AMVESTORS FINANCIAL CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
May 15, 1997
Please Sign and Return Immediately
The undersigned hereby appoints Ralph W. Laster, Jr. and Mark V. Heitz, or
either of them, with powers of substitution, attorneys and proxies to
represent the undersigned at the Annual Meeting of Stockholders of AmVestors
Financial Corporation, to be held on May 15, 1997, at the Kansas City Airport
Marriott Hotel, 775 Brasilia Avenue, Kansas City, Missouri 64153, and at any
adjournment or adjournments thereof, with all power which the undersigned
would possess if personally present and to vote all shares of stock which the
undersigned may be entitled to vote at said meeting.
(A) The election of three (3) Class I directors.
Janis L. Andersen
FOR n ________________
WITHHOLD VOTE n
MARK V. HEITZ
FOR n ________________
WITHHOLD VOTE n
ROBERT T. McELROY, M.D.
FOR n ________________
WITHHOLD VOTE n
(To withhold a vote for any individual nominee, check the box marked WITHHOLD
VOTE next to the nominee's name above. To cumulate votes for any nominee[s],
write the number of votes cast for each in the space provided next to the box.
The total number of votes must not exceed three times the number of shares you
hold.)
(B) To ratify the selection of independent public accountants.
FOR n AGAINST n ABSTAIN n
(C) In their discretion, either of the above named agents is authorized to
vote upon any other matters which may come
before the meeting or any adjournment or adjournments thereof.
FOR n AGAINST n ABSTAIN n
The undersigned hereby revokes any and all powers of attorney heretofore given
to vote or act with respect to said shares; and hereby ratifies and confirms
all that said attorneys, proxies or any of them, or their substitutes, may
lawfully do by virtue hereof.
Either of the above named agents at said meeting, either personally or by
substitute, shall exercise all powers of proxies hereunder.
THIS PROXY WILL BE VOTED IN FAVOR OF OR AGAINST THE MATTERS SET FORTH ABOVE AS
YOU MAY INDICATE, BUT IN THE EVENT NO INDICATION IS GIVEN, SAME WILL BE VOTED
IN FAVOR OF THE NOMINEES AND THE PROPOSALS LISTED ABOVE.
Please sign your name on the signature line below in the same way it is
printed on this form. When signing as an attorney, executor, administrator,
trustee or guardian, or on behalf of a corporation, please give your full
title as such.
Dated this________________________day of ______1997
Signature ______________________________________
Signature ______________________________________
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF AMVESTORS
FINANCIAL CORPORATION.
MANAGEMENT RECOMMENDS A VOTE FOR ALL ITEMS.
NOTICE OF ANNUAL MEETING
OF
STOCKHOLDERS
NOTICE IS HEREBY GIVEN, that the Annual Meeting of Stockholders of
AmVestors Financial Corporation will be held at 10:00 a.m. on May 15, 1997,
at the Kansas City Airport Marriott Hotel, 775 Brasilia Avenue, Kansas City,
Missouri 64153 for the following purposes:
A.To elect three (3) Class I directors to serve until their terms
expire or until their successors shall be
elected and qualify;
B.To ratify the selection of independent public accountants; and
C.To act upon any other matters that may come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on March 26,
1997, as the record date for determination of stockholders entitled to notice
of and to vote at the meeting.
You are cordially invited to attend the meeting. Even in the event
that you plan to attend, you are respectfully requested to sign, date and
return the enclosed proxy.
By Order of the Board of Directors
LYNN F. HAMMES, Secretary
Dated: March 31, 1997
Topeka, Kansas
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. WHETHER OR
NOT YOU EXPECT TO ATTEND IN PERSON, PLEASE SIGN AND DATE THE ENCLOSED PROXY
CARD AND RETURN IT. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
AMVESTORS FINANCIAL CORPORATION
555 SOUTH KANSAS AVENUE, TOPEKA, KANSAS 66603
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
MAY 15, 1997
This proxy statement is furnished in connection with the solicitation
of proxies by and on behalf of the Board of Directors of AmVestors Financial
Corporation (hereinafter referred to as "AmVestors" or the "Company"), the
parent company of American Investors Life Insurance Company, Inc.
("American"), American Investors Sales Group, Inc. ("AISG"), AmVestors
Investment Group, Inc. ("AMVIG"), AmVestors Acquisition Subsidiary, Inc.,
AmVestors CBO II, Inc., Financial Benefit Life Insurance Company ("Financial
Benefit"), Annuity International Marketing Corporation ("AIMCOR"), The
Insurance Mart, Inc. (TIM), and Rainbow Card Pack Publications, Inc.
("Rainbow"), to be used in voting at the Annual Meeting of Stockholders of
the Company to be held at 10:00 a.m. on May 15, 1997, at the Kansas City
Airport Marriott Hotel, 775 Brasilia Avenue, Kansas City, Missouri 64153. The
approximate date on which the proxy materials for the 1997 Annual Meeting of
Stockholders are being mailed to stockholders of record is March 31, 1997.
A person giving the enclosed proxy has the power to revoke it at any
time before it is voted by notifying the Secretary of the Company in writing,
by submitting a later-dated proxy or by voting in person at the meeting.
Giving the proxy will not in any way affect the stockholder's right to attend
the annual meeting and vote in person. The cost of this solicitation will be
borne by the Company and may be conducted by mail, in person, or by telephone
by employees of the Company. Such employees will receive no additional
compensation for their participation in the solicitation of proxies on behalf
of the Board of Directors. The Company has retained Beacon Hill Partners,
Inc. to assist in the solicitation of proxies on behalf of the Board of
Directors for a fee of approximately $6,000.00 plus out-of-pocket expenses.
Stockholders of record at the close of business on March 26, 1997,
will be entitled to notice of and to vote at the meeting. On the record date,
there were 13,249,115 issued and outstanding shares of AmVestors Common Stock
("Common Stock"), no par value per share. A majority of the total issued and
outstanding shares entitled to vote at the Annual Meeting will constitute a
quorum. Broker non-votes, abstentions and withhold authority votes all count
for the purpose of determining a quorum. Shares as to which a stockholder
abstains are considered shares entitled to vote on the applicable proposal
and are included in determining whether such proposal is approved (i.e., an
abstention would have the effect of a vote against the applicable proposal).
On the other hand, broker non-votes are not considered shares entitled to
vote on the applicable proposal and are not included in determining whether
such proposal is approved (i.e. a broker non-vote would have no effect on the
outcome of a vote on the applicable proposal). Stockholders of record are
entitled to one vote per share upon all matters presented at the meeting,
with the exception of the election of directors. Stockholders have cumulative
voting rights with respect to the election of directors. Each stockholder
shall have the right to cast as many votes in the aggregate as shall equal
the number of shares held by him multiplied by the number of directors to be
elected, and each stockholder may cast the whole number of votes for one
candidate or may divide his votes among the three candidates in any manner
the stockholder may determine. There are no conditions precedent to the
exercise of such rights.
The shares covered by any properly executed proxy received by the
Board of Directors prior to the meeting will be voted as the stockholder
specifies; HOWEVER, IF ANY SUCH PROXY FAILS TO SPECIFY HOW IT WILL BE VOTED
IN THE ELECTION OF DIRECTORS OR ON ANY PROPOSAL, IT WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES AND FOR THE RATIFICATION OF INDEPENDENT PUBLIC
ACCOUNTANTS LISTED THEREON. IN THE DISCRETION OF THE HOLDER OF THE PROXY,
VOTES FOR THE ELECTION OF DIRECTORS MAY BE CUMULATED IN THE MANNER THAT THE
HOLDER OF THE PROXY DETERMINES. As to any other matter of business which is
properly brought before the meeting, a vote may be cast pursuant to the
accompanying proxy in accordance with the judgment of the holder of the
proxy; however, the Board of Directors does not know of any such other
matters of business as of the date of mailing the proxy materials.
Proposals for the 1998 Annual Meeting of the Company must be
submitted in writing by qualified stockholders on or before December 2, 1997.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, DATE, EXECUTE AND RETURN THE
ENCLOSED FORM OF PROXY.
2
<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth information based upon the records of
the Company and filings with the Securities and Exchange Commission as of
March 26, 1997, with respect to all persons who were known to the Company to
be the beneficial owners of more than five percent (5%) of the Company's
Common Stock (the only class of voting securities outstanding):
<TABLE>
<CAPTION>
AGGREGATE
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
_________________________________ ______________________ __________________
<S> <C> <C>
Heartland Advisors, Inc. 882,206 (1) 6.7%
790 North Milwaukee Street
Milwaukee, WI 53202
Dimensional Fund Advisors, Inc. 726,255 (2) 5.5%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>
(1) Heartland Advisors, Inc. has sole voting power over 849,906 shares of
AmVestors common stock and sole dispositive power over 882,206 shares of
AmVestors common stock.
(2)Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 726,255 shares of
AmVestors Financial Corporation stock as of December 31, 1996, all of which
shares are held in portfolios of DFAInvestment Dimensions Group Inc., a
registered open-end investment company, or in series of the DFA Investment
Trust Company, a Delaware business trust, or the DFAGroup Trust and DFA
Participation Group Trust, investment vehicles for qualified employee benefit
plans, all of which Dimensional Fund Advisors Inc. serves as investment
manager. Dimensional disclaims beneficial ownership of all such shares.
Dimensional has sole voting power over 469,948 shares of AmVestors common
stock and sole dispositive power over 726,255 shares of AmVestors common
stock.
SECURITIES OWNED BY MANAGEMENT
The following table sets forth, as of March 26, 1997, information
with respect to the beneficial ownership of the Company's Common Stock (the
only class of voting securities outstanding) by each director, each nominee,
each executive officer named in the Summary Compensation Table below, and by
all directors, nominees and officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP <F1> PERCENT OF CLASS
_____________________________ __________________________ _______________
<S> <C> <C>
Janis L. Andersen, Director 24,944 <F2> *
Robert G. Billings, Director 12,027 <F3> *
Jack H. Brier, Director 10,278 <F4> *
Frank T. Crohn, Chairman of the Board of Financial Benefit and Director
of the Company 543,296 <F5> 4.1%
Thomas M. Fogt, Executive Vice President of the Company 14,602 <F6> *
Lynn F. Hammes, Executive Vice President, Secretary &
Treasurer of the Company 64,549 <F7> *
Mark V. Heitz, President, General Counsel and Director of the Company 266,216 <F8> 2.0%
Ralph W. Laster, Jr., Chairman, Chief Executive Officer and
Director of the Company 346,064 <F9> 2.6%
R. Rex Lee, M.D., Director 70,073 <F10> *
Robert R. Lee, II, Director 12,282 <F11> *
Jack R. Manning, Director 2,471 <F12> *
John F.X. Mannion, Director 5,092 <F13> *
Robert T. McElroy, M.D., Director 52,465 <F14> *
James V. O'Donnell, Director 4,500 <F15> *
Timothy S. Reimer, Chief Investment Officer of the Company 110,137 <F16> *
Donna J. Rubertone, President and Chief Operating Officer
of Financial Benefit 117,653 <F17> *
James R. Stanley, Executive Vice President of the Company 80,735 <F18> *
All officers and directors as a
group (17 persons) 1,737,384 12.2%
*Less than one percent (1%)
3
<PAGE>
<FN>
<F1> Directors and Officers have sole voting and investment powers of the
shares shown unless held under options or otherwise indicated below.
<F2> Includes 7,000 shares which may be acquired upon the exercise of options
which are currently exercisable.
<F3> Includes 7,000 shares which may be acquired upon the exercise of options
which are currently exercisable.
<F4> Includes 1,600 shares owned by Brier Development Company, Inc. Mr. Brier
is the president and sole shareholder of Brier Development Company, Inc. Also
includes 3,500 shares which may be acquired upon the exercise of options
which are currently exercisable.
<F5> Includes 18,724 shares owned by Mr. Crohn's spouse and warrants owned by
Mr. Crohn's spouse to acquire an additional 4,566 shares. Mr. Crohn disclaims
any beneficial interest in these shares and warrants. Includes 35,703 shares
allocated and held in trust under the Company's ESOPs. Includes 157,661
shares which may be acquired upon the exercise of options and warrants which
are currently exercisable, in addition to the warrants held by Mr. Crohn's
spouse.
<F6> Includes 716 shares owned by the Thomas M. Fogt Revocable Trust and 716
shares owned by the Janice A. Fogt Revocable Trust. Mr. Fogt serves as the
co-trustee of both trusts. Also includes 2,170 shares allocated and held in
trust under the Company's Employee Stock Ownership Plan (ESOP).
<F7> Includes 6,783 shares allocated and held in trust under the Company's
ESOP. Also includes 50,266 shares which may be acquired upon the exercise of
options which are currently exercisable.
<F8> Includes 10,499 shares allocated and held in trust under the Company's
ESOP. Also includes 246,176 shares which may be acquired upon the exercise of
options which are currently exercisable.
<F9> Includes 12,169 shares allocated and held in trust under the Company's
ESOP. Also includes 293,498 shares which may be acquired upon exercise of
options which are currently exercisable.
<F10> Includes 583 shares allocated and held in trust under the Company's
ESOP. Also includes 42,271 shares which may be acquired upon the exercise of
options which are currently exercisable.
<F11> Includes 7,000 shares which may be acquired upon the exercise of options
which are currently exercisable.
<F12> Includes 471 shares which may be acquired upon the exercise of warrants
which are currently exercisable.
<F13> Includes 998 shares which may be acquired upon the exercise of options
and warrants which are currently exercisable.
Mr. Mannion is Chairman of the Board and Chief Executive Officer of Unity
Mutual Life Insurance Company. As of March 18, 1997, Unity Mutual owned 9,634
shares and warrants to acquire an additional 12,658 shares. Mr. Mannion
disclaims any beneficial interest in the shares owned by Unity Mutual.
<F14> Includes 1,340 shares owned by Dr. McElroy's spouse. Also includes 3,500
shares which may be acquired upon exercise of options which are currently
exercisable.
<F15> Includes 3,500 shares which may be acquired upon the exercise of options
which are currently exercisable.
<F16> Includes 7,545 shares allocated and held in trust under the Company's
ESOPs. Also includes 88,936 shares which may be acquired upon the exercise of
options which are currently exercisable.
<F17> Includes 28,344 shares allocated and held in trust under the Company's
ESOP. Includes 13,114 shares which may be acquired upon the exercise of
warrants which are currently exercisable and 50,000 shares which may be
acquired upon exercise of options which are currently exercisable.
<F18> Includes 11,799 shares allocated and held in trust under the Company's
ESOP. Also includes 68,936 shares which may be acquired upon exercise of
options which are currently exercisable.
</TABLE>
PROPOSAL A
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide that the members of
the AmVestors Financial Corporation Board of Directors (the "Board") shall be
divided into three classes, as nearly equal in number as possible, each of
which is to serve for three years, one class being elected each year. The
terms of the directors in Class I expire with this Annual Meeting.
Unless otherwise directed, the shares represented by properly
executed proxies received prior to the vote on the election of directors will
be cast for the three nominees listed below. If any nominee becomes
unavailable for any reason, or if a vacancy on the Board of Directors should
occur before the election (which events are not anticipated), the shares
represented by proxies may be voted for such other person as may be
determined by the holder of such proxies.
The following information is provided for the nominees for the Class
I directors and for the Class II and Class III directors whose terms in
office are continuing:
4
<PAGE>
NOMINEES FOR ELECTION AS CLASS I DIRECTORS
<TABLE>
<CAPTION>
PRINCIPAL DIRECTOR TERM TO
NAME AGE OCCUPATION SINCE EXPIRE
______________________ _______ ___________________________ ______________ ___________
<S> <C> <C> <C> <C>
Janis L. Andersen 43 Self-Employed Public Relations
Marketing Consultant 1986 1997
Mark V. Heitz 44 President and General Counsel of
AmVestors Financial Corporation 1986 1997
Robert T. McElroy, M.D. 61 Physician and Surgeon 1994 1997
CONTINUING DIRECTORS WHOSE TERMS ARE NOT EXPIRING
PRINCIPAL DIRECTOR TERM TO
NAME AGE OCCUPATION SINCE EXPIRE
______________________ _______ _____________________________ ______________ ___________
Robert G. Billings 60 President, Alvamar, Inc. 1986 1998
Jack H. Brier 50 President, Brier Development
Company, Inc. 1994 1998
Robert R. Lee, II 39 Attorney, Wilson, Lee & Gurney 1992 1998
John F.X. Mannion 64 Chairman of the Board and Chief
Executive
Officer of Unity Mutual Life
Insurance
Company 1996 1998
Ralph W. Laster, Jr. 45 Chairman of the Board and Chief
Executive Officer of AmVestors
Financial Corporation 1986 1999
R. Rex Lee, M.D. 67 Physician and Surgeon 1986 1999
James V. O'Donnell 46 President, Bush-O'Donnell and
Company, Inc. 1994 1999
Frank T. Crohn 72 Chairman of the Board, Financial
Benefit
Life Insurance Company 1996 1999
</TABLE>
NOMINEES
Janis L. Andersen has served on the Board of AmVestors since its
inception in 1986. She also serves as a director of American and AmVestors
Acquisition Subsidiary, Inc. Ms. Andersen is a self-employed public relations
and marketing consultant.
Mark V. Heitz currently serves as President and General Counsel of
AmVestors; Chairman and General Counsel of American; President and Chief
Executive Officer of AISG and President and General Counsel of AmVestors
Acquisition Subsidiary, Inc. He has served as a director of the Company,
American and AISG since 1986. He is also currently a member of the Boards of
AMVIG, AmVestors Acquisition Subsidiary, Inc., Financial Benefit, AIMCOR, TIM
and Rainbow.
Robert T. McElroy, M.D. was appointed to the Board of AmVestors on
March 24, 1994. He also serves as a director of American and AmVestors
Acquisition Subsidiary, Inc. Dr. McElroy is a self-employed physician and
surgeon in Topeka, Kansas.
CONTINUING DIRECTORS
Robert G. Billings is President of Alvamar, Inc., a real estate
development company. He has served on AmVestors' Board since 1986 and has
been a director of American since 1982. Mr. Billings also serves on the Board
of AMVIG and AmVestors Acquisition Subsidiary, Inc.
Jack H. Brier was appointed to the Board of AmVestors on March 24,
1994. He also serves on the Boards of AMVIG and AmVestors Acquisition
Subsidiary, Inc. Mr. Brier served as a member of the Board of Trustees of the
Kansas Public Employees Retirement System from 1990 to 1992. He is also a
member of the Board of Columbian National Title Insurance Company. Mr. Brier
is currently the President of Brier Development Company, Inc. in Topeka,
Kansas.
Robert R. Lee, II has been engaged in the private practice of law in
Wichita, Kansas, since 1984. He is currently a partner in the law firm of
Wilson, Lee & Gurney. Mr. Lee has served on the Board of AmVestors since 1992
and American since 1989. He also serves on the Board of AmVestors Acquisition
Subsidiary, Inc. Mr. Lee is the son of Dr. R. Rex Lee, a fellow member of the
AmVestors' Board.
5
<PAGE>
John F.X. Mannion was appointed to the Board of AmVestors on April 8,
1996. He served as a Director of Financial Benefit Group, Inc. ("FBG") from
1983 to 1996. Mr. Mannion has served as Chairman of the Board and Chief
Executive Officer of Unity Mutual Life Insurance Company since 1980. He first
joined Unity in 1974 as its President. Since 1974 he has been a member of its
Board of Directors. He is also on the Board of Directors of Germantown Life
Insurance Company in Radonor, Pennsylvania; NYNEX Telecommunications and
Onondaga Venture Capital Fund. Mr. Mannion is the immediate past Chairman of
the Medical Information Bureau and the current Chairman of the Life Insurance
Council of New York.
Ralph W. Laster, Jr. has served as Chief Executive Officer of
AmVestors since January 1988, and as Chairman of the Board of AmVestors since
May 1988 and as a director since 1986. In addition to his duties as Chairman
and Chief Executive Officer of AmVestors, Mr. Laster has also served as
President and Chief Executive Officer of American since April 1991 and serves
as Chairman of the Board of AISG; Chairman, President and Chief Executive
Officer of AMVIG and Chairman and Chief Executive Officer of AmVestors
Acquisition Subsidiary, Inc. He also serves as Chief Executive Officer and
Director of Financial Benefit, AIMCOR, TIM and Rainbow. Mr. Laster has served
the Company since its inception and has been affiliated with American since
1981.
R. Rex Lee, M.D. was an incorporator of American and has served as a
director of American since its incorporation in March, 1965. Dr. Lee has also
served on the Board of AmVestors since its inception in 1986. In addition,
Dr. Lee served as Senior Medical Director to American from May, 1965 to
April, 1993. Dr. Lee also serves as a Director of AmVestors Acquisition
Subsidiary, Inc. Dr. Lee is a self-employed physician and surgeon in Wichita,
Kansas.
James V. O'Donnell was appointed to the Board of AmVestors on March
24, 1994. Mr. O'Donnell also serves on the Boards of AMVIG and AmVestors
Acquisition Subsidiary, Inc. He currently serves as President of
Bush-O'Donnell and Company, Inc., a funds management and investment banking
firm in St. Louis, Missouri. Prior to his work at Bush-O'Donnell, Mr.
O'Donnell was employed at Goldman, Sachs & Company from 1974 to 1988 where he
held the title of Vice President.
Frank T. Crohn was appointed to the Board of AmVestors on April 8,
1996. Mr. Crohn is Chairman of the Board of Financial Benefit, AIMCOR, TIM
and Rainbow. He previously served as FBG's Chairman of the Board, Chief
Executive Officer and Director as well as Chairman of Financial Benefit,
AIMCOR and TIM. A Chartered Life Underwriter, he was President and Chief
Executive Officer of National Benefit Life Insurance Company, New York from
1962 until June, 1982. From 1982 until February, 1983, he was Deputy Chairman
of National Benefit. Mr. Crohn also serves as a Director of Unity Mutual Life
Insurance Company, Syracuse, New York and Franklin Managed Trust, San Mateo,
California, Mr. Crohn has served as President of the Life Insurance Council
of New York and the Florida Association of Domestic Insurance Companies.
The favorable vote of a plurality of the Common Stock of the Company
in attendance or represented by proxy and entitled to vote at the Annual
Meeting is needed for the election of directors.
The Board of Directors recommends a vote FOR the election of each of
the nominees to the Board.
BOARD OF DIRECTORS
BOARD AND COMMITTEES OF THE BOARD
The full Board met 6 times in 1996. All directors attended more than
75% of the total number of meetings of the Board and Committees to which they
belong.
The Company has standing audit, nominating, compensation, executive
search and stock option committees.
The Company's Audit Committee consists of Messrs. Brier, Robert R.
Lee, II and Dr. McElroy. The committee met twice during the year. Its
function is to recommend to the Board of Directors the independent public
accounting firm that will conduct the annual audit of the Company's accounts,
to review the nature and scope of the audit, to review the accounting
practices and control systems of the Company, and to review the
qualifications and performance of the proposed auditing firm. The selection
of such firm is subject to ratification by the stockholders at each Annual
Meeting.
The Nominating Committee consists of Mr. Crohn, Ms. Andersen and Mr.
Billings. The committee met once during the year to nominate directors for
election. They will consider stockholder nominations submitted in writing.
The Compensation Committee consists of Dr. R. Rex Lee, Messrs,
Manning, O'Donnell, and Billings. Dr. Lee serves as chairman of the
committee. The committee met three times to review and recommend to the Board
of Directors the levels, amounts and types of compensation and remuneration
paid to officers and directors of the Company. See Executive Compensation.
The Executive search committee and stock option committee did not
meet in 1996.
6
<PAGE>
COMPENSATION OF DIRECTORS
Outside directors were compensated for their service on the Board of
AmVestors Financial Corporation at the rate of $750 per month plus $1,500 for
each meeting attended. For committee meetings held on days other than the
regular Board Meeting days, each outside Board member in attendance is
compensated $500 for such service. Directors who are employees of the Company
are not compensated for service as members of the Board or any Committee of
the Board. In addition, the Chairman of the Compensation Committee is paid
$1,000 per month.
On May 19, 1994 the stockholders approved the 1994 Stock Deferral
Plan for Non-Employee Directors ("Director Deferral Plan"). Under the
Director Deferral Plan, each non-employee director may elect to defer the
receipt of fees for services to the
Board and its Committees, which are then credited in stock units
payable in an equal number of shares of AmVestors' Common Stock and held by
the Company in an account for the benefit of such director. In the event of
such an election, the Company will apply the amount of director fees
specified by the director to determine the number of shares of the Company's
Common Stock that are payable to such director based on a price equal to the
average closing price of the Company's Common Stock for the quarter in which
such election applies.
On March 28, 1996, the Board adopted a plan whereby all outside
directors are granted options to acquire 1,000 shares of AmVestors Common
Stock annually at the meeting of the Board of Directors immediately following
the Annual Stockholders Meeting. In addition, the Board adopted a plan
establishing minimum stock ownership requirements for all directors. The
ownership requirement for each director is set at $50,000, at the fair market
value of AmVestors Common Stock of each previous year end.
On March 26, 1992, the Company adopted the AmVestors Financial
Corporation Directors Retirement Plan ("Plan"). The Plan provides a monthly
retirement benefit to eligible retired directors in the amount of $750. In
addition, the Company will continue to pay premiums for life insurance
coverage for each eligible director for the amount of coverage provided while
they were a director of the Company. Directors who attain age 60 and have
completed five years of service for the Company are eligible to receive
benefits under the Plan.
EXECUTIVE OFFICERS
The following is a list of current executive officers of the Company.
Officers serve at the pleasure of the Board of Directors.
<TABLE>
<CAPTION>
Name Age Position(s) Held with the Company
____________________ _____ ______________________________________________
<S> <C> <C>
Ralph W. Laster, Jr. 45 Mr. Laster has served as a director of AmVestors since 1986; Chief
Executive Officer of AmVestors since January 1988 and as Chairman of
the Board of AmVestors since May 1988. Mr. Laster has also served as
a director of American since 1984, President and Chief Executive
Officer of American since April, 1991; Chairman of the Board of AISG;
Chairman, President and Chief Executive Officer of AMVIG; Chairman
and Chief Executive Officer of AmVestors Acquisition Subsidiary, Inc.;
and Chief Executive Officer and a Director of Financial Benefit,
AIMCOR, TIM and Rainbow.
Mark V. Heitz 44 Mr. Heitz currently serves as President and General Counsel of
AmVestors; Chairman and General Counsel of American; President and
Chief Executive Officer of AISG; and President and General Counsel of
AmVestors Acquisition Subsidiary, Inc. He has served as a director of
the Company since its inception in 1986 and as a director of American
since 1986. Mr. Heitz has also served as a director of AISG
since 1986, and he is a member of the Boards of AMVIG, AmVestors
Acquisition Subsidiary, Inc., Financial Benefit, AIMCOR, TIM and
Rainbow.
Thomas M. Fogt 51 Mr. Fogt currently serves as Executive Vice President, Corporate
Development of AmVestors and AmVestors. Mr. Fogt also serves as a
Director of Financial Benefit, and as a director of AIMCOR, TIM and
Rainbow. Mr. Fogt has been employed by the Company since July,
1994.
7
<PAGE>
Timothy S. Reimer 38 Mr. Reimer has served as Executive Vice President and Chief
Investment Officer of the Company since 1993. In addition, Mr. Reimer
serves as Executive Vice President of AMVIG and Chief Investment
Officer of American, Financial Benefit, AMVIG and AmVestors
Acquisition Subsidiary, Inc. He is also a member of the Board of
AMVIG to which he was elected in 1988. Mr. Reimer has been
employed by the Company since 1988.
Lynn F. Hammes 45 Mr. Hammes currently serves as Executive Vice President, Secretary
and Treasurer of the Company, AISG, AMVIG and AmVestors
Acquistion Subsidiary, Inc. In addition, Mr. Hammes also serves as
Executive Vice President, Chief Financial Officer, Secretary and
Treasurer of American and Financial Benefit. He is also a member of the
Board of AMVIG to which he was elected in 1993. Mr. Hammes has
been employed by the Company since 1987.
Frank T. Crohn 72 Mr. Crohn currently serves as Chairman of the Board of Financial
Benefit, AIMCOR, TIM and Rainbow. Mr. Crohn formerly held the
titles of Chairman and Chief Executive Officer of FBG. He was
appointed to the Board of AmVestors on April 11, 1996 in connection
with the Merger of FBG into AmVestors Acquisition Subsidiary, Inc.
Donna J. Rubertone 39 Ms. Rubertone currently serves as President, Chief Operating Officer
and Director of Financial Benefit, AIMCOR, TIM and Rainbow. Ms.
Rubertone formerly held the titles of Executive Vice President, Chief
Operating Officer and Secretary of FBG. She became associated with
AmVestors on April 11, 1996, in connection with the Merger of FBG
into AmVestors Acquisition Subsidiary, Inc.
James R. Stanley 49 Mr. Stanley has served as Executive Vice President of the Company
since 1995. Prior to 1995, Mr. Stanley served as Senior Vice President
of the Company and American. Mr. Stanley has been employed by the
Company since 1981.
</TABLE>
EXECUTIVE COMPENSATION
In accordance with rules pertaining to executive compensation
disclosure adopted by the Securities and Exchange Commission ("SEC"), the
Company is required to provide certain data and information with regard to
the compensation and benefits provided the Company's Chief Executive Officer
and certain of the most highly compensated executive officers. The disclosure
requirements include the use of various tables and graphs, and a report from
the Compensation Committee explaining the rationale that led to the
fundamental executive compensation decisions discussed herein.
The following table sets forth summary compensation information for
the last three fiscal years on Mr. Laster, the Company's Chief Executive
Officer and Messrs. Heitz, Fogt, Reimer and Hammes, four of the executive
officers, for services rendered in all capacities to the Company and its
subsidiaries for the years ended December 31, 1996, 1995 and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS ALL OTHER
NAME AND ANNUAL COMPENSATION <F1> SECURITIES UNDERLYING COMPEN-
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)<F2> OPTION/SAR'S (#) SATION ($) <F7>
___________________________ _______ ___________ __________ _________________
<S> <C> <C> <C> <C> <C>
Mr. Ralph W. Laster, Jr. 1996 400,000 309,479 180,000 shrs <F3> 21,149
Chairman and CEO of the 1995 400,000 210,000 15,000 26,136
Company 1994 370,000 154,168 - 26,134
Mr. Mark V. Heitz 1996 300,000 197,306 157,000 shrs <F4> 21,149
President and General 1995 260,000 136,500 10,000 26,136
Counsel of the Company 1994 235,000 97,918 - 26,134
Mr. Thomas M. Fogt 1996 200,000 50,000 50,000 shrs 24,899
Executive Vice President 1995 175,000 61,250 - 29,886
Corporate Development 1994 87,500<F8> 13,125 50,000 -
8
<PAGE>
Mr. Timothy S. Reimer 1996 225,000 90,000 71,500 shrs <F5> 17,399
Executive Vice President and 1995 175,000 82,032 5,000 22,386
Chief Investment Officer 1994 141,010 79,318 - 22,051
of the Company
Mr. Lynn F. Hammes 1996 145,000 48,334 56,500 shrs <F6> 20,774
Executive Vice President, 1995 142,500 44,532 5,000 25,573
Secretary and Treasurer 1994 142,500 26,719 - 25,688
of the Company
<FN><F1> Excludes perquisites which did not exceed the lesser of $50,000 or
10% of
the combined salary and bonus of any executive officer for the year.
<F2> Bonus compensation reported is based, in part, on the attainment of
specific financial objectives under the Incentive Compensation Plan and Bonus
Compensation Agreements ("Bonus Plans") as described below in the
Compensation Committee Report on Executive Compensation. Compensation paid
under the Bonus Plans is based upon performance of the company in 1996 and is
paid in 1997. Mr. Reimer's bonus compensation was paid in a single lump sum.
The other executive officers will receive one half of the bonus under the
Bonus Plans in a lump sum and the other half as a salary bonus, paid
semi-monthly during 1997. If the executive officer separates from service,
the unpaid portion of the salary bonus is forfeited.
<F3> Includes options covering 48,000 shares originally granted in 1991, where
the expiration date was extended one year.
<F4> Includes options covering 48,000 shares originally granted in 1991, where
the expiration date was extended one year.
<F5> Includes options covering 33,657 shares originally granted in 1991, where
the expiration date was extended one year.
<F6> Includes options covering 24,000 shares originally granted in 1991, where
the expiration date was extended one year.
<F7> Amounts reported in this column consist of contributions allocated by the
Company to each officer under the Company's tax qualified ESOP and the
AmVestors Financial Corporation Money Purchase Pension Plan. These
allocations are held in trust pending the officer's termination or
retirement. All full-time employees with more than one year of service
participate in these plans.
<F8> Mr. Fogt was employed on July 1, 1994.
</TABLE>
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table contains information concerning the grant of stock
options under the Company's 1989 Non-Qualified Stock Option Plan
("Non-Qualified Plan") and the Company's Incentive Stock Option Plan ("ISO
Plan") to the five executive officers of the Company named above during 1996.
The table provides the number of options granted, the exercise price, and the
present dollar value of the options.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1996
NUMBER OF
SECURITIES % TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE MARKET PRICE GRANT DATE
OPTIONS GRANTED TO EMPLOYEES OR BASE PRICE ON DATE EXPIRATION PRESENT VALUE
NAME (#)<F1> IN FISCAL YEAR<F2> (S/SH) OF GRANT <F3> DATE ($)<F4>
_________ _______________ ________________ ____________ ___________ _____________ ____________
<S> <C> <C> <C> <C> <C> <C>
Mr. Laster 140,000 22.83 12.875 3/28/06 856,800
20,000 22.83 4.8348 11.25 4/1/97 131,600
28,000 22.83 7.50 11.25 11/8/97 120,120
Mr. Heitz 109,000 19.1 12.875 3/28/06 667,080
20,000 19.1 4.834 11.25 4/1/97 131,600
28,000 19.1 7.50 11.25 11/8/97 120,120
Mr. Fogt 50,000 3.9 12.875 3/28/06 306,000
Mr. Reimer 70,500 12.65 12.875 3/28/06 431,460
9,657 12.65 5.3125 11.25 2/28/97 59,101
4,000 12.65 4.8438 11.25 4/1/97 26,320
20,000 12.65 7.50 11.25 11/8/97 85,800
Mr. Hammes 32,500 6.86 12.875 3/28/06 198,900
8,000 6.86 4.8348 11.25 4/1/97 52,640
16,000 6.86 7.50 11.25 11/8/97 68,640
9
<PAGE>
<FN><F1> All options granted were for Common Stock of the Company. Except for
options where the expiration date was extended, all options granted under
Non-Qualified Plan are exercisable 12 months following the date of grant and
have a term of 10 years, unless terminated earlier by reason of the executive
officer's termination of employment as described herein. All options granted
under the ISO Plan have a term of 10 years, unless terminated earlier by
reason of the executive officer's termination of employment as described
herein. Options granted to each executive officer under the ISO Plan vest on
December 31, of each fiscal year as follows:
Date Mr. Laster Mr. Heitz Mr. Fogt Mr. Hammes Mr. Reimer
_________ __________ _________ __________ ___________ __________
12/31/96 108,936 77,936 18,936 7,766 39,436
12/31/97 7,766 7,766 7,766 7,766 7,766
12/31/98 7,766 7,766 7,766 7,766 7,766
12/31/99 7,766 7,766 7,766 7,766 7,766
12/31/00 7,766 7,766 7,766 1,436 7,766
All options under the Non-Qualified Plan and the ISO terminate upon the earlier
of (i) the date of termination of the executive
officer's employment if such termination occurs within 12 months of the date
of the option grant; (ii) three months following the date of termination of
the executive officer if such termination occurs more than 12 months
following the option grant; or (iii) 12 months following the date of the
executive officer's termination if such termination is by reason of death or
disability.
<F2> Percentage includes the total number of options where the expiration date
was extended in 1996.
<F3> In 1996, the Company extended the expiration date one year on options
granted to executive officers in 1991. These options are listed in the table
as new grants at less than market value. All other option grants were at the
closing market price of the Common Stock on the date of grant.
<F4> The values shown were calculated using a binomial option pricing model
and are presented solely for purposes of comparative disclosure in accordance
with certain regulations of the SEC. The binomial model is a mathematical
formula widely used to value traded stock options, which calculates present
value based on assumptions about future interest rates, stock price
volatility and dividend yield. There is no assurance that the value realized
by an executive officer, if any, will be at or near the value estimated by
the model. In calculating the grant date present values set forth in the
table, the Company used the following assumptions: (a) weighted average
expected volatility of 29.35%; (b) weighted average risk free rate of return
of 5.14%; (c) payment of dividends equal to $.075 per year; and (d) exercise
at the expiration date. No adjustments have been made for non-transferability
or risk of forfeiture.
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN 1996,
AND 1996 YEAR END OPTION/SAR VALUE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT 1996 IN-THE-MONEY OPTIONS/SARS
YEAR END (#) AT 1996 YEAR END ($) <F1>
__________________________ _________________________
SHARES ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
_________ ________________________ ____________________________ _________________________
<S> <C> <C> <C> <C> <C> <C>
Mr. Laster - - 293,588 31,064 $ 1,235,354 $ 58,245
Mr. Heitz - - 246,176 31,064 1,126,713 58,245
Mr. Fogt - - 68,936 31,064 1,285,505 58,245
Mr. Reimer - - 102,593 31,064 470,768 58,245
Mr. Hammes - - 76,766 24,734 401,296 46,376
<FN><F1> Value of unexercised In-The-Money Options is calculated by subtracting
the exercise price from the market value of the underlying stock at 1996 year
end and multiplying the result times the number of shares subject to
exercise. Year end market value of Common Stock was $14.75.
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION
OF EMPLOYMENT ARRANGEMENTS
Pursuant to an employment agreement by and between AmVestors,
American, AMVIG and AISG ("Companies") and Mr. Laster, the Companies have
agreed to provide Mr. Laster a base salary, health benefits, insurance
benefits and other perquisites through May 31, 1997. Mr. Laster's salary is
reviewed annually based upon certain subjective and objective performance
factors discussed in the Compensation Committee Report on Executive
Compensation. The agreement also provides that if Mr. Laster is discharged
without cause prior to the end of the contract term, he is entitled to
receive contract compensation throughout the remaining term of the contract.
10
<PAGE>
Pursuant to an employment agreement by and between AmVestors,
American and Mr. Heitz, AmVestors and American have agreed to provide Mr.
Heitz a base salary, health benefits, insurance benefits and other
perquisites through December 31, 1998. Mr. Heitz's salary is reviewed
annually based upon certain subjective and objective performance factors. The
agreement also provides that AmVestors and American will pay Mr. Heitz
severance pay, if he is discharged without cause, in an amount equal to the
salary and other compensation and benefits due for the remainder of the
calendar year in which such termination of employment occurs. Mr. Heitz is
also entitled to receive a continuation of his monthly base salary for a
period not to exceed the difference between 12 months and the number of
months after such termination in which salary and benefits were payable in
the calendar year in which such discharge occurred.
Pursuant to an Employment Agreement dated April 8, 1996, Mr. Crohn
has agreed to serve, for a period of two years, as Chairman of the Board of
Financial Benefit, AIMCOR and TIM. Mr. Crohn is required to devote no more
than 500 hours per calendar year to his duties and is entitled to (i) a
salary of $200,000 per year; (ii) at the inception of the Employment
Agreement, 75,000 non-qualified options to purchase AmVestors Common Stock
under the AmVestors Non-Qualified Stock Option Plan at an exercise price equal
to the market price of the AmVestors Common Stock on the date of issue;
(iii) participate in all fringe benefit, stock option and retirement plans
available to employees of Financial Benefit generally; (iv) reimbursement of
business expenses; and (v) continued salary payments for up to six months
after any disability (as defined therein) of Mr. Crohn. Mr. Crohn's
employment may be terminated prior to its expiration only for cause, which
includes conviction of certain crimes, gross negligence or willful misconduct
in the performance of his duties or a material breach of his Employment
Agreement which is unremedied for more than 30 days. Mr. Crohn has also
agreed that during his employment and for a period of one year thereafter, he
will not compete directly or indirectly with AmVestors or attempt to entice
away or employ any employee of AmVestors or its subsidiaries.
Pursuant to an Employment Agreement dated April 8, 1996 Ms. Rubertone
has agreed to serve for a period of three years as President of Financial
Benefit, AIMCOR and TIM. Pursuant to her Employment Agreement, Ms. Rubertone
is required to devote her full working time to the business of such
subsidiaries and is entitled to, among other things (i) a salary of $175,000
per year, (ii) participate in the Incentive Compensation Plan and Bonus
Compensation Agreements as the Board of Directors of AmVestors shall, in its
discretion, determine; (iii) at the inception of the Employment Agreement,
50,000 non-qualified options to purchase AmVestors Common Stock under the
AmVestors Non-Qualified Stock Option Plan at an exercise price equal to the
market price of the Common Stock on the date of issue; (iv) participate in
all fringe benefit, stock option and retirement plans available to employees
of Financial Benefit generally; (v) reimbursement of business expenses; and
(vi) continued salary payments for up to six months after any disability (as
defined therein) of Ms. Rubertone. Ms. Rubertone's employment may be
terminated prior to its expiration either (i) for cause, which includes
conviction of certain crimes, gross negligence or willful misconduct in the
performance of her duties or a material breach of her Employment Agreement
which is unremedied for more than 30 days; or (ii) without cause upon payment
of a severance amount equal to a full year's salary plus a sum equal to any
bonus payments received by Ms.Rubertone in the previous twelve months. Ms.
Rubertone has also agreed that during her employment she will not compete
directly or indirectly with AmVestors and that she will at no time disclose
any confidential information regarding AmVestors or its subsidiaries.
On January 1, 1997 Messrs. Fogt, Reimer and Hammes entered into one
year employment agreements ("Agreements") with the company. The agreements
automatically renew for successive one year terms unless the executive
officer is terminated for cause, or voluntarily separates from service. If
any of the executive officers are terminated by the company other than for
cause the agreements provide that the executive officer shall be entitled to
receive his current salary for a period of 12 months.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Recommendations on executive compensation are made to the Board by
the four-member Compensation Committee of the Board ("Committee"). The
Committee is composed of Dr. Lee, Messrs. O'Donnell, Billings and Manning.
Each member of the Committee is a non-employee director of the Company.
Set forth below is a report submitted by the Committee addressing the
Company's compensation policies and philosophies for 1996 as they affected
Mr. Laster and the other executive officers.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee Report on executive compensation below
shall not be deemed to be filed under or incorporated by reference into any
filing under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
report by reference.
In 1995, the Committee contracted William M. Mercer, Inc. ("Mercer"),
an independent compensation consultant to perform a comprehensive review of
the Company's compensation practices. Mercer conducted a full assessment of
the design and effectiveness of the Company's compensation strategies and
compared the executive compensation and corporate performance to comparable
corporations that define its competitive marketplace for executive talent.
Mercer reported its findings directly to the Committee without the prior
review of the executive officers. The Committee considered Mercer's report in
its compensation decisions for 1996.
11
<PAGE>
EXECUTIVE COMPENSATION POLICIES
Compensation decisions are made by the whole Board based upon the
review and recommendations of the Committee. It is anticipated that criteria
similar to that discussed herein, in addition to the criteria set forth in
the Incentive Plans and the Bonus Arrangement described above, will be
employed for compensation decisions in 1997.
The focus of the executive compensation program is to attract,
motivate and retain quality executives by providing a well rounded
compensation plan based on both Company and individual performance. In
addition to salary and bonus awards, the Committee may utilize both annual
and long-term stock incentive plans which are intended to reward executive
officers and other key employees upon achieving specific goals. The board
believes that the adoption of incentive compensation plans which tie
incentive and bonus compensation to specific corporate performance objectives
operate to motivate its executive officers to achieve the maximum corporate
performance and overall profitability. In addition, the Board believes that
performance based compensation which places a meaningful portion of the
executive's compensation at risk with the other shareholders should be an
integral part of the total compensation package.
Section 162(m) of the Internal Revenue Code, enacted in 1993 and
effective for taxable years beginning after January 1, 1994, generally limits
to $1 million per individual per year the federal income tax deduction for
compensation paid to certain executive officers by a publicly-held company.
Compensation that qualifies as performance-based compensation for purposes of
section 162(m) is not subject to the $1 million deduction limitation. Section
162(m) did not affect the deductibility of compensation payments in 1996;
however, the Committee will consider Section 162(m) in its compensation
decisions on an ongoing basis.
EXECUTIVE OFFICER COMPENSATION AND PERFORMANCE
Compensation paid to the executive officers consists of base salary,
bonus, non-qualified stock option awards, incentive stock optionawards and
contributions to the Company's Employee Stock Ownership Plan and Money
Purchase Pension Plan. A portion of the bonus compensation paid to executive
officers is based on the attainment of specific financial objectives in 1996
under the Incentive Plans described below. One half of the bonus compensation
derived from the Incentive Plans is paid in a lump sum and the other half is
paid as a salary bonus during 1997. If the executive officer separates from
service, the unpaid portion of the salary bonus is forfeited. A portion of
the bonus paid to Messrs. Laster and Heitz was derived from the performance
of the company stock under the Incentive Arrangement as described below.
BASE SALARY AND ANNUAL BONUS
The salary and bonus of the Company's executive officers is reviewed
and approved annually by the Board. The Board's decisions concerning base
salary and bonus levels are based upon recommendations from the Committee,
which reviews corporate and individual performance in making its
recommendations to the Board. The Chief Executive Officer's recommendation
for remuneration for executive officers for 1996 was concurred with by the
Committee and approved by the Board. To assist the Committee in its compensati
on decisions for executive officers, the Chief Executive Officer reviews the
performance of each executive officer and recommends to the Committee
proposed remuneration for each respective officer. The Committee considers
both objective and subjective criteria in its evaluation of each executive
officer, including the Chief Executive Officer.
In 1994, the Board adopted an Incentive Compensation Plan and Bonus
Compensation Agreements ("Plans") to provide certain executive officers and
key employees with the opportunity to earn incentive compensation based upon
the financial performance of the Company. Under the Plans executive officers
are generally entitled to additional bonus compensation based upon one or
more of the following: (i) AmVestors' net operating income; (ii) American's
new premium; (iii) AmVestors' capital raising; (iv) Financial Benefit's net
operating income; (v) AmVestors' Investment yield; (vi) Successful merger of
Financial Benefit's operations; (vii) Introduction of new products for
American and Financial Benefit; (viii) American's statutory return on
capital; (ix) Timely financial reporting; (x) Consolidated premiums; (xi)
AmVestors asset growth; (xii) Expense reduction at merged companies; and
(xiii) Premiums for Financial Benefit.
The Plans award points to executive officers and key employees when
the specified objectives are attained. Executive Officers are awarded more
points for categories in which their position affords them the greatest
opportunity to affect performance in that category. Incentive compensation is
calculated by multiplying the percentage of base salary specified for each
officer times the ratio of performance objective points earned divided by
total performance objective points possible. The objectives, the number of
performance objective points possible and the bonus percentage of base salary
specified for each executive officer is set by the whole Board based upon the
recommendations of the Compensation Committee and is intended to reflect each
officer's potential to influence the profitability of the Company's
operations. For 1996 compensation, the maximum incentive bonus potential for
executive officers under the Plans ranged from 35% to 75% of base salary.
In addition, in 1995 the Compensation Committee adopted the Special
Incentive Bonus Arrangement ("Incentive Arrangement") to provide Mr. Laster
and Mr. Heitz with the opportunity to earn additional incentive compensation
based upon the Company's Common Stock performance. The Board further intends
that the Incentive Arrangement will induce the executive officers to remain
in the service of the Company and continue their valuable and substantial
efforts on its behalf.
12
<PAGE>
The cash bonus to be paid under the Incentive Arrangement is equal to
the difference between the average per share Common Stock price at the close
of trading for the last ten trading days of 1995, and the average of the per
share price at the close of trading for the last ten trading days of 1996.
The per share price difference is then multiplied by 75,000 for Mr. Laster
and 45,000 for Mr. Heitz. It is the intent of the Incentive Arrangement to
pay a cash bonus which approximates the growth performance of 75,000 shares
and 45,000 of the Company Common Stock for the 1996 calendar year.
The Committee also considers subjective factors in its review of each
executive officer. Such factors include business planning skills, leadership
abilities, creativity, experience, assumption of additional duties in
connection with promotions or changes, and individual performance in any
special projects or situations.
STOCK INCENTIVE PLANS AND STOCK OWNERSHIP
The Committee recognizes that stock ownership and stock-based
performance arrangements are beneficial and operate to increase executive
officers' incentive to enhance stockholder value. The Company currently has
four separate stock incentive plans: (1) 1989 Non-Qualified Stock Option
Plan, (2) 1996 Incentive StockOption Plan, (3) 1989 Stock Appreciation Rights
Plan, and (4) 1989 Restricted Stock Plan ("Stock Incentive Plans"). The
purpose of the Stock Incentive Plans is to provide executive officers with a
meaningful equity interest in the Company. These plans are intended to retain
key executives and align their financial interests with those of
stockholders.
In 1996, the Committee granted stock options to the executive
officers in amounts set forth on page 9 in the table on Option Grants in
1996. Stock options may be granted from time to time by the Committee to
executive officers or other employees with such frequency and, subject to
certain terms and limitations set forth in the Non-Qualified Plan and ISO and
as approved by the whole Board. Stock options are granted for terms not
exceeding 10 years, with an exercise price equal to the closing price of the
Common Stock on the date of the grant. Although the Company also has a Stock
Appreciation Rights Plan and a Restricted Stock Plan, the Committee did not
recommend awards under these Plans as part of the total 1996 compensation
package.
In 1996, the Board established stock ownership guidelines for
executive officers. Under the guidelines, the CEO is required to own stock
equal to three time base salary; the president is required to own stock equal
to two times base salary; and executive vice presidents are required to own
stock equal to their base salary. ESOP shares count toward meeting the
requirement; however, stock options do not count toward the executive
officer's ownership requirements. To the extent that the executive officer
has not met the ownership requirements, the portion of the executive
officer's bonus to be paid as a salary bonus will be paid in AmVestors Common
Stock until the ownership requirement is satisfied.
CEO COMPENSATION
The Chief Executive Officer's primary responsibilities are to direct
and oversee the day-to-day operations of the Company and its wholly-owned
subsidiaries, including, but not limited to, the investment of the Company's
assets.
In 1996, Mr. Laster's base salary was $400,000 per annum. His base
salary is established pursuant to his employment contract and is subject to
increase annually at the sole discretion of the Board. Mr. Laster's base
salary may not be diminished prior to May 31, 1997. Mr. Laster's 1996 base
salary was not increased over his 1995 base salary.
In determining the base salary paid to Mr. Laster, the Committee
considers a number of variables including financial performance, individual
performance, special assignments or tasks and achievement of particular
goals. In recommending base salary, the Committee exercises broad discretion
and considers all of the above criteria. No single criteria is assigned
specific weight in the determination.
Bonus Compensation in 1996 was derived solely from the Bonus
Agreement and the Incentive Arrangement described above. Under the Bonus
Agreement, Mr. Laster had the opportunity to earn a bonus equal to 75% of his
1996 base salary if the Company achieved all performance objectives
established by the Board. Mr. Laster's bonus under the Bonus Agreement was
calculated by multiplying his 1996 base salary times the ratio of performance
objective points earned divided by total performance objective points possible
. Mr. Laster's bonus for 1996 under the Bonus Agreement was $66,667. The
remainder of Mr. Laster's bonus was earned under the Incentive Arrangement
based on the performance of the Company's stock from December 31, 1995 to
December 31, 1996 as described above. The difference in the average closing
price on December 31, 1995 and the average closing price for the last ten
trading days of 1996 was $3.238 per share. The difference was multiplied
times 75,000 to yield a bonus under the Arrangement equal to $242,813.
Mr. Laster's bonus earned under the Bonus Agreement and the Incentive
Arrangement was $309,479. $33,333.00 of this amount will be paid in
restricted stock to satisfy the stock ownership requirements as described
above. Mr. Laster received other compensation in the form of contributions
under the Company's ESOP, Money Purchase Pension Plan and other perquisites.
13
<PAGE>
Mr. Laster's 1996 compensation reflects the Committee's assessment of
his personal performance and leadership, as well as his relative value to the
Company, and ability to impact the Company's performance.
R. Rex Lee, M.D., Chairman
Jack R. Manning
Robert G. Billings
James V. O'Donnell
COMPLIANCE WITH THE SECURITIES EXCHANGE ACT OF 1934
The Company's directors and executive officers are required under the
Securities Exchange Act of 1934 to file reports of ownership and changes of
ownership with the Securities and Exchange Commission. Based solely on a
review of the copies of the reports furnished to the Company and written
representations from directors, the Company believes that during 1996 all
filing requirements applicable to directors and executive officers have been
complied with.
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total
stockholder return (assuming reinvestment of dividends) with the S&P 500
Index and the S&P Life Insurance Index.
The Stock Performance Graph shall not be deemed to be filed under, or
incorporated by reference into, any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this graph by reference.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMVESTORS, S&P 500 INDEX, AND THE S&P LIFE INSURANCE INDEX
AMVESTORS FINANCIAL CORPORATION
1991 1992 1993 1994 1995 1996
AmVestors Financial Corporation .... $100 159 160 138 172 218
S&P 500 Index .................. 100 108 118 120 165 203
S&P 500 Life Insurance Index...... 100 134 136 113 161 197
Assumes $100 invested on December 31, 1991, in AmVestors Financial
Corporation Common Stock, the S&P 500 Index and the S&P Life Insurance Index.
14
<PAGE>
PROPOSAL C
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Deloitte & Touche
LLP as its independent public accountants for the fiscal year 1997. At the
meeting, the stockholders will be asked to ratify the Board of Director's
selection of Deloitte & Touche, LLP as the independent public accountants for
the fiscal year 1997. During the fiscal year 1996, Deloitte & Touche , LLP
provided the professional services related to the examination of the
financial statement of the Company and related entities, including annual
reports to stockholders and the Securities and Exchange Commission and have
certified the same and provided advice with regard to preparation of federal
income tax returns and other tax and accounting matters. The Audit Committee
of the Board of Directors approved such services taking into consideration
the possible effects which the rendering of such services would have on the
independence of the accountants. It is expected that representatives of
Deloitte & Touche, LLP will be present at the stockholders' meeting to make a
statement or to answer questions.
The favorable vote of a majority of the Common Stock of the Company
in attendance or represented by proxy and entitled to vote at the Annual
Meeting is needed to ratify the Board of Director's selection of independent
public accountants.
The Board of Directors recommends a vote FOR ratification of the
independent public accountants.
DISCRETIONARY AUTHORITY
While the Notice of Annual Meeting calls for the transaction of any
other business as may properly come before the meeting, the Board of
Directors has no present intention of presenting any matters for action by
the stockholders at the meeting, other than as set forth herein. The enclosed
proxy gives discretionary authority to vote all shares subject to such proxy
in the event that any additional matters should be presented by a
stockholder.
AMVESTORS FINANCIAL CORPORATION WILL UNDERTAKE TO PROVIDE TO EACH
PERSON SOLICITED (INCLUDING BENEFICIAL OWNERS), UPON REQUEST, ADDITIONAL
COPIES OF THE FORM 10-K REPORT FOR THE YEAR ENDED DECEMBER 31, 1996,
INCLUDING FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS. AMVESTORS RESERVES
THE RIGHT TO EXACT A FEE NOT IN EXCESS OF REASONABLE EXPENSES FOR SO DOING.
By Order of the Board of Directors
LYNN F. HAMMES, Secretary
Dated: March 31, 1997
Topeka, Kansas
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