<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [ ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Aon Corporation
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Aon Corporation
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
(5) Total fee paid:
- - --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- - --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- - --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- - --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE> 2
AON CORPORATION
- - --------------------------------------------------------------------------------
Notice of Annual Meeting of Holders of Common Stock
and Series C Preferred Stock to be held April 17, 1998
- - --------------------------------------------------------------------------------
To the Stockholders of
AON CORPORATION
NOTICE IS HEREBY GIVEN that the annual meeting of the holders of shares of
Common Stock and Series C Preferred Stock of Aon Corporation will be held on
Friday, April 17, 1998, at 10:00 A.M., at The First Chicago Center, One First
National Plaza, Chicago, Illinois, for the following purposes:
1. To elect directors pursuant to the By-Laws. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION OF ALL
NOMINEES.
2. To approve and adopt the Aon 1998 Employee Stock Purchase Plan (the
"Plan"). THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" THE ADOPTION OF THE PLAN.
3. To adopt a resolution ratifying the appointment of Ernst & Young LLP as
the Company's independent auditors for the year 1998. THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ADOPTION OF THE RESOLUTION.
4. To consider a proposal made by a stockholder as set forth beginning on
page 25 of the Proxy Statement. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS VOTE "AGAINST" THE PROPOSAL.
5. To transact such other business as may properly come before the meeting.
The close of business on Wednesday, February 25, 1998 has been fixed as the
record date for the determination of stockholders entitled to vote at the
stockholders' meeting. Only those stockholders of record at the close of
business on such date will be entitled to vote at the meeting.
Aon Corporation
KEVANN M. COOKE
Kevann M. Cooke
Corporate Secretary
March 9, 1998
<PAGE> 3
AON CORPORATION
123 NORTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
- - --------------------------------------------------------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS ON APRIL 17, 1998
- - --------------------------------------------------------------------------------
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 17, 1998. 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, 1997, including financial statements, is being mailed to stockholders,
together with this Proxy Statement, beginning on or about March 9, 1998. 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 if mailed from within the United States. 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 and not otherwise revoked 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 owned are voted.
If no specific direction is marked on a duly executed proxy as to the
manner of voting, the proxy will be voted in accordance with the recommendations
of the Board of Directors set forth herein. Please see page 27 of this Proxy
Statement for more details regarding voting procedures.
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 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 $8,500. The enclosed proxy is
solicited by and on behalf of the Board of Directors.
1
<PAGE> 4
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on February 25, 1998, which is the record date
fixed for determination of stockholders entitled to vote at the meeting, there
were 167,971,048 Common Shares and 1,000,000 Preferred Shares outstanding, each
entitled to one vote.
As of February 25, 1998, the beneficial owners of 5% or more of any class
of the Company's securities entitled to vote at the meeting and which were known
to the Company were:
<TABLE>
<CAPTION>
No. of Common Percent of
Name and Address Shares Class (%)
---------------- ------------- ----------
<S> <C> <C>
Patrick G. Ryan 20,481,873(1) 12.2
c/o Aon Corporation
123 North Wacker Drive
Chicago, IL 60606
Brinson Partners, Inc. 11,215,175(2) 6.7
209 S. LaSalle Street
Chicago, IL 60604
Putnam Investments, Inc. 10,232,241(2) 6.1
One Post Office Square
Boston, MA 02109
No. of Preferred Percent of
Name and Address Shares Class
- - ----------------------------------------- ---------- -----
W. Clement Stone 400,000 40
c/o W. Clement Stone
Enterprises, Inc.
P.O. Box 649
Lake Forest, IL 60045
Jessie V. Stone 600,000 60
c/o W. Clement Stone
Enterprises, Inc.
P.O. Box 649
Lake Forest, IL 60045
</TABLE>
- - ------------
(1) Includes 14,909,625 Common Shares owned by Ryan Enterprises Corporation of
Illinois or its wholly-owned subsidiaries ("REC") or by Ryan Holding
Corporation of Illinois or its wholly-owned subsidiaries ("RHC") and 2,069
shares owned by the Company's Employee Stock Ownership Plan and allocated to
Mr. Ryan, and 196,909 shares beneficially owned and attributed to Mr. Ryan
pursuant to his investment in the Aon Common Stock Fund through the Aon
Savings Plan. 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 864,900 Common Shares held of record and beneficially owned by Mrs.
Ryan; Mr. Ryan disclaims any beneficial interest in these shares. Under the
terms of the Employee Stock Ownership Plan and under the terms of the Aon
Savings Plan, as a participant in such plans Mr. Ryan is entitled to direct
the manner in which the respective trustees will vote the shares allocated
to him. Unallocated shares of the plans are voted by the respective trustees
in the same manner and proportion as allocated shares for which timely
instructions have been received from all participants. Also includes 90,000
shares which Mr. Ryan has the right to acquire pursuant to presently
exercisable stock options and options which will become exercisable within
60 days of February 25, 1998.
(2) Includes to the best knowledge of the Company all shares beneficially owned
by its parent, subsidiaries and affiliates.
2
<PAGE> 5
AGENDA ITEM NO. 1
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
nominees are currently Directors of the Company, except Ms. Woo, who has been
nominated for the first time. Mr. Notebaert was elected as a director in March
of this year. 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 Insurance
Company of America ("Combined Insurance"), a subsidiary of the Company, or Ryan
Insurance Group, Inc. ("Ryan Group"), which merged with the Company in 1982.
Ages shown for all Directors are as of December 31, 1997. 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 Group in 1982. Prior to the merger, Mr. Ryan served as Chairman
of the Board and Chief Executive Officer of Ryan Group. Mr. Ryan served as a
director of First Chicago NBD Corporation from 1983 until May, 1997. He is a
director of the Tribune Company and Sears, Roebuck and Co. and serves as
Chairman of the Board of Trustees of Northwestern University and as a Trustee of
Rush-Presbyterian-St. Luke's Medical Center. He serves as Chairman of the
Executive Committee of the Company.
Age: 60
- - --------------------------------------------------------------------------------
DANIEL T. CARROLL Director since 1980
Mr. Carroll is Chairman of The Carroll Group, a management consulting firm. 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 director of A.M. Castle Co.; American Woodmark Corporation;
Comshare, Inc.; Diebold, Inc.; Oshkosh Truck Corporation; Wolverine World Wide,
Inc.; and Woodhead Industries, Inc. He serves as a member of the Audit and the
Investment Committees of the Company.
Age: 71
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3
<PAGE> 6
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 Bank and Trust Company
of Chicago; CNA Income Shares, Inc.; Duff & Phelps Utilities Income Inc.; and
Local Initiatives Support Corporation. He is a Life Trustee of Northwestern
University and Chairman of The Human Relations Foundation of Chicago. He serves
as a member of the Audit and the Investment Committees of the Company.
Age: 71
- - --------------------------------------------------------------------------------
EDGAR D. JANNOTTA Director since 1995
On January 2, 1996, William Blair & Company, L.L.C., an international investment
banking firm, converted from a partnership at which time Mr. Jannotta was named
Senior Director. Prior to this conversion, 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;
Molex Incorporated; New York Stock Exchange, Inc.; Oil-Dri Corporation of
America; Safety-Kleen Corp.; and Unicom Corporation. He serves as a member of
the Investment and the Organization and Compensation Committees of the Company.
Age: 66
- - --------------------------------------------------------------------------------
PERRY J. LEWIS Director since 1972
Mr. Lewis is a Managing Director of Morgan Lewis Githens & Ahn, an 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
Chancellor Media Corporation; Gradall Industries, Inc.; ITI Technologies, Inc.;
and Stuart Entertainment, Inc. He serves as a member of the Audit and the
Investment Committees of the Company.
Age: 59
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4
<PAGE> 7
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 and Chief
Executive Officer of Schwarz Paper Company, a printer, converter, producer and
distributor of packaging and promotional materials; and a director of Dean Foods
Company, The First National Bank of Chicago, First Chicago NBD Corporation,
McDonald's Corporation, Skyline Corporation, and the Tribune Company. He is
Chairman of the Board of Trustees of the University of Notre Dame and 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 Lyric Opera. He serves
as Chairman of the Nominating Committee and as a member of the Organization and
Compensation Committee of the Company.
Age: 68
- - --------------------------------------------------------------------------------
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 Big Flower
Press Holdings Inc.; Manpower, Inc. and Sara Lee Corporation. Mr. Minow is
former Chairman of the Carnegie Corporation of New York, an Advisory 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 Life Trustee of the University of
Notre Dame and is the Annenberg Professor of Communications and Law at
Northwestern University. He serves as a member of the Organization and
Compensation and the Nominating Committees of the Company.
Age: 71
- - --------------------------------------------------------------------------------
RICHARD C. NOTEBAERT Director since 1998
Mr. Notebaert has been Chairman of the Board, President and Chief Executive
Officer of Ameritech Corporation, a full-service communications company, since
April 1994. Mr. Notebaert served as President and Chief Executive Officer of
Ameritech Corporation from January 1994 to April 1994, as President and Chief
Operating Officer from June 1993 to January 1994 and as Vice Chairman from
January 1993 to June 1993. He served as President of Ameritech Services, Inc., a
wholly-owned subsidiary of Ameritech's five state telephone companies, from June
1992 to January 1993, as President of Ameritech's Indiana Bell subsidiary from
1989 to 1992 and as President of Ameritech Mobile Communications, Inc. from 1986
to 1989. Mr. Notebaert is a director of Sears, Roebuck and Co., a Charter
Trustee of Northwestern University, a Trustee of the University of Notre Dame
and the Chicago Symphony Orchestra. He is currently a member of The Business
Council, The Business Roundtable, The Council on Competitiveness, The Chicago
Council on Foreign Relations, The Civic Committee of The Commercial Club of
Chicago and The Economic Club of Chicago.
Age: 50
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5
<PAGE> 8
DONALD S. PERKINS Director since 1983
Mr. Perkins retired from Jewel Companies Inc., the retail supermarket and drug
chain, 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
Cummins Engine Company, Inc.; Current Assets; LaSalle Street Fund, Inc.; LaSalle
U.S. Realty Income & Growth Fund, Inc.; Lucent Technologies; Nanophase
Technologies, Inc.; Ryerson Tull, Inc.; Springs Industries, Inc.; and Time
Warner, Inc. He is a trustee for The Putnam Funds, and is Vice Chairman of the
Board of Trustees of Northwestern University. He serves as Chairman of the
Organization and Compensation Committee and as a member of the Nominating
Committee of the Company.
Age: 70
- - --------------------------------------------------------------------------------
JOHN W. ROGERS, JR. Director since 1993
Mr. Rogers is President of Ariel Capital Management, Inc., the institutional
money management firm which he founded in 1983. He is also a director of First
Chicago NBD Corporation; The First National Bank of Chicago; and Burrell
Communications Group Inc. Mr. Roger's civic affiliations include: President of
the Board of Commissioners of the Chicago Park District; Director of the Chicago
Urban League; Former Member of the Board of Governors of the National
Association of Securities Dealers, Inc.; Trustee of Rush-Presbyterian--St.
Luke's Medical Center; Board Member of the Chicago Symphony Orchestra; Director
of Family Focus, Inc.; Member of the Council on the Graduate School of Business
of the University of Chicago; and a former member of the Board of Trustees of
Princeton University. He serves as a member of the Audit and the Investment
Committees of the Company.
Age: 39
- - --------------------------------------------------------------------------------
GEORGE A. SCHAEFER Director since 1991
Mr. Schaefer served as Chairman and Chief Executive Officer of Caterpillar Inc.,
the construction machinery and equipment manufacturing company, from 1985 until
his retirement in July, 1990. Mr. Schaefer is a director of Caterpillar Inc.;
Helmerich & Payne, Inc.; Autoliv, Inc.; and Morton International, Inc. He is a
member of The Business Council. He serves as Chairman of the Audit Committee and
as a member of the Organization and Compensation Committee of the Company.
Age: 69
- - --------------------------------------------------------------------------------
6
<PAGE> 9
RAYMOND I. SKILLING Director since 1977
Mr. Skilling has served as Executive Vice President and Chief Counsel of the
Company since 1980. Between 1976 and 1980 he was Executive Vice
President--Planning and Implementation. Prior to that 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. He
serves as a member of the Executive Committee of the Company.
Age: 58
- - --------------------------------------------------------------------------------
FRED L. TURNER Director since 1991
Mr. Turner is Senior Chairman, Chairman of the Executive Committee and a
Director of McDonald's Corporation, the international fast food restaurant
franchising company. 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 House Charities.
He serves as a member of the Organization and Compensation Committee and as
Chairman of the Investment Committee of the Company.
Age: 64
- - --------------------------------------------------------------------------------
ARNOLD R. WEBER Director since 1991
Dr. Weber served as President of Northwestern University from 1985 until 1994.
On January 1, 1995 he became Chancellor of Northwestern University. From 1980 to
1985, Dr. Weber was President of the University of Colorado. Dr. Weber has also
held various senior federal 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 Santa Fe Corporation; Inland
Steel Industries, Inc.; PepsiCo, Inc.; Deere & Company; and the Tribune Company.
He is a trustee of the University of Notre Dame. He serves as a member of the
Audit and Investment Committees of the Company.
Age: 68
- - --------------------------------------------------------------------------------
7
<PAGE> 10
CAROLYN Y. WOO
Dr. Woo assumed the deanship of the College of Business at the University of
Notre Dame in August 1997. From 1995 to 1997, she served as Associate Executive
Vice President of Academic Affairs at Purdue University and from 1993 to 1995 as
Director of the Professional Master's Programs in the Krannert School of
Management at Purdue University. She joined Purdue University as an Assistant
Professor in 1981 and was promoted to Full Professor in 1991. Dr. Woo currently
serves on the Board of Directors of Bindley-Western Industries, Inc. and of
NIPSCO Industries, Inc.
Age: 43
- - --------------------------------------------------------------------------------
8
<PAGE> 11
OWNERSHIP OF COMMON SHARES
The following table sets forth the number of Common Shares beneficially
owned as of February 25, 1998 by each Director including Patrick G. Ryan and
Raymond I. Skilling, by each of the other four most highly compensated executive
officers, and by all Directors and the Named Executives (as hereinafter defined)
combined. 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 the 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 under the Outside Director Deferred Compensation
and Stock Award Plans (see "Compensation of the Board of Directors"), the Aon
Deferred Compensation Plan (see "Executive Compensation"), or the Aon Stock
Award Plan (see "Organization and Compensation Committee Report--Long Term
Incentive Compensation--Aon Stock Award Plan") except as noted in footnotes 7
and 8.
<TABLE>
<CAPTION>
No. of Shares Percent of
Directors Beneficially Owned(1) Class(2)
--------- --------------------- ----------
<S> <C> <C>
Patrick G. Ryan(3)(4)(8).................................... 20,481,873 12.2
Daniel T. Carroll(9)........................................ 3,150 *
Franklin A. Cole(9)......................................... 3,375 *
Edgar D. Jannotta(9)........................................ 38,025 *
Perry J. Lewis(9)........................................... 5,175 *
Joan D. Manley.............................................. 6,075 *
Andrew J. McKenna(9)........................................ 11,025 *
Newton N. Minow(9).......................................... 90,675 *
Richard C. Notebaert(9)..................................... 731
Peer Pedersen............................................... 21,717 *
Donald S. Perkins(5)(9)..................................... 7,650 *
John W. Rogers, Jr.(6)(9)................................... 4,437 *
George A. Schaefer(9)....................................... 6,525 *
Raymond I. Skilling(3)(4)(7)(8)............................. 434,956 *
Fred L. Turner(9)........................................... 3,880 *
Arnold R. Weber(9).......................................... 2,250 *
Carolyn Y. Woo(9)........................................... 675
Totals................................................. 21,122,194
Executives
- - ------------------------------------------------------------
Daniel T. Cox(3)(4)(7)(8)................................... 74,856 *
Harvey N. Medvin(3)(4)(7)(8)(10)............................ 530,720 *
Michael D. O'Halleran(3)(4)(7).............................. 93,165
All Directors and Named Executives combined (19 persons).... 21,820,935 13.0
</TABLE>
- - ------------
(1) The Directors and Named Executives, and all Directors and the Named
Executives combined, 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..................................... 14,909,625 Shared Shared
Franklin A. Cole.................................... 2,700 Shared Shared
Arnold R. Weber..................................... 1,575 Shared Shared
Michael D. O'Halleran............................... 47,913 Shared Shared
All Directors and Named Executives combined
(other than as indicated in note (3))............. 14,961,813
</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.
9
<PAGE> 12
(3) Includes the following Common Shares beneficially owned by members of the
immediate family of the directors and Named Executives: 864,900 by Mrs.
Ryan; 3,850 by Mrs. Cox; 450 by Mr. Cox's son; 3,375 by Mrs. Medvin; 33,750
by Mrs. Minow; 25,381 by Mrs. O'Halleran; and 249,889 by Mrs. Skilling
(Mrs. Skilling and Mrs. Ryan are sisters). As to the Common Shares so held,
the directors and Named Executives disclaim beneficial ownership.
(4) Includes beneficial interest in the allocated shares of the Aon Employee
Stock Ownership Plan ("ESOP"), and includes beneficial interest in
attributable shares of the Aon Common Stock Fund held pursuant to
investment through the Aon Savings Plan, but excludes the unallocated
shares of the ESOP. Unallocated Common Shares owned by the ESOP, which are
owned for the benefit of all participating employees, totaled 733,941. The
allocated and unallocated shares owned by the ESOP, and the attributed
Common Shares of the Aon Common Stock Fund of the Aon Savings Plan are
voted by the trustees as directed by their respective participants.
(5) Excludes 9,942,331 Common Shares held in trust by The Putnam Funds 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.
(6) Ariel Capital Management, Inc., of which Mr. Rogers is President and
founder, does not beneficially own any Common Shares nor has it
beneficially owned any Common Shares during Mr. Rogers' tenure on the Board
of the Company.
(7) Does not include shares awarded under the Aon Stock Award Plan which are
not yet vested. See "Summary Compensation Table." Also does not include
shares awarded which have vested but receipt of which have been deferred
under the Aon Stock Award Plan. Such shares are credited to a bookkeeping
account on a dividend reinvested basis. Accumulated balances as of December
31, 1997 were as follows: Mr. Cox, 21,381; Mr. Medvin, 5,052.
(8) Includes the following number of Common Shares which the respective
Directors and Named Executives will have the right to acquire pursuant to
presently exercisable employee stock options, or stock options or stock
awards which will become exercisable or vested within 60 days following
February 25, 1998: Patrick G. Ryan, 90,000; Daniel T. Cox, 16,875; Harvey
N. Medvin, 26,625; Raymond I. Skilling, 7,500.
(9) Includes 675 Common Shares which each outside Director will have the right
to acquire pursuant to the Aon Outside Director Stock Award Plan within 60
days following February 25, 1998.
(10) Excludes 3,300 shares owned by a charitable foundation for which Mr.
Medvin's spouse acts as a trustee and has shared voting and investment
control.
COMPENSATION OF THE BOARD OF DIRECTORS
Each Director who is not a salaried employee of the Company or any of its
subsidiaries ("an outside Director") receives a $20,000 yearly retainer for
services to the Board of Directors. In addition, the Chairman of the Nominating,
the Organization and Compensation, the Audit, and the Investment Committees,
respectively, receives an additional $2,500 annually for services in such
capacities. In addition to the above retainers, outside Directors receive $750
for each Board and Board Committee meeting attended. Under the Aon Outside
Director Stock Award Plan (as amended and restated in 1994) (the "Award Plan"),
outside Directors are granted 675 (as adjusted for the May 1997 stock split)
Common Shares each year following their election at the annual meeting of
stockholders. Any outside Director elected to the Board other than at the annual
stockholders' meetings receives a pro rata number of Common Shares. Officers of
the Company or its subsidiaries do not receive any additional compensation for
membership on the Board of Directors or any of its Committees.
10
<PAGE> 13
Under the Award Plan, outside Directors are also entitled to certain
benefits when they retire from the Board. The Award Plan provides for an amount
to be credited to an account on behalf of each outside Director, as follows:
(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 will accrue pro rata over the number of years between 1994
and the normal retirement date of the Director. The benefit for the years of
service commencing in 1994 will accrue in full on each service anniversary date.
Upon retirement from the Board, or upon death or disability, the vested value
accumulated in the account as to a particular outside Director (the "Accrued
Vested Retirement Amount") will be distributed in ten substantially equal
installments consisting of Common Shares. The amount of Common Shares to be
delivered will be calculated by dividing the Accrued Vested Retirement Amount by
the average of the high and low market price of Common Shares on the normal
retirement date for each outside Director.
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 outside Directors, to recognize the mutual interest of the Company and its
outside Directors in supporting worthy charitable institutions and to assist the
Company in attracting and retaining outside Directors of the highest caliber.
The Company is funding the Bequest Plan generally through the maintenance of
life insurance policies on its outside Directors. The charitable donations by
the Company will be directed to charitable institutions designated by the
outside Directors. The Bequest Plan is designed so that upon the deaths of
specified outside Directors, it will then donate a maximum of $100,000 per
outside Director each year for ten years in the name of the outside Director to
tax qualified institutions designated by the outside Director. Individual
outside Directors derive no financial benefit from the Bequest Plan since any
and all insurance proceeds and tax deductible charitable donations accrue solely
to the Company. An outside Director is not eligible to participate in the
Bequest Plan until he or she has completed one full year of service on the
Board. 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.
DIRECTORS DEFERRED STOCK ARRANGEMENTS AND SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to the outside Director Deferred Compensation Plan (the "Deferred
Plan"), and pursuant to the Award Plan, outside Directors may defer cash
compensation and Common Shares earned into phantom stock accounts, the value of
which is measured by reference to Common Shares.
Under the Deferred Plan, outside 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 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 outside
Directors' benefit. The outside 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 Shares 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 Common Shares, each
outside 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 outside Director specifies a
11
<PAGE> 14
payout schedule, including a commencement date, pursuant to which the Company
will distribute to the outside Director the amount in the outside Director's
cash account and either the cash equivalent of the amount in the outside
Director's phantom stock account, or Common Shares equal to the number of shares
of phantom stock.
Under the Award Plan, outside Directors may also elect to defer receipt of
the 675 Common Shares and instead maintain a phantom stock account. As dividends
are declared on Common Shares, each outside Director's phantom stock account,
for bookkeeping purposes, is credited with the dividends which would have been
earned if Common Shares had been received and the funds so credited are treated
as if reinvested in Common Shares. Outside 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.
The following table shows, as of February 25, 1998, the total number of
shares credited to the outside Directors' respective phantom stock accounts
under the Deferred Plan and under the Award Plan ("Phantom Shares"), and the
number of Common Shares representing the Accrued Vested Retirement Amount (the
"Retirement Shares") for each outside Director under the Award Plan:
<TABLE>
<CAPTION>
Number of Number of
Phantom Retirement
Director Shares Shares
- - -------- --------- ----------
<S> <C> <C>
Daniel T. Carroll*............................. 27,209 4,106
Franklin A. Cole*.............................. 34,607 3,649
Edgar D. Jannotta*............................. 4, 640 307
Perry J. Lewis................................. 6,212 2,395
Joan D. Manley*................................ 16,317 2,654
Andrew J. McKenna*............................. 27,409 2,965
Newton N. Minow................................ 7,489 2,190
Peer Pedersen**................................ 32,044 4,865
Donald S. Perkins*............................. 16,266 3,649
John W. Rogers, Jr.*........................... 6,356 925
George A. Schaefer............................. 2,701 1,551
Fred L. Turner*................................ 11,160 1,451
Arnold R. Weber*............................... 8,158 1,517
------- ------
Total................................... 200,568 32,224
</TABLE>
The Company has fully reported deferrals by outside Directors of cash
compensation into Phantom Share accounts in the Deferred Plan and in the Award
Plan on a cumulative basis for each year since 1993 in a form similar to that
set out in the above table, despite the fact that the Company was not required
to do so under the relevant proxy rules. Based on the Company's review of copies
of Forms 3, 4, and 5, and amendments thereto, the Company believes that since
January 1, 1997 all relevant reports required to be filed have been filed,
subject to the following exceptions. The 1994 and 1995 deferrals of cash
compensation into Phantom Share accounts pursuant to the Deferred Plan by each
of the outside Directors indicated by an asterisk in the above table and the
1994, 1995 and 1996 deferrals of cash compensation into the Phantom Share
account of the outside Director indicated by an additional asterisk were all
reported on Forms 5 on February 17, 1998, later than required, due to errors by
the Company. No such outside Director has disposed of any Common Shares since
1993 or has begun receiving any deferred amounts. In the interest of continuing
to keep all stockholders informed of deferrals of cash compensation by outside
Directors into Phantom Share accounts under the Deferred Plan, under the Award
Plan and the number of Common Shares representing the Accrued Vested Retirement
Amount, the Company intends to continue to make voluntary disclosures in future
years in the form of the above table.
12
<PAGE> 15
THE BOARD OF DIRECTORS COMMITTEES AND MEETINGS
The Board of Directors of the Company has appointed standing committees,
including Executive, Audit, Investment, Organization and Compensation, and
Nominating Committees. Membership on the committees since the last annual
meeting of the Board in 1997 has been as follows:
<TABLE>
<CAPTION>
Organization and
Executive Audit Investment Compensation Nominating
--------- ----- ---------- ---------------- ----------
<S> <C> <C> <C> <C>
Patrick G. Ryan(1) George A. Schaefer(1) Fred L. Turner(1) Donald S. Perkins(1) Andrew J. McKenna(1)
Peer Pedersen Daniel T. Carroll Daniel T. Carroll Edgar D. Jannotta Joan D. Manley
Raymond I. Skilling Franklin A. Cole Franklin A. Cole Andrew J. McKenna Newton N. Minow
Joan D. Manley Edgar D. Jannotta Newton N. Minow Peer Pedersen
Perry J. Lewis Perry J. Lewis George A. Schaefer Donald S. Perkins
John W. Rogers, Jr. Peer Pedersen Fred L. Turner
Arnold R. Weber John W. Rogers,
Jr.
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 met once
during 1997, and acted by unanimous written consent on five 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 three times during
1997.
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 five times
during 1997.
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 regarding possible
candidates, the Committee will consider stockholders' recommendations.
Suggestions, together with a description of the proposed nominee's
qualifications, stock holdings 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 13 in order
to be considered in connection with the annual meeting of the Company's
stockholders in the spring of the following year. The Nominating Committee did
not meet during 1997, but did meet in March of 1998, at which time it discussed
the vacancies which would result from the retirements from the Board of Ms.
Manley and Mr. Pedersen, each of which will become effective as of April 17,
1998. The Committee unanimously recommended Mr. Notebaert and Ms. Woo as
nominees for election at the earliest practicable date. Mr. Notebaert was first
elected by the Board of Directors on March 5, 1998; Ms. Woo is a nominee for
election at the annual meeting of the Company on April 17, 1998.
The Organization and Compensation Committee annually reviews and determines
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 Chairman, 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 Aon Stock Option Plan, the Aon Stock Award Plan and the Aon Deferred
Compensation Plan, including granting stock options and stock awards and
interpreting the plans, and has general
13
<PAGE> 16
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 six times
during 1997.
The Board of Directors met eight times during 1997 and acted by unanimous
written consent on one occasion. 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.
EXECUTIVE COMPENSATION
The following table discloses compensation received by the Company's Chief
Executive Officer and the other four most highly compensated executives (the
"Named Executives") for the three fiscal years ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Other Long- All
Annual Restrictive Term Other
Compen- Stock Incentive Options/ Compen-
Name and Principal sation Award(s) Payouts SARs sation
Position Year Salary $ Bonus $ ($) ($)(1) ($) (#) ($)(2)
------------------ ---- -------- ------- ------- ----------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Patrick G. Ryan.................... 1997 1,032,692 731,250 258,114(3) 225,000 187,637
Chairman, President, Chief 1996 957,692 1,620,000 178,659 150,000 184,513
Executive Officer & Director 1995 886,968 742,500 163,697 75,000 53,396
Daniel T. Cox...................... 1997 439,231 456,750 91,617
Executive Vice President 1996 415,385 528,000 515,000 72,244
1995 401,305 365,500 29,650
Harvey N. Medvin................... 1997 501,923 356,250(4) 25,000 95,893
Executive Vice President, 1996 463,462 637,500 772,500 22,500 86,142
Chief Financial Officer 1995 428,600 361,250 375,500 30,332
& Treasurer
Michael D. O'Halleran(5)........... 1997 750,000 582,500 125,623
President & Chief 1996 750,000 850,000 302,630 1,490,625 525,611
Operating Officer, Aon Group, 1995 750,000 665,000 50,938
Inc.
Raymond I. Skilling................ 1997 501,923 356,250 650,625 35,000 97,376
Executive Vice President, 1996 463,462 637,500 87,550
Chief Counsel & Director 1995 428,600 361,250 375,500 30,332
</TABLE>
- - ------------
(1) As of December 31, 1997, the Named Executives held the following number of
unvested shares of restricted stock granted pursuant to the Aon Stock Award
Plan, the vesting schedule for which and the market value (the average high
and low price on the relevant date) of which, on the dates of grant and as
of year-end 1997 are respectively set forth below:
<TABLE>
<CAPTION>
No. Shares Date of Grant December 31, 1997 Last Vesting
Unvested Value ($) Value Date
---------- ------------- ----------------- ------------
<S> <C> <C> <C> <C>
Daniel T. Cox..................... 48,750 1,041,241 2,827,500 March 14, 2006
Harvey N. Medvin.................. 61,125 1,403,998 3,545,250 March 14, 2006
Michael D. O'Halleran............. 173,427 3,959,964 10,058,766 January 2, 2006
Raymond I. Skilling............... 41,250 1,146,562 2,392,500 March 20, 2007
</TABLE>
No dividends are paid on shares of unvested restricted stock.
(2) The amounts disclosed in this column include:
(a) Company contributions of $4,800 in fiscal year 1997 under the Aon
Savings Plan, a defined contribution plan, on behalf of each of the
Named Executives except Mr. Ryan who no longer participates in the
Plan.
14
<PAGE> 17
(b) Company contributions of $11,090 in fiscal year 1997 under the ESOP, on
behalf of each of the Named Executives.
(c) Company contributions of the following amounts in fiscal year 1997
under the Aon Supplemental ESOP on behalf of Mr. Ryan, $111,176; Mr.
Cox, $51,014; Mr. Medvin, $48,393; Mr. O'Halleran, $79,885; and Mr.
Skilling, $48,393.
(d) Company contributions of the following amounts for fiscal 1997 under
the Aon Executive Life Insurance Plan, a split-dollar arrangement, on
behalf of Mr. Ryan, $65,371; Mr. Cox, $24,713; Mr. Medvin, $31,610; Mr.
O'Halleran, $29,848; and Mr. Skilling, $33,093.
(3) Represents perquisites related to the personal use of company-owned
automobiles and aircraft, and miscellaneous personal services provided for
business purposes considered to be reasonable and necessary business
expenses of the Company which, in the case of Mr. Ryan for 1997, consisted
of the use of the Company aircraft and the use of a Company car and driver.
(4) Mr. Medvin deferred receipt of $106,854 of this amount pursuant to the
Company's Deferred Compensation Plan.
(5) Mr. O'Halleran and a subsidiary of the Company have entered into an
employment contract having a term ending December 31, 1998, subject to
renewal. The contract provides: an annual base salary of $750,000 and
benefits generally available to senior executives; stock awards in the
amount of 20,000 shares (subject to subsequent stock splits) on January 1 of
1994, 1996 and 1998; and restrictive covenants for the benefit of the
Company for a period of two years following termination. The contract may be
terminated with or without cause. In the event of an involuntary termination
(except for cause, as defined in the contract) or death or disability prior
to December 31, 1998, additional compensation in the amount of $750,000 will
be paid and the unvested portion of any stock award already made will be
accelerated and become fully vested. If the contract is not renewed after
December 31, 1998, compensation will continue to be paid at the contractual
rate for two years.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES(1)
The following table provides information on stock option exercises in
fiscal 1997 by the Named Executives:
<TABLE>
<CAPTION>
Value of Unexercised
Shares Subject to In-the-Money Options/SAR's
Shares Value Options Fiscal Year-End at Fiscal Year End(2)
Acquired Realized ---------------------------- ----------------------------
Name on Exercise ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Patrick G. Ryan........ -- -- 40,500 544,500 1,432,124 12,744,756
Daniel T. Cox.......... -- -- 6,750 15,750 238,687 556,937
Harvey N. Medvin....... -- -- 13,500 79,000 477,374 1,770,592
Michael D.
O'Halleran........... -- -- -- -- -- --
Raymond I. Skilling.... 6,750 132,656 -- 50,750 -- 730,841
</TABLE>
- - ------------
(1) Based upon the average high and low price of the Common Shares as of the
date exercised.
(2) Based upon the average high and low price of the Common Shares as of
December 31, 1997.
15
<PAGE> 18
OPTION GRANTS IN 1997 FISCAL YEAR
During 1997, Mr. Ryan, Mr. Medvin, and Mr. Skilling were granted options to
purchase of shares the Company's Common Stock. Subject to the terms of the Aon
Stock Option Plan(1), additional information regarding these options is set
forth in the table below:
<TABLE>
<CAPTION>
Individual Grants Grant Date Value
- - -------------------------------------------------------------------------------------------- ----------------
Number of Percent of
securities total options
underlying granted to Exercise or Grant Date
option employees base price Expiration Present
Name granted in fiscal year ($/Sh) Date Value($)(2)
---- ----------- -------------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Patrick G. Ryan............... 225,000 14.5 43.3750 3/20/2007 2,364,790
Harvey N. Medvin.............. 25,000 1.6 53.0313 7/18/2007 321,250
Raymond I. Skilling........... 35,000 2.2 53.0313 7/18/2007 449,750
</TABLE>
- - ------------
(1) Optionees have no right to receive dividends on or vote any shares until
such shares have been delivered. The total amount of shares disclosed in
this table will vest in accordance with the normal vesting schedule, as
follows:
<TABLE>
<CAPTION>
Name Date Percent Vested
---- ---- --------------
<S> <C> <C>
Patrick G. Ryan............................................. 03/20/2000 30%
03/20/2001 50%
03/20/2002 70%
03/20/2003 100%
Harvey N. Medvin and Raymond I. Skilling.................... 07/18/2000 30%
07/18/2001
50%
07/18/2002
70%
07/18/2003
100%
</TABLE>
(2) Based upon the Black-Scholes Option Pricing Model assuming a volatility rate
of .1809, a risk free interest rate of 6%, a dividend yield of 2.0% and that
475 days on average elapse between vesting and exercise.
16
<PAGE> 19
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
under 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:
<TABLE>
<CAPTION>
Years of Service
----------------------------------------------------------------------------
Remuneration($) 10 15 20 25 30 35 40
- - --------------- -------- -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 600,000.................... $100,500 $130,500 $160,500 $190,500 $220,500 $250,500 $ 280,500
800,000.................... 134,000 174,000 214,000 254,000 294,000 334,000 374,000
1,000,000................... 167,500 217,500 267,500 317,500 367,500 417,500 467,500
1,200,000................... 201,000 261,000 321,000 381,000 441,000 501,000 561,000
1,400,000................... 234,500 304,500 374,500 444,500 514,500 584,500 654,500
1,600,000................... 268,000 348,000 428,000 508,000 588,000 668,000 748,000
1,800,000................... 301,500 391,500 481,500 571,500 661,500 751,500 841500
2,000,000................... 335,000 435,000 535,000 635,000 735,000 835,000 935,000
2,200,000................... 368,500 478,500 588,500 698,500 808,500 918,500 1,028,500
</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 1993, and the aggregate of base salary and certain eligible bonus payments
for the 1993 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 individual comprising the Executive
Group as of December 31, 1997 are: Mr. Ryan $1,763,942 and 19 years; Mr. Cox
$895,981 and 11 years; Mr. Medvin $858,173 and 19 years; Mr. O'Halleran
$1,332,500 and 9 years; and Mr. Skilling $858,173 and 21 years. The annual
pension amounts included in the table above are based upon the following
assumptions: (1) amounts are before integration of Social Security benefits
which, based upon maximum coverage in effect on December 31, 1997, would reduce
the annual amounts shown by: 10 years--$1,465; 15 years--$2,198; 20
years--$2,930; 25 years--$3,663; 30 years--$4,396; 35 years--$5,128; and 40
years--$5,128, (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.
17
<PAGE> 20
ORGANIZATION AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation programs are administered by the
Organization and Compensation Committee of the Board (the "Compensation
Committee") consisting entirely of outside directors. In this capacity the
Compensation Committee determines the compensation for the Company's Chief
Executive Officer, Patrick G. Ryan, and the compensation of the other Named
Executives in consultation with Mr. Ryan. In addition, the Compensation
Committee advises and consults with Mr. Ryan regarding the compensation of other
officers and key employees.
The Compensation Committee regards the evaluation of the Chief Executive
Officer, Mr. Ryan, as a critical Board of Directors responsibility. As such, Mr.
Ryan's compensation is determined following an annual review of his and the
Company's performance conducted collectively, without Mr. Ryan, by all outside
Directors of the Company. During this review, the outside Directors discuss in
detail the extent to which during the most recent fiscal year the Company
achieved certain goals agreed to by Mr. Ryan and the outside Directors at the
beginning of the year.
The Compensation Committee has consistently believed that the compensation
of the Company's executives should be materially linked with the interests of
stockholders. To this end, stock award and stock option programs have become key
elements of compensation.
In order to ensure that the compensation program is competitive and
appropriate, the Compensation Committee periodically reviews the levels of
executive compensation from a number of general survey sources, with a focus on
available data relating to the Named Executives being considered. In addition
the Compensation Committee annually retains a nationally recognized compensation
consultant unaffiliated with the Company. The compensation consultant assists
the Compensation Committee by providing an in-depth analysis of the compensation
policies and practices of the Peer Group companies and a comparison thereof to
the Company's with specific emphasis on the position of Chairman and Chief
Executive Officer. The Peer Group consists of the companies used to prepare the
Performance Graph following this report.
Specifically, the total compensation program is comprised of three distinct
components: Base Salary, Short Term Incentive Compensation, and Long Term
Incentive Compensation.
BASE SALARY
Base salaries for the Named Executives are established at levels considered
appropriate in light of the executives' responsibilities and performance.
Relative survey data found that base salaries for Named Executives were
competitive with those of comparable Peer Group executives, and, in the
aggregate, slightly below the median for the Peer Group. As a result of these
findings, the Committee decided to adjust base salaries where performance or the
executive's compensation relative to that of comparably situated executives
dictated. While base salaries increased on average 5.4% over 1996 levels, the
greatest portion of total compensation for the Named Executives is in the form
of variable performance based compensation, namely Short Term and Long Term
Incentives. On average 63.5% of total compensation was performance based.
SHORT TERM INCENTIVE COMPENSATION
During 1995, the stockholders approved the 1995 Senior Officer Incentive
Compensation Plan (the "Incentive Plan"). The Incentive Plan is designed to
permit amounts to be paid thereunder during fiscal year 1996 and thereafter to
qualify as performance based compensation as that term is defined in Section
162(m) of the Internal Revenue Code of 1986, thereby enhancing the ability of
the Company to deduct the full amount paid to a Named Executive even though any
such individual's total compensation may exceed $1,000,000.
18
<PAGE> 21
Under the terms of the Incentive Plan each Named Executive was eligible to
receive a maximum award of 180% of the prior year's Base Salary. However, in no
event could an award exceed $3,000,000. Payment of awards is further conditional
on the Company's achievement of annually established performance thresholds. The
Compensation Committee does, however, have discretion to grant awards which are
less than the amounts called for on an aggregate or individual basis, based upon
objective and subjective performance criteria tailored to each individual as
discussed below.
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 in part as
to those executives responsible for a specific operating unit.
Subjective performance criteria encompassed evaluation of the initiative
and contribution to overall corporate performance and any special projects that
each Named Executive may have undertaken or was assigned.
Early in 1997, the Compensation Committee reviewed the 1996 performance of
each Named Executive in light of both the objective and subjective criteria
described above, and in general exercised their discretion to reduce awards for
1997.
With respect to the Chief Executive Officer in 1996, the Compensation
Committee also utilized both objective and subjective performance criteria with
the greatest weight being placed on certain agreed upon goals relating to both
short-term and long-term financial performance of the Company which directly
related to the interests of stockholders.
The Compensation Committee also considered the Chief Executive Officer's
performance as it related to certain subjective performance goals that,
collectively, the Board of Directors including the Compensation Committee and
the Chief Executive Officer, believed could contribute to the Company's long
term performance.
Accordingly, it is believed that the annual incentive awards paid in 1997
to Mr. Ryan, and the other Named Executives, are consistent with the Peer Group
considering both the Company's financial performance and the individual's
respective performance. Furthermore, the continuing growth of the Company
through financially and strategically sound acquisitions and the effective
assimilation of these acquisitions into the Company is particularly noteworthy.
LONG TERM INCENTIVE COMPENSATION
Both the Aon Stock Award Plan and the Aon Stock Option Plan reward
executives for long term strategic management and subsequent enhancement of
stockholder value by providing the executive with an opportunity to acquire an
appropriate ownership interest in the Company.
Aon Stock Award Plan
The Compensation Committee and the Chief Executive Officer believe that the
attraction and retention of key individuals is vital to the long term
performance of the Company. The Aon Stock Award Plan has become a critical
factor in attaining this result. For example, awards are subject to a ten year
vesting schedule which is designed to provide award recipients with a
significant incentive to continue their service with the Company.
Awards under the Aon Stock Award Plan are made based on the Compensation
Committee's and the Chief Executive Officer's assessment of an executive's past
performance, the Compensation Committee's appraisal of the executive's skills
and other strengths, and most significantly the long term contribution the
executive can make to the Company's performance. In addition, in making
19
<PAGE> 22
awards the Compensation Committee takes into consideration awards previously
made to an executive, and the number of awards outstanding in the aggregate to
all award recipients.
During fiscal year 1997, grants under the Aon Stock Award Plan were made to
one of the Named Executives as detailed in the Summary Compensation Table, while
the following shares of Common Stock became vested pursuant to grants made in
years prior to 1997:
<TABLE>
<CAPTION>
Shares Values($)
------ ---------
<S> <C> <C>
Patrick G. Ryan............................................. (1) (1)
Daniel T. Cox............................................... 10,125 497,999
Harvey N. Medvin............................................ 10,125 499,594
Michael D. O'Halleran....................................... 32,946 1,430,614
Raymond I. Skilling......................................... 5,625 318,867
</TABLE>
- - ------------
(1) Mr. Ryan, though eligible, is not currently participating in the Aon Stock
Award Plan.
Aon Stock Option Plan
In general, options under the Aon Stock Option Plan are granted on criteria
similar to, and for similar purposes as, those for the granting of awards under
the Aon Stock Award Plan. For 1997, the Compensation Committee continued its
recently established practice of providing a portion of total compensation in
the form of Long Term Incentive Compensation such as grants under the Stock
Option Plan. As a result, in 1997, Mr. Ryan was granted options to purchase
225,000 (as adjusted for the May 1997 three for two stock split) shares of
Common Stock with an exercise price equal to the Common Stock market value on
the grant date. For more detailed information regarding the options granted to
Mr. Ryan refer to the table "Executive Compensation--Option Grants in 1997
Fiscal Year."
SUBMITTED BY THE ORGANIZATION AND COMPENSATION COMMITTEE OF THE COMPANY'S
BOARD OF DIRECTORS:
<TABLE>
<S> <C> <C>
Donald S. Perkins Andrew J. McKenna George A. Schaefer
(Chairman) Newton N. Minow Fred L. Turner
Edgar D. Jannotta
</TABLE>
20
<PAGE> 23
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN(1)
AON CORPORATION, STANDARD & POOR'S, PEER GROUP AND FORMER PEER GROUP INDICES
FISCAL YEARS ENDED DECEMBER 31
<TABLE>
<CAPTION>
MEASUREMENT PERIOD FORMER PEER
(FISCAL YEAR COVERED) AON CORP S & P 500 PEER GROUP GROUP
<S> <C> <C> <C> <C>
1992 100.00 100.00 100.00 100.00
1993 92.67 110.08 100.66 107.09
1994 95.62 111.53 97.66 108.60
1995 154.42 153.45 123.18 156.17
1996 197.57 188.68 158.33 189.75
1997 285.71 251.63 217.18 292.73
</TABLE>
(1) The "Peer Group" of the Company is comprised of issuers which are, taken as
a whole, in the same industry or which have similar lines of business. The
Peer Group has been revised this year to reflect the current business
composition of the Company and its operating subsidiaries, which has been
affected by, among other things, the acquisition by the Company of one of
the former peer group companies as well as other consolidations and trends
in the insurance and financial services industry. The new Peer Group
comprises: American Federated Life Assurance Company; Arthur J. Gallagher &
Co.; E.W. Blanch Holdings Inc.; Marsh & McLennan Companies, Inc.; Poe &
Brown Inc.; Provident Companies, Inc.; and Sedgwick Group P.L.C. and Willis
Corroon Group P.L.C. (through their ADR's). The performance graph also
includes the former peer group, and assumes that the value of the investment
in each of Aon Common Shares, the Peer Group and the former peer group index
was $100 on December 31, 1992, that each of the $100 invested in the Peer
Group index and the former peer group index was
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allocated pro rata among the Peer Group companies and the former peer group
companies according to their respective market capitalizations, that the
value of the Peer Group index and the former 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. The former peer group of the
Company comprises American International Group, Inc.; American General
Corporation; The Chubb Corporation; General Re Corporation; Marsh & McLennan
Companies, Inc.; Travelers, Inc.; Torchmark Corp.; Transamerica Corporation
and UNUM Corporation. Results for Alexander & Alexander Services Inc., which
in prior years had been included in the former peer group and performance
graphs, are no longer available as a result of the acquisition of Alexander
& Alexander Services Inc. by the Company in January 1997. The exclusion of
Alexander & Alexander Services Inc. from the former peer group impacts the
former peer group index.
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 and chief executive officer 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, and Pedersen & Houpt, P.C., a law
firm of which Peer Pedersen is Chairman and Managing Partner, to perform certain
legal services during the year 1997 and anticipates that such firms may be
retained to perform legal services in 1998. During 1997, 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
1997, or is expected to involve in 1998, 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 1997.
AGENDA ITEM NO. 2
APPROVAL OF THE AON 1998 EMPLOYEE STOCK PURCHASE PLAN
In January 1998, the Organization and Compensation Committee recommended,
and the Board adopted, subject to stockholder approval, the Aon 1998 Employee
Stock Purchase Plan (the "Plan"). If approved by the stockholders, the Plan
provides eligible employees (defined below) with an opportunity to purchase the
Company's Common Shares through payroll deductions. The Plan is intended to
assist eligible employees in acquiring a stock ownership interest in the Company
pursuant to a plan that is intended to qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"), thereby helping eligible employees provide for their future security
and encouraging them to remain in the employment of the Company and
participating subsidiaries.
The substance and effect of certain provisions of the Plan are described
below. The following discussion is qualified in its entirety by reference to the
text of the proposed Plan.
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<PAGE> 25
SHARES RESERVED FOR THE PLAN
The aggregate number of Common Shares which may be purchased or issued
under the Plan shall not exceed 5,000,000, subject to adjustment in the event of
stock dividends, stock splits, combination of shares, recapitalizations, or
other changes in the outstanding Common Shares. Any such adjustment will be made
by the Board. Common Shares issued under the Plan may consist, in whole or in
part, of authorized and unissued shares or treasury shares.
ELIGIBLE EMPLOYEES
Employees of the Company (or a subsidiary designated by the Company, which
subsidiary elects to participate) are eligible if they meet certain conditions.
To be eligible the employee must have completed one year of employment and the
employee's customary employment must be 20 hours or more per week. As to those
subsidiaries which are anticipated to participate beginning July 1, 1998,
approximately 16,000 employees will be eligible to participate.
MATERIAL FEATURES OF THE PLAN
Beginning July 1, 1998, the Company may make grants of options on January 1
and July 1 of each year the Plan is in effect or on such other date as the
Committee (as defined herein) shall designate. Each option period shall last for
six months ending on the June 30 or December 30 immediately following the grant
of options or such dates as the Committee determines.
Each participating employee on a date of exercise shall be entitled to
purchase Common Shares at a purchase price equal to the lower of 85% of the fair
market value of Common Shares on the date of grant or the date of exercise.
Dates of exercise shall be the last day of each six-month period.
Payment for Common Shares purchased under the Plan will be made by
authorized payroll deductions from a participating employee's eligible
compensation.
Eligible employees who elect to participate in the Plan will designate a
stated whole percentage from 1% to 15% of eligible compensation, to be credited
to a periodic deposit account. On each date of exercise, the entire periodic
deposit account of each participant in the Plan will be used to purchase whole
Common Shares. The Company shall cause a stock purchase account to be maintained
for each participant to reflect the shares of common stock purchased under the
Plan by each participant. No participant in the Plan is permitted to purchase
shares under the Plan at a rate that exceeds $12,500 in fair market value of
Common Shares in any six month option period, or such lower amount or over such
other period of time as may be selected by the Committee.
All funds received by the Company from the sale of Common Shares under the
Plan may be used for any corporate purpose.
NEW PLAN BENEFITS
It is not possible to determine how many eligible employees will
participate the Plan in the future. Therefore, it is not possible to determine
with certainty the dollar value or number of Common Shares that will be
distributed under the Plan. Because participation in the Plan is optional, it is
not possible to determine the benefits or amounts that would have been received
under the Plan during 1997 by Named Executives, any other officers of the
Company or any Director who is also a salaried employee of the Company or any of
its subsidiaries. Mr. Ryan and the outside Directors are not eligible to
participate under the Plan.
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TAX TREATMENT
The Plan is intended to qualify as an employee stock purchase plan within
the meaning of Section 423 of the Code. Under the Code, an employee who elects
to participate in an offering under the Plan will not realize income at the time
the option is granted or when the Common Shares purchased under the Plan are
transferred to such employee. If an employee disposes of such Common Shares
after two years from the date of the offering of such Common Shares commences
and after one year from the date of the transfer of such Common Shares to the
employee, the employee will be required to include in income, as compensation
for the year in which such disposition occurs, an amount equal to the lesser of
(a) the excess of the fair market value of such Common Shares at the time of
disposition over the purchase price, or (b) 15% of the fair market value of such
Common Shares at the time the offering commenced. The employee's basis in the
Common Shares disposed of will be increased by an amount equal to the amount so
includable in the employee's income as compensation, and any gains or loss
computed with reference to such adjusted basis which is recognized at the time
of the disposition will be a capital gain or loss, either short-term or
long-term, depending upon the holding period for such Common Shares. In the
event of a disposition within such two-year or one-year period, the employee
will be required (1) to include in ordinary income, as compensation for the year
in which such disposition occurs, the excess of the market value on the purchase
date over the price paid and (2) report the change in market value between the
purchase date and the sale date as capital gain or loss. The Company (or the
subsidiary by which the employee is employed) will be entitled to a tax
deduction from income equal to the amount the employee is required to include in
ordinary income as a result of such disposition. The Company will require the
employee to pay any applicable payroll taxes.
An employee who is a non-resident of the United States for U.S. tax
purposes will generally not be subject to the U.S. federal income tax rules
described above with respect to the Common Shares purchased under the Plan.
PLAN ADMINISTRATION AND TERMINATION
The Organization and Compensation Committee of the Board (the "Committee")
shall administer the Plan on behalf of the Company. The Committee may delegate
any or all of the administrative functions under the Plan to such individual,
subcommittees, or entities as the Committee considers appropriate. The Committee
may adopt rules and procedures not inconsistent with the provisions of the Plan
for its administration. The Committee's interpretation and construction of the
Plan is final and conclusive.
The Plan is being implemented based on the current understanding of the tax
and accounting treatments affecting employees and the Company, and the right to
amend the Plan is reserved. The Board may at any time, or from time to time,
amend, suspend or terminate the Plan, except that, without approval of 50% or
more of the Common Shares entitled to vote, no amendment may increase the number
of Common Shares reserved for purchase, or reduce the purchase price per share
under the Plan, other than as described above.
Adoption of this proposal requires an affirmative vote of a majority of the
votes cast at the meeting.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" AGENDA ITEM
NO. 2. -- APPROVAL OF THE AON 1998 EMPLOYEE STOCK PURCHASE PLAN.
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<PAGE> 27
AGENDA ITEM NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company, following the recommendation of the
Audit Committee, has appointed Ernst & Young LLP as the Company's independent
auditors for the year 1998. Ernst & Young LLP was first retained as the
Company's independent auditors in February 1986. No relationship exists between
the Company and the firm 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 1998. 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 1999. Because of the difficulty
and expense of making any substitution of auditors for 1998 following the 1998
annual meeting, it is contemplated that the appointment for the year 1998 will
be permitted to stand unless the Board finds other good reason for making a
change.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE FOLLOWING
RESOLUTION--AGENDA ITEM NO. 3:
RESOLVED, that the appointment of Ernst & Young LLP by the Board of
Directors as the Company's independent auditors for the year 1998 is
hereby ratified.
The Company anticipates that a representative of Ernst & Young LLP 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.
AGENDA ITEM NO. 4
PROPOSAL BY STOCKHOLDER
The Domestic and Foreign Missionary Society of the Protestant Episcopal
Church in the United States of America of 815 Second Avenue, New York, New York,
10017-4594, is the holder of 14,400 Common Shares and has caused the following
proposal to be incorporated in this Proxy Statement. The Board of Directors
believes that it may be the intent of the stockholder to present the proposal at
the annual meeting of the Company. The Company is not responsible for any of the
contents of the language of the proposal by the stockholder, which is set out
below in italic type and between quotation marks. The Board of Directors
unanimously opposes this proposal by stockholder for the reasons set forth in
Management's Statement in Opposition which follows the proposal by stockholder.
"INSURANCE COMPANIES' TIES TO TOBACCO"
"WHEREAS, a July 7-9, 1995 editorial in USA Today declared: Here's a little
health-care news item: according to a commentary in the upcoming edition of
the British medical journal Lancet, major U.S. health insurers are large
investors in major U.S. tobacco companies. In other words, the nation's
merchants of care are partners with the nation's merchants of death....
these investments grate and gall. Every year, tobacco use is fatal for
thousands of Americans. For insurers to provide health care for those
suffering smokers on the one hand while investing it in the source of their
misery on the other is unconscionable. And hypocritical."
"As shareholders, we are deeply concerned about the ethical implications of
investments in the tobacco industry by companies that sell life insurance,
especially when they are paying out hundreds of millions of dollars to
patients who are sick and dying as a result of tobacco use. In
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1994, the Centers for Disease Control and Prevention released an article
entitled "Medical-Care Expenditures Attributable to Cigarette Smoking,
United States--1993." The study found that smoking-related disease has an
enormous economic impact. It is estimated that in 1993 the direct medical
costs associated with smoking totaled $30 billion. In 1996 the American
Medical Association called for mutual funds and health-conscious investors
to refuse to own stock in tobacco companies, and for those same investors
to divest from stocks and bonds in tobacco companies. We believe that it is
inconsistent for an insurance company that sells life insurance to invest
in tobacco equities and yet give preferential rates to non-smokers.
Therefore, we believe that the company should seriously review its stand
related to these apparently contradictory positions on tobacco."
"THEREFORE, LET IT BE RESOLVED that the shareholders request the Board to
initiate a policy mandating no further purchases of tobacco equities in its
non-pension fund portfolios unless it can be proven that cigarette smoking
does not cause the illnesses and deaths attributed to it. Furthermore, the
company shall divest itself of all further tobacco stocks by January 1,
1999."
"SUPPORTING STATEMENT: Allstate, Chubb, UNUM and other companies that sell
life insurance have policies and/or practices that have resulted in
prohibitions or limitations on tobacco equity investments. Further, a March
27, 1997, report by the Investor Responsibility Research Center noted that
five out of the nine directors serving on the company's Investment
Committee had relationships with educational and philanthropic institutions
that formally prohibited tobacco investments. The ethical and economic case
for divestment from tobacco equities is even stronger, we believe, for a
company that sells life insurance than it is for universities and
foundations. As the USA Today editorial noted above concludes: Insurers
have a responsibility to maximize returns. But they have a responsibility
to hold down costs, too. Investing in tobacco while charging premiums based
in part on the cost of treating tobacco-related illness mocks that
obligation."
"If you agree, please vote YES for this resolution."
MANAGEMENT'S STATEMENT IN OPPOSITION TO PROPOSAL BY STOCKHOLDER
A single stockholder has submitted this proposal which, in essence, repeats
the submission made by the same stockholder at the Company's 1997 annual
meeting. An overwhelming majority of the Company's stockholders, representing
93.5% of all stockholders who voted, cast their votes AGAINST this proposal at
last year's annual meeting. Respecting the wishes of this overwhelming majority
and taking into account the other issues discussed in this statement, your Board
of Directors has once again unanimously decided to oppose this proposal.
The context in which the proposal is made should be put into perspective.
The proposal appears to assume that the Company is exclusively or primarily an
insurance company which sells life and/or health insurance. This assumption is
erroneous. Consolidated revenues of the Company attributable to the accident and
health business and related investment income in 1997 were approximately 18% of
the total consolidated revenues of the Company, and consolidated revenues
attributable specifically to life and health insurance premiums and related
investment income were less than half of that percentage.
This Company complies with applicable federal, state and local laws and
regulations regarding investments. Your Board believes that, as a matter of
principle, the investment policy decisions of the Company should always be made
keeping in mind the best interests of the stockholders as a whole and in
accordance with the guidance of the Board and its Investment Committee. Your
Board believes it is of fundamental importance that investment policy decisions
continue to be made and managed without monitoring portfolios for items which
may not find favor with individual stockholders. In every free society different
stockholders are likely to disagree about particular investments,
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and attempting to comply with the concerns of each and every stockholder would
present overly complex and, indeed, unmanageable challenges.
In conclusion, your Board strongly urges that the investment policy
decisions of the Company continue to be made and managed in accordance with the
guidance of the Board and its Investment Committee with the goal of maximizing
shareholder value in compliance with all relevant legal and regulatory
requirements and in keeping with the views so clearly expressed by the
overwhelming majority of votes cast on this issue at the Company's 1997 Annual
Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" AGENDA ITEM
NO. 4--PROPOSAL BY STOCKHOLDER.
VOTING PROCEDURES
A quorum for the transaction of business at any meeting of the stockholders
of the Company shall consist of the holders of at least a majority of the issued
and outstanding Shares entitled to vote, present in person or by proxy. At all
meetings at which a quorum is present, all matters, except as otherwise provided
by law or in the certificate of incorporation of the Company, shall be decided
by the vote of the holders of a majority of the Shares representing the quorum.
All matters included for consideration by the stockholders in this Proxy
Statement shall be decided by the vote of the holders of a majority of the
Shares representing the quorum. Abstentions and broker non-votes are counted for
purposes of determining the presence or absence of a quorum at the annual
meeting for the transaction of business. If a duly executed proxy is marked to
indicate that all or a portion of the Shares represented by such proxy are not
being voted with respect to a particular matter, such non-voted Shares will not
be considered present and entitled to vote on such matter.
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 and not otherwise
revoked will be voted according to its terms. If no specific direction is marked
on a duly execute proxy as to the manner of voting, the proxy will be voted in
accordance with the recommendations of the Board of Directors set forth herein.
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. A proxy may be revoked by
(a) delivering to the Company a duly executed written notice of revocation dated
later than the date of the proxy which is being revoke; (b) delivering to the
Company a duly executed replacement proxy relating to the same shares as the
proxy it is meant to replace; or (c) by attending the annual meeting of
stockholders and voting in person. Written revocations should be sent to the
Office of the Corporate Secretary of the Company at the address listed on page
one of this Proxy Statement.
1999 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 1999,
stockholder proposals conforming to applicable rules and regulations must be
received by the Company not later than November 13, 1998. Such proposals should
be sent to the Office of the Corporate Secretary of the Company at the address
listed on page one of this Proxy Statement, with a copy of such proposal to be
sent to the Office of the Chief Counsel of the Company at that same address.
AVAILABILITY OF 10-K REPORT
The Company will file its Annual Report on Form 10-K for the year ended
December 31, 1997, with the Securities and Exchange Commission on or before
March 31, 1998. A copy of the report, including any financial statements and
schedules, and a list describing any exhibits not contained
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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.
OTHER MATTERS
The Board of Directors 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 interest 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.
By Order of the Board of Directors
KEVANN M. COOKE
Kevann M. Cooke
Corporate Secretary
Dated: March 9, 1998
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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 17, 1998 AT 10:00 A.M.
================================================================================
