<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
PROTECTIVE LIFE CORPORATION
(Name of Registrant as Specified in Its Charter)
PROTECTIVE LIFE CORPORATION
(Name of Person Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
N/A
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
- -------------------------------------------------------------------------------
/X/ 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:
$125.00
- -------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
Preliminary Proxy Materials
- -------------------------------------------------------------------------------
(3) Filing party:
PROTECTIVE LIFE CORPORATION
- -------------------------------------------------------------------------------
(4) Date filed:
Preliminary Proxy Materials were filed
on March 1, 1994 and the $125 Filing Fee was paid on February 28, 1994.
- -------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Notice of
Annual Meeting of
Stockholders
to be held on
May 2, 1994
and
Proxy Statement
[PROTECTIVE LIFE CORPORATION LOGO]
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
Letter from the President and Chief Executive Officer................. 1
Notice of 1994 Annual Meeting of Stockholders......................... 2
Proxy Statement....................................................... 3
General Information.................................................. 3
Voting Securities and Record Date................................... 4
Principal Stockholders.............................................. 5
* Election of Directors................................................. 8
Election of Directors and Information about Nominees................. 8
Vote Required........................................................ 11
Certain Information Concerning the Board of Directors and Its Committees 11
Director's Fees......................................................... 12
Compensation Committee Interlocks and Insider Participation............. 12
Executive Compensation................................................... 14
Performance Share Plan.................................................. 15
Pension Plan............................................................ 16
Severance Compensation Agreements....................................... 17
Report on Executive Compensation........................................ 18
Salary................................................................. 18
Annual Incentive Plan.................................................. 19
Performance Share Plan................................................. 19
$1 Million Limit on Executive Compensation............................. 20
Performance Comparison.................................................. 22
Certain Transactions..................................................... 24
* Proposals to Amend the Certificate of Incorporation...................... 25
Other Information........................................................ 26
Independent Public Accountants.......................................... 26
Annual Reports Available................................................ 26
Stockholder Proposals................................................... 26
* To be voted on at the Annual Meeting of Stockholders
<PAGE>
[PROTECTIVE LIFE CORPORATION LOGO]
- --------------------------------------------------------------------------------
P. O. Box 2606 * Birmingham, AL 35202 * (205) 879-9230
March 25, 1994
To the Stockholders of Protective Life Corporation:
You are invited to attend the 1994 Annual Meeting of Stockholders of
Protective Life Corporation, which will be held at the principal office of the
Company, 2801 Highway 280 South, Birmingham, Alabama, on Monday, May 2, 1994
at 10:00 a.m., CDT. Formal notice of the Annual Meeting, a Proxy Statement,
and a form of proxy accompany this letter.
Also enclosed is the Company's 1993 Annual Report to Stockholders.
At the Annual Meeting, stockholders will elect directors for the forthcoming
year and consider and vote upon a proposed amendment to the Company's 1985
Restated Certificate of Incorporation to increase the number of authorized
shares of Common Stock of the Company from 20,000,000 shares of the par value
of $0.50 per share to 80,000,000 shares of the par value of $0.50 per share.
The proposed amendment would also increase the number of shares of authorized
Preferred Stock of the Company from 1,000,000 shares of the par value of $1.00
per share to 4,000,000 shares of the par value of $1.00 per share. Please
carefully consider the enclosed Proxy Statement and execute and return your
proxy so that the Company may be assured of the presence of a quorum at the
Annual Meeting. A postage prepaid envelope is enclosed for your convenience in
replying. The prompt return of your proxy will be of great assistance in
reducing the expense of subsequent mailings. If you attend the Annual Meeting,
and so elect, you may withdraw your proxy and vote in person.
Sincerely yours,
/s/ Drayton Nabers, Jr.
Drayton Nabers, Jr.
President and
Chief Executive Officer
1
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 2, 1994
TO THE STOCKHOLDERS OF PROTECTIVE LIFE CORPORATION:
Notice is hereby given that the Annual Meeting of Stockholders of
Protective Life Corporation will be held at the principal office of the
Company, 2801 Highway 280 South, Birmingham, Alabama, on Monday, May 2, 1994
at 10:00 a.m., CDT, for the purpose of considering and acting upon the
following:
(a) the election of 13 directors to serve for the ensuing year,
(b) considering and voting upon the proposed amendment to the 1985
Restated Certificate of Incorporation, recommended by the Board of
Directors and described in the accompanying Proxy Statement, to
increase the number of shares of authorized Common Stock of the
Company from 20,000,000 shares of the par value of $0.50 per share
to 80,000,000 shares of the par value of $0.50 per share,
(c) considering and voting upon the proposed amendment to the 1985
Restated Certificate of Incorporation, recommended by the Board of
Directors and described in the accompanying Proxy Statement, to
increase the number of shares of authorized Preferred Stock of the
Company from 1,000,000 shares of the par value of $1.00 per share
to 4,000,000 shares of the par value of $1.00 per share, and
(d) the transaction of such other business as may properly come before
the Annual Meeting or any adjournment thereof.
The close of business on Friday, March 11, 1994 has been fixed by the
Board of Directors as the record date for determination of stockholders of the
Company entitled to notice of and to vote at the Annual Meeting of
Stockholders. The stock transfer books of the Company will not be closed.
The Annual Meeting may be adjourned from time to time without notice
other than announcement at the meeting, or any adjournment thereof, and any
business for which notice is hereby given may be transacted at any such
adjournment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ John K. Wright
JOHN K. WRIGHT, SECRETARY
March 25, 1994
2
<PAGE>
PROTECTIVE LIFE CORPORATION
P. O. BOX 2606
BIRMINGHAM, ALABAMA 35202
PROXY STATEMENT DATED MARCH 25, 1994
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 2, 1994
GENERAL INFORMATION
This Proxy Statement is furnished to the stockholders of Protective Life
Corporation, a Delaware corporation ("Company"), in connection with the
solicitation of proxies on behalf of Management to be used in voting at the
Annual Meeting of Stockholders ("Annual Meeting") to be held Monday, May 2,
1994. If the enclosed form of proxy is properly executed and received by the
Company before or at the Annual Meeting, shares represented thereby will be
voted as specified thereon. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES AS DIRECTORS AND FOR THE ADOPTION OF
THE PROPOSALS AMENDING THE 1985 RESTATED CERTIFICATE OF INCORPORATION OF THE
COMPANY RECOMMENDED BY THE BOARD OF DIRECTORS AND DESCRIBED HEREIN.
The enclosed form of proxy provides a method for stockholders to
withhold authority or abstain from voting. If a stockholder makes such a
direction, his shares will not be voted either for or against a proposal but
would be counted for the purposes of determining that a quorum of the
stockholders would be present at the meeting. While there may be instances in
which a stockholder may consider abstaining, the Board of Directors encourages
all stockholders to vote their shares in their best judgment and to
participate in the voting process to the fullest extent possible.
A stockholder may revoke his proxy at any time before such proxy is
voted by giving a proxy bearing a later date or written notice of such
revocation (in either case delivered to the Secretary of the Company at its
principal office prior to the time of taking the vote) or by voting in person
at the Annual Meeting. Attendance at the Annual Meeting will not in and of
itself constitute the revocation of a proxy.
A quorum of stockholders (stockholders owning a majority of the
outstanding shares of the Company entitled to vote) must be present, in person
or by proxy, to conduct business at the Annual Meeting of Stockholders, and a
majority vote of those shares issued and outstanding is required to vote "for"
a proposal in order for such proposal to be adopted. Both abstentions and
broker non-votes are included in determining the number of stockholders
present for quorum purposes. Broker non-votes exist where a broker proxy
indicates that the broker is not authorized to vote on some proposals. As
required by Delaware law, abstentions (but not broker non-votes) are counted
in calculating the number of shares voting on a particular proposal. In
counting votes on a particular proposal, only those votes clearly indicated as
voting "for" a proposal are counted as such. Abstentions are recorded and
counted separately.
As votes are received they are compared with the list of stockholders as
of March 11, 1994 to ensure that the stockholders are entitled to vote and are
voting their authorized number
3
<PAGE>
of shares. Votes for each proposal are tallied by the Internal Audit
Department of the Company. All proxies, work papers, and summaries of results
are then reviewed by an independent panel of proxy judges.
The Company will bear all costs in connection with this solicitation.
In addition to the use of the mails, proxies may be solicited, in person or by
telephone, by officers or employees of the Company or its subsidiaries, who
will not be separately compensated therefor. Brokerage houses, nominees,
fiduciaries, and other custodians have been requested to forward soliciting
material to the beneficial owners of Company Common Stock held of record by
them and will be reimbursed for their reasonable expenses in connection with
such mailing or other communication with the beneficial owners.
The Management of the Company does not know of any matters that may be
brought before the Annual Meeting other than the matters described in the
accompanying Notice of Annual Meeting. If any other matters should properly
be brought before the Annual Meeting or any adjournment thereof, THE ENCLOSED
PROXY WILL BE VOTED IN ACCORDANCE WITH THE JUDGMENT OF THE PERSON OR PERSONS
VOTING IT, UNLESS "AUTHORIZATION WITHHELD" IS INDICATED IN THE APPROPRIATE BOX
OF THE PROXY.
THIS SOLICITATION IS MADE BY MANAGEMENT OF THE COMPANY.
VOTING SECURITIES AND RECORD DATE
Shares of common stock ("Common Stock"), $0.50 par value per share, are
the only voting securities of the Company and each share is entitled to one
vote. Only holders of record of Common Stock at the close of business on
March 11, 1994 will be entitled to vote at the Annual Meeting. As of that
date, there were 15,668,231 shares of Common Stock of the Company issued, of
which 1,974,987 shares were held as treasury shares, leaving 13,693,244 shares
issued, outstanding and entitled to vote at the Annual Meeting.
4
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to (i) persons
known to be the beneficial owners as of March 11, 1994 of 5% or more of the
Company's Common Stock, (ii) each current director and named executive officer,
and (iii) all directors and executive officers of the Company, as a group:
<TABLE>
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP(1) PERCENT
NAME OF --------------------------- OF
BENEFICIAL OWNER SOLE POWER SHARED POWER(2) CLASS(1)
- ---------------- ---------- --------------- --------
<S> <C> <C>
William J. Rushton III 353,278(3) 5,547(4) 2.6%
John W. Woods 2,775 -0- *
Crawford T. Johnson III 27,000 2,100 *
William J. Cabaniss, Jr. 58,072 38,488 *
H. G. Pattillo 4,000 -0- *
Drayton Nabers, Jr. 28,511(5) 3,692 *
Edward L. Addison 3,175 -0- *
John J. McMahon, Jr. 4,572 9,053(6) *
A. W. Dahlberg 1,021 -0- *
John W. Rouse, Jr. 1,123 -0- *
Robert T. David 1,813 -0- *
Ronald L. Kuehn, Jr. 827 -0- *
Herbert A. Sklenar -0- 561 *
Ormond L. Bentley 9,260(7) -0- *
R. Stephen Briggs 16,439(8) -0- *
Jim E. Massengale 17,679(9) -0- *
A. S. Williams III 15,478(10) -0- *
Dennis R. Glass 4,472 -0- *
All current directors
and executive officers as a
group (23 individuals) 557,405(11)(12) 60,716 4.5%
AmSouth Bank N.A. in various
fiduciary capacities(13) -0- 1,755,290(13) 12.8%(13)
Nicholas Company, Inc.(14) 1,610,210(14) -0- 11.8%(14)
Firstar Corporation (15) 744,100(15) 8,600(15) 5.5%(15)
- ---------------------------------
*less than one percent
<FN>
(1) The number of shares reflected are shares which under applicable
regulations of the Securities and Exchange Commission are deemed to be
beneficially owned. Shares deemed to be beneficially owned, under such
regulations, include shares as to which, directly or indirectly, through
any contract, relationship, arrangement, undertaking or otherwise, either
voting power or investment power is held or shared. The total number of
shares beneficially owned is subdivided, where applicable, into two
categories: shares as to which voting/investment power is held solely
and shares as to which voting/investment power is shared. Unless
otherwise indicated in the following notes, if a beneficial owner has
sole power, he has sole voting and investment power, and if a beneficial
owner has shared power, he has shared voting and investment power. The
percentage calculation is based on the aggregate number of shares
beneficially owned.
(2) This column may include shares held in the name of a spouse, minor
children, or certain other relatives sharing the same home as the
director or officer, or held by the director or officer, or the spouse of
the director or officer, as a trustee or as a custodian for children, as
to all of which beneficial ownership is disclaimed by the respective
directors and officers except as otherwise noted below.
</TABLE>
5
<PAGE>
<TABLE>
<S><C>
<FN>
(3) Includes 14,745 shares held in the Company's 401(k) and Stock Ownership
Plan for which Mr. Rushton has sole voting power.
(4) Shares owned by the wife of Mr. Rushton.
(5) Includes 2,600 shares held in the Company's 401(k) and Stock Ownership
Plan for which Mr. Nabers has sole voting power.
(6) Includes 53 shares held as stock allotments in Mr. McMahon's deferred
compensation account pursuant to the terms of the Company's Deferred
Compensation Plan for Directors who are not Employees of the Company.
(7) Includes 1,275 shares held in the Company's 401(k) and Stock Ownership
Plan for which Mr. Bentley has sole voting power.
(8) Includes 5,246 shares held in the Company's 401(k) and Stock Ownership
Plan for which Mr. Briggs has sole voting power.
(9) Includes 6,673 shares held in the Company's 401(k) and Stock Ownership
Plan for which Mr. Massengale has sole voting power.
(10) Includes 5,108 shares held in the Company's 401(k) and Stock Ownership
Plan for which Mr. Williams has sole voting power.
(11) No officer or director owns any stock of any affiliate of the Company.
(12) Included are the interests of the persons as of December 31, 1993 in
45,945 shares held in the Company's 401(k) and Stock Ownership Plan,
which owned a total of 616,201 shares on such date. Each 401(k) and
Stock Ownership Plan participant has sole voting power with respect to
the shares held in the participant's accounts. The 442,073 shares held
in the Company's 401(k) and Stock Ownership Plan Trust which have not
been allocated to participants will be voted by the Trustees in
accordance with the majority of the vote of all participants.
(13) AmSouth Bank N.A., 1900 5th Avenue North, Birmingham, Alabama 35203, has
advised the Company that the bank, in its capacity as fiduciary of
various trusts and estates, may be deemed the beneficial owner, as of
December 31, 1993, of 1,760,290 shares of Common Stock of the Company,
for which the bank had no sole voting or investment power, but has shared
voting power with respect to 1,755,290 shares and shared investment power
with respect to 1,402,925 shares. AmSouth Bank N.A. has further advised
the Company that none of the separate trusts and estates of which it is
fiduciary holds as much as 5% of the outstanding shares of the Company.
AmSouth Bank N.A. reported its beneficial ownership as 12.85%. The table
shows the percentage based on 13,693,244 shares of Common Stock
outstanding on March 11, 1994.
(14) Nicholas Company, Inc., 700 North Water Street, Milwaukee, Wisconsin
53202, has advised the Company that it, in its capacity as an investment
advisor, may be deemed the beneficial owner, as of December 31, 1993, of
1,610,210 shares of Common Stock of the Company. Nicholas Company, Inc.
has sole investment power and no voting power with respect to 1,610,210
shares. Nicholas Company, Inc. has further advised the Company that none
of its separate clients other than Nicholas Fund, Inc. holds as much as
5% of the outstanding shares of the Company. Nicholas Fund, Inc. has
advised the Company that it, in its capacity as an investment company,
may be deemed the beneficial owner, as of December 31, 1993, of 1,016,200
shares of Common Stock of the Company included within the shares reported
by Nicholas Company, Inc. Nicholas Fund, Inc. has sole voting power and
no investment power with respect to 1,016,200 shares. Nicholas Company,
Inc. reported its beneficial ownership as 11.8%. The table shows the
percentage based on 13,693,244 shares of Common Stock outstanding on
March 11, 1994.
</TABLE>
6
<PAGE>
<TABLE>
<S><C>
<FN>
(15) Firstar Corporation, 777 E. Wisconsin Avenue, Milwaukee, Wisconsin 53202,
has advised the Company that it, in its capacity as a holding company, may
be deemed the beneficial owner, as of December 31, 1993, of 752,700
shares of Common Stock of the Company. Firstar Corporation has sole
voting power with respect to 708,000 shares, sole investment power
with respect to 744,100 shares, shared voting power with respect to 8,600
shares, and shared investment power with respect to 8,000 shares. A
subsidiary of Firstar Corporation, Firstar Investment Research &
Management Company, 777 E. Wisconsin Avenue, Milwaukee, Wisconsin 53202,
has advised the Company that it, in its capacity as an investment advisor,
may be deemed the beneficial owner, as of December 31, 1993, of 752,100
shares of Common Stock of the Company. Firstar Investment Research &
Management Company has sole voting power with respect to 394,000 shares,
sole investment power with respect to 430,100 shares, and shared voting
power and shared investment power with respect to 322,000 shares. Firstar
Corporation reported its beneficial ownership as 5.5%, which it has
advised the Company includes beneficial ownership by its subsidiary. The
table shows the percentage based on 13,693,244 shares of Common Stock
outstanding on March 11, 1994.
</TABLE>
7
<PAGE>
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS AND INFORMATION ABOUT NOMINEES
Unless "Withhold Authority" is specified in the proxy as to all or some
of the nominees, the persons named in the accompanying proxy intend to vote
the shares represented by such proxy, if properly dated and signed, for the
election as directors of the thirteen nominees listed herein, all of whom
are now directors of the Company. If elected, each shall serve as a
director of the Company until the 1995 Annual Meeting of Stockholders and
thereafter until his successor shall have been elected and shall qualify,
except as otherwise provided in the By-laws.
Should one or more of such nominees become unavailable or ineligible to
serve, it is intended that the shares represented by the proxy will be voted
for the election of the other nominees and may be voted, unless authorization
is withheld, for any substitute nominee or nominees as Management may
designate. Management has no reason to believe that any nominee will be
unable or unwilling to serve as a director if elected.
The information in the following table and the notes thereto with
respect to each nominee for election as director with regard to his age,
principal occupation or employment for the last five years, and certain other
directorships of the nominee has been furnished to the Company by the
respective nominees. No nominee, other than Messrs. Rushton and Nabers, has
any position or office with the Company or any subsidiary. The table and
notes also indicate the nominees' present committee memberships.
PROTECTIVE
LIFE OR
COMPANY
PRINCIPAL OCCUPATION DIRECTOR
NAME AGE AND DIRECTORSHIPS SINCE
- ---- --- -------------------- ----------
William J. 64 Chairman of the Board of the Company and,
Rushton III formerly, its Chairman of the Board and
Chief Executive Officer and, formerly,
its President; Director, Alabama Power
Company, AmSouth Bancorporation, AmSouth
Bank N.A., and The Southern Company.
(a)(b)(e)(f) 1956(h)
John W. Woods 62 Chairman of the Board and Chief Executive
Officer, AmSouth Bancorporation (bank
holding company); also Chairman of the
Board, President, and Chief Executive
Officer of AmSouth Bank N.A. and,
formerly, its Chairman of the Board and
Chief Executive Officer; Director,
AmSouth Bancorporation, AmSouth Bank
N.A., Alabama Power Company, and McWane,
Inc. (a)(b)(c) 1970
8
<PAGE>
PROTECTIVE
LIFE OR
COMPANY
PRINCIPAL OCCUPATION DIRECTOR
NAME AGE AND DIRECTORSHIPS SINCE
- ---- --- -------------------- ----------
Crawford T. 69 Chairman of Coca-Cola Bottling Company
Johnson III United, Inc. (soft drinks); Director,
Coca-Cola Bottling Company United, Inc.,
Alabama Power Company, and Russell
Corporation. (a)(e)(f) 1970
William J. 55 President of Precision Grinding, Inc.
Cabaniss, Jr. (machine grinding); Director of Precision
Grinding, Inc., AmSouth Bancorporation,
AmSouth Bank N.A., and Birmingham Steel
Corporation. (a)(d)(e) 1974(i)
H. G. Pattillo 67 Chairman of the Board and President,
Pattillo Construction Company, Inc.
(industrial construction); Director,
Eaton Corporation, John H. Harland
Company, Trust Company Bank, SunTrust
Banks, Inc., and Simpson Paper Company.
(d)(f) 1979
Drayton Nabers, 53 President and Chief Executive Officer of
Jr. the Company and, formerly, its President
and Chief Operating Officer and its
Senior Vice President; Partner in law
firm of Cabaniss, Johnston, Gardner,
Dumas & O'Neal (1972-1978); Director,
Energen Corporation and National Bank of
Commerce of Birmingham. (a)(b)(e)(f)(g) 1982
Edward L. 64 Chairman of the Board and Chief Executive
Addison Officer of The Southern Company (electric
utilities) and, formerly, its President
and Chief Executive Officer; formerly,
Chairman of the Board of Southern Company
Services, Inc.; formerly, President of
Gulf Power Company; Director, The
Southern Company, Alabama Power Company,
Georgia Power Company, Southern Company
Services, Inc., Phelps Dodge Corporation,
Wachovia Corporation of Georgia, Wachovia
Bank of Georgia, N.A., and CSX
Corporation. (c)(d) 1985
John J. McMahon, 51 President of McWane, Inc. (pipe and valve
Jr. manufacturing) and, formerly, its Vice
President and Assistant Secretary;
formerly, President of McWane Financial
Corporation; Partner in law firm of
Cabaniss, Johnston, Gardner, Dumas &
O'Neal (1974-1975); Director, McWane,
Inc., National Commerce Corporation,
National Bank of Commerce of Birmingham,
and John H. Harland Company. (a)(b)(c) 1987
9
<PAGE>
PROTECTIVE
LIFE OR
COMPANY
PRINCIPAL OCCUPATION DIRECTOR
NAME AGE AND DIRECTORSHIPS SINCE
- ---- --- -------------------- ----------
A. W. Dahlberg 53 President of The Southern Company
(electric utilities); formerly, President
and Chief Executive Officer, Georgia
Power Company; formerly, President and
Chief Executive Officer of Southern
Company Services, Inc.; Director, The
Southern Company, Georgia Power Company,
Southern Company Services, Inc., Southern
Electric Generating Company, Southern
Investment Group, Inc., Trust Company of
Georgia, Trust Company Bank, and Equifax,
Inc. (d)(f) 1987
John W. Rouse, 56 President and Chief Executive Officer,
Jr. Southern Research Institute (scientific
research); formerly, Dean of Engineering
and Professor of Engineering at the
College of Engineering of the University
of Texas at Arlington; Director, Alabama
Power Company. (a)(d)(f) 1988
Robert T. David 55 Vice President and Dean, School of
Business, Samford University; also
President and Chief Executive Officer of
Polatomic, Inc.; Director, Stockham Valve
and Fittings, Inc., Information Plus
Corporation, and Triad Guaranty Inc.
(a)(b)(f) 1988
Ronald L. Kuehn, 58 Chairman of the Board, President and
Jr. Chief Executive Officer, Sonat Inc.
(energy and natural resources) and,
formerly, its President and Chief
Executive Officer and President and Chief
Operating Officer; Director, Sonat Inc.,
AmSouth Bancorporation, AmSouth Bank
N.A., Southern Natural Gas Company, Union
Carbide Corporation, Praxair, Inc., and
Sonat Offshore Drilling Inc. (a)(c)(e) 1990
Herbert A. 62 Chairman and Chief Executive Officer of
Sklenar Vulcan Materials Company (construction
materials and chemicals) and, formerly,
its President and Chief Executive
Officer; Director, Vulcan Materials
Company, AmSouth Bancorporation, AmSouth
Bank N.A., and Temple-Inland, Inc.
(a)(b)(c) 1992
- ------------------------
(a) also a member of the Executive Committee
(b) also a member of the Finance and Investments Committee
(c) also a member of the Compensation and Management Succession Committee
(d) also a member of the Audit Committee
(e) also a member of the Board Structure and Nominating Committee
(f) also a member of the Strategic Issues Committee
(g) also a director and current officer of each principal Company subsidiary
(h) with the exception of the period 1958-1962
(i) with the exception of the period November 1988 - February 1992
10
<PAGE>
VOTE REQUIRED
To approve the election of the nominees as directors, the affirmative
vote of the holders of a majority of the shares issued, outstanding and
entitled to vote is required.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
THE NOMINEES AS DIRECTORS AS SET FORTH IN THIS PROXY STATEMENT.
CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
To assist in carrying out its duties and responsibilities, the Board of
Directors has an Executive Committee, a Finance and Investments Committee, an
Audit Committee, a Compensation and Management Succession Committee, a Board
Structure and Nominating Committee, and a Strategic Issues Committee, each
composed of members of the Board. The members of each committee are identified
by appropriate notes in the table on pages 8-10.
The Executive Committee exercises the power of the Board of Directors,
if necessary, between the meetings of the Board. The Company's Chairman of the
Board is a standing member of the committee. This committee has broad
authority to act on behalf of the Board of Directors whenever a meeting of the
entire Board of Directors is not practical. The Executive Committee met three
times during 1993.
Effective May 3, 1993, the Board of Directors formed the Finance and
Investments Committee. This committee has responsibility for reviewing and
acting upon financial and investment matters, including borrowing and lending
transactions entered into by the Company and its subsidiaries. The Finance
and Investments Committee met six times during 1993.
The Audit Committee reviews internal controls, systems and procedures,
accounting policies, and other significant aspects of the financial management
of the Company, including the Company's internal audit functions. It also
reviews with the Company's independent public accountants their audit
procedures, management letters, and other significant aspects of the annual
audit made by the independent public accountants. The Audit Committee met
three times during 1993.
The Compensation and Management Succession Committee has oversight and
ultimate charge and control of the compensation paid officers and employees of
the Company and its subsidiaries, whether by salary or under any other
compensation plan, including the Company's Annual Incentive Plan and its
Performance Share Plan. This committee is also vested with the responsibility
of recommending to the Company's Board of Directors a successor to the Chief
Executive Officer whenever the need to name such a successor may arise. The
Compensation and Management Succession Committee met two times during 1993.
The Board Structure and Nominating Committee is charged with the broad
responsibility of reviewing and advising the Board of Directors on the
functions and procedures of the Board
11
<PAGE>
and its committees, the compensation of the directors for service on the Board
and its committees, and the selection and tenure of directors. No formal
procedures whereby individual stockholders can submit recommendations of
persons to be considered for nomination as a director of the Company have been
instituted. However, the committee would consider any such recommendations
made to it in writing on a timely basis. The Board Structure and Nominating
Committee met two times during 1993.
The Strategic Issues Committee is responsible for examining critical
issues facing the insurance industry as well as reviewing the Company's future
opportunities. The Strategic Issues Committee met two times during 1993.
Each of the committees reports its actions taken to the Board of
Directors.
The Board of Directors met five times during 1993.
DIRECTOR'S FEES
Mr. Nabers does not receive director's fees. Mr. Rushton receives
$200,000 per year for his service as Chairman of the Board. Mr. Rushton is
also eligible to receive payment of any Performance Share Plan awards, if
earned, that were awarded to him during his tenure as Chief Executive Officer
(see the "Report on Executive Compensation"). Other directors receive an
annual director's fee of $20,000 (increased from $19,000 in March 1994), and
$800 for each Executive Committee, Finance and Investments Committee, Audit
Committee, Compensation and Management Succession Committee, Board Structure
and Nominating Committee, or Strategic Issues Committee meeting attended. For
each board meeting attended, the Birmingham directors receive $1,000 and the
non-Birmingham directors receive $1,800 and reimbursement of their travel
expenses. Non-Birmingham directors receive an additional fee of $500 for
attendance at Audit Committee, Compensation and Management Succession
Committee, Board Structure and Nominating Committee, or Strategic Issues
Committee meetings when travel to Birmingham is for the special purpose of
attending the meeting.
The Company has established a Deferred Compensation Plan for Directors
Who Are Not Employees of the Company (the "Plan") whereby eligible directors
may voluntarily elect to defer to a specified date receipt of all or any
portion of their director's fees. Director's fees so deferred are credited to
the directors in cash or Company stock equivalents or a combination thereof.
The cash portion earns interest at approximately the Company's short-term
borrowing rate. The stock equivalent portion is credited with dividends in
the form of additional stock equivalents. Deferred director's fees will be
distributed as specified by the directors in accordance with the Plan unless
distribution is accelerated under certain provisions, including upon a change
in control of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation and Management Succession Committee
("Committee") are Messrs. McMahon (Chairman), Woods, Addison, Kuehn, and
Sklenar. Messrs. McMahon, Woods, Addison, Kuehn, and Sklenar are executive
officers of
12
<PAGE>
McWane, Inc., AmSouth Bancorporation, The Southern Company, Sonat Inc., and
Vulcan Materials Company, respectively.
No member of the Committee was an officer or employee of the Company or
any of its subsidiaries at any time during 1993. Also, no member of the
Committee was formerly an officer of the Company or any of its subsidiaries.
During 1993, McWane, Inc., Sonat Inc., and Vulcan Materials Company,
with which Committee members Messrs. McMahon, Kuehn, and Sklenar,
respectively, were affiliated, paid the Company's principal operating
subsidiary, Protective Life Insurance Company ("Protective Life") premiums,
fees, or investment product deposits for various types of insurance in the
amount of $99,706, $546,000, and $4,098,077, respectively.
Mr. Rushton, the Company's Chairman of the Board, and prior to May 1992,
also its Chief Executive Officer, serves as a director of AmSouth
Bancorporation and, through April 1993, served as a member of its Compensation
Committee. Mr. Woods, the Chairman of the Board and Chief Executive Officer
of AmSouth Bancorporation, serves as a director of the Company and as a member
of the Company's Committee. AmSouth Bancorporation and subsidiaries maintain
a group life insurance program with Protective Life (which through reinsurance
is shared with two other companies). AmSouth Bank N.A. serves as Trustee for
Protective Life's retired lives reserve program. In 1993, Protective Life and
the Company paid $1,300,421 in credit and mortgage insurance and annuity
commissions and $2,418,996 in interest, mortgage loan service fees, and other
charges to AmSouth Bank N.A. and other subsidiaries of AmSouth Bancorporation.
Additionally, during 1993 AmSouth Bancorporation and certain of its
subsidiaries paid Protective Life premiums, fees, or investment product
deposits for various types of insurance in the amount of $4,353,541.
Mr. Rushton also serves as a director of The Southern Company. Mr.
Addison, the Chairman of the Board and Chief Executive Officer of The Southern
Company, serves as a director of the Company and on the Company's Committee.
During 1993, the following subsidiaries of The Southern Company, Southern
Company Services, Inc., and affiliates and Alabama Power Company, paid
Protective Life premiums, fees, or investment product deposits for various
types of insurance in the amount of $862,533.
13
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM
COMPENSATION
--------------------------------------------------------------
OTHER LONG-TERM ALL
ANNUAL INCENTIVE PLAN OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(1)(2) COMPENSATION PAYOUTS(1)(2)(3) COMPENSATION(4)
(A) (B) (C) (D) (E) (H) (I)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DRAYTON NABERS, JR. 1993 $398,583 $365,700 $2,238 $413,654 $6,746
President and Chief Executive Officer 1992 339,769 226,800 7,488 77,439 6,546
since May 1992 1991 295,000 193,800 140,790
President and Chief Operating Officer
from August 1982 to May 1992
- -----------------------------------------------------------------------------------------------------------------------------------
A. S. WILLIAMS III 1993 227,008 137,800 4,020 172,641 6,746
Senior Vice President, Investments and 1992 208,333 126,000 9,270 39,022 6,546
Treasurer 1991 195,833 108,500 71,865
- -----------------------------------------------------------------------------------------------------------------------------------
ORMOND L. BENTLEY 1993 200,217 115,800 3,886 164,094 6,746
Senior Vice President, Group 1992 185,250 89,000 8,395 39,022 6,546
1991 172,500 90,600 71,865
- -----------------------------------------------------------------------------------------------------------------------------------
R. STEPHEN BRIGGS 1993 222,392 149,100 4,218 152,129 6,746
Executive Vice President 1992 185,250 71,900 9,468 40,262 6,546
1991 172,833 144,900 74,165
- -----------------------------------------------------------------------------------------------------------------------------------
JIM E. MASSENGALE 1993 184,417 97,800 1,249 158,966 5,991
Senior Vice President 1992 173,833 61,300 3,989 39,022 6,546
1991 166,167 81,400 71,865
- -----------------------------------------------------------------------------------------------------------------------------------
DENNIS R. GLASS 1993 218,279 -0- 1,050 -0- -0-
Executive Vice President and Chief 1992 246,667 104,200 6,300 -0- 6,546
Financial Officer from September 1991 1991 80,000 114,000 -0-
to October 1993
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
FOOTNOTES:
(1) For further information, see the "Report on Executive Compensation".
(2) Includes amounts deferred under the Deferred Compensation Plan for Officers.
(3) For further information, see the "Long-Term Incentive Plan-Awards In Last Fiscal Year" table.
(4) Matching contributions to the Company's 401(k) and Stock Ownership Plan.
</TABLE>
The above table sets forth certain information for the year ended
December 31, 1993 relating to the Chief Executive Officer and the four most
highly compensated executive officers of the Company whose total remuneration
from the Company and all subsidiaries exceeded $100,000. The above table also
includes information concerning Mr. Glass, who resigned as Executive Vice
President and Chief Financial Officer of the Company in October 1993.
The Company has established a Deferred Compensation Plan for Officers
(the "Officers' Plan") whereby eligible officers may voluntarily elect to
defer to a specified date receipt of all or any portion of their Annual
Incentive Plan and Performance Share Plan bonuses. Bonuses so deferred are
credited to the officers in cash or Company stock equivalents or a combination
thereof. The cash equivalent portion earns interest at approximately the
Company's short-term borrowing rate. The stock equivalent portion is credited
with dividends in the form of additional stock equivalents. Deferred bonuses
will be distributed as specified by the officers in accordance with the
Officers' Plan unless accelerated under certain provisions, including upon a
change in control of the Company.
14
<PAGE>
PERFORMANCE SHARE PLAN
LONG-TERM INCENTIVE PLAN-AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS (IN SHARES)
---------------------------------------
PERFORMANCE OR
NUMBER OF OTHER PERIOD UNTIL
SHARES, UNITS OR MATURATION OR
NAME OTHER RIGHTS (#) PAYOUT THRESHOLD TARGET MAXIMUM
(A) (B) (C) (D) (E) (F)
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Drayton Nabers, Jr. 7,300 shares December 31, 1996 3,650 7,300 9,125
- ---------------------------------------------------------------------------------------------------------
R. Stephen Briggs 2,400 shares December 31, 1996 1,200 2,400 3,000
- ---------------------------------------------------------------------------------------------------------
Ormond L. Bentley 2,400 shares December 31, 1996 1,200 2,400 3,000
- ---------------------------------------------------------------------------------------------------------
Jim E. Massengale 2,250 shares December 31, 1996 1,125 2,250 2,813
- ---------------------------------------------------------------------------------------------------------
A. S. Williams III 2,700 shares December 31, 1996 1,350 2,700 3,375
- ---------------------------------------------------------------------------------------------------------
Dennis R. Glass 3,150 shares December 31, 1996 1,575 3,150 3,938
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
In 1993, the Compensation and Management Succession Committee of the
Company's Board of Directors awarded performance shares, as indicated, to the
above named executives, which are not payable, if at all, until the results of
the comparison group of companies for the four-year period ending December 31,
1996 are known.
The Performance Share Plan was initially adopted by stockholders in 1973
and was renewed by stockholder action in 1983 and amended by the Board of
Directors in 1990. The Protective Life Corporation 1992 Performance Share
Plan (the "Performance Share Plan") was adopted by stockholder action in 1992.
Executive officers and key employees are eligible for awards under the
Performance Share Plan. Under the Performance Share Plan, the criterion for
payment of performance share awards is made in accordance with the Company's
average return on average equity for an award period (up to five years)
compared with that of a comparison group of publicly held life insurance
companies, multiline insurers and insurance holding companies during the award
period. The comparison group of companies consists of the 40 largest publicly
held stock life and multiline insurance companies as listed in the NATIONAL
UNDERWRITER, "INSURANCE STOCK RESULTS", each having net worth in excess of
$100 million, ranked according to net worth at January 1, 1993. For further
information on the comparison group of companies, see page 23.
With respect to 1993 awards, the entire award is earned only if the
Company's average return on average equity for the four-year period ranks at
the top 25% of the comparison group. If the Company ranks at the top 10% of
the comparison group, 125% of the award is earned. If the Company ranks at
the median of the comparison group, 50% of the award is earned and if the
Company's results are below the median of the comparison group, no portion of
the award
15
<PAGE>
is earned. The Performance Share Plan provides for interpolation between
thresholds to determine the exact percentage to be paid.
PENSION PLAN
PENSION PLAN TABLE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
REMUNERATION YEARS OF SERVICE
----------------------------------------------------------------------------------
15 20 25 30 35
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 125,000 $ 28,177 $ 37,569 $ 46,961 $ 56,353 $ 65,745
150,000 34,177 45,569 56,961 68,353 79,745
175,000* 40,177 53,569 66,961 80,353 93,745
200,000* 46,177 61,569 76,961 92,353 107,745
225,000* 52,177 69,569 86,961 104,353 121,745*
250,000* 58,177 77,569 96,961 116,353 135,745*
300,000* 70,177 93,569 116,961 140,353* 163,745*
400,000* 94,177 125,569* 156,961* 188,353* 219,745*
500,000* 118,177 157,569* 196,961* 236,353* 275,745*
600,000* 142,177* 189,569* 236,961* 284,353* 331,745*
700,000* 166,177* 221,569* 276,961* 332,353* 387,745*
800,000* 190,177* 253,569* 316,961* 380,353* 443,745*
900,000* 214,177* 285,569* 356,961* 428,353* 499,745*
1,000,000* 238,177* 317,569* 396,961* 476,353* 555,745*
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
<FN>
- ---------------------
*Current pension law limits the maximum annual benefit payable at normal
retirement age under a defined benefit plan to $118,800 for 1994 and is
subject to increase in later years. In addition, in 1994, such a plan may
not take into account annual compensation in excess of $150,000, which
amount is similarly subject to increase in later years. The Company's
Excess Benefit Plan, adopted effective September 1, 1984, and amended and
restated as of January 1, 1989, provides for payment, outside of the Pension
Plan, of the difference between (1) the fully accrued benefits which would
be due under the Pension Plan absent both of the aforesaid limitations and
(2) the amount actually payable under the Pension Plan as so limited.
</TABLE>
All officers, as well as the other salaried employees of the Company and
its wholly-owned subsidiaries, after completion of one year of service and
attainment of age 21, are covered by the Protective Life Corporation Pension
Plan ("Pension Plan"), which is a qualified defined benefit pension plan
generally providing an annual pension beginning at normal retirement age (or
later retirement) and continuing for life.
The above table illustrates estimated gross annual benefits which would
be payable for life at normal retirement age by the Pension Plan for employees
with average compensation (remuneration under the table above) and years of
service.
Compensation covered by the Pension Plan (for purposes of pension
benefits) excludes commissions and performance share awards and generally
corresponds to that shown under the heading "Annual Compensation" in the
Summary Compensation Table. Compensation is calculated based on the average
of the highest level of compensation paid during a period of 36
16
<PAGE>
consecutive whole months. Only three Annual Incentive Plan bonuses (whether
paid or deferred under a Deferred Compensation Plan maintained by the Company)
may be included in obtaining the average compensation.
The annual benefit at normal retirement age will be equal to (i) 1.1% of
the employee's average compensation multiplied by years of service up to 35
years, plus (ii) 0.5% of the employee's average compensation in excess of
covered compensation, for purposes of social security, multiplied by years of
service up to 35 years, plus (iii) 0.55% of the employee's average
compensation multiplied by years of service in excess of 35 years. Benefits
in the above table are not reduced by social security or other offset amounts.
The named executives and their estimated length of service as of
December 31, 1993 are provided in the following table.
<TABLE>
<CAPTION>
-----------------------------------------------------------
-----------------------------------------------------------
NAME YEARS OF SERVICE
-----------------------------------------------------------
-----------------------------------------------------------
<S> <C>
Drayton Nabers, Jr. 15
R. Stephen Briggs 22
Ormond L. Bentley 28
Jim E. Massengale 11
A. S. Williams III 29
Dennis R. Glass 2
-----------------------------------------------------------
-----------------------------------------------------------
</TABLE>
A straight life annuity is the normal benefit form, but actuarially
equivalent options are available. Participants age 55 and older who have 10
or more years of vested service may retire before normal retirement age 65
with reduced benefits. After three years of service, participants will be 20%
vested and an additional 20% interest will be vested for each succeeding year
of service in excess of three. Eligible spouses will receive survivor
benefits following the death of the participant.
SEVERANCE COMPENSATION AGREEMENTS
The Company has entered into Severance Compensation Agreements with all
executive officers and several other officers. These agreements provide for
certain payments upon termination of employment or reduction in duties or
compensation following certain events constituting a "change in control". The
agreements may be terminated or modified by the Board of Directors at any time
prior to a change in control. The benefits granted upon termination of
employment are (i) continuation (for up to twenty-four months) in the
Company's hospital, medical, accident, disability, and life insurance plans as
provided to the executive immediately prior to the date of his termination of
employment and (ii) a plan distribution. The distribution shall consist of
(1) the payment in full of all pending performance share awards as if fully
earned, using the higher of the market price or price of the Company's stock
in the transaction
17
<PAGE>
effecting the change in control, and (2) delivery of an annuity to equal
increased benefits under the Pension Plan resulting from an additional three
years of credited service (subject to the Pension Plan's maximum on crediting
service).
By an amendment to the Severance Compensation Agreements adopted in
March 1992, the maximum benefits are limited to two times the sum of the
executive's most recent annualized base salary plus the last earned bonus
under the Company's Annual Incentive Plan (not to exceed certain tax law
limitations). The amendment also provides that if the Performance Share Plan
had terminated before the time of payment of benefits, the amount of benefits
under the Severance Compensation Agreements would be reduced by the amount of
the payment due the executive under the terms of the Performance Share Plan.
REPORT ON EXECUTIVE COMPENSATION
The Compensation and Management Succession Committee ("Committee") has
oversight and ultimate control of the compensation paid to the Chief Executive
Officer and other officers and employees of the Company and its subsidiaries,
whether by salary or under other compensation plans, including the Company's
Annual Incentive Plan and its Performance Share Plan. This Report on
Executive Compensation ("Report") was prepared by the Committee.
There were three primary types of compensation paid to executive
officers of the Company in 1993: (i) salary, (ii) Annual Incentive Plan
bonuses, and (iii) long-term incentive Performance Share Plan awards which are
further described below. A significant portion of the Chief Executive
Officer's total compensation is incentive compensation. As reflected in the
Summary Compensation Table, for 1993, 66% of the Chief Executive
Officer's total compensation was incentive compensation.
SALARY
The Company utilizes a nationally recognized salary administration
methodology whereby each position, including that of Chief Executive Officer,
has assigned points based upon several factors including level of
responsibility. The number of points translates into a salary range which is
reviewed by the Company's compensation consultants and compared to similar
positions in other companies. Some of the companies in the peer group index
listed on page 23 are included in the comparison group. Data from at
least one other nationally recognized compensation consulting source is
reviewed to confirm the Chief Executive Officer's salary range. Individual
competence, length of time within a position, and comparisons to salaries for
similar positions in other companies guide determination of where an
individual employee's salary falls within the position's salary range.
Company performance may be a factor in determining the amount of any base
salary increase. Based upon such an analysis, which was prepared for the
Committee's review, the Committee established the Chief Executive Officer's
current salary at $445,000.
18
<PAGE>
ANNUAL INCENTIVE PLAN
In 1973, the Company adopted its Management Incentive Plan ("MIP"),
which in 1990 was amended and renamed the Annual Incentive Plan ("AIP"). The
AIP, like the MIP, was established for the purpose of rewarding, retaining,
and providing incentive for outstanding performance for those employees who
contribute most to the operating progress of the Company. The AIP is
administered by the Committee. Employees are selected and individual bonuses
are allotted to them by the Company's executive officers with the approval of
the Chief Executive Officer. The Committee sets the total amount of bonuses
payable for each year and reviews the methodology used to determine individual
bonuses. The Committee specifically reviews and approves each annual bonus
paid to the executive officers, including the Chief Executive Officer.
Currently, there are 96 employees in the AIP, including the Chief
Executive Officer. Each employee is assigned a target bonus percentage which
ranges from 8% to 45% of salary. The Chief Executive Officer's target bonus
percentage is 45%. Bonus payments, when made, may range from 33% to 200% of
the target. The AIP provides that the total of all AIP bonuses cannot exceed
5% of the Company's pretax income for that year. The Committee is authorized
to determine the exact percentage of AIP bonuses earned, subject to the
maximum, and may direct that no AIP bonuses be paid. The Committee has
authority to determine to what extent a nonrecurring gain or loss may be
included in the amount of pretax income in the administration of this plan.
An individual's AIP bonus is based upon Company-wide performance and, in
addition, may also be based upon divisional and/or individual performance.
The Chief Executive Officer's AIP bonus is based on the Company's achieved
earnings per share according to a range fixed for the year at the Committee's
March meeting.
The Committee believes that its administration of the AIP relates
bonuses to Company performance. For the years 1985-1988, no AIP bonuses were
paid to the Chief Executive Officer.
Under the terms fixed by the Committee, the Company's 1993 earnings per
share resulted in Mr. Nabers earning an AIP bonus of 90% of his base salary
or $365,700. The total payout to all employees under the AIP for 1993
was $2,583,800, which is 3% of the Company's pretax
earnings.
PERFORMANCE SHARE PLAN
The Performance Share Plan was initially adopted in 1973 by stockholders
to motivate officers and key employees, including the Chief Executive Officer,
to focus on the Company's long-range earnings performance, to reward them
based on long-range results, and to provide a process by which officers and
key employees may increase stockholdings in the Company. Under the
Performance Share Plan, officers and key employees of the Company and its
wholly-owned subsidiaries, who are determined by the Committee to have a
substantial opportunity to influence the long-term growth in profitability of
the Company, are eligible to
19
<PAGE>
participate in the Performance Share Plan. Those selected by the Committee
are awarded performance shares on an annual basis, each of which has a
potential value equal to the market value of one share of Company Common Stock
at the date payment may be earned. If an award is earned, unless deferment is
elected under the Deferred Compensation Plan for Officers (see page 14),
the employees receive payment (in cash approximately equal to the income tax
liability on the award and the balance in Common Stock) of all or part of
the award four years after the award date, based on the award conditions
determined by the Committee at the time of the award. With respect to 1993
awards, the number of performance shares awarded was determined by multiplying
the employee's award percentage times base salary plus target AIP bonus,
divided by the average share price of the Company's Common Stock. The Chief
Executive Officer's 1994 award percentage is 40%. For 1993, a total of 38,200
shares were awarded to 23 participants. For further information, see the
"Long-Term Incentive Plan-Awards in Last Fiscal Year" table on page 15
and the accompanying text for a description of how 1993 awards may be earned.
Under the Performance Share Plan, the criterion for payment of
performance share awards is made in accordance with the Company's average
return on average equity for an award period compared with that of a
comparison group of publicly held life insurance companies, multiline insurers
and insurance holding companies during the award period. The comparison group
of companies is comprised of the 40 largest publicly held stock life and
multiline insurance companies as listed in the NATIONAL UNDERWRITER,
"INSURANCE STOCK RESULTS", each having net worth in excess of $100 million,
ranked according to net worth at January 1, 1993, (see page 23). If
the Company's results are below the median of the comparison group no portion
of the award is earned. The Committee believes the operation of the
Performance Share Plan relates long-term incentive compensation to the
Company's long-term performance. For example, no performance shares were
earned by any employees for award periods ending in 1987-1990.
The Company's average return on average equity for the award period
ending in 1992 was above the median of the comparison group and, accordingly,
a partial payment of the award was made. For 1992, Mr. Nabers received
$77,439 in shares of Company Common Stock and cash, representing 45% of his
four-year 1989 performance share award. Mr. Nabers previously had received
47% of his 1989 performance share award in 1991. In 1993, Mr. Nabers received
$413,654 in shares of Company Common Stock and cash, representing 70% of his
1990 performance share award in anticipation of 1993 results placing the
Company near the top 25 percent of the comparison group. After 1993 results
are finally tabulated for the comparison group, in 1994, Mr. Nabers may earn
additional performance shares currently valued at approximately $160,000. No
other payments under the plan will be due Mr. Nabers in 1994.
$1 MILLION LIMIT ON EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended, states
that publicly held corporations may not take tax deductions for amounts
greater than $1 million that are paid annually to executives whose pay must be
disclosed separately in the Company's Proxy
20
<PAGE>
Statement, unless such compensation is "qualified performance-based
compensation". To date, none of the named executives in this Report has
received compensation which exceeds such a $1 million annual limit. The
Company's Annual Incentive Plan and Performance Share Plan previously have
been approved by stockholders and the Company's executive compensation
procedures meet many, though not all, of the requirements necessary to meet
the criteria for "qualified performance-based compensation". Under a
transition rule for plans that have been previously approved by stockholders,
the Company may deduct any annual compensation in excess of $1 million until
1997, provided certain procedural actions are taken by the Committee. The
Committee is presently studying what possible revisions to executive
compensation administration might be required in order to be able to deduct
any covered compensation in excess of $1 million after 1997.
COMPENSATION AND MANAGEMENT
SUCCESSION COMMITTEE
John J. McMahon, Jr., Chairman
Edward L. Addison John W. Woods
Herbert A. Sklenar Ronald L. Kuehn
21
<PAGE>
PERFORMANCE COMPARISON
The following graph compares total returns on the Company's Common Stock
over the last five fiscal years to the Standard & Poor's 500 Stock Index ("S&P
500") and to a peer comparison group ("Peer Group"). Total return values were
calculated based on cumulative total return values assuming reinvestment of
dividends. The shareholder return shown in the graph below is not necessarily
indicative of future performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN(1)
AMONG PROTECTIVE LIFE CORPORATION, S&P 500, AND PEER GROUP(2)
[PERFORMANCE GRAPH FILED UNDER FORM SE]
FOOTNOTES:
(1) Assumes $100 invested on December 31, 1988 in Protective Life
Corporation, S&P 500, and Peer Group Common Stocks including
reinvestment of dividends.
(2) Fiscal Year ending December 31.
22
<PAGE>
The Peer Group index is comprised of the Company and the 40 largest
publicly held stock life and multiline insurance companies as listed in the
NATIONAL UNDERWRITER, "INSURANCE STOCK RESULTS", each having net worth in
excess of $100 million, ranked according to net worth at January 1, 1993.
This group of companies is identical to those companies included in the
Company's Performance Share Plan comparison group of companies. The index
weights individual company returns for stock market capitalization. The
companies included in the Peer Group index are:
Aetna Life & Casualty Company
AFLAC, Inc.
Alfa Corporation
American General Corporation
American Heritage Life Investment Corporation
American International Group, Inc.
American National Insurance Company
Aon Corporation
Capital Holding Corporation
CIGNA Corporation
CNA Financial Corporation
Conseco, Inc.
Delphi Financial Group, Inc.
The Equitable Companies Incorporated
Equitable of Iowa Companies
First Colony Corporation
Home Beneficial Corporation
Independent Insurance Group, Inc.
I.C.H. Corporation
Jefferson-Pilot Corporation
John Alden Financial Corporation
Kansas City Life Insurance Company
Kemper Corporation
The Liberty Corporation
Lincoln National Corporation
National Western Life Insurance Company
The NWNL Companies, Inc.
Old Republic International
Presidential Life Corporation
Protective Life Corporation
Provident Life & Accident Insurance Company of
America
The Statesman Group, Inc.
Sun America, Inc.
Torchmark Corporation
Transamerica Corporation
The Travelers Corporation
Unitrin Incorporated
UNUM Corporation
USLICO Corporation
USLIFE Corporation
Washington National Corporation
The composition of the Peer Group has changed from that used in the
previous year's Proxy Statement. The Equitable Companies Incorporated, Delphi
Financial Group, Inc., First Colony Corporation, John Alden Financial
Corporation, and The Statesman Group, Inc. were added to the Peer Group index
because they are now among the 40 largest companies. American Bankers
Insurance Group, Inc. was deleted because the NATIONAL UNDERWRITER lists it
as a property and casualty insurer; American Travelers Corporation was deleted
because it no longer was among the 40 largest companies; Colonial Companies,
Inc. was deleted because it was acquired by UNUM Corporation; and Kentucky
Central Life Insurance Company was deleted after it was placed in
receivership.
As disclosed in the "Report on Executive Compensation", the Company's
incentive compensation is predominantly based upon comparisons of the
Company's return on average equity (rather than total return) to that of the
Peer Group. The following table sets forth the return on average equity and
average return on average equity for the Company and the median for the Peer
Group. As described in the "Report on Executive Compensation", the
Company's results directly affect incentive compensation.
23
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
PROTECTIVE LIFE CORPORATION PEER GROUP MEDIAN(1)
----------------------------------------------------------------------------
YEAR ROE(2) AVERAGE ROE(3) ROE(2) AVERAGE ROE(3)
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993 18.6% 15.6% -- --
1992 15.5 13.5 12.1% 10.2%
1991 15.1 9.8 11.1 9.8
1990 13.0 8.6 9.1 10.9
1989 10.5 8.5 11.7 11.4
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
FOOTNOTES:
<FN>
(1)The median is the middle value in a distribution, above and below which
lie an equal number of values.
(2)Return on average equity for the year shown.
(3)Average return on average equity for the award period then in effect.
For 1989, the award period was for the five-year period ending with
1989. For 1990-1993, the award period was for the four-year period
ending with the year shown.
</TABLE>
CERTAIN TRANSACTIONS
Director Woods is Chairman of the Board and Chief Executive Officer of
AmSouth Bancorporation, a bank holding company which owns all of the stock of
AmSouth Bank N.A. In addition to Mr. Woods, four of the directors of the
Company, including Director Rushton, are also directors of such bank and four
are directors of AmSouth Bancorporation. AmSouth Bancorporation and
subsidiaries maintain a group life insurance program with Protective Life
(which through reinsurance is shared with two other companies). AmSouth Bank
N.A. serves as Trustee for Protective Life's retired lives reserve program.
In 1993, Protective Life and the Company paid $1,300,421 in credit and
mortgage insurance and annuity commissions and $2,418,996 in interest,
mortgage loan service fees, and other charges to AmSouth Bank N.A. and other
subsidiaries of AmSouth Bancorporation.
In 1993, Protective Life and the Company paid $30,817 in interest,
mortgage loan service fees, credit insurance commissions, and other charges to
National Bank of Commerce, which has two directors in common with the Company.
In 1993, the Company paid $1,932,833 in accident and health insurance
premiums to Southeast Health Plan, Inc., which had one director in common with
the Company.
During 1993, the Company paid $409,878 in fees to Equifax, Inc. which
has one director in common with the Company.
During 1993, the following corporations with which one or more of the
Company's directors were affiliated paid Protective Life premiums, fees, or
investment product deposits for various types of insurance as follows:
Alabama Power Company................................$ 696,421
AmSouth Bancorporation and subsidiaries.............. 4,353,541
Coca-Cola Bottling Company United, Inc............... 133,544
24
<PAGE>
McWane, Inc. and affiliates..........................$ 99,706
National Bank of Commerce............................ 96,852
Pattillo Construction Company, Inc................... 44,555
Sonat Inc. and subsidiaries.......................... 546,000
Southern Company Services, Inc. and affiliates....... 166,112
Southern Research Institute.......................... 71,017
Vulcan Materials Company............................. 4,098,077
PROPOSALS TO AMEND
THE CERTIFICATE OF INCORPORATION
The Board of Directors has adopted a resolution approving, and
recommends the adoption by the stockholders of, an amendment to the 1985
Restated Certificate of Incorporation of the Company, which would increase the
number of shares of authorized Common Stock of the Company from 20,000,000
shares of the par value of $0.50 per share to 80,000,000 shares of the par
value of $0.50 per share.
The Board of Directors has also adopted a resolution approving, and
recommends the adoption by stockholders of, an amendment to the 1985 Restated
Certificate of Incorporation of the Company, which would increase the
authorized Preferred Stock of the Company from 1,000,000 shares of the par
value of $1.00 per share to 4,000,000 shares of the par value of $1.00 per
share.
The resolution to be submitted to the stockholders is as follows:
The first sentence of Section 4.1 is hereby deleted from the
1985 Restated Certificate of Incorporation of Protective Life
Corporation and there is hereby inserted in lieu thereof the
following: "The total number of shares of all classes of
capital stock which the Corporation shall have authority to
issue is eighty-four million (84,000,000), of which eighty
million (80,000,000) shares of the par value of $0.50 per
share are to be of a class designated `Common Stock' and four
million (4,000,000) shares of the par value of $1.00 per share
are to be of a class designated `Preferred Stock'."
REASONS FOR THE INCREASE IN AUTHORIZED SHARES
The primary purpose of the proposed increase in the number of authorized
shares of Common Stock and Preferred Stock is to provide additional shares for
use in connection with possible public equity offerings, possible future
acquisitions, and possible future stock splits. Management expects to register
Preferred Stock of the Company under the Securities Act of 1933, probably on
a delayed (or "shelf") basis, to give the Company flexibility in connection
with future acquisition opportunities. The terms of any Preferred Stock to be
issued, including dividend rates, conversion prices, voting rights, redemption
prices and similar matters, will be determined by the Board of Directors or a
duly authorized committee thereof at the time of issuance without further
stockholder authorization. There are no other present plans, pending
negotiations, understandings or arrangements that would involve the
issuance of additional
25
<PAGE>
Common Stock or Preferred Stock. However, if the proposed increase in the
number of authorized shares is approved by stockholders, the Company will have
increased flexibility to effect equity offerings, acquisitions, or stock splits
as opportunities arise or circumstances change. Issuance of stock in connection
with such possible future transactions would be subject to approval by the
Board of Directors.
VOTE REQUIRED
To approve the amendment, the affirmative vote of the holders of a
majority of the shares issued, outstanding and entitled to vote is required.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE
PROPOSALS TO AMEND THE COMPANY'S 1985 RESTATED CERTIFICATE OF INCORPORATION.
OTHER INFORMATION
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Coopers & Lybrand was selected as the principal independent
public accountants for the Company and its subsidiaries for 1993. It is
anticipated that Coopers & Lybrand will be selected again in 1994 as the
Company's principal independent public accountants. This firm has served as
independent public accountants for the Company and its predecessor since 1974.
Representatives of Coopers & Lybrand are expected to attend the Annual Meeting
of Stockholders and will have an opportunity to make a statement if they so
desire and to respond to appropriate questions.
In evaluating the selection of Coopers & Lybrand as principal
independent public accountants for the Company and its subsidiaries, the Audit
Committee of the Board of Directors has considered generally the non-audit
professional services that Coopers & Lybrand will likely be asked to provide
for the Company during 1994, and the effect which performing such services
might have on audit independence. It has reviewed the non-audit services
which were performed in 1993 and determined that they were consistent with
Company policy.
ANNUAL REPORTS AVAILABLE
A COPY OF THE COMPANY'S 1993 ANNUAL REPORT ON FORM 10-K TO THE
SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO ANY
STOCKHOLDER WHO REQUESTS SUCH REPORT IN WRITING FROM JOHN K. WRIGHT, VICE
PRESIDENT, SENIOR ASSOCIATE COUNSEL, AND SECRETARY, PROTECTIVE LIFE
CORPORATION, P. O. BOX 2606, BIRMINGHAM, ALABAMA 35202.
STOCKHOLDER PROPOSALS
In order to be included in the proxy materials for the Company's 1995
Annual Meeting of Stockholders, any proposals of stockholders intended to be
presented at the 1995 Annual Meeting of Stockholders must be received in
written form by the Company's Secretary at the principal office of the Company
at the address stated above on or before December 1, 1994.
26
<PAGE>
[Protective Life Corporation Logo]
P. O. Box 2606
Birmingham, Alabama 35202
PROXY
The undersigned hereby appoints William J. Rushton III, Drayton
Nabers, Jr., and John K. Wright, and each of them, with power of substitution,
as proxies to represent and vote on behalf of the undersigned all shares of
Common Stock of Protective Life Corporation which the undersigned is entitled
to vote at the Annual Meeting of Stockholders to be held at the principal
office of the Company, 2801 Highway 280 South, Birmingham, Alabama 35223 on
Monday, May 2, 1994 at 10:00 a.m., CDT, and at any adjournments thereof,
hereby revoking all proxies heretofore given with respect to such shares, upon
the following proposals more fully described in the notice of, and Proxy
Statement dated March 25, 1994 for, said meeting (receipt whereof is hereby
acknowledged).
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
<PAGE>
<TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
1. ELECTION OF DIRECTORS / / FOR all nominees listed below (except as marked to the contrary below)
/ / WITHHOLD AUTHORITY to vote for all nominees listed below
<S> <C> <C> <C> <C>
WILLIAM J. RUSHTON III JOHN W. WOODS CRAWFORD T. JOHNSON III WILLIAM J. CABANISS, JR. H. G. PATTILLO
DRAYTON NABERS, JR. EDWARD L. ADDISON JOHN J. MCMAHON, JR. A. W. DAHLBERG JOHN W. ROUSE, JR.
ROBERT T. DAVID RONALD L. KUEHN, JR. HERBERT A. SKLENAR
INSTRUCTION: TO WITHHOLD AUTHORITY to vote for any individual nominee, write that nominee's name here:__________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 2 AND 3.
2. APPROVAL OF THE AMENDMENT TO THE 1985 RESTATED CERTIFICATE OF INCORPORATION OF PROTECTIVE LIFE CORPORATION SET FORTH IN THE
PROXY STATEMENT DATED MARCH 25, 1994, INCREASING THE NUMBER OF SHARES OF AUTHORIZED COMMON STOCK.
/ / FOR / / AGAINST / / ABSTAIN
3. APPROVAL OF THE AMENDMENT TO THE 1985 RESTATED CERTIFICATE OF INCORPORATION OF PROTECTIVE LIFE CORPORATION SET FORTH IN THE
PROXY STATEMENT DATED MARCH 25, 1994, INCREASING THE NUMBER OF SHARES OF AUTHORIZED PREFERRED STOCK.
/ / FOR / / AGAINST / / ABSTAIN
4. UNLESS "AUTHORIZATION WITHHELD" IS MARKED BELOW, THE PERSONS NAMED ABOVE AS PROXIES ARE AUTHORIZED TO VOTE IN ACCORDANCE WITH
THEIR OWN JUDGMENT UPON SUCH OTHER MATTER OR MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. / / AUTHORIZATION WITHHELD
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
SPECIFIED ABOVE BY THE UNDERSIGNED. IF NO DIRECTION IS MADE
WITH RESPECT TO A PROPOSAL, THIS PROXY WILL BE VOTED "FOR"
SUCH PROPOSAL.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Dated ________________________________________, 1994
____________________________________________________
Signature
____________________________________________________
Signature
Please sign exactly as your name appears hereon, date, and return
promptly in the enclosed postage prepaid envelope.
