<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
PROTECTIVE LIFE CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
PROTECTIVE LIFE CORPORATION
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
PROTECTIVE LIFE CORPORATION PROTECTIVE [LOGO]
Post Office Box 2606
Birmingham, Alabama 35202
205-879-9230
March 24, 1995
To the Stockholders of Protective Life Corporation:
You are invited to attend the 1995 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 1, 1995 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 1994 Annual Report to Stockholders.
At the Annual Meeting, stockholders will elect directors for the forthcoming
year. 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.
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
TABLE OF CONTENTS
PAGE
Letter from the Chairman of the Board, President and
Chief Executive Officer. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Notice of 1995 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. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Pension Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Severance Compensation Agreements . . . . . . . . . . . . . . . . . . . . . 16
Compensation and Management Succession Committee's Report on
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Annual Incentive Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Performance Share Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 18
$1 Million Limit on Executive Compensation . . . . . . . . . . . . . . . . 19
Performance Comparison. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Certain Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . 23
Annual Reports Available . . . . . . . . . . . . . . . . . . . . . . . . . 23
Stockholder Proposals. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
* To be voted on at the Annual Meeting of Stockholders
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 1, 1995
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 1, 1995 at 10:00 a.m.,
CDT, for the purpose of considering and acting upon the following:
(a) the election of 12 directors to serve for the ensuing year and
(b) 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 10, 1995 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 24, 1995
2
<PAGE>
PROTECTIVE LIFE CORPORATION
P. O. BOX 2606
BIRMINGHAM, ALABAMA 35202
PROXY STATEMENT DATED MARCH 24, 1995
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 1, 1995
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 1,
1995. 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.
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 and have the
effect of votes against the proposal being voted upon.
As votes are received they are compared with the list of stockholders as of
March 10, 1995 to ensure that the stockholders are entitled to vote and are
voting their authorized number of shares. Votes for each proposal are tallied
by the Internal Audit Department of the Company.
3
<PAGE>
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 10,
1995 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 1,945,007
shares were held as treasury shares, leaving 13,723,224 shares issued,
outstanding and entitled to vote at the Annual Meeting.
4
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information concerning beneficial ownership
of the Company's Common Stock as of March 10, 1995 with respect to (i) persons
the Company believes to be the beneficial owners 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>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP(1) PERCENT
NAME OF ------------------------- OF
BENEFICIAL OWNER SOLE POWER SHARED POWER(2) CLASS(1)
---------------- ---------- ------------ -----
<S> <C> <C> <C>
William J. Rushton III 339,136(3) 5,547(4) 2.5%
John W. Woods 3,008 -0- *
Crawford T. Johnson III 29,000 2,250 *
William J. Cabaniss, Jr. 48,072 38,488 *
H. G. Pattillo 4,000 10,000 *
Drayton Nabers, Jr. 37,332(5) 5,127 *
Edward L. Addison 3,408 -0- *
John J. McMahon, Jr. 5,523(6) 9,000 *
A. W. Dahlberg 1,136 -0- *
John W. Rouse, Jr. 1,236 -0- *
Robert T. David 1,929 -0- *
Ronald L. Kuehn, Jr. 888 -0- *
Herbert A. Sklenar 329 683 *
Ormond L. Bentley 13,556(7) -0- *
R. Stephen Briggs 21,724(8) -0- *
John D. Johns 2,448(9) 400 *
A. S. Williams III 20,649(10) -0- *
All current directors
and executive officers as
a group (23 individuals) 572,108(11)(12) 72,945 4.7%
AmSouth Bank of Alabama in
various fiduciary
capacities(13) -0- 1,732,679(13) 12.6%(13)
Nicholas Company, Inc.(14) 1,367,610(14) -0- 10.0%(14)
Firstar Corporation (15) 1,005,475 59,650(15) 7.8%(15)
<FN>
-------------------------------
*less than one percent
(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.
(3) Includes 15,125 shares held in the Company's 401(k) and Stock Ownership
Plan for which Mr. Rushton has sole voting power.
5
<PAGE>
(4) Shares owned by the wife of Mr. Rushton.
(5) Includes 2,769 shares held in the Company's 401(k) and Stock Ownership
Plan for which Mr. Nabers has sole voting power. Also, includes 10,052
share equivalents allocated to Mr. Nabers' deferred compensation account
pursuant to the terms of the Company's Deferred Compensation Plan for
Officers. Upon distribution, share equivalents will be distributed in
shares of Company Common Stock. Such shares will be issued directly to
Mr. Nabers who will have sole voting power over the shares at that time.
(6) Includes 951 share equivalents allocated to 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.
Upon distribution, share equivalents will be distributed in shares of
Company Common Stock. Such shares will be issued directly to Mr. McMahon
who will have sole voting power over the shares at that time.
(7) Includes 1,410 shares held in the Company's 401(k) and Stock Ownership
Plan for which Mr. Bentley has sole voting power. Also, includes 4,161
share equivalents allocated to Mr. Bentley's deferred compensation
account pursuant to the terms of the Company's Deferred Compensation Plan
for Officers. Upon distribution, share equivalents will be distributed
in shares of Company Common Stock. Such shares will be issued directly
to Mr. Bentley who will have sole voting power over the shares at that
time.
(8) Includes 5,698 shares held in the Company's 401(k) and Stock Ownership
Plan for which Mr. Briggs has sole voting power. Also, includes 4,475
share equivalents allocated to Mr. Briggs' deferred compensation account
pursuant to the terms of the Company's Deferred Compensation Plan for
Officers. Upon distribution, share equivalents will be distributed in
shares of Company Common Stock. Such shares will be issued directly to
Mr. Briggs who will have sole voting power over the shares at that time.
(9) Includes 215 shares held in the Company's 401(k) and Stock Ownership Plan
for which Mr. Johns has sole voting power. Also, includes 1,133 share
equivalents allocated to Mr. Johns' deferred compensation account
pursuant to the terms of the Company's Deferred Compensation Plan for
Officers. Upon distribution, share equivalents will be distributed in
shares of Company Common Stock. Such shares will be issued directly to
Mr. Johns who will have sole voting power over the shares at that time.
(10) Includes 5,563 shares held in the Company's 401(k) and Stock Ownership
Plan for which Mr. Williams has sole voting power. Also, includes 4,716
share equivalents allocated to Mr. Williams' deferred compensation
account pursuant to the terms of the Company's Deferred Compensation Plan
for Officers. Upon distribution, share equivalents will be distributed
in shares of Company Common Stock. Such shares will be issued directly
to Mr. Williams who will have sole voting power over the shares at that
time.
(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, 1994 in
28,210 shares held in the Company's 401(k) and Stock Ownership Plan,
which owned a total of 628,333 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 396,902 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. Also,
includes 36,225 share equivalents allocated to the deferred compensation
accounts of participating directors and executive officers as a group
pursuant to the Company's Deferred Compensation Plan for Directors Who
Are Not Employees of the Company and the Company's Deferred Compensation
Plan for Officers.
(13) AmSouth Bank of Alabama (formerly, 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, 1994, of 1,737,695 shares of
Common Stock of the Company, for which the bank has no sole voting or
investment power, but has shared voting power with respect to 1,732,679
shares and shared investment power with respect to 1,392,471 shares.
AmSouth Bank of Alabama 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 of
6
<PAGE>
Alabama reported its beneficial ownership as 12.67%. The table shows the
percentage based on 13,723,224 shares of Common Stock outstanding on
March 10, 1995.
(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, 1994, of
1,367,610 shares of Common Stock of the Company. Nicholas Company, Inc.
has sole investment power and no voting power with respect to 1,367,610
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, 1994, of 930,400
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 930,400 shares. Nicholas Company,
Inc. reported its beneficial ownership as 9.99%. The table shows the
percentage based on 13,723,224 shares of Common Stock outstanding on
March 10, 1995.
(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, 1994, of
1,065,725 shares of Common Stock of the Company. Firstar Corporation has
sole voting power with respect to 956,075 shares, sole investment power
with respect to 1,005,475 shares, shared voting power with respect to
58,150 shares, and shared investment power with respect to 59,650 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, 1994, of
1,065,125 shares of Common Stock of the Company. Firstar Investment
Research & Management Company has sole voting power with respect to
488,500 shares, sole investment power with respect to 537,900 shares,
shared voting power with respect to 521,170 shares, and shared investment
power with respect to 527,225 shares. Firstar Corporation reported its
beneficial ownership as 7.8%, which it has advised the Company includes
beneficial ownership by its subsidiary. The table shows the percentage
based on 13,723,224 shares of Common Stock outstanding on March 10, 1995.
</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 twelve 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 1996 Annual Meeting of Stockholders and thereafter until his successor shall
have been elected and shall qualify, except as otherwise provided in the
By-laws.
Crawford T. Johnson III will retire as director at the Annual Meeting of
Stockholders having reached the retirement age fixed in the Company's 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 Mr. Nabers, has any position or office with
the Company or any subsidiary. The table and notes also indicate the nominees'
present committee memberships.
<TABLE>
<CAPTION>
PROTECTIVE
LIFE OR
COMPANY
PRINCIPAL OCCUPATION DIRECTOR
NAME AGE AND DIRECTORSHIPS SINCE
---- --- -------------------- ----------
<C> <C> <S> <C>
William J. Rushton III 65 Chairman Emeritus of the Company and, formerly, its Chairman
of the Board, its Chairman of the Board and Chief Executive
Officer, and its President; Director, Alabama Power Company,
AmSouth Bancorporation, AmSouth Bank of Alabama, and The
Southern Company. (a)(b)(e) 1956(h)
John W. Woods 63 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
of Alabama and, formerly, its Chairman of the Board and Chief
Executive Officer; Director, AmSouth Bancorporation, AmSouth
Bank of Alabama, Alabama Power Company, and McWane, Inc.
(a)(c)(e) 1970
8
<PAGE>
<CAPTION>
PROTECTIVE
LIFE OR
COMPANY
PRINCIPAL OCCUPATION DIRECTOR
NAME AGE AND DIRECTORSHIPS SINCE
---- --- -------------------- ----------
<C> <C> <S> <C>
William J. Cabaniss, Jr. 56 President of Precision Grinding, Inc. (machine grinding);
Director of Precision Grinding, Inc., AmSouth Bancorporation,
AmSouth Bank of Alabama, and Birmingham Steel Corporation.
(a)(b)(d) 1974(i)
H. G. Pattillo 68 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. (f) 1979
Drayton Nabers, Jr. 54 Chairman of the Board, President and Chief Executive Officer
of the Company and, formerly, its President and Chief Executive
Officer and 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)(g) 1982
Edward L. Addison 65 Retired Chairman of the Board and Chief Executive 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, Phelps Dodge
Corporation and CSX Corporation. (d)(e) 1985
John J. McMahon, Jr. 52 President of McWane, Inc. (pipe and valve 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)(c)(e) 1987
A. W. Dahlberg 54 Chairman of the Board, President and Chief Executive Officer
of The Southern Company (electric utilities) and, formerly,
its President; 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., Alabama Power Company, Southern Nuclear Operating
Company, Trust Company of Georgia, Trust Company Bank, and
Equifax, Inc. (c)(f) 1987
9
<PAGE>
<CAPTION>
PROTECTIVE
LIFE OR
COMPANY
PRINCIPAL OCCUPATION DIRECTOR
NAME AGE AND DIRECTORSHIPS SINCE
---- --- -------------------- ----------
<C> <C> <S> <C>
John W. Rouse, Jr. 57 President and Chief Executive Officer, 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)(b)(d) 1988
Robert T. David 56 Garrett Professor of Business Administration, Berry College;
formerly, Vice President and Dean, School of Business, Samford
University; formerly, President and Chief Executive Officer of
Polatomic, Inc.; Director, Stockham Valve and Fittings, Inc.,
Polatomic, Inc., and Triad Guaranty Inc. (a)(d)(f) 1988
Ronald L. Kuehn, Jr. 59 Chairman of the Board, President and 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 of Alabama, Southern Natural Gas Company, Union
Carbide Corporation, Praxair, Inc., and Sonat Offshore Drilling
Inc. (a)(b)(c) 1990
Herbert A. Sklenar 63 Chairman and Chief Executive Officer of Vulcan Materials
Company (construction materials and chemicals) and, formerly,
its President and Chief Executive Officer; Director, Vulcan
Materials Company, AmSouth Bancorporation, AmSouth Bank of
Alabama, and Temple-Inland, Inc. (a)(b)(c) 1992
<FN>
--------------------------------
(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
</TABLE>
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 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 did not meet during 1994.
The Finance and Investments 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 1994.
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 1994.
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 three times during 1994.
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 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
11
<PAGE>
recommendations made to it in writing on a timely basis. The Board Structure
and Nominating Committee met two times during 1994.
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 did not meet during 1994.
Each of the committees reports its actions taken to the Board of Directors.
The Board of Directors met seven times during 1994. During 1994, no
director attended fewer than 75% of the total number of meetings of the Board
and the committees of which he was a member.
DIRECTOR'S FEES
Mr. Nabers does not receive director's fees. Other directors receive an
annual director's fee of $20,000, and $1,000 (increased from $800 in March 1995)
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 directors who reside in Birmingham receive $1,000
and the directors who do not reside in Birmingham ("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 non-Birmingham directors
are Messrs. Addison, Dahlberg, and Pattillo.
In 1994, Mr. Rushton received $50,000 for his service as Chairman of the
Board through May 1994. Mr. Rushton also received payment of earned performance
share awards that were awarded to him during his tenure as Chief Executive
Officer.
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 in
stock or cash 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, Dahlberg, Kuehn, and
Sklenar. Messrs. McMahon, Woods, Dahlberg, Kuehn, and Sklenar are executive
officers of McWane, Inc., AmSouth Bancorporation, The Southern Company, Sonat
Inc., and Vulcan Materials Company, respectively.
12
<PAGE>
No member of the Committee was an officer or employee of the Company or any
of its subsidiaries at any time during 1994. Also, no member of the Committee
was formerly an officer of the Company or any of its subsidiaries.
During 1994, McWane, Inc. and National Bank of Commerce of Birmingham, with
which Committee member Mr. McMahon was affiliated, paid the Company's principal
operating subsidiary, Protective Life Insurance Company or its affiliates
("Protective Life") premiums, fees, or investment product deposits for various
types of insurance in the amounts of $106,023 and $75,585, respectively.
Likewise, Sonat Inc., with which Committee member Mr. Kuehn was affiliated, and
Vulcan Materials Company, with which Committee member Mr. Sklenar was
affiliated, paid Protective Life premiums, fees, or investment product deposits
for various types of insurance in the amounts of $440,000 and $4,222,189,
respectively.
Mr. Rushton, the Company's Chairman Emeritus (formerly, its Chairman of the
Board), serves as a director of AmSouth Bancorporation. Mr. Woods, the Chairman
of the Board and Chief Executive Officer of AmSouth Bancorporation, serves 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 of Alabama serves
as Trustee for Protective Life's retired lives reserve program. In 1994,
Protective Life and the Company paid $1,367,145 in credit and mortgage insurance
and annuity commissions and $3,539,377 in interest, mortgage loan service fees,
and other charges to AmSouth Bank of Alabama and other subsidiaries of AmSouth
Bancorporation. Additionally, during 1994, 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 $6,553,930.
Mr. Rushton also serves as a director of The Southern Company. Mr.
Dahlberg, the Chairman of the Board, President and Chief Executive Officer of
The Southern Company, serves on the Company's Committee, and Mr. Addison,
formerly, the Chairman of the Board and Chief Executive Officer of The Southern
Company, served on the Company's Committee through May 1994. During 1994,
affiliates of The Southern Company paid Protective Life premiums, fees, or
investment product deposits for various types of insurance in the amount of
$192,596.
13
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-----------------------------------------------------------
OTHER LONG-TERM ALL
ANNUAL INCENTIVE PLAN OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1)(2) BONUS(1)(2)(3) COMPENSATION PAYOUTS COMPENSATION(5)
(1)(3)(4)
(a) (b) (c) (d) (e) (h) (i)
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DRAYTON NABERS, JR. 1994 $438,550 $400,500 $1,188 $605,979(6) $4,500
Chairman of the Board, President and 1993 398,583 365,700 2,238 520,122 6,746
Chief Executive Officer 1992 339,769 226,800 7,488 77,439 6,546
----------------------------------------------------------------------------------------------------------------------------------
JOHN D. JOHNS 1994 268,333 189,000 -0- 84,457(6) 4,500
Executive Vice President and Chief 1993 60,001 75,020 -0- -0- -0-
Financial Officer since October 1993
----------------------------------------------------------------------------------------------------------------------------------
R. STEPHEN BRIGGS 1994 268,333 153,900 3,168 236,479(6) 4,500
Executive Vice President 1993 222,392 149,100 4,218 204,345 6,746
1992 185,250 71,900 9,468 40,262 6,546
----------------------------------------------------------------------------------------------------------------------------------
A. S. WILLIAMS III 1994 252,500 153,000 2,970 255,482(6) 4,500
Senior Vice President, Investments and 1993 227,008 137,800 4,020 217,077 6,746
Treasurer 1992 208,333 126,000 9,270 39,022 6,546
----------------------------------------------------------------------------------------------------------------------------------
ORMOND L. BENTLEY 1994 211,300 107,400 2,970 232,257(6) 4,500
Senior Vice President, Group 1993 200,217 115,800 3,886 193,257 6,746
1992 185,250 89,000 8,395 39,022 6,546
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
<FN>
FOOTNOTES:
(1) For further information, see the "Compensation and Management Succession
Committee's Report on Executive Compensation".
(2) Includes amounts that the named executive officer may have voluntarily
elected to contribute to the Company's 401(k) and Stock Ownership Plan.
(3) Includes amounts that the named executive officer may have voluntarily
deferred under the Company's Deferred Compensation Plan for Officers.
(4) For further information, see the "Long-Term Incentive Plan--Awards In Last
Fiscal Year" table.
(5) Matching contributions to the Company's 401(k) and Stock Ownership Plan.
(6) 1994 long-term compensation is not yet determinable. The amount shown is
the best estimate available as of the date of this Proxy Statement.
</TABLE>
The above table sets forth certain information for the year ended
December 31, 1994 relating to the Chief Executive Officer and the four most
highly compensated executive officers of the Company.
PERFORMANCE SHARE PLAN
LONG-TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
PERFORMANCE OR ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF OTHER PERIOD UNTIL NON-STOCK PRICE-BASED PLANS (IN SHARES)
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. 6,650 shares December 31, 1997 3,325 8,313 11,305
----------------------------------------------------------------------------------------------------------------------------
John D. Johns 2,770 shares December 31, 1997 1,385 3,463 4,709
----------------------------------------------------------------------------------------------------------------------------
R. Stephen Briggs 2,770 shares December 31, 1997 1,385 3,463 4,709
----------------------------------------------------------------------------------------------------------------------------
A. S. Williams III 2,110 shares December 31, 1997 1,055 2,638 3,587
----------------------------------------------------------------------------------------------------------------------------
Ormond L. Bentley 1,790 shares December 31, 1997 895 2,238 3,043
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
In 1994, 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,
1997 are known.
With respect to 1994 awards awarded to the named executive officers, 125%
of the award is earned 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, 170% 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 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>
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
YEARS OF SERVICE
REMUNERATION ----------------------------------------------------------------------------------------------
15 20 25 30 35
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 125,000 $ 28,056 $ 37,408 $ 46,760 $ 56,112 $ 65,464
150,000 34,056 45,408 56,760 68,112 79,464
175,000* 40,056 53,408 66,760 80,112 93,464
200,000* 46,056 61,408 76,760 92,112 107,464
225,000* 52,056 69,408 86,760 104,112 121,464*
250,000* 58,056 77,408 96,760 116,112 135,464*
275,000* 64,056 85,408 106,760 128,112* 149,464*
300,000* 70,056 93,408 116,760 140,112* 163,464*
400,000* 94,056 125,408* 156,760* 188,112* 219,464*
500,000* 118,056 157,408* 196,760* 236,112* 275,464*
600,000* 142,056* 189,408* 236,760* 284,112* 331,464*
700,000* 166,056* 221,408* 276,760* 332,112* 387,464*
800,000* 190,056* 253,408* 316,760* 380,112* 443,464*
900,000* 214,056* 285,408* 356,760* 428,112* 499,464*
1,000,000* 238,056* 317,408* 396,760* 476,112* 555,464*
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
<FN>
_________________________
*Current pension law limits the maximum annual benefit payable at normal
retirement age under a defined benefit plan to $120,000 for 1995 and is subject
to increase in later years. In addition, in 1995, 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 ("Excess
Benefit Plan"), adopted effective September 1, 1984, and amended and restated as
of January 1, 1989, provides for payment, outside of the Protective Life
Corporation Pension Plan ("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>
The above table illustrates estimated gross annual benefits which would be
payable for life in a straight life annuity commencing at normal retirement age
under the Pension Plan and the Excess Benefit Plan for employees with average
compensation (remuneration under the table above) and years of service.
Benefits in the above table are not reduced by social security or other offset
amounts.
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 consecutive whole
months. Only three Annual Incentive Plan bonuses (whether paid or deferred
15
<PAGE>
under a Deferred Compensation Plan maintained by the Company) may be included in
obtaining the average compensation.
The named executives and their estimated length of service as of
December 31, 1994 are provided in the following table.
--------------------------------------------------------
--------------------------------------------------------
NAME YEARS OF SERVICE
--------------------------------------------------------
--------------------------------------------------------
Drayton Nabers, Jr. 16
John D. Johns 1
R. Stephen Briggs 23
A. S. Williams III 30
Ormond L. Bentley 29
--------------------------------------------------------
--------------------------------------------------------
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 Common Stock in the
transaction effecting the change in control, and (2) delivery of an annuity to
equal increased benefits under the Pension Plan and the Excess Benefit Plan
resulting from an additional three years of credited service (subject to the
Pension Plan's maximum on crediting service).
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 Severance Compensation Agreements also provide that if the Performance Share
Plan has terminated before the time of payment of benefits, the amount of
benefits under the Severance Compensation Agreements would be reduced by any
payment to the executive due to the termination of the Performance Share Plan.
COMPENSATION AND MANAGEMENT SUCCESSION COMMITTEE'S
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 1994: (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 1994, 69% of the Chief Executive Officer's total
compensation was incentive compensation.
16
<PAGE>
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 insurance companies of comparable size measured by total
assets and/or revenues. Some of the companies in the peer group index listed on
page 21 are included in the comparison group. Similar salary survey data for
life insurance companies 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
(adjusted for size) guide determination of where an individual employee's salary
falls within the position's salary range. Company performance may also be a
factor in determining the amount of any base salary increase for the Chief
Executive Officer. No specific weights are given to any of the factors
considered by the Committee. Based upon such an analysis, which was prepared
for the Committee's review, the Committee established the Chief Executive
Officer's 1994 base salary at $445,000.
The Committee's compensation strategy for executive officers has generally
been to pay salaries at or below the median which, when supplemented by an
Annual Incentive Plan award, will produce total cash compensation approximately
at the seventy-fifth percentile for Company performance at the seventy-fifth
percentile to that of a comparison group of companies. Growth in earnings per
share and return on average equity are the two principal measures of Company
performance employed by the Committee.
ANNUAL INCENTIVE PLAN
In 1973, the Company adopted an annual cash bonus plan, which in 1990 was
amended and renamed the Annual Incentive Plan ("AIP"). The AIP 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 125 employees in the AIP, including the Chief
Executive Officer. Each employee is assigned a target bonus percentage which
ranges from 4% 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 Committee is authorized to determine the exact percentage of AIP
bonuses earned and may direct that no AIP bonuses be paid.
The AIP provides that the Committee may credit annually to an incentive
reserve for each fiscal year an incentive provision which may not be more than
5% of the Company's pretax income for that year. In 1994, $3,000,000, or 2.8%
of the Company's 1994 pretax income, was credited to the incentive reserve. In
any year the Committee may pay any part or all of the incentive reserve as
awards. Any part of the incentive reserve which is not paid in any year may
remain in the incentive reserve and be carried forward to the next year. 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. No adjustment was made to 1994 pretax income.
17
<PAGE>
An individual's AIP bonus is based upon Company performance and, in
addition, may also be based upon divisional and/or individual performance
criteria specifically related to the officer's responsibilities which are
consistent with overall Company objectives. The Chief Executive Officer's AIP
bonus is based solely on the Company's achieved earnings per share according to
a range fixed for the year at the Committee's March meeting. For the other
named executive officers, 40% to 100% of their respective AIP bonuses are based
upon Company performance.
Under the terms fixed by the Committee, Mr. Nabers would earn a target AIP
bonus of 45% of 1994 base salary if the Company's 1994 operating earnings per
share were $4.05 representing approximately a 16% operating return on average
equity. A maximum bonus, 200% of target or 90% of Mr. Nabers' 1994 base salary
would be paid if the Company's operating earnings were $4.47 representing
approximately a 17.5% operating return on average equity. The Company's 1994
operating earnings per share of $4.76 per share representing approximately a
18.7% operating return on average equity resulted in Mr. Nabers earning a
maximum AIP bonus of 90% of his 1994 base salary, or $400,500. The total payout
to all employees under the AIP for 1994 was $3,088,800, which is 2.9% of the
Company's pretax earnings.
The Committee believes that its administration of the AIP relates bonuses
paid to the Chief Executive Officer to Company performance.
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 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 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, the employee receives 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 1994 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. Each employee is assigned an award percentage which ranges from 20% to
50%, to provide long-term compensation which is competitive to that offered by
insurance companies of comparable size. The Chief Executive Officer's 1994
award percentage is 50%. For 1994, a total of 31,070 shares were awarded to 23
participants. For further information, see the "Long-Term Incentive Plan--
Awards in Last Fiscal Year" table on page 14 and the accompanying text for a
description of how 1994 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
generally comprised of the Company and the 40 largest publicly held stock life
and multiline insurance companies as listed in the NATIONAL UNDERWRITER,
18
<PAGE>
"INSURANCE STOCK RESULTS", each having net worth in excess of $100 million,
ranked according to net worth, excluding downstream affiliates of any companies
in the comparison group (see page 21). If the Company's four-year 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.
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 had previously received 47% of his 1989
performance share award in 1991. For 1993, Mr. Nabers received $520,122 in
shares of Company Common Stock and cash, representing 91.6% of his 1990
performance share award for 1993 results placing the Company in the top 16% of
the comparison group.
Results for the award period ending in 1994 will not be known until the
1994 results for the individual companies included in the comparison group are
available. Based upon information available as of the date of this Proxy
Statement, it is anticipated that the Company's 1994 results will place the
Company in the top 14% of the comparison group which will entitle Mr. Nabers to
receive approximately $605,979 in shares of Company Common Stock and cash,
representing 93% of his 1991 performance share award.
$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 Statement, unless such compensation is
"qualified performance-based compensation". To date, after giving effect to
deferred compensation arrangements, 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 the Company's executive compensation plans,
and the administration thereof, that 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
A. W. Dahlberg John W. Woods
Herbert A. Sklenar Ronald L. Kuehn
19
<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)
[GRAPH]
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994
------------------------------------------------------------
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PROTECTIVE LIFE CORPORATION __________ / / __________ $100 $108 $144 $239 $354 $401
------------------------------------------------------------
S&P 500 .......... - .......... 100 97 126 136 150 152
------------------------------------------------------------
PEER GROUP ----------TRIANGLE---------- 100 83 115 141 155 150
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
<FN>
Footnotes:
(1) Assumes $100 invested on December 31, 1989 in Protective Life
Corporation, S&P 500, and Peer Group Common Stocks including
reinvestment of dividends.
(2) Fiscal Year ending December 31.
</TABLE>
20
<PAGE>
The Peer Group index is generally 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, 1994,
excluding downstream affiliates of any companies in the comparison group. 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 Kemper Corporation
AFLAC, Inc. The Liberty Corporation
Alfa Corporation Life Partners Group, Inc.
American General Corporation Lincoln National
American Heritage Life Corporation
Investment Corporation National Western Life
American Income Holding, Inc. Insurance Company
American International Group, The NWNL Companies, Inc.
Inc. Old Republic International
American National Insurance Presidential Life
Company Corporation
Aon Corporation Protective Life Corporation
CIGNA Corporation Provident Life & Accident
CNA Financial Corporation Insurance Company of
Conseco, Inc. America
Delphi Financial Group, Inc. Providian Corporation
The Equitable Companies Southwestern Life
Incorporated Corporation
Equitable of Iowa Companies The Statesman Group, Inc.
First Colony Corporation Sun America, Inc.
Home Beneficial Corporation Torchmark Corporation
Independent Insurance Group, Unitrin Incorporated
Inc. UNUM Corporation
Jefferson-Pilot Corporation USLICO Corporation
John Alden Financial Corporation USLIFE Corporation
Kansas City Life Insurance Washington National
Company Corporation
The composition of the Peer Group has changed from that used in the
previous year's Proxy Statement. Transamerica Corporation was deleted because
the NATIONAL UNDERWRITER lists it as a financial services company, and The
Travelers Corporation was deleted because it was acquired by Primerica
Corporation. American Income Holding, Inc. and Life Partners Group, Inc. were
added to the Peer Group index because they are now among the 40 largest
companies.
As disclosed in the "Compensation and Management Succession Committee's
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 "Compensation
and Management Succession Committee's Report on Executive Compensation", the
Company's results directly affect incentive compensation.
21
<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>
1994 20.1% 17.3% 10.5%(4) 9.5%(4)
1993 18.6 15.6 12.4 9.7
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
<FN>
FOOTNOTES:
(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. For 1993 and 1994, average
equity excludes net unrealized gains and losses on investments.
(3) Average return on average equity for the four-year award period ending with
the year shown.
(4) The 1994 Peer Group Median is not yet determinable. The percentage shown
is the best estimate available as of the date of this Proxy Statement.
</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 of Alabama. 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 of
Alabama serves as Trustee for Protective Life's retired lives reserve program.
In 1994, Protective Life and the Company paid $1,367,145 in credit and mortgage
insurance and annuity commissions and $3,539,377 in interest, mortgage loan
service fees, and other charges to AmSouth Bank of Alabama and other
subsidiaries of AmSouth Bancorporation.
In 1994, the Company received $65,568 from the National Bank of Commerce of
Birmingham ("NBC"), in connection with the provision of a partial guaranty of
mortgage loan participations previously sold to NBC, which has two directors in
common with the Company.
The Company is a 25% member of a limited liability company formed to
acquire, for $7.0 million, an office building adjacent to the Company's home
office from an affiliate of The Southern Company which will continue to lease
portions of the building. During 1994, the limited liability company received
$1,709,376 in lease payments from affiliates of The Southern Company. The
Southern Company has three directors in common with the Company. Financing for
the purchase of the office building in the amount of $7.3 million was provided
to the limited liability company by Trust Company Bank which has two directors
in common with the Company.
During 1994, 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. . . . . . . . . . . . . . . . . . $ 707,864
AmSouth Bancorporation and subsidiaries. . . . . . . . . 6,553,930
Coca-Cola Bottling Company United, Inc.. . . . . . . . . 143,303
22
<PAGE>
McWane, Inc. and affiliates. . . . . . . . . . . . . . . $ 106,023
National Bank of Commerce of Birmingham. . . . . . . . . 75,585
Pattillo Construction Company, Inc.. . . . . . . . . . . 42,255
Sonat Inc. and subsidiaries. . . . . . . . . . . . . . . 440,000
The Southern Company and affiliates. . . . . . . . . . . 192,596
Southern Research Institute. . . . . . . . . . . . . . . 111,658
SunTrust Banks, Inc. and affiliates. . . . . . . . . . . 5,500,000
Union Carbide Corporation. . . . . . . . . . . . . . . . 3,000,000
Vulcan Materials Company . . . . . . . . . . . . . . . . 4,222,189
OTHER INFORMATION
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Coopers & Lybrand L.L.P. was selected as the principal
independent public accountants for the Company and its subsidiaries for 1994.
It is anticipated that Coopers & Lybrand L.L.P. will be selected again in 1995
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 L.L.P. 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 L.L.P. 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 L.L.P. will likely be asked to
provide for the Company during 1995, and the effect which performing such
services might have on audit independence. It has reviewed the non-audit
services which were performed in 1994 and determined that they were consistent
with Company policy.
ANNUAL REPORTS AVAILABLE
A COPY OF THE COMPANY'S 1994 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 THE SECRETARY OF THE CORPORATION,
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 1996
Annual Meeting of Stockholders, any proposals of stockholders intended to be
presented at the 1996 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 November 25, 1995.
23
<PAGE>
PROTECTIVE [LOGO]
PROTECTIVE LIFE CORPORATION
Post Office Box 2606
Birmingham, Alabama 35202
PROXY
The undersigned hereby appoints Drayton Nabers, Jr., John D. Johns, 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 1,
1995 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
proposal more fully described in the notice of, and Proxy Statement dated
March 24, 1995 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>
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
WILLIAM J. RUSHTON III JOHN W. WOODS 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: ________________________________________________
2. 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
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 __________________________________, 1995
______________________________________________
Signature
______________________________________________
Signature
Please sign exactly as your name appears hereon, date, and return promptly in
the enclosed postage prepaid envelope.
