<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 Section 240.14a-11(c) or Section 240.14a-12
ARTHUR J. GALLAGHER & CO.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO
ARTHUR J. GALLAGHER & CO.
THE GALLAGHER CENTRE
TWO PIERCE PLACE
ITASCA, ILLINOIS 60143-3141
March 27, 1998
Dear Stockholder:
Our Annual Meeting will be held on Tuesday, May 19, 1998, at 10:00 a.m.,
Central Standard Time, at The Gallagher Centre, Two Pierce Place, Second
Floor, Itasca, Illinois.
The formal Notice of Annual Meeting of Stockholders and Proxy Statement
accompanying this letter describe the business requiring action at the
meeting. A presentation by J. Patrick Gallagher, Jr., President and Chief
Executive Officer of the Company, and I will provide information on the
business and progress of your Company during 1997 and our directors and
officers will be available to answer your questions.
We appreciate the interest of our stockholders in Arthur J. Gallagher & Co.
and are pleased that in the past so many of you have exercised your right to
vote your shares. We hope that you continue to do so.
Whether or not you plan to attend, please mark, sign, date and return the
accompanying proxy card as soon as possible. The enclosed envelope requires no
postage if mailed in the United States. If you attend the meeting, you may
revoke your proxy and vote personally.
Cordially,
ROBERT E. GALLAGHER
Chairman of the Board
<PAGE>
ARTHUR J. GALLAGHER & CO.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1998
To the Stockholders of
ARTHUR J. GALLAGHER & CO.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Arthur J.
Gallagher & Co. (the "Company") will be held Tuesday, May 19, 1998, at 10:00
a.m., Central Standard Time, at The Gallagher Centre, Two Pierce Place, Second
Floor, Itasca, Illinois for the following purposes:
1. To elect Three Class II directors;
2. To consider and act upon a proposal to approve amendments to the Arthur
J. Gallagher & Co. 1988 Incentive Stock Option Plan (i) extending the
term through May 10, 2008; (ii) authorizing the Option Committee to
amend all existing grants so that all options shall immediately vest in
the event of a change in control of the Company; (iii) providing that
future option grants shall immediately vest in the event of a change in
control of the Company; and (iv) increasing the number of shares of
Common Stock subject thereto from 550,000 to 875,000;
3. To ratify the appointment of Ernst & Young LLP as independent auditors
for the fiscal year ending December 31, 1998; and
4. To transact such other business as may properly come before the meeting
and any adjournment thereof.
The Board of Directors has fixed the close of business on March 23, 1998 as
the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, you are urged to mark,
date and sign the enclosed proxy and return it promptly so your vote can be
recorded. If you are present at the meeting, you may revoke your proxy and
vote in person.
Date: March 27, 1998
By Order of the Board of Directors
CARL E. FASIG
Secretary
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING
IN PERSON.
<PAGE>
ARTHUR J. GALLAGHER & CO.
THE GALLAGHER CENTRE
TWO PIERCE PLACE
ITASCA, ILLINOIS 60143-3141
PROXY STATEMENT
GENERAL INFORMATION
USE OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Arthur J. Gallagher & Co. (the "Company") of proxies to
be voted at the Annual Meeting of Stockholders to be held on Tuesday, May 19,
1998, in accordance with the foregoing notice. The Proxy Statement and
accompanying proxy are being mailed to stockholders on or about March 27,
1998.
Any proxy may be revoked by the person giving it at any time before it is
voted by delivering to the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date. Shares represented
by a proxy, properly executed and returned to the Company and not revoked,
will be voted at the Annual Meeting.
Shares will be voted in accordance with the directions of the stockholder as
specified on the proxy. In the absence of directions, the proxy will be voted
FOR the election of the Class II directors named as the nominees in this Proxy
Statement; FOR the approval of amendments to the Company's 1988 Incentive
Stock Option Plan (i) extending the term through May 10, 2008; (ii)
authorizing the Option Committee to amend all existing grants so that all
options shall immediately vest in the event of a change in control of the
Company; (iii) providing that future option grants shall immediately vest in
the event of a change in control of the Company; and (iv) increasing the
number of shares of Common Stock subject thereto from 550,000 to 875,000 and
FOR the ratification of the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 1998. Any other
matters that may properly come before the meeting will be acted upon by the
persons named in the accompanying proxy in accordance with their discretion.
RECORD DATE AND VOTING SECURITIES
The close of business on March 23, 1998 has been fixed as the record date
(the "Record Date") for the determination of stockholders entitled to notice
of and to vote at the Annual Meeting and any adjournment thereof. As of the
Record Date, the Company had 16,920,499 shares of Common Stock outstanding and
entitled to vote. Each share of Common Stock is entitled to one vote,
exercisable in person or by proxy. There are no other outstanding securities
of the Company entitled to vote, and there are no cumulative voting rights
with respect to the election of directors.
The presence, in person or by proxy, of a majority of the outstanding shares
of the Common Stock of the Company is necessary to constitute a quorum at the
Annual Meeting. An automated system administered by the Company's transfer
agent tabulates the votes. Abstentions and broker non-votes are included in
the number of shares present and voting for the purpose of determining if a
quorum is present. Abstentions are also included in the tabulation of votes
cast on proposals presented to the stockholders but broker non-votes are not.
<PAGE>
EXPENSES OF SOLICITATION
All expenses of the solicitation of proxies will be paid by the Company.
Officers, directors and employees of the Company may also solicit proxies by
telephone, facsimile or in person.
PRINCIPAL HOLDERS OF SECURITIES
The following tabulation shows with respect to any person who is known to be
the beneficial owner as of December 31, 1997 of more than 5% of the Company's
Common Stock, par value $1.00 per share, which is its only class of issued and
outstanding capital stock, (i) the total number of shares of Common Stock
beneficially owned as of such date; and (ii) the percent of Common Stock so
owned as of the same date.
<TABLE>
<CAPTION>
AMOUNT & NATURE PERCENT OF
NAME AND ADDRESS OF OF BENEFICIAL COMMON
BENEFICIAL OWNER OWNERSHIP STOCK
------------------- --------------- ----------
<S> <C> <C>
Franklin Resources, Inc........................ 1,047,400(1) 6.2%
777 Mariners Island Boulevard
P. O. Box 7777
San Mateo, CA 94403-7777
</TABLE>
The following tabulation shows with respect to each of the directors of the
Company, the executive officers named in the Summary Compensation Table, and
all directors and executive officers as a group, fourteen in number, (i) the
total number of shares of Common Stock beneficially owned as of March 23,
1998; and (ii) the percent of Common Stock so owned as of the same date.
<TABLE>
<CAPTION>
AMOUNT & NATURE PERCENT OF
NAME OF OF BENEFICIAL COMMON
BENEFICIAL OWNER OWNERSHIP(2) STOCK
---------------- --------------- ----------
<S> <C> <C>
Robert E. Gallagher............................ 757,338(3) 4.5%
T. Kimball Brooker............................. 17,380 *
John G. Campbell............................... 31,135 *
Michael J. Cloherty............................ 99,502 *
Peter J. Durkalski............................. 60,885(4) *
James W. Durkin, Jr............................ 66,200 *
J. Patrick Gallagher, Jr....................... 191,390(5) 1.1%
Jack M. Greenberg.............................. 27,380 *
Frank M. Heffernan, Jr......................... 282,200(6) 1.7%
Philip A. Marineau............................. 19,380 *
Walter F. McClure.............................. 70,906(7) *
Gary M. Van der Voort.......................... 144,825(8) *
James R. Wimmer................................ 31,380(9) *
All directors and executive officers
as a group (14 persons)....................... 1,856,733 10.7%
</TABLE>
- --------
*Less than 1%
(1) Information obtained from a Schedule 13G dated January 27, 1998 filed with
the Securities and Exchange Commission by Franklin Resources, Inc., its
subsidiaries, Franklin Mutual Advisers, Inc. and Franklin Advisers, Inc.,
and its principal shareholders, Charles B. Johnson and Rupert H. Johnson,
Jr. The Company has been informed that Franklin Resources, Inc., through
its subsidiaries, is considered the beneficial owner in the aggregate of
1,047,400 shares, or 6.2% of shares outstanding of the Company's voting
Common Stock.
2
<PAGE>
(2) Calculated pursuant to Rule 13d-3(d) under the Securities Exchange Act of
1934. Unless otherwise stated in these notes, each person has sole voting
and investment power with respect to all such shares. Under Rule 13d-3(d),
shares not outstanding which are subject to options exercisable within
sixty days are deemed outstanding for the purpose of computing the number
and percentage owned by such person, but are not deemed outstanding for
the purpose of computing the percentage owned by each other person listed.
Includes shares which the listed beneficial owner has a right to acquire
within sixty days as follows: T. Kimball Brooker, 7,380 shares; John G.
Campbell, 13,750 shares; Michael J. Cloherty, 31,500 shares; Peter J.
Durkalski, 36,000 shares; James W. Durkin, Jr., 54,093 shares; J. Patrick
Gallagher, Jr., 61,000 shares; Jack M. Greenberg, 25,380 shares; Frank M.
Heffernan, Jr., 20,100 shares; Philip A. Marineau, 19,380 shares; Walter
F. McClure, 45,500 shares; Gary M. Van der Voort, 71,500 shares; James R.
Wimmer, 27,380 shares; all directors and executive officers as a group (14
persons), 435,463 shares.
(3) Includes 75,000 shares held in trust for the benefit of Robert E.
Gallagher's grandchildren, 100,000 shares held by a limited partnership of
which Robert E. Gallagher and Isabel Gallagher, his wife, are the general
partners, 100,000 shares held in trust for the benefit of Isabel
Gallagher, 100,000 shares held by a charitable trust under which Robert E.
Gallagher is the trustee; and 69,012 shares held in the Lauren E.
Gallagher Trust under which Robert E. Gallagher is a trustee.
(4) Includes 4,885 shares held in trust for the benefit of his minor children
by his wife, Delores Durkalski, and another as trustees.
(5) Includes 36,820 shares held in trust for the benefit of his minor children
by his wife, Anne M. Gallagher, and another as trustees and 24,404 shares
held by his wife.
(6) Includes 260,500 shares held in trust by Frank M. Heffernan, Jr. and
Lenore B. Heffernan, his wife, as trustees.
(7) Includes 11,600 shares held in trust by Walter F. McClure and Alice M.
McClure, his wife, as trustees, and 10,500 shares held by his wife.
(8) Includes 3,600 shares held as custodian for the benefit of his children
under the Uniform Gift to Minors Act.
(9) Includes 4,000 shares held by his wife, Gertrude A. Wimmer.
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of ten directors.
The directors are divided into three classes: four Class II directors have
terms expiring at the 1998 Annual Meeting; three Class III directors have
terms expiring in 1999; and three Class I directors have terms expiring in
2000. Each class of directors is elected to three-year terms at sequential
annual meetings.
Set forth below is information concerning the nominees for election as Class
II directors as well as information concerning the directors in the other two
classes. The Board of Directors recommends a vote FOR the election of such
nominees. The persons named on the enclosed proxy card intend to vote the
proxies solicited hereby FOR all the nominees named below unless such
authority is withheld. The affirmative vote of the holders of a plurality of
the shares of Common Stock represented in person or by proxy is required to
elect directors.
If elected, each nominee for Class II director will serve until the 2001
annual election of directors or until his successor is elected and qualified,
or until his earlier death, resignation or removal. John G. Campbell, Robert
E. Gallagher, Frank M. Heffernan, Jr. and Walter F. McClure are currently
members of the Board of Directors as Class II directors, each having been
previously elected by the stockholders. Messrs. Robert E. Gallagher, Heffernan
and McClure are the nominees for re-election as Class II directors for three-
year terms.
3
<PAGE>
Mr. Campbell has elected not to stand for re-election. After the 1998 Annual
Meeting, the Board of Directors may consider candidates to fill the vacancy
created by Mr. Campbell's decision. The enclosed proxy cannot be voted for more
than three nominees. Should any nominee be unavailable to serve or for good
cause refuse to serve, an event which the Board of Directors does not
anticipate, the persons named in the enclosed proxy intend to vote the proxies
solicited hereby for the election of such other nominee, if any, as they may
select.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
AS CLASS II DIRECTORS WITH TERMS EXPIRING IN 2001
<TABLE>
<CAPTION>
YEAR FIRST ELECTED DIRECTOR, BUSINESS
NAME AGE EXPERIENCE AND OTHER DIRECTORSHIPS
---- --- -------------------------------------
<C> <C> <S>
Robert E. Gallagher(1)....... 75 Director since 1950; Chairman since 1990;
Chief Executive Officer from 1963 to 1994.
Frank M. Heffernan, Jr....... 67 Director since 1996; Vice President since
1987.
Walter F. McClure............ 64 Director since 1981; Senior Vice President
since 1993; Vice President from 1980 to
1993.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE AS
CLASS III DIRECTORS WITH TERMS EXPIRING IN 1999
Michael J. Cloherty.......... 50 Director since 1982; Executive Vice
President and Chief Financial Officer since
1996; Vice President-Finance 1981 to 1996.
Jack M. Greenberg............ 55 Director since 1985; Employed by McDonald's
Corporation since 1982, Vice Chairman since
1992, Chief Financial Officer from 1982 to
1996, Chief Executive Officer since July
1997 and Chairman of McDonald's USA since
1996; Director of McDonald's Corporation,
Harcourt General, Inc. and Stone Container
Corporation.
Philip A. Marineau........... 51 Director since 1991; Employed by Pepsi-Cola
North America since December 1997 as
President and Chief Executive Officer;
President and Chief Operating Officer of
Dean Foods Co. from 1996 to 1997; President
from 1993 to 1995 and Chief Operating
Officer from 1992 to 1995 of The Quaker Oats
Company; Chairman of the Board of Pete's
Brewing Company since February 1997 and
director since July 1996.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE AS
CLASS I DIRECTORS WITH TERMS EXPIRING IN 2000
T. Kimball Brooker........... 58 Director since 1994; President, Barbara Oil
Company since 1989; Managing Director,
Morgan Stanley & Co., Inc. from 1978 to
1988; Director of Zenith Electronics
Corporation.
J. Patrick Gallagher, Jr.(1). 46 Director since 1986; Chief Executive Officer
since 1995; President since 1990; Chief
Operating Officer from 1990 to 1994; Vice
President-Operations from 1985 to 1990.
James R. Wimmer(2)........... 69 Director since 1985; Partner, Lord, Bissell
& Brook, attorneys, from 1959 to 1992; Vice-
Chairman and General Counsel of Commonwealth
Industries Corporation from 1991 to 1993.
Mr. Wimmer retired as a partner from Lord,
Bissell & Brook in 1992 and is presently of
counsel to that firm.
</TABLE>
- --------
(1) Robert E. Gallagher is an uncle of J. Patrick Gallagher, Jr.
(2) Lord, Bissell & Brook has served as outside counsel to the Company for over
twenty years.
4
<PAGE>
BOARD OF DIRECTORS
The Company's Board of Directors has the responsibility to review the
overall operations of the Company. The Board members are kept informed of the
Company's results of operations and proposed plans and business objectives by
the Company's management. During 1997, the Board of Directors met six times.
All of the directors attended at least 75% of those meetings and meetings of
the committees on which they served. Included among the committees of the
Board are standing Nominating, Audit and Compensation Committees.
NOMINATING COMMITTEE
The Nominating Committee considers new nominees proposed for the Board of
Directors and will consider individuals whose names and qualifications are
furnished in writing to the Committee (in care of the Chairman at the
Company's principal office) by stockholders. Current members of the Nominating
Committee are Robert E. Gallagher (Chairman), T. Kimball Brooker and J.
Patrick Gallagher, Jr. The Committee met once in 1997.
AUDIT COMMITTEE
The Audit Committee assists the Board in carrying out its responsibilities
for monitoring management's accounting for the Company's financial results and
for the timeliness and adequacy of the reporting of those results; discusses
and makes inquiry into the audits of the Company's books made internally and
by outside independent auditors, the Company's financial and accounting
policies, its internal controls and its financial reporting; and investigates
and makes a recommendation to the Board each year with respect to the
appointment of independent auditors for the following year. Current members of
the Audit Committee are James R. Wimmer (Chairman), T. Kimball Brooker, Jack
M. Greenberg and Philip A. Marineau. The Committee met three times in 1997.
COMPENSATION COMMITTEE
The Compensation Committee determines the salaries, bonuses and other
compensation and terms and conditions of employment of the executive officers
and certain key employees of the Company and makes recommendations to the
Board of Directors with respect to the Company's compensation plans and
policies; provided, however, that the Option Committee of the Board of
Directors administers the Company's stock option plans. Current members of the
Compensation Committee are J. Patrick Gallagher, Jr. (Chairman), T. Kimball
Brooker, Robert E. Gallagher, Jack M. Greenberg, Philip A. Marineau and James
R. Wimmer. The Committee met two times in 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
J. Patrick Gallagher, Jr. and Robert E. Gallagher are executive officers of
the Company and serve on the Compensation Committee. Both officers abstain
from discussion and voting on matters concerning their respective
compensation. James R. Wimmer, a director of the Company, is of counsel to
Lord, Bissell & Brook, a law firm which provides legal services to the
Company.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933 or the Securities Exchange Act of
1934 that might incorporate filings, including this Proxy Statement, in whole
or in part, the following report and the Comparative Performance Graph on page
9 shall not be incorporated by reference into any such filings.
5
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
EXECUTIVE COMPENSATION
The Compensation Committee is responsible for determining the total
compensation, other than stock options, and employment conditions of the
Company's executive officers. In determining the total 1997 compensation, the
Compensation Committee generally evaluated the executive's contribution to the
overall success of the Company in achieving the corporate goals set out below.
The business growth and human resources goals were given less weight in
determining the executive's compensation than the profit goal.
Profit--The immediate profit goals of the Company are expressed in the
annual budget. The effort of an individual executive in meeting or
exceeding the budget of his or her department or division has historically
been an important criterion in the evaluation. However, in 1997, the
Compensation Committee focused on the contribution of the executive to the
overall success of the Company in meeting its budget. Longer term profit
goals, as measured against the Company's Three Year Strategic Plan, are
also considered in the evaluation. In 1997, the Company generally exceeded
its budgetary goals with pretax profit increasing 23% over 1996.
Business Growth--The Company considers its long term business growth to be
a critical factor in the continued success of the Company. Executives are
expected to support the Company's acquisition program, which seeks to
achieve growth by successfully integrating independent businesses into the
corporate structure. Similarly, establishment of operations in new
geographic areas, as well as the successful development and marketing of
new product lines, are considered necessary to the continued growth of the
Company and are included in the evaluation. In 1997, three businesses were
acquired. The development and marketing of new product lines continued on a
basis consistent with prior years. The Company believes that these efforts
had a direct impact on the 6% increase in total revenues achieved in 1997
over 1996.
Human Resources--As a service business, the Company believes that its
employees are its greatest asset. Over 50% of the Company's expenses in
1997 were related to the compensation of its employees and related costs.
The Company is committed to the successful hiring, training and retaining
of people who promote the growth, financial success and management
succession of the Company. An executive's ability to manage these
resources, as well as the attendant expenses, is a significant criterion.
In 1997, the Company's overall success in effectively managing its
employees, while reducing headcount by 3%, evidenced the commitment of the
Company's executive officers, as a group, to the corporate goal of
continuously improving the quality of its human resources. This was
demonstrated by the Company's ability to generate $125,000 in revenue per
employee for 1997, one of the highest figures in the industry and an
increase from the $115,000 in restated revenue per employee generated
during 1996.
Enhancement of shareholder value is the ultimate goal of the Company. The
Compensation Committee believes that its focus on specific corporate goals
should result in a strong stock price, improved earnings per share and greater
return on stockholders' equity. Earnings per share in 1997 increased by 24%
over 1996. This substantial increase was directly related to the efforts of
the Company's executive officers during the intense competitive pressures of
1997 and prior years. Recognizing these efforts, the Compensation Committee
applied a bonus formula, determined early in 1997, which was based on growth
in net earnings per share. Most of the executive officers received substantial
bonuses, which were paid in February 1998, from the application of this
formula.
6
<PAGE>
The Company also has a discretionary bonus pool for executive officers and
key employees, contingent upon satisfactory corporate growth and the
attainment of predetermined managerial goals. These pre-determined goals are
extremely varied and, in the case of the executive officers, are established
by the individual officer in conjunction with the Compensation Committee. The
goals are too diverse to generalize but typically include meeting or exceeding
budgetary guidelines and contribution to the Company's profitability.
Attainment of these goals in many cases may be determined by a subjective
judgment of the individual supervisor or, in the case of the executive
officers, by the Compensation Committee. The eligibility for participation in
the bonus pool is determined by the Board. Approximately 50 executive officers
and key employees are current participants. Certain executive officers who
received the formula bonus discussed above also received a discretionary bonus
for 1997.
Option grants to executive officers under the Company's 1988 Nonqualified
Stock Option Plan are determined by the Option Committee of the Board of
Directors and are generally based upon more subjective factors than those used
by the Compensation Committee. The Option Committee considers the
recommendations of the executive officers of the Company, the responsibilities
of each grantee, his past performance and his anticipated future contribution
to the Company. No option grants were made to any executive officer in 1997.
Amendments to the Internal Revenue Code adopted in 1993 limit the
deductibility for federal income tax purposes of certain compensation payable
to top executive officers of publicly held corporations. Certain types of
compensation are excluded from the limitations. The Company believes that the
limitations are not applicable to stock options granted under its 1988
Incentive Stock Option Plan.
Executive officers participate in the Savings and Thrift Plan, Pension Plan
and Stock Option Plan, as well as customary employee health benefits and
expense reimbursement in accordance with the Company's policy.
During 1997, the Committee compared the compensation of the seven most
highly compensated executive officers of the Company to the publicly held
competitors of the Company included in the Comparative Performance Graph on
Page 9. The Committee targets the middle of its competitors' salary range for
its executive officers' compensation. The Committee believes that the 1997
compensation of the Company's seven most highly compensated executive officers
will be in the middle range when compared to its publicly-held competitors
after making certain adjustments for the size of the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION
The 1997 salary of J. Patrick Gallagher, Jr., the Company's Chief Executive
Officer, was not increased from the salary received in 1996. Mr. Gallagher
received bonuses of $25,000 for 1996, and $300,000 for 1997. In determining
Mr. Gallagher's bonus, the Compensation Committee considered the Company's
excellent performance in 1997, as well as Mr. Gallagher's voluntary election
to reduce his total compensation in prior years.
Compensation Committee
J. Patrick Gallagher, Jr. (Chairman)
Robert E. Gallagher
T. Kimball Brooker
Jack M. Greenberg
Philip A. Marineau
James R. Wimmer
7
<PAGE>
SUMMARY COMPENSATION TABLE
The following table presents information concerning compensation paid or set
aside by the Company and its subsidiaries on an accrual basis to or for the
benefit of the Chief Executive Officer and each of the other six most highly
compensated executive officers of the Company in each of the Company's last
three fiscal years.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
--------------- ------------
SECURITIES ALL OTHER
SALARY BONUS UNDERLYING COMPENSATION
OFFICER YEAR ($) ($)(1) OPTIONS (#) ($)(2)
- ------- ---- ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Robert E. Gallagher............ 1997 275,000 -- -- 7,300
Chairman 1996 275,000 -- -- 8,000
1995 275,000 -- -- 7,500
J. Patrick Gallagher, Jr. ..... 1997 356,000 300,000 -- 5,100
President and Chief Executive
Officer 1996 356,000 25,000 10,000 4,200
1995 356,000 25,000 10,000 2,600
Michael J. Cloherty............ 1997 346,000 500,000 -- 6,200
Executive Vice President and 1996 346,000 25,000 10,000 4,900
Chief Financial Officer
1995 325,000 25,000 10,000 3,200
Gary M. Van der Voort.......... 1997 305,800 122,300 -- 5,800
Vice President 1996 305,800 15,000 10,000 5,800
1995 305,800 15,000 10,000 4,200
Peter J. Durkalski............. 1997 261,500 104,600 -- 4,500
Vice President 1996 261,500 20,000 10,000 4,500
1995 261,500 20,000 10,000 2,300
James W. Durkin, Jr............ 1997 270,000 108,000 -- 4,500
Vice President 1996 250,000 30,000 10,000 4,400
1995 250,000 15,000 10,000 2,700
Walter F. McClure.............. 1997 260,000 104,000 -- 8,500
Senior Vice President 1996 260,000 15,000 7,500 8,700
1995 260,000 15,000 7,500 6,800
</TABLE>
- --------
(1) Represents bonuses related to services rendered in the fiscal year
indicated above that were determined and paid in the subsequent fiscal
year.
(2) Includes amounts contributed by the Company under the 401(k) match feature
of the Company's Savings and Thrift Plan of $3,200 in 1997, $3,000 in 1996
and $1,500 in 1995, and the equivalent annual value of insurance premiums
paid by the Company for group term life insurance for the benefit of the
named executive officer.
The following graph demonstrates a five year comparison of cumulative total
returns for the Company, the S&P 500 and a New Peer Group comprised of the
Company ("AJG & Co."), Aon Corporation, Hilb, Rogal and Hamilton Co., Marsh &
McLennan Companies, Inc., Poe & Brown, Inc., Sedgwick Group P.L.C. (through
its ADRs) and Willis Corroon Group P.L.C. (through its ADRs). The New Peer
Group was revised
8
<PAGE>
in 1997 to reflect the effect of consolidation within the industry. The
Comparative Performance Graph also includes the Old Peer Group which is
comprised of the Company, Alexander & Alexander Services, Inc., Hilb, Rogal and
Hamilton Co., Marsh & McLennan Companies, Inc., and Poe & Brown, Inc. Alexander
& Alexander Services, Inc. was acquired by Aon Corporation in January 1997, and
their results were not available for inclusion in the Comparative Performance
Graph for that year. The comparison charts the performance of $100 invested in
the Company, the S&P 500, the New Peer Group and the Old Peer Group on
December 31, 1992, with dividend reinvestment.
<TABLE>
<CAPTION>
Label A B C D
- -----------------------------------------------------------------------------------------------
Label Gallagher (Arthur J.) & Co S&P 500 Index New Peer Group Old Peer Group
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 1992 100 100 100 100
- -----------------------------------------------------------------------------------------------
2 1993 131.05 110.08 95.94 91.7
- -----------------------------------------------------------------------------------------------
3 1994 119.01 111.53 93.04 93.85
- -----------------------------------------------------------------------------------------------
4 1995 142.41 153.45 121.83 105.63
- -----------------------------------------------------------------------------------------------
5 1996 122.69 188.68 147.23 121.63
- -----------------------------------------------------------------------------------------------
6 1997 141.13 251.63 211.57 178.07
</TABLE>
DIRECTORS' COMPENSATION
Directors who are officers of the Company receive compensation in their
capacities as officers and receive no additional compensation for serving as
directors.
Non-employee directors, currently Messrs. Brooker, Greenberg, Marineau and
Wimmer, are eligible to receive compensation consisting of nonqualified stock
options. In addition, non-employee directors receive an annual retainer of
$20,000 per year or, in lieu of the cash retainer, an option to purchase shares
of the Company's Common Stock below market value, plus fees of $500 for
attendance at each Board meeting or committee meeting on a date other than a
Board meeting date. Non-employee directors are reimbursed for travel and
accommodation expenses incurred in attending Board or committee meetings. Non-
employee directors are not eligible for participation in any other compensation
plans of the Company.
In 1989, the Company's stockholders approved the adoption of the Company's
1989 Non-Employee Directors' Stock Option Plan (the "1989 Plan"), which was
subsequently amended in 1990, 1993, 1994, 1996, 1997, and 1998. The 1989 Plan
currently provides that non-employee directors are eligible to be granted
nonqualified options to purchase a maximum of 200,000 shares of the Company's
Common Stock. The Plan encompasses options granted to non-employee directors at
the discretion of the Option Committee of the Company's Board of Directors
("Discretionary Options") and options granted to non-employee directors
9
<PAGE>
pursuant to an election made by a non-employee director to receive options in
lieu of his annual retainer ("Retainer Options"). Shares issued upon exercise
of options granted under the 1989 Plan may be repurchased shares held by the
Company or authorized but previously unissued shares.
Under the 1989 Plan, a Discretionary Option shall be exercisable at such
rate and price fixed by the Option Committee. Discretionary Options terminate
if not exercised by the date set forth in the 1989 Plan or by such date
established by the Option Committee at the time it makes the grant.
Pursuant to the terms of the 1989 Plan, Messrs. Marineau and Wimmer have
elected to receive their annual retainers for 1998 in the form of an option to
purchase the Company's Common Stock. Each year on or before two weeks
preceding the Company's Annual Meeting of Stockholders, the Option Committee
shall determine the number of shares of Common Stock with respect to which a
non-employee director may be granted a Retainer Option. The non-employee
director's option exercise price per share shall be equal to the Fair Market
Value of the Common Stock subject to the Retainer Option less the Annual
Retainer, divided by the number of shares subject to the Retainer Option. The
option exercise price per share shall be not less than the par value of the
Common Stock. "Fair Market Value" is defined as the closing price of the
Company's Common Stock as reported on the New York Stock Exchange Consolidated
Transaction Reporting System for the day on which the option is granted.
On May 20, 1997, the Company granted a Retainer Option for 1,000 shares of
the Company's Common Stock to each of Messrs. Marineau and Wimmer at an
exercise price of $11.50 per share. Such options are exercisable at the rate
of one-fourth of such grant each successive quarter commencing August 20,
1997. In addition, on September 1, 1997, the Company granted a Discretionary
Option for 5,000 shares of the Company's Common Stock to each of Messrs.
Brooker, Greenberg, Marineau and Wimmer at an exercise price of $35.75 per
share, which was the closing price for a share of Common Stock as reported on
the Consolidated Transaction Reporting System for securities listed on the New
York Stock Exchange on that date. Such options are exercisable at the rate of
one-third of such grant each successive September 1, commencing September 1,
1998.
The Company approved a supplemental deferred compensation arrangement,
effective July 1, 1996, with Robert E. Gallagher upon his retirement, and to
his surviving spouse upon his death, and the surviving spouse of John P.
Gallagher, providing for a payment of $100,000 annually, inclusive of any
Company pension plan payments, to be paid until the death of each such
beneficiary.
SAVINGS AND THRIFT PLAN
The Company maintains a savings and thrift plan covering substantially all
U.S. employees which is qualified under the Internal Revenue Code. Employees
who have attained age 21 and completed a year of service may generally
contribute up to the lesser of $9,500 in 1997 and $10,000 in 1998 or 15% of
their gross earnings on a pre-tax basis under the 401(k) "salary reduction"
feature of the plan. Effective for plan years beginning after 1994, the
maximum includible compensation for an employee for any year may not exceed an
overall salary maximum as determined by the Internal Revenue Service of
$160,000. In 1997, the Company matched 50% of any employee's pre-tax
contributions up to a maximum 4% of such employee's gross earnings, resulting
in a possible maximum matched contribution from the Company of 2% of such
employee's gross earnings. Effective July 1, 1997, participating employees may
borrow up to 50% of their account balance, subject to certain limitations.
10
<PAGE>
PENSION PLAN
The Company also maintains a non-contributory defined benefit pension plan
covering substantially all domestic employees which is qualified under the
Internal Revenue Code. The plan provides an annual pension benefit on normal
retirement at age 65 which, when paid in the form of a single life annuity,
will equal 1% of final average earnings multiplied by the number of years of
credited service, not to exceed 25 years (without any deduction for social
security or other offset amounts). A person's earnings for purposes of the
plan include all compensation other than allowances such as moving expenses
plus any pre-tax contributions under the 401(k) feature of the savings and
thrift plan. Effective for plan years beginning after 1988, the maximum
includible compensation for a participant for any year may not exceed an
overall salary maximum as determined by the Internal Revenue Service of
$160,000. The remuneration for executive officers shown under "Salary" and
"Bonus" in the Summary Compensation Table constitutes their earnings during
1997 for purposes of the plan without regard to the Internal Revenue Service's
limitation. "Final average earnings" are the highest average earnings received
in any five consecutive full calendar years before retirement. Employees'
pension rights are fully vested after the earlier of (i) 5 years of service
with the Company or (ii) the attainment of age 65.
The following table shows the estimated annual benefits (which are not
subject to deduction for social security or other offset amounts) payable on
retirement under the Company's defined benefit plan to persons in specific
remuneration and credited years of service classifications assuming (i) the
person elects the single life annuity basis providing monthly payments without
benefits to his survivors and (ii) the person continues in the employ of the
Company at his present rate of remuneration until age 65:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE
REMUNERATION
DURING HIGHEST
FIVE YEARS OF CREDITED
CONSECUTIVE SERVICE
YEARS -----------------------
BEFORE 25 OR
RETIREMENT 15 20 MORE
-------------- ------- ------- -------
<S> <C> <C> <C>
$150,000....................................... $22,500 $30,000 $37,500
175,000....................................... 26,250 35,000 43,750
200,000....................................... 30,000 40,000 50,000
225,000....................................... 33,750 45,000 56,250
250,000....................................... 37,500 50,000 62,500
</TABLE>
For purposes of estimating potential pension benefits using the foregoing
table, the number of years of credited service as of December 31, 1997 for the
executive officers named in the Summary Compensation Table are as follows:
Robert E. Gallagher (25 years), J. Patrick Gallagher, Jr. (22 years), Michael
J. Cloherty (15 years), Gary M. Van der Voort (25 years), Peter J. Durkalski
(22 years), James W. Durkin, Jr. (21 years), and Walter F. McClure (20 years).
Such pension benefits are in addition to amounts payable to such persons under
the Company's savings and thrift plan on their retirement and are subject to
certain limitations as required under the Internal Revenue Code.
STOCK OPTION PLANS
The Company maintains a 1988 Incentive Stock Option Plan and a 1988
Nonqualified Stock Option Plan. During the Company's 1997 fiscal year, no
executive officers named in the Summary Compensation Table received an option
grant.
11
<PAGE>
The following table sets forth certain information regarding options to
purchase shares of Common Stock exercised during the Company's 1997 fiscal year
and the number and value of unexercised options to purchase shares of Common
Stock held at the end of the Company's 1997 fiscal year by the executive
officers of the Company named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SECURITIES SECURITIES VALUE OF VALUE OF
UNDERLYING UNDERLYING UNEXERCISED UNEXERCISED
NUMBER OF UNEXERCISED UNEXERCISED IN-THE-MONEY IN-THE-MONEY
SHARES VALUE OPTIONS AT OPTIONS AT OPTIONS AT OPTIONS AT
ACQUIRED ON REALIZED FY-END (#) FY-END (#) FY-END ($) FY-END ($)
NAME EXERCISE (#) ($) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE(2) UNEXERCISABLE(2)
- ---- ------------ -------- ----------- ------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Gallagher..... -- -- -- -- -- --
J. Patrick Gallagher,
Jr..................... -- -- 47,500 71,500 401,000 403,000
Michael J. Cloherty..... 8,000 99,000 19,500 63,500 34,000 335,000
Gary M. Van der Voort... 25,000 495,000 59,000 66,000 603,000 368,000
Peter J. Durkalski...... 4,000 55,000 23,500 66,000 87,000 368,000
James W. Durkin, Jr..... 1,300 25,000 41,800 65,800 332,000 363,000
Walter F. McClure....... 10,500 211,000 37,800 39,800 406,000 210,000
</TABLE>
- --------
(1) Market value of underlying securities at exercise, minus the exercise
price.
(2) Market value of underlying securities at year end, minus the exercise
price.
SEVERANCE PAY PLAN
The Company has a plan for severance compensation to employees after a
hostile takeover. The plan defines a hostile takeover to include, among other
events, the following events, if not approved by two-thirds of the members of
the Board of Directors in office immediately prior to any such events: the
election of directors not nominated by the Board of Directors, a business
combination, such as a merger, not approved by the holders of 80% or more of
the Common Stock and the Board of Directors or not meeting various "fair price"
criteria, or the acquisition of 20% or more of the combined voting power of the
Company's stock by any person or entity. All full-time and part-time employees
who are regularly scheduled to work 20 or more hours per week and who have
completed at least two years of continuous employment with the Company are
participants in the plan. A severance benefit is payable under the plan if a
participant's employment with the Company terminates voluntarily or
involuntarily within two years after a hostile takeover for reasons such as
reduction in compensation, discontinuance of employee benefit plans without
replacement with substantially similar plans, change in duties or status,
certain changes in job location and involuntary termination of employment for
reasons other than just cause. For participants who have completed two but less
than five years of employment, the benefit is equal to the employee's annual
compensation during the year immediately preceding the termination of
employment. For employees who have completed five or more years of employment,
the benefit is equal to two and one-half times the employee's annual
compensation during the 12 months ending on the date of termination of
employment, but may not exceed 2.99 times average annual compensation during
the preceding five years. Annual compensation is defined for purposes of the
plan as the amount of the employee's wages, salary, bonuses and other incentive
compensation. Benefits are payable in a lump sum not less than 10 days after
termination of employment.
12
<PAGE>
PROPOSAL 2--APPROVAL OF AMENDMENTS TO THE
COMPANY'S 1988 INCENTIVE STOCK OPTION PLAN
The Arthur J. Gallagher & Co. 1988 Incentive Stock Option Plan (the "Plan"),
adopted in 1988 and amended in 1988 and 1993, authorizes the grant of options
for up to 550,000 shares of the Company's Common Stock, of which options for
500,570 shares were granted from 1988 through 1997. After giving effect to the
cancellation of options for 123,075 shares under the Plan through February 28,
1998 (thereby becoming available again for grant), options for only 172,505
shares are currently available for grant under the Plan.
The Board of Directors believes the Plan is accomplishing its purpose which
is to promote the interests of the Company and its stockholders by providing
key employees with an opportunity to acquire a proprietary interest in the
Company and thereby to develop a stronger incentive to put forth maximum
effort for the continued success and growth of the Company and its
subsidiaries. In addition, the opportunity to acquire a proprietary interest
in the Company aids the Company in attracting and retaining key personnel of
outstanding ability.
The Plan provides for a termination date of May 10, 1998. The Board of
Directors believes that it is in the best interest of the Company to extend
the termination date of the Plan so that it will continue to accomplish its
purposes. Accordingly, the Board of Directors, by resolution dated January 22,
1998, approved an amendment extending the Plan for a period not to exceed ten
years through May 10, 2008, subject to approval of the Company's stockholders.
The Plan currently makes no provision for the acceleration of vesting of
options in the event of a change in control of the Company. The Board of
Directors believes that, in order to maximize the value of an option grant to
key employees, it is desirable to provide for the immediate vesting of all
options previously granted in the event of a change in control of the Company.
Accordingly, the Board of Directors, by resolution dated January 22, 1998,
approved an amendment to the Plan which accomplishes this objective, subject
to the approval of the Company's stockholders. The proposed amendment defines
a change in control of the Company as (a) the acquisition by a person of the
beneficial ownership of 50% or more of the Company's voting stock; (b) the
cessation, for any reason, of a majority of the directors of the Company to
serve as directors during any two year period; or (c) the approval by the
stockholders of the Company of the sale of substantially all of the assets of
the Company, or any transaction the effect of which would result in (a) or (b)
above.
The Board of Directors believes that an increase in the number of shares
available for grant under the Plan is necessary to continue accomplishing its
purpose. Accordingly, the Board of Directors, by resolution dated January 22,
1998, approved an amendment to increase the number of shares of the Company's
Common Stock subject to the Plan by 325,000 shares from 550,000 shares to
875,000 shares, subject to approval of the Company's stockholders.
Shares issued upon exercise of options granted under the Plan may be shares
held by the Company as treasury shares or as authorized but previously
unissued shares. There are not currently any specific plans for grants of
options under the Plan. However, it is expected that options will be granted
pursuant to the Plan during 1998. The actual number or identity of persons to
be granted options has not been determined as of the date of this Proxy
Statement. The closing price for a share of the Company's Common Stock on
March 23, 1998 on the New York Stock Exchange was $44 9/16.
13
<PAGE>
ADMINISTRATION
The Plan is administered by the Option Committee of the Company's Board of
Directors (the "Committee"). The members of the Committee during 1997 were T.
Kimball Brooker (Chairman), Jack M. Greenberg and Philip A. Marineau, each of
whom was a non-employee director as that term is used in Rule 16b-3 under the
Securities Exchange Act of 1934. Subject to the provisions of the Plan and
Section 422A of the Internal Revenue Code, as amended (the "Code"), the
Committee has the authority: (a) to determine which employees of the Company
and its subsidiaries shall receive options and how many options each employee
shall receive; (b) to grant the options; (c) to determine the terms and
conditions of the options including exercise dates, limitations on exercise,
and the price and payment terms; (d) to determine the limitation, if any, on
the number of shares acquired under an option which may be sold by an employee
in any one year; and (e) to adopt such rules and regulations for the
administration of the Plan as it deems appropriate.
The term of office of Committee members and the manner in which such members
may be removed from office are within the discretion of the Company's Board of
Directors.
ELIGIBILITY
Participants in the Plan are those salaried officers and other salaried key
employees of the Company and its subsidiaries who, in the opinion of the
Committee, are in a position to affect materially the profitability and growth
of the Company and its subsidiaries. On March 23, 1998, there were
approximately 1,000 officers and key employees eligible to participate in the
Plan.
GRANT AND EXERCISE OF OPTIONS
The options granted under the Plan are designed to qualify as "incentive
stock options" as that term is defined in the Economic Recovery Tax Act of
1981. The exercise price of an option under the Plan may not be less than 100%
of the fair market value of the shares subject thereto (110% in the case of a
"10% stockholder" who owns more than 10% of the outstanding voting stock of
the Company) at the time the option is granted. The maximum fair market value,
determined at date of grant, of stock for which all incentive stock options
are first exercisable by any employee in any calendar year may not exceed
$100,000.
Under the Plan, options must expire not later than ten years after the date
of grant (five years in the case of an option granted under the Plan to a 10%
stockholder). Options granted under the Plan are exercisable at the rate of
10% of the total option for each calendar year after the end of the calendar
year in which the option was granted (20% per calendar year in the case of an
option granted to a 10% stockholder), together with a carry forward of
unexercised options from the same grant for prior years. Subject to the
approval of the Company's stockholders of this Proposal, the vesting of the
options granted will immediately accelerate in the event of a change in
control of the Company.
In 1997, options for 18,000 shares were granted under the Plan to three key
employees, none of whom were directors or executive officers of the Company.
RESTRICTIONS ON EXERCISE AND TRANSFER
Options granted under the Plan are not transferable, except on the death of
the grantee, by will or the laws of descent and distribution. During the
lifetime of the grantee, any options granted to him may only be
14
<PAGE>
exercised by him. In the event of the termination of a grantee's employment
other than by reason of his death or disability, all unexercised options then
held by him shall be deemed terminated. If a grantee dies while an employee of
the Company or a subsidiary, and before the date of expiration of any option
granted under the Plan, such option shall terminate on the earlier of such
date of expiration or three months following the date of such death. If the
employment of a grantee is terminated by reason of his disability (as such
term is defined in Section 22(e)(3) of the Code), such option shall terminate
on the earlier of such option's expiration date or one year following such
employee's date of termination.
AMENDMENT AND TERMINATION
The Board of Directors of the Company may amend, suspend or terminate the
Plan provided that no such termination or amendment may, without the consent
of the individual to whom any option shall have been previously granted,
adversely affect the rights of such individuals under such option. Unless
first approved by the stockholders of the Company, no amendment shall be made
to the Plan which: (a) materially modifies the eligibility requirements; (b)
increases the total number of shares of stock which may be purchased under the
Plan by all employees or by any one of them; (3) changes the option price
fixed by the Committee; or (d) changes the term of the option. Subject to the
approval by the stockholders of this Proposal at the 1998 Annual Meeting, no
option may be granted under the Plan after its termination on May 10, 2008.
FEDERAL INCOME TAX TREATMENT
An employee who has been granted an option under the Plan will not realize
taxable income and the Company will not be entitled to a deduction at the time
of the grant or exercise of such option. The excess of the fair market value
of the shares at the time of exercise over the option price constitutes a tax
preference item for purposes of computing the employee's alternative minimum
tax. If the employee makes no disposition of shares acquired pursuant to an
incentive stock option within two years from the date of grant of such option,
and within one year of the transfer of the shares to such employee, any gain
or loss realized on a subsequent disposition of such shares will be treated as
a long-term capital gain or loss. A disposition includes a sale, exchange,
gift, or any transfer of legal title, including a contribution of shares to a
profit sharing plan. Under such circumstances, the Company will not be
entitled to any deduction for federal income tax purposes. If the foregoing
holding period requirements are not satisfied, a portion of any gain in the
year of disposition will be taxable to the employee as ordinary income, and
the Company will be entitled to a corresponding deduction.
VOTE REQUIRED
The amendments to the Plan will not become effective unless approved and
adopted by the affirmative vote of the holders of at least a majority of the
voting stock represented at the Annual Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
IN FAVOR OF THE ADOPTION OF THE AMENDMENTS
TO THE 1988 INCENTIVE PLAN.
15
<PAGE>
PROPOSAL 3--RATIFICATION OF THE APPOINTMENT OF
ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1998
The Audit Committee has considered the qualifications of Ernst & Young LLP
and recommended that the Board of Directors appoint them as independent
auditors of the Company for the fiscal year ending December 31, 1998. The
Board of Directors desires to obtain stockholders' ratification of the Board's
action in such appointment. A resolution ratifying the appointment will be
offered at the meeting. If the resolution is not adopted, the adverse vote
will be considered as a direction to the Board to select other auditors for
the following year. Because of the difficulty and expense of making any
substitution of auditors so long after the beginning of the current year, it
is contemplated that the appointment for the year 1998 will stand unless the
Board finds other good reason for making a change.
A representative of Ernst & Young LLP will be present at the Annual Meeting
to respond to appropriate questions and to make a statement if the
representative so desires.
Ratification requires the affirmative vote by holders of at least a majority
of the outstanding shares voting at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
IN FAVOR OF RATIFICATION OF THE APPOINTMENT OF
ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR 1998.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Stockholder proposals to be presented at the 1999 Annual Meeting of
Stockholders must be received by the Company at its principal office on or
before November 27, 1998 to be considered for inclusion in the Company's proxy
materials for that meeting.
OTHER MATTERS
The Company knows of no other matters to be presented for action at the
meeting. If any other matters should properly come before the meeting or any
adjournment thereof, such matters will be acted upon by the persons named as
proxies in the accompanying proxy according to their best judgment in the best
interests of the Company.
The Annual Report of Stockholders containing financial statements for the
year ended December 31, 1997, and other information concerning the Company is
being furnished to the stockholders but is not to be regarded as proxy
soliciting material.
Each stockholder is urged to mark, date, sign and return the enclosed proxy
card in the envelope provided for that purpose. Your prompt response is
helpful and your cooperation will be appreciated.
Dated: March 27, 1998
By Order of the Board of Directors
CARL E. FASIG
Secretary
16
<PAGE>
ARTHUR J. GALLAGHER & CO.
1988 INCENTIVE STOCK OPTION PLAN
1. Purpose.
The purpose of this 1988 Incentive Stock Option Plan (the "Plan") is to
promote the interests of Arthur J. Gallagher & Co., a Delaware corporation
(the "Company"), and its shareholders by providing key employees on whom rests
the major responsibility for the present and future success of the Company and
its subsidiaries with an opportunity to acquire a proprietary interest in the
Company and thereby develop a stronger incentive to put forth maximum effort
for the continued success and growth of the Company and its subsidiaries. In
addition, the opportunity to so acquire a proprietary interest in the Company
will aid in attracting and retaining key personnel of outstanding ability.
2. Administration.
All administrative duties hereunder shall rest with the Option Committee of
the Board of Directors (hereinafter the "Committee"). The Committee shall have
the duty and authority, subject to the provisions of the Plan and of section
422A of the Internal Revenue Code (the "Code"), to:
(a) determine which individuals shall receive options and how many options
each individual shall receive;
(b) grant the options;
(c) determine the terms and conditions of the options including exercise
dates, limitations on exercise, and the price and payment terms;
(d) determine the limitation, if any, on the number of shares acquired
under an option which may be sold by the employee in any one year;
(e) prescribe the form or forms of the instruments evidencing any options
granted under the Plan and of any other instruments required under the
Plan, and to change such forms from time to time; and
(f) adopt such rules and regulations for the administration of the Plan as
it deems appropriate.
In making the foregoing determinations the Committee may take into account
the nature of the services rendered by the respective individuals, their
present and potential contributions to the Company's success, and such other
factors as the Committee, in its discretion, shall deem relevant.
3. Shares Subject to the Plan.
The shares that may be made subject to options under the Plan shall be
shares of Common Stock of the Company, one dollar ($1.00) par value ("Common
Stock"), and the total shares subject to option and issued pursuant to this
Plan shall not exceed, in the aggregate, 300,000 shares of the Common Stock of
the Company. If any such option lapses or terminates for any reason without
having been exercised in full, the shares covered by the unexercised portion
of such option may again be made subject to options granted under the Plan.
Shares issued upon exercise of options granted under the Plan may be shares
held by the Company either as treasury shares or as authorized but previously
unissued shares. Upon authorization from the Board of Directors, the Company
may from time to time acquire shares of Common Stock on the open market upon
such terms as the Board shall deem appropriate for reserve in its treasury for
reissuance in connection with exercises hereunder.
A-1
<PAGE>
4. Eligibility.
Employees eligible to participate in the Plan shall be those salaried
officers and other salaried key employees of the Company and its subsidiaries
who, in the opinion of the Committee, are in a position to affect materially
the profitability and growth of the Company and its subsidiaries. Directors
who are salaried key employees within the meaning of the foregoing are
eligible to participate in the Plan, provided however that members of the
Committee shall not be eligible to receive options. An employee owning stock
comprising over 10% of the combined voting power of the Company or any
subsidiary, as determined pursuant to applicable regulations under the Code,
(a "10% Shareholder"), is not eligible to receive an option unless the option
price offered is at least 110% of the fair market value of the stock at the
time the option is granted, and unless the option by its terms expires not
more than five years from the date of grant. For all purposes of the Plan,
except where "wholly owned" is indicated, the term "subsidiary" shall mean a
corporation 50% or more of the stock of which is owned directly by the Company
or indirectly through another corporation or corporations in which the Company
owns 50% or more of the stock.
5. Granting of Options.
Subject to the terms and conditions of the Plan, the Committee may from time
to time prior to the termination of the Plan grant to eligible employees
options to purchase the number of shares of Common Stock authorized by the
Committee, subject to such terms and conditions as the Committee may
determine. More than one option may be granted to the same employee.
6. Option Price.
The purchase price per share of Common Stock subject to an option shall be
fixed by the Committee, but shall not be less than 100% (110% in the case of a
10% Shareholder) of the fair market value of a share of Common Stock on the
date the option is granted by the Committee.
7. Term of Options.
The term of each option shall be not more than 10 years commencing with the
date of grant (5 years in the case of a 10% Shareholder). Except as provided
in Paragraph 13 hereof, no option may be exercised at any time unless the
holder thereof is then an employee of the Company or of a subsidiary.
8. Method of Exercising Options.
Any option granted hereunder may be exercised by the optionee by delivering
to the Company at its main office (attention of the Secretary) written notice
of the number of shares with respect to which the option rights are being
exercised and by paying in cash the purchase price of the shares purchased in
full, in exchange for the issuance and delivery of certificates therefor. The
Committee in its discretion may permit an employee to use shares of stock of
the Company as payment for additional stock purchased pursuant to an option.
The value of the shares to be used as payment shall be determined by the
Committee. The Company may delay the processing of any exercise hereunder so
long as may be necessary, in the opinion of counsel to the Company, to comply
with securities laws and regulations relating to disclosure of material non-
public information concerning the Company.
A-2
<PAGE>
9. Amount Exercisable.
Each option may be exercised, so long as it is valid and outstanding, from
time to time in part or as a whole, subject to any limitations with respect to
the number of shares for which the option may be exercised at a particular
time and to such other conditions as the Committee in its discretion may
specify upon granting the option.
10. Maximum Annual Amount.
The aggregate maximum fair market value of stock (determined at date of
grant) of the underlying Common Stock for which incentive stock options
granted hereunder and under any other "incentive" stock option plan of the
Company are first exercisable by any employee in any calendar year may not
exceed $100,000.
11. Capital Adjustments Affecting Common Stock.
In the event of a capital adjustment resulting from a stock dividend, stock
split, reorganization, merger, consolidation, or a combination or exchange of
shares, the number of shares of Common Stock subject to the plan and the
number of shares under the option shall be adjusted in a manner consistent
with such capital adjustment. The price of any shares under option shall be
adjusted so that there will be no change in the aggregate purchase price
payable upon exercise of any such option.
12. Transferability of Options.
Options shall not be transferable by the optionee otherwise than by will or
under the laws of descent and distribution, and shall be exercisable, during
his lifetime, only by the optionee.
13. Termination of Employment or Death of Optionee.
Except as may be otherwise expressly provided herein, options shall
terminate upon the earlier of the date of the expiration of such option or
upon termination of the employment relationship between the Company or a
subsidiary and the optionee for any reason other than death or disability as
described below. Whether authorized leave of absence, or absence on military
or government service, shall constitute severance of the employment
relationship between the Company or a subsidiary and the optionee shall be
determined by the Committee at the time thereof.
(A) Death. If an optionee dies while in the employ of the Company or a
subsidiary, and before the date of expiration of such option, such option
shall terminate on the earlier of such date of expiration or three months
following the date of such death. After death, the optionee's executors,
administrators, or any person or persons to whom the optionee's option may be
transferred by will or by the laws of descent and distribution shall have the
right, at any time prior to such termination, to exercise the option, in whole
or in part, subject to the terms and conditions of the Plan and of the stock
option agreement entered into by the optionee.
(B) Retirement For Disability. If, before the date of expiration of the
option, the holder of an option shall retire from the employ of the Company or
any subsidiary for reasons of disability and is disabled within the meaning of
Internal Revenue Code Section 105(d)94), such option shall terminate on the
earlier of the date of expiration or one year after the date of such
retirement.
A-3
<PAGE>
14. Requirements of Law.
In the event the shares issuable on exercise of an option are not registered
under the Securities Act of 1933, the Company shall imprint the following
legend or any other legend which counsel for the Company considers necessary
or advisable to comply with the Securities Act of 1933:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities
laws of any State and may not be sold or transferred except upon such
registration or upon receipt by the Corporation of an opinion of counsel
in form and substance satisfactory to the Corporation that registration
is not required for such sale or transfer."
The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act of 1933 (as now in
effect or as hereafter amended); and in the event any shares are so registered
the Company may remove any legend on certificates representing such shares.
The Company shall make reasonable efforts to cause the exercise of an option
or the issuance of shares pursuant thereto to comply with any law or
regulation of any governmental authority.
15. No Rights as Stockholder.
No optionee shall have rights as a stockholder with respect to shares
covered by an option until the date of issuance of a stock certificate for
such shares; and, expect as otherwise provided in Paragraph 11 hereof, no
adjustment for dividends, or otherwise, shall be made if the record date
therefor is prior to the date of issuance of such certificate.
16. Employment Obligation.
The granting of any option shall not impose upon the Company or subsidiary
any obligation to employ or continue to employ any optionee; and the right of
the Company or subsidiary to terminate the employment of any officer or other
employee shall not be diminished or affected by reason of the fact that an
option has been granted to such officer or employee.
17. Written Agreement.
Each option granted hereunder shall be embodied in a written option
agreement which shall be subject to the terms and conditions prescribed above
and shall be signed by the optionee and by the President, any Vice President
or the Secretary of the Company for and in the name and on behalf of the
Company. Such an option agreement shall contain such other provisions as the
Committee in its discretion shall deem advisable.
18. Amendment, Termination and Effective Date.
This Plan shall be effective as of June 1, 1988, and shall terminate ten
years after this Effective Date. The Board shall have the right to amend,
suspend or terminate the Plan, provided that no termination or amendment of
the Plan may, without the consent of the individual to whom any option shall
have been theretofore granted, adversely affect the rights of such individual
under such option. Unless first approved by the shareholders of the Company,
no amendment shall be made to the Plan which:
(a) materially modifies the eligibility requirements provided in Paragraph
4;
(b) increases the total number of shares of stock which may be purchased
under the Plan by all employees or by any one of them, except as provided in
Paragraph 11;
A-4
<PAGE>
(c) changes the option price specified in Paragraph 6, except as provided in
Paragraph 11; or
(d) changes the option period in Paragraph 7.
In Witness Whereof, the Company has caused its President and Secretary to
execute this Plan this 10th day of May, 1988.
ARTHUR J. GALLAGHER & CO.
ROBERT E. GALLAGHER
By: _________________________________
Robert E. Gallagher, President
Attest:
DEAN H. GOOSSEN
- -------------------------------------
Dean H. Goossen, Secretary
A-5
<PAGE>
AMENDMENT NO. ONE TO THE
ARTHUR J. GALLAGHER & CO. 1988 INCENTIVE
STOCK OPTION PLAN
This Amendment No. One to the Arthur J. Gallagher & Co. 1988 Incentive Stock
Option Plan, dated July 19, 1988, is made by Arthur J. Gallagher & Co., a
Delaware corporation (the "Company").
Whereas, the Arthur J. Gallagher & Co. 1988 Incentive Stock Option Plan (the
"Plan"), was adopted by the Company's Board of Directors on March 15, 1988
subject to approval by the Company's Stockholders, which approval was given on
May 10, 1988; and
Whereas, the Company's Board of Directors has determined that the Plan
should be amended to make minor technical corrections to conform with certain
provisions of Section 422A of the Internal Revenue Code, as amended;
Now, Therefore, in consideration of the foregoing and in order to reflect
the approvals of the Board of Directors and the Stockholders of the Company:
1. The first sentence of Paragraph 18 of the Plan is hereby amended in its
entirety to read as follows:
"This Plan shall be effective as of May 10, 1988, and shall terminate
ten years after this Effective Date."
2. Except as expressly amended and supplemented by this Amendment, the Plan
is hereby ratified and confirmed in all respects.
In Witness Whereof, the Company has caused its President and Secretary to
execute this Amendment No. One to the Plan as of the 19th day of July, 1988.
ARTHUR J. GALLAGHER & CO.
R. E. Gallagher
By: _________________________________
R. E. Gallagher
President
Attest:
Dean H. Goossen
- -------------------------------------
Dean H. Goossen
Secretary
A-6
<PAGE>
AMENDMENT NO. TWO TO THE
ARTHUR J. GALLAGHER & CO. 1988 INCENTIVE
STOCK OPTION PLAN
This Amendment No. Two to the Arthur J. Gallagher & Co. 1988 Incentive Stock
Option Plan, dated May 11, 1993, is made by Arthur J. Gallagher & Co., a
Delaware corporation (the "Company").
Whereas, the Arthur J. Gallagher & Co. 1988 Incentive Stock Option Plan (the
"Plan") was adopted by the Company's Board of Directors and approved by the
Company's Stockholders in 1988; and
Whereas, the Company's Board of Directors has determined that the Plan
should be amended to increase the number of shares of the Company's Common
Stock subject to the Plan from 300,000 to 550,000 shares subject to approval
by the Company's Stockholders, which approval was given on May 11, 1993;
Now, Therefore, in consideration of the foregoing and in order to reflect
the approvals of the Board of Directors and the Stockholders of the Company:
1. The first sentence of Section 3 of the Plan is hereby amended in its
entirety to read as follows:
"The shares that may be made subject to options under the Plan shall
be shares of Common Stock of the Company, one dollar ($1.00) par
value ("Common Stock"), and the total shares subject to option and
issued pursuant to this Plan shall not exceed, in the aggregate,
550,000 shares of the Common Stock of the Company."
2. Except as expressly amended and supplemented by this Amendment, the Plan
is hereby ratified and confirmed in all respects.
In Witness Whereof, the Company has caused its President and Secretary to
execute this Amendment No. Two to the Plan as of the 11th day of May, 1993.
ARTHUR J. GALLAGHER & CO.
J. Patrick Gallagher, Jr.
By: _________________________________
J. Patrick Gallagher, Jr.
President
Attest;
Carl E. Fasig
- -------------------------------
Carl E. Fasig
Secretary
A-7
<PAGE>
AMENDMENT NO. THREE TO THE
ARTHUR J. GALLAGHER & CO. 1988 INCENTIVE
STOCK OPTION PLAN
This Amendment No. Three to the Arthur J. Gallagher & Co. 1988 Incentive
Stock Option Plan, dated August 31, 1993, is made by Arthur J. Gallagher &
Co., a Delaware corporation (the "Company").
Whereas, the Arthur J. Gallagher & Co. 1988 Incentive Stock Option Plan (the
"Plan") was adopted by the Company's Board of Directors and approved by the
Company's Stockholders in 1988; and
Whereas, the Plan currently requires that a stock option grant be evidenced
by a written agreement to be signed by the optionee; and
Whereas, the Company, upon the recommendation of the Stock Option Committee,
has determined that it is in the best interest of the Company to be able to,
from time to time, evidence the grant of options in a manner most meaningful
to employees; and
Whereas, upon the recommendation of the Stock Option Committee, the Company
desires to amend the Plan to allow for more meaningful communication to
optionees regarding the grant of stock options;
Now, Therefore, be it Resolved, that the Plan is amended as follows:
1. Section 17 "Written Agreement" is hereby deleted in its entirety and
replaced with:
"17. Form of Agreement
Each Option granted hereunder shall be embodied in a writing, the
form and content of which shall be as the Committee in its discretion
shall deem advisable."
2. Except as expressly amended and supplemented by this Amendment, the Plan
is hereby ratified and confirmed in all respects.
In Witness Whereof, the Company has caused its President and Secretary to
execute this Amendment No. Three to the Plan as of the 31st day of August,
1993.
ARTHUR J. GALLAGHER & CO.
J. Patrick Gallagher, Jr.
By: _________________________________
J. Patrick Gallagher, Jr.
President
Attest:
Carl E. Fasig
- -------------------------------------
Carl E. Fasig
Secretary
A-8
<PAGE>
PROPOSED
AMENDMENT NO. FOUR TO THE
ARTHUR J. GALLAGHER & CO. 1988 INCENTIVE
STOCK OPTION PLAN
THIS AMENDMENT NO. FOUR to the ARTHUR J. GALLAGHER & CO. 1988 INCENTIVE
STOCK OPTION PLAN, dated __________, 1998, is made by Arthur J. Gallagher & Co.,
a Delaware corporation (the "Company").
WHEREAS, the Arthur J. Gallagher & Co. 1988 Incentive Stock Option Plan
(the "Plan") was adopted by the Company's Board of Directors and approved by the
Company's Stockholders in 1988; and
WHEREAS, the Company's Board of Directors has determined that, subject to
approval by the Company's Stockholders, which approval was given on May 19,
1998, Sections 2, 3 and 18 should be amended to (i) authorize the Option
Committee to amend all existing option grants so that, in the event of a change
in control of the Company, the option shall become immediately exercisable in
full; (ii) increase the number of shares of the Company's Common Stock subject
to the Plan from 550,000 to 875,000; and (iii) to extend the termination date of
the Plan to May 10, 2008; and a new Section 19 should be added to the Plan
providing that future option grants shall become immediately exercisable in the
event of a change in control of the Company.
NOW, THEREFORE, in consideration of the foregoing and in order to reflect
the approvals of the Board of Directors and the Stockholders of the Company:
1. Section 2 of the Plan is hereby amended in its entirety to read as follows:
"A. All administrative duties hereunder shall rest with the Option
Committee of the Board of Directors (hereinafter the "Committee"). The
Committee shall have the duty and authority, subject to the provisions of
the Plan and of section 422A of the Internal Revenue Code (the "Code"), to:
(i) determine which individuals shall receive options and how
many options each individual shall receive;
(ii) grant the options;
(iii) determine the terms and conditions of the options including
exercise dates, limitations on exercise, and the price and payment
terms;
(iv) determine the limitation, if any, on the number of shares
acquired under an option which may be sold by the employee in any one
year;
<PAGE>
(v) prescribe the form or forms of the instruments evidencing
any options granted under the Plan and of any other instruments
required under the Plan, and to change such forms from time to time;
and
(vi) adopt such rules and regulations for the administration of
the Plan as it deems appropriate.
B. In making the foregoing determinations the Committee may take
into account the nature of the services rendered by the respective
individuals, their present and potential contributions to the Company's
success, and such other factors as the Committee, in its discretion, shall
deem relevant.
C. The Committee is further authorized, at its discretion, to amend
at any time all previous grants of options pursuant to the Plan and in
effect as of May 19, 1998, to provide that in the event of a change in
control of the Company, as defined in Paragraph 19 below, all such options
shall become immediately vested and exercisable."
2. The first sentence of Paragraph 3 of the Plan is hereby amended in its
entirety to read as follows:
"The shares that may be made subject to options under the Plan shall be
shares of Common Stock of the Company, one dollar ($1.00) par value
("Common Stock"), and the total shares subject to option and issued
pursuant to this Plan shall not exceed, in the aggregate, 875,000 shares of
the Common Stock of the Company."
3. The first sentence of Paragraph 18 of the Plan is hereby amended in its
entirety to read as follows:
"This Plan shall be effective as of May 10, 1988 and shall terminate on
May 10, 2008."
4. A new Paragraph 19 of the Plan shall be added as follows:
"19. Change in Control
In the event of a change in control of the Company, as defined below, each
option outstanding shall immediately become exercisable in full. For all
purposes of the Plan, a "change in control of the Company" occurs if: (a)
any person or group, as defined in Sections 13(d) and 14(d)(2) of the
Exchange Act, as amended, is or becomes the beneficial owner, directly or
indirectly of securities of the Company representing 50 percent or more of
the combined voting power of the Company's outstanding securities then
entitled to vote for the election of directors; or (b) during any period of
two consecutive years, individuals who at the beginning of
<PAGE>
such period constitute the Board of Directors and any new directors whose
election by the Board or nomination for election by the Company's
Stockholders was approved by at least two-thirds of the directors then
still in office who either were directors at the beginning of the period or
whose election was previously so approved cease for any reason to
constitute at least a majority thereof; or the Stockholders of the Company
shall approve the sale of all or substantially all of the assets of the
Company or any merger, consolidation, issuance of securities or purchase of
assets, the result of which would be the occurrence of any event described
in clause (a) or (b) above."
IN WITNESS WHEREOF, the Company has caused its President and Secretary to
execute this Amendment No. Four to the Plan as of the day of , 1998.
ARTHUR J. GALLAGHER & CO.
By:_____________________________
J. Patrick Gallagher, Jr.
President
ATTEST:
- -------------------------------
Carl E. Fasig
Secretary
<PAGE>
- -
- -
PROXY PROXY
LOGO
ARTHUR J. GALLAGHER & CO.
TWO PIERCE PLACE
ITASCA, ILLINOIS 60143
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert E. Gallagher and J. Patrick Gallagher,
Jr., or either of them, as attorneys and proxies, each with the power to
appoint a substitute, and hereby authorizes them to represent and to vote, as
designated below, all the shares of voting stock of Arthur J. Gallagher & Co.
held of record by the undersigned on March 23, 1998, at the Annual Meeting of
Stockholders to be held on May 19, 1998 or any adjournment thereof.
IN THEIR DISCRETION, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3. THIS PROXY IS REVOCABLE AT ANY TIME.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE>
ARTHUR J. GALLAGHER & CO.
PLEASE MARK VOTE IN OVAL
IN THE FOLLOWING MANNER
USING DARK INK ONLY.
0
I
0
- -
- -
For
0
Withheld
0
For All
Except
0
For
0
Against
0
Abstain
0
1. Election of Directors--Class II Nominees for term expiring in 2001 are
Robert E. Gallagher, Frank M. Heffernan, Jr. and Walter F. McClure.
----------------
Nominee Exception
2. Approval of amendments to the Company's 1998 Incentive Stock Option Plan
(i) extending the term through May 10, 2008; (ii) providing that all exist-
ing and future grants shall immediately vest in the event of a change in
control of the Company; and (iii) increasing the number of shares subject to
such plan from 550,000 to 875,000.
For
0
Against
0
Abstain
0
3. Ratification of the appointment of Ernst & Young LLP as the independent
auditors of the Corporation for 1998.
Dated: ______________________________________________________________, 1998
Signature(s) ___________________________________________________________________
________________________________________________________________________________
IMPORTANT: PLEASE SIGN YOUR NAME EXACTLY AS IT APPEARS OPPOSITE. IN THE CASE OF
JOINT HOLDERS, ALL SHOULD SIGN. WHEN SIGNING AS AN ATTORNEY, EXECUTOR, ADMINIS-
TRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION,
PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF
A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
