<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934 (AMENDMENT NO. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
AON CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)2 of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes: None
<PAGE>
AON CORPORATION
123 NORTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
- --------------------------------------------------------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS ON APRIL 20, 1995
- --------------------------------------------------------------------------------
The annual meeting of the stockholders of Aon Corporation (the "Company")
will be held at The First Chicago Center, One First National Plaza, Chicago,
Illinois, at 10:00 A.M. on April 20, 1995. This Proxy Statement is being sent
to each holder of the issued and outstanding shares of the Company's Common
Stock ("Common Shares") and each holder of the issued and outstanding shares of
the Company's Series C Cumulative Preferred Stock ("Preferred Shares" and,
together with the Common Shares, the "Shares") entitled to vote at the meeting
in order to furnish information relating to the business to be transacted at
the meeting. The Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1994, including financial statements, is being mailed to
stockholders, together with this Proxy Statement, beginning on or about March
8, 1995. No part of such Annual Report shall be regarded as proxy-soliciting
material or as a communication by means of which any solicitation is made.
We hope that you will be present at the meeting. If you cannot attend, please
complete, sign and send to us the enclosed proxy in the accompanying envelope
so that your shares will be represented. The envelope is addressed to the
Company and requires no postage. You may revoke your proxy at any time before
it is voted at the meeting. Each proxy duly executed and received prior to the
meeting will be voted according to its terms. Stockholders who receive more
than one proxy card--due to the existence of multiple Common Share accounts--
should sign and return all proxies received in order to be sure that all shares
so owned are voted.
If no direction as to the manner of voting the proxy is made, the proxy will
be voted in accordance with the recommendations of the Board of Directors set
forth herein.
The Company will bear the cost of the preparation and solicitation of
proxies, including the reasonable charges and expenses of brokerage firms or
other nominees for forwarding proxy material to beneficial owners of Common
Shares. In addition to solicitation by mail, proxies may be solicited by
telephone, by facsimile, or personally by certain officers and regular
employees of the Company and its subsidiaries without extra compensation. The
Company has retained Georgeson & Co., 100 Wall Street, New York, New York to
aid in the solicitation of proxies for a fee estimated at $7,500. The enclosed
proxy is solicited by and on behalf of the Board of Directors.
1
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on February 28, 1995, the record date fixed for
determination of stockholders entitled to vote at the meeting, there were
Common Shares and 1,000,000 Preferred Shares outstanding, each entitled to one
vote.
As of February 28, 1995, the only persons known by the Company to be a
beneficial owner of 5% or more of any class of the Company's voting securities
were:
<TABLE>
<CAPTION>
Percent of
Name and Address No. of Common Shares Class
---------------- ----------------------- ----------
<S> <C> <C>
Patrick G. Ryan
c/o Aon Corporation
123 N. Wacker Drive
Chicago, Illinois 60606
<CAPTION>
Percent of
Name and Address No. of Preferred Shares Class
---------------- ----------------------- ----------
<S> <C> <C>
Jessie V. Stone
445 Sheridan Rd.
Winnetka, IL 60093
W. Clement Stone
W. Clement Stone
Enterprises, Inc.
P.O. Box 649
Lake Forest, IL 60045
</TABLE>
- --------
(1) Includes Common Shares owned by Ryan Enterprises Corporation of
Illinois or its wholly-owned subsidiaries ("REC"), Common Shares owned
by Ryan Holding Corporation of Illinois or its wholly-owned subsidiaries
("RHC") and shares owned by the Company's Employee Stock Ownership Plan
and allocated to Mr. Ryan. Mr. Ryan, his wife and his children own all of
the outstanding common stock of REC and RHC, and Mr. and Mrs. Ryan and two
of their sons are the sole Directors of REC and RHC. Accordingly, the
Common Shares held by REC and RHC are included in the shares beneficially
owned by Mr. Ryan. Also includes Common Shares held of record and
beneficially owned by Mr. Ryan's spouse. Mr. Ryan disclaims any beneficial
interest in these shares. Under the terms of the Employee Stock Ownership
Plan, Mr. Ryan is entitled to direct the manner in which the Plan's
Trustees will vote the shares allocated to Mr. Ryan.
ELECTION OF DIRECTORS
Unless a proxy directs to the contrary, it is intended that the proxies will
be voted for the election as Directors of the fifteen nominees named on the
following pages to hold office until the next succeeding annual stockholders'
meeting or until their respective successors are duly elected and qualify. All
the nominees are currently Directors of the Company except Mr. Jannotta, who
has been nominated for the first time. While management has no reason to
believe that any of the nominees will not be available to serve as a Director,
if for any reason any of them should become unavailable, the proxies will be
voted for such substitute nominees as may be designated by the Board of
Directors. The directors shall be elected by the vote of the majority of votes
present in person or represented by proxy at the meeting. Accordingly, since
votes withheld will count as present at the meeting (and will therefore also
count towards the establishment of a quorum), a vote withheld for a nominee
will adversely effect that nominee's ability to secure the necessary majority
of the votes present at the meeting.
Set forth on the following pages is biographical information concerning each
management nominee for election as a Director, the nominee's principal
occupation, the period during which the nominee has served as a Director of the
Company including service as a Director or employee of Combined
2
<PAGE>
Insurance Company of America, ("Combined Insurance") or Ryan Insurance Group,
Inc. ("Ryan Group"), which are subsidiaries of the Company. Ages shown for all
directors are as of December 31, 1994. There are no nominees for the Board
other than the management nominees.
- --------------------------------------------------------------------------------
PATRICK G. RYAN Director since 1965
Patrick G. Ryan has been Chairman of the Board of the Company since 1990 and
President and Chief Executive Officer of the Company since the merger of the
Company and Ryan in 1982. Prior to the merger, Mr. Ryan served as Chairman of
the Board and Chief Executive Officer of Ryan Group. Mr. Ryan is a Director of
First Chicago Corporation and its wholly owned subsidiary, The First National
Bank of Chicago. He is a Trustee of Rush-Presbyterian-St. Luke's Medical Center
and Northwestern University.
Age: 57
- --------------------------------------------------------------------------------
DANIEL T. CARROLL Director since 1980
Mr. Carroll is Chairman and President of The Carroll Group, Inc. From early
1980 until early 1982 he was President and Chief Executive Officer and a
Director of Hoover Universal, Inc. From 1975 until early 1980 he was President
of Gould Inc. He is a Director of A. M. Castle Co., American Woodmark
Corporation, Comshare, Inc., DeSoto, Inc., Diebold, Inc., Michigan National
Bank, Michigan National Corporation, Oshkosh Truck Corporation, UDC Homes,
Inc., Wolverine World Wide, Inc. and Woodhead Industries, Inc. He serves as a
member of the Organization & Compensation and Nominating Committees.
Age: 68
- --------------------------------------------------------------------------------
FRANKLIN A. COLE Director since 1984
Mr. Cole, since 1984, has been Chairman of Croesus Corporation, a personal
investment company. From 1971 to 1984 he was Chairman and Chief Executive
Officer of Walter E. Heller International Corporation (renamed Amerifin
Corporation in January 1984), a worldwide diversified financial services
company. Mr. Cole is also a Director of American National Corporation and its
subsidiary, American National Bank and Trust Company of Chicago, CNA Income
Shares, Inc., Duff & Phelps Utilities Income Inc., GATX Corporation, Local
Initiatives Support Corporation and Peoples Energy Corporation. He is Vice
Chairman of the Board of Trustees of Northwestern University, past President
and a Director of the Chicago Central Area Committee and Chairman of The
Chicago Human Relations Foundation. He is a member of the Investment and Audit
Committees and serves as a Director of the Aon Foundation.
Age: 68
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
EDGAR D. JANNOTTA
Mr. Jannotta joined William Blair & Company in May 1959 as an Associate, became
a Partner in January 1965, Assistant Managing Partner in June 1973, Managing
Partner in September 1977, and Senior Partner in January 1995. He is a director
of AAR Corp., Bandag, Incorporated, Commonwealth Edison Company, Encyclopedia
Britannica, Inc., Molex Incorporated, New York Stock Exchange, Inc., Oil-Dri
Corporation of America, Safety-Kleen Corp., and Sloan Valve Company.
- --------------------------------------------------------------------------------
PERRY J. LEWIS Director since 1972
Mr. Lewis is a Managing Director of Morgan Lewis Githens & Ahn, Inc., a New
York investment banking firm. Until October 1, 1979, Mr. Lewis was Senior Vice
President and a Director of Smith Barney, Harris Upham & Co., Inc. He is a
Director of Haynes International, Inc., Broadcasting Partners, Inc., Quaker
Fabric Corporation, Tyler Corporation and Stuart Entertainment, Inc. He serves
as a member of the Investment and Executive Committees.
Age: 57
- --------------------------------------------------------------------------------
JOAN D. MANLEY Director since 1984
From 1960 to 1984, Mrs. Manley was with Time Incorporated, serving as a Group
Vice-President from 1975 onwards and as a Director from 1978 to 1984. She is
also a Director of BFP Holdings, Inc., Sara Lee Corporation, Scholastic, Inc.,
and Viking Office Products, Inc. She sits on the boards of the Keystone Center
and The Summit Foundation. She serves as Chairman of the Nominating Committee
and is a member of the Audit Committee.
Age: 62
- --------------------------------------------------------------------------------
ANDREW J. MCKENNA Director since 1970
Mr. McKenna served as a Director of Ryan Group from 1970 until 1982 when he was
elected to the Board of Directors of the Company. He is Chairman, President and
Chief Executive Officer of Schwarz Paper Company, a distributor and printer of
packaging materials, and a Director of Dean Foods Company, First Chicago
Corporation and its wholly owned subsidiary, The First National Bank of
Chicago, McDonald's Corporation, Skyline Corporation, The Tribune Company and
the Board Governors of the Chicago Stock Exchange. He is Chairman of the Board
of Trustees of the University of Notre Dame and Vice Chairman of the Board of
Trustees of the Museum of Science and Industry. Mr. McKenna is also a Director
of Children's Memorial Hospital and the Association of Governing Boards of
Universities and Colleges. He serves as a member of the Investment and
Organization and Compensation Committees.
Age: 65
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
NEWTON N. MINOW Director since 1990
Mr. Minow is Counsel to the Chicago law firm of Sidley & Austin where he served
as Partner from 1965 to 1991. He served as Chairman of the Federal
Communications Commission from 1961 to 1963. He is a director of Foote, True
North Communications, Inc., Manpower, Inc., Sara Lee Corporation and the
Tribune Company. Mr. Minow is also Chairman of the Carnegie Corporation of New
York, a Trustee and former Chairman of the Board of Trustees of The RAND
Corporation, and former Chairman of the Board of Governors of the Public
Broadcasting Service. He is a Life Trustee of Northwestern University, a
Trustee of the University of Notre Dame and Director of the Annenberg
Washington Program of Northwestern University. He serves as a member of the
Audit and Investment Committees.
Age: 68
- --------------------------------------------------------------------------------
PEER PEDERSEN Director since 1974
Mr. Pedersen is an attorney at law and Chairman of the Board of the Chicago law
firm of Pedersen & Houpt, P.C. He is a Director of Arrington Travel Center;
Boston Chicken, Inc.; Chemical Waste Management, Inc.; Chr. Hansen's
Laboratory, Inc.; Discovery Zone, Inc.; H20 Plus, Inc.; HPBM, Inc.; Orange &
Blue Distributing Company, Inc.; Peterson Products Corporation; Spraying
Systems Co.; Tempel Steel Company; Tennis Corporation of America; WMX
Technologies, Inc.; Western Cities Broadcasting, Inc.; and the Western Golf
Association. He also serves on the Board of Children's Memorial Hospital; St.
Joseph Carondelet Child Care, Rehabilitation Institute of Chicago and the Boys
and Girls Clubs of Chicago and is President of the Robert R. McCormick Boys and
Girls Club of Chicago. He serves as Chairman of the Audit Committee and is a
member of the Organization & Compensation Committee.
Age: 69
- --------------------------------------------------------------------------------
DONALD S. PERKINS Director since 1983
Mr. Perkins retired from Jewel Companies Inc. in 1983. He had been with Jewel
since 1953, serving as President from 1965 to 1970, as Chairman of the Board of
Directors from 1970 to 1980, and as Chairman of the Executive Committee until
his retirement. He is a Director of American Telephone and Telegraph Company,
Cummins Engine Company, Inc., Illinova, Inland Steel Industries, Inc., K-mart
Corporation, LaSalle Street Fund, Inc., The Putnam Funds, Springs Industries,
Inc., and Time Warner, Inc. He is Vice Chairman of the Board of Trustees of
Northwestern University and Chairman of the Health Research and Education
Trust. He serves as Chairman of the Organization and Compensation Committee and
is a member of the Investment Committee.
Age: 67
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
JOHN W. ROGERS, JR. Director since 1993
Mr. Rogers is President and founder of Ariel Capital Management, Inc., an
institutional money management firm. Mr. Rogers is a director of American
National Bank and Trust Company of Chicago, Burrell Communications, Inc., and
Morrison Knudsen Corporation. In addition to serving as President of the board
of the Chicago Park District, John serves as a director of the Chicago Urban
League, The National Association of Securities Dealers, The Chicago Symphony
Orchestra and is a Trustee of Rush Presbyterian-St. Lukes Medical Center. He is
a member of the Audit and Investment Committees.
Age: 36
- --------------------------------------------------------------------------------
GEORGE A. SCHAEFER Director since 1991
Mr. Schaefer served as Chairman and Chief Executive Officer of Caterpillar Inc.
from 1985 until his retirement in July, 1990. Mr. Schaefer is a director of
Caterpillar Inc., Helmerich & Payne, Inc., McDonnell Douglas Corporation and
Morton International, Inc. He is a member of The Business Council. He serves as
a member of the Audit and Organization and Compensation Committees.
Age: 66
- --------------------------------------------------------------------------------
RAYMOND I. SKILLING Director since 1977
Mr. Skilling is an attorney at law and a Solicitor of the English Supreme
Court. He serves as Executive Vice President and Chief Counsel of the Company.
He is a member of the Executive Committee. He has been employed by the Company
since 1976, prior to which he was a partner in the international law firm now
called Clifford Chance, headquartered in London, England. Mr. Skilling has been
a legal advisor to the Company since 1967.
Age: 55
- --------------------------------------------------------------------------------
FRED L. TURNER Director since 1991
Mr. Turner is Senior Chairman, Chairman of the Executive Committee and a
Director of McDonald's Corporation. Mr. Turner joined McDonald's Corporation in
1956 and assumed his current position in 1990, after serving that Company as
Chairman of the Board and Chief Executive Officer. Mr. Turner is also a
director of Baxter International, Inc., W.W. Grainger, Inc. and Ronald McDonald
Children's Charities. He serves as a member of the Audit Committee and is
Chairman of the Investment Committee.
Age: 61
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
ARNOLD R. WEBER Director since 1991
Dr. Weber served as President of Northwestern University from 1985 until .
In 1995 he became Chancellor of Northwestern. From 1980 to 1985, Dr. Weber was
President of the University of Colorado. Dr. Weber has also held various senior
government positions including Executive Director of the Cost of Living Council
and Associate Director of the Office of Management and Budget. He is a director
of Burlington Northern Inc., Household Receivables Funding Corporation, Inland
Steel Industries, Inc., PepsiCo, Inc., John Deere and the Tribune Company. He
serves as a member of the Investment and the Organization and Compensation
Committees.
Age: 65
- --------------------------------------------------------------------------------
OWNERSHIP OF COMMON STOCK BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of Common Shares beneficially owned
February 28, 1995 by each Director including the Company's Chief Executive
Officer, Patrick G. Ryan and Raymond I. Skilling, who is one of the Company's
other four most highly compensated executive officers, by each of the other
three most highly compensated executive officers, and by all Directors and
Executive Officers as a group. As used in this Proxy Statement, "beneficially
owned" means the sole or shared power to vote or direct the voting of a
security and/or sole or shared investment power with respect to a security
(i.e. the power to dispose or direct the disposition of a security). The table
therefore does not include the "phantom stock" shares held by outside directors
under the Outside Director Deferred Compensation and Stock Award Plans. See
"Compensation of Directors" for a description of these plans and the Outside
Directors' interest therein.
<TABLE>
<CAPTION>
No. of Shares Percent of
Beneficially Owned(1) Class(2)
--------------------- ----------
Directors
- ---------
<S> <C> <C>
Patrick G. Ryan...............................
Daniel T. Carroll.............................
Franklin A. Cole..............................
Perry J. Lewis................................
Joan D. Manley................................
Andrew J. McKenna.............................
Newton N. Minow...............................
Peer Pedersen.................................
Donald S. Perkins.............................
John W. Rogers, Jr............................
George A. Schaefer............................
Raymond I. Skilling...........................
John E. Swearingen............................
Fred L. Turner................................
Arnold R. Weber...............................
<CAPTION>
Executive Officers
- ------------------
<S> <C> <C>
Michael A. Conway.............................
Daniel T. Cox.................................
Harvey N. Medvin..............................
All Directors and Executive Officers as a
group (18 persons)...........................
</TABLE>
7
<PAGE>
- --------
(1) The Directors and Executive Officers, and all Directors and Executive
Officers of the Company as a group, have sole voting power and sole
investment power over the Common Shares listed, except as indicated in note
(3) and in the table below:
<TABLE>
<CAPTION>
Number of
Common Voting Investment
Shares Power Power
--------- ------ ----------
<S> <C> <C> <C>
Patrick G. Ryan.................................
Franklin A. Cole................................
All Directors and Executive Officers as a group
(other than as indicated in note (3))..........
</TABLE>
(2) An asterisk indicates that the percentage of shares beneficially owned by
the named individual does not exceed one percent (1%) of the Company's
shares.
(3) Includes the following Common Shares beneficially owned by immediate family
of the nominees: by Mrs. Ryan; by Mrs. Minow; and by Mrs.
Skilling. (Mrs. Skilling and Mrs. Ryan are sisters.) As to the Common
Shares so held, the nominees disclaim beneficial ownership.
Also includes Common Shares beneficially owned directly or through
trusts by members of the immediate families of executive officers who are
not nominees. As to such Common Shares, such executive officers disclaim
beneficial ownership.
(4) Includes beneficial interest in the allocated portion of the Aon
Corporation Employee Stock Ownership Plan ("ESOP"), but excludes beneficial
interest in the Aon Corporation Savings Plan (the "Savings Plan") and the
unallocated portion of the ESOP. Unallocated shares owned by the ESOP and
shares owned by the Savings Plan, which are owned for the benefit of all
participating employees, totalled Common Shares as of January 31, 1995.
The Common Shares owned by the plans (other than the allocated portion of
the ESOP, which has pass-through voting rights) are voted by the respective
plans' trustees. The ESOP requires that such trustees vote all unallocated
shares in the same proportions as such trustees were directed by the plan
participants to vote the allocated shares.
(5) Excludes Common Shares held in trust for which Mr. Perkins is a trustee
and has shared voting and investment power. As to the Common Shares so
held, Mr. Perkins disclaims beneficial ownership.
COMPENSATION OF THE BOARD OF DIRECTORS
Each Director who is not a salaried employee of the Company or any of its
subsidiaries receives a $20,000 yearly retainer for services to the Board of
Directors. In addition, the Chairman of the Organization and Compensation,
Audit and Investment Committees, respectively, receives an additional $2,500
annually for services in such capacities. In addition to the above retainers,
Directors who are not salaried employees of the Company or any of its
subsidiaries receive $750 for each Board and Board Committee meeting attended.
Under the Aon Outside Director Stock Award Plan, non-employee directors are
granted 300 Common Shares each year following their election at the Annual
Meeting of Stockholders (any director elected to the Board other than at the
Annual Stockholders' Meetings receives a pro rata number of Common Shares).
Directors may elect to defer receipt of the Common Shares and instead maintain
a phantom stock account. "Dividends" earned on the share equivalent balance in
the phantom stock account are treated as though reinvested, and directors may
choose a time and schedule for pay-out of the phantom stock account in Common
Shares plus the cash equivalent of any fractional shares. Officers of the
Company (or its subsidiaries) receive no additional compensation for membership
on the Board of Directors or any of its Committees.
Directors may elect to defer cash compensation earned pursuant to the Outside
Director Deferred Compensation Plan (the "Plan"). Under the Plan, Directors
elect that portion of the annual retainer and fees (collectively referred to as
"Fees") which will be credited to either a cash account, the earnings of
8
<PAGE>
which are based on one-year Treasury bills, or a stock account whose value is
based upon the performance of the Common Shares on a dividend reinvested basis.
The cash account is a bookkeeping device only and no funds are actually
invested or set aside for the directors' benefit. The Directors' stock accounts
are credited with the number of phantom shares that could have been purchased
at the average of the high and low price of the Common Share on the date the
Fees are earned. The phantom stock account does not consist of actual shares,
but is maintained for bookkeeping purposes only. As dividends are declared on
the Common Shares, each Director's phantom stock account, for bookkeeping
purposes, is credited with the dividends which would have been earned if Common
Shares had been purchased and the funds so credited are treated as if
reinvested in Common Shares. Each participating Director specifies a payout
schedule, including a commencement date, pursuant to which the Company will
distribute to the Director the amount in the Director's cash account and the
cash equivalent of the amount in the Director's phantom stock account.
The following table shows, as of February 28, 1995, the total number of
phantom shares of Common Stock credited to directors under the Outside Director
Deferred Compensation Plan and the number of Common Shares credited to the
director's phantom stock account under the Aon Corporation Outside Director
Stock Award Plan, in each case as described above.
<TABLE>
<CAPTION>
Number of
Phantom
Shares
---------
<S> <C>
Daniel T. Carroll...............................................
Franklin A. Cole................................................
Perry J. Lewis..................................................
Joan D. Manley..................................................
Andrew J. McKenna...............................................
Newton N. Minow.................................................
Peer Pedersen...................................................
Donald S. Perkins...............................................
John W. Rogers, Jr..............................................
Fred L. Turner..................................................
Arnold R. Weber.................................................
</TABLE>
In 1994 the Company established an Outside Director Bequest Plan (the
"Bequest Plan"). The purpose of the Bequest Plan is to acknowledge the service
of directors, to recognize the mutual interest of the Company and its directors
in supporting worthy charitable institutions and to assist the Company in
attracting and retaining directors of the highest caliber. The Company is
funding the program primarily through life insurance policies on its directors.
The charitable donations by the Company will be directed to charitable
institutions designated by the directors. The plan is designed so that when the
Company receives life insurance proceeds as a result of the deaths of specified
directors, it will then donate $1,000,000 per director in the name of the
director to designated tax qualified institution(s). Individual directors
derive no financial benefit from the Plan since all insurance proceeds and tax
deductible charitable donations accrue solely to the Company. A Director is not
eligible to participate in the plan until he or she has completed one full year
of service on the Board and the Board retains at all times the right to
terminate the Bequest Plan and to decline to make any requested bequest if in
the Board's judgment doing so is in the best interests of the Company and its
stockholders.
9
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has appointed standing committees,
including Executive, Audit, Organization and Compensation, Investment and
Nominating Committees. Membership on the Committees is as follows:
<TABLE>
<CAPTION>
Organization and
Executive Audit Investment Compensation Nominating
--------- ----- ---------- ---------------- ----------
<S> <C> <C> <C> <C>
Patrick G. Ryan(1) Peer Pedersen(1) Fred L. Turner(1) Donald S. Perkins(1) Joan D. Manley(1)
Perry J. Lewis Franklin A. Cole Franklin A. Cole Daniel T. Carroll Daniel T. Carroll
Raymond I. Skilling Joan D. Manley Perry J. Lewis Andrew J. McKenna John E. Swearingen
Newton N. Minow Andrew J. McKenna Peer Pedersen
John W. Rogers, Jr. Newton N. Minow George A. Schaefer
George A. Schaefer Donald S. Perkins Arnold R. Weber
Fred L. Turner John W. Rogers, Jr.
John E. Swearingen
Arnold R. Weber
</TABLE>
- --------
(1) Chairman.
When the Board of Directors is not in session, the Executive Committee is
empowered to exercise such powers and authority in the management of the
business and affairs of the Company as would be exercised by the Board of
Directors, subject to certain exceptions. The Executive Committee did not meet
during 1994 but did act by Unanimous Written Consent on occasions.
The Audit Committee provides assistance to the Board of Directors in
discharging its responsibilities in connection with the financial and
accounting practices of the Company and the internal controls related thereto,
and represents the Board of Directors in connection with the services rendered
by the Company's independent auditors. The Audit Committee met 3 times during
1994.
The Investment Committee is responsible for the formation of broad investment
policy applicable to the operating subsidiaries of the Company. This policy is
implemented by all subsidiaries based on the specific financial requirements of
the individual units. The Investment Committee met 5 times during 1994.
The Nominating Committee recommends nominees to the Board to fill vacancies
or as additions to the Board of Directors. Although the Committee does not
specifically solicit suggestions from stockholders as to possible candidates,
the Committee will consider stockholders' recommendations. Suggestions,
together with a description of the proposed nominee's qualifications,
stockholdings in the Company, other relevant biographical information, and an
indication of the willingness of the proposed nominee to serve, should be sent
to the Corporate Secretary of the Company. Suggestions may be submitted at any
time of year but should be received by November 15 of each year in order to be
considered in connection with the regular annual meeting of the Company's
stockholders in the spring of the following year. The Nominating Committee did
not meet in 1994, but did meet in January 1995, at which time it recommended to
the Board that the Board nominate Mr. Jannotta to fill the vacancy that would
result from Mr. Swearingen's retirement, which will become effective as of
April 20, 1995.
The Organization and Compensation Committee annually reviews and makes
recommendations to the Board of Directors regarding the compensation of the
Chairman, President and Chief Executive Officer of the Company. The
Organization and Compensation Committee also reviews, advises and consults with
the President and Chief Executive Officer on the compensation of other officers
and key employees and as to the Company's policy on compensation. The
Organization and Compensation Committee also administers the Company's Stock
Option Plan, Stock Award Plan and Deferred Compensation Plan, including
granting stock options and stock awards and interpreting the plans, and has
general oversight responsibility with respect to the Company's other employee
benefit programs. In addition, the Organization and Compensation Committee also
renders advice and counsel to the Chairman, President and Chief Executive
Officer on the selection of senior officers of the Company and key executives
of the Company's major subsidiaries. The Organization and Compensation
Committee met 5 times during 1994.
10
<PAGE>
During 1994, all incumbent Directors attended at least 75% of the meetings of
the Board and all committees of the Board on which the respective Directors
served. The Board of Directors met seven times during 1994.
EXECUTIVE COMPENSATION
The following table discloses compensation received by the Company's Chief
Executive Officer and the four most highly paid executive officers (the "Named
Executives") for the three fiscal years ended December 31, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Other
Annual Restrictive Long-term All
Compen- Stock Incentive Compen-
Name and Principal Salary Bonus sation Award(s) Payouts sation(3)
Position Year $ $ ($)(2) ($)(2) ($) ($)
------------------ ---- ------ ----- ------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Patrick G. Ryan.........
President, Chief
Executive
Officer & Director
Michael A. Conway.......
Senior Vice President &
Senior
Investment Officer
Daniel T. Cox...........
Executive Vice
President
Harvey N. Medvin........
Executive Vice
President, Chief
Financial Officer &
Treasurer
Raymond I. Skilling.....
Executive Vice
President, Chief
Counsel & Director
</TABLE>
- --------
(1) Represents non-cash benefits in excess of $ related to the personal use
of company-owned automobiles and aircraft, miscellaneous personal services,
and memberships in certain clubs and professional associations provided for
business purposes considered to be reasonable and necessary business
expenses of the Company which, in the case of Mr. Ryan for 1994, was in the
total amount of $ , consisting of $ for club memberships, $31,661 for
use of Company aircraft and $ for the use of a Company car and driver.
(2) As of December 31, 1994, the Named Executives held the following number of
unvested shares of restricted stock, the vesting schedule for which and the
market value of which on the dates of grant and as of year-end 1994,
respectively, are set forth below: No dividends are paid on shares of
unvested restricted stock.
<TABLE>
<CAPTION>
Date of
No. Shares Grant December 31, 1994 Vesting
Unvested Value Value Schedule
---------- ------- ----------------- --------
<S> <C> <C> <C> <C>
Michael Conway.................
Daniel Cox.....................
Harvey Medvin..................
Raymond Skilling...............
</TABLE>
(3) The amounts disclosed in this column include:
(a) Company contributions of $ in fiscal 1994 under the Aon Savings
Plan, a defined contribution plan, on behalf of each of the Named
Executives.
11
<PAGE>
(b) Company contributions of $ in fiscal year 1994 under the ESOP, on
behalf of each of the Named Executives.
(c) Company contributions of the following amounts in fiscal 1994 under the
Aon Supplemental ESOP on behalf of Mr. Ryan, $ ; Mr. Conway, $ ; Mr.
Cox, $ ; Mr. Medvin, $ ; and Mr. Skilling, $ .
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES(1)
The following table provides information on stock option exercises in fiscal
1994 by Daniel T. Cox, the only Named executive to have exercised a stock
option during fiscal year 1994, and the value of such officer's unexercised
stock options as of December 31, 1994.
<TABLE>
<CAPTION>
Number of
Options at Value of In-The-Money(2)
Fiscal Year-End Options at Fiscal Year End
Shares Acquired Value(1) ------------------------- ---------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------- ----------- ------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Daniel T. Cox...........
</TABLE>
- --------
(1) Based upon the average high and low price of Aon Corporation Common Shares
as of the date exercised.
(2) Market value of underlying securities at year-end, minus the exercise or
base price.
OPTION GRANTS IN 1994 FISCAL YEAR
During 1994, each Named Executive was granted options to purchase the
Company's common stock. In each case, the option becomes exercisable with
respect to 30% of the total shares subject to option on March 17, 1997, 20% on
each of March 17, 1998 and 1999, and 30% on March 17, 2000. Additional
information regarding these options is set forth in the table below.
<TABLE>
<CAPTION>
Potential
realizable value at
assumed annual
rates of stock
price appreciation
Individual Grants for option term
- ----------------------------------------------------------------------- -------------------
Number of Percent of
securities total options Exercise
underlying granted to or base
option employees price Expiration
Name granted in fiscal year ($/Sh) date 5% 10%
---- ---------- -------------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Patrick G. Ryan.........
Michael A. Conway.......
Daniel T. Cox...........
Harvey N. Medvin........
Raymond I. Skilling.....
</TABLE>
PENSION PLAN TABLE
The following table shows the estimated annual pension benefits payable to a
covered participant at normal retirement age (65 years) under the Company's
qualified defined benefit pension plan, (the "Aon Pension Plan"), as well as
the non-qualified supplemental pension plan, (the "Excess Benefit Plan"). The
Excess Benefit Plan provides benefits that would otherwise be denied
participants by reason of certain Internal Revenue Code limitations on
qualified plan benefits, based on remuneration that is covered under the plans
and years of service with the Company and its subsidiaries:
12
<PAGE>
<TABLE>
<CAPTION>
Years of Service
--------------------------------------------------------------
Remuneration ($) 10 15 20 25 30 35 40
- ---------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000......
400,000......
600,000......
800,000......
1,000,000......
1,200,000......
1,400,000......
1,600,000......
</TABLE>
A participant's remuneration covered by the Aon Pension Plan and the Excess
Benefit Plan is the average of his or her base salary for each fiscal year
prior to 1994, and the aggregate of base salary and certain eligible bonus
payments for the 1994 fiscal year and each fiscal year thereafter, for the five
consecutive calendar plan years during the last ten years of the participant's
career for which such average is the highest or, in the case of a participant
who has been employed for less than five full calendar years, the period of his
or her employment with the Company and its subsidiaries. Covered compensation
and the estimated years of service for each of the Named Executives as of
December 31, 1994 is: Mr. Ryan $ and 16 years; Mr. Conway $ and 20 years;
Mr. Cox $ and 8 years; Mr. Medvin $ and 16 years; and Mr. Skilling $ and
18 years. The annual pension amounts included in the table above are based upon
the following assumptions: (1) amounts are before reductions for Social
Security benefits which, based upon maximum coverage in effect on December 31,
1994, would reduce the annual amounts shown by: 10 years-$ ; 15 years-$ ; 20
years-$ ; 25 years-$ ; 30 years-$ and 40 years-$ , (2) retiring
participants have attained age 65 and are fully vested, and (3) retiring
participants have chosen to have benefits payable as straight life annuities.
ORGANIZATION AND COMPENSATION COMMITTEE REPORT
The Company's executive compensation programs are administered by the
Organization and Compensation Committee of the Board (the "Compensation
Committee"). The Compensation Committee is comprised of six independent non-
employee directors.
The Compensation Committee determines the compensation for the Company's
Chief Executive Officer, Patrick G. Ryan, and for the Company's other four
executive officers, who in 1994 were the Company's most highly paid executives
(collectively the "Named Executives"), and advises and consults with the Chief
Executive Officer regarding the compensation of other officers and key
employees. In 1994, the Named Executives, consisted of, in addition to Mr.
Ryan, Michael A. Conway, Daniel T. Cox, Harvey N. Medvin, and Raymond I.
Skilling. The compensation of the Named Executives other than Mr. Ryan is
determined by the Compensation Committee in consultation with Mr. Ryan.
The Compensation Committee regards the evaluation of the Chief Executive
Officer, Mr. Ryan, as a critical Board of Directors responsibility. Therefore,
Mr. Ryan's compensation is determined following an annual review of the
Company's performance conducted collectively by all non-employee directors of
the Company, which includes each member of the Compensation Committee. During
this review, the outside directors discuss with Mr. Ryan in detail the extent
to which during the most recent fiscal year the Company has achieved certain
goals agreed to by Mr. Ryan and the outside directors at the beginning of such
fiscal year.
The Compensation Committee and the Company believe that compensation of its
executive officers and senior management should be directly and materially
linked with the interests of stockholders. Specifically the compensation
program:
. Rewards executives for long-term strategic management and the enhancement
of stockholder value by providing them with an opportunity to acquire an
appropriate ownership interest in the Company.
13
<PAGE>
. Supports a performance-oriented environment that rewards performance with
respect to Company goals but also Company performance as compared to that
of the performance of comparable companies in the same industry.
. Attracts and retains key executives critical to the long-term success of
the Company.
In order to ensure that the compensation program is competitive, in 19 the
Compensation Committee retained a nationally recognized compensation consultant
(the "Compensation Consultant") unaffiliated with the Company. The Compensation
Consultant developed a compensation peer group (the "Peer Group") which
consists of the companies comprising the peer group used to prepare the
Performance Graph following this Report. The criteria for selecting companies
for the Peer Group were (i) to choose companies whose insurance underwriting or
insurance brokerage business, or mix thereof, most closely resembled that of
the Company's, including, where possible, the Company's principal competitors
and (ii) to restrict the group to a manageable size, thereby facilitating an in
depth analysis of the Peer Group companies' compensation policies and a
comparison thereof to the Company's.
For fiscal year 1994, the compensation program consisted of base salary,
short-term incentive pay (annual bonus arrangements) and long-term incentive
compensation.
BASE SALARY
One of the findings of the Compensation Consultant was that base salaries for
the Named Executives were competitive with those of comparable Peer Group
executives, and, in the aggregate, slightly below the median for the Peer
Group, even though the performance of the Company was favorable in comparison
with that of the Peer Group. In light of these findings, especially in regard
to short-term incentive pay, the Committee determined that a greater focus
should be made with respect to both Annual Bonus Arrangements and Long-Term
Incentive Compensation.
Therefore, the committee decided to keep base salaries essentially at 1993
levels except where performance and relation to the market clearly dictated
otherwise. For 1994, aggregate increase in salaries was 1.06%for the Named
Executives. Retaining base salaries for the Named Executives essentially at
1993 levels provided an opportunity to shift a greater portion of total
compensation for the Named Executives to Annual Bonus Arrangements and Stock
Options.
ANNUAL BONUS ARRANGEMENTS
Each Named Executive was eligible for an annual bonus of up to 60% of Base
Salary. Such annual bonuses for the Named Executives are reported in the
Summary Compensation Table and were based on both objective and to a lesser
degree subjective performance criteria tailored to each individual. Objective
criteria included but were not limited to achievement of profit objectives,
actual versus target annual operating budget performance and actual versus
target revenue growth, either as to the Company as a whole or, for those
executives in charge of a specific operating unit, as to the officer's
particular operating unit. Target annual revenue growth and target annual
operating budgets utilized for purposes of determining annual bonuses were
based on business plans established prior to the beginning of the year.
Subjective performance criteria encompassed evaluation of each officer's
initiative and contribution to overall corporate performance in any special
projects that the officer may have undertaken. For purposes of determining 1993
bonus compensation payable in 1994, goals with respect to certain of these and
other matters, for both the Company as a whole and for certain of the Named
Executives, were agreed to in advance between the Compensation Committee and
the Chief Executive Officer. Although in individual cases, the relative
importance of attaining certain goals in determining each Named Executive's
bonus was weighted, there was no single weighting which applied to all Named
Executives. With respect to the Chief Executive Officer in 1994, the
Compensation Committee placed the greatest weight on certain agreed upon goals
relating to the financial performance of the Company for the 1993 fiscal year.
The Compensation Committee also relied to a lesser extent on the Chief
Executive Officer's achievement of certain non-quantifiable short term goals
14
<PAGE>
that the Board of Directors, the Compensation Committee and the Chief Executive
Officer believed would contribute to the Company's long term performance. No
specific formula was used to determine the Chief Executive Officer's bonus or
the bonus of any of the other four Named Executives.
Early in 1994 the Compensation Committee reviewed the performance in 1993 of
each Named Executive in light of both the objective and subjective criteria
discussed above. In conducting these reviews, the Compensation Committee
discussed with the Chief Executive Officer the performance of each of the other
four Named Executives. According to the Compensation Consultant, the bonus paid
in 1994 to Mr. Ryan, and the bonuses paid to all of the Named Executives in the
aggregate, fell at the low end of the range of bonus compensation paid by the
Peer Group companies to their comparably situated executives.
LONG-TERM INCENTIVE COMPENSATION
The long-term incentive component of officer compensation is tied to the
opportunity to acquire Company stock under the Aon Stock Award Plan and the Aon
Stock Option Plan. Both plans are designed to align a significant portion of
the executive compensation program with stockholder interest and to assist in
retention of executives.
Aon Stock Award Plan
Awards under the Aon Stock Award Plan are made based on the Compensation
Committee's and the Chief Executive Officer's assessment, based on an
executive's past performance, their subjective appraisal of his or her skills
and other strengths, and the long term contribution he or she can make to the
Company's performance. Awards are therefore subject to a vesting schedule
designed to give recipients an incentive to continue their service with the
Company. When an award vests, the amount of stock vested is delivered to the
recipient at no consideration and free of all restrictions other than those
imposed by applicable securities laws. In making awards, the Compensation
Committee takes into consideration awards previously made to a potential
recipient, the vesting schedule of such awards, and the number of awards
outstanding in the aggregate to all recipients.
During fiscal year 1994 no grants were made to the Named Executives under
this Plan. However, during 1994, the following Common shares became vested and
were delivered to the following Named Executives: Mr. Conway (x,xxx), Mr. Cox
(x,xxx), Mr. Medvin (x,xxx) and Mr. Skilling (x,xxx). The value of shares on
the dates of vesting during 1994 was: Mr. Conway ($xxx,xxx), Mr. Cox
($xxx,xxx), Mr. Medvin ($xxx,xxx) and Mr. Skilling ($xxx,xxx).
Aon Stock Option Plan
Options under the Aon Stock Option Plan are granted on the basis of criteria
similar to, and for similar purposes as, those for the granting of awards under
the Aon Stock Award Plan. During 1994, the Committee and the Company elected to
shift a greater portion of total compensation to Long Term Incentive
Compensation mechanisms such as grants under the Stock Option Plan as a means
to align the executives interest with that of the shareholders. As a result,
during 1994 the Named Executives were in the aggregate granted options to
purchase 165,000 shares of the Company's common stock with an exercise price
equal to the stock's market value on the day of grant. For detailed information
regarding the options granted during 1994, see "Executive Compensation--Options
Granted in Fiscal 1994."
SUBMITTED BY THE ORGANIZATION AND COMPENSATION COMMITTEE OF THE COMPANY'S
BOARD OF DIRECTORS:
Donald S. Perkins Daniel T. Carroll Andrew J. McKenna
(Chairman) George A. Schaefer Arnold J. Weber
Peer Pedersen
15
<PAGE>
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN(1)
AON CORPORATION AND PEER GROUP INDICES
FISCAL YEARS ENDED DECEMBER 31
(1) The Peer Group consists of: Alexander & Alexander Services Inc., American
International Group, Inc., American General Corporation, The Chubb
Corporation, General Re Corporation, Marsh & McLennan, Travelers, Inc.,
Torchmark, Transamerica Corporation and UNUM Corporation. Assumes that the
value of the investment in Aon Common Stock and the Peer Group index was
$100 on December 31, 1989, that the $100 invested in the Peer Group Index
was allocated pro rata among the Peer Group companies according to their
respective market capitalizations, that the value of the Peer Group Index
was determined by weighting the contribution of the constituent companies
according to their respective market capitalizations as of the beginning of
each annual period, and that all dividends were reinvested.
16
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. McKenna, a director of the Company and a member of the Organization and
Compensation Committee of the Company, and Mr. Medvin, the Company's executive
vice president, chief financial officer and treasurer, serve on the board of
directors of a private company, Schwarz Paper Company. Mr. McKenna is also the
chairman, president, chief executive officer and principal stockholder of
Schwarz Paper Company.
TRANSACTIONS WITH MANAGEMENT
The Company and one or more of its subsidiaries retained Sidley & Austin, a
law firm to which Newton N. Minow is Counsel, to perform certain legal
services during the year 1994 and anticipate that the firm will be retained to
perform legal services in 1995. Mr. Ryan has substantial ownership interests
in certain automobile dealerships which, during 1994, received commissions of
$ from the sale of credit life and credit accident and health insurance
written by Globe Life Insurance Company, a subsidiary of the Company, and paid
premiums of $ for automobile mechanical repair insurance to Virginia Surety
Company, Inc., also a subsidiary of the Company. The commissions received and
premiums paid by these dealerships were on terms no more favorable than those
generally offered to unrelated dealerships. During 1994 corporations and other
entities with which Directors are or were associated had insurance or other
transactions with the Company and certain of its subsidiaries and affiliates
in the ordinary course of business. All of these transactions were on
substantially the same terms as those prevailing at the time for comparable
transactions with unrelated parties. None of such insurance or other
transactions involved during 1994, or is expected to involve in 1995, payments
from or to the Company and its subsidiaries and affiliates for property and
services in excess of 5% of the Company's or the other entity's consolidated
gross revenues during 1994.
APPROVAL OF AON CORPORATION 1995 SENIOR OFFICER
INCENTIVE COMPENSATION PLAN (THE "INCENTIVE PLAN")
Background. In January 1994, the Board of Directors adopted the Incentive
Plan, subject to shareholder approval. If approved, the Incentive plan will be
employed to partially determine the compensation of senior management,
including each named executive officer/1/, beginning with calendar year 1995.
Immediately prior to 1995, each named executive officer was eligible for an
annual bonus of up to 60% of Base Salary (the "Annual Bonus Arrangement").
These annual bonuses were based on both objective and, to a lesser degree,
subjective factors. In some cases, the factors related to the performance of
the Company as a whole and, in others, they involved the performance of those
operations or areas for which the executive was principally responsible.
Prior to 1994, all cash payments made pursuant to the Annual Bonus
Arrangement as well as all other cash compensation paid to the Named
Executives were deductible by the Company for federal income tax purposes.
However, the Omnibus Reconciliation Act of 1993 added a new Section 162(m) to
the Internal Revenue code of 1986, as amended. Section 162(m) prohibits
publicly held corporations, such as the Company, from deducting as
compensation "applicable remuneration" paid to "covered employees" to the
extent it exceeds $1 million for a taxable year.
- --------
/1/Throughout this Proxy Statement "Named Executive" refers specifically to
the Chief Executive Officer and the other four most highly compensated
executive officers for 1994 and "named executive officers" refers generally to
the chief executive officer and the other four most highly compensated
executive officers from year to year.
17
<PAGE>
"Covered Employee" is in turn effectively defined in Section 162(m) to
include a corporation's named executive officers. As a result, beginning in
1994 if a named executive officer of the Company in any taxable year were to be
paid in more than $1 million in "applicable remuneration", the Company would be
prohibited from deducting the amount in excess of $1,000,000.
However, Section 162(m) permits corporations to exclude from "applicable
remuneration" amounts paid based on performance as long as certain conditions
are met. The Incentive Plan is designed to permit amounts paid thereunder to be
excluded from compensation for purposes of determining whether a given named
executive officer's annual compensation exceeds the $1,000,000 Section 162(m)
threshold, thereby enhancing the ability of the Company to deduct the full
annual amount paid to a named executive officer even though such officer's
total compensation may exceed $1,000,000.
In order to so exclude compensation from "applicable remuneration": (i) such
performance related compensation must be payable on account of the attainment
of one or more pre-established performance goals set by a compensation
committee of a corporation's board of directors comprised solely of two or more
outside directors; (ii) the material terms of the compensation and the
performance goals must be disclosed to and approved by a corporation's
shareholders; and (iii) the compensation committee must certify that the
performance goals have been satisfied.
Terms of the Incentive Plan. Participation in the Incentive Plan is limited
to salaried employees of the Company selected by Organization and Compensation
Committee ("Incentive Plan Participants"). The Company anticipates that the
Company's named executive officers will all be Incentive Plan Participants each
year the Incentive Plan is in effect.
Each Incentive Plan Participant will be eligible to receive an annual
Incentive Plan award (an "Award") equal to 180% of Base Salary, but in no event
more than $3,000,000. (See "Report of the Organization and Compensation
Committee" for the definition of and a discussion of Base Salary). Within 90
days of the beginning of each calendar year, the Organization and Compensation
Committee (which is currently comprised of six outside directors) will
determine specific standards ("Specific Corporate Performance Thresholds") that
must be attained with respect to the year in question before any Award will be
paid to any Incentive Plan Participant. The Specific Corporate Performance
Thresholds may include the Company's earnings per share, return on equity,
total shareholder return, or any other quantifiable measure of the Company's
performance that the Organization and Compensation Committee may select. For
any given year, the Organization and Compensation Committee may select a single
Specific Corporate Performance Threshold or some combination of such measures.
Following the year with respect to which the bonus is to be awarded, the
Organization and Compensation Committee will meet to determine whether the
applicable Specific Corporate Performance Thresholds have been attained. If so,
the Organization and Compensation Committee will so certify to the Board and
will calculate the Award for which each Participant is eligible. The
Organization and Compensation Committee will then review such amount and the
performance of the Incentive Plan Participant and determine in its sole
discretion whether the maximum Award for which such Participant is eligible
should be paid in full or whether a lesser amount should be paid, and, if so,
how much.
Payments under the Incentive Plan will be made in a lump sum subject to the
Company's customary payroll and tax withholding practices.
APPROVAL OF THE AON OUTSIDE DIRECTORS
COMPENSATION PLAN AS AMENDED
Under this Plan, non-employee Directors, are entitled to receive 300 shares
of Company common stock per annum as described above (See "Compensation of the
Board of Directors"). In 1994, the Company amended this Plan (the "Retirement
Amendments") to include certain benefits for directors when they retire from
the Board.
18
<PAGE>
The Retirement Amendments provide that each director will have credited to
his retirement account (the "Retirement Account"):
(i) $10,000 for each annual period of Board service prior to 1994, but not
more than $100,000 in the aggregate; and
(ii) $20,000 per annum for each annual period of service commencing with
April 15, 1994.
The pre-1994 amount, however, will vest pro rata over the number of years
between 1994 and the year the Director attains the age of seventy-two. The
benefit for the years of service commencing in 1994 will vest in full on each
service anniversary date.
On the day a Director ceases serving on the Board, the vested amount in his
Retirement Account will be divided by the average of the high and low market
price of Aon common stock on such day (or, if such day is not a business day,
on the most recent trading day) and one-tenth of the resulting number of shares
will be distributed to the Director annually during the following ten year
period. Set forth below are retirement benefits to which each nominee (other
than Mr. Jannotta, who, if elected, will commence his service on the Board on
April 20, 1995) and to which Mr. Swearingen (who has resigned from the Board
effective as of April 20, 1995) would be entitled if he were to resign on April
20, 1995.
[INSERT CHART]
APPROVAL OF DEFERRED COMPENSATION PLAN
In 1994, the Company adopted a Deferred Compensation Plan (the "1994 Deferred
Compensation Plan"). United States--based employees with annual earnings of at
least $125,000 ("Eligible Employees") are eligible to participate.
Under the 1994 Deferred Compensation Plan, an Eligible Employee may in any
given year (the "Deferral Year") defer payment of any whole percentage of such
employee's current compensation and any whole percentage of any performance
bonus to be paid the following year with respect to performance during the
Deferral Year (collectively, the "Deferred Amount"). Payment of the Deferred
Amount may be deferred for any period longer than 12 months.
At the time that an Eligible Employee elects to defer compensation, the
Employee must also specify a distribution method consisting of the date on
which payments are to begin (the "Initial Payment Date") and a payment period
that may range from a lump sum distribution on the Initial Payment Date up to
10 consecutive annual liquidating distributions. The election of the amount to
defer, the deferral period and distribution method must be made prior to
December 15th of the year prior to the Deferral Year and may not be changed
except upon a finding by the Organization and Compensation Committee that such
a change is warranted because the Eligible Employee has encountered an
unexpected hardship sufficiently severe to justify an exception.
Eligible Employees may "invest" the Deferred Amount in either an Aon Common
Stock Account or an Aon General Account. The Aon Common Stock Account is a
bookkeeping account the value of which is determined by assuming that all
Deferred Amounts are invested in Aon common stock on a dividend reinvestment
basis. The Aon General Account is a bookkeeping account the value of which is
determined by assuming all Deferred Amounts earn annual interest at the average
yield for one-year treasury bills.
Eligible Employees may reallocate amounts between the Common Stock Account
and the General Account annually. The balance in an Eligible Employees' Common
Stock Accounts and General Accounts are bookkeeping entries only. No company
funds are segregated with respect to these accounts and payment of the amounts
owed to Eligible Employees in respect of compensation deferred under the
Deferred Compensation Plan is a general unsecured obligation of the Company.
The Named
19
<PAGE>
Executive's who deferred compensation under the Deferred Compensation Plan in
1994, their respective Deferred Amounts, and the balances in their respective
Common Stock and General Accounts are set forth below.
[INSERTCHART]
INDEPENDENT AUDITORS
The Board of Directors of the Company, following the recommendation of the
Audit Committee, has appointed Ernst & Young, L.L.P. as the Company's
independent auditors for the year 1995. Ernst & Young was first retained as the
Company's independent auditors in February 1986. No relationship exists between
the firms other than the usual relationship between independent auditors and
their clients.
Although this appointment is not required to be submitted to a vote of the
stockholders, the Board of Directors believes it appropriate as a matter of
policy to request that the stockholders ratify the appointment of the
independent auditors for the year 1995. In the event a majority of the votes
cast at the meeting are not voted in favor of the following resolution, the
adverse vote will be considered as a direction to the Board of Directors of the
Company to select another auditor for the year 1995. Because of the difficulty
and expense of making any substitution of auditors for 1995 following the 1995
Annual Meeting, it is contemplated that the appointment for the year 1995 will
be permitted to stand unless the Board finds other good reason for making a
change.
The Board of Directors has proposed that the stockholders adopt the following
resolution:
RESOLVED, that the appointment of Ernst & Young by the Board of Directors
as the Company's independent auditors for the year 1995 is hereby ratified.
The proxies will be voted in favor of the ratification of the appointment
unless otherwise specifically indicated thereon.
The Company anticipates that a representative of Ernst & Young will be
present at the Annual Meeting. Such representative will be given the
opportunity to make a statement if he or she desires to do so, and is expected
to be available to respond to any questions which may be submitted at the
meeting.
1996 PROPOSALS OF STOCKHOLDERS
In order to be considered for inclusion in the proxy statement for the
regular annual meeting of the stockholders of the Company in the year 1996,
stockholder proposals must have been received by the Company not later than
November 15, 1995. Such proposals should be sent to the Corporate Secretary of
the Company at the address listed on page 1 hereof.
AVAILABILITY OF 10-K REPORT
The Company will file its Annual Report on Form 10-K for the year ended
December 31, 1994, with the Securities and Exchange Commission on or before
March 31, 1995. A copy of the report, including any financial statements and
schedules, and a list describing any exhibits not contained therein, may be
obtained without charge by any stockholder. The exhibits are available upon
payment of charges which approximate the Company's cost of reproduction of the
exhibits. Requests for copies of the report should be sent to the Office of the
Corporate Secretary at the address listed on page 1 hereof.
20
<PAGE>
OTHER MATTERS
Management is not aware of any business to be acted upon at this meeting
other than that which is described in this Proxy Statement, but in the event
any other business should properly come before the meeting calling for a vote
of the stockholders, the proxy holders (as indicated on the accompanying proxy
card or cards) will vote the proxies according to their best judgment in the
interests of the Company.
Please exercise your right to vote by completing and signing the enclosed
proxy card and returning it promptly in the enclosed envelope. In the event
that you attend the meeting, you may revoke your proxy and vote your Shares in
person.
Aon Corporation
LOGO
Arthur F. Quern
Corporate Secretary
Dated: March 8, 1995
21
<PAGE>
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- --------------------------------------------------------------------------------
AON CORPORATION
Notice of
Annual Meeting of Stockholders
and Proxy Statement
FIRST CHICAGO CENTER
ONE FIRST NATIONAL PLAZA
CHICAGO, ILLINOIS
APRIL 20, 1995 AT 10:00 A.M.
- --------------------------------------------------------------------------------
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PRINTED IN U.S.A.
<PAGE>
Aon Corporation
123 North Wacker Drive
Chicago, Illinois 60606
PLEASE SIGN AND RETURN YOUR PROXY CARD PROMPTLY
[ART LOGO]
PLEASE RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE PROVIDED
- --------------------------------------------------------------------------------
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. 4909
----
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 3, 4 AND 5.
- --------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3, 4 AND 5.
- --------------------------------------------------------------------------
1. Election of directors.
FOR* [_] WITHHELD [_]
*To withhold authority to vote for any nominee(s), mark the "FOR" box and write
the name of such nominee on line provided below
- --------------------------------------------------------------------------------
2. To approve the Company's adoption of the 1995 Senior Officer Incentive
Compensation Plan.
FOR [_] AGAINST [_] ABSTAIN [_]
3. To approve the amendment of the Company's Outside Directors Compensation
Plan to include retirement benefits in the form of Company common stock.
FOR [_] AGAINST [_] ABSTAIN [_]
4. To approve the Company's adoption of a Deferred Compensation Plan.
FOR [_] AGAINST [_] ABSTAIN [_]
5. Appointment of Ernst & Young as Company's independent auditors.
FOR [_] AGAINST [_] ABSTAIN [_]
6. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- --------------------------------------------------------------------------------
SIGNATURE DATE
- --------------------------------------------------------------------------------
SIGNATURE (IF JOINTLY HELD) DATE
<PAGE>
Aon corporation PROXY/VOTING INSTRUCTION CARD
Chicago, Illinois
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON APRIL 15, 1994.
The undersigned hereby appoints P. G. RYAN or R. I. SKILLING, the attorneys and
agents of the undersigned, each with powers of substitution, as proxies for the
undersigned to vote all the Common Shares and/or Preferred Shares the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of
Aon Corporation called to be held at 10:00 A.M., Friday, April 15, 1994, or any
adjournment thereof in the manner indicated on the reverse side of this proxy,
and upon such other business as may lawfully come before the meeting. IF NO
DIRECTION AS TO THE MANNER OF VOTING THE PROXY IS MADE, THE PROXY WILL BE VOTED
FOR THE ELECTION OF DIRECTORS AND FOR ITEMS 2, 3 AND 4 AS INDICATED ON THE
REVERSE SIDE HEREOF. This card also constitutes voting instructions for all
shares votable by the undersigned as a participant in the Aon Employee Stock
Ownership Plan and held of record by the trustees of the Plan. The trustees
intend to cause all undirected and unallocated common shares held under the
Plan to be voted in the same proportion as are voted the shares of all
participants who have timely delivered voting instructions to the trustees. All
voting instructions with respect to shares held of record by the Plan shall be
confidential.
Election of Directors
Nominees:
Patrick G. Ryan, Daniel T. Carroll, Franklin A. Cole, Perry J.
Lewis, Joan D. Manley, Andrew J. McKenna, Newton N. Minow, Donald
S. Perkins, Peer Pedersen, John W. Rogers, Jr., George A. Schaefer,
Raymond I. Skilling, John E. Swearingen, Fred L. Turner, Arnold R.
Weber.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
CODE 1994 COMMON SEE REVERSE
SIDE
<PAGE>
Aon CORPORATION
1995 SENIOR OFFICER INCENTIVE COMPENSATION PLAN
1. PURPOSE
The purpose of the Aon Corporation 1995 Senior Officer Incentive Compensation
Plan (the "Plan") is to encourage the highest level of performance by key
employees of operating subsidiaries and affiliates of Aon Corporation (which
subsidiaries and affiliates are herein referred to as the "Corporation") by
making appropriate levels of cash awards following satisfaction of quantifiable
performance goals.
2. PLAN ADMINISTRATION
The Plan shall be administered by the Organization and Compensation Committee
(the "Committee") of the Aon Corporation Board of Directors (the "Board"). All
questions involving eligibility for awards, interpretations of the provisions of
the Plan, or the operation of the Plan shall be decided by the Committee. No
member of the Committee shall be eligible to receive an award under the Plan.
All determinations of the Committee shall be conclusive. The Committee may
obtain such advice or assistance as it deems appropriate from persons not
serving on the Committee.
3. ELIGIBILITY
Participation in the Plan is limited to key salaried employees of the
Corporation selected by the Committee (a "Participant"). Participation may be
revoked at any time by the Committee. An employee whose participation is
revoked will be notified, in writing, of such revocation as soon as practicable
following such action. An individual who becomes eligible to participate in the
Plan during the Plan Year (the one year period beginning January 1 and ending on
December 31 of each calendar year) may be approved by the Committee for a
partial year of participation. In such case, the Participant's award shall be
prorated based on the number of full months of participation.
4. TERMS AND CONDITIONS OF AWARDS
Each Participant will be entitled to receive a maximum award equal to 180% of
Base Pay (the "Award") subject to the performance measured described below.
Base Pay is the salary earned while participating in the Plan in the current
Plan Year. The maximum amount payable under the Plan to a Participant, in any
given Plan Year, is equal to the lesser of 180% of Base Pay or $3,000,000.
Within the first 90 days of the Plan Year the Committee shall determine the
specific Corporate Performance Thresholds which must be met prior to the payment
of any Awards determined pursuant to this paragraph. The Corporate Performance
Thresholds will be based upon either a certain singular business criteria, such
as Earnings Per Share, Return on Equity, Total Shareholder Return, or Operating
Income, or a combination of one or more business criteria.
<PAGE>
At the end of each Plan Year, Awards will be computed for each participant.
Payment of Awards will be made in cash, subject to applicable tax withholding,
as soon as practicable after the achievement of Corporate Performance Thresholds
and other material terms of the Plan are certified, and individual Awards are
approved, by the Committee; provided, however that the Committee may in its sole
discretion reduce individual Awards determined pursuant to this paragraph.
5. EMPLOYMENT TERMINATION
In the event a Participant's employment is terminated due to death or disability
during a Plan Year, the Participant's Award will be reduced to reflect the
partial year of participation. This reduction will be determined by multiplying
the award by a fraction, the numerator of which is the Participant's total
months of participation in the current Plan Year through the date of termination
rounded up to whole months, and the denominator of which is twelve (12). The
Participant's reduced Award will be paid in accordance with Section 4
hereinabove. In the event a Participant's employment is terminated for reasons
other than death or disability, all rights to an award for the Plan Year will be
forfeited.
6. NO RIGHT TO CONTINUED EMPLOYMENT
Nothing in the Plan shall confer on a Participant any right to continue in the
employ of the Corporation or in any way affect the Corporation's right to
terminate the Participant's employment at any time without prior notice and for
any or no reason.
7. BENEFICIARY
Each Participant under the Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his death before he receives any
or all of such benefit. Each designation will revoke all prior designations by
the same Participant, shall be in a form prescribed by the Committee, and will
be effective only when filed by the Participant in writing with the Committee
during his lifetime. In the absence of any such designation, or if for any
reason such designation is ineffective, in whole or in part, benefits remaining
unpaid at the Participant's death shall be paid to his estate.
8. TAX WITHHOLDING
Any and all payments made under the Plan shall be subject to applicable federal,
state, or local taxes required by the law to be withheld.
9. IMPACT ON OTHER BENEFITS
Amounts paid under this Plan will not be considered compensation for purposes of
other benefit plans offered by the Corporation unless specifically provided for
in such plans.
<PAGE>
10. TERMINATION OR AMENDMENT OF THE PLAN
The Plan may be modified, amended, or terminated at any time by the Board. The
existence of the Plan does not obligate or bind the Corporation to pay an Award
to any Participant (or beneficiary) nor does any Participant (or beneficiary)
attain any vested, non-forfeitable right to an Award until the Award has been
finalized and approved for payment by the Committee.
11. NON-TRANSFERABILITY
Except as specifically provided herein or as may otherwise be required by law,
no undistributed Award payable to the Participant may be sold, transferred, or
assign or encumbered, in whole or in part, by a Participant, and any attempt to
so alienate or subject any such amount shall be void.
12. EFFECTIVE DATE OF THE PLAN
The Plan shall become effective as of January 1, 1995.
<PAGE>
AON CORPORATION
1994 AMENDED AND RESTATED OUTSIDE
DIRECTOR STOCK AWARD PLAN
1. PURPOSE: Aon Corporation (the "Company") has established the 1994 Amended
and Restated Outside Director Stock Award Plan (the "Plan"). The purposes of
the Plan are to attract and retain well qualified persons for service as
directors of the Company, who are not salaried employees of the Company or any
of its subsidiaries ("Outside Directors"); and to provide such Outside Directors
with the opportunity to increase their proprietary interest in the Company, and
thereby to increase their personal interest in the Company's continued success,
through the payment of a portion of directors' fees and through the payment of
retirement income in the form of shares of the Company Common Stock, $1.00 par
value ("Common Stock").
2. ADMINISTRATION: The Organization and Compensation Committee (the
"Committee") of the Board of Directors of Aon Corporation will have the
responsibility and authority to administer and interpret the provisions of the
Plan.
In administering the Plan, the Committee may employ attorneys, consultants,
accountants or other persons, and the Company and the Committee shall be
entitled to rely upon the advice, opinions or valuation of any such persons.
All usual and reasonable expenses of the Committee shall be paid by the Company.
No member of the Committee shall be personally liable for any action,
determination or interpretation taken or made with respect to the Plan or awards
made thereunder, and all members of the Committee shall be fully indemnified and
protected by the Company in respect of any such action, determination or
interpretation, in the absence of a fraudulent act or omission.
3. ELIGIBILITY: Awards under the Plan shall be available to all Outside
Directors; provided, that no director who is an employee of the Company or any
of its subsidiaries shall be eligible
1
<PAGE>
for participation in the Plan.
4. AWARDS:
(a) ANNUAL AWARDS: At each meeting of the Board of Directors of the
Company (the "Board") next following the Annual Meeting of Stockholders of the
Company (the "Annual Meeting of the Board") beginning with the meeting to be
held on April 20, 1990 (the "Effective Date"), each Outside Director shall be
awarded 300 shares of Common Stock (the "Annual Fees Award") subject to and in
accordance with the terms of Section 5. Each such award shall be evidenced by a
written agreement, executed by the Outside Director and the Company.
In the case of an Outside Director who is appointed to the Board other than
at the Annual Meeting of Stockholders in any year, such Outside Director shall
be awarded a prorated number of full shares of Common Stock based on the number
of prospective full months of service during the year to end at the then next
Annual Meeting of the Board.
(b) RETIREMENT AWARDS:
(i) Beginning April 15, 1994, each Outside Director in office as of
April 15, 1994 will be credited as of each Annual Meeting of the Board
with shares of Common Stock, subject to and in accordance with the
terms of Section 5, with a Market Value equivalent to the product of
(a) each such Outside Director's years of past service as an Outside
Director of the Company, subject to a maximum of 10 years, multiplied
by (b) ten thousand dollars ($10,000) and divided by (c) the number of
years of service from April 15, 1994 to each such Outside Director's
Mandatory Retirement Date (the "Past Service Award").
(ii) Beginning April 15, 1994, for each full year of service as an
Outside Director after April 15, 1994, an Outside Director will be
credited as of each Annual Meeting of the Board with shares of Common
Stock, subject to and in accordance with the terms of Section 5,
equivalent to twenty thousand dollars ($20,000) in value (the "Future
Service Award").
2
<PAGE>
(iii) The "Market Value" as of the date of the Annual Meeting of
Stockholders shall mean the arithmetic mean of the high and low prices
of the Common Stock as quoted on the New York Stock Exchange as
published in the Wall Street Journal.
(iv) All accumulated shares (hereinafter referred to as "Retirement
Shares") credited pursuant to this subparagraph (b) shall vest at the
rate of ten percent per year of total service; provided, however, all
Retirement Shares credited pursuant to this subparagraph (b) shall be
100% vested at such time as an Outside Director reaches the Mandatory
Retirement Date. As used herein, a "year of total service" means that
period of time measured from Annual Meeting of Stockholders to the next
following Annual Meeting of Stockholders. As used herein "Mandatory
Retirement Date" shall mean the next regularly scheduled Annual Meeting
of Stockholders immediately following attainment of age 72.
(v) On the first day of the month following the latter of the Mandatory
Retirement Date or the date a Director ceases to serve as a director,
the number of Retirement Shares credited to the Outside Director will
be distributed to the retired Director in ten equal annual
installments.
If an Outside Director retires prior to the Mandatory Retirement
Date, the distribution of vested Retirement Shares shall be deferred
for the lesser of five years from the date services to the Board
ceases, or the number of years remaining until the Mandatory Retirement
Date and shall be paid in equal annual installments over ten years.
Such deferred distribution shall commence on the first day of the month
following the deferral period.
In the event of an Outside Director's death following retirement
from the Board any remaining shares payable pursuant to this
subparagraph (b)(v) shall be distributed to the designated beneficiary
or if none then the estate.
3
<PAGE>
(vi) In the event that an Outside Director becomes unable to fulfill
his duties as a director due to death or disability all Retirement
Shares including unaccrued Past Service Awards as of that date shall be
100% vested and payable to the director in ten equal annual
installments commencing at the beginning of the month following death
or determination of disability.
In the event of an Outside Director's death while an active member of
the Board of Directors, all shares payable pursuant to this
subparagraph (b)(vi) shall be distributed to the designated
beneficiary, or if none then the estate, in ten equal installments.
5. TERMS AND CONDITIONS:
(a) Up to 30,000 shares of Common Stock may be issued pursuant to the Plan.
Shares of Common Stock issued pursuant to the Plan will be drawn from treasury
shares. Such shares will not be registered under the Securities Act of 1933, as
amended (the "Act") and will be "restricted securities" as defined in the Act or
rules promulgated thereunder. Such shares may not be sold, assigned,
transferred or otherwise disposed of in the absence of an effective registration
statement covering such shares, or unless such registration is not required by
reason of an exemption available under the Act. Shares awarded under the Plan
shall be certificated. Certificates for shares issued under the Plan shall
include the following legend:
"The Shares represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act") and, accordingly, may not
be offered, sold or otherwise pledged, hypothecated or transferred
unless (A) pursuant to an effective registration statement under the
Act or (B) an applicable exemption from the registration requirements
of the Act is available. In addition, the transferability of this
certificate and the shares of stock represented hereby are subject to
the terms and conditions contained in the
4
<PAGE>
Aon Corporation 1994 Amended and Restated Outside Director Stock
Award Plan."
(b) No award of Common Stock received under the Plan may be sold, assigned,
transferred or otherwise disposed of for at least six months after receipt of
the award, unless death or disability of the Outside Director occurs before the
expiration of the six-month period.
(c) An Annual Fees Award received by an Outside Director who does not elect
to defer such receipt as provided in Section 6, shall be shown in the Company's
proxy statement if appropriate for the year in which the Common Stock was
granted, and the Outside Director, as of the date of receipt of the Common
Stock, shall be registered as a "Stockholder of Record" and shall immediately
become entitled to all dividends paid on the Company's Common Stock and to all
voting rights accorded the Company's Common Stock and the shares shall be shown
on the appropriate form for reporting beneficial ownership of securities
pursuant to Section 16 of the Securities Exchange Act of 1934.
(d) The Board shall appropriately adjust the number of shares for which
awards may be granted pursuant to the Plan in the event of reorganization,
recapitalization, stock split, reverse stock split, stock dividend, exchange or
combination of shares, merger, consolidation, rights offering, or any change in
capitalization.
6. DEFERMENT OF ANNUAL FEES AWARD:
(a) Each year the Outside Director may make an irrevocable election to
defer the receipt of the Annual Fees Award until a date agreed upon between the
Outside Director and the Company (the "Distribution Date"). Such election shall
be made each year in advance of the date of the Annual Meeting of Stockholders
at which the Outside Director is standing for election. In the case of an
Outside Director who is elected to the Board other than at the Annual Meeting of
Stockholders, such election to defer shall be in advance of the Board meeting at
which the Outside Director is standing for election.
5
<PAGE>
(b) A bookkeeping account shall be established for each Outside Director's
deferred Annual Fees Award ("Bookkeeping Account"). The Bookkeeping Account
shall reflect the number of shares of Common Stock deferred from time to time by
each Outside Director. The Bookkeeping Account shall also be credited with the
amount of cash dividends each Outside Director would have received from time to
time had the Outside Director actually owned the number of shares credited to
his or her Bookkeeping Account on each dividend payment date. With regard to
the cash dividends, each Outside Director may choose either:
(i) To have the Bookkeeping Account credited with a number of
units("Stock Units") equal to the number of shares of Common Stock
(including fractions of a share) which is equal to the cash dividend
portion of the Bookkeeping Account then attributed to the Outside
Director, assuming the purchase price per share is equal to the Market
Price on such dividend payment date.
(ii) To have the Bookkeeping Account credited with cash and that cash
portion of the Bookkeeping Account shall be credited with interest,
compounded semi-annually at an annual rate determined as of January 1st
and July 1st of each year by averaging the one-year Treasury bill yield
as published monthly by the Federal Reserve Bank of St. Louis on a bank
discount basis through the secondary market for the last six months
immediately prior thereto.
7. COMPANY'S OBLIGATION: The Company's obligation with respect to each Outside
Director's Bookkeeping Account or Retirement Shares shall be a general liability
of the Company and the Company shall not be required to fund in any manner any
such Bookkeeping Account or Retirement Shares. Any shares of Common Stock
deliverable or cash payable with respect to any Bookkeeping Account or
Retirement Shares shall come solely from the general assets of the Company. The
rights of an Outside Director with respect to any Bookkeeping Account or
Retirement Shares shall be those of an unsecured general creditor. Outside
Directors shall not have the right to vote Common Stock credited to any
Bookkeeping Account or any credited Retirement Shares, and shall not be required
to be shown as owning such Common
6
<PAGE>
Stock on any proxy statement and shall not be required to show such Common Stock
on the appropriate form for reporting beneficial ownership under Section 16 of
the Securities Exchange Act of 1934 until the Distribution Date of such Annual
Fees Award or receipt of Retirement Shares after the Mandatory Retirement Date.
8. TRANSFERABILITY: Any award deferred pursuant to Section 6 and/or any
credited Retirement Shares shall not be transferable other than by will or the
laws of descent and distribution, and shall not be receivable prior to the
Distribution Date or the Mandatory Retirement Date with regard to Retirement
Shares, but in no event shall such date be less than six months from the date of
the award, except in the case of the Outside Director's death or disability.
9. REGULATORY COMPLIANCE AND LISTING: The delivery of any shares under this
Plan may be postponed by the Company for such period as may be required to
comply with Federal or State securities laws, including listing requirements,
national securities exchange requirements and any other law or regulation
applicable to the delivery of such shares. The Company shall not be obligated
to deliver any shares under this Plan if such delivery shall constitute a
violation of any provision of any law or any regulation of any governmental
authority or any national securities exchange. In addition, the shares when
delivered may be subject to conditions, including transfer restrictions, if such
conditions are required to comply with applicable securities law.
10. NO RIGHT TO CONTINUE AS OUTSIDE DIRECTOR: Nothing contained in this Plan
shall be construed as conferring upon the Outside Director the right to continue
to be associated with the Company as an Outside Director or in any other
capacity.
11. AMENDMENT OR DISCONTINUANCE: The Board may amend, rescind or terminate the
Plan as it shall deem advisable; provided, however, that no change may be made
more than once every six months and no changes may be made in awards theretofore
granted under the Plan which would impair an Outside Director's rights without
his or her consent.
7
<PAGE>
12. APPROVAL OF PLAN: The Outside Director Stock Award Plan was originally
adopted by the Board on March 16, 1990 and approved by the Company's
stockholders as of April 19, 1991. The 1994 Amended and Restated Outside
Director Stock Award Plan was adopted by the Board on March 18, 1994 and must be
submitted to the Company's stockholders within 18 months of its approval by the
Board. If the Company does not obtain stockholder approval of the 1994 Amended
and Restated Plan within 18 months, any Retirement Awards made subsequent to
March 18, 1994 will be null and void, but the Outside Director Stock Award Plan
will be deemed to have continued unamended and in full force and effect.
13. GOVERNING LAW: This Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Illinois
pertaining to contracts made and to be performed wholly within such
jurisdiction, except as Federal Law may apply.
8
<PAGE>
AON
DEFERRED COMPENSATION
PLAN
<PAGE>
AON DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
PAGE
----
SECTION 1 DEFINITION OF TERMS
- --------- -------------------
1.01 Accounts 2
1.02 Aon Common Stock Account 2
1.03 Aon General Account 2
1.04 Beneficiary 2
1.05 Board 2
1.06 Change of Control 2
1.07 Code 3
1.08 Committee 3
1.09 Company 3
1.10 Compensation 3
1.11 Employee 3
1.12 Participant 4
1.13 Performance Bonus 4
1.14 Plan 4
1.15 Subsidiary 4
SECTION 2 ELIGIBILITY AND PARTICIPATION
- --------- -----------------------------
2.01 Eligibility 4
2.02 Participation 4
SECTION 3 ELECTION TO DEFER
- --------- -----------------
3.01 Irrevocable Election 5
3.02 First Calendar Year Election 5
3.03 Election as to Period Deferral 5
3.04 Election as to Aon Common Stock Account or Aon General Account 5
3.05 Failure to Make an Election 5
SECTION 4 DEFERRED COMPENSATION AMOUNTS
- --------- -----------------------------
4.01 Deferral Period Subaccounts 6
4.02 Amounts Credited to the Aon Common Stock Account 6
4.03 Amounts Credited to the Aon General Account 6
4.04 Dividends Credited to Aon Common Stock Account 7
<PAGE>
TABLE OF CONTENTS (Cont'd)
<TABLE>
<CAPTION>
PAGE
----
SECTION 5 METHOD OF DISTRIBUTION OF DEFERRED COMPENSATION
- --------- -----------------------------------------------
<C> <S> <C>
5.01 Election of Distribution 7
5.02 Method of Distribution 7
5.03 Installment Payments 8
5.04 Termination of Employment Prior to Distribution Date 8
5.05 Hardship Withdrawals 8
5.06 Distribution Upon Death after Payments Have Commenced 9
5.07 Distribution to Beneficiaries 9
5.08 Distributions from Aon Common Stock Account 9
SECTION 6 MISCELLANEOUS
- --------- -------------
6.01 Other Benefit Plans 10
6.02 Participant's Rights 10
6.03 Change of Control 11
6.04 Nonalienability and Nontransferability 11
6.05 Plan Administrator 12
6.06 Amendment and Termination 12
SECTION 7 GENERAL PROVISIONS
- --------- ------------------
7.01 Notices 12
7.02 Controlling Law 12
7.03 Gender and Number 12
7.04 Captions 12
7.05 Action by the Company 12
7.06 Facility of Payment 12
7.07 Withholding Payroll Taxes 13
7.08 Severability 13
7.09 Liability 13
7.10 Successors 13
7.11 Unfunded Status of the Plan 13
</TABLE>
<PAGE>
Aon Deferred Compensation Plan
------------------------------
Preamble
--------
The name of this plan is the Aon Deferred Compensation Plan (the "Plan").
Its purpose is to provide certain select management or highly compensated
employees of Aon Corporation and its subsidiaries with the opportunity to
defer amounts earned as an employee. The Plan shall be effective as of
October 1, 1994.
SECTION 1
---------
DEFINITIONS
-----------
1.01 "Accounts" shall mean the Aon Common Stock Account and the Aon General
Account.
1.02 "Aon Common Stock Account" shall mean the account established on the
books of the Company or a Subsidiary for a Participant who has elected
to defer Compensation or the Performance Bonus, as if such deferral
had been invested in whole and fractional shares of Aon common stock.
1.03 "Aon General Account" shall mean the account established on the
books of the Company or a Subsidiary for a Participant who has elected
to defer Compensation or to defer a Performance Bonus as if such
deferral had been invested in accordance with Section 4.03.
1.04 "Beneficiary" shall mean the beneficiary or beneficiaries designated
by the Participant to receive the amount, if any, payable under the
Plan upon the death of the Participant.
1.05 "Board" shall mean the board of directors of the Company.
1.06 "Change of Control" shall mean:
(a) the purchase or other acquisition by any person (as defined by
(S)(S) 13(d) or 14(d)(2) of the Securities Exchange Act of 1934 (the
"Act") or any comparable successor provisions) of beneficial ownership
(within the meaning of Rule 13d-3 under the Act) of 20% or more of
either the outstanding shares of
2
<PAGE>
common stock or the combined voting power of the Company's then
outstanding voting securities entitled to vote generally; or
(b) the consummation of a merger or equivalent combination in which
the Company is not the continuing or surviving corporation, or
pursuant to which shares of Aon common stock are converted into cash,
securities or other property, other than a merger of the Company in
which the holders of Aon common stock immediately prior to the merger
have substantially the same proportionate ownership of common stock of
the surviving corporation immediately after the merger; or
(c) the election by stockholders of members of the Board 20% or more
whom are persons who were not nominated in the most recent proxy
statement of the Company; or
(d) a liquidation or dissolution of the Company or the sale of all or
substantially all of the Company's assets.
1.07 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.08 "Committee" shall mean the Organization and Compensation Committee
of the Board (or such successor committee of the Board as shall from
time to time have responsibility for compensation matters).
1.09 "Company" shall mean Aon Corporation.
1.10 "Compensation" shall mean the following types of earnings paid to
an Employee for his service on behalf of the Company or the
Subsidiaries: salary and fixed base compensation including
compensation for overtime, and net commission, renewal and override
compensation. Compensation shall be determined before excluding any
pretax deferrals for retirement, health, welfare, death, insurance, or
similar plans of the Company.
The following shall not be included in Compensation: (i) deferred
commission payments; (ii) bonuses; (iii) stock awards; (iv) expense
reimbursements; (v) income from exercise of stock options; (vi)
distributions from, and Company or Subsidiary contributions to, the
Aon Savings Plan, the Aon Employee Stock Ownership Plan, the Aon
Pension Plan or any other Company or Subsidiary fund or plan providing
retirement, health, welfare, death, insurance or similar benefits;
(vii) amounts paid to an Employee in respect to employment during
which he is not permanently employed within the United States or its
possessions; and (viii) amounts previously deferred under the terms of
the Plan.
1.11 "Employee" shall mean any United States staff employee of the Company
and its Subsidiaries.
3
<PAGE>
1.12 "Participant" shall mean any eligible Employee who elects to
participate in the Plan pursuant to Section 2.
1.13 "Performance Bonus" shall mean any amount paid by the Company or a
Subsidiary to an Employee pursuant to periodic individual performance
appraisals or a formal contractual bonus program.
1.14 "Plan" shall mean the Aon Deferred Compensation Plan.
1.15 "Subsidiary" shall mean any corporation of which 50% or more of the
voting stock is owned or controlled, directly or indirectly, by the
Company or by one or more of such corporations.
SECTION 2
---------
ELIGIBILITY AND PARTICIPATION
-----------------------------
2.01 Eligibility. Any Employee of the Company or a Subsidiary who received
wages or compensation as reported on Box 1 of IRS Form W-2 of
$125,000 or more in the prior calendar year or whose rate of annual
base pay in the current calendar year is $125,000 or more shall be
eligible to participate in the Plan in accordance with the
requirements of Section 2.02, unless otherwise decided by the
Committee. In addition, other select management or highly compensated
Employees may be eligible to participate at the option of the
Committee.
2.02. Participation. Every eligible Employee shall become a Participant
after making an irrevocable election to participate as described in
Sections 3.01 or 3.02 and as of the first day of the first period for
which amounts are deferred. Where the context so requires, an
individual for whose benefit an account is being maintained under
this Plan shall also be deemed to be a Participant. The Company will
establish an Aon Common Stock Account and Aon General Account, as
applicable, for each Participant. Such accounts shall be book entries
maintained by the Company or its Subsidiaries, and the existence of
such book entries shall not create and shall not be deemed to create
a trust of any kind, or a fiduciary relationship between the Company
or the Subsidiary and the Employee or Beneficiary.
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SECTION 3
ELECTION TO DEFER
3.01 Irrevocable Election. On or before December 31 of any year, each
Employee eligible to participate in the Plan shall be entitled to make
an irrevocable election to defer receipt of: (i) any whole percentage
of Compensation otherwise payable from the Company or a Subsidiary for
the following calendar year; and (ii) any whole percentage of a
Performance Bonus to be earned in the following calendar year.
3.02 First Calendar Year Election. Within 30 days after the later of the
date the Plan is effective or the date the Employee first becomes
eligible to participate in the Plan, each Employee eligible to
participate shall be entitled to make an irrevocable election to defer
(i) any whole percentage of Compensation not yet payable; and (ii) any
whole percentage of a Performance Bonus not yet earned.
3.03 Election as to Period of Deferral. Each Employee shall also make,
within the time specified in Section 3.01 or 3.02, an irrevocable
election as to the period of deferral and distribution in accordance
with Section 5.
3.04 Election as to Aon Common Stock Account or Aon General Account. Each
Employee shall also make, within the time specified in Section 3.01 or
3.02, (i) an election as to the allocation of the full amount of
deferred Compensation to the Aon Common Stock Account or to the Aon
General Account; (ii) an election as to the allocation of the full
amount of the deferred Performance Bonus to the Aon Common Stock
Account or to the Aon General Account; and, if the Participant
desires, (iii) a similar election to reallocate balances in the Aon
Common Stock Account and Aon General Account.
3.05 Failure to Make an Election. The elections set forth in any notice
described in Sections 3.01 through 3.03 shall pertain only to the
period for which they are made, and if no election is made for a
period no deferral will be made. In the event an Employee fails to
specify an allocation of Compensation or of the Performance Bonus,
100% of the deferred portion of such Employee's Compensation or
Performance Bonus shall be credited to the Aon General Account.
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SECTION 4
DEFERRED COMPENSATION AMOUNTS
4.01 Deferral Period Subaccounts. Separate subaccounts under the Aon
Common Stock Account and under the Aon General Account for each
deferral period shall be established and maintained for each
Participant. Such subaccounts shall reflect the amount deferred for
each deferral period specified in each election form by the
Participant. In the event two or more subaccounts reflect deferred
amounts which are to be paid at the same time, all such subaccounts
shall be aggregated into a single subaccount.
4.02 Amounts Credited to the Aon Common Stock Account. With respect to an
Employee's election to defer any portion of Compensation or the
Performance Bonus, a Participant's Aon Common Stock Account will be
credited with such additions as the Participant has elected to defer
to such account. For purposes of crediting Compensation or the
Performance Bonus, deferred amounts shall be assumed to have been
invested in Aon common stock. The amount of shares so credited will be
determined by dividing the deferred amount of the Participant's
Compensation or Performance Bonus by the fair market value of Aon
common stock on the New York Stock Exchange for the day such
Compensation or Performance Bonus would have been payable to the
Participant had it not been deferred. Fair market value on any day is
the average of the highest and lowest price at which the stock was
sold on the New York Stock Exchange that day. In the event of a
recapitalization, stock split, stock dividend, combination or exchange
of shares, merger, consolidation, rights offering, separation,
reorganization or liquidation, or any other change in the corporate
structure or shares of the Company, the Committee may make such
equitable adjustments to prevent dilution or enlargement of rights, as
it may deem appropriate, in the number and class of shares so
credited.
4.03 Amounts Credited to the Aon General Account. With respect to an
Employee's election to defer any portion of Compensation or of a
Performance Bonus, a Participant's Aon General Account will be
credited with such additions as the Participant has elected to defer
to such account. For purposes of computing such addition, deferred
amounts shall be credited as of the day such Compensation or
Performance Bonus would have been payable to the Participant had it
not been deferred, and such deferrals shall be credited with interest,
compounded semiannually, at the annual rate determined as of January 1
and July 1 of each year by averaging the one-year Treasury bill yield
as published monthly by the Federal Reserve Bank of St. Louis on a
bank discount basis through the secondary market for the last six
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months immediately prior thereto. The rate of interest shall be so
determined by the Committee but may be modified by the Board at any
time in its exclusive discretion, with prospective effect but with
respect to all prior and all future deferrals; provided, however, that
no such modification may be implemented without advance notice to
Participants affected by the modification.
Such deferred amounts shall be deemed to earn interest from the date
of crediting until the last day of the month preceding (i) the Elected
Distribution Date (as defined in Section 5.02) and every 12-month
anniversary of the Elected Distribution Date in the case of
installment payments; (ii) the Termination Distribution Date (as
defined in Section 5.04) and every 12-month anniversary of the
Termination Distribution Date in the case of installment payments; or
(iii) the hardship distribution date, whichever is applicable.
4.04 Dividends Credited to Aon Common Stock Account. As of each dividend
payment date, each Participant's Aon Common Stock Account shall be
credited with the dividends that would be paid with respect to Aon
common stock on the dividend payment date as if the Participant owned
the stock credited to the Aon Common Stock Account. Dividends will be
credited as if reinvested in whole or fractional shares on the
dividend date.
SECTION 5
METHOD OF DISTRIBUTION OF DEFERRED COMPENSATION
5.01 Election of Distribution. Any amount deferred for any period plus any
earnings or dividends attributable thereto shall be payable under the
method selected by the Participant under Section 5.02, unless the
Participant terminates employment before the Elected Distribution Date
(as defined below) or receives a hardship withdrawal in accordance
with Section 5.05 before the period of deferral has expired.
5.02 Method of Distribution. At the time the Participant elects to defer
Compensation or the Performance Bonus pursuant to Section 3, the
Participant shall also make an irrevocable election as to (i) the
beginning date of distribution with respect to amounts so credited to
the Accounts of the Participant; and (ii) the number of annual
installments, not in excess of ten, over which such distribution will
be made. Payments, subject to the provisions
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of Sections 5.04 and 5.05, shall commence within 30 days following the
date of distribution specified by the Participant in his or her
deferral election (the "Elected Distribution Date"); provided,
however, that the Committee may in its sole discretion determine that
payment shall be made over a shorter or longer period or in more
frequent installments, or commence on an earlier or later date, or any
or all of the above. Each installment shall be withdrawn
proportionately from the Aon Common Stock Account and the Aon General
Account.
5.03 Installment Payments. The first annual installment shall be paid
within the 30-day period following the Elected Distribution Date or
following the Termination Distribution Date, whichever is applicable.
Subsequent annual installments shall be paid within the 30-day period
following the end of each 12-month anniversary of the Elected
Distribution Date or Termination Distribution Date, whichever is
applicable. The amount of the first payment shall be a fraction of
the total balances of the Participant's Accounts for such period (with
interest credited in accordance with Section 4.03; with dividends
credited in accordance with Section 4.04, and with Aon common stock as
valued under Section 5.08), the numerator of which is one and the
denominator of which is the total number of installments elected. The
amount of each subsequent payment shall be a fraction of the total
balances of the Participant's Accounts similarly computed for each
subsequent payment, the numerator of which is one and the denominator
of which is the total number of installments remaining.
5.04 Termination of Employment Prior to Distribution Date. If the
Participant terminates employment for any reason prior to the Elected
Distribution Date, payments shall commence within the 30-day period
following the first business day of the first calendar year following
the year in which employment terminated (the "Termination Distribution
Date"), and distributions shall be made in the same number of annual
installments as had been elected by the Participant at the time of the
deferral election; provided, however, that the Committee may, in its
sole discretion, determine that distribution to a terminated employee
shall commence on any earlier or later date.
5.05 Hardship Withdrawals. If a Participant or Beneficiary would otherwise
suffer severe financial hardship and distribution of amounts credited
to the Accounts has not yet commenced, deferral of amounts may be
suspended and payment of amounts credited to the Accounts shall
commence within 30 days following the determination of the Committee
that such hardship resulted from an unforeseeable emergency that is
caused by an event beyond the control of the Participant or
Beneficiary. Such suspension or withdrawal may not exceed the amount
necessary to meet the emergency.
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For purposes of this section, "unforeseeable emergency" is defined as
a severe financial hardship to the Participant resulting from a sudden
and unexpected illness or accident of the Participant or of a
dependent (as defined in Internal Revenue Code Section 152(a)) of the
Participant, loss of the Participant's property due to casualty or
other similar extraordinary and unforeseeable circumstances arising as
a result of events beyond the control of a Participant. Payment may
not be made to a Participant to the extent that such hardship is or
may be relieved:
(a) through reimbursement or compensation by insurance or otherwise;
(b) by liquidation of the Participant's assets, to the extent the
liquidation of such assets would not itself cause severe
financial hardship.
5.06 Distribution Upon Death after Payments Have Commenced. If any
Participant dies before receiving all amounts credited to such
Participant's Accounts, the unpaid amounts in the Participant's
Accounts shall be paid to the Participant's Beneficiary or
Beneficiaries in accordance with the last effective beneficiary
designation form filed by the Participant with the Company. Such
unpaid amounts shall be paid in the same manner and at the same time
as had been elected by the Participant prior to such Participant's
death.
5.07 Distribution to Beneficiaries. Each Participant shall file with the
Company a form indicating the person, persons, or entity which are to
receive the Participant's benefits under the Plan if the Participant
dies before receiving all the balances in his Accounts. A
Participant's beneficiary designation may be changed at any time prior
to death by execution and delivery of a new beneficiary designation
form. If a Participant has failed to designate a Beneficiary, the
amounts payable hereunder shall be made to such person or persons who,
as of the date payment is to be made under this Plan, would receive
distribution of the Participant's account balances, if any, under the
terms of the Aon Savings Plan, or, if the Participant is not a
participant in the Aon Savings Plan at the time of his death or if the
Beneficiary fails to survive the Participant, payment shall be made in
a lump sum to the estate of the Participant. A Beneficiary who fails
to survive a Participant by at least 10 days shall be deemed to have
predeceased the Participant.
5.08 Distributions from Aon Common Stock Account. The form of
distribution from the Aon Common Stock Account may be elected by the
Participant no fewer than 30 days prior to distribution, or, in the
case of hardship pursuant to Section 5.05, at the time the Committee
determines hardship. Distributions from the Aon Common Stock Account
may be made in cash, in Aon common stock, or in a combination of cash
and Aon common stock; provided, however,
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that the Committee, in its sole discretion, may modify such election
and determine the form of distribution. To the extent each
installment payment will be paid in cash, the cash value of the Aon
common stock credited to the Aon Common Stock Account shall be
obtained by multiplying the number of full and fractional shares to be
converted to cash by the average market price of Aon common stock on
the New York Stock Exchange for the last business day of the month
immediately preceding: (a) in the case of the first annual
installment, the Elected Distribution Date or the Termination
Distribution Date, whichever is applicable; (b) in the case of
subsequent installments, the 12-month anniversary of the Elected
Distribution Date or the 12-month anniversary of the Termination
Distribution Date, whichever is applicable; or (c) the hardship
determination date.
SECTION 6
---------
MISCELLANEOUS
-------------
6.01 Other Benefit Plans. The amount of each Participant's Compensation or
Performance Bonus which the Participant elects to defer under the Plan
shall be deemed compensation for the purpose of calculating the
amount of a Participant's benefits or contributions under all
retirement and welfare benefit plans sponsored by the Company and the
Subsidiaries, except to the extent not permitted under such retirement
or welfare benefit plan and except to the extent not permitted under
the Code.
No amount distributed to a Participant from a Participant's Accounts
under this Plan shall be deemed to be compensation with respect to a
Participant's entitlement to benefits under any employee benefit plan
established by the Company or the Subsidiaries for its employees
unless otherwise specifically provided in such plan.
6.02 Participant's Rights. Establishment of the Plan shall not be
construed to give any Participant the right to be retained in the
Company's or a Subsidiary's service or to any benefits not
specifically provided by the Plan. Neither a Participant nor a
Beneficiary shall have any interest in the deferred compensation or
earnings credited to his accounts. All amounts deferred or otherwise
held for the account of a Participant or a Beneficiary under the Plan
shall remain the sole property of the Company or Subsidiary. With
respect to such amounts, the Participant or Beneficiary is merely a
general creditor, and any obligation of the Company or Subsidiary
hereunder is purely
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contractual and shall not be funded or secured in any way, except as
described in Section 6.03.
In case the claim of any Participant or Beneficiary for benefits under
the Plan is denied, the Company shall provide adequate notice in
writing to such claimant, setting forth the specific reasons for such
denial. The notice shall be written in a manner calculated to be
understood by the claimant. The Company shall afford a Participant or
Beneficiary whose claim for benefits has been denied 60 days from the
date notice of such denial is delivered or mailed in which to appeal
the decision in writing to the Committee. If the Participant or
Beneficiary appeals the decision in writing within 60 days, the
Committee shall review the written comments and any submissions of the
Participant or Beneficiary and render its decision regarding the
appeal all within 60 days of such appeal.
6.03 Change of Control. Upon a Change of Control, the Company shall, as
soon as possible, but in no event longer than 45 days following the
Change of Control, establish an irrevocable grantor trust: (a) subject
to the claims of the Company's creditors; (b) with respect to which
the Participants and Beneficiaries have only the rights of unsecured
general creditors and receive no title or beneficial ownership; (c)
under which benefits payable may not be assigned, alienated, pledged,
attached or encumbered by the Participant or Beneficiary; and (d) in
substantial compliance with the required provisions of Revenue
Procedure 92-64, 1992-33 I.R.B. 11, of the Internal Revenue Service
(or any comparable successor procedure).
At the same time, the Company shall make a contribution to such trust
in an amount that is sufficient to pay each Participant or Beneficiary
the benefits to which such Participants and Beneficiaries would be
entitled pursuant to the terms of the Plan as of the date on which the
Change of Control occurred. Any payments made to a Participant under
the trust for his benefit shall reduce dollar for dollar the amount
payable to the Participant or Beneficiary from the general assets of
the Company.
Upon the occurrence of a Change of Control, this Plan may not be
amended until all accounts have been paid in full and may be
terminated only if all accounts have been paid in full.
6.04 Nonalienability and Nontransferability. The rights of a Participant to
the payment of deferred compensation as provided in the Plan shall not
be assigned, transferred, pledged or encumbered, or be subject in any
manner to alienation or anticipation. No Participant may borrow
against his Accounts. No Accounts shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, or levy of any kind,
whether voluntary or involuntary, including any liability which is for
alimony or other payments for the support of a spouse or former
spouse, or for any other relative of any Participant.
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6.05 Plan Administrator. The administrator of the Plan shall be the
Committee, which shall have authority to adopt rules and regulations
for carrying out the Plan, to delegate its administrative
responsibilities as it shall, from time to time, deem advisable, and
to interpret, construe, and implement the provisions thereof. Any
decision or interpretation of any provision of the Plan adopted by the
Committee shall be final and conclusive.
6.06 Amendment and Termination. The Plan may, at any time (except as
provided in Section 6.03 upon a Change of Control), be amended,
modified, or terminated by action of the Board. No amendment,
modification, or termination shall, without the consent of a
Participant, adversely affect such Participant's rights with respect
to amounts accrued in his or her Accounts.
SECTION 7
---------
GENERAL PROVISIONS
------------------
7.01 Notices. All notices to the Company hereunder shall be delivered to
the attention of the Secretary of the Company. Any notice or filing
required or permitted to be given to the Company under this Plan shall
be sufficient if in writing and hand delivered, or sent by registered
or certified mail, to the Company at the principal office of the
Company. Such notice shall be deemed given as of the date of delivery
or, if delivery is made by mail, as of the date shown on the postmark
or the receipt for registration or certification.
7.02 Controlling Law. Except to the extent superseded by federal law, the
laws of Illinois shall be controlling in all matters relating to the
Plan.
7.03 Gender and Number. Where the context admits, words in the masculine
gender shall include the feminine and neuter genders, the plural shall
include the singular and the singular shall include the plural.
7.04 Captions. The captions of Sections and paragraphs of this Plan are
for convenience only and shall not control or affect the meaning of
construction of any of its provisions.
7.05 Action by the Company. Any action required or permitted by the
Company under the Plan shall be by resolution of its Board or any
person or persons authorized by resolution of its Board.
7.06 Facility of Payment. Any amounts payable hereunder to any person
under legal disability or who, in the judgment of the Company, is
unable to properly manage his financial affairs may be paid to the
legal representative of such
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person or may be applied for the benefit of such person in any manner
which the Company may select.
7.07 Withholding Payroll Taxes. To the extent required by the laws in
effect at the time distributions or contributions are made to this
Plan, the Company shall withhold from such payments any taxes required
to be withheld for federal, state, or local government purposes. A
participant shall have the duty to pay to the Company or the
Subsidiary an amount equal to the taxes required by any government to
be withheld or otherwise deducted and paid by the Company or a
Subsidiary as a result of the distribution to the Participant of
shares of stock. Such shares shall not be delivered to the
Participant until such time as such payment has been made.
7.08 Severability. Whenever possible, each provision of the Plan shall be
interpreted in such manner as to be effective and valid under
applicable law (including the Internal Revenue Code), but if any
provision of the Plan shall be held to be prohibited by or invalid
under applicable law, then (a) such provision shall be deemed amended
to, and to have contained from the outset such language as shall be
necessary to, accomplish the objectives of the provision as originally
written to the fullest extent permitted by law and (b) all other
provisions of the Plan shall remain in full force and effect.
7.09 Liability. No member of the Board, no employee of the Company or a
Subsidiary, and no member of the Committee (nor the Committee itself)
shall be liable for any act or action hereunder whether of omission or
commission, by any other member or employee or by any agent to whom
duties in connection with the administration of the Plan have been
delegated or, except in circumstances involving his bad faith, gross
negligence or fraud, for anything done or omitted to be done by
himself. The Company will fully indemnify and hold the members of the
Committee harmless from any liability hereunder, except in
circumstances involving a Committee member's bad faith, gross
negligence, or fraud. The Company or the Committee may consult with
legal counsel, who may be counsel for the Company or other counsel,
with respect to its obligation or duties hereunder, or with respect to
any action or proceeding or any question of law, and shall not be
liable with respect to any action taken or omitted by it in good faith
pursuant to the advice of counsel.
7.10 Successors. The provisions of the Plan shall bind and inure to the
benefit of the Company and its successors and assigns. The term
"successors" as used herein shall include any corporation or other
business entity which shall by merger, consolidation, purchase, or
otherwise, acquire all or substantially all of the business and assets
of the Company and successors of any such corporation or other
business entity.
7.11 Unfunded Status of the Plan. Except as provided in Section 6.03, any
and all payments made to the Participant pursuant to the Plan shall be
made only from the general assets of the Company or a Subsidiary. All
accounts under
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the Plan shall be for bookkeeping purposes only and shall not
represent a claim against specific assets of the Company or the
Subsidiaries. Nothing contained in this Plan shall be deemed to
create a trust of any kind or create any fiduciary relationship.
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IN WITNESS WHEREOF, Aon Corporation hereby adopts the Aon Deferred
Compensation Plan, effective as set forth above, as of this __________________
day of _________________________, 19___.
AON CORPORATION
By:_______________________________
Executive Vice President
15
