<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Crawford & Company
- --------------------------------------------------------------------------------
(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
CRAWFORD LOGO
March 26, 1997
Dear Shareholder:
You are cordially invited to attend the Company's 1997 Annual Meeting of
Shareholders which will be held on Tuesday, April 22, 1997, beginning at 2:00
p.m. at the Company's headquarters, 5620 Glenridge Drive, N. E., Atlanta,
Georgia.
The official Notice of Annual Meeting of Shareholders, Proxy Statement and
form of Proxy are included with this letter and contain information about the
meeting and the various matters on which the shareholders will act.
As is our custom, a brief report will be made at this meeting on the
Company's 1996 activities and the outlook for 1997. I hope you will be able to
attend the meeting. Whether or not you plan to attend, it is important that you
sign and return your Proxy promptly, as your vote is important to the Company.
On behalf of our Board of Directors, officers, and employees, I wish to
thank you for your continued interest in and support of Crawford & Company.
Sincerely,
/s/ D. A. Smith
D. A. Smith,
Chairman, President
and Chief Executive Officer
<PAGE> 3
CRAWFORD & COMPANY
P.O. BOX 5047
ATLANTA, GEORGIA 30302
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1997
---------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Crawford
& Company (the "Company") will be held in the Home Office Building of the
Company, 5620 Glenridge Drive, N.E., Atlanta, Georgia, on Tuesday, April 22,
1997, at 2:00 p.m., local time, for the following purposes:
1. To elect nine (9) Directors to serve until the next Annual Meeting
of Shareholders and until their successors are elected and qualified;
2. To approve the adoption by the Board of Directors of the 1997 Key
Employee Stock Option Plan;
3. To approve the adoption by the Board of Directors of the 1997 Non-
Employee Director Stock Option Plan;
4. To approve the appointment of Arthur Andersen LLP as auditors for
the Company for the 1997 fiscal year; and
5. To transact any and all other such business as may properly come
before the meeting or any adjournment thereof.
Information relating to the above matters is set forth in the accompanying
Proxy Statement dated March 26, 1997. Only shareholders of record of Class B
Common Stock of the Company as of the close of business on March 6, 1997 will be
entitled to vote at the meeting and any adjournment thereof.
By Order of The Board of Directors
/s/ JUDD F. OSTEN
-------------------------------------
JUDD F. OSTEN, Secretary
Atlanta, Georgia
March 26, 1997
IT IS IMPORTANT THAT YOUR SHARES OF CLASS B COMMON STOCK BE REPRESENTED AT
THE MEETING WHETHER OR NOT YOU ARE PERSONALLY ABLE TO BE PRESENT. ACCORDINGLY,
IF YOU DO NOT PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND SIGN THE ENCLOSED
PROXY AND RETURN IT IN THE ACCOMPANYING POSTAGE PREPAID ENVELOPE.
PROXIES ARE NOT BEING SOLICITED WITH RESPECT TO THE SHARES OF CLASS A
COMMON STOCK OF THE COMPANY.
<PAGE> 4
CRAWFORD & COMPANY
P.O. BOX 5047
ATLANTA, GEORGIA 30302
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 22, 1997
This Proxy Statement and the accompanying Proxy are being mailed to
shareholders of Class B Common Stock of Crawford & Company (the "Company") in
connection with the solicitation of proxies by the Board of Directors of the
Company from holders of Class B Common Stock for use at the Annual Meeting of
Shareholders to be held in the Home Office Building of the Company, 5620
Glenridge Drive, N.E., Atlanta, Georgia, on Tuesday, April 22, 1997 at 2:00
p.m., local time, and any adjournment thereof. When the Proxy is properly
executed and returned, the shares of Class B Common Stock it represents will be
voted at the meeting and any adjournment thereof as directed by the shareholder
executing the Proxy unless it is revoked. If no directions are given on the
Proxy with respect to election of Directors, the shares represented by the Proxy
will be voted for the below listed nominees, for the approval of the adoption of
the 1997 Key Employee Stock Option Plan, for approval of the 1997 Non-Employee
Director Stock Option Plan and for the approval of the appointment of Arthur
Andersen LLP to serve as auditors of the Company in 1997. Any shareholder giving
a Proxy has the power to revoke it at any time before it is voted by the
execution of another Proxy bearing a later date or by written notification to
the Secretary of the Company. Shareholders who are present at the Annual Meeting
may revoke their Proxy and vote in person if they so desire.
Only shareholders of record of Class B Common Stock of the Company as of
the close of business on March 6, 1997 (the "Record Date") will be entitled to
vote at the Annual Meeting. As of that date, the Company had outstanding
17,150,624 shares of Class B Common Stock, each share being entitled to one
vote. A majority of the issued and outstanding shares of Class B Common Stock
entitled to vote at the Annual Meeting will constitute a quorum for the
transaction of business at such meeting. The Annual Report of the Company for
the fiscal year ended December 31, 1996 is enclosed herewith. This Proxy
Statement and the accompanying Proxy are being first mailed to Class B Common
Stock shareholders on or about March 26, 1997.
Additionally, for information only, this Proxy Statement is being mailed to
shareholders of Class A Common Stock of the Company as of the Record Date.
Shares of Class A Common Stock are not entitled to vote at the Annual Meeting of
Shareholders. Accordingly, no proxy is being requested and no proxy should be
sent with respect to such shares.
ELECTION OF DIRECTORS
NOMINEES AND VOTING
The By-Laws of the Company provide that the number of Directors which shall
constitute the full Board of Directors shall be nine and the shareholders shall
elect the Directors at each Annual Meeting. The Board of Directors has nominated
the nine persons listed below as Directors, to hold office until the next Annual
Meeting and until their successors are elected and qualified. Each nominee,
except Mr. Wood, is a member of the present Board of Directors and was elected
by the shareholders at the last Annual Meeting on April 18, 1996. If, at the
time of the Annual Meeting, any of the nominees should be unable to serve, the
persons named in the Proxy will vote for substitute nominees selected by the
Board of Directors. The Company has no reason to believe that any of the
nominees will not be available for election as a Director.
<PAGE> 5
NOMINEE INFORMATION
The following table gives certain information as to each person nominated
by the Board of Directors for election as a Director:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NAME AGE AND DIRECTORSHIPS SINCE
---- --- -------------------- --------
<S> <C> <C> <C>
Dennis A. Smith 47 Chairman of the Board, President and Chief Executive 1994
Officer of the Company
Forrest L. Minix 69 Retired, former Chairman of the Board and Chief 1973
Executive Officer of the Company.
J. Hicks Lanier 56 Chairman of the Board of Oxford Industries, Inc., a 1976
manufacturer of apparel products; Director of
SunTrust Banks of Georgia, Inc.; Shaw Industries,
Inc. and Genuine Parts Company
Charles Flather 63 Managing partner of Middlegreen Associates, Boston, 1978
Massachusetts, an investment management company;
Director of Asia Strategic Growth Fund, Inc.
Linda K. Crawford 54 Private investor. 1980
Jesse C. Crawford 48 President of Crawford Communications, Inc., a 1986
full-service provider of teleproduction services
including audio/video production and post
production, multimedia title design, satellite
services, animation, and special effects.
Larry L. Prince 58 Chairman of the Board, Chief Executive Officer and 1987
Director of Genuine Parts Company, a service
organization engaged in automotive and industrial
parts and office products distribution; Director of
Equifax, Inc., SunTrust Banks of Georgia, Inc., John
H. Harland Co., Southern Mills and UAP, Inc.
(Canada).
John A. Williams 54 Chairman of the Board of Post Properties, Inc., a real 1996
estate management and development company; Director
of Barnett Banks, Inc.
E. Jenner Wood, III 45 Executive Vice President -- Trusts and Investments --
Services, SunTrust Banks, Inc.; Director of Oxford
Industries, Inc. and Cotton States Life Insurance
Co.
</TABLE>
Mr. Smith has held his present position since January 1, 1996 and for more
than five years prior thereto held other executive officer positions with the
Company. On January 1, 1996, Mr. Minix retired from his position with the
Company. Mr. Wood has held his present position since October, 1993 and prior
thereto held the position of Executive Vice President -- Trusts and Investment
Management for SunTrust Bank/Atlanta. The principal occupation or employment of
each of the other nominees during the past five years has been as indicated in
the above table.
Linda K. Crawford is the widow of Jesse C. Crawford's brother.
SPECIAL COMMITTEES AND ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
The Board of Directors has three standing committees. The Executive
Committee consists of Virginia C. Crawford as Chairman, and Forrest L. Minix,
Dennis A. Smith, Larry L. Prince, Jesse S. Hall and Jesse C. Crawford as
members. The Audit Committee consists of Charles Flather as Chairman, and J.
Hicks Lanier, Larry L. Prince and John A. Williams as members. The Senior
Compensation and Stock Option Committee consists of J. Hicks Lanier as Chairman,
with Virginia C. Crawford, Jesse S. Hall, Linda K. Crawford and Charles Flather
as members. The Board of Directors does not have a standing nominating
committee.
2
<PAGE> 6
The Executive Committee may exercise all the authority of the Board of
Directors between its meetings with respect to all matters not specifically
reserved by law to the Board of Directors. The Executive Committee held seven
meetings during 1996.
The Audit Committee makes recommendations concerning the engagement or
discharge of the Company's independent auditors, reviews with the independent
auditors the audit plan and results of the audit engagement, reviews the scope
and results of the Company's internal auditing procedures and the adequacy of
its accounting controls, approves professional services provided by the
independent auditors, reviews the independence of the independent auditors, and
considers the range of the independent auditor's audit and non-audit fees. The
Audit Committee held two meetings during 1996.
The Senior Compensation and Stock Option Committee formulates and approves
salaries, grants of stock options and other compensation to the Chairman of the
Board and, upon recommendation by the Chairman of the Board, salaries, grants of
options and other compensation for all other Officers of the Company. The Senior
Compensation and Stock Option Committee held two meetings during 1996.
During 1996, the Board of Directors held four meetings. Each of the
Company's Directors attended at least seventy-five percent (75%) of the
aggregate number of meetings of the Board of Directors and committees thereof of
which such Director was a member.
COMPENSATION
Each Director of the Company received a quarterly fee of $2,000, and $500
for each Board of Directors and Committee meeting attended during 1996.
SHAREHOLDER VOTE
Each share of Class B Common Stock is entitled to cast an affirmative vote
for up to nine (9) Director nominees. Cumulative voting is not permitted. The
nine nominees for Director who receive the highest number of votes cast, in
person or by proxy, at the Annual Meeting will be elected Directors. Negative
votes or abstentions, including broker non-votes, will not be counted.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ITS NOMINEES FOR
DIRECTORS.
3
<PAGE> 7
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information for the fiscal
years ending December 31, 1996, 1995, and 1994, concerning compensation paid to
or accrued by the Company for (A) those persons who were, at December 31, 1996,
(i) the Chief Executive Officer, or (ii) the other four most highly compensated
Executive Officers of the Company and (B) one former Executive Officer who, but
for the fact that at December 31, 1996 he was not an Executive Officer of the
Company, would have been one of the other four most highly compensated Executive
Officers (hereinafter collectively referred to as the Named Executive Officers):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------------
ANNUAL COMPENSATION AWARDS
----------------------------- ------------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS/SAR (#)(1) COMPENSATION ($)(2)
--------------------------- ---- ---------- --------- ------------------ -------------------
<S> <C> <C> <C> <C> <C>
D. A. Smith..................... 1996 $388,419 $250,000 339,000 $ 1,329
Chairman and Chief 1995 352,332 100,000 14,000 1,196
Executive Officer 1994 254,167 100,000 30,500 1,248
A. L. Meyers, Jr................ 1996 253,336 101,688 106,000 68,901(3)
President 1995 187,500 6,400 4,000 68,786
Claims Services 1994 268,053 0 0 48,072
J. R. Bryant.................... 1996 175,000 70,000 56,000 1,329
President 1995 160,417 12,900 5,000 1,016
Casualty Risk 1994 105,352 5,485 3,500 1,248
Management Services
D. R. Chapman................... 1996 254,243 113,100 86,000 2,397
Executive Vice 1995 240,708 21,607 12,000 2,282
President 1994 225,484 55,919 5,000 2,190
Finance
R. P. Albright.................. 1996 179,329 79,709 6,000 383,455(4)
Former President 1995 201,617 14,120 7,000 1,598
Disability Management 1994 191,750 41,418 4,000 1,848
J. F. Osten..................... 1996 210,084 93,224 46,000 1,827
Senior Vice President 1995 194,796 16,408 7,500 1,598
General Counsel and 1994 181,950 41,848 4,000 1,848
Secretary
</TABLE>
- ---------------
(1) Represents shares of the Company's Class A Common Stock.
(2) "All Other Compensation" for 1996 consists of contributions for the account
of each of the Named Executive Officers to the Company's Savings and
Investment Plan of $615, and the balance for each of the Named Executive
Officers, except Mr. Meyers and Mr. Albright, represents premium payments
made by the Company on term life insurance policies for such individual's
benefit.
(3) In addition to the contribution to the Company's Savings and Investment
Plan, represents $1,782 premium payment on term life insurance, and $66,504
paid under the Company's Retirement Plan in connection with Mr. Meyer's
previous retirement from the Company in 1994.
(4) In addition to the contribution to the Company's Savings and Investment
Plan, represents $1,611 premium payment on term life insurance, and
$381,229 paid or accrued in cash and property under a severance agreement
in connection with the termination of Mr. Albright's employment.
4
<PAGE> 8
STOCK OPTION EXERCISES AND YEAR-END VALUES
The following table provides information concerning the exercise of stock
options during the last fiscal year and unexercised options held as of the end
of the fiscal year with respect to the Named Executive Officers:
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/
FY-END (#) SARS AT FY-END ($)
SHARES ACQUIRED --------------------- ---------------------
ON EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#)(1) REALIZED ($)(1)(2) UNEXERCISABLE(3) UNEXERCISABLE(3)
---- --------------- ------------------ --------------------- ---------------------
<S> <C> <C> <C> <C>
D. A. Smith.......... 1,950A $52,244 34,900 $ 128,213
1,950B 370,600 1,097,163
A. L. Meyers, Jr..... 0 0 800 5,400
0 109,200 314,100
J. R. Bryant......... 0 0 6,300 38,050
0 62,500 200,275
D. R. Chapman........ 600A 13,150 26,400 166,750
600B 100,600 320,500
R. P. Albright....... 3,600A 78,900 17,900 147,623
3,600B 15,200 80,500
J. F. Osten.......... 0 0 11,700 69,800
0 55,800 187,825
</TABLE>
- ---------------
(1) Represents the number of shares of the Company's Class A Common Stock and
Class B Common Stock, respectively, issued upon exercise of outstanding
options during the fiscal year and the aggregate "Value Realized."
(2) "Value Realized" is a hypothetical calculation required by rules of the
Securities and Exchange Commission, representing (A) the difference between
(i) the closing price of the Stock on the New York Stock Exchange on the
date of exercise, and (ii) the per-share exercise price of the option,
multiplied by (B) the number of shares acquired. None of the shares
acquired on exercise were sold by the Named Executive Officer and the
profit or loss ultimately realized by the Named Executive Officer will be
the difference, if any, between (i) the sale price of the shares when sold
and (ii) the exercise price.
(3) Represents the aggregate number of shares of Class A Common Stock and Class
B Common Stock covered by unexercised options at fiscal year end, and the
aggregate difference between the exercise price and market value thereof at
December 31, 1996 based on the closing price for the Class A and Class B
shares on the New York Stock Exchange on that date. The upper number
relates to options exercisable at fiscal year end and the lower number
relates to options which were not exercisable on that date.
5
<PAGE> 9
STOCK OPTION GRANTS
The following table provides information concerning the grant of stock
options under the Company's 1990 Stock Option Plan during the fiscal year ended
December 31, 1996:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES PRICE EXPIRATION -------------------------------------------
NAME GRANTED(#)(1) IN FISCAL YEAR ($/SH) DATE 0% ($) 5% ($) 10% ($)
---- ------------- -------------- -------- ---------- ------ -------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
D. A. Smith............... 8,500 0.86% $16.63 1/30/2006 $0 $ 88,871 $ 225,216
330,000 33.24 19.00 8/21/2003 0 2,552,517 5,948,456
500 0.05 16.00 1/01/2006 0 5,031 12,750
A.L. Meyers, Jr........... 6,000 0.60 16.63 1/30/2006 0 62,732 158,976
100,000 10.07 19.00 8/21/2003 0 773,490 1,802,562
J.R. Bryant............... 6,000 0.60 16.63 1/30/2006 0 62,732 158,976
50,000 5.04 19.00 8/21/2003 0 386,745 901,281
D. R. Chapman............. 6,000 0.60 16.63 1/30/2006 0 62,732 158,976
80,000 8.06 19.00 8/21/2003 0 618,792 1,442,050
R. P. Albright............ 6,000 0.60 16.63 1/30/2006 0 62,732 158,976
J. F. Osten............... 6,000 0.60 16.63 1/30/2006 0 62,732 158,976
40,000 4.03 19.00 8/21/2003 0 309,396 721,025
All Shareholders.......... $467.8 million(3) $1,185.5 million(3)
</TABLE>
- ---------------
(1) Options granted are with respect to the Company's Class A Common Stock and
become exercisable twenty percent (20%) each year commencing on the first
anniversary of the option grant date, except for the options with the
8/21/2003 expiration date which become exercisable at the earlier of (A)
when the Class A Common Stock price reaches $26.60 per share (adjusted for
the March 11, 1997 stock split) or (B) August 21, 2002.
(2) The "Annual Rates of Stock Price Appreciation" set forth in the table are
mandated by the rules of the Securities and Exchange Commission. The
Company gives no assurance that these or any other rates of appreciation
can or will be achieved over the option terms. However, any rates of
appreciation that are achieved will benefit all holders of the Company's
Common Stock.
(3) Represents the increase in the aggregate market value of the Company's
outstanding Class A and Class B Common Stock at December 31, 1996, assuming
a 5% and 10% annual rate of appreciation in the respective stock prices
over the ensuing ten (10) years.
6
<PAGE> 10
PENSION PLANS
The following table indicates estimated annual retirement benefits on a
straight line annuity basis payable following retirement at age 65 to
participants at the specified compensation and period of service classifications
under the Company's defined benefit pension plans:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40 45
------------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$125,000........................... $ 37,500 $ 50,000 $ 62,500 $ 75,000 $ 87,500 $100,000 $112,500
150,000........................... 45,000 60,000 75,000 90,000 105,000 120,000 135,000
175,000........................... 52,500 70,000 87,500 105,000 122,500 140,000 157,500
200,000........................... 60,000 80,000 100,000 120,000 140,000 160,000 180,000
225,000........................... 67,500 90,000 112,500 135,000 157,500 180,000 202,500
250,000........................... 75,000 100,000 125,000 150,000 175,000 200,000 225,000
300,000........................... 90,000 120,000 150,000 180,000 210,000 240,000 270,000
400,000........................... 120,000 160,000 200,000 240,000 280,000 320,000 360,000
500,000........................... 150,000 200,000 250,000 300,000 350,000 400,000 450,000
600,000........................... 180,000 240,000 300,000 360,000 420,000 480,000 540,000
700,000........................... 210,000 280,000 350,000 420,000 490,000 560,000 630,000
800,000........................... 240,000 320,000 400,000 480,000 560,000 640,000 720,000
</TABLE>
The Company maintains a non-contributory Retirement Plan for the benefit of
substantially all of the employees of the Company. The Retirement Plan provides
for annual retirement benefits at Normal Retirement Age (65) equal to 2% of the
participant's total compensation (as defined in the Retirement Plan) for all
credited years of service under the Plan. The benefits are not affected by
Social Security benefits payable to the participant; however, they are
actuarially reduced for retirements before the Normal Retirement Age or if the
retiree selects benefits other than an individual life-time annuity.
Additionally, the Company maintains an unfunded Supplemental Executive
Retirement Plan for certain Executive Officers to provide benefits that would
otherwise be payable under the Retirement Plan but for limitations placed on
covered compensation and benefits under the Internal Revenue Code. Credited
years of service under the Retirement Plan for Messrs. Smith, Meyers, Bryant,
Chapman, Albright and Osten are 24, 36, 22, 16, 29 and 6, respectively.
7
<PAGE> 11
REPORT OF THE SENIOR COMPENSATION AND STOCK OPTION
COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the Senior
Compensation and Stock Option Committee (the "Committee") of the Board of
Directors, composed of the Directors whose names are listed below this report.
The fundamental philosophy of the Committee is to insure that the compensation
programs of the Company will attract and retain key executives critical to its
long-term success through the establishment of a performance-oriented
environment that rewards the achievement of strategic management goals, with the
attendant enhancement of shareholder value.
There are three elements in the Company's executive compensation program,
all related to individual and Company performance.
- Base Salary Compensation
- Annual Incentive Compensation
- Long-term Incentive Compensation
BASE SALARY COMPENSATION
The Company has established a comprehensive Wage and Salary Administration
Policy. This Policy includes a program for grading each position, including
those of the Executive Officers of the Company, to insure internal equity.
Additionally, the Policy sets forth grade levels and salary ranges for those
grade levels, and provides for annual merit increases tied to individual job
performance as measured through annual performance reviews. Based on published
national surveys, the Company annually establishes merit increase budgets as a
percent of current salaries and any increases in salary ranges for the next
fiscal year. Generally, the Company is at the midpoint of projected merit salary
increases and salary range adjustments as reflected in the national surveys,
with some adjustment up or down depending on prior year pre-tax earnings and
revenues of the Company. Consistent with the overall merit increase percentage,
the Company establishes guidelines for individual salary adjustments based on
the individual's performance rating.
The Committee reevaluates and sets the salary of the Chief Executive
Officer on an annual basis. In establishing the base salary for the Chief
Executive Officer, the Committee looks primarily at the pre-tax earnings of the
Company in the preceding fiscal year as compared to the prior fiscal year. It
also takes into account unusual circumstances which may have impacted that
performance which were not within the control of the Company or its Executive
Officers, the increases in the base salaries of other employees of the Company,
and the Committee's assessment of the personal performance of the Chief
Executive Officer during the preceding year. For 1996, the Committee increased
Mr. Smith's 1996 base salary by approximately 10%, to $375,000 per annum to
reflect Mr. Smith's assumption of additional responsibilities as the new
Chairman and Chief Executive Officer.
ANNUAL INCENTIVE COMPENSATION
Under the Company's 1996 Incentive Compensation Plan, which covers all key
employees of the Company (other than the Chief Executive Officer), at the
beginning of each fiscal year the Committee establishes pre-tax earnings and
revenues thresholds, as well as targeted pre-tax earnings. A bonus pool is
created for sales and marketing key employees based principally on increases in
revenues above the threshold amount, while the bonus pool for other participants
is based primarily on growth in pre-tax earnings from the threshold amount up to
the targeted pre-tax earnings. Individual bonuses are allocated from the bonus
pools based primarily on the participant's base salary, adjusted for the
performance of the business unit of which he or she is a part in the case of
operational participants and performance to budget in the case of staff
participants, as well as his or her personal performance.
The Committee sets a bonus for the Chief Executive Officer, based primarily
on pre-tax earnings and the bonuses paid under the 1996 Incentive Compensation
Plan, as a percentage of salary, to the other Executive
8
<PAGE> 12
Officers of the Company. Historically, the Chief Executive Officer's bonus, as a
percentage of his base salary, has been higher than the average paid to the
other Executive Officers, expressed as a percentage of their base salaries. For
1996, the Committee awarded a bonus of $250,000 to Mr. Smith.
LONG-TERM INCENTIVE COMPENSATION
Under the Company's 1990 Stock Option Plan, officers and other key
employees of the Company are granted options by the Committee to purchase shares
of the Company's Class A Common Stock. The exercise price for all options
granted is set at the market price of the Company's Class A Common Stock on the
date of the option grant and, to the extent permissible under the relevant
provisions of the Internal Revenue Code, the options granted under the Plan are
statutory "Incentive Stock Options". The Committee had previously authorized the
grant of options under the Plan covering a specified number of shares of the
Company's Class A Common Stock to participants on the occasion of their election
or appointment to that position or subsequent promotion. During 1996 that
authorization was rescinded. The Committee typically reviews and acts upon the
recommendations of the Chief Executive Officer for the grant of options, on a
discretionary basis, annually to the Company's other officers and key employees.
The number of shares of the Company's Class A Common Stock covered by such
options is generally based upon the grade level of the officer or other key
employee's position, with some adjustment for extraordinary performance, but
without regard to the individual's stock ownership or the number of options
previously granted.
The Company's other long-term incentive compensation program was the
Long-Term Executive Bonus Plan for Plan Years 1994-1996 (the "Long-Term Bonus
Plan"). Participants in the Long-Term Bonus Plan were the Chief Executive
Officer and other senior executive officers of the Company designated by the
Chief Executive Officer. The amount available for distribution to all
participants in 1997 under the Long-Term Bonus Plan was to be based on the
aggregate dollar increase in the Company's adjusted audited pre-tax earnings
during the three year period ending December 31, 1996 over the audited pre-tax
earnings for the year ended December 31, 1993. There was no increase in adjusted
audited pre-tax earnings for the period and no bonuses were distributed under
the Long-Term Bonus Plan.
The Committee does not intend to adopt a further cash long-term incentive
plan, and in lieu thereof increased the number of options granted under the
Company's 1990 Stock Option Plan. In addition to the annual grant of options
discussed above, the Committee granted special options in August, 1996 to the
Chief Executive Officer, the Executive Officers, and six (6) other officers and
key employees of the Company. The options granted at that time covered 730,000
shares of the Company's Class A Common Stock, of which the Chief Executive
Officer was granted an option for 330,000 shares in recognition of what the
Committee views as his critical role in enhancing shareholder value. The
Committee has not established a time table for consideration of the grant of
further options outside the annual grant of options to the Company's officers
and other key employees; however, it does not believe this should be done on an
annual or regular basis.
<TABLE>
<S> <C> <C>
J. HICKS LANIER VIRGINIA C. CRAWFORD LINDA K. CRAWFORD
JESSE S. HALL CHARLES FLATHER
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Virginia C. Crawford served as a member of the Senior Compensation and
Stock Option Committee of the Board of Directors during the past fiscal year.
Mrs. Crawford is a Vice President of the Company.
9
<PAGE> 13
STOCK OWNERSHIP INFORMATION
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information, as of March 1, 1997, as to
shares of Class A and Class B Common Stock beneficially owned by each current
Director or nominee for election as a Director, each of the Named Executive
Officers, and all current Directors and Executive Officers as a group. As of
March 1, 1997, 16,203,576 shares of Class A Common Stock and 17,150,624 shares
of Class B Common Stock were outstanding.
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT AND NATURE OF TOTAL SHARES
BENEFICIAL OWNERSHIP(1) OUTSTANDING(2)
------------------------ ------------------
NAME CLASS A CLASS B CLASS A CLASS B
---- ---------- ---------- ------- -------
<S> <C> <C> <C> <C>
Virginia C. Crawford............................. 6,501 56,501 -- --
Dennis A. Smith(3)............................... 55,475 18,775 -- --
Forrest L. Minix................................. 82,048 82,048 -- --
Jesse S. Hall(4)................................. 1,900 6,800 -- --
Linda K. Crawford(5)............................. 1,879,644 2,604,492 11.6% 15.2%
J. Hicks Lanier(4)............................... 2,025 2,025 -- --
Charles Flather.................................. 3,375 3,375 -- --
Jesse C. Crawford(6)............................. 3,251,077 1,294,918 20.1% 7.6%
Larry L. Prince(4)............................... 750 750 -- --
John A. Williams................................. -- 1,000 -- --
E. Jenner Wood, III(4)........................... 500 -- -- --
Archie Meyers, Jr.(7)............................ 3,592 332 -- --
Jim R. Bryant(8)................................. 8,100 1,150 -- --
Donald R. Chapman(9)............................. 40,610 21,468 -- --
Robert P. Albright(10)........................... 16,700 15,046 -- --
Judd F. Osten(11)................................ 15,900 -- -- --
All Directors and Executive Officers as a Group
(14 persons)(12)............................... 5,350,997 4,093,634 33.0% 23.9%
</TABLE>
- ---------------
(1) Except as otherwise indicated in the following footnotes, the persons
possessed sole voting and investment power with respect to all shares set
forth opposite their names.
(2) Except where a percentage is specified, the person's ownership represents
less than 1% of the outstanding shares.
(3) Includes 41,700 shares of Class A Common Stock and 5,000 shares of Class B
Common Stock subject to options exercisable within sixty (60) days of March
1, 1997.
(4) Mr. Hall is a former Executive Vice President, responsible for Trust and
Investment Management activities, of SunTrust Banks, Inc. Mr. Lanier and
Mr. Prince are directors of SunTrust Bank of Georgia, Inc., a subsidiary of
SunTrust Banks, Inc. Mr. Wood is currently Executive Vice President --
Trusts and Investment Management for SunTrust Banks, Inc. Messrs. Hall,
Lanier, Prince and Wood disclaim any beneficial ownership in shares held by
SunTrust Banks, Inc. or any of its banking subsidiaries, which shares are
not reflected in the table. See "Information With Respect to Certain
Business Relationships" and "Security Ownership of Certain Beneficial
Owners."
(5) See Notes (4), (5), and (6) to table set forth under "Security Ownership of
Certain Beneficial Owners" below with respect to Class B Common Stock. The
shares of Class A Common Stock shown as beneficially owned by Linda K.
Crawford include 1,127,562 shares which are held in four trusts for the
benefit of two daughters of Linda K. Crawford. Under the terms of two of
these trusts, holding an aggregate of 163,110 shares of Class A Common
Stock, Linda K. Crawford and another individual share investment power.
Under two of these trusts, holding an aggregate of 964,452 shares of Class
A
(footnotes continued on page 11)
10
<PAGE> 14
Common Stock, Linda Crawford has sole voting authority but has no
investment authority. Linda K. Crawford disclaims any beneficial interest
in any of the shares of Class A Common Stock held in these trusts. Included
in the shares shown as beneficially owned by Linda K. Crawford are 700,614
shares of Class A Common Stock held in trust for her benefit. Under the
terms of this trust, Linda K. Crawford has sole voting and investment power
with respect to the shares held in the trust. In addition to the above,
Linda K. Crawford has sole voting and investment power with respect to
51,468 shares of Class A Common Stock shown as beneficially owned by her.
(6) See Note (8) to the table set forth under "Security Ownership of Certain
Beneficial Owners" below with respect to the Class B Common Stock. The
shares of Class A Common Stock shown as beneficially owned by Jesse C.
Crawford include 970,107 shares attributable to him as a general and
limited partner of Crawford Partners, L.P.
(7) Includes 2,800 shares of Class A Common Stock subject to options
exercisable within sixty (60) days of March 1, 1997.
(8) Includes 7,800 shares of Class A Common Stock and 1,000 shares of Class B
Common Stock subject to options exercisable within sixty (60) days of March
1, 1997.
(9) Includes 25,600 shares of Class A Common Stock and 5,500 shares of Class B
Common Stock subject to options exercisable within sixty (60) days of March
1, 1997.
(10) Includes 10,300 shares of Class A Common Stock and 5,300 shares of Class B
Common Stock subject to options exercisable within sixty (60) days of March
1, 1997.
(11) Includes 15,900 shares of Class A Common Stock subject to options
exercisable within sixty (60) days of March 1, 1997.
(12) Includes 1,133,217 shares of Class A Common Stock and 1,561,473 shares of
Class B Common Stock as to which voting or investment power is shared;
112,500 shares of Class A Common Stock and 19,800 shares of Class B Common
Stock subject to options exercisable within sixty (60) days of March 1,
1997; and 1,127,562 shares of Class A Common Stock and 1,631,174 shares of
Class B Common Stock as to which beneficial ownership is disclaimed.
11
<PAGE> 15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information concerning each person
known to the Company to be the "beneficial owner", as such term is defined by
the rules of the Securities and Exchange Commission ("SEC"), of more than 5% of
the outstanding shares of Class B Common Stock of the Company as of March 1,
1997:
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT AND NATURE OF TOTAL SHARES
NAME AND ADDRESS BENEFICIAL OWNERSHIP OUTSTANDING
---------------- -------------------- ------------
<S> <C> <C>
SunTrust Banks, Inc.............................. 9,913,095(1) 57.8%
One Park Place, N.E.
Atlanta, Georgia 30303
Crawford Partners, L.P........................... 9,093,522(1) 53.0%
55 Park Place
Atlanta, Georgia 30303
Marital Trust for the Benefit of
Virginia C. Crawford........................... 6,326,363(2) 36.9%
55 Park Place
Atlanta, Georgia 30303
Wachovia Corporation............................. 2,598,524(3)(4)(5)(6) 15.2%
191 Peachtree St., N.E.
Atlanta, Georgia 30303
Linda K. Crawford................................ 2,604,492(4)(5)(6) 15.2%
1198 Longcourte Dr., N.W.
Atlanta, Georgia 30327
Frank L. Wilson, III............................. 2,316,469(7) 13.5%
230 Peachtree St., N.W.
Atlanta, Georgia 30303
Jesse C. Crawford................................ 1,294,918(8) 7.6%
Crawford Communications, Inc.
532 Armour Circle, N.E.
Atlanta, Georgia 30324
Taylor/Bass/Guylay Group
Portfolio F. Investors, L.P...................... 230,000(9)(13) 1.3%
The Bass Management Trust........................ 111,660(10)(13) 0.7%
Sid R. Bass Management Trust..................... 111,600(11)(13) 0.7%
Lee M. Bass...................................... 111,650(13) 0.7%
Wesley Guylay Capital Management................. 343,050(12)(13) 2.0%
Total.................................. 907,900(13) 5.3%
c/o W. Robert Lothan
201 Main Street, Suite 2000
Fort Worth, Texas 76102
</TABLE>
- ---------------
(1) The shares are held by one or more bank subsidiaries of SunTrust Banks of
Georgia, Inc., SunTrust Banks of Florida, Inc., and/or SunTrust Banks of
Tennessee, Inc., subsidiaries of SunTrust Banks, Inc. in various fiduciary
and agency capacities. SunTrust Bank, Atlanta has sole voting power with
respect to 9,909,845 of such shares. SunTrust Bank, Atlanta has sole
investment power with respect to 9,907,146 of such shares and shares
investment power with respect to 1,012 of such shares. SunTrust Bank,
Nashville, N.A. has sole voting power with respect to 3,250 of such shares,
and sole investment power with respect to 2,250 of such shares. As the
corporate parents of SunTrust Bank, Atlanta and SunTrust
(Footnotes continued on page 13)
12
<PAGE> 16
Bank, Nashville, N.A., SunTrust Banks of Georgia, Inc., SunTrust Banks of
Tennessee, Inc., and SunTrust Banks, Inc. may also be deemed to be
beneficial owners of shares held by SunTrust Bank, Atlanta and SunTrust
Bank, Nashville, N.A. SunTrust Banks of Georgia, Inc., SunTrust Bank,
Atlanta, SunTrust Bank, Nashville, N.A., SunTrust Banks of Tennessee, Inc.,
and SunTrust Banks, Inc. disclaim any beneficial interest in any such
shares. Included are all of the shares shown as beneficially owned by
Crawford & Partners, L.P.
(2) The shares shown as beneficially owned by the Marital Trust are
attributable to it by virtue of its being a limited partner and a member of
a limited liability company which is one of the general partners of
Crawford Partners, L.P.
(3) All of the shares are held for the benefit of various clients, including
shares held in trusts for the benefit of Linda K. Crawford and her
daughters. Wachovia Bank of Georgia, a banking subsidiary of Wachovia
Corporation, has shared voting power with respect to 266,555 of such
shares. Wachovia Corporation and Wachovia Bank of Georgia disclaim any
beneficial interest in any of these shares.
(4) The shares shown as beneficially owned by Linda K. Crawford and Wachovia
Corporation include 266,555 shares which are held in two trusts established
for the benefit of two children of Robert C. Crawford. Under the terms of
these trusts, Wachovia Bank of Georgia and another individual share voting
power with respect to the shares held by such trusts, and Linda K. Crawford
and another individual share investment power with respect thereto. Linda
K. Crawford disclaims any beneficial interest in any of these shares held
in trust.
(5) Included in the shares shown as beneficially owned by Linda K. Crawford and
Wachovia Corporation are 921,850 shares which are held in trust for the
benefit of Linda K. Crawford. Under the terms of this trust, Linda K.
Crawford has sole voting and investment power with respect to the shares
held in the trust. Wachovia Corporation and Wachovia Bank of Georgia
disclaim any beneficial interest in any of these shares. Linda K. Crawford
has sole voting and investment power with respect to 51,468 shares shown as
beneficially owned by her.
(6) The shares shown as beneficially owned by Linda K. Crawford and Wachovia
Corporation include 1,364,619 shares which are held in three trusts for the
benefit of two children of Linda K. Crawford, all of which shares are held
in trusts under which Wachovia Bank of Georgia and Frank L. Wilson, III are
co-trustees, under the terms of which trusts Linda K. Crawford has sole
voting power and Wachovia Bank of Georgia and Frank L. Wilson, III share
investment power. Linda K. Crawford disclaims any beneficial interest in
any of these shares held in Trust.
(7) The shares shown as beneficially owned by Frank L. Wilson, III are all
shares held in trusts for the benefit of Linda K. Crawford or the daughters
of Linda K. Crawford, with respect to which Frank L. Wilson, III is a
trustee. Frank L. Wilson, III disclaims any beneficial interest in any of
the shares held in these trusts.
(8) The shares shown as beneficially owned by Jesse C. Crawford are
attributable to him as a general and limited partner of Crawford Partners,
L.P.
(9) The shares held by Portfolio F Investors, L.P. may also be deemed to be
beneficially owned by each of (i) Thomas M. Taylor, in his capacity as
President and sole stockholder of (ii) Trinity Capital Management, Inc.,
which is the sole general partner of (iii) T. F. Investors, L.P., which is
the general partner of (iv) Trinity I Fund, L.P., which is the sole general
partner of Portfolio F. Investors, L.P.
(10) The shares held by The Bass Management Trust may also be deemed to be
beneficially owned by (i) Perry R. Bass in his capacity as sole trustee and
as one of two trustors of The Bass Management Trust, and (ii) Nancy L. Bass
in her capacity as one of the two trustors of The Bass Management Trust.
(11) The shares held by Sid R. Bass Management Trust may also be deemed to be
beneficially owned by Sid R. Bass in his capacity as a trustee and the sole
trustor of Sid R. Bass Management Trust.
(12) The shares held by Wesley Guylay Capital Management may also be deemed to
be beneficially owned by Wesley Richard Guylay in his capacity as the sole
general partner of Wesley Guylay Capital Management.
(Footnotes continued on page 14)
13
<PAGE> 17
(13) Thomas M. Taylor, Perry R. Bass, Sid R. Bass, Lee M. Bass, Wesley Richard
Guylay and other investors, including those named above, have filed a
Schedule 13D as of July 12, 1996 with the Securities and Exchange
Commission. The persons making the Schedule 13D filing have stated that
neither the fact of such filing nor anything contained therein shall be
deemed an admission that a "group" exists within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934. The information reflected
above is based on the Schedule 13D filing provided to the Company and no
independent investigation of the accuracy of the information contained
therein has been made by the Company.
INFORMATION WITH RESPECT TO CERTAIN BUSINESS RELATIONSHIPS
SunTrust Banks, Inc., through its banking subsidiaries (collectively, the
"Banks"), hold 9,913,095 shares of Class B Common Stock of the Company. See
"Stock Ownership Information -- Security Ownership of Certain Beneficial
Owners." The Banks exercise voting authority with respect to shares of Class B
Common Stock held in fiduciary capacities. The Company also maintains a normal
commercial banking relationship with the Banks. SunTrust Bank, Atlanta serves as
trustee for the Crawford & Company Retirement Plan, and the Crawford & Company
Employee Disability Income Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers, and greater than ten percent (10%) beneficial owners of
the Company's equity securities, to file with the Securities and Exchange
Commission and the New York Stock Exchange reports of ownership and changes in
ownership of common stock and other equity securities of the Company. Officers,
directors and greater than ten percent shareholders are required by the
Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such reports furnished to the
Company or written representations that no other reports are required, the
Company believes that, during the year ending December 31, 1996, all filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with, except that two reports on Form 3 covering
the acquisition of the Company's equity securities were filed late by Crawford
Partners, L.P. and Crawford Management Company, L.L.C. Additionally, the timely
filed report on Form 4 for the month of November for the Marital Trust for the
benefit of Virginia C. Crawford inadvertently did not include the Marital
Trust's continuing indirect interest in the Company's equity securities through
the Marital Trust's limited partnership interest in Crawford Partners, L.P. and
its being a member of Crawford Management Company, L.L.C., one of the general
partners of Crawford Partners, L.P. This omission was corrected by filing an
amended Form 4.
14
<PAGE> 18
FIVE YEAR COMPARATIVE STOCK PERFORMANCE GRAPH
The following line graph compares the cumulative return on the Company's
Class B Common Stock against the cumulative total return on (i) the Standard &
Poors Composite 500 Stock Index and (ii) the Standard & Poors
Insurance -- Property and Casualty Index for the five year period commencing
December 31, 1991 and ended December 31, 1996:
<TABLE>
<CAPTION>
MEASUREMENT PERIOD CRAWFORD & S&P 500 S&P
(FISCAL YEAR COVERED) COMPANY INDEX PROPERTY-
(CLASS B) CASUALTY
INSURANCE INDEX
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 89.47 107.62 117.11
1993 61.28 118.46 115.04
1994 63.73 120.03 120.67
1995 66.95 165.13 163.38
1996 97.52 203.05 198.53
</TABLE>
- ---------------
This total shareholders return model assumes reinvested dividends.
Prepared by Standard & Poor's Compustat Services, a division of McGraw-Hill,
Inc.
PROPOSAL TO APPROVE THE 1997 KEY EMPLOYEE STOCK OPTION PLAN
GENERAL. On February 4, 1997, the Board of Directors adopted the Crawford
& Company 1997 Key Employee Stock Option Plan (the "Employee Plan") in the form
attached as Appendix "A" hereto. The Employee Plan allows for the grant to key
employees of the Company of options to purchase shares of Class A Common Stock
of the Company. An aggregate total of 2,500,000 shares of Class A Common Stock
(to be adjusted for the March 11, 1997 three-for-two stock split) are available
for grant under the Employee Plan. The purpose of the Employee Plan is to
attract and retain key employees through issuance of stock options which provide
the key employee with a stake in the future of the Company tied to enhancement
of shareholder value. Concurrently with the adoption of the Employee Plan, the
Board of Directors amended the Company's 1990 Stock Option Plan to terminate
that plan so that no further options would be granted under it.
OPTIONS. The Employee Plan provides for the granting to key employees of
the Company and any subsidiary both options intended to satisfy the requirements
of Section 422 of the Internal Revenue Code of 1986 ("Incentive Stock Options")
and options not intended to satisfy those requirements ("Non-Qualified
Options").
ADMINISTRATION. The Employee Plan is administered by the Senior
Compensation and Stock Option Committee (the "Committee") of the Company's Board
of Directors. Only those directors who are "non-
15
<PAGE> 19
employee directors" within the meaning of Rule 16b3(b)(3) under the Securities
Exchange Act of 1934 and "outside directors" within the meaning of sec. 162(m)
of the Internal Revenue Code of 1986 are eligible for Committee membership. The
Committee has the power to interpret the Employee Plan and to take such other
action in the administration and operation of the Employee Plan as the Committee
deems equitable under the circumstances, which actions are binding on the
Company, on each affected key employee, and on each other person directly or
indirectly affected by such action.
PARTICIPANTS. Any full-time, salaried employee of the Company or any
subsidiary of the Company (within the meaning of Section 425(f) of the Code)
who, in the judgment of the Committee acting in its absolute discretion, is key
to the success of the Company or such subsidiary ("key employee") may
participate in the Employee Plan. The Company estimates that approximately 160
employees of the Company and its subsidiaries are eligible to participate in the
Employee Plan. The Committee may grant options under the Employee Plan to such
key employees as the Committee may determine, except no individual key employee
may receive options under the Employee Plan covering in the aggregate more than
1,000,000 shares of Class A Common Stock (to be adjusted for the March 11, 1997
three-for-two stock split).
EXERCISE PRICE. The exercise price of options granted under the Employee
Plan is determined by the Committee, but such price may not be less than the
fair market value of the Class A Common Stock on the date the option is granted.
As defined in the Employee Plan, the "fair market value" of a share of Class A
Common Stock on the date an option is granted will be determined by reference to
the closing price of a share of such stock on the NYSE as accurately reported
for such date in The Wall Street Journal. Options granted under the Employee
Plan provide for payment of the exercise price in cash, Class A Common Stock or
a combination of cash and Class A Common Stock. The Company will receive no
payment upon the granting of options pursuant to the Employee Plan.
EXERCISE PERIOD. Each option granted under the Employee Plan is
exercisable in whole or in part as set forth in the particular Option Agreement
under which such option is granted, but in no event (i) before the date on which
such option is granted, or (ii) after (A) the date such option is exercised in
full, or (B) the date which is the tenth anniversary of the date such option is
granted, subject to earlier termination of the option in the event of the sale
or merger of the Company. See "Sale or Merger of the Company", below.
Additionally, all outstanding options under the Employee Plan are subject to
shareholder approval of the Employee Plan on or before February 4, 1998 and such
options will expire if that approval is not timely obtained.
LIMITATION ON GRANT OF INCENTIVE STOCK OPTIONS. To the extent that the
aggregate fair market value of the shares subject to Incentive Stock Options
granted after 1986 (determined as of the date such Incentive Stock Options were
granted) which first become exercisable in any calendar year exceeds $100,000,
such options will be treated as Non-Qualified Options. The fair market value of
the shares subject to any other option (determined as of the date such option
was granted) which is intended to satisfy the requirement of Section 422 of the
Code and which is granted to such key employee under a plan maintained by the
Company, a subsidiary, or a parent corporation shall be treated (for purposes of
this $100,000 limitation) as if granted under the Employee Plan.
NON-TRANSFERABILITY. Options granted under the Employee Plan may not be
transferred by a key employee and, during the key employee's lifetime, may be
exercised only by the key employee.
ADJUSTMENT OF SHARES. The Employee Plan provides for adjustments by the
Committee in an equitable manner of the number of shares of Class A Common Stock
available for grant of options under the Employee Plan, the number of shares of
Class A Common Stock covered by options granted under the Employee Plan, and the
exercise price to reflect any change in the capitalization of the Company,
including, but not limited to, changes such as stock splits or stock dividends,
mergers, consolidations or other reorganizations. The March 11, 1997
three-for-two stock split will increase the number of shares available under the
Employee Plan and under outstanding options by fifty percent (50%) and decrease
the per share price on options outstanding as of March 11, 1997 by one third.
SALE OR MERGER OF THE COMPANY. If the Company agrees to sell substantially
all of its assets, or agrees to any merger, consolidation, reorganization,
division or other corporate transaction in which Class A Common
16
<PAGE> 20
Stock is converted into another security or into the right to receive securities
or other property and such agreement does not provide for the assumption or
substitution of the options granted under the Employee Plan, each outstanding
option shall terminate thirty (30) days after notice by the Committee to the
optionee of the pendency of such event.
TERM OF THE EMPLOYEE PLAN. No option shall be granted under the Employee
Plan on or after February 4, 2007.
AMENDMENT TO THE EMPLOYEE PLAN. The Employee Plan may be amended by the
Board of Directors from time to time to the extent that the Board of Directors
deems necessary or appropriate; however, no amendment may be made without
approval of the shareholders of the Company (i) to increase the number of shares
reserved under the Employee Plan, (ii) to change the class of employees eligible
for options under the Employee Plan, (iii) if shareholder approval of such
amendment is required for continued compliance with Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or (iv) if
shareholder approval is required by any other applicable laws or regulations or
by the rules of the NYSE. The Board of Directors may also suspend the granting
of options under the Employee Plan at any time and may terminate the Employee
Plan at any time; provided, however, the Board of Directors may only modify,
amend or cancel any options theretofore granted if the optionee consents in
writing to such modification, amendment or cancellation or there is a
dissolution or liquidation of the Company or a transaction as described under
the heading "Sale or Merger of the Company" above.
FEDERAL INCOME TAX CONSEQUENCES. A description of the federal income tax
consequences of participation in the Employee Plan under present law is set
forth below. This description is only a general summary based on current federal
income tax laws, regulations (including certain proposed regulations), and
judicial and administrative interpretations thereof. The federal income tax laws
and regulations are frequently amended, and such amendments may or may not be
retroactive with respect to transactions described herein.
General. The grant of an option to a key employee is not a taxable event.
The exercise of an option may result in taxable ordinary income to the key
employee, the amount of such income being equal to the "Spread," defined as the
excess of (i) the fair market value of shares acquired upon exercise of the
option, over (ii) the exercise price for such shares. Upon sale of those shares,
the key employee will recognize a capital gain or loss measured by the
difference between (i) the net amount realized upon disposition and (ii) the
"Tax Basis" in the shares. The Tax Basis in shares acquired upon exercise of any
option differs depending on whether the option exercise price is paid in cash or
in stock. With a cash exercise, the Tax Basis of the acquired shares will be
equal to (i) the cash paid increased by (ii) any amount included in the key
employee's gross income as compensation by virtue of the exercise of the option.
If shares of stock are exchanged in full or partial payment of the exercise
price, the Tax Basis of the number of shares acquired equal to the number
exchanged shall be the Tax Basis of those exchanged shares. The shares acquired
as part of the exchange which are in excess of the number surrendered have a Tax
Basis equal to the amount included in the key employee's gross income as
compensation with respect to the exercise of the option.
Exercise of an Incentive Stock Option. The exercise of an Incentive Stock
Option and the related transfer of Class A Common Stock are covered by special
tax provisions under which the key employee does not recognize any taxable
ordinary income. However, the Spread on the date of exercise generally will
constitute a tax preference item adjustment for the purposes of computing the
key employee's alternate minimum tax in the year in which the option is
exercised. As a result, notwithstanding that the key employee will not recognize
income for regular tax purposes upon exercise of an Incentive Stock Option, his
or her federal income tax liability may be increased under the alternative
minimum tax rules. The portion of such alternative minimum tax liability, if
any, attributable to the Spread may result in a credit against the key
employee's regular tax liability in later years.
Early Disposition of Incentive Stock Option Shares. If the Class A Common
Stock transferred pursuant to the exercise of an Incentive Stock Option is
disposed of within (i) two years from the date of the grant of the option or
(ii) one year from the date the shares were transferred upon exercise of the
option (the "Holding Periods"), the key employee generally will recognize
ordinary income at the time of the disposition equal to the Spread on the
exercise date. If the sale price of the shares is less than the market value on
the date of
17
<PAGE> 21
exercise, the amount of ordinary income to be recognized may be reduced. The
balance, if any, of the key employee's gain over the amount treated as ordinary
income on such an early disposition will be short- or long-term gain depending
upon whether the holding period applicable to long-term capital assets is
satisfied. If an early disposition occurs in the same tax year as the exercise,
the Spread will not constitute a tax preference item adjustment (as described
above).
Qualifying Disposition of Incentive Stock Option Shares. Following
satisfaction of the Holding Periods, the sale or other taxable disposition of
Class A Common Stock acquired upon the exercise of an Incentive Stock Option
generally will result in long-term capital gain or loss treatment with respect
to the difference between (i) the amount realized on the disposition and (ii)
the Tax Basis of the shares sold.
Exercise of Non-Qualified Option and Sale of Shares. As a result of the
exercise of a Non-Qualified Option, the optionee will recognize ordinary income
in an amount equal to the Spread. Depending upon the period the shares are held
after exercise, the sale or other taxable disposition of Class A Common Stock
acquired upon the exercise of a Non-Qualified Option will result in a short- or
long-term capital gain or loss equal to the difference between (i) the amount
realized on the disposition and (ii) the Tax Basis of the shares sold.
APPROVAL OF EMPLOYEE PLAN. The adoption of the Employee Plan must be
approved by the favorable vote of a majority of the shares of Class B Common
Stock present and voting at the Annual Meeting. Proxies solicited by the Board
of Directors will be voted in favor of this proposal, unless the shareholders
specify in their proxies a contrary choice. Abstentions, including broker
non-votes, will not be counted.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE 1997 KEY EMPLOYEE STOCK OPTION PLAN.
PROPOSAL TO APPROVE THE 1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
GENERAL. On February 4, 1997 the Board of Directors adopted the Crawford &
Company 1997 Non-Employee Director Stock Option Plan (the "Director Plan") in
the form attached as Appendix "B" hereto. The Director Plan provides for the
grant of options to non-employee directors of the Company for a specified number
of shares of the Company's Class A Common Stock. A total of 300,000 shares of
Class A Common Stock (to be adjusted for the March 11, 1997 three-for-two stock
split) are reserved for issuance under the Director Plan. The purpose of the
Director Plan is to tie a portion of the non-employee director compensation
directly to increases in shareholder value. Currently, such non-employee
directors are not eligible to participate in any of the Company's stock based
compensation plans.
OPTIONS. If the Director Plan is approved by the Shareholders, each
eligible director elected or re-elected at the meeting at which the Director
Plan is approved will receive on that date an option for 10,000 shares of Class
A Common Stock (to be adjusted for the March 11, 1997 three-for-two stock
split). At each subsequent Annual Meeting, each new eligible director shall
receive an option on that date for 10,000 shares of Class A Common Stock (to be
adjusted for the March 11, 1997 three-for-two stock split) and each re-elected
eligible director shall receive an option on that date for 2,000 shares of Class
A Common Stock (to be adjusted for the March 11, 1997 three-for-two stock
split).
ELIGIBILITY. Only those directors who, at the time of their election or
re-election as directors, are neither officers nor employees of the Company may
receive options under the Director Plan.
EXERCISE PRICE. The exercise price of options granted under the Director
Plan is the fair market value of the Class A Common Stock on the date the option
is granted. As defined in the Director Plan, the "fair market value" of a share
of Class A Common Stock on the date an option is granted will be determined by
reference to the closing price of a share of such stock on the NYSE as
accurately reported for such date in The Wall Street Journal. Options granted
under the Director Plan provide for payment of the exercise price in cash, Class
A Common Stock, or a combination of cash and Class A Common Stock. The Company
will receive no payment upon the granting of options pursuant to the Director
Plan.
18
<PAGE> 22
EXERCISE PERIOD. Each option granted under the Director Plan is
exercisable in whole or in part at any time after grant, but not after (i) the
date the option holder is no longer a director of the Company if such date
occurs on or before the fifth anniversary of the option grant date, or (ii) the
tenth anniversary of the option grant date if the optionee is and remains a
director of the Company through the fifth anniversary of the option grant date,
subject to earlier termination of the Option in either case in the event of the
sale or merger of the Company. See "Sale or Merger of the Company", below.
NON-TRANSFERABILITY. Options granted under the Director Plan may not be
transferred by the option holder and, during his or her lifetime, may be
exercised only by him or her.
ADJUSTMENT OF SHARES. The Director Plan provides for adjustments of the
number of shares of Class A Common Stock available for the grant of options
under the Director Plan, the number of shares of Class A Common Stock covered by
the options granted under the Director Plan, and the exercise price to reflect
any change in the capitalization of the Company, including, but not limited to,
changes such as stock splits or stock dividends, mergers, consolidations or
other reorganizations. Adjustments under the Director Plan shall be on the same
basis as any adjustment under the Company's 1997 Key Employee Stock Option Plan.
By virtue of the March 11, 1997 three-for-two stock split, the number of shares
available for grant under the Director Plan and the number of shares stated
above for each option to be granted have increased by fifty percent (50%).
SALE OR MERGER OF THE COMPANY. If the Company agrees to sell substantially
all of its assets, or agrees to any merger, consolidation, reorganization,
division or other corporate transaction in which Class A Common Stock is
converted into another security or into the right to receive securities or other
property and such agreement does not provide for the assumption or substitution
of the options granted under the Director Plan, each outstanding option shall
terminate thirty (30) days after notice by the Board of Directors to the
optionee of the pendency of such event.
TERM OF THE DIRECTOR PLAN. No option shall be granted under the Director
Plan on or after February 4, 2007.
AMENDMENT TO THE DIRECTOR PLAN. The Director Plan may be amended by the
Board of Directors from time to time to the extent that the Board of Directors
deems necessary or appropriate; however, no amendment may be made without
approval of the shareholders of the Company (i) to increase the number of shares
reserved under the Director Plan, or (ii) to change the class of directors
eligible for options under the Director Plan.
FEDERAL INCOME TAX CONSEQUENCES. A description of the federal income tax
consequences of participation in the Director Plan under present law is set
forth below. This description is only a general summary based on current federal
income tax laws, regulations (including certain proposed regulations), and
judicial and administrative interpretations thereof. The federal income tax laws
and regulations are frequently amended, and such amendments may or may not be
retroactive with respect to transactions described herein.
Grant or Exercise. The grant of an option to a director is not a taxable
event. The exercise of an option will result in taxable ordinary income to the
director, the amount of such income being equal to the "Spread," defined as the
excess of (i) the fair market value of shares acquired upon exercise of the
option, over (ii) the exercise price for such shares.
Tax Basis. The Tax Basis in shares acquired upon exercise of any option
differs depending on whether the option exercise price is paid in cash or in
stock. With a cash exercise, the Tax Basis of the acquired shares will be equal
to (i) the cash paid, increased by (ii) any amount included in the director's
gross income as compensation by virtue of the exercise of the option. If shares
of stock are exchanged in full or partial payment of the exercise price, the Tax
Basis of the number of shares acquired equal to the number exchanged shall be
the Tax Basis of those exchanged shares. The shares acquired as part of the
exchange which are in excess of the number surrendered have a Tax Basis equal to
the amount included in the director's gross income as compensation by virtue of
the exercise of the option.
19
<PAGE> 23
Sale of Shares. Depending upon the period the shares are held after
exercise, the sale or other taxable disposition of Class A Common Stock acquired
upon the exercise of an option will result in a short- or long-term capital gain
or loss equal to the difference between (i) the amount realized on the
disposition and (ii) the Tax Basis of the shares sold.
APPROVAL OF DIRECTOR PLAN. The adoption of the Director Plan must be
approved by the favorable vote of a majority of the shares of Class B Common
Stock present and voting at the Annual Meeting. Proxies solicited by the Board
of Directors will be voted in favor of this proposal, unless the shareholders
specify in their proxies a contrary choice. Abstentions, including broker
non-votes, will not be counted.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE 1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
APPOINTMENT OF INDEPENDENT AUDITORS
Arthur Andersen LLP has been selected by the Audit Committee to serve as
auditors for the Company in 1997. If approved by the Class B Common Stock
shareholders, the Company will appoint Arthur Andersen LLP as auditors of the
Company for 1997. Should the shareholders not approve the selection of Arthur
Andersen LLP, the Board of Directors of the Company will seek other auditors.
Representatives of Arthur Andersen LLP will be present at the meeting and will
be given the opportunity to make a statement, if they desire, and to respond to
questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
ARTHUR ANDERSEN LLP AS THE COMPANY'S AUDITORS FOR 1997.
FORM 10-K
The Crawford & Company Annual Report on Form 10-K for 1996, filed with the
Securities and Exchange Commission, is available free of charge upon written
request to the Secretary, Crawford & Company, P.O. Box 5047, Atlanta, Georgia
30302.
SHAREHOLDER PROPOSALS
Any shareholder proposal to be presented at the 1998 Annual Meeting of the
Shareholders must be received by the Company no later than November 26, 1997 in
accordance with Rule 14a-8 under the Securities Exchange Act of 1934.
OTHER MATTERS
The minutes of the Annual Meeting of Shareholders held on April 18, 1996
will be presented at the meeting, but it is not intended that action taken under
the Proxy will constitute approval of the matters referred to in such minutes.
The Board of Directors knows of no other matters to be brought before the
meeting. If any other matters come before this meeting, however, the persons
named in the Proxy will vote such Proxy in accordance with their judgment on
such matters.
20
<PAGE> 24
EXPENSES OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company. In an
effort to have as large a representation at the Annual Meeting as possible,
special solicitation of proxies may, in certain instances, be made personally,
or by telephone, telegraph or by mail by one or more employees of the Company.
The Company may also reimburse brokers, banks, nominees or other fiduciaries for
the reasonable clerical expenses of forwarding the proxy material to their
principals, the beneficial owners of the Company's Class A or Class B Common
Stock.
March 26, 1997
21
<PAGE> 25
APPENDIX A
CRAWFORD & COMPANY
1997 KEY EMPLOYEE STOCK OPTION PLAN
Section 1. Plan Established. Crawford & Company, a Georgia corporation,
hereby adopts as of the 4th day of February, 1997, this 1997 Key Employee Stock
Option Plan, pursuant to which certain of the Key Employees of the Company and
Subsidiary Corporations, to be selected and determined as hereinafter set forth,
may be granted Options to purchase shares of the Class A Common Stock of the
Company; provided that no Option granted under the Plan will be exercisable
until shareholder approval of the Plan has been obtained and provided further
that the Plan and any Options granted under it will terminate if shareholder
approval is not received for the Plan within twelve (12) months after the date
first written above.
Section 2. Purpose of Plan. The purpose of the Plan is to strengthen the
Company and those corporations which are or later become Subsidiary
Corporations, by providing to specific Key Employees added incentives for high
levels of performance and to encourage stock ownership in the Company. The Plan
seeks to accomplish these goals by providing a means whereby these Key Employees
may be given an opportunity to purchase, by way of option, shares of Stock of
the Company.
Section 3. Definitions: (a) "Board" means the Board of Directors of the
Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means the Senior Compensation and Stock Option Committee of
the Board, or such other or successor committee as the Board may, from time to
time, establish.
(d) "Company" means Crawford & Company, a Georgia corporation, and any
successor to such corporation.
(e) "Incentive Stock Option" means an Option intended to meet all the
requirements of Section 422 of the Code and the regulations thereunder.
(f) "Fair Market Value" means (1) the closing price for a share of Stock on
the New York Stock Exchange (or if Stock is no longer traded on the New York
Stock Exchange, on the exchange or quotation system which reports or quotes the
closing price for a share of Stock) as accurately reported for any date (or, if
no shares of Stock are traded on such date, for the immediately preceding date
on which shares of Stock were traded) in The Wall Street Journal (or if The Wall
Street Journal no longer reports such price, in a newspaper or trade journal
selected by the Committee) or (2) if no such price quotation is available, the
price which the Committee, acting in good faith, determines through any
reasonable valuation method that a share of Stock might change hands between a
willing buyer and a willing seller, neither being under any compulsion to buy or
to sell and both having reasonable knowledge of the relevant facts.
(g) "Key Employee" means full-time, salaried employees of the Company or a
Subsidiary Corporation, as selected by the Committee.
(h) "Non-Qualified Stock Option" means any Option, other than an Incentive
Stock Option.
(i) "Option" means any option awarded under this Plan.
(j) "Optionee" means any Key Employee awarded an Option.
(k) "Plan" means this Crawford & Company 1997 Key Employee Stock Option
Plan, as amended from time to time.
(l) "Stock" means the Class A Common Stock of the Company.
(m) "Subsidiary Corporation" means any corporation which is a subsidiary
corporation (within the meaning of Section 425(f) of the Code) of the Company.
A-1
<PAGE> 26
Section 4. Eligibility. Key Employees, who have been selected as provided
in Section 5, will be eligible to receive Options; provided, however, that Key
Employees owning more than 10% of the total combined voting power of all classes
of stock of the Company or any Subsidiary Corporation will be eligible to
receive Incentive Stock Options only if: (i) the option price is at least 110%
of the Fair Market Value (at the time the option is granted) of the shares
issued under the Option; and (ii) the Incentive Stock Option may not be
exercised after the expiration of five (5) years from the date the Incentive
Stock Option is granted.
Section 5. Administration and Grant of Options. The Plan will be
administered by the Committee consisting of two or more directors appointed by
the Board who are "non-employee directors" (within the meaning of Rule 16b-3 of
the Securities Exchange Act of 1934) and "outside directors" (within the meaning
of Section 162(m) of the Code). Subject to the express provisions of the Plan,
the Committee will have complete authority to determine those Key Employees to
whom, the time or times, and the price at which Options may be granted, the
option periods, the number of shares subject to each Option, and whether an
Option will be granted as an Incentive Stock Option or a Non-Qualified Stock
Option. Subject to the express provisions of the Plan, the Committee will also
have complete authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations consistent with the Plan and relating to it, to determine
the terms and provisions of each option agreement (which need not be the same),
to determine the rights and obligations of Optionees under the Plan, and to make
all other determinations necessary or advisable in the administration of the
Plan.
Section 6. Shares Subject to the Plan. The maximum aggregate number of
shares in respect to which Options may be granted is 2,500,000 shares of Stock.
The aggregate number of shares which may be subject to Options granted to any
one Key Employee under the Plan shall not exceed 1,000,000. The maximum
aggregate number of shares which may be granted under the Plan or to any one Key
Employee is subject, however, to increase or decrease pursuant to the provisions
of Section 13. More than one Option may be granted to the same Key Employee. If
any Option will terminate for any reason without having been exercised in full,
the shares applicable to the unexercised portion of the Option will become
available for other Options under this Plan, unless the Plan is then terminated.
The Plan will continue for a period of ten (10) years from the date upon which
it is adopted; provided however, that the Board may terminate the Plan at any
time within its absolute discretion. No such termination, other than as provided
for in Sections 1 and 14, will in any way affect any Option then outstanding.
Section 7. Number of Shares. Subject to the express provision of the Plan,
the Committee will determine the number of shares to be covered by any Option
granted to an Optionee provided, however, that the aggregate Fair Market Value
(determined as of the time the Option is granted) of the Stock for which any Key
Employee may exercise Incentive Stock Options in any calendar year (under any
plans of the Company or any Subsidiary Corporation) will not exceed $100,000.
Section 8. Option Price. The option price of the shares under each Option
shall be set by the Committee at the time of grant and, subject to Section 4,
such option price will not be less than the Fair Market Value of the shares on
the date of the grant of the Option.
Section 9. Exercise of Options. (a) Subject to the provisions of Sections
1 and 14, each Option will become exercisable at such times and in such
installments as the Committee will provide in the terms of the option agreement;
provided, however, that the Committee may, on terms and conditions as it may
determine to be appropriate, accelerate the time at which such Option or any
portion thereof may be exercised.
(b) The Option will be exercised by the Optionee's giving written notice to
the Company's Corporate Secretary specifying (i) the number of full shares to be
purchased and (ii) the method of payment, in accordance with Section 10. Where
an Option is being exercised at any time only in part, not less than fifty (50)
shares will be covered by any such partial exercise.
Section 10. Payment of the Option Price and Taxes. (a) Full payment of the
option price for the number of shares specified in the notice of exercise
delivered pursuant to Section 9 shall accompany such notice of exercise.
Additionally, in the case of the exercise of a Non-Qualified Option, the
Optionee shall deliver to the Company, or make arrangements satisfactory to the
Company, for the payment of any
A-2
<PAGE> 27
withholding or other taxes which are required to be paid by or collected on
behalf of the Optionee by reason of the exercise.
(b) The option price and required withholding or other taxes may be paid
(i) in cash or certified check; (ii) by delivery to the Company of shares of
Stock with a Fair Market Value on the exercise date equal to the option price
and any required withholding or other taxes; or (iii) by any combination of (i)
or (ii).
Section 11. Termination of the Option. Each Option will specify a date
upon which the Option will terminate if it has not then been exercised in full.
The termination date will, in each instance, be fixed by the Committee, but in
no event will an Option permit the exercise thereof after the earlier of
termination of the Option as described in Sections 1 or 14 hereof or ten (10)
years from date of grant.
Section 12. Non-Transferable. No Option will be assignable or transferable
except by will or by laws of descent and distribution. Any other attempted
assignment or transfer, or any attempted pledge, hypothecation or other
disposition of, or levy of any execution, attachment or similar process upon any
Option will be null and void and without effect. During the lifetime of an
Optionee, the Option will be exercisable only by the Optionee.
Section 13. Change in Capitalization. If the outstanding shares of Stock
are increased, decreased, or changed into, or exchanged for a different number
or kind of shares or securities of the Company, without receipt of consideration
by the Company, through reorganization, merger, recapitalization,
reclassification, stock split, stock dividend, stock consolidation, or
otherwise, an appropriate and proportionate adjustment will be made in the
number and kind of shares as to which Options may be granted. A corresponding
adjustment changing the number or kind of shares and the exercise price per
share allocated to unexercised Options, or portions thereof, which will have
been granted prior to any such change will likewise be made. Any such
adjustment, however, in an outstanding Option will be made without change in the
total price applicable to the unexercised portion of the Option, but with a
corresponding adjustment in the number of shares and price for each share
subject to the Option. Adjustments under this Section will be made by the Board
or the Committee, whose determination as to what adjustments will be made, and
to the extent thereof, will be final and conclusive. No fractional shares of
Stock will be issued under the Plan on account of any such adjustment.
Section 14. Mergers or Consolidations. Not less than thirty (30) days
prior to the dissolution or liquidation of the Company or a reorganization,
merger or consolidation of the Company with one or more corporations as a result
of which the Company will not be the surviving or resulting corporation, or a
sale of substantially all of the assets of the Company to another person, or a
reverse merger in which the Company is the surviving corporation but the shares
of the Stock outstanding immediately preceding the merger are to be converted by
virtue of the merger to other property (a "Terminating Event"), the Board or the
Committee will notify each Optionee of the pendency of the Terminating Event.
Upon delivery of the notice, any Option granted prior to the Terminating Event
will be exercisable in full. Upon the date thirty (30) days after delivery of
the notice, any Option or portion thereof not exercised will terminate, and upon
the effective date of the Terminating Event, the Plan will terminate, unless
provision is made in connection with the Terminating Event for assumption of
Options previously granted, or substitution for such Options of new options
offering stock of a successor employer corporation, or a parent or subsidiary
corporation thereof, solely at the option of the successor corporation or parent
or subsidiary corporation, with appropriate adjustments as to the number and
kind of shares and prices.
Section 15. Disposition of Shares. Any Optionee who acquires Stock
pursuant to an Option will, so long as he or she remains an employee of the
Company or Subsidiary Corporation, be obligated to advise the Company in the
case of each sale or other disposition of any Stock so acquired, such advice to
be given to the Company immediately upon the occurrence of any such sale or
other disposition.
Section 16. Option Agreement. Each Option granted will be evidenced by a
written stock option agreement executed by the Company, and will contain each of
the provisions and agreements herein specifically required to be contained
therein, and in addition it may contain other terms and conditions as the
Committee may deem desirable and which are not inconsistent with the Plan.
A-3
<PAGE> 28
Section 17. Qualification of Plan. It is intended that each Incentive
Stock Option to be issued under this Plan will qualify as and be subject to
exercise only to the extent that it does qualify as an "incentive stock option"
as defined in Section 422 of the Code. The Board may make any amendment to the
Plan which, in the opinion of the counsel of the Company, will be required to
obtain or maintain such conformity.
Section 18. Amendment of Plan. The Board may make changes in the Plan, and
with consent of the Optionee, in the terms and conditions of his or her Option,
as it will deem advisable, but may not, without the approval of the shareholders
of the Company: (a) increase the maximum number of shares of Stock subject to
the Plan (except as may be done pursuant to Section 13); (b) decrease the
minimum option price requirement contained in Section 8 (except as may be done
pursuant to Section 13); (c) extend the term of the Plan or the term of any
Option beyond 10 years; (d) decrease the option price applicable to any Option
granted under the Plan (except as may be done pursuant to Section 13); (e)
withdraw the administration of the Plan from the Committee; (f) permit any
member of the Committee to be eligible to hold or receive Options under the
Plan; or (g) alter any outstanding Option agreement to the detriment of the
Optionee, without the consent of the Optionee (except as may be done pursuant to
Section 13).
Section 19. Type of Option Granted. Both Incentive Stock Options and
Non-Qualified Stock Options may be granted under the Plan. The Committee, at its
sole discretion, will determine whether an Option granted under the Plan to a
Key Employee will be an Incentive Stock Option or a Non-Qualified Stock Option.
The Committee may make such determination in any manner that it chooses,
including but not limited, to, an option-by-option or employee-by-employee
basis. The Committee will, at the time of grant, clearly designate the intended
nature of any Option granted, whether as an Incentive Stock Option or Non-
Qualified Stock Option.
Section 20. Applicable Law; Severability; Interpretation. The Plan will be
construed, administered, and governed in all respects in accordance with the
laws of the State of Georgia; provided, however, that if any provision is
susceptible to more than one interpretation, it will be interpreted in a manner
consistent with the Plan being an incentive stock option plan under Section 422
of the Code. If any provision of the Plan will be held by a court of competent
jurisdiction to be invalid or unenforceable, the remaining provisions of the
Plan will continue to be fully effective. For purposes of this Plan, references
to the masculine shall include the feminine, reference to the singular shall
include the plural, and references to the plural shall include the singular.
Section 21. Shares Reserved. The Company will at all times during the term
of the Plan reserve and keep available the number of shares of Stock as will be
sufficient to satisfy the requirements of the Plan, and will pay all fees and
expenses necessarily incurred by the Company in connection therewith.
Section 22. No Shareholder Rights. No Optionee shall have any rights as a
shareholder of the Company as a result of the grant of an Option to him or her
under this Plan or his or her exercise of such Option pending the actual
delivery of Stock subject to such Option to such Optionee.
Section 23. No Contract of Employment. The grant of an Option under this
Plan shall not constitute a contract of employment and shall not confer on an
Optionee any rights in connection with the termination of his or her employment
in addition to those rights, if any, expressly set forth in the option agreement
which evidences his or her Option.
Section 24. Titles. Titles are provided in this Plan for convenience only
and are not to serve as a basis for interpretation or construction of the Plan.
A-4
<PAGE> 29
On this 4th day of February, 1997, I hereby certify that the foregoing Plan
was duly adopted by the Board on this date.
/s/ JUDD F. OSTEN
--------------------------------------
Judd F. Osten
Corporate Secretary
(Corporate Seal)
On this day of , 1997, I hereby certify that the foregoing
Plan was duly approved by the shareholders on , 1997.
--------------------------------------
Judd F. Osten
Corporate Secretary
(Corporate Seal)
A-5
<PAGE> 30
APPENDIX B
CRAWFORD & COMPANY
1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
Section 1. Plan Established. Crawford & Company, a Georgia corporation,
hereby adopts as of the 4th day of February, 1997, this 1997 Non-Employee
Director Stock Option Plan, pursuant to which Non-Employee Directors of the
Company shall be granted Options to purchase shares of the Class A Common Stock
of the Company; provided that no Option shall be granted under the Plan until
shareholder approval of the Plan has been obtained and provided further that the
Plan will terminate if shareholder approval is not received for the Plan within
twelve (12) months after the date first written above.
Section 2. Purpose of Plan. The purpose of the Plan is to strengthen the
Company by providing to Non-Employee Directors added incentives for high levels
of performance and to encourage stock ownership in the Company on a basis
consistent with that provided to key employees, including employee directors,
under the Company's stock option and stock purchase plans. The Plan seeks to
accomplish these goals by providing a means whereby these Non-Employee Directors
shall be given an opportunity to purchase, by way of option, shares of Stock of
the Company.
Section 3. Definitions: (a) "Board" means the Board of Directors of the
Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Company" means Crawford & Company, a Georgia corporation and any
successor to such corporation.
(d) "Fair Market Value" means the closing price for a share of Stock on the
New York Stock Exchange (or if Stock is no longer traded on the New York Stock
Exchange, on the exchange or quotation system which reports or quotes the
closing price for a share of Stock) as accurately reported for any date (or, if
no shares of Stock are traded on such date, for the immediately preceding date
on which shares of Stock were traded) in The Wall Street Journal (or if The Wall
Street Journal no longer reports such price, in a newspaper or trade journal
selected by the Board).
(e) "Non-Employee Director" means any member of the Board who is not, at
the time of grant of an Option, an employee or officer of the Company.
(f) "Option" means any option awarded under this Plan.
(g) "Optionee" means any Non-Employee Director awarded an Option.
(h) "Plan" means this Crawford & Company 1997 Non-Employee Director Stock
Option Plan, as amended from time to time.
(i) "Stock" means the Class A Common Stock of the Company.
Section 4. Eligibility. Each Non-Employee Director shall be eligible to
and shall receive Options on (i) the day of the shareholder meeting of the
Company at which the Plan is approved for all Non-Employee Directors elected or
reelected to the Board at that meeting; (ii) the day of first election to the
Board for all individuals who are not members of the Board on the date of
shareholder approval of the Plan; and (iii) on the day of each annual meeting of
the shareholders of the Company following shareholder approval of the Plan and
in which the Non-Employee Director is reelected to the Board.
Section 5. Grant of Options. Options shall be granted for the indicated
number of shares of Stock to each eligible Non-Employee Director as follows:
(i) 10,000 shares on the day of shareholder approval of the Plan;
(ii) 10,000 shares on the day of first election to the Board; and
(iii) 2,000 shares on the day of re-election to the Board after
shareholder approval of the Plan.
B-1
<PAGE> 31
Section 6. Shares Subject to the Plan. The maximum aggregate number of
shares in respect to which Options may be granted is 300,000 shares of Stock.
The maximum aggregate number of shares is subject, however, to increase or
decrease pursuant to the provisions of Section 13. If any Option will terminate
for any reason without having been exercised in full, the shares applicable to
the unexercised portion of the Option will become available for other Options
under this Plan, unless the Plan is then terminated.
Section 7. Term of Plan. The Plan will continue for a period of ten (10)
years from the date upon which it is approved by the Shareholders of the
Company; provided, however, that the Board or Shareholders may terminate the
Plan at any time within their absolute discretion. No such termination, other
than as provided for in Section 14, will in any way affect any Option then
outstanding.
Section 8. Option Price. The option price of the shares under each Option
shall be the Fair Market Value of the shares on the date of the grant of the
Option.
Section 9. Exercise of Options. Each Option shall be exercisable at any
time after grant and before termination in accordance with Sections 11 and 14 by
delivery to the Company's Corporate Secretary of a notice of exercise, together
with payment in accordance with Section 10.
Section 10. Payment of the Option Price. (a) Full payment of the option
price for the number of shares specified in the notice of exercise delivered
pursuant to Section 9 shall accompany such notice of exercise.
(b) The option price may be paid (i) in cash or certified check; (ii) by
delivery to the Company of shares of Stock with a Fair Market Value on the
exercise date equal to the option price; or (iii) by any combination of (i) or
(ii).
Section 11. Termination of the Option. Subject to Section 14, each Option
shall terminate on:
(i) the date on which the Optionee is no longer a Non-Employee
Director, but only if such date occurs prior to the fifth anniversary of
the grant date of the Option; or
(ii) if the Optionee remains a Non-Employee Director through the fifth
anniversary of the grant date of the Option, on the tenth anniversary of
the grant date of the Option.
Section 12. Non-Transferable. No Option will be assignable or transferable
except by will or by laws of descent and distribution. Any other attempted
assignment or transfer, or any attempted pledge, hypothecation or other
disposition of, or levy of any execution, attachment or similar process upon any
Option will be null and void and without effect. During the lifetime of an
Optionee, the Option will be exercisable only by the Optionee.
Section 13. Change in Capitalization. If the outstanding shares of Stock
are increased, decreased, or changed into, or exchanged for a different number
or kind of shares or securities of the Company, without receipt of consideration
by the Company, through reorganization, merger, recapitalization,
reclassification, stock split, stock dividend, stock consolidation, or
otherwise, an adjustment will be made in the number and kind of shares as to
which Options may be granted and a corresponding adjustment changing the number
or kind of shares and the exercise price per share allocated to unexercised
Options, or portions thereof, which will have been granted prior to any such
change will likewise be made. Any such adjustment, however, in an outstanding
Option will be made without change in the total price applicable to the
unexercised portion of the Option, but with a corresponding adjustment in the
number of shares and price for each share subject to the Option. Adjustments
under this Section will be limited to and be on the same basis as those made
under the Company's 1997 Key Employee Stock Option Plan. No fractional shares of
Stock will be issued under the Plan on account of any such adjustment.
Section 14. Mergers or Consolidations. Not less than thirty (30) days
prior to the dissolution or liquidation of the Company or a reorganization,
merger or consolidation of the Company with one or more corporations as a result
of which the Company will not be the surviving or resulting corporation, or a
sale of substantially all of the assets of the Company to another person, or a
reverse merger in which the Company is the surviving corporation but the shares
of the Stock outstanding immediately preceding the merger are to be
B-2
<PAGE> 32
converted by virtue of the merger to other property (a "Terminating Event"), the
Board shall notify each Optionee of the pendency of the Terminating Event. Upon
the date thirty (30) days after delivery of the notice, any Option or portion
thereof not exercised will terminate, and upon the effective date of the
Terminating Event, the Plan will terminate, unless provision is made in
connection with the Terminating Event for assumption of Options previously
granted, or substitution for such Options of new options offering stock of a
successor employer corporation, or a parent or subsidiary corporation thereof,
solely at the option of the successor corporation or parent or subsidiary
corporation, with appropriate adjustments as to the number and kind of shares
and prices.
Section 15. Disposition of Shares. Any Optionee who acquires Stock
pursuant to an Option will, so long as he or she remains a member of the Board,
be obligated to advise the Company in the case of each sale or other disposition
of any Stock so acquired, such advice to be given to the Company's Corporate
Secretary immediately upon the occurrence of any such sale or other disposition.
Section 16. Option Certificate. Each Option granted will be evidenced by a
written Option Certificate executed on behalf of the Company in the form
attached as Exhibit "A" hereto.
Section 17. Amendment of Plan and Options. The Board may only make changes
in the Plan with the approval of the shareholders of the Company, other than
changes required by the Code, federal securities laws, or rules and regulations
promulgated thereunder. No change in the terms and conditions of any Option may
be made without the consent of the Optionee.
Section 18. Applicable Law; Severability; Interpretation. The Plan will be
construed, administered, and governed in all respects in accordance with the
laws of the State of Georgia. If any provision of the Plan will be held by a
court of competent jurisdiction to be invalid or unenforceable, the remaining
provisions of the Plan will continue to be fully effective. For purposes of this
Plan, references to the masculine shall include the feminine, reference to the
singular shall include the plural, and references to the plural shall include
the singular.
Section 19. Shares Reserved. The Company shall at all times during the
term of the Plan reserve and keep available the number of shares of Stock as
will be sufficient to satisfy the requirements of the Plan, and will pay all
fees and expenses necessarily incurred by the Company in connection therewith.
Section 20. No Shareholder Rights. No Optionee shall have any rights as a
shareholder of the Company as a result of the grant of an Option to him or her
under this Plan or his or her exercise of such Option pending the actual
delivery of Stock subject to such Option to such Optionee.
Section 21. Titles. Titles are provided in this Plan for convenience only
and are not to serve as a basis for interpretation or construction of the Plan.
On this 4th day of February, 1997, I hereby certify that the foregoing Plan
was duly adopted by the Board on this date.
/s/ JUDD F. OSTEN
--------------------------------------
Judd F. Osten
Corporate Secretary
(Corporate Seal)
B-3
<PAGE> 33
On this day of , 1997, I hereby certify that the foregoing
Plan was duly approved by the shareholders on , 1997.
--------------------------------------
Judd F. Osten
Corporate Secretary
(Corporate Seal)
B-4
<PAGE> 34
EXHIBIT "A"
CRAWFORD & COMPANY
1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
STOCK OPTION
(NON-TRANSFERRABLE)
OPTION CERTIFICATE
Effective this day of , (the "Option Grant
Date"), Crawford & Company ("Crawford"), a Georgia corporation, pursuant to the
Crawford & Company 1997 Non-Employee Director Stock Option Plan (the "Plan"),
hereby grants a stock option (the "Option") to ("Optionee") to
purchase from Crawford shares of Crawford non-voting Class A Common
Stock, $1.00 par value ("Stock"), at an option price of $ per share.
This Option is subject to all of the terms and conditions set forth in the Plan,
a copy of which is attached to this Option Certificate.
CRAWFORD & COMPANY
--------------------------------------
Dennis A. Smith,
Chairman and Chief Executive Officer
B-5
<PAGE> 35
[LOGO]
Printed on Recycled Paper
<PAGE> 36
APPENDIX C
CRAWFORD & COMPANY
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 22, 1997. THIS PROXY IS
SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints D. A. Smith, D. R. Chapman and J. F. Osten,
and each of them, proxies with full power of substitution, for and in the name
of the undersigned, to vote all shares of Class B Common Stock of Crawford &
Company which the undersigned would be entitled to vote if personally present at
the Annual Meeting of Shareholders of Crawford & Company to be held in the Home
Office Building of Crawford & Company, 5620 Glenridge Drive, N.E., Atlanta,
Georgia on April 22, 1997 at 2:00 P.M., and at any adjournment thereof, upon the
matters described in the accompanying Notice of Annual Meeting and Proxy
Statement and upon any other business that may properly come before the meeting
or any adjournment thereof, hereby revoking any proxy heretofore executed by the
undersigned to vote at said meeting. Said proxies are directed to vote on the
matters described in the accompanying Proxy Statement as follows, and otherwise
in their discretion:
1. Proposal to elect the nine (9) nominees listed below as Directors (except as
indicated to the contrary below).
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to
(except as indicated to the contrary) vote for all nominees listed below
NOMINEES: Smith, Minix, Lanier, Flather, L. K. Crawford, J. C. Crawford,
Prince, Williams, Wood.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
the name of nominee in the space provided below)
- --------------------------------------------------------------------------------
2. Proposal to approve the adoption of the 1997 Key Employee Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve the adoption of the 1997 Non-Employee Director Stock
Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to approve the appointment of Arthur Andersen LLP as auditors of the
Company for the 1997 fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED ABOVE, OR IF NO DIRECTION IS INDICATED,
WILL BE VOTED "FOR" THE ABOVE PROPOSALS.
(Continued on Reverse Side)
The undersigned acknowledges receipt with this Proxy of a copy of the Notice of
Annual Meeting of Shareholders and the Proxy Statement dated March 26, 1997.
Dated: , 1997
--------------------
--------------------------------
--------------------------------
Signature of Shareholder
IMPORTANT: Please date this
Proxy and sign exactly as your
name or names appear hereon. If
shares are held jointly,
signatures should include both
names. Executors,
administrators, trustees,
guardians and others signing in
a representative capacity,
please give your full title. If
a corporation, please sign in
full corporate name by President
or other authorized officer. If
a partnership, please sign in
partnership name by authorized
person.
