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 [ ] Confidential, For Use of the
[x] Definitive Proxy Statement Commission Only (as Permitted
[ ] Definitive Additional Materials by Rule 14a.6(e)(2))
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
EQUITABLE OF IOWA COMPANIES
___________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] 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:
_________________________________________________
EQUITABLE OF IOWA COMPANIES
PROXY STATEMENT
Annual Meeting of Shareholders, April 24, 1997
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 24, 1997, 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 four director
nominees named herein and approval of Ernst & Young LLP as auditors for 1997.
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
21, 1997.
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 6, 1997,
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 32,019,563 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, based on information available as of March 6, 1997,
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) 3,007,536 9.4%
1429 North Federal Hwy.
Ft. Lauderdale, FL 33304
FMR Corp.(2) 2,339,355 7.3%
82 Devonshire Street
Boston, MA 02109-3614
Hans F. E. Wachtmeister 1,918,525 6.0%
Belmont Hill School
Belmont, MA 02178
Massachusetts Financial 1,883,600 5.9%
Services Company(3)
500 Boylston Street
Boston, MA 02116
<FN>
(1) All shares held in a revocable trust. Excludes 15,905 shares held by
her husband, Richard S. Ingham in a revocable trust.
(2) Based on statements in Schedule 13G dated February 14, 1997. The filing
indicates that FMR Corp. has sole voting power with respect to 53,755 shares,
and sole dispositive power with respect to 2,339,355 shares. FMR Corp. is
the parent of Fidelity Management Trust Company and Fidelity Management &
Research Company, an investment adviser to various registered investment
companies.
(3) Based on statements in Schedule 13G dated February 12, 1997. The filing
indicates Massachusetts Financial Services Company has sole voting power with
respect to 1,769,700 shares, and sole dispositive power with respect to all
shares.
</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 eleven directors with the terms of four expiring at the
Meeting. Ms. Greer was elected to the Board of Directors on August 8, 1996
to fill a newly created directorship. Pursuant to the provisions of the
Company's Restated Articles of Incorporation, she may continue as a director
only until the Meeting. Consistent with the provisions of the Company's
Restated Articles of Incorporation, Dr. Doris M. Drury, who served as a
director during 1996, will be retiring the Board of Directors as a result of
attaining the age of seventy. Dr. Drury's retirement will be effective upon
the conclusion of the Meeting. Ms. Greer and Messrs. Hubbell, Ingham, Jr.,
and Urban have been nominated by the Board of Directors for election by the
shareholders for terms ending in 2000, 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 (67), Partner in law firm of 1971(a) 1998
Carter Ledyard & Milburn.
GAYLE L. GREER (56), Group Vice President, Time Warner 1996 1997
National Division; Senior Vice President, Time Warner
Communications; Director, Public Service Company of
Colorado.
JAMES L. HESKETT (63), Professor, Harvard University 1985 1998
Graduate School of Business Administration; Director,
Office Depot, Inc.
FRED S. HUBBELL (45), Chairman (since April, 1993), 1987 1997
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") and Golden American
Life Insurance Company ("Golden American") (since
August, 1996); Director, Pioneer Hi-Bred International,
Inc. and The Macerich Company.
RICHARD S. INGHAM, JR. (51), Vice President and 1994 1997
Controller, Asterisk, Inc. (diversified media, real
estate and retail holding company).
ROBERT E. LEE (61), Executive Director Emeritus, 1981 1998
Executive Director (1989 to 1996), The Denver
Foundation (community foundation); Director,
Meredith Corporation, Source Capital Corp. and
Storage Technology Corporation.
JACK D. REHM (64), Director, Chairman (since 1988 1999
July, 1992), President (until July, 1994) and Chief
Executive Officer (until January, 1997), Meredith
Corporation (diversified media company); Director,
The Vernon Company and International Multifoods, Inc.
THOMAS N. URBAN (62), Chairman, President (from 1984 1979 1997
to March, 1995), Chief Executive Officer (March to
August, 1995), and Director of Pioneer Hi-Bred
International, Inc. (hybrid seed corn business);
Visiting Professor, Harvard University Graduate
School of Business (since August, 1995); Director,
Sigma Aldrich Corp. and Case Corporation.
</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>
HANS F. E. WACHTMEISTER (52), Teacher, Belmont Hill 1981 1999
School, Belmont, Massachusetts.
RICHARD S. WHITE (59), General Manager of the John 1993 1999
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 five directors, Dr. Drury, Ms.
Greer, Messrs. Covey, Lee, and Rehm, who are not employees of the Company.
The Committee met three times during 1996 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 1996 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 1996. All directors
attended at least 75% of the total number of meetings of the Board and
committees of the Board on which they served. In 1996 compensation of the
non-employee directors of the Company consisted of an annual fee of $28,000
and an additional $750 was paid to the Chair of each Committee. The non-
employee directors of the Company also receive $1,000 for attendance at any
special meeting, and $500 for any telephonic meeting. The Company has a
program by which non-employee directors may receive restricted stock in lieu
of all or a portion of their annual fees. The restricted stock vests prorata
at the end of each year of service on the Board of Directors and upon
attendance of a regular quarterly meeting 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 1996 Non-Employee
Directors' Stock Option Plan may provide the opportunity for additional
compensation based on the performance of the Company's Common Stock.
Pursuant to the Plan, all non-employee directors receive an annual grant of
an option to purchase 1,000 shares of Common Stock. Each option permits the
holder to purchase shares at their fair market value on the date the option
was granted. The options are exercisable 20% after three years, 50% after
four years and 100% five years after the grant date. 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.
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 50. Senior Vice President of the Company,
Equitable American and Equitable Life.
FRED S. HUBBELL. Age 45. Chairman, President and Chief Executive Officer of
the Company, Equitable American, Equitable Life, and USG and Chairman of EISI
and Golden American.
TERRY L. KENDALL. Age 50. President and Chief Executive Officer of First
Golden American Life Insurance Company of New York (since May, 1996) and
Golden American (since September, 1993); Executive Vice President of
Equitable Life and USG (since August, 1996); Managing Director of Bankers
Trust Company New York (August, 1993 to August, 1996); President of United
Pacific Life (September, 1982 to July, 1993).
PAUL E. LARSON. Age 44. Executive Vice President and Chief Financial
Officer of the Company, Equitable American, Equitable Life, Golden American,
and USG.
THOMAS L. MAY. Age 48. Senior Vice President of Marketing for Equitable
Life and USG.
JOHN A. MERRIMAN. Age 54. Secretary and General Counsel of the Company,
Equitable American, Equitable Life, and USG.
BETH B. NEPPL. Age 39. Vice President of Human Resources of Equitable Life,
Golden American, and USG.
PAUL R. SCHLAACK. Age 50. President and Chief Executive Officer of EISI,
the Company's investment management subsidiary.
JEROME L. SYCHOWSKI. Age 54. Senior Vice President and Chief Information
Officer of Equitable Life, Golden American, and USG (since December, 1996);
Senior Vice President Information Services of Mutual of Omaha (October, 1995
to December, 1996); Consultant (June, 1993 to October, 1995); Vice President
Administration/Chief Information Officer of MSI Insurance (June, 1979 to
June, 1993).
DAVID A. TERWILLIGER. Age 39. Vice President, Treasurer and Controller of
the Company, and Vice President and Controller of Equitable American, EISI,
Equitable Life, Golden American, and USG.
SECURITY OWNERSHIP OF MANAGEMENT
The following sets forth, as of March 6, 1997, 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 22,391 *
Dr. Drury 11,551 *
Ms. Greer 1,923 *
Mr. Heskett 13,389 *
Mr. Hubbell 750,534 2.3%
Mr. Ingham, Jr. 24,716 *
Mr. Lee 7,905 *
Mr. Rehm 18,891 *
Mr. Urban 5,051 *
Mr. Wachtmeister 1,918,525 6.0%
Mr. White 3,770 *
Mr. Durland, Jr. 90,565 *
Mr. Larson 93,887 *
Mr. May 32,489 *
Mr. Schlaack 259,559 *
All directors and executive
officers as a group (20) 3,408,922 10.6%
<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, 162,675; and Wachtmeister, 1,832,632.
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., 11,600; Hubbell, 185,100; Larson, 28,800;
May, 9,300; Schlaack, 19,000; and all directors and executive officers as a
group, 270,820. Includes shares held in Company 401(k) Savings Plan by the
following persons: Durland, Jr., 12,905; Hubbell, 20,475; Larson, 8,524;
May, 3,989; Schlaack, 20,815; and all executive officers as a group, 92,619.
(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 four most highly compensated executive officers (the
"named executive officers"):
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
___________________
Name and Principal
Position Year Salary($) Bonus($)
__________________________________________________________
<S> <C> <C> <C>
Fred S. Hubbell 1996 533,025 394,439
President & CEO 1995 511,667 247,200
1994 468,750 408,500
Paul R. Schlaack 1996 327,875 249,185
President & CEO 1995 311,750 165,890
EISI 1994 296,583 265,220
Paul E. Larson 1996 267,791 128,540
Executive V.P. 1995 242,833 70,760
Treas. & CFO 1994 227,917 119,600
Thomas L. May,
Sr. V.P.- 1996 231,751 73,260
Marketing(5) 1995 162,543 29,641
Lawrence V. Durland, Jr., 1996 202,250 72,810
Sr. V.P. 1995 196,667 47,280
1994 192,667 82,990
</TABLE>
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
______________________
Awards Payouts
______ _______
Restricted Securities
Name and Principal Stock Underlying LTIP All Other
Position Year Awards Options Payouts Compensation
($)(1) (#)(2) ($)(3) ($)(4)
_____________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Fred S. Hubbell 1996 526,875 40,000 -0- 14,483
President & CEO 1995 -0- 44,000 -0- 14,650
1994 339,600 30,000 -0- 13,000
Paul R. Schlaack 1996 245,875 19,000 24,844 15,000
President & CEO 1995 19,594 23,000 38,919 15,000
EISI 1994 264,074 18,000 39,345 13,000
</TABLE>
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
______________________
Awards Payouts
______ _______
Restricted Securities
Name and Principal Stock Underlying LTIP All Other
Position Year Awards Options Payouts Compensation
($)(1) (#)(2) ($)(3) ($)(4)
_____________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Paul E. Larson 1996 319,935 26,000 93,029 15,000
Executive V.P. 1995 73,396 20,000 55,195 15,000
Treas. & CFO 1994 55,256 15,000 4,500 13,000
Thomas L. May,
Sr. V.P.- 1996 170,349 15,000 12,422 10,242
Marketing(5) 1995 19,118 7,000 -0- 2,627
Lawrence V. Durland, 1996 182,650 7,000 9,937 8,336
Jr., Sr. V.P. 1995 146,500 8,500 20,531 8,033
1994 54,831 6,000 -0- 3,000
<FN>
(1) In 1994, 1995 and 1996 (1996: only Mr. Larson, 2,101 shares; and Mr. May,
1,345 shares) 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. These 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. Valuation of these awards is based upon fair
market value stock price of $35.375 on May 2, 1994, $36.625 on May 1, 1995
and $35.25 on May 1, 1996. On February 14, 1996 the named executive
officers were granted restricted stock awards which vest in 5 years. The
valuation of these awards is based upon the fair market value stock price
of $35.125 on the date of grant. At December 31, 1996 (based upon the fair
market value stock price of $45.875) 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 (30,360;
$1,392,765, Mr. Schlaack (19,853; $910,756), Mr. Larson (14,495; $664,958),
Mr. May (4,820; $221,117), Mr. Durland, Jr. (12,310; $564,721). 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) For 1996 this compensation includes payment to each named executive officer
in lieu of typical perquisite payments as follows: Mr. Hubbell, $11,483;
Mr. Schlaack, $12,000; Mr. Larson, $12,000; Mr. May, $7,242; Mr. Durland,
Jr., $5,336. The payments are classified as taxable income and are required
to be applied to specified business expenses of the named executive.
Additionally, the balance of this compensation includes contributions to the
Company's 401(k) Plan on behalf of each named executive officer to match a
portion of their pre-tax deferral contributions (included under the Salary
column) made by each to such plan.
(5) Mr. May became an executive officer in 1995, therefore no information is
provided for 1994.
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock options
during the last fiscal year to the named executive officers under the Company's
Restated and Amended 1992 Stock Incentive Plan:
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options Exercise
Underlying Granted to or Base Grant Date
Options Employees Price Expiration Present
Granted(#)(1) in Fiscal Year ($/sh) Date Value $ (2)
______________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Fred S. 40,000 12.5% 35.125 2-14-06 568,000
Hubbell
Paul R. 19,000 6.0% 35.125 2-14-06 269,800
Schlaack
Paul E. 16,000 5.0% 35.125 2-14-06 227,200
Larson 10,000 3.1% 35.00 4-24-06 141,400
Thomas L. 7,000 2.2% 35.125 2-14-06 99,400
May 8,000 2.5% 38.235 5-16-06 123,600
Lawrence V. 7,000 2.2% 35.125 2-14-06 99,400
Durland, Jr.
<FN>
(1) All Options 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.
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 14, 2006 is an incentive stock option.
(2) Values of $14.20 per share for the options expiring February 14, 2006,
$14.14 per share for the option expiring April 24, 2006, and $15.45 per
share for the option expiring May 16, 2006 were 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 6.43% risk-free rate of return on the options, an
expected stock price volatility of .33 calculated using stock prices for
the past 5 years, a 1.5% future dividend yield, and 10 years to time of
exercise. A downward adjustment of 13% 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 appreciates at levels equal to
that determined by the Black-Scholes model, the value appreciation realized
by all shareholders will be $454 million of which the named executive
officers would receive .3% or approximately $1,519,400 of such increase in
value.
(3) All non-executive officer employees, as a group, received options for the
purchase of shares of the underlying stock representing 52% of the total
options granted to employees in 1996. The grant date present value of
these options is $2,357,200.
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
The following table provides information, with respect to named executive
officers, concerning the exercise of options during the last fiscal year and
value of unexercised options held as of the end of the fiscal year:
<TABLE>
<CAPTION>
Number of
securities Value of
underlying unexercised
unexercised in-the-money
Shares options/SARs options/SARs
Acquired Value at FY-End(#) at FY-End($)
Name on Exer- Realized exercisable/ exercisable/
cise(#) ($)(1) unexercisable unexercisable (2)
_______________________________________________________________________________
<S> <C> <C> <C> <C>
Fred S. Hubbell 0 0 149,900/ 5,721,712/
160,200 2,679,150
Paul R. Schlaack 19,600 653,662 0/ 0/
84,400 1,416,925
Paul E. Larson 32,400 922,475 12,600/ 359,125/
86,200 1,358,575
Lawrence V.
Durland, Jr. 4,000 126,625 4,000/ 113,800/
31,900 546,737
Thomas L. May 13,500 457,594 2,000/ 35,850/
40,500 597,400
<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 ($45.875) less
exercise price. 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 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
1991 1992 1993 1994 1995 1996
EIC $100.00 $220.23 $336.14 $284.16 $328.06 $475.51
S&P 500 $100.00 $107.79 $118.66 $120.56 $165.78 $204.30
Life Index $100.00 $132.46 $132.24 $121.74 $173.15 $229.73
* Assumes $100 invested on December 31, 1991, 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 individual is scheduled to
reach social security retirement age) 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 ( $160,000 compensation limit and $125,000
benefit limit for 1997).
Messrs. Hubbell, Schlaack, Larson, May and Durland, Jr. have 14, 12, 20, 7 and
11 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 1996 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
____________
<S> <C> <C> <C> <C> <C>
$150,000 48,556 64,742 80,928 80,928 80,928
$200,000 65,431 87,242 109,053 109,053 109,053
$250,000 82,306 109,742 137,178 137,178 137,178
$300,000 99,181 132,242 165,303 165,303 165,303
$400,000 132,931 177,242 221,553 221,553 221,553
$500,000 166,681 222,242 277,803 277,803 277,803
$600,000 200,431 267,242 334,053 334,053 334,053
$800,000 267,931 357,242 446,553 446,553 446,553
$1,000,000 335,431 447,242 559,053 559,053 559,053
$1,200,000 402,931 537,242 671,553 671,553 671,553
</TABLE>
OTHER COMPENSATION ARRANGEMENTS
The named executive officers are participants in the Company's Key Employee
Severance Pay Plan. This Plan provides benefits equal to one year's
compensation. Benefits accrue to the named executives 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 one year of the occurrence of such an event, with benefits
equal to two years' compensation with no offset for compensation from other
employment.
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 four most highly compensated executive officers. The disclosure
requirements for these five 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
annuity and 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 annuity and life insurance companies of
comparable asset size, and include many companies included in the published
industry index presented in the Performance Graph on page 13, 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 $515,000 to
$535,600 (4.0%) effective February 16, 1996. 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 annuity and 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 13, 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 1996 in the amount of $394,439 based on a
statistical review of predetermined targets for the Company's 1996 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 1996 Mr. Hubbell
earned a 74% incentive bonus payment for the Company's 1996 performance.
In 1996 Mr. Hubbell was granted options to purchase 40,000 shares of the
Company's Common Stock at an exercise price of $35.125 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, and past and expected contributions to
the Company.
In addition, in 1996 Mr. Hubbell was granted restricted stock in the amount of
15,000 shares of the Company's Common Stock, which vest in 2001. This award of
restricted stock to Mr. Hubbell was made taking into account Mr. Hubbell's
overall compensation package and the desire to provide a competitive package
based upon comparative industry data. These shares of Common Stock cannot be
sold or otherwise disposed of until the restriction period lapses, and are
forfeited if Mr. Hubbell terminates employment for any reason other than
retirement, disability or death prior to the lapsing of the restriction period
in 2001.
Mr. Hubbell also received $11,483 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 16, 1996, 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 annuity and 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 1996. In 1996, the named executive officers of the Company
earned cash bonuses based on a review of the Company's 1996 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, 1996.
STOCK AWARDS IN 1996 . 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, 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 1996 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, 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
Gayle L. Greer
Jack D. Rehm
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 1997 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 1998 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 21, 1997 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 1996 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 11, 1997
_______________________
604 Locust Street
Des Moines, Iowa 50309
_______________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 24, 1997
_______________________
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 24, 1997, at 9:30 a.m., Des Moines local time, for the
following purposes.
1. To elect four directors.
2. To ratify the appointment of auditors for the year 1997.
3. 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 6, 1997, 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 1996, including audited
financial statements, is enclosed.
By Order of the Board of Directors.
John A. Merriman
Secretary
Des Moines, Iowa
March 11, 1997
EQUITABLE OF IOWA COMPANIES
Proxy For Annual Meeting of Shareholders
April 24, 1997
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 24, 1997 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 11, 1997, a
copy of which has been received by the undersigned, as follows:
Dated _______________________________, 1997.
___________________________________________
___________________________________________
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.)
Gayle L. Greer, Fred S. Hubbell, Richard S. Ingham, Jr., Thomas N. Urban
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space below.)
______________________________________________________________________________
2. APPROVAL OF THE APPOINTMENT OF ERNST & YOUNG LLP AS AUDITORS FOR THE
COMPANY.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. 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.
