<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / 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 Section240.14a-11(c) or
Section240.14a-12
AON CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
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/ / 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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
AON CORPORATION
--------------------------------------------------------------
------------------
NOTICE OF ANNUAL MEETING OF HOLDERS OF COMMON STOCK
AND SERIES C PREFERRED STOCK TO BE HELD APRIL 18, 2000
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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
Tuesday, April 18, 2000, at 10:00 A.M., at Aon Center, 200 East Randolph Drive,
Chicago, Illinois, for the following purposes:
1. To elect directors pursuant to the By-Laws. YOUR BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION OF ALL
NOMINEES.
2. To approve an amendment to the certificate of incorporation of the
Company to increase the number of authorized shares of Common Stock of
the Company to 750,000,000. YOUR BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE AMENDMENT.
3. To approve the amendment and restatement of the Aon Stock Award Plan and
to re-approve the plan in its entirety with a limit on the number of
shares to be granted annually to any one person in order to qualify such
plan for treatment under Section 162(m) of the Internal Revenue Code.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE APPROVAL OF THE AMENDMENT AND RESTATEMENT AND THE RE-APPROVAL
OF THE PLAN IN ITS ENTIRETY.
4. To adopt a resolution ratifying the appointment of Ernst & Young LLP as
the Company's independent auditors for the year 2000. YOUR BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ADOPTION OF THE RESOLUTION.
5. To transact such other business as may properly come before the meeting.
The close of business on Wednesday, February 23, 2000 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
[SIGNATURE]
Kevann M. Cooke
VICE PRESIDENT AND CORPORATE SECRETARY
March 6, 2000
<PAGE>
AON CORPORATION
123 NORTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
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PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON APRIL 18, 2000
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The annual meeting of the stockholders of Aon Corporation (the "Company")
will be held at Aon Center, 200 East Randolph Drive, Chicago, Illinois, at 10:00
A.M. on April 18, 2000. This Proxy Statement is being sent to each holder of the
issued and outstanding shares of the Company's Common Stock ("Common Shares")
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, 1999, including financial statements is being
mailed to stockholders together with this Proxy Statement beginning on or about
March 6, 2000. 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
validate the enclosed proxy by mail, by telephone or by using the Internet, so
that your Shares will be represented. To validate a proxy by mail, please sign
the enclosed proxy and return it in the accompanying envelope. The envelope is
addressed and requires no postage. To validate a proxy by telephone or by using
the Internet please follow the instructions located on each proxy card. You may
revoke your proxy at any time before it is voted at the meeting. Each proxy duly
validated 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 Share accounts--should validate all such
proxies in order to be sure that all of the Shares so owned are voted. All proxy
procedures are designed to authenticate a stockholder's identity, allow voting
instructions to be given and confirm that instructions have been properly
recorded consistent with the requirements of applicable law. There may be costs
incurred by a stockholder for use of the Internet and the telephone which are
charged by Internet access providers and telephone companies.
If no specific direction is marked on a duly validated proxy as to the
manner of voting, then the proxy will be voted in accordance with the
recommendations of the Board of Directors set forth herein. Please see page 25
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., 17 State Street, New York, New York 10004 to aid in
the solicitation of proxies for a fee estimated at $9,000. The enclosed proxy is
solicited by and on behalf of the Board of Directors of the Company.
1
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on February 23, 2000, which is the record date
fixed for determination of stockholders entitled to vote at the meeting, there
were 256,453,450 Common Shares and 1,000,000 Preferred Shares outstanding, each
entitled to one vote.
As of February 23, 2000, 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
Name and Address Shares of Class
---------------- ------------- --------
<S> <C> <C>
Patrick G. Ryan 31,094,288(1) 12.12
c/o Aon Corporation
123 North Wacker Drive
Chicago, IL 60606
Capital Research and
Management Company 17,157,000(2) 6.69
333 South Hope Street
Los Angeles, CA 90071
Barrow, Hanley, Mewhinney &
Strauss, Inc. 16,934,985(2) 6.60
3232 McKinney Ave
15th Floor
Dallas, TX 75204
Vanguard Windsor Funds 14,202,862(2) 5.55
P.O. Box 2600
Valley Forge, PA 19842
</TABLE>
<TABLE>
<CAPTION>
No. of Preferred Percent
Name and Address Shares of Class
---------------- ---------------- --------
<S> <C> <C>
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 22,364,437 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"), 3,831
Common Shares beneficially owned under the ESOP Account of the Aon Savings
Plan and allocated to Mr. Ryan, and 302,215 Common Shares beneficially owned
and attributed to Mr. Ryan pursuant to his investment in the Aon Common
Stock Fund of the Aon Savings Plan. Mr. Ryan, Mrs. Ryan and their 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
Common Shares beneficially owned by Mr. Ryan. Also includes 1,301,250 Common
Shares held of record and beneficially owned by Mrs. Ryan; Mr. Ryan
disclaims any beneficial interest in those Common Shares. Under the terms of
the separate ESOP Account of the Aon Savings Plan and under other terms of
the Aon Savings Plan, as a participant in such plans Mr. Ryan is entitled to
direct the manner in which the trustees will vote the Common Shares
attributable to him; in addition, all Common Shares for which voting
instructions are not received are voted by the trustees in the same
proportion as Common Shares for which voting instructions are received. Also
includes 495,000 Common 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 23, 2000.
(2) Includes to the best knowledge of the Company all Common Shares beneficially
owned by its parents, subsidiaries and affiliates.
2
<PAGE>
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 seventeen 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. 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 affect 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, 1999. There
are no nominees for the Board other than the management nominees.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE ELECTION OF ALL NOMINEES.
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PATRICK G. RYAN Director since 1965
Patrick G. Ryan has been Chairman of the Board of the Company since 1990 and
Chief Executive Officer since 1982. He was elected President and Chief Executive
Officer of the Company at the time of the merger of the Company and Ryan Group
in 1982, and served as President of the Company until April 1999. Prior to the
merger, Mr. Ryan served as Chairman of the Board and Chief Executive Officer of
Ryan Group. 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: 62
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DANIEL T. CARROLL Director since 1980
Mr. Carroll has been Chairman of The Carroll Group, a management consulting
firm, since 1982. From early 1980 until early 1982 he served as President, 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.; Diversa Inc.; Oshkosh Truck Corporation;
Wolverine World Wide, Inc.; and Woodhead Industries, Inc. He serves as a member
of the Audit Committee and the Investment Committee of the Company.
Age: 73
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3
<PAGE>
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FRANKLIN A. COLE Director since 1984
Mr. Cole, since 1984, has been Chairman of Croesus Corporation, an advisory and
personal investment firm. 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 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 Committee and the
Investment Committee of the Company.
Age: 73
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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 Chairman of the Board of Trustees of the
University of Chicago and President of the Lyric Opera of Chicago. Mr. Jannotta
is a director of AAR Corp.; Bandag, Incorporated; Inforte Corp.; Molex
Incorporated; and Unicom Corporation. He serves as a member of the Organization
and Compensation Committee and the Investment Committee of the Company.
Age: 68
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LESTER B. KNIGHT Director since 1999
Mr. Knight is the former Vice Chairman and director of Cardinal Health, Inc., a
diversified healthcare service company. Mr. Knight was Chairman of the Board and
Chief Executive Officer of Allegiance from 1996 until February 1999, and had
been with Baxter from 1981 until 1996 where he served as corporate vice
president from 1990, executive vice president from 1992, and as a director from
1995. He was Chairman and a director of The Baxter Allegiance Foundation. He is
a director of Evanston Northwestern Healthcare and Junior Achievement of
Chicago. He is a Trustee of Northwestern University. Mr. Knight serves as a
member of the Investment Committee and the Organization and Compensation
Committee of the Company.
Age: 41
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4
<PAGE>
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PERRY J. LEWIS Director since 1972
Mr. Lewis has been a Partner of Morgan Lewis Githens & Ahn, an investment
banking firm, for more than sixteen years. 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 AMFM Inc. and ITI Technologies, Inc. Mr. Lewis is President
of the Performing Arts Center Foundation, Inc. and serves as a director of The
Aldrich Museum of Contemporary Art. He serves as a member of the Audit Committee
and the Investment Committee of the Company.
Age: 61
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ANDREW J. MCKENNA Director since 1970
Mr. McKenna served as a Director of the 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, a printer, converter, producer and distributor of
packaging and promotional materials, and a Director of McDonald's Corporation,
Skyline Corporation, and Tribune Company. He is Chairman of the Board of
Trustees of the University of Notre Dame. Mr. McKenna is also a Director of
Children's Memorial Hospital, the Lyric Opera and a trustee of the Museum of
Science and Industry. He serves as the Chairman of the Nominating Committee and
a member of the Executive Committee and the Organization and Compensation
Committee of the Company.
Age: 70
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NEWTON N. MINOW Director since 1990
Mr. Minow, since 1991, has been 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
Manpower, Inc. 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 Committee and the Nominating Committee of the
Company.
Age: 73
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5
<PAGE>
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RICHARD C. NOTEBAERT Director since 1998
Mr. Notebaert is the retired chairman of the board of Ameritech. He served as
chairman of the board and chief executive officer of Ameritech Corporation, a
full-service communications company, from April 1994 until December 1999.
Mr. Notebaert was elected vice chairman of Ameritech in January 1993, became
president and chief operating officer in June 1993 and president and chief
executive officer in January 1994, after joining Ameritech Communications in
1983 and serving in other significant positions with the Ameritech organization.
Mr. Notebaert is a director of Sears, Roebuck and Co., Cardinal Health Inc., a
Trustee of the University of Notre Dame and the Chicago Symphony Orchestra. He
is currently a member of The Business Council, The Civic Committee of The
Commercial Club of Chicago, The Economic Club of Chicago, University of Illinois
President's Advisory Counsel and the Executives' Club of Chicago. He serves as a
member of the Organization and Compensation Committee and the Investment
Committee of the Company.
Age: 52
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MICHAEL D. O'HALLERAN Director since 1999
Mr. O'Halleran has been President and Chief Operating Officer of the Company
since April 16, 1999. Since 1995 he has served as President and Chief Operating
Officer of Aon Group, Inc., the global insurance brokerage and consulting arm of
the Company. He has also served in other significant senior management positions
within the Aon group of companies since 1987 and has more than 25 years of
experience in the insurance and reinsurance industries. He is a director of
Cardinal Health, Inc. and served as a director of Allegiance Corporation prior
to its merger with Cardinal Health, Inc. in February, 1999. He is also a
director of Optimark Technologies, Inc. and the College of Insurance. He serves
on the Arts and Letters Advisory Board at the University of Notre Dame and is a
trustee of Dublin City University in Dublin. Mr. O'Halleran serves as a member
of the Executive Committee and the Nominating Committee of the Company.
Age: 49
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DONALD S. PERKINS Director since 1983
Mr. Perkins retired from Jewel Companies Inc., a diversified retail 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 its
Executive Committee until his retirement. Mr. Perkins served as a director of
American Telephone and Telegraph Company from 1979 until the spin-off from it of
Lucent Technologies, Inc. in 1989, and served as a director of Lucent
Technologies from 1989 until February 2000. He is a director of LaSalle Hotel
Properties; LaSalle Street Fund, Inc.; LaSalle U.S. Realty Income & Growth
Fund, Inc.; Luminant Worldwide; and Nanophase Technologies. He 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: 72
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6
<PAGE>
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JOHN W. ROGERS, JR. Director since 1993
Mr. Rogers is President of Ariel Capital Management, Inc., an institutional
money management firm specializing in equities, having founded the firm in
January 1983. In addition, Ariel Capital serves as the investment advisor,
administrator and distributor of Ariel Mutual Funds. Mr. Rogers is also a
director of GATX Corporation, Burrell Communications Group, Bank One
Corporation, Unicom Corporation and the John S. and James L. Knight Foundation.
He is director of the Chicago Urban League; 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 Committee and the
Investment Committee of the Company.
Age: 41
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GEORGE A. SCHAEFER Director since 1991
Mr. Schaefer is a Director of Caterpillar Inc., the construction machinery and
equipment manufacturing company. He served as Chairman and Chief Executive
Office of Caterpillar from 1985 until his retirement in July, 1990 and served in
other senior management positions during the course of his career with
Caterpillar which began in 1951. He is a director of Helmerich & Payne, Inc. and
an honorary 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: 71
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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 served as 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: 60
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7
<PAGE>
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FRED L. TURNER Director since 1991
Mr. Turner is Senior Chairman 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 as its Chairman of the Board and Chief Executive Officer. Mr. Turner is
also a director of Baxter International, Inc.; and W.W. Grainger, Inc. He serves
as a member of the Organization and Compensation Committee and as Chairman of
the Investment Committee of the Company.
Age: 66
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ARNOLD R. WEBER Director since 1991
Dr. Weber is President Emeritus of Northwestern University, where he served as
President from 1985 until 1994 and as Chancellor from January 1, 1995. 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 Committee and the Investment Committee of the Company.
Age: 70
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DR. CAROLYN Y. WOO Director since 1998
Dr. Woo assumed the deanship of the College of Business at the University of
Notre Dame in July 1997. From 1995 to 1997 she served as Associate Executive
Vice President of Academic Affairs at Purdue University, and from 1993 to 1995
she served 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 Arvin Industries Inc.;
Bindley-Western Industries, Inc.; and of Nisource Industries, Inc. She serves as
a member of the Audit Committee and the Nominating Committee of the Company.
Age: 45
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8
<PAGE>
OWNERSHIP OF COMMON SHARES
The following table sets forth the number of Common Shares beneficially
owned as of February 23, 2000 by each Director, each nominee for Director, by
the Chief Executive Officer Patrick G. Ryan and by each of the other four most
highly compensated executives (the "Named Executives"), and by all Directors,
nominees and the Named Executives combined. Named Executives are indicated by a
double asterisk. As used in this Proxy Statement, "beneficially owned" means a
person has, or may have within 60 days, 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 Plan and the 1994 Amended and
Restated Outside Director Stock Award Plan (see "Compensation of the Board of
Directors"), the Aon Deferred Compensation Plan (see "Executive Compensation"),
or the Aon Stock Award Plan (as amended and restated in 1997) (see "Organization
and Compensation Committee Report--Long Term Incentive Compensation") except as
noted in footnote 5.
<TABLE>
<CAPTION>
Shares Percent of
Name Beneficially Owned(1) Class(2)
- - - - - - - - - - - - - - - - - ---- --------------------- ----------
<S> <C> <C>
Patrick G. Ryan**(3)(4)(5).................................. 31,094,288 12.12
Daniel T. Carroll(6)........................................ 3,712 *
Franklin A. Cole(6)......................................... 4,050 *
Daniel T. Cox**(3)(4)(5).................................... 96,794 *
Edgar D. Jannotta(6)........................................ 56,025 *
Lester B. Knight(6)......................................... 30,000 *
Perry J. Lewis(6)........................................... 6,750 *
Andrew J. McKenna(6)........................................ 31,775 *
Harvey N. Medvin**(3)(4)(5)(7).............................. 991,077 *
Newton N. Minow(3)(6)....................................... 135,045 *
Richard C. Notebaert(6)..................................... 1,500 *
Michael D. O'Halleran**(3)(4)............................... 173,676 *
Donald S. Perkins(6)........................................ 10,462 *
John W. Rogers, Jr.(6)(8)................................... 5,643 *
George A. Schaefer(6)....................................... 8,775 *
Raymond I. Skilling**(3)(4)(5).............................. 695,905 *
Fred L. Turner(6)........................................... 4,807 *
Arnold R. Weber(6).......................................... 3,656 *
Carolyn Y. Woo(6)........................................... 1,012 *
All Directors and Named Executives combined (19 persons).... 33,354,952 13.00
</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..................................... 22,364,437 Shared Shared
Franklin A. Cole.................................... 4,050 Shared Shared
Arnold R. Weber..................................... 3,656 Shared Shared
</TABLE>
(2) An asterisk indicates that the percentage of Common Shares beneficially
owned by the named individual does not exceed one percent (1%) of the
Company's Common Shares.
(3) The following Common Shares are beneficially owned by members of the
immediate family of the following directors and Named Executives: 1,301,250
by Mrs. Ryan; 5,475 by Mrs. Cox; 975 by
9
<PAGE>
Mr. Cox's son; 5,062 by Mrs. Medvin; 54,375 by Mrs. Minow; 99,840 by
Mrs. O'Halleran; and 374,827 by Mrs. Skilling (Mrs. Skilling and Mrs. Ryan
are sisters). As to the Common Shares so held, each such director and Named
Executive disclaims beneficial ownership.
(4) Includes beneficial interest in the attributable Common Shares of the ESOP
Account of the Aon Savings Plan, and includes beneficial interest in
attributable Common Shares of the Aon Common Stock Fund of the Aon Savings
Plan. The Common Shares of the ESOP Account and the Aon Common Stock Fund of
the Aon Savings Plan are voted by the trustees as directed by their
respective participants; all Common Shares for which voting instructions are
not received are voted by the trustees in the same proportion as Common
Shares for which voting instructions are received.
(5) 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 which will
become exercisable or stock awards which will become vested within 60 days
following February 23, 2000: Patrick G. Ryan, 495,000; Daniel T. Cox,
38,250; Harvey N. Medvin, 86,437; Raymond I. Skilling, 30,375.
(6) Does not include the number of Common Shares equal to $50,000 which each
Outside Director will be awarded on April 18, 2000 pursuant to the Aon
Outside Director Stock Award Plan. See "Compensation of the Board of
Directors."
(7) Excludes 9,750 Common Shares owned by a charitable foundation for which
Mrs. Medvin acts as a trustee and has shared voting and investment control.
Mr. Medvin disclaims any beneficial ownership in such Common Shares.
(8) 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. Roger's tenure of the Board of the
Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on the Company's review of copies of Forms 3, 4 and 5 and amendments
thereto furnished to the Company since January 1, 1999, all Directors and
officers of the Company have timely reported all transactions to the Securities
and Exchange Commission.
COMPENSATION OF THE BOARD OF DIRECTORS
CASH COMPENSATION AND STOCK AWARDS
Each outside Director receives a $30,000 yearly retainer for services to the
Board of Directors. No additional fees are payable for Board or committee
attendance or for service chairing a committee. In addition, under the 1994
Amended and Restated Outside Director Stock Award Plan (as amended) (the "Award
Plan"), each outside Director is granted a number of Common Shares equal to
$50,000 each year following their election to the Board of Directors at the
annual meeting of stockholders. Any outside Director elected to the Board other
than at the annual stockholder's meeting receives a pro rata number of Common
Shares based upon the number of full months of service.
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
10
<PAGE>
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.
DEFERRED COMPENSATION
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 (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 Common Shares, but is maintained for bookkeeping purposes
only. As dividends are declared and paid 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 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, or Common Shares
equal to the number of shares in the phantom stock account.
Under the Award Plan, outside Directors may also elect to defer receipt of
annual award of 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 Common Shares.
In addition, under the Award Plan, outside Directors are also entitled to
certain deferred 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 April of the year following each Director's 72nd birthday. 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 following table shows, as of February 23, 2000, the total number of
Common Share equivalents 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 Share equivalents representing the
11
<PAGE>
Accrued Vested Retirement Amount (the "Retirement Shares") for each outside
Director under the Award Plan:
<TABLE>
<CAPTION>
Phantom Retirement
Director Shares Shares
- - - - - - - - - - - - - - - - - -------- -------- ----------
<S> <C> <C>
Daniel T. Carroll.................................. 46,092 7,589
Franklin A. Cole................................... 57,632 7,262
Edgar D. Jannotta.................................. 11,087 2,427
Lester B. Knight................................... 1,922 n/a
Perry J. Lewis..................................... 12,002 4,765
Andrew J. McKenna.................................. 46,464 5,900
Newton N. Minow.................................... 15,429 5,214
Richard C. Notebaert............................... 3,878 464
Donald S. Perkins.................................. 29,137 7,262
John W. Rogers, Jr................................. 12,978 3,681
George A. Schaefer................................. 8,104 4,409
Fred L. Turner..................................... 21,232 4,126
Arnold R. Weber.................................... 15,174 4,312
Carolyn Y. Woo..................................... 1,315 464
------- ------
Total...................................... 282,446 57,875
</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 is not required to
do so under the relevant proxy rules. 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.
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 1999 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)
Andrew J. McKenna Daniel T. Carroll Daniel T. Carroll Edgar D. Jannotta Newton N. Minow
Michael D. O'Halleran Franklin A. Cole Franklin A. Cole Lester B. Knight Michael D. O'Halleran
Raymond I. Skilling Perry J. Lewis Edgar D. Jannotta Andrew J. McKenna Donald S. Perkins
John W. Rogers, Jr. Lester B. Knight Newton N. Minow Carolyn Y. Woo
Arnold R. Weber Perry J. Lewis Richard C. Notebaert
Carolyn Y. Woo Richard C. Notebaert George A. Schaefer
John W. Rogers, Jr. Fred L. Turner
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
in 1999, but it acted by unanimous written consent on one occasion.
12
<PAGE>
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
1999.
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 1999.
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 6, 2000 in
order to be considered in connection with the annual meeting of the Company's
stockholders in the spring of 2001. The Nominating Committee met once during
1999.
The Organization and Compensation Committee annually reviews and determines
the compensation of the Chairman and Chief Executive Officer of the Company. The
Organization and Compensation Committee also reviews, advises and consults with
the Chairman and Chief Executive Officer on the compensation of the President
and Chief Operating Officer and 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 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 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 four times during 1999.
The Board of Directors met six times during 1999. All incumbent Directors
attended at least 85% of the meetings of the Board and all committees of the
Board on which the respective Directors served.
13
<PAGE>
EXECUTIVE COMPENSATION
The following table discloses compensation received by the Company's Chief
Executive Officer and the Named Executives for the three fiscal years ended
December 31, 1999. All numbers of Common Shares have been adjusted for the May,
1997 and the May, 1999 3-for-2 stock splits:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------------------------- ---------------------------------
Other All
Annual Restrictive Other
Compen- Stock Compen-
Name and Principal sation Award(s) Options sation
Position Year Salary $ Bonus $(1) $(2) ($)(3) (#) ($)(4)
------------------ -------- --------- ---------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Patrick G. Ryan.................... 1999 1,119,230 990,000 174,266 315,000 183,291
Chairman, Chief Executive 1998 1,088,461 1,890,000 271,635 322,500 363,771
Officer & Director 1997 1,032,692 731,250 258,114 337,500 187,637
Michael D. O'Halleran(5)........... 1999 1,000,000 900,000 840,037 45,000 134,894
President, Chief Operating 1998 884,615 1,125,000 2,615,625 241,090
Officer & Director 1997 750,000 582,500 125,623
Daniel T. Cox...................... 1999 485,384 375,000 325,781 72,777
Executive Vice President 1998 464,230 600,750 30,000 132,927
1997 439,231 456,750 91,617
Harvey N. Medvin................... 1999 547,692 405,000 977,344 85,188
Executive Vice President & 1998 533,076 765,000 30,000 145,219
Chief Financial Officer 1997 501,923 356,250 37,500 95,893
Raymond I. Skilling................ 1999 542,692 401,250 977,344 84,700
Executive Vice President, 1998 529,230 765,000 164,430
Chief Counsel & Director 1997 501,923 356,250 650,625 32,500 97,376
</TABLE>
- - - - - - - - - - - - - - - - - ---------
(1) Represents performance-based bonus payments made pursuant to the terms of
the 1995 Senior Officer Incentive Compensation Plan. For more detailed
information refer to the "Short Term Incentive Compensation" section of the
Organization and Compensation Committee Report on Executive Compensation
beginning on page 17 of this proxy statement.
(2) Represents the value of personal use of a company-owned automobile and
aircraft.
(3) As of December 31, 1999, the Named Executives held the following number of
unvested shares of restricted stock granted pursuant to the Aon Stock Award
Plan (as amended and restated in 1997) (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 1999 are respectively set forth below:
<TABLE>
<CAPTION>
No. Shares December 31, 1999
Unvested Value Last Vesting Date
---------- ----------------- -----------------
<S> <C> <C> <C>
Patrick G. Ryan...................... -0- n/a n/a
Michael D. O'Halleran................ 267,549 $10,685,238 January 2, 2009
Daniel T. Cox........................ 45,750 $ 1,827,141 March 19, 2009
Harvey N. Medvin..................... 70,312 $ 2,808,052 March 19, 2009
Raymond I. Skilling.................. 60,750 $ 2,426,203 March 19, 2009
</TABLE>
14
<PAGE>
Under the Terms of the Aon Stock Award Plan, Common Shares granted are
subject to the following vesting schedule:
<TABLE>
<CAPTION>
Years of Continuous Employment
From Date of Grant Percent Vested
- - - - - - - - - - - - - - - - - ------------------------------ --------------
<S> <C>
3 20%
4 10%
5 10%
6 10%
7 10%
8 10%
9 10%
10 20%
</TABLE>
No voting rights attach and no dividends are paid on shares of unvested
restricted stock.
(4) Amounts disclosed in this column include:
(a) Company contributions of $8,400 in fiscal year 1999 under the Aon
Savings Plan, a defined contribution plan, on behalf of each of the Named
Executives.
(b) Company contributions of the following amounts in fiscal year 1999 under
the Aon Supplemental Savings Plan on behalf of Mr. Ryan, $102,334;
Mr. Cox, $36,770; Mr. Medvin, $41,616; Mr. O'Halleran, $91,350; and
Mr. Skilling, $41,156.
(c) Company contributions of the following amounts in fiscal year 1999 under
the Aon Executive Life Insurance Plan, a split-dollar arrangement, on
behalf of Mr. Ryan, $72,557; Mr. Cox, $27,607; Mr. Medvin, $35,172;
Mr. O'Halleran, $35,144; and Mr. Skilling $35,144.
(5) Mr. O'Halleran and a subsidiary of the Company have entered into an
employment contract which provides for employment terminable with or without
cause, and the following: an annual base salary of not less than $750,000;
stock awards in the amount of 20,000 Common Shares (subject to subsequent
stock splits) which were made on January 1 of 1994, 1996 and 1998;
restrictive covenants and confidentiality provisions for the benefit of the
Company; additional compensation upon death or disability or upon
termination without cause equal to one times annual base salary; and
additional compensation of $750,000 per year for two years upon termination
without cause conditioned on compliance with the restrictive covenants. The
contract renews each year unless notice of non-renewal is given not less
than 30 days prior to December 31 of each year.
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
1999 by each of the Named Executives:
<TABLE>
<CAPTION>
Value of Unexercised
Shares Subject to In-the-Money Options
Shares Options Fiscal Year-End at Fiscal Year End(2)
Acquired Value --------------------------- ---------------------------
Name on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Patrick G. Ryan........... -- -- 265,500 1,249,500 $6,025,279 $9,266,736
Daniel T. Cox............. 11,250 $269,427 12,375 40,125 $ 307,456 $ 251,555
Harvey N. Medvin.......... -- -- 52,125 111,375 $1,216,103 $1,077,756
Michael D. O'Halleran..... -- -- -0- 45,000 -0- -0-
Raymond I. Skilling....... -- -- 13,500 62,625 $ 335,406 $ 492,178
</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, 1999.
15
<PAGE>
OPTION GRANTS IN 1999 FISCAL YEAR
Information regarding options to purchase Common Shares which were granted
to Named Executives during 1999 is set forth below. All such options are subject
to the terms of the Aon Stock Option Plan.
<TABLE>
<CAPTION>
Number of Percent of
securities total options
underlying granted to Exercise or
option employees base price Expiration Grant Date
Name granted(1) in fiscal year ($/Sh) Date Present Value(2)
---- ---------- -------------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Patrick G. Ryan................... 315,000 14.7458 43.4375 3/19/2009 $3,453,616
Michael D. O'Halleran............. 45,000 2.1065 43.4375 3/19/2009 $ 493,374
</TABLE>
- - - - - - - - - - - - - - - - - ---------
(1) The total amount of Common Shares disclosed will vest in accordance with the
normal vesting schedule as follows: 30% on each of 3/19/2002 and 3/19/2005;
and 20% on each of 3/19/2003 and 3/19/2004.
(2) Based upon the Black-Scholes Option Pricing Model assuming a volatility rate
of 21.17%, a risk-free interest rate of 6%, a dividend yield of 2% and that
.87 years on average elapse between vesting and exercise.
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>
750,000............. 115,620 153,973 187,212 220,452 253,691 286,930 314,843
1,000,000............ 154,715 206,138 250,742 295,346 339,950 384,555 421,787
1,250,000............ 193,810 258,303 314,272 370,241 426,210 482,179 528,730
1,500,000............ 232,905 310,467 377,801 445,135 512,469 579,803 635,674
1,750,000............ 272,000 362,632 441,331 520,030 598,729 677,427 742,617
2,000,000............ 311,095 414,797 504,861 594,924 684,988 775,052 849,561
2,250,000............ 350,191 466,962 568,390 669,819 771,247 872,676 956,504
2,500,000............ 389,286 519,126 631,920 744,713 857,507 970,300 1,063,448
2,750,000............ 428,381 571,291 695,450 819,608 943,766 1,067,925 1,170,391
3,000,000............ 467,476 623,456 758,979 894,502 1,030,026 1,165,549 1,277,335
3,250,000............ 506,571 675,621 822,509 969,397 1,116,285 1,263,173 1,384,278
3,500,000............ 545,666 727,786 886,039 1,044,291 1,202,544 1,360,797 1,491,222
3,750,000............ 584,762 779,950 949,568 1,119,186 1,288,804 1,458,422 1,598,165
</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, 1999 are: Mr. Ryan $2,109,230 and 21 years; Mr. Cox
$860,384 and 13 years; Mr. Medvin $952,692 and 21 years; Mr. O'Halleran
$1,900,000 and 11 years; and Mr. Skilling $943,942
16
<PAGE>
and 23 years. The annual pension amounts included in the table above are based
upon the following assumptions: (1) retiring participants have attained age 65
and are fully vested, and (2) retiring participants have chosen to have benefits
payable as straight life annuities.
ORGANIZATION AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
PHILOSOPHY
The Company's executive compensation program is designed to attract, retain
and motivate top quality and experienced individuals. The program provides
competitive compensation opportunities while supporting a pay for performance
culture that emphasizes at risk compensation. As such the program is heavily
oriented toward incentive compensation tied to both short and long term
financial goals which are considerably linked to the interest of stockholders.
The executive compensation program is 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.
COMPONENTS
There are three distinct components to the executive compensation program:
- Base Salary
- Short Term Incentive Compensation
- 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 versus
the competitive market both within the insurance industry and externally. In
1999, the median increase in base salary for the Named Executive Officers as a
group was 2.8%.
SHORT TERM INCENTIVE COMPENSATION
The 1995 Senior Officer Incentive Compensation 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 the Named Executive
even though any such individual's total compensation may exceed $1,000,000.
Under the terms of the Incentive Plan each Named Executive was eligible to
receive a maximum bonus of 180% of the prior year's Base Salary. However, in no
event could a bonus exceed $3,000,000. Payment of a bonus is further conditioned
on the Company's achievement of annually established performance thresholds,
which are materially linked to the interests of stockholders. It is important to
note that the Incentive Plan provides the Compensation Committee the discretion
to grant bonuses which are less than the amounts provided for on an aggregate or
individual basis, based upon objective and subjective performance criteria
tailored to each individual.
17
<PAGE>
For bonus payments payable during calendar year 1999 the Compensation
Committee, in exercising its discretion, adjusted the level of bonuses to
reflect the Company's and the individuals' performance during 1998.
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.
The Aon Stock Award Plan has been an effective tool in the attraction and
retention of key individuals throughout the Company. The awards made under the
Aon Stock Award Plan are subject to a ten-year vesting schedule, which by design
provides for a significant incentive for award recipients to continue their
service with the Company.
During fiscal year 1999, grants under the Aon Stock Award Plan were made to
four of the Named Executives as detailed in the Summary Compensation Table. The
Chief Executive Officer, Mr. Ryan, although eligible, is not currently
participating in the Aon Stock Award Plan. In general, options under the Aon
Stock Option Plan are granted on a criterion similar to, and for similar
purposes as, those for the granting of awards under the Aon Stock Award Plan.
For more detailed information regarding the options granted to the Named
Executives refer to the table Executive Compensation--Options Grants in 1999
Fiscal Year. For more detailed information regarding options exercised by the
Named Executives during 1999 please refer to the table Executive
Compensation--Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values.
The granting of awards, under the Aon Stock Award Plan, and options, under
the Aon Stock Option Plan, are made based on the Compensation Committee's and
the Chief Executive Officer's assessment of an executive's past performance, an
appraisal of the executive's talents and other strengths and most notably the
long term contribution the executive can make to the Company's performance. In
addition, the Compensation Committee takes into consideration awards and options
made previously to an executive, and the number of awards and options
outstanding in the aggregate to all individuals.
CEO COMPENSATION
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 components are 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 Compensation
Committee and other outside Directors discuss in detail the extent to which
Mr. Ryan had achieved both his beginning of the year objective and subjective
performance goals. In summary, the Committee believes that Mr. Ryan's
performance in 1998 in assembling a worldwide brokerage strength was an
outstanding achievement.
Based upon the Company's performance during 1998 the Compensation Committee,
in consultation with the other outside Directors, has determined that Mr. Ryan
merits an incentive award, payable under the Incentive Plan, of 50% of the
maximum annual award. Furthermore, it is believed that the annual incentive
award paid in 1999 to Mr. Ryan is consistent with the Peer Group considering
both the Company's performance and Mr. Ryan's individual performance for 1998.
In addition, for 1999 Mr. Ryan was granted an option to purchase 315,000
Common Shares, as adjusted for the May, 1999 three for two stock split, subject
to the normal provisions of the Aon Stock Option Plan. The Compensation
Committee believes that this grant is an integral component of Mr. Ryan's total
compensation package and provides a direct link to the interests of
stockholders. For more detailed information regarding Mr. Ryan's grant please
refer to the table Executive Compensation--Option Grants in 1999 Fiscal Year.
18
<PAGE>
The Compensation Committee believes that a significant portion of
Mr. Ryan's compensation should be based upon performance and it has established
guidelines in that regard. For calendar year 1999, 80% of Mr. Ryan's total
compensation was based upon either individual performance or Company
performance. Specifically, 18% of Mr. Ryan's total compensation was payable in
the form of Short Term Incentives while 62% of total compensation was the value
marked to his Long Term Incentives. For more detailed information regarding
Mr. Ryan's compensation components please refer to the Summary Compensation
Table.
COMPENSATION CONSULTANT AND COMPETITIVE DATA
In order to ensure that the compensation program is competitive and
appropriate, the Compensation Committee annually reviews the levels of executive
compensation from a number of general survey sources, with a particular focus on
available data relating to the position of Chief Executive Officer. In addition,
the Compensation Committee periodically retains a nationally recognized
compensation consultant, unaffiliated with the Company, to provide an analysis
of the compensation policies and practices of the Peer Group companies and a
comparison thereof to the Company's.
SUBMITTED BY THE ORGANIZATION AND COMPENSATION COMMITTEE OF THE COMPANY'S
BOARD OF DIRECTORS
<TABLE>
<S> <C>
Donald S. Perkins, Chairman Newton N. Minow
Edgar D. Jannotta Richard C. Notebaert
Lester B. Knight George A. Schaefer
Andrew J. McKenna Fred L. Turner
</TABLE>
19
<PAGE>
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN(1)
AON CORPORATION, STANDARD & POOR'S AND PEER GROUP INDICES
FISCAL YEARS ENDED DECEMBER 31
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AON CORP S & P 500 PEER GROUP
<S> <C> <C> <C>
1994 $100.00 $100.00 $100.00
1995 $161.49 $137.58 $128.80
1996 $206.61 $169.17 $167.00
1997 $298.78 $225.60 $234.84
1998 $287.26 $290.08 $306.55
1999 $317.77 $351.12 $374.80
</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 comprises: AFLAC Incorporated; Arthur J. Gallagher & Co.; E.W.
Blanch Holdings Inc.; Marsh & McLennan Companies, Inc.; Poe & Brown Inc.;
and Unum Provident Corporation, which is the company resulting from the
merger in 1999 between former Peer Group company Provident Companies, Inc.,
and UNUM Corporation. The performance graph assumes that the value of the
investment of Aon Common Shares and 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
weighing 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. Separate results for Provident
Companies, Inc., which in prior years had been included in the Peer Group
and performance graph, are no longer available as a result of the
acquisition of it by UNUM in 1999.
20
<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 and chief financial officer, serve on the board of directors of a
private company, Schwarz. Mr. McKenna is also the chairman and chief executive
officer of Schwarz.
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 1999 and anticipates that the firm may be retained to perform
legal services in 2000. During 1999, 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 1999, or is
expected to involve in 2000, 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 1999.
AGENDA ITEM NO. 2
AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
On November 19, 1999, the Board of Directors of the Company approved and
recommended, subject to stockholder approval, an amendment to the Fourth
Article of the Company's Second Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") to increase the number of
authorized Common Shares from 300 million to 750 million.
The Company currently is authorized by its Certificate of Incorporation to
issue 300 million Common Shares with a par value of $1.00 per share, and
25 million shares of Serial Preferred Stock with a par value of $1.00 per share
on such other terms as the directors may from time to time approve. As a result
of the May, 1999 three-for-two stock split, 86 million Common Shares were issued
pro rata to stockholders of record of Common Shares. As of February 23, 2000,
there were 256,453,450 Common Shares issued and outstanding. If the proposed
amendment to the Company's Certificate of Incorporation (the "Amendment") is
adopted, the number of authorized Common Shares will be increased to 750 million
shares and the authorized number of shares of preferred stock would remain
unchanged. Common Shares are not subject to pre-emptive rights; to the extent
that such shares are issued in the future other than pro rata to all then
existing stockholders, the voting power of stockholders not receiving such
shares will be diluted.
The Board of Directors believes it is desirable for the Company to have the
flexibility, should corporate purposes make it advisable, to issue more Common
Shares than its Certificate of Incorporation currently authorizes without
incurring the expense or delay incident to calling a special meeting of the
stockholders or waiting for the next annual meeting. Such general corporate
purposes, none of which is known or specifically planned at the current time,
may include, among others, future financing transactions, acquisitions, employee
benefit plans, and stock dividends or splits.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT OF
THE CERTIFICATE OF INCORPORATION TO INCREASE IN THE NUMBER OF AUTHORIZED COMMON
SHARES OF THE COMPANY.
21
<PAGE>
AGENDA ITEM NO. 3
AMENDMENT AND RESTATEMENT OF THE AON STOCK AWARD PLAN
AND RE-APPROVAL OF THE PLAN IN ITS ENTIRETY
The Aon Stock Award Plan (the "Award Plan") was first approved by
stockholders in 1988. The Aon Stock Option Plan (the "Option Plan") was first
approved by stockholders in 1980. Both plans (the "Plans") serve as a part of
the Company's overall strategy to attract, motivate and retain valuable and
talented personnel to contribute to the long-term success of the Company and its
subsidiaries. The Plans are also significant because they align the interests of
the employees of the Company with its stockholders.
The Award Plan is administered by the Organization and Compensation
Committee (the "Compensation Committee") of the Board of Directors which
consists solely of outside Directors who are not eligible to participate in the
Award Plan. The Compensation Committee considers both Plans as integral parts of
the Company's overall compensation policy for its management and key employees
and the ability to motivate their best efforts on behalf of the Company and its
subsidiaries. Upon recent review of both Plans the Compensation Committee has
recommended to the Board that the Award Plan be amended to include the ability
to grant options and that the Award Plan be restated in its entirety. The
amendment and restatement of the Award Plan will not change the terms or
provisions regarding stock awards, but will only add the ability to grant stock
options on terms identical to those of the Option Plan. The amendment and
restatement will not increase the total number of Common Shares authorized or
available for issuance under the Award Plan or the Option Plan.
The Compensation Committee also believes that the proper tax treatment of
the Company is a necessary part of the amendment to the Award Plan. Under
Internal Revenue Code Section 162(m), in order for the Company to qualify to
take the appropriate tax deductions upon the exercise of any options granted
under the Award Plan the stockholders of the Company must specifically approve
an amendment to the Award Plan which limits the number of Common Shares subject
to options which can be granted to any one individual and the stockholders of
the Company must specifically re-approve the Award Plan in its entirety. The
Compensation Committee has therefore also recommended to the Board that the
Award Plan be amended to provide that the number of Common Shares subject to
options which can be granted to any one individual each fiscal year is limited
to 675,000 and that the Award Plan be re-approved in its entirety.
Upon consideration of the recommendations made by the Compensation
Committee, the Board has concluded that the amendments are in the best interest
of the Company. The Board fully supports the recommendations of the Compensation
Committee, and has adopted the amendments, subject to stockholder approval.
The following summary describes the material features of the Award Plan as
proposed to be amended and all material differences of the amended Award Plan
from the existing Award Plan, and is qualified in its entirety by reference to
the specific provisions of the Award Plan as restated, the full text of which is
set forth as Exhibit A and incorporated by reference into this Proxy Statement.
The Award Plan currently authorizes up to 19,350,000 Common Shares (as
adjusted for the 1997 and 1999 three-for two stock splits) to be used as awards
(and is subject to adjustment for any future changes in capitalization as may be
deemed advisable by the Compensation Committee to prevent the dilution or
enlargements of rights). The number of Common Shares available for issuance
under the Award Plan fluctuates over time, and was 4,141,000 as of February 23,
2000. The market value of a Common Share on that date was $22.375, based on the
closing price on the New York Stock Exchange. As of February 23, 2000,
approximately 1,850 employees of subsidiaries of the Company held options to
purchase approximately 11,000,000 Common Shares, and approximately
700 employees of subsidiaries of the Company held awards to receive
approximately 9,400,000 Common Shares.
22
<PAGE>
The Award Plan requires that the recipient of a stock award complete three
continuous years of service after the date of grant before the award begins to
vest in increments of 10% per year (20% after the third and tenth year) ending
after the tenth year of continuous employment. Recipients of stock awards
receive stock units which, upon vesting, are payable in Common Shares, or, in
the discretion of the Compensation Committee, in cash. The Compensation
Committee may, in its discretion, permit the deferral of all or a portion of
Common Shares deliverable upon vesting. Award recipients have no right to
receive dividends on any Common Share units or to vote such Common Shares until
such Common Shares have vested and have been delivered. Termination of
employment causes an award recipient's unvested award to be forfeited, except
upon disability or death or unless otherwise specifically considered and
approved by the Compensation Committee. In the event of disability or death, all
awards continue to vest in accordance with the vesting schedule. No award made
prior to any amendment or termination of the Award Plan shall be adversely
affected or limited without the award recipient's consent.
Grants are made at the discretion of the Compensation Committee to regular,
full-time employees of the Company and may be made in such amounts as the
Compensation Committee may determine. See "Organization and Compensation
Committee Report--Long Term Incentive Compensation" for a discussion of the
compensation policies underlying the Award Plan. Because the selection of award
recipients is discretionary, it is not possible to identify those employees who
will participate in the Award Plan; however, the Board does not anticipate any
significant change in the policies or standards for considering an employee. The
Board does, however, anticipate that the use of awards will be limited and the
use of options will be expanded under the Award Plan.
If approved by stockholders, the Award Plan will be amended to add the
ability to grant options. The number of Common Shares available for issuance
under the Award Plan was 4,141,000 as of February 23, 2000. The provisions
governing the grant of options under the Award Plan will be identical to the
provisions of the Option Plan. Options granted under the Award Plan may be
incentive stock options ("ISOs") or non-qualified stock options ("NQSOs") Each
option granted will have an exercise price equal to the market value of a Common
Share on the date of grant. Each optionee is required to complete two continuous
years of service after the date of grant before the option begins to vest in
increments ending at the end of four years of 33% at the end of the second year,
34% at the end of the third year, and 33% at the end of four years. Option
recipients will have no right to receive dividends on any Common Shares until
such options have been exercised and the Common Shares have been delivered, and
there will be no right to vote Common Shares until such Common Shares have been
delivered. ISOs must be exercised in a manner consistent with applicable
Internal Revenue Code provisions regarding qualification of options as ISOs. To
the extent the fair market value of Common Shares exceed applicable Internal
Revenue Code limitations, any such excess shall be deemed to be the equivalent
number of NQSOs.
An option shall be exercised by giving proper notice to the Company
accompanied by payment of the option price in such form as may be permitted by
the Committee, including but not limited to a cash payment, tender or
certification of ownership of Common Shares held at least 6 months, or by a
cashless exercise through a broker. Common Shares obtained by option exercises
are unrestricted securities; however, the options themselves cannot be
transferred except as may be permitted by the Compensation Committee in
connection with estate planning or to a member of a recipient's immediate family
in compliance with Rule 16a-1(e) of the Securities Act of 1934. An option cannot
be pledged or otherwise encumbered by a recipient. The Compensation Committee
may, in its discretion, permit the deferral of all or a portion of the Common
Shares otherwise deliverable upon the exercise of an option.
Except in the event of disability or death, termination of employment will
cause an option recipient's unvested options to be forfeited and unexercised
vested options to be forfeited 30 days following termination, unless otherwise
specifically considered and approved by the Compensation Committee. In the event
of disability or death, all options continue to vest in accordance with the
vesting schedule. No
23
<PAGE>
option granted prior to any amendment or termination of the plan can be
adversely affected or limited without the option recipient's consent.
Under the terms of the Award Plan, subject to applicable requirements of
Federal and State securities laws and the requirements of applicable national
securities exchanges, the Board of Directors has the right to amend or terminate
the Plan; however it is the policy of the Board of Directors that all
significant changes be submitted for stockholder approval and that the Board be
guided by the outcome of the stockholder vote.
U.S. TAX CONSEQUENCES--AWARDS
The recipient of an award receives Common Shares on the date of vesting and
must include in taxable income the fair market value of the stock as of the date
of vesting, unless the recipient elects to defer receipt of Common Shares prior
to vesting, in which case the amount which must be included in the recipient's
taxable income is the fair market value as of the date of receipt. This taxable
income is subject to withholding taxes and FICA. The Company requires payment of
such tax withholdings prior to delivery of Common Shares. The Company is
correspondingly entitled to deduct as an expense for income tax purposes the
amount the recipient includes in taxable income in the year it is included.
U.S. TAX CONSEQUENCES--OPTIONS
The principal difference between ISO's and NQSO's is the tax treatment
authorized under the Internal Revenue Code. An optionee recognizes no taxable
income on the grant of an NQSO or an ISO. Upon the exercise of an NQSO, the
optionee will pay the option price to the Company and will recognize taxable
income equal to the difference between the option price and the fair market
value of the Common Shares on the date of exercise; the Company will receive the
option price and may deduct as an expense that same difference between the
option price and the fair market value. Upon the exercise of an ISO, the
optionee will pay the option price to the Company and, if an optionee disposes
of Common Shares received upon the exercise within one year, will recognize
taxable compensation income in the year of disposition equal to the difference
between the option price and the lesser of the (i) fair market value on the date
of exercise or (ii) the value received on the date of disposition; the Company
may take as a deduction that same amount. If an optionee disposes of Common
Shares more than one year after exercise of an option, the optionee recognizes
long-term capital gain, but the Company will not take any such amount as a
deduction.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT
AND RESTATEMENT OF THE AON STOCK AWARD PLAN AND RE-APPROVAL OF THE PLAN IN ITS
ENTIRETY.
AGENDA ITEM NO. 4
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 1999. Ernst & Young LLP was first retained as the
Company's independent auditors in February 1986. 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
2000. 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 2000. Because of the difficulty and expense of making any substitution
of auditors for 2000 following the 2000 annual meeting, it is contemplated that
the appointment for the year 2000 will be permitted to stand unless the Board
finds other good reason for making a change.
24
<PAGE>
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE FOLLOWING
RESOLUTION--AGENDA ITEM NO. 4:
RESOLVED, that the appointment of Ernst & Young LLP by the Board of
Directors as the Company's independent auditors for the year 2000 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.
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, presented 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, except for Agenda Item No. 2, regarding the
amendment of the Certificate of Incorporation of the Company to increase the
number of authorized Common Shares, which shall be decided by the vote of the
holders of a majority of Shares outstanding. 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 matters.
You may revoke your proxy at any time before it is voted at the meeting.
Each proxy duly validated by mail, telephone or by using the Internet prior to
the meeting and not otherwise revoked will be voted according to its terms. If
no specific direction is indicated on a duly validated 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
validate all such proxies in order to be sure that all of the 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 revoked; (b) delivering to the Company by mail, by telephone or
by using the Internet a duly validated replacement proxy relating to the same
Shares and dated later than the date of the proxy which is being replaced; 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.
PROPOSALS OF STOCKHOLDERS FOR 2001 ANNUAL MEETING
In order to be considered for inclusion in the Company's proxy statement for
the regular annual meeting of the stockholders of the Company in the year 2001,
stockholder proposals conforming to applicable rules and regulations must be
received by the Company not later than November 6, 2000.
Stockholder proposals not submitted for inclusion in the Company's proxy
statement but submitted for presentation at the regular annual meeting of the
stockholders of the Company in the year 2001 will be considered untimely
submitted under applicable rules unless received on or before the close of
business on January 19, 2001.
25
<PAGE>
All 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, 1999 with the Securities and Exchange Commission on or before March
30, 2000. 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.
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 which requires
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 validating your proxy by mail, by
telephone or by using the Internet. To validate a proxy by mail please sign and
return it promptly in the enclosed envelope. To validate a proxy by telephone or
by using the Internet please follow the instructions located on your proxy card.
In the event that you attend the meeting, you may revoke your proxy and vote
your Shares in person if you so desire.
INCORPORATION BY REFERENCE
The following document is incorporated by reference in its entirety and
attached hereto and made a part of this Proxy Statement as Exhibit A: The Aon
Stock Award Plan (as amended and restated through February, 2000).
By Order of the Board of Directors
[SIGNATURE]
Kevann M. Cooke
VICE PRESIDENT AND CORPORATE SECRETARY
Dated: March 6, 2000
26
<PAGE>
EXHIBIT A
AON STOCK AWARD PLAN
(AS AMENDED AND RESTATED THROUGH FEBRUARY, 2000)
1. PURPOSE
Aon Corporation and its subsidiaries (the "Corporation"), has adopted the
Aon Stock Award Plan (as amended and restated through February 2000) (the
"Plan"). The purpose of the Plan is to foster and promote the long-term
financial success of the Corporation and materially increase stockholder value
by: (a) strengthening the Corporation's capability to develop, maintain, and
direct an outstanding management team; (b) motivating superior performance by
means of long-term performance related incentives; (c) encouraging and providing
for obtaining an ownership interest in the Corporation; (d) attracting and
retaining outstanding executive talent by providing incentive compensation
opportunities competitive with other major companies; and (e) enabling
executives to participate in the long term growth and financial success of the
Company.
2. ADMINISTRATION
The Plan shall be administered by the Organization and Compensation
Committee (the "Committee") of Aon Corporation's Board of Directors (the
"Board"). Subject to the limitations of the plan, the Committee shall have the
sole and complete authority to: (a) select from the regular, full-time employees
of the Corporation, those who shall participate in the Plan ("Participant");
(b) make awards in such forms and amounts as it shall determine; (c) impose such
limitations, restrictions and conditions upon such awards as it shall deem
appropriate; (d) interpret the Plan and adopt, amend and rescind administrative
guidelines and other rules and regulations relating to the Plan; (e) correct any
defect or omission or reconcile any inconsistency in this Plan or in any award
granted hereunder; and (f) make all other determinations and take all other
actions deemed necessary or advisable for the implementation and administration
of the Plan. The Committee's determinations on matters within its authority
shall be conclusive and binding upon the Corporation and all other persons.
3. TYPES OF AWARDS
Awards of the common stock, $1.00 par value per share of the Corporation
(the "Common Stock") under this Plan may be in the form of any one or more of
the following: (a) incentive stock options (as defined by Internal Revenue Code
Section 422 and referred to herein as "ISO's"); (b) regular stock options (not
intended to be accorded favored tax treatment, and referred to herein as
"RSO's"); and (c) stock awards granted pursuant to Section 7.
4. SHARES SUBJECT TO THE PLAN
Since the adoption of the Plan in 1987, after giving effect to subsequent
additions approved by shareholders and stock splits, the aggregate number of
shares of Common Stock which may be issued pursuant to awards under the Plan
shall be 19,350,000, subject to adjustment pursuant to Section 10 hereof.
5. STOCK OPTION TERMS AND CONDITIONS
The Committee may make option grants of Common Stock in the form of ISO's
and/or RSO's (collectively referred to as "Option Grant").
The purchase price per share of Common Stock subject to an Option Grant
shall not be less than 100% of the fair market value of the Common Stock on the
date such Option Grant is made. "Fair Market
A-1
<PAGE>
Value" as used in the Plan with regard to a date means 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, or, if The Wall Street
Journal is no longer published, such other periodical as is chosen by the
Committee.
An Option Grant shall vest after a Participant's period of continuous
employment by the Corporation from the date of the Option Grant ("Grant Date")
in accordance with the schedule set forth below:
<TABLE>
<CAPTION>
Participant's Full Years of Continuous
Employment From Grant Date Percent Vested
- - - - - - - - - - - - - - - - - -------------------------------------- --------------
<S> <C>
2 33%
3 34%
4 33%
</TABLE>
A Participant, following the vesting of any portion of an Option Grant as
set forth above, may elect to exercise an option by giving written notice to the
Corporation on such form as the Committee may prescribe. Payment for all shares
to be purchased pursuant to an exercise of an option shall be made in a form or
manner authorized by the Committee, including, but not limited to, cash or, if
the Committee so permits, (a) by delivery of certification of ownership to the
Corporation of the number of shares of Common Stock which have been owned by the
holder for at least six (6) months prior to the date of exercise having an
aggregate Fair Market Value of not less than the product of the purchase price
of the option multiplied by the number of shares the Participant intends to
purchase upon exercise of the option on the date of delivery; or (b) in a
cashless exercise through a broker. Delivery of such certificates is conditioned
on the Participant's prior compliance with this Section and with the terms of
Section 9. Upon receipt of such stock certificate, the Participant is free to
hold or subject to Section 15 dispose of it at will. The Participant does not
have the right to vote any shares of Common Stock subject to an Option Grant or
receive dividends on such shares prior to the time that the option to which they
are subject is exercised. The Committee at its discretion may alter the terms of
the vesting of Option Grants; provided however, no Option Grant may be exercised
after the tenth (10th) anniversary of the date of the making of such Option
Grant.
Notwithstanding any provision contained in the Plan to the contrary, the
maximum number of shares for which Option Grants may be made under this Plan to
any one Participant in any one calendar year is 675,000 shares of Common Stock,
subject to adjustment pursuant to Section 10 hereof.
6. LIMITATION ON ISO'S
Notwithstanding anything in the Plan to the contrary, to the extent required
from time to time by the Internal Revenue Code and promulgation's thereunder
("Code"), the following additional provisions shall apply to Option Grants which
are intended to qualify as ISO's:
(a) The aggregate Fair Market Value (determined as of the Grant Date) of the
shares of Common Stock with respect to which ISO's are exercisable for
the first time by any Participant during any calendar year (under all
plans of the Corporation) shall not exceed $100,000 or such other amount
as may subsequently be specified by the Code; provided that, to the
extent that such limitation is exceeded, any excess options (as
determined under the Code) shall be deemed to be RSO's.
(b) Any ISO's authorized under the Plan shall contain such other provisions
as the Committee shall deem advisable, but shall in all events be
consistent with and contain or be deemed to contain all provisions
required in order to qualify the Option Grants as ISO's.
(c) All ISO's must be granted within ten years from the effective date of
this Plan.
A-2
<PAGE>
7. STOCK AWARD TERMS AND CONDITIONS
The Committee may in its discretion make grants of Common Stock, subject to
this Section 7 (herein referred to as "Stock Awards"). The Stock Awards shall
vest after a Participant's period of continuous employment by the Corporation
from the date of the Stock Award (the "Award Date") in accordance with the
schedule set forth below:
<TABLE>
<CAPTION>
Participant's Full Years of Continuous
Employment From Award Date Percent Vested
- - - - - - - - - - - - - - - - - -------------------------------------- --------------
<S> <C>
3 20
4 10
5 10
6 10
7 10
8 10
9 10
10 20
</TABLE>
Within 30 days of the vesting of any portion of a Stock Award by virtue of
the Participant's completing the full years of continuous employment as set
forth above, the Corporation shall deliver to the Participant a stock
certificate covering the requisite number of shares of Common Stock. Delivery of
such certificates is conditioned on the Participant's prior compliance with the
terms of Section 9. Upon receipt of such stock certificate, the Participant is
free to hold or, subject to Section 15, dispose of it at will. The Participant
does not have the right to vote any shares of Common Stock subject to an Award
or receive dividends on such shares prior to the time they are vested. The
Committee in its discretion may alter the terms of the vesting of Stock Awards.
The Committee shall have the discretion to discharge all or a portion of its
obligation under this paragraph by paying to the Participant an amount of money
equal to the fair market value of all or a portion of the undelivered shares of
Common Stock on the date the Stock Award becomes vested, less applicable
withholding taxes.
8. EMPLOYMENT TERMINATION
If a Participant's employment terminates for any reason, other than by death
or disability, all unvested Option Grants and Stock Awards will be forfeited. If
a Participant's employment terminates because of death or disability all
unvested Option Grants and Stock Awards will continue to vest in accordance with
Sections 5 and 7, respectively. The Committee, however, shall have the
discretion to accelerate the vesting of any unvested Option Grant or to deliver
shares of Common Stock representing all or a portion of any unvested Stock
Award, with respect to specific terminating Participants if, after reviewing all
of the facts and circumstances of such termination, the Committee determines
that such delivery is appropriate and equitable.
Any participant who terminates employment, other than by death or
disability, will be permitted to exercise any vested Option Grants, pursuant to
Section 5, for a period of 30 days immediately following the Participant's
termination of employment, after which any vested Option Grants will be
forfeited.
9. WITHHOLDING TAXES
A Participant shall have the duty to pay to the Corporation an amount equal
to the taxes required by any government to be withheld or otherwise deducted and
paid by the Corporation as a result of the exercise by the Participant of any
Option Grant or the delivery to the Participant of any shares subject to an
Option Grant and/or Stock Award. Shares of Common Stock subject to an exercised
Option Grant and/or Stock Award shall not be delivered to the Participant until
such time as such payment has been made.
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The Committee may, in its discretion and subject to such rules as it may
adopt, permit or, in the absence of the receipt of payment therefore within
prescribed time periods, require the Participant to pay all or a portion of the
withholding taxes (federal, state and local) by electing to have the Corporation
withhold shares of Common Stock otherwise issuable having a Fair Market Value
equal to all or any portion of the withholding tax to be satisfied in this
manner.
However, in no event will the amount of shares of Common Stock withheld
exceed the amount necessary to satisfy the required minimum statutory
withholding.
10. ADJUSTMENT IN EVENT OF CHANGES IN CAPITALIZATION
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 Corporation, the Committee may make such equitable adjustments, to
prevent dilution or enlargement of rights, as it may deem appropriate, including
but not limited to (a) the maximum number of shares available to be issued
pursuant to Section 4; (b) the maximum number of shares of Common Stock which
may be granted in a single year pursuant to Section 5; (c) the number of shares
of Common Stock subject to outstanding Option Grants and/or Stock Awards and
(d) the exercise price of outstanding Option Grants.
11. 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.
12. IMPACT ON OTHER BENEFITS
The value of any shares of Common Stock delivered (or money in lieu thereof)
under this Plan shall not be includable as compensation or earnings for purposes
of any other benefit plan offered by the Corporation.
13. BENEFICIARY
Any shares deliverable after a Participants death (or money in lieu thereof)
shall be delivered (or paid) to the beneficiary as designated in writing by the
Participant. If no beneficiary is so designated, delivery (or payment) will be
made to the Participant's estate. The Participant may change the designated
beneficiary of this Plan by filing with the Committee written notices of such
change.
14. TERMINATION OR AMENDMENT OF THE PLAN
The Board shall have the right to amend or terminate the Plan at any time.
An outstanding Option Grant or Stock Award, however, may not in any way be
adversely affected or limited by any Plan amendment or termination approved
after the Grant Date or the Award Date, as the case may be, without the
Participant's written consent (or, if the Participant is not then living, the
affected beneficiary); provided, that adjustments pursuant to Section 10 herein
shall not be subject to the foregoing limitations of this Section 14.
15. REGULATORY COMPLIANCE AND LISTING
The delivery of any shares of Common Stock under this Plan may be postponed
by the Corporation for such period as may be required to comply with any
applicable requirements under the Federal or State securities laws, any
applicable listing or other requirements of any national securities exchange and
requirements under any other law or regulation applicable to the delivery of
such shares, and the Corporation shall not be obligated to deliver any shares of
Common Stock under this Plan if such delivery shall constitute a violation of
any provision of any law or of any regulation of any governmental
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<PAGE>
authority or any national securities exchange. In addition, the shares of Common
Stock when delivered may be subject to conditions, including transfer
restrictions, if required to comply with applicable securities law.
16. MISCELLANEOUS
The shares of Common Stock to be delivered under the Plan may be either
authorized but unissued shares or shares which have been or may be reacquired by
the Corporation, as determined from time to time by the Committee.
To the extent any shares of Common Stock are not delivered to a Participant
or beneficiary because the Option Grant or Stock Award was forfeited or
canceled, or the shares of Common Stock are not delivered because the Option
Grant or Stock Award is settled in cash or used to satisfy the applicable tax
withholding obligation, such shares shall not be deemed to have been delivered
for purposes of determining the maximum number of shares of Common Stock
available for delivery under the Plan.
If the exercise price of an Option Grant under this Plan is satisfied by
tendering shares of Common Stock to the Corporation (by either actual delivery
or by attestation), only the number of shares of Common Stock issued net of
shares of Common Stock tendered shall be deemed delivered for purposes of
determining the maximum number of shares of Common Stock available for delivery
under the Plan.
17. TRANSFERABILITY
No Option Grant and/or Stock Award and no right under any such Option Grant
and/or Stock Award shall be transferable by a Participant otherwise than by will
or by the laws of descent and distribution; provided, however, that if so
determined by the Committee, a Participant may, in the manner established by the
Committee;
(a) designate a beneficiary or beneficiaries to exercise the rights of the
Participant and receive any property distributable with respect to any
Option Grants and/or Stock Awards upon the death of the Participant, or;
(b) transfer an Option Grant and/or Stock Award to any member of such
Participant's "immediate family" (as such term is defined in Rule
16a-1(e) promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, or any successor rule or
regulation) or to a trust or family partnership whose beneficiaries are
members of such Participant's "immediate family."
Each Option Grant and Stock Award or right under any Option Grant and Stock
Award shall be exercisable during the Participant's lifetime only by the
Participant, or by a member of such Participant's immediate family or a trust or
family partnership for members of such immediate family pursuant to a transfer
as described above, or if permissible under applicable law, by the Participant's
guardian or legal representative. No Option Grant and/or Stock Award or right
under any such Option Grant and/or Stock Award may be pledged, alienated,
attached or otherwise encumbered, any purported pledge, alienation, attachment
or encumbrance thereof shall be void and unenforceable against the Corporation.
18. DEFERRAL OF AWARDS
The Committee may, in its discretion and subject to such rules as it may
adopt, permit a Participant to defer all or a portion of such shares of Common
Stock otherwise deliverable pursuant to the Plan.
19. EFFECTIVE DATE OF THE PLAN
The Plan as amended and restated shall become effective as of the date of
approval of this Plan by the Board and the stockholders of the Company.
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<PAGE>
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AON CORPORATION
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
AON CENTER
200 EAST RANDOLPH DRIVE
CHICAGO, ILLINOIS
APRIL 18, 2000 AT 10:00 A.M.
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<PAGE>
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AON CORPORATION PROXY/VOTING INSTRUCTION CARD
CHICAGO, ILLINOIS
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON APRIL 18, 2000.
The undersigned hereby appoints Patrick G. Ryan, Raymond I. Skilling or Kevann
M. Cooke, each individually and 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 on April 18, 2000 at Aon Center, 200 East Randolph
Drive, Chicago, Illinois at 10:00 A.M. CST, 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" ITEM 2, 3 AND 4 AS INDICATED ON THE REVERSE SIDE HEREOF.
This card also constitutes voting instructions by the undersigned to the
trustees of the ESOPAccount of the Aon Savings Plan, and the trustee of the Aon
Stock Fund of the Aon Savings Plan, respectively, for all shares votable by the
undersigned and held of record by such trustees, if any. If there are any shares
for which instructions are not timely received, the trustees of each plan will
cause all such shares to be voted in the same manner and proportion as the
shares of the respective plans for which timely instructions have been received.
All voting instructions for shares held of record by the plans shall be
confidential.
Election of Directors
Nominees: (01) Patrick G. Ryan, (02) Daniel T. Carroll, (03) Franklin A.
Cole, (04) Edgar D. Jannotta, (05) Lester B. Knight, (06) Perry
J. Lewis, (07) Andrew J. McKenna, (08) Newton N. Minow, (09)
Richard C. Notebaert, (10) Michael D. O'Halleran, (11) Donald S.
Perkins, (12) John W. Rogers Jr. , (13) George A. Schaefer, (14)
Raymond I. Skilling, (15) Fred L. Turner, (16) Arnold R. Weber,
(17) Carolyn Y. Woo.
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.
-----------
SEE REVERSE
SIDE
-----------
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TRIANGLE FOLD AND DETACH HERE TRIANGLE
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<PAGE>
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/X/ PLEASE MARK YOUR 4909
VOTES AS IN THIS
EXAMPLE.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1,2,3 AND 4
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FOR WITHHELD
1. Election of / / / /
Directors.
To withhold authority to vote for any nominee(s), mark the "FOR"
box and write the name of such nominee on line provided below:
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FOR AGAINST ABSTAIN
2. Approval of increase / / / / / /
in authorized shares
of Common Stock to
750,000,000.
FOR AGAINST ABSTAIN
3. Approval of amend- / / / / / /
ment and restatement
of Aon Stock Award
Plan and reapproval
of such plan in its
entirety.
FOR AGAINST ABSTAIN
4. Appointment of Ernst & / / / / / /
Young as Company's
Independent Auditors.
5. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
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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.
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SIGNATURE (IF JOINTLY HELD) DATE
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TRIANGLE FOLD AND DETACH HERE TRIANGLE
Aon Corporation stockholders can now give proxies to vote their shares by
mail, by telephone or by using the Internet. To use the telephone or the
Internet you will need your proxy card, your voter control number shown
above (just below the perforation) and the tax identification number
associated with your stockholder account. If you use the telephone or the
Internet, there is no need for you to return the proxy card.
- To use the telephone, you will need a touch-tone telephone. Dial
1-877-PRX-VOTE (1-877-779-8683), 24 hours a day, seven days a week.
- To use the Internet, log on to the Internet and go to the following
website: www/eproxyvote.com/aoc
-------------------------------
- To use the mails, fold and detach the proxy card and use the enclosed
envelope, which is already addressed and requires no postage.
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