224 9,000 6,322 8,672
Jon P. Newsome 1995 85,849 28,000 35,451 14,694
President & CEO 1994 75,702 21,000 46,165 13,000
USG (5) 1993 98,008 29,000 23,214 14,497
<FN>
(1) In 1993, 1994 and 1995 awards were granted equal to 20% of the
increase in ownership of Company stock by the named executive officers
during the year to encourage ownership of Company stock. Valuation of
awards is based upon fair market value stock price of $27.875 on May 1,
1993, $35.375 on May 2, 1994, and $36.625 on May 1, 1995. The restricted
stock awards vest 10% after 2nd year, an additional 20% after 3rd year,
an additional 30% after 4th year, and the final 40% after 5th year. At
December 31, 1995 (based upon the fair market value stock price of
$32.125) the number and market value of shares of restricted stock held
by each of the named executive officers in all restricted stock programs
were as follows: Mr. Hubbell (18,240; $585,960), Mr. Schlaack (15,200;
$488,300), Mr. Larson (6,117; $196,509), Mr. Durland, Jr. (7,755;
$249,129), Mr. Merriman (9,255; $297,317), Mr. Newsome (0; $0).
Restricted stock awards will vest in the event of a change of control of
the Company. The shareholder is entitled to receive cash dividends and
has all other rights as a shareholder as to such shares prior to vesting,
however upon voluntary termination by the shareholder prior to vesting
the full award is forfeited. Any future grants of restricted shares to
the named executive officers will be consistent with the compensation
philosophy of the Company discussed below.
(2) Awards comprised of qualified and non-qualified stock options. All
options were granted with an exercise price equal to the then fair
market value of the underlying stock. The options have vesting periods
as described in "Option Grants in Last Fiscal Year" table. Unvested
options are forfeited upon voluntary termination of employment with the
Company. All options will vest in the event of a change of control of
the Company.
(3) Payments represent cash bonus received by the named executive officer
upon the achievement of specified three year cumulative performance
goals. The earned bonus vests consistent with the option to which it
is associated and is paid only upon the exercise of the option held by
the named executive officer.
(4) This compensation includes payment to each named executive officer in
lieu of typical perquisite payments as follows: Mr. Hubbell, $11,650;
Mr. Schlaack, $12,000; Mr. Larson, $12,000; Mr. Durland, Jr., $5,033;
Mr. Merriman, $6,000; Mr. Newsome, $11,694. The payments are classified
as taxable income and are required to be applied to specified business
expenses of the named executive. Additionally, the balance of this
compensation includes contributions to the Company's 401(k) Plan on
behalf of each named executive officer to match a portion of their pre-
tax deferral contributions (included under the Salary column) made
by each to such plan.
(5) Mr. Newsome resigned his position in November, 1995 and forfeited all
unvested restricted stock and unexercised options previously awarded to
him.
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options during the last fiscal year to the named executive officers
under the Company's 1992 Stock Incentive Plan:
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options Exercise
Underlying Granted to or Base Grant Date
Options Employees Price Expiration Present
Granted(#)(1) in Fiscal Year ($/sh) Date Value $ (2)
______________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Fred S. 34,000 11.9% 31.00 2-15-05 403,240
Hubbell 10,000 3.5% 31.00 2-15-99 323,000
Paul R. 19,000 6.6% 31.00 2-15-05 225,340
Schlaack 4,000 1.4% 31.00 2-15-99 129,200
Paul E. 16,000 5.6% 31.00 2-15-05 189,760
Larson 4,000 1.4% 31.00 2-15-99 129,200
Lawrence V. 7,000 2.5% 31.00 2-15-05 83,020
Durland, Jr. 1,500 0.5% 31.00 2-15-99 48,450
John A. 10,000 3.5% 31.00 2-15-05 118,600
Merriman 2,000 0.7% 31.00 2-15-99 64,600
Jon P. 22,000 7.7% 31.00 2-15-05 260,920
Newsome (3) 6,000 2.1% 31.00 2-15-99 193,800
<FN>
(1) Options with an expiration date of February 15, 2005 have a five year
vesting period with 20% exercisable after 3rd year, an additional 30%
after 4th year, and the final 50% after 5th year. Options with an
expiration date of February 15, 1999 vest on February 15, 1998, and on
exercise a cash bonus may be paid if certain performance criteria for
the three years ending December 31, 1997 are met. All options were
granted with exercise prices equal to the then fair market value of the
underlying stock. Unvested options are forfeited upon a voluntary
termination of employment with the Company. The options will vest in
the event of a change of control of the Company. One-half of each
option grant expiring on February 15, 2005 is an incentive stock option.
(2) Values of $11.86 per share for the 10 year options, and $32.30 per
share for the 4 year options which includes a cash bonus value of
$23.56, are derived through application of the Black-Scholes option
pricing model. The actual value, if any, an executive may realize will
depend on the excess of the stock price over the exercise price on the
date the option is exercised, so there is no assurance the value
realized by the named individual will be at or near the value estimated
by the Black-Scholes model. The estimated values derived are based on
assumptions of a 6.5% risk-free rate of return on the 10 year options
and 6.3% on the 4 year options, an expected stock price volatility of
.354 calculated using stock prices for the past 5 years, a 2.1% future
dividend yield which is approximately equal to the Company's Common
Stock historical dividend yield, and 10 years and 4 years, respectively,
to time of exercise. A downward adjustment of 13% for the 10 year
options, and 8.7% for the 4 year options, was made to the valuation
to reflect the risk of forfeiture characteristics of the options. If
there is no stock price appreciation above the option exercise price,
the option will have no value. If the stock price based on the 10 year
options appreciates at levels equal to that determined by the Black-
Scholes model, the value appreciation realized by all shareholders will
be $377 million of which the named executive officers would receive .3%
or approximately $1,020,000 of such increase in value. If the stock
price based on the 4 year options appreciates to levels equal to
that determined by the Black-Scholes model, the value appreciation
realized by all shareholders will be $280 million, of which the named
executive officers would receive .3% or approximately $700,000 of such
increase in value.
(3) The options granted to Mr. Newsome were forfeited upon his resignation.
(4) All non-executive officer employees, as a group, received options for
the purchase of shares of the underlying stock representing 52.6% of
the total options granted to employees in 1995. The grant date
present value of these options is $1,781,965.
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table provides information, with respect to named
executive officers, concerning the exercise of options during the last
fiscal year and value of unexercised options held as of the end of the
fiscal year:
<TABLE>
<CAPTION>
Number of
securities Value of
underlying unexercised
unexercised in-the-money
Shares options/SARs options/SARs
Acquired Value at FY-End(#) at FY-End($)
Name on Exer- Realized exercisable/ exercisable/
cise(#) ($)(1) unexercisable unexercisable (2)
_______________________________________________________________________________
<S> <C> <C> <C> <C>
Fred S. Hubbell 16,000 406,000 113,700/ 2,897,575/
156,400 1,370,662
Paul R. Schlaack 20,000 589,562 0/ 0/
85,000 736,188
Paul E. Larson 42,600 1,295,125 27,760/ 696,315/
77,440 613,910
Lawrence V.
Durland, Jr. 15,600 465,550 0/ 0/
32,900 298,788
John A. Merriman 15,000 448,031 0/ 0/
43,000 368,656
Jon P. Newsome 22,500 571,141 0/ 0/
0 0
<FN>
(1) Value realized determined from market price on date of exercise less
the exercise price.
(2) Value determined from market price at fiscal year end ($32.125) less
exercise price. The actual value, if any, an executive may realize
will depend on the stock price on date of exercise of option, so there
is no assurance the value stated will be equal to the value realized by
the executive.
</TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
EIC, S&P 500 COMPOSITE INDEX, VALUE LINE INSURANCE: LIFE INDEX
The following performance graph provides comparative cumulative, five
year shareholder returns on an indexed basis of the Company's Common
Stock with the Standard & Poor's 500 Composite Index and the Value Line
Insurance: Life Index. This latter published industry index reflects
the analysis of the performance of fourteen life insurance companies
selected by Value Line Institutional Services.
PERFORMANCE GRAPH
1990 1991 1992 1993 1994 1995
EIC $100.00 $259.19 $570.81 $871.25 $736.52 $850.30
S&P 500 $100.00 $130.55 $140.72 $154.91 $157.39 $216.42
Life Index $100.00 $146.52 $192.78 $193.00 $177.20 $249.64
*Assumes $100 invested on December 31, 1990, in EIC Common Stock, S&P 500
Composite Index, and Value Line Insurance: Life Index. Cumulative total
return assumes reinvestment of dividends.
RETIREMENT PLANS
The Company and its wholly owned subsidiaries maintain a qualified
defined benefit pension plan ("Pension Plan") for substantially all
their employees, as well as two nonqualified pension plans
("Excess Plan" and "Supplemental Plan") for certain employees. The
Pension Plan and the Excess and Supplemental Plans are actuarial plans
and the amount of the contribution with respect to a specific
person cannot readily be separately calculated by the actuaries for
the plans.
Under the Pension Plan, employees receive an annual pension for life
payable on a monthly basis at normal retirement age (65) equal to 1.75%
of the average monthly compensation over the last 60 months of service
(including base pay and bonuses) multiplied by months of service (up to
300 months), plus an additional 0.50% of the average monthly
compensation in excess of covered compensation (the average of Social
Security taxable wage bases in effect for the 35 calendar years ending
with the calendar year in which the current plan year began) multiplied
by months of service (up to 300 months). Reduced benefits are paid if
an employee elects early retirement (between ages 55 and 64 with at
least 5 years of service).
The Excess Plan and the Supplemental Plan provide benefits for any
employee equal to the additional benefits he or she would have received
under the qualified Pension Plan if the maximum benefit limit (Excess
Plan) and compensation limit (Supplemental Plan) under Sections 415 and
401(a)(17) of the Internal Revenue Code did not apply ( $150,000
compensation limit and $120,000 benefit limit for 1995).
Messrs. Hubbell, Schlaack, Larson, Durland, Jr. and Merriman have 13,
11, 19, 10 and 10 years of credited service respectively. Compensation
under the qualified Pension Plan and the Excess and Supplemental Plans
for these five named executives includes the compensation shown in the
Summary Compensation Table under the headings "Salary" and "Bonus".
In 1995 no contribution was required to fund the qualified Pension Plan.
The Excess Plan and the Supplemental Plan are unfunded plans, with
benefits paid out of general assets of the Company.
The following Table sets forth the annual retirement benefits under the
formula based on a straight life annuity, assuming retirement at age 65,
currently payable for the indicated combinations of salary and years of
service. The table shows the combined amount that would be payable from
the qualified Pension Plan and the Excess and Supplemental Plans.
<TABLE>
<CAPTION>
Years of Service
Final Five-Year____________________________________________________________
Average Annual
Compensation 15 20 25 30 35
<C> <C> <C> <C> <C> <C>
$125,000 $ 40,243 $ 53,658 $ 67,072 $ 67,072 $ 67,072
$150,000 48,681 64,908 81,134 81,134 81,134
$175,000 57,118 76,157 95,197 95,197 95,197
$200,000 65,556 87,408 109,259 109,259 109,259
$225,000 73,993 98,658 123,322 123,322 123,322
$250,000 82,431 109,907 137,384 137,384 137,384
$300,000 99,306 132,408 165,509 165,509 165,509
$400,000 133,056 177,407 221,759 221,759 221,759
$450,000 149,931 199,908 249,884 249,884 249,884
$500,000 166,806 222,408 278,009 278,009 278,009
$550,000 183,681 244,907 306,134 306,134 306,134
$600,000 200,556 267,408 334,259 334,259 334,259
$650,000 217,431 289,908 362,384 362,384 362,384
$700,000 234,306 312,407 390,509 390,509 390,509
$750,000 251,181 334,908 418,634 418,634 418,634
$800,000 268,056 357,408 446,759 446,759 446,759
$850,000 284,931 379,907 474,884 474,884 474,884
$900,000 301,806 402,408 503,009 503,009 503,009
$950,000 318,681 424,908 531,134 531,134 531,134
$1,000,000 335,556 447,407 559,259 559,259 559,259
</TABLE>
OTHER COMPENSATION ARRANGEMENTS
The named executive officers, except Mr. Newsome, are participants in
the Company's Executive Severance Pay Plan. This Plan provides
benefits, depending upon length of service but limited to one year's
salary. Benefits accrue to eligible employees under the Plan on
termination of employment but compensation from other employment is
deducted from benefits otherwise payable. The Plan provides that upon a
change of control of the Company, benefits will vest if the named
executives are terminated within two years of the occurrence of such an
event.
The named executive officers are participants in the Company's Restated
and Amended Key Employee Incentive Plan. This Plan is a means for the
Company to provide incentives and rewards to those persons who are in a
position to contribute significantly to the long term profits and growth
of the Company. An annual bonus plan is administered by the
Compensation Committee under this Plan. The Plan also provides
acceleration of awards at specified target levels in the event of a
change of control of the Company.
Various award programs under the Company's 1982 Incentive Stock Option
Plan and Restated and Amended 1992 Stock Incentive Plan have been
established in which the named executive officers are participants.
These Plans contain provisions which allow for vesting of awards upon
termination of employment, as a result of designated events, and for
acceleration of awards upon a change of control of the Company.
REPORT OF COMPANY'S COMPENSATION COMMITTEE
Under rules established by the Securities and Exchange Commission, the
Company is required to provide certain data and information in regard to
the compensation and benefits provided to the Company's Chief Executive
Officer and the next five most highly compensated executive officers.
The disclosure requirements for these six individuals (the "named
executive officers") include the use of tables set forth above and a
report explaining the rationale and considerations that led to
fundamental executive compensation decisions affecting those
individuals. In fulfillment of this requirement, the Compensation
Committee has prepared the following report.
Compensation Philosophy. This report describes the compensation
philosophy followed by the Committee and resulting actions taken by the
Company for the reporting periods shown in the various compensation
tables supporting this report. The Committee approves payment amounts
and award levels for executive officers of the Company and its
subsidiaries. In its analysis and in reaching compensation related
decisions, the Committee has direct access to both competitive data and
an independent compensation consultant.
The executive compensation program of the Company has been designed to:
_ Provide a pay for performance policy that differentiates
compensation amounts based upon corporate and individual performance as
compared to the life insurance industry;
_ Motivate key senior officers to achieve strategic business
initiatives and reward them for such achievement;
_ Provide compensation opportunities which are comparable to those
offered by other leading companies, thus allowing the Company to compete
for and retain talented executives who are important to the Company's
long-term success; and
_ Align the interests of executives with the long-term interests
of stockholders through award opportunities that can result in ownership
of Common Stock.
At present, the executive compensation program is comprised of salary,
annual cash incentive opportunities, long-term incentive opportunities
in the form of cash incentives, stock options and restricted stock and
benefits typically offered to executives by similar corporations.
Salary and standard annual incentive payouts are targeted at the 50th
percentile of industry surveys. These independently prepared surveys
provide specific data on compensation paid at various executive levels
of life insurance companies of comparable asset size, and include many
companies included in the published industry index presented in the
Performance Graph on page 12, but are not limited to them. An
individual's total cash compensation can exceed industry averages when
cash bonus payouts are greater than targeted levels based on the
performance of the Company exceeding that of the industry on average.
Stock options and restricted stock are used to align managers' interests
with those of the shareholders but significant vesting periods are also
used to encourage long term stock ownership and retention as employees.
As an executive's level of responsibility increases, a greater portion
of his or her potential total compensation opportunity is based upon
performance incentives and less on salary and employee benefits, causing
greater potential variability in the individual's absolute compensation
level from year-to-year. In addition, the higher that one rises in the
organization, the greater the mix of compensation shifts to stock-based
awards.
CEO's Compensation. Mr. Hubbell's base salary was increased from
$475,000 to $515,000 (8.4%) effective February 1, 1995. This increase
reflected consideration of (1) compensation data provided by comparative
industry surveys, (2) the Committee's assessment of performance over the
previous one-year period which exceeded or met agreed upon objectives
including, in order of importance, increased operating earnings, return
on equity, growth of assets, achievement of a return on assets objective
while maintaining adequate capitalization to retain current ratings from
the A.M. Best and Standard & Poors rating agencies, maintaining adequate
spreads consistent with insurance product pricing, and reducing
delinquencies, reducing higher risk assets and increasing life insurance
and annuity sales, and (3) a comparison of the financial performance of
the Company for the previous one year period which exceeded or met that
of comparable life insurance companies. While the relative weight
assigned to each factor, or component thereof, is not quantified,
significant weight is given to comparative compensation industry data.
The independently prepared industry surveys utilized are national in
scope and include information from nationally recognized compensation
consulting firms. These surveys include many of the companies in the
index shown on page 12, but are not limited to them. These surveys are
used to define the midpoint of Mr. Hubbell's salary range for his base
salary whereas his level of performance, along with the performance of
the Company compared to the companies in the index and other life
insurance and annuity companies, determines his comparative position
within the salary range. The base salary was set close to the 50% level
shown by the surveys after consideration of all of the factors. The
cash bonus if earned may increase Mr. Hubbell's total compensation above
the 50% level relative to the industry survey data.
Mr. Hubbell earned a cash bonus for 1995 in the amount of $247,200 based
on a statistical review of predetermined targets for the Company's 1995
performance. This review included an assessment of how the Company's
operating earnings and return on equity compared with established
objectives based upon expected industry performance in those same
performance measures. Mr. Hubbell's incentive opportunity may range
from 0% - 100% of his base salary. In 1995 Mr. Hubbell earned a 48%
incentive bonus payment for the Company's 1995 performance. Although
the operating earnings of the Company exceeded the predetermined target
level and industry average, a one-time charge to the Company for
guaranty fund assessments negatively impacted the Company's return on
equity, thus Mr. Hubbell's bonus payment reflected this charge.
In 1995 Mr. Hubbell was granted options to purchase 44,000 shares of the
Company's Common Stock at an exercise price of $31.00 per share which
was equal to the market value of the stock on the date of the grants.
The amount of the options granted was determined by the practices of
other comparable companies as verified by external surveys and outside
consultants, as well as Mr. Hubbell's level of responsibilities, amounts
of options and restricted stock awards previously granted, number of
options exercised and held, and past and expected contributions to the
Company.
Mr. Hubbell also received $11,650 in lieu of typical perquisite
payments. This payment is classified as taxable income and is applied
directly to business expenses. In addition the Company contributed
$3,000 to Mr. Hubbell's 401(k) account.
Salaries. Effective February 1, 1995, the Committee increased the
salaries paid to the other named executive officers. Those individuals
were granted salary increases based on individual performance compared
to their agreed upon objectives and national insurance industry
compensation data for executive officers with similar levels of
responsibilities at life insurance companies of comparable asset size.
As considered in establishing Mr. Hubbell's compensation, the
compensation survey data is used to define the competitive midpoint of
each executive's salary range and individual and Company performance
determines comparative position within the range.
Bonus Awards for 1995. In 1995, the named executive officers of the
Company earned cash bonuses based on a review of the Company's 1995
performance compared to predetermined targets. This review included an
assessment of how the Company's operating earnings and return on equity
compared with established objectives based upon expected industry
performance in those same performance measures. Payment was based on
the degree of statistical achievement of the above mentioned performance
objectives which the Committee established in February, 1995. Although
operating earnings of the Company exceeded the target level and industry
average, a one-time charge incurred by the Company for guaranty fund
assessments negatively impacted the Company's return on equity, thus
each named executive officer's bonus payment reflected this charge.
Stock Awards in 1995. The Company's stock incentive plans are designed
to align a significant portion of the executive compensation program
with shareholder interests. These shareholder approved plans permit the
granting of several different types of stock-based awards. Two types of
awards have been granted to executive officers and other key employees
under the 1992 Stock Incentive Plan. Substantially all awards have been
in the form of stock options which grant the participant a right to
purchase shares of common stock, subject to significant vesting periods,
over ten-year and four-year periods. The exercise price of the options
is equal to the fair market value per share as of the date the option is
granted. The amount of options granted is determined by the practices
of other comparable companies as verified by external surveys and
outside consultants, as well as each executive officer's level of
responsibilities, amounts of options and restricted stock awards
previously granted, number of options exercised and held, and past and
expected contributions to the Company. Additionally restricted stock
has been awarded to participants. These are awards of shares of common
stock which cannot be sold or otherwise disposed of until the applicable
restriction period lapses and which are forfeited if the participant
terminates employment for any reason other than retirement, disability
or death prior to the lapsing of the restriction period (or applicable
portion of such period). The Stock Purchase Incentive Program is
designed to increase management's ownership of Company stock over a five
year period. Under this program the Committee awards restricted stock
equal to 20% of the amount of increased individual ownership of the
Company's stock.
All stock awards granted in 1995 did not exceed 1% of the total outstanding
stock of the Company. The Committee intends to maintain this annual award
limit over time. In granting stock options and restricted stock, the
Committee took into account the practices of other comparable companies as
verified by external surveys and outside consultants, as well as the
executive's level of responsibility, number of options exercised and held,
and past and expected contributions to the Company.
In 1993 Section 162(m) of the Internal Revenue Code was amended to place
limitations on the deductibility to the Company of compensation paid to
the named executive officers. The current policy of the Committee is to
establish executive compensation levels and programs that will be
competitive within the industry and attract and retain highly talented
individuals. It is the goal of the Committee that executive
compensation will be structured so as not to be subject to the
deductibility limitations of Section 162(m) to the extent practical and
consistent with its compensation policy.
EQUITABLE OF IOWA COMPANIES
COMPENSATION COMMITTEE
By: Robert E. Lee, Chairman
Richard B. Covey
Doris M. Drury
Jack D. Rehm
Compensation Committee Interlocks and Insider Participation
Mr. Hubbell serves as the Chairman of the Compensation Committee of
Pioneer Hi-Bred International, Inc. Mr. Urban, who was the Chairman and
President of Pioneer Hi-Bred International, Inc. for a portion of 1995,
serves as a member of the Board of Directors of the Company. The Board
of Directors does not believe that this relationship has provided Mr.
Hubbell with any favorable compensation arrangements or authority which
would not have otherwise been granted to him by the Board of Directors
as the Chairman, President and Chief Executive Officer of the Company.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons who beneficially own more than ten
percent of the Company's stock, to file initial reports of ownership
and reports of changes in ownership with the Securities and Exchange
Commission. These persons are required to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on a review
of the copies of such forms furnished to the Company and written
representations from these persons, the Company believes that all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than ten percent beneficial owners were complied with.
PROPOSAL TO APPROVE EQUITABLE OF IOWA COMPANIES
1996 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
On February 14, 1996 the Compensation Committee of the Board of
Directors adopted, subject to approval by the Company's shareholders,
the Equitable of Iowa Companies 1996 Non-Employee Directors' Stock
Option Plan ("Plan"). If such approval is not obtained, all outstanding
options shall become void, no further grants shall be made and the Plan
shall immediately terminate.
The Plan is designed to encourage directors to acquire increased
ownership of the Company's Common Stock, thereby helping to align the
interests of non-employee directors and the shareholders, and to assist
in attracting and retaining directors who have the experience, ability
and skills necessary to assist in the Company's sustained progress,
growth and prosperity.
Non-employee directors also receive cash remuneration for their services,
as described above under "Compensation of the Board of Directors."
Description of the Plan
The following summary description of the Plan is qualified in its
entirety by reference to the full text of the Plan, which is attached as
Exhibit A.
The Plan provides for an initial grant on February 14, 1996 of options
to purchase 1,000 shares of Common Stock of the Company and automatic
annual grants of options to purchase 1,000 shares of Common Stock from
1997 through 2000. Grants are made to each active director serving on
the Board at the time of the grant who is not an employee of the Company
or any of its subsidiaries or affiliates. Each new non-employee
director will receive the initial grant of 1,000 on joining the Board,
and in ensuing years will receive the annual grant. The amounts of
future grants are subject to adjustment in the event of stock splits and
other changes in stock.
Each option permits the holder to purchase shares at their fair market
value on the date the option was granted. Payment may be in cash,
previously acquired Common Stock or a combination of the two. The share
purchase price must be paid in full at the time of exercise of any
portion of an option.
The Plan provides that the initial grants on February 14, 1996 will be
effective on the date shareholder approval is given (shareholders will
vote on April 25, 1996) and will become exercisable 20% after three
years, 50% after four years, and 100% five years after the grant date.
Annual grants will become exercisable on the same schedule. If there is
a change in control of the Company as defined in the Plan, all options
will immediately vest and generally will become exercisable.
Annual option grants under the Plan will be made on the first regular
Board meeting date in each year from 1997 through 2000. The Plan will
expire, unless earlier terminated, on February 29, 2000.
Non-Employee Directors' Stock Option Plan
<TABLE>
<CAPTION>
Number of Shares (1)
Initial Annual
Plan Participants Option Grant Option Grant
_________________________________________________________________________
<S> <C> <C>
Executive officers and other
Employees 0 0
Each non-employee director 1,000 1,000
Non-Employee directors as a
group (2) 9,000(3) 9,000
_____________
<FN>
(1) Number of shares of Common Stock that can be purchased under each
initial or annual option.
(2) As of March 7, 1996; includes nine non-employee directors.
(3) The option exercise price for the initial grants is $35.125, which
is 100% of the fair market value of the Common Stock on February 14,
1996.
</TABLE>
As of March 7, 1996, the fair market value of the Company's Common Stock
was $38.875.
All options will expire ten years after the date of grant, unless
earlier terminated. If a participating director terminates service on
the Board as a result of death, disability, retirement pursuant to the
provisions of the Company's Restated Articles of Incorporation, or a
change in control, previously granted options will vest immediately. If
a participating director terminates service on the Board for any other
reason, his or her outstanding options may be exercised only to the
extent that they were exercisable at the time of such termination, and
any unvested options are forfeited. All options must be exercised
within five years of termination of Board service and in any event
within the original ten-year option term. Each option will be
nontransferable other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order.
An aggregate of 60,000 shares of Common Stock are subject to the Plan.
Shares subject to options that terminate unexercised will be available
for future option grants. Adjustments will be made in the number and
kind of shares subject to the Plan, future grants and outstanding
options, and in the purchase price of outstanding options, in the event
of any change in the Company's outstanding shares by reason of any stock
split or stock dividend, recapitalization, merger, consolidation or
other similar corporate change.
The Plan will be administered by the Compensation Committee. The
Compensation Committee is authorized to interpret the Plan, establish
and amend rules relating to the Plan and make other determinations
necessary or advisable for the administration of the Plan, but will have
no discretion with respect to the selection of directors to receive
options, the number of shares subject to the Plan or to any option or
the purchase price for shares subject to option. The Compensation
Committee will also have no authority to increase Plan benefits
materially. The Board of Directors may terminate the Plan, but may
amend the Plan only in minor respects and cannot extend its duration,
reduce the option price, increase the shares reserved or increase Plan
benefits materially.
Certain Federal Income Tax Consequences
The options granted under the Plan will be non-statutory options not
intended to qualify under Section 422A of the Internal Revenue Code.
The grant of options will not result in taxable income to the director
or a tax deduction for the Company. The exercise of an option will
result in taxable ordinary income to the director and a corresponding
deduction for the Company, in each case equal to the difference between
the fair market value of the shares on the date of exercise and the
option exercise price.
The Board of Directors recommends a vote "FOR" approval of the Equitable
of Iowa Companies 1996 Non-Employee Directors' Stock Option Plan.
The Plan will be approved if, upon determination of a quorum at the
Meeting, the votes cast favoring the Plan exceed the votes cast opposing
the Plan.
RATIFICATION OF APPOINTMENT OF AUDITORS
Upon recommendation of the Audit Committee, the Board of Directors has
appointed the accounting firm of Ernst & Young LLP to act as independent
auditors for the Company during 1996 and is requesting ratification by
the shareholders. The Company knows of no direct or material indirect
financial interest of this accounting firm in the Company.
Representatives of Ernst & Young LLP are expected to be present at the
Meeting and may make a statement, if they desire to do so, and will be
available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
To be included in the Proxy Statement and form of proxy for the 1997
Annual Meeting of Shareholders, shareholder proposals intended to be
presented at that meeting must be received by the Company at its
principal office no later than November 22, 1996 and otherwise be in
compliance with applicable securities laws. In addition, the Company's
Amended and Restated Bylaws ("the Bylaws") provide certain procedures
that a shareholder must follow to nominate persons for election as
directors or to introduce an item of business at the Meeting, even if
such item is not to be included in the Company's Proxy Statement and
form of proxy. Such procedural requirements are fully set forth in the
Company's Bylaws, a copy of which may be obtained without charge by any
shareholder by contacting the Secretary of the Company at the address
set forth on the cover of this Proxy Statement.
OTHER MATTERS
Management does not know of any matters to be presented at the Meeting
other than those stated above. If any other business should come before
the Meeting, the persons named in the enclosed proxy will vote thereon
as he or they determine to be in the best interests of the Company.
A copy of the Annual Report to Shareholders for 1995 is mailed to
shareholders together with this Proxy Statement. Such report is not
incorporated in this Proxy Statement and is not to be considered a part
of the proxy soliciting material.
By Order of the Board of Directors.
John A. Merriman
Secretary
Des Moines, Iowa
March 12, 1996
EXHIBIT A
EQUITABLE OF IOWA COMPANIES
1996 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
1. Purpose.
The 1996 Non-Employee Directors' Stock Option Plan (the "Plan") of
Equitable of Iowa Companies ("Company") is designed to encourage
directors to acquire increased ownership of the Company's common stock
("Common Stock"), thereby helping to align the interests of non-employee
directors and the shareholders, and to assist in attracting and
retaining directors who have the experience, ability and skills
necessary to assist in the Company's sustained progress, growth and
profitability.
2. Effective Date.
The Plan shall be effective on February 14, 1996, subject to the
approval of the Plan by an affirmative vote of the holders of a majority
of the Common Stock represented in person or by proxy and entitled to
vote at the 1996 Annual Meeting of Shareholders. Grants of options made
under the Plan on its effective date are subject to shareholder approval
of the Plan as provided above. In the event such approval is not
obtained, such options shall be null and void.
3. Administration of the Plan.
The Plan shall be administered by the Compensation Committee of the
Board of Directors of the Company ("Committee"). The Committee shall
have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to
time, deem advisable, to interpret the terms and provisions of the Plan
and any stock option issued under the Plan (and any agreement relating
thereto) and to otherwise supervise the administration of the Plan.
Notwithstanding the foregoing, the selection of the Non-Employee
Directors (as defined in Section 4) to whom stock options are to be
granted, the timing of such grants, the number of shares subject to any
stock option, the exercise price of any stock option, the periods during
which any stock option may be exercised and the term of any stock option
shall be as hereinafter provided, and the Committee shall have no
discretion as to such matters. The Plan is intended to allow
Non-Employee Directors to receive stock options without such stock
options causing them to cease to be "disinterested persons" (within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934 ("1934
Act") with respect to other stock plans of the Company. Grants of stock
options under the Plan are intended to meet the requirements of
Rule 16b-3(c)(2)(ii). To the extent that any provision of the Plan or
action by the Committee with respect thereto would be inconsistent with
such intent, such provision or action shall be null and void.
The determination of the Committee on all matters relating to the Plan
or any agreement relating thereto shall be conclusive and final. No
member of the Committee shall be liable for any action or determination
made in good faith with respect to the Plan or any stock option.
4. Participation in the Plan.
All members of the Company's Board of Directors (the "Board") who are
not, as of the date of any option grant, employees of the Company or
any of its subsidiaries or affiliates shall be eligible to participate
in the Plan ("Non-Employee Director").
5. Non-Qualified Stock Options.
All options granted under the Plan shall be non-qualified stock options
covering shares of Common Stock.
6. Terms, Conditions and Form of Options.
(a) Initial Option Grant. On February 14, 1996, an option to
purchase 1,000 shares of Common Stock shall be automatically awarded to
each Non-Employee Director. Each such option shall vest and become
exercisable in accordance with Section 6(e).
(b) Subsequent Option Grants. With respect to each person
who first becomes a Non-Employee Director after the effective date of
the Plan, a stock option to purchase 1,000 shares of Common Stock is
granted as of the date such person is elected or appointed as a
Non-Employee Director. Such subsequent grant shall be in addition to
any annual grants of stock options as described in Section 6(c) below.
(c) Annual Option Grant. On the date of the first regular
meeting of the Board in each calendar year from 1997 through 2000, an
option to purchase 1,000 shares of Common Stock shall be automatically
granted to each Non-Employee Director other than any such director who
received an initial option grant in the then preceding six months.
Each such option shall vest and become exercisable in accordance with
Section 6(e).
(d) Exercise Price. The exercise price per share of stock
for which each option is exercisable shall be 100% of the fair market
value per share on the date the option is granted, which shall be the
closing price of the Common Stock as reported for that date. If there
is no reported trading for that date, such closing price for the next
preceding trading day shall be used. The option price for the shares
purchased shall be paid in full at the time of exercise in cash, by the
surrender of shares of Common Stock valued at their fair market value on
the date of exercise, or by any combination of cash and such shares.
Exercise shall be effective upon receipt by the Secretary of the Company
of notice of such exercise accompanied by proper payment.
(e) Vesting of Options. Each option shall be exercisable in
whole or in part subject to these vesting limitations:
(i) beginning on the third anniversary of the date of grant,
for whole shares up to 20% of the shares of Common Stock covered by the
stock option;
(ii) beginning on the fourth anniversary of the date of grant,
for whole shares up to 50% of the shares of Common Stock covered by the
stock option; and
(iii) beginning on the fifth anniversary of the date of grant
and thereafter until the expiration of the term of the stock option, for
whole shares up to 100% of such shares.
(f) Term of Option. Each option shall terminate upon the
expiration of ten years from the date of grant, and shall be subject to
earlier termination as hereinafter provided.
(g) Termination of Service. In the event of the termination
of service on the Board by the holder of any option, other than by
reason of retirement pursuant to the provisions of the Company's
Restated Articles of Incorporation, permanent disability, death or a
Change in Control, the then outstanding options of such optionee shall
be exercisable only to the extent that they were exercisable on the date
of such termination, and any unvested options shall be forfeited. In
the event of termination of Board service of an optionee by reason of
retirement pursuant to the provisions of the Company's Restated Articles
of Incorporation, permanent disability, death or a Change in Control (as
defined in Section 9 below), each of the then outstanding options of
such optionee shall immediately vest and become exercisable, provided,
however, that no option (even though exercisable) shall be exercised
within six months after the date it is granted, and the Committee shall
settle such option in cash during such period following a Change in
Control.
(h) Exercise After Service Terminated. An optionee shall be
entitled to exercise all vested options within five years after
termination of Board service, but in no event after the expiration date
of the option.
7. Shares of Stock Subject to the Plan.
The shares that may be purchased pursuant to options under the Plan
shall not exceed an aggregate of 60,000 shares of Common Stock. Any
shares subject to an option which for any reason expires or is
terminated unexercised as to such shares shall again be available for
issuance under the Plan. In the event that the number of shares of
Common Stock available for future grant under the Plan is insufficient
to make all automatic grants required to be made on a given date, then
all Non-Employee Directors entitled to a grant shall share ratably in
the number of stock options on shares available for grant under the
Plan.
8. Dilution and Other Adjustment.
In the event of any change in the outstanding shares of the Company's
Common Stock by reason of any stock split, stock dividend,
recapitalization, merger, consolidation, combination or exchange of
shares, the sale, lease or conveyance of substantially all of the assets
of the Company or other similar corporate change, such equitable
adjustments shall be made in the Plan, in the maximum number of shares
referred to in Section 7 and in the grants hereunder, including future
awards under Section 6 and the exercise price of outstanding options, as
the Committee determines are necessary or appropriate. In the event of
any stock split or stock dividend, such adjustments shall be self-
operative and shall not require any Committee action.
9. Change in Control.
In the event of a Change in Control, options shall become immediately
exercisable and remain exercisable for the period specified in
Section 6(h). "Change in Control" means (i) a transaction under which
any "person" (as such term is used in Sections 13(d) and 14(d) of the
1934 Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly of securities of the Company
representing 25% or more of the combined voting power of the Company's
then outstanding securities; (ii) the Company shall enter into an
agreement to sell substantially all of its assets; (iii) there shall be
consummated any consolidation or merger of the Company in which the
holders of the Company's capital stock immediately prior to the
consummation of the transaction do not hold more than 50% of the common
stock of the surviving corporation immediately after consummation of the
transaction measured both in voting power and in number of shares of
common stock outstanding after such transaction (treating as outstanding
any common stock which would result from the conversion of any
outstanding convertible securities for both the voting power and total
outstanding common stock tests); or (iv) the shareholders of the Company
approve any plan or proposal for the liquidation or dissolution of the
Company or for any transaction specified in the preceding clause (iii).
10. Miscellaneous Provisions.
(a) Rights as Shareholder. An optionee shall have no rights
as a holder of the Common Stock with respect to options granted
hereunder, unless and until certificates for shares of such stock are
issued to the optionee.
(b) Non-Transferability. Options shall not be assignable or
transferable otherwise than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code of 1986 ("Code") as amended, or
Title I of the Employee Retirement Income Security Act or the rules
thereunder, and during an optionee's lifetime shall be exercisable only
by the optionee or a duly appointed guardian or legal representative of
the optionee.
(c) Agreements. All options granted under the Plan shall be
evidenced by agreements or notices containing such terms and conditions
(not inconsistent with the Plan) as the Committee shall adopt.
(d) Government Regulations. The Plan and the granting and
exercise of options hereunder shall be subject to all applicable Federal
and state laws and all rules and regulations issued thereunder,
including registration and private placement restrictions, and the Board
in its discretion may, subject to the provisions of Section 12 hereof,
make such changes in the Plan (except such changes which, by law or in
order to maintain the exemption provided by Rule 16b-3 under the 1934
Act, must be approved by the shareholders) or impose restrictions upon
the exercise of options as may be required to conform the Plan to such
applicable laws, rules and regulations.
(e) Costs, Expenses and Taxes. The costs and expenses of
administering the Plan shall be borne by the Company and not charged to
any optionee. Income and other taxes assessed on the spread when an
option is exercised shall be the responsibility of the person exercising
the option. Should any tax withholding be required by law, such taxes
may be paid through the Company's withholding of shares otherwise
issuable upon exercise, in accordance with procedures established by the
Committee and consistent with Section 12. As a term of any grant under
the Plan, the Committee may provide that the optionee may elect to have
the Company withhold shares previously owned or acquired from any grant
for payment of withholding taxes due in respect to an exercise of any
option.
(f) No Right to Continue as a Director. Neither the Plan,
nor the granting of an option nor any other action taken pursuant to the
Plan, shall constitute or be evidence of any agreement or understanding,
express or implied, that the Company will retain a director for any
period of time, or any particular rate of compensation.
(g) Registration of Shares. Unless the shares have been
registered under the Securities Act of 1933, as amended, each person
purchasing or receiving shares of Common Stock pursuant to a stock
option shall represent to and agree with the Company in writing that
such person is acquiring the shares of Common Stock without a view to
the distribution thereof. Any certificates for such shares of Common
Stock shall include an appropriate legend to reflect the restrictions on
transfer.
(h) Other Plans. Nothing contained in the Plan shall prevent
the Company or any subsidiary from adopting other or additional
compensation arrangements for its Non-Employee Directors.
(i) No Funding of Plan. Benefits payable under the Plan to
any person shall be paid directly by the Company. The Company shall not
be required to fund, or otherwise segregate assets to be used for
payment of, benefits under the Plan.
11. Amendment and Termination of the Plan.
(a) Amendment of the Plan. The Committee may amend, alter,
or discontinue the Plan, but no amendment, alteration or discontinuation
shall be made which would (a) impair the rights of an optionee under a
stock option without the optionee's consent, except such an amendment
made to cause grants and other transactions under the Plan to qualify
for the exemption provided by Rule 16b-3; or (b) disqualify grants and
other transactions under the Plan from the exemption provided by Rule
16b-3; provided, however, no amendment to the Plan may be made by the
Committee without approval of shareholders which (i) changes the
criteria for Non-Employee Directors who can receive stock options under
the Plan, (ii) changes vesting conditions, term of exercisability,
timing, amount or exercise price of stock options under the Plan, or
(iii) materially increases the aggregate number of shares of Common
Stock which may be issued under the Plan. In addition, (a) no amendment
shall be made without the approval of the Company's shareholders to the
extent such approval is required by law or agreement and (b) if
required, the Plan shall not be materially amended more often than once
every six months other than to comport with changes in the Code or the
rules and regulations promulgated thereunder.
(b) Termination. The Plan (but not any options theretofore
granted) shall in any event terminate on, and no options shall be
granted after February 29, 2000.
12. Compliance with SEC Regulations.
It is the Company's intent that the Plan comply in all respects with
Rule 16b-3 under the 1934 Act and any related regulations. If any
provision of this Plan is later found not to be in compliance with such
rules and regulations, the provision shall be deemed null and void. All
grants and exercises of options under this Plan shall be executed in
accordance with the requirements of Section 16 of the 1934 Act and
regulations promulgated thereunder.
13. Governing Law.
The Plan shall be construed in accordance with and governed by the
laws of the State of Iowa, excluding any choice of law provisions which
may indicate the application of the laws of another jurisdiction.
______________________
EQUITABLE
OF IOWA
COMPANIES
______________________
604 Locust Street
Des Moines, Iowa 50309
______________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 25, 1996
______________________
Notice is hereby given that the Annual Meeting of Shareholders of EQUITABLE
OF IOWA COMPANIES will be held in the Governor's Room of the Des Moines Club,
33rd Floor Ruan Center, Seventh and Grand Avenue, Des Moines, Iowa, on
Thursday, April 25, 1996, at 9:30 a.m., Des Moines local time, for the
following purposes:
1. To elect three directors.
2. To approve the Company's 1996 Non-Employee Directors' Stock Option
Plan.
3. To ratify the appointment of auditors for the year 1996.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 7, 1996, will
be entitled to notice of and to vote at the meeting or any adjournment
thereof.
Shareholders are cordially invited to attend the meeting in person. IF YOU
WILL NOT BE ABLE TO ATTEND THE MEETING IN PERSON, PLEASE DATE, INDICATE YOUR
CHOICE ON THE MATTERS TO BE VOTED UPON, AND SIGN THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
A copy of the Annual Report to Shareholders for 1995, including audited
financial statements, is enclosed.
By Order of the Board of Directors.
John A. Merriman
Secretary
Des Moines, Iowa
March 12, 1996
EQUITABLE
OF IOWA COMPANIES
March 22, 1996
Dear Shareholder:
The annual meeting of Shareholders of Equitable of Iowa Companies
will be held in the Governor's Room of the Des Moines Club, 33rd Floor
Ruan Center, Seventh and Grand Avenue, Des Moines, Iowa, on Thursday,
April 25, 1996 at 9:30 a.m., Des Moines local time. At the meeting
Shareholders will elect three directors, act upon the proposed 1996
Non-Employee Directors' Stock Option Plan, and ratify the appointment
of Ernst & Young LLP as auditors for the Company.
It is important that your shares are represented at this meeting.
Whether or not you plan to attend the meeting, please review the enclosed
proxy materials, complete the attached proxy form below, and return it
promptly in the envelope provided.
EQUITABLE OF IOWA COMPANIES
Proxy For Annual Meeting of Shareholders
April 25, 1996
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints FREDERICK S. HUBBELL, PAUL E. LARSON AND
JOHN A. MERRIMAN, and each of them as Proxies, with power of substitution in
each, to vote all shares of the Common Stock of Equitable of Iowa Companies
(the "Company"), which the undersigned is entitled to vote at the Annual
Meeting of Shareholders of the Company to be held on April 25, 1996 at 9:30
a.m., Des Moines local time, and at any adjournment thereof, on all matters
set forth in the Notice of Meeting and Proxy Statement dated March 12, 1996, a
copy of which has been received by the undersigned, as follows:
Dated _______________________________, 1995
___________________________________________
___________________________________________
Signature of Shareholder(s)
IMPORTANT: Please mark this proxy, date,
sign exactly as your name(s) appear(s) and
return in the enclosed envelope. If shares
are held jointly, signature should indicate
that status. Trustees and others signing
in a representative capacity should so
indicate.
(Please complete, date, sign and mail this Proxy Card
in the envelope provided)
PLEASE MARK VOTES [ ] OR [X]
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE
VOTED "FOR" EACH OF THE MATTERS STATED.
1. ELECTION OF DIRECTORS:
[ ] FOR electing all nominees [ ] WITHHOLD AUTHORITY to vote for
listed below (except as all nominees listed below.
marked to the contrary.)
Jack D. Rehm, Hans F.E. Wachtmeister, Richard S. White
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space below.)
______________________________________________________________________________
2. APPROVAL OF COMPANY'S 1996 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVAL OF THE APPOINTMENT OF ERNST & YOUNG LLP AS AUDITORS FOR THE
COMPANY.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. The Proxies are authorized to vote upon such other matters as may properly
come before the meeting as they determine to be in the best interests of
the Company.
