<PAGE> 1
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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
JEFFERSON-PILOT CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 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:
/X/ 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> 2
[JEFFERSON
PILOT LOGO]
JEFFERSON-PILOT CORPORATION
100 North Greene Street
Greensboro, North Carolina 27401
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
MEETING DATE: MAY 1, 1995
Dear Shareholder:
You are cordially invited to attend the 1995 Annual Meeting of Jefferson-Pilot's
shareholders. We will meet at the Corporation's offices in Greensboro, North
Carolina on Monday, May 1, 1995, at 10:00 A.M.
The matters to be acted upon at the meeting are described in the attached Notice
of Meeting and Proxy Statement.
Detailed information relating to the Corporation's activities and performance
during 1994 is contained in our Annual Report to Shareholders.
I urge you to vote your shares by proxy, even if you plan to attend the meeting.
After you read the proxy statement, please indicate on the proxy card the way
you want your shares voted. Then date, sign and return the proxy card in the
postage-paid return envelope.
On behalf of your Board of Directors, thank you for your continued support.
Sincerely,
David A. Stonecipher
--------------------
David A. Stonecipher
President and CEO
Jefferson-Pilot Corporation
March 29, 1995
<PAGE> 3
NOTICE OF 1995 ANNUAL MEETING OF SHAREHOLDERS
MARCH 29, 1995
Notice is Hereby Given that the Annual Meeting of Shareholders of
Jefferson-Pilot Corporation will be held at the Jefferson-Pilot Building (4th
Floor), 100 North Greene Street, Greensboro, North Carolina, at 10:00 o'clock
a.m. local time, on Monday, May 1, 1995, for the purpose of:
(1) electing four persons as Class III directors with terms continuing
until the Annual Meeting of Shareholders in 1998 and until their
successors are duly elected and qualified;
(2) approving an amendment to the Articles of Incorporation of the
Corporation to increase the authorized common stock from 100,000,000 to
150,000,000 shares;
(3) approving an amendment to the Articles of Incorporation to authorize a
new class of 20,000,000 preferred shares;
(4) approving amendment and restatement of the Long Term Stock Incentive
Plan;
(5) approving the 1995 Non-Employee Directors' Stock Option Plan for the
Corporation's outside directors; and
(6) transacting any other business that may be properly brought before the
meeting or any adjournment of the meeting.
Holders of common stock of record at the close of business on March 6, 1995 will
be entitled to vote at the meeting or any adjournment of the meeting.
Whether or not you expect to attend the meeting, please date, sign and return
promptly the enclosed proxy card in order to ensure that your shares are voted.
A shareholder giving a proxy may revoke it at any time before it is voted at the
meeting.
On behalf of the Board of Directors,
Robert A. Reed
--------------
Robert A. Reed
Vice President and Secretary
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
CONTENTS
Proxy Solicitation and Voting Information................................................... 3
Proposal I -- Election of Directors......................................................... 3
Security Ownership.......................................................................... 7
Executive Compensation...................................................................... 8
Proposals II and III -- Amendments to Articles of Incorporation to Increase Authorized
Common Stock and to Authorize Preferred Stock............................................. 16
Proposal IV -- Approval of Amendment and Restatement of Long Term Stock Incentive Plan...... 18
Proposal V -- Approval of 1995 Non-Employee Directors' Stock Option Plan.................... 21
Other Information........................................................................... 23
Exhibit 1 -- Proposed Amendments to the Articles............................................ 24
Exhibit 2 -- Long Term Stock Incentive Plan................................................. 25
Exhibit 3 -- 1995 Non-Employee Directors' Stock Option Plan................................. 29
</TABLE>
2
<PAGE> 4
PROXY STATEMENT
PROXY SOLICITATION AND VOTING INFORMATION
The enclosed proxy is solicited by the Board of Directors of Jefferson-Pilot
Corporation ("Corporation") in connection with the Annual Meeting of
Shareholders ("Meeting") to be held on May 1, 1995 and any and all adjournments
of the Meeting. These proxies will be voted if properly signed, received by the
Corporation prior to the close of voting at the Meeting and not revoked.
Holders of record of the Corporation's common stock ("common stock") at the
close of business on March 6, 1995 will be entitled to vote at the Meeting. On
that date, 48,457,231 shares of common stock were outstanding. Record holders
are entitled to one vote per share on each matter properly brought before the
Meeting. A majority of the outstanding shares of common stock must be
represented in person or by proxy at the Meeting in order to constitute a quorum
for the transaction of business.
Under North Carolina law and the Corporation's Articles of Incorporation,
assuming a quorum is present, (i) the candidates receiving the highest number of
votes will be elected directors, (ii) a majority of the votes cast by
shareholders on each of the other matters voted on at the Meeting is required
for its approval. Abstentions and broker non-votes are counted for purposes of
determining a quorum. Abstentions, broker non-votes or failure to vote are
disregarded in tabulating voting results, except as otherwise noted as to a
specific proposal. Shareholders may not cumulate their votes. Votes will be
counted by employees of Georgeson & Company, Inc. ("Georgeson"), which has been
appointed to serve as Inspector of Election for the Meeting.
Proxies representing shares of common stock held of record also will represent
full and fractional shares held under the Corporation's Dividend Reinvestment
Plan.
A shareholder who has returned a proxy may revoke it at any time before its use
by delivering a written notice of revocation to the Secretary of the
Corporation, by submitting a properly executed, subsequently-dated proxy to the
Corporation or by voting in person at the Meeting.
Where the shareholder specifies a choice with respect to any matter to be acted
upon, the shares will be voted in accordance with such specification(s). Unless
otherwise so instructed, properly executed proxies which are returned in a
timely manner will be voted for the nominees for director and for the four other
proposals described in this Proxy Statement.
PROPOSAL I -- ELECTION OF DIRECTORS
Jefferson-Pilot's Board of Directors presently consists of fifteen members,
divided into three classes. The terms of office of the three classes of
directors end in successive years.
Three members of the class of directors whose term of office is expiring have
been nominated to serve for a new three-year term that will end in 1998. Two
directors, A. Linwood Holton, Jr. and Charles W. McCoy, are not standing for
reelection in deference to the Board's retirement policy for directors which is
included in the corporate governance principles ratified by shareholders at the
1993 annual meeting. All of the other directors and nominees have previously
been elected by the shareholders except that the Board has nominated George W.
Henderson, III for a three-year term. Mr. Henderson is President and Chief
Executive Officer of Burlington Industries, Inc.
The Board has reduced the number of directors from fifteen to fourteen effective
at the annual meeting, reflecting the two retirements and one new director.
The accompanying proxy will be voted for the election of the four nominees,
unless authority to vote for one or more nominees is withheld. If any nominee is
unable or unwilling to serve as a director for any reason (which is not
anticipated), the proxy will be voted for the election of any substitute nominee
designated by the Board of Directors.
3
<PAGE> 5
Certain information about these nominees and the other directors whose terms of
office will continue after the Meeting is shown below.
<TABLE>
<CAPTION>
NAME, AGE AND YEAR
FIRST BECAME A
DIRECTOR PRINCIPAL OCCUPATION DURING LAST FIVE YEARS AND OTHER POSITIONS(1)
-------------------------------------------------------------------------------------------
<S> <C>
NOMINEES TO SERVE FOR A THREE-YEAR TERM EXPIRING 1998 -- CLASS III
ROBERT G. GREER* Chairman of the Board, Tanglewood Bank, Houston, TX
age 60
Director since 1975
GEORGE W. HENDERSON, President and Chief Executive Officer, Burlington Industries, Inc.
III (manufacturer of textile products), Greensboro, NC since January 1,
age 46 1995; President and Chief Operating Officer from April 1993; prior
Nominee thereto, Group Vice President; also a director since 1990
HUGH L. MCCOLL, JR. Chairman and Chief Executive Officer, NationsBank Corporation,
age 59 Charlotte, NC since November 1993; Chairman, President and Chief
Director since 1993 Executive Officer from December 1992 to October 1993 and prior to
December 1991; President and Chief Executive Officer from December
1991 to December 1992; also serves as Chief Executive Officer of
that company's subsidiary banks
MARTHA A. WALLS President and Chief Executive Officer, Southern Newspapers, Inc.,
age 67 Houston, TX
Director since 1990
</TABLE>
<TABLE>
<S> <C>
CONTINUING DIRECTORS FOR THE TERM EXPIRING 1996 -- CLASS I
THOMAS M. BELK President, Belk Stores Services, Inc., Charlotte, NC and President
age 70 of numerous department stores in the Southeast and Southwest
Director since 1989 operating under the Belk name
WILLIAM E. BLACKWELL President, Jefferson-Pilot Communications Company since July 1991;
age 62 Executive Vice President of the Corporation(2)
Director since 1985
C. RANDOLPH FERGUSON Senior Vice President of the Corporation since May 1989; prior
age 49 thereto, Vice President - Planning & Internal Auditing; Executive
Director since 1989 Vice President - Group, Jefferson-Pilot Life Insurance Company
since August 1988(2)
WILLIAM PORTER PAYNE President and Chief Executive Officer, Atlanta Committee for the
age 47 Olympic Games, Atlanta, GA since January, 1991; prior thereto,
Director since 1993 President and Chief Executive Officer, Georgia Amateur Athletics
Foundation, d/b/a Atlanta Organizing Committee, Atlanta, GA
ROBERT H. SPILMAN* Chairman of the Board of the Corporation since March 1993; Chairman
age 67 of the Board and Chief Executive Officer, Bassett Furniture
Director since 1984 Industries, Inc. (furniture manufacturer), Bassett, VA
CONTINUING DIRECTORS FOR THE TERM EXPIRING 1997 -- CLASS II
EDWIN B. BORDEN President and Chief Executive Officer, The Borden Manufacturing Co.
age 60 (textiles), Goldsboro, NC
Director since 1991
WILLIAM H. CUNNINGHAM* Chancellor, The University of Texas System, Austin, TX since
age 51 September 1992; prior thereto, President, The University of Texas
Director since 1986 at Austin
</TABLE>
4
<PAGE> 6
<TABLE>
<CAPTION>
NAME, AGE AND YEAR
FIRST BECAME A
DIRECTOR PRINCIPAL OCCUPATION DURING LAST FIVE YEARS AND OTHER POSITIONS(1)
-------------------------------------------------------------------------------------------
<S> <C>
E. S. MELVIN Senior Vice President, Central Carolina Bank & Trust Company since
age 61 June 1993; prior thereto, Chairman of the Board and Chief Executive
Director since 1988 Officer, 1st Home Federal Savings and Loan Association of the
Carolinas, F.A., Greensboro, NC
DONALD S. RUSSELL, JR. Attorney in sole practice in Columbia, SC
age 55
Director since 1977
DAVID A. STONECIPHER* President and CEO of the Corporation; President-Elect and CEO-Elect
age 53 from September 1992 to February 1993; President and CEO since March
Director since 1993 1993, Jefferson-Pilot Life Insurance Company(2); President,
GeorgiaUS (holding company), Atlanta, GA from February 1991 to
August 1992 and Executive Vice President from April 1989 to
February 1991; also served as President and CEO of that company's
subsidiaries, Life Insurance Company of Georgia and Southland Life
Insurance Company, from July 1991 to August 1992 and as President
and Chief Operating Officer of the former from May 1989 to July
1991 and as President of the latter from January 1990 to July 1991
</TABLE>
---------------
* Member of the Corporation's Executive Committee.
(1) In addition to the directorships shown in the table, Mr. Belk is a director
of NationsBank Corporation and Ruddick Corporation; Mr. Borden is a
director of Carolina Power & Light Company, Triangle Bancorp, Ruddick
Corporation and Winston Hotels, Inc.; Mr. Cunningham is a director of
Freeport-McMoRan, Inc., La Quinta Motor Inns, Inc., twenty-one funds in the
John Hancock family of mutual funds and Texas Commerce Bank (Advisory
Director); Mr. McColl is a director of CSX Corporation, Ruddick Corporation
and Sonoco Products Company; Mr. Melvin is a director of Beamon
Corporation; Mr. Russell is a director of NationsBank, N.A. (Carolinas) and
Piedmont Natural Gas Company; and Mr. Spilman is a director of Dominion
Resources, Inc., NationsBank Corporation, The Pittston Co., Reliable
Stores, Inc., Trinova Corporation and Virginia Electric and Power Company.
(2) Jefferson-Pilot Communications Company and Jefferson-Pilot Life Insurance
Company are wholly-owned subsidiaries of the Corporation.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held five meetings during 1994. Attendance by directors
at meetings of the Board and of committees on which they served averaged
approximately 95%.
To assist the Board of Directors in carrying out its duties and
responsibilities, it has appointed several standing committees, including the
four described below.
Under the Statement of Principles of Jefferson-Pilot Corporation with Respect to
Certain Corporate Governance Matters, which were adopted by the Board and
ratified overwhelmingly by shareholders in 1993, the Audit, Compensation and
Conflict of Interests Committees may not include any inside director (a current
or recent executive officer or any relative thereof) or any other director who
is an executive officer of another public corporation on whose board an
executive officer and director of the Corporation serves. Each of these
Committees is authorized to engage independent advisers with an appropriate
budget made available for this purpose. The Nominating Committee may not include
more than one inside director.
The Audit Committee, which met twice in 1994, is currently composed of Directors
Russell (Chairman), Belk, Borden, Holton, Melvin and Walls. The duties of the
Committee include recommendation of the independent accountants to be appointed
by the Board; approval of the scope of the accountants' examination and other
services; review of the financial statements, including auditors' opinions and
management letters, and reporting to the Board the Committee's recommendation
with respect thereto; review of financial and/or fiscal
5
<PAGE> 7
policies and policy decisions; determination of the duties and responsibilities
of the officer with internal auditing responsibility; approval of the scope of
such officer's work and review of the results thereof; approval of such
officer's staffing requirements and budget; and, through review of the results
of internal and external audits, monitoring of internal programs to ensure
compliance with laws, regulations and the Corporation's responsibilities for
financial reporting to the public.
The Compensation Committee, which met three times in 1994, is currently composed
of Directors Cunningham (Chairman), McCoy, Belk, McColl, Melvin, and Spilman.
The duties of the Committee include approval of salaries to be paid to senior
executive officers; approval of or delegation to the President or a Vice
President of the authority to approve the salaries of all other officers; review
of the qualified employee benefit plans maintained by the Corporation; review of
all recommendations for changes in any plan which must be approved by the Board;
and administering officer incentive plans as well as determining the awards
thereunder for senior executive officers.
The Nominating Committee, which met once in 1994, is currently composed of
Directors Stonecipher (Chairman), Cunningham, Greer, McCoy and Spilman. The
duties of the Committee include recommendation to the Board with respect to
nominees for election as directors; and recommendation to the Board with respect
to the composition of all Committees of the Board other than the Executive and
Nominating Committees. In selecting nominees for the Board of Directors, the
Committee will consider nominees recommended in writing by shareholders to the
same extent as nominees recommended by management. The Committee will not be
able to consider recommendations received less than 120 days prior to the date
of the meeting at which directors are to be elected.
The Conflict of Interests Committee, which met once in 1994, is currently
composed of Directors Walls (Chairperson), Borden, Holton, Payne and Russell.
The duties of the Committee include annual review of all significant
relationships which directors have with the Corporation, directly or indirectly,
and make appropriate recommendations to the Board based thereon concerning
Committee assignments. The duties also include investigation of any complaints
concerning a possible conflict of interests involving directors or officers of
the Corporation, recommendation to the Board of action to be taken to remove any
such conflict and recommendation of policies or procedures designed to avoid any
such conflicts of interests.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Corporation or one of its subsidiaries
receive a retainer of $30,000 per year, plus a fee of $1,000 for each Board or
committee meeting of the Corporation or one of its subsidiaries attended ($500
for a committee meeting held in connection with a Board meeting). In 1994, the
retainer was $25,000 and the subsidiary meeting fee was $500. Committee
chairpersons receive an additional annual retainer of $3,000. The Chairman of
the Board receives an additional annual retainer of $50,000. For each of
Directors McColl and Payne, one-third of the non-employee director stock grant
of 2,250 shares of common stock vested during 1994. The Corporation has
discontinued the practice of making such one-time awards to non-employee
directors.
Directors may elect to defer receipt of some or all cash directors' fees.
Deferred accounts are credited with phantom stock of the Corporation or with
interest at rates representative of market rates, as selected by the director.
Deferred accounts are unfunded and are paid out after Board service ends.
The Non-Employee Directors' Stock Option Plan described on page 21 will provide
the opportunity for additional compensation based on the performance of the
Corporation's common stock.
6
<PAGE> 8
SECURITY OWNERSHIP
The following table shows the beneficial ownership of the Corporation's common
stock as of March 6, 1995 for each director, the director nominee and each of
the five highest paid executive officers, and for all such persons and other
executive officers as a group, based on information they supplied.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
NAME OWNED(1)(2)
----------------------------------------------------------------------------------------------------
<S> <C>
Thomas M. Belk................................................................... 3,335
William E. Blackwell............................................................. 51,113
Edwin B. Borden.................................................................. 11,000
William H. Cunningham............................................................ 3,008
C. Randolph Ferguson............................................................. 35,049
Robert G. Greer.................................................................. 3,600
George W. Henderson, III......................................................... 200
A. Linwood Holton, Jr. .......................................................... 2,560
Hugh L. McColl, Jr. ............................................................. 2,250(2)
Charles W. McCoy................................................................. 19,203
E. S. Melvin..................................................................... 7,325
William Porter Payne............................................................. 2,877(3)
Donald S. Russell, Jr. .......................................................... 79,875
Robert H. Spilman................................................................ 11,449
David A. Stonecipher............................................................. 98,885
Martha A. Walls.................................................................. 9,302
Dennis R. Glass.................................................................. 43,543
John D. Hopkins.................................................................. 35,500
Kenneth C. Mlekush............................................................... 37,692
Directors, the nominee and executive officers as a group (20 persons)............ 460,418(2)
</TABLE>
---------------
(1) The individuals have sole voting and investment power with respect to the
shares shown, except as follows: Mr. Belk: 135 shares are held by his wife
and 3,200 shares are held by a corporation of which he is the sole
shareholder; Mr. Blackwell: 1,500 shares are held by his wife; Mr.
Melvin: 300 shares are held by each of two sons; Mr. Russell: 74,250 shares
are held of record by his father under an arrangement under which Mr.
Russell has sole voting power; Mr. Spilman: 700 shares are held by his
wife; Mr. Stonecipher: 2,000 shares are held by his wife; and Ms.
Walls: 5,600 shares are owned jointly with her husband and 1,323 shares are
held by a corporation of which she is an officer, director and principal
shareholder. Except as specifically indicated, the directors named in this
note have no authority to vote these shares. The shares reported include
the following shares which the executives had the right to acquire within
60 days through the exercise of employee options: Mr. Blackwell, 3,333; Mr.
Ferguson, 2,500; Mr. Stonecipher, 75,000; Mr. Glass, 40,000; Mr. Hopkins,
32,500; Mr. Mlekush, 36,666; and the group, 219,999.
(2) None of the individuals reported beneficial ownership of more than 1% of the
total shares outstanding. Mr. McColl reported that NationsBank Corporation,
of which he is Chairman and Chief Executive Officer, holds 1,355,000 shares
(2.8%) for its own account, as to which he disclaims beneficial ownership.
(3) Includes 750 shares, the last installment of a non-employee director stock
grant, which are scheduled to vest on May 3, 1995.
The Corporation believes that all of its executive officers and directors
complied in 1994 with all applicable stock ownership reporting requirements
under Section 16(a) of the Securities Exchange Act of 1934, except that Mr.
McColl was late in filing reports disclosing certain of the purchases of stock
by NationsBank Corporation.
7
<PAGE> 9
The following table shows ownership of the Corporation's common stock by all
persons known to the Corporation to own beneficially five percent or more of
such stock as of March 6, 1995.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Delcor, Inc. 3,095,400(1) 6.4%
1105 North Market Street
Wilmington, DE 19899
INVESCO PLC 2,441,735(2) 5.0%
11 Devonshire Square
London EC2M 4YR, England
</TABLE>
---------------
(1) Delcor, Inc. ("Delcor"), Golden Eagle Industries, Inc. ("Golden Eagle")
(1110 East Morehead Street, Charlotte, NC 28204), C. D. Spangler, Jr. (910
Raleigh Road, Chapel Hill, NC 27515) and W. D. Cornwell, Jr. (1110 East
Morehead Street, Charlotte, NC 28204), have furnished the Corporation with
an SEC Schedule 13D dated December 21, 1992 and an amendment thereto dated
January 18, 1993, indicating that Delcor, a wholly-owned subsidiary of
Golden Eagle, is the record owner of these 3,095,400 shares, that Messrs.
Spangler and Cornwell may be deemed to control Golden Eagle and Delcor, and
that Messrs. Spangler and Cornwell may thus be considered to have
beneficial ownership of the shares of common stock beneficially owned by
Delcor. Mr. Cornwell, who is a director, President and Treasurer of Delcor
and Golden Eagle, is the record owner of 2,500 shares of common stock; in
addition, 2,000 shares of common stock are held under arrangements under
which Mr. Cornwell might be deemed a beneficial owner of such shares. Mr.
Spangler, who is the record owner of 750 shares of common stock, is a
director of Golden Eagle.
(2) INVESCO PLC has furnished the Corporation with an SEC Schedule 13G dated
February 10, 1995 indicating that it and a number of its affiliates
including INVESCO Capital Management, Inc. may be deemed to beneficially
own these 2,441,735 shares by virtue of having shared voting power and
shared dispositive power over the shares, which are reported to be held on
behalf of other persons who have the power to direct the receipt of
dividends and proceeds from sales.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Principles of the Executive Pay Program
The foundation of the executive compensation program is based on guiding
principles designed to align compensation with the Corporation's mission,
business strategy and values. Building on this foundation, the executive
compensation program is designed to retain and motivate the executive talent
needed to maximize the Corporation's return to shareholders by:
- providing base compensation levels that are competitive with that
provided in the various markets in which the Corporation competes for
executive talent;
- rewarding executives for the achievement of specific corporate and unit
earnings goals, as well as market-related goals necessary to build value
over the long term; and
- creating earned share ownership opportunities so that the long-term
maximization of shareholder value truly links executive and shareholder
interests.
In the executive compensation program's implementation, the Compensation
Committee considers each of these principles, which are described in greater
detail below.
8
<PAGE> 10
Competitive Compensation Levels
Total compensation (base salary and incentive) targets for expected levels of
performance are developed for executive officers. Published survey materials,
proxy statement analyses and counsel with consultants form the basis for
establishing targeted compensation levels, including the incentive compensation
described below. Companies listed as the "Similarly Diversified Companies" in
the Performance Graph are included in the compensation survey data, as are other
companies. The Corporation uses broad financial services and insurance industry
surveys to determine competitive data, since executives may be recruited from or
attracted to companies other than those included in the "Similarly Diversified
Companies." In general, total compensation is targeted at the second quartile
(i.e., the 50 to 75 percent range) of the relevant marketplace for each
executive's area of responsibility (e.g., life insurance, broadcasting, etc.).
Actual compensation of the individuals named in the Summary Compensation Table
for 1994, including Mr. Stonecipher, fell within the second quartile of the
relevant marketplace.
Incentive and Reward
Achieving both the short- and long-term goals described below is necessary for
executives to earn competitive total compensation. Depending on position,
between 50 and 60 percent of each executive officer's total targeted
compensation is based upon performance. Performance-related elements include
annual bonus, long-term incentive compensation ("Long-Term Plan") payouts and
stock options.
The annual incentive compensation plan is keyed to competitive annual incentive
norms and is based on the achievement of short-term goals consisting of the
Corporation's earnings per share ("EPS") and operating income targets set for
the Corporation and each line of business. Additional short-term goals such as
market share, premium growth and new business issued may also affect incentive
awards. The short-term goals for executives are developed based on the
Corporation's annual budgets and operating plans. The weights accorded to the
goals vary depending on the participant's position. The actual performance of
the Corporation and of the individuals named in the Summary Compensation Table
in 1994 resulted in bonuses varying from 40.7% to 49.3% of base salary.
Long-term incentives come in two forms under the Stock Option Plan: the
Long-Term Plan, which is a three-year plan based on cumulative growth of
operating EPS, and stock options. Participants in the Long-Term Plan are
eligible for an annual payment, the first having been made in early 1995,
contingent upon the Corporation's achieving specified levels of compound growth
rate in the cumulative operating earnings per share ("CGR") during the preceding
three years (or, in the case of the phase-in period ending December 31, 1994,
the preceding two years). Payouts are expressed as a percentage (which varies
according to the participant and the level of CGR achieved) of each
participant's salary during the last year of the relevant period and are
established in combination with the expected value of stock option grants such
that competitive and performance-related long-term incentive opportunities are
available. No amounts will be payable under the Long-Term Plan if the CGR during
the relevant period is less than 50% of the targeted CGR. Payouts for Mr.
Stonecipher are based on a percentage that is 33% greater than the percentage
for other current participants in the Long-Term Plan due to differences in
competitive practice for the Chief Executive Officer position versus that of
other executive officers.
Nearly half of the stock options awarded in 1994 to executive officers were
granted pursuant to employment agreements, which are described below under
"Employment Contracts." The agreements provide for grants of options in amounts
that, when combined with long-term incentives under the three-year plan, provide
total long-term incentive compensation that is competitive with other large
insurance companies, based on data from industry surveys. Actual gains from
stock option grants are dependent upon stock price increases from the fair
market value at the time of grant. The Compensation Committee does not consider
levels of share ownership or past option grants in making current stock option
awards as it desires to continually reinforce the goal of stock price
improvement.
9
<PAGE> 11
Equity Ownership
Sustained and increasing ownership by executives of the Corporation's stock is
expected upon shares being earned through performance. Half of the value earned
under the Long-Term Plan is delivered in shares. In the first payout for the
phase-in cycle which ended in 1994, an aggregate of 4,483 shares were delivered
to six executive officers. The direct link between shareholders and executives
is strengthened by using stock options as an important incentive vehicle.
Expectations are established regarding the continued ownership by executives
during their employment of shares acquired upon exercise of options and under
the Long-Term Plan.
Chief Executive Officer's Compensation
Mr. Stonecipher's salary for 1994 reflected a 4% increase over that guaranteed
for 1993 under his employment agreement with the Corporation, which was
negotiated on an arms' length basis and entered into on August 11, 1992. Under
this agreement, Mr. Stonecipher's bonus for 1994 was determined in accordance
with a formula based on growth in EPS over the prior year. In 1994, EPS
increased 12.8% compared with 1993 (before the initial application of FAS 106).
In addition, pursuant to his employment agreement, Mr. Stonecipher participates
in the Long-Term Plan and received a payout in early 1995 based on achievement
of near-target CGR over the two-year period 1993-94, and in 1994 received a
stock option to purchase 25,000 shares at the fair market value on the date of
grant.
The Corporation has not awarded any compensation that is non-deductible under
Section 162(m) of the Internal Revenue Code. In the event that the Compensation
Committee considers awarding compensation in the future which would not be
deductible under Section 162(m), the Committee will consider what actions, if
any, should be taken to seek to make such compensation deductible.
COMPENSATION COMMITTEE
William C. Cunningham, Chairman
Thomas M. Belk
Hugh L. McColl, Jr.
Charles W. McCoy
E. S. Melvin
Robert H. Spilman
10
<PAGE> 12
A summary of the compensation for the Corporation's chief executive officer, and
for the four other executive officers who were the highest paid for 1994 ("named
officers"), for services to the Corporation or its subsidiaries is shown in the
following table.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
--------------------
ANNUAL COMPENSATION AWARDS(2) PAYOUTS
----------------------------------- ---------- -------
OTHER ANNUAL SECURITIES LTIP
COMPENSATION UNDERLYING PAYOUTS
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS(#) ($)(3)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David A. Stonecipher................... 1994 780,000 338,520 -- 25,000 203,840
President and Chief Executive Officer 1993 750,000 235,500 -- 25,000 --
of the Corporation and of 1992 242,308 -- 221,790 25,000 --
Jefferson-Pilot Life Insurance
Company(4)
Kenneth C. Mlekush..................... 1994 338,000 140,000 -- 15,000 66,248
Senior Vice President of the 1993 325,000 122,900 36,508 15,000 --
Corporation and Executive Vice 1992 -- -- 125,000 -- --
President -- Individual of
Jefferson-Pilot Life Insurance
Company(4)
William E. Blackwell................... 1994 317,500 156,464 -- 10,000 62,230
Executive Vice President of the 1993 305,000 132,370 -- -- --
Corporation and President, 1992 261,192 133,875 -- -- --
Jefferson-Pilot Communications
Company
Dennis R. Glass........................ 1994 303,000 125,000 30,000 7,500 59,388
Senior Vice President and Treasurer of 1993 63,462 13,992 125,000 25,000 --
the Corporation and Executive Vice
President and Treasurer of
Jefferson-Pilot Life Insurance
Company(4)
John D. Hopkins........................ 1994 282,500 115,000 -- 15,000 --
Senior Vice President and General 1993 188,558 56,567 41,300 15,000 --
Counsel of the Corporation and
Executive Vice President and General
Counsel of Jefferson-Pilot Life
Insurance Company(4)
</TABLE>
---------------
(1) Other annual compensation for Mr. Mlekush includes a transition payment of
$50,000 and a payment for bonus foregone from his previous employer of
$75,000. For Mr. Hopkins it includes a transition payment of $35,000. For
Mr. Stonecipher it includes a transition payment of $150,000 and a payment
of $70,640 for costs in connection with the sale of his former residence.
For Mr. Glass it includes a transition payment of $25,000 and a payment for
bonus foregone from his previous employer of $130,000 of which $30,000 was
paid in 1994.
(2) During the years 1992-1994, none of the named individuals were granted any
stock appreciation rights ("SAR's") or restricted stock awards.
(3) LTIP payouts were made 50% in shares of the Corporation's common stock which
the executives are expected to retain.
(4) Mr. Stonecipher became President and Chief Executive Officer on March 1,
1993, having joined the Corporation as President-Elect and Chief Executive
Officer-Elect on September 8, 1992. Messrs. Glass, Hopkins and Mlekush
first became employed by the Corporation in 1993. See "Employment
Contracts" below.
11
<PAGE> 13
LONG TERM STOCK INCENTIVE PLAN
This plan provides long term incentives, based on Jefferson-Pilot common stock
and on growth in earnings per share ("EPS"), to employees who may influence the
long term performance of the Corporation and its subsidiaries. Key features of
the plan include stock options and long term incentive awards. The option price
may not be less than 100% of the fair market value of the stock on the award
date. The following table shows options awarded by the Compensation Committee in
1994 to the named officers.
The price of the common stock must appreciate in order for optionees to realize
any gain. As the stock price increases, all shareholders benefit
proportionately.
OPTION GRANTS DURING 1994
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS GRANT DATE
UNDERLYING GRANTED TO PRESENT VALUE
OPTIONS EMPLOYEES EXERCISE EXPIRATION (BLACK-SCHOLES)
NAME GRANTED(#) IN 1994 PRICE ($) DATE ($)(1)
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
David A. Stonecipher.................. 25,000 19.4 45.125 2/14/04 161,056
Kenneth C. Mlekush.................... 15,000 11.6 45.125 2/14/04 96,634
William E. Blackwell.................. 10,000 7.8 45.125 2/14/04 64,423
Dennis R. Glass....................... 7,500 5.8 45.125 2/14/04 48,317
John D. Hopkins....................... 15,000 11.6 45.125 2/14/04 96,634
</TABLE>
---------------
(1) The values shown in this table have been calculated through standard
application of the Black-Scholes pricing model, using the following
assumptions: options are exercised at the end of their ten-year term;
interest rates are based on U.S. Treasury Strips available on the grant
date and maturing at the end of the option term; volatility is based on the
average daily closing market prices for December 1989 through December
1993; and the average annual dividend growth rate approximates 10%. The
actual value an executive officer receives from a stock option is dependent
on future market conditions, and there can be no assurance that the value
ultimately realized by the executive will not be more or less than the
amount reflected as "Grant Date Present Value." In addition, the value
shown does not take into account the nontransferability of the options. The
options granted under employment agreements are exercisable immediately and
the discretionary options (5,000 for Mr. Mlekush, 10,000 for Mr. Blackwell
and 7,500 for Mr. Hopkins) become exercisable in one-third increments over
three years.
The following table shows stock option exercises during 1994 and the value of
unexercised options as of December 31, 1994.
AGGREGATED OPTION EXERCISES IN 1994
AND DECEMBER 31, 1994 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT 12-31-94 (#) AT 12-31-94 ($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David A. Stonecipher... -- -- 75,000 -- 575,000 --
Kenneth C. Mlekush..... -- -- 25,000 5,000 121,875 33,750
William E. Blackwell... 8,750 228,732 -- 10,000 -- 67,500
Dennis R. Glass........ -- -- 32,500 -- 50,625 --
John D. Hopkins........ -- -- 22,500 7,500 50,625 50,625
</TABLE>
The dollar values shown above represent the difference between the fair market
value of the common stock and the exercise price of the options at exercise or
December 31, 1994 respectively.
12
<PAGE> 14
The following table shows awards in 1994 under the Long-Term Plan, which is
described under "Incentive and Reward" above.
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1994
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE UNDER NON-STOCK
OR OTHER PRICE-BASED PLANS
NUMBER OF SHARES PERIOD UNTIL -----------------------------
UNITS OR OTHER MATURATION OR THRESHOLD TARGET MAXIMUM
NAME RIGHTS (#)(1) PAYOUT(2) ($)(3) ($)(3) ($)(3)
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
David A. Stonecipher.................. -- 1994-1996 156,000 312,000 468,000
Kenneth C. Mlekush.................... -- 1994-1996 50,700 101,400 152,100
William E. Blackwell.................. -- 1994-1996 47,625 95,250 142,875
Dennis R. Glass....................... -- 1994-1996 45,450 90,900 136,350
John D. Hopkins....................... -- 1994-1996 -- -- --
</TABLE>
---------------
(1) Long-term awards are not designated in shares, units or other rights.
Payouts are based on the compound growth rate ("CGR") in earnings per share
during the three-year period. Payouts, if any, are in a 50/50 ratio of cash
and common stock valued at the fair market value on the date of payout.
(2) Amounts in the table are based on current annual salary. Actual payments, if
any, will be calculated as a percentage (which varies according to the
participant and the level of CGR achieved) of salary during the last year
in the period.
(3) Payouts are contingent upon achieving specified levels of CGR. The target
amount will be payable if the targeted CGR is achieved. The threshold
amount will be payable if 50% of the targeted CGR is achieved; below 50% no
payout will be made. The maximum amount will be payable if 150% or more of
the targeted CGR is achieved.
RETIREMENT PLANS
Retirement benefits are provided under both a qualified plan and a nonqualified
supplemental benefit plan maintained by the Corporation for certain senior
executives, and the following table includes benefits under both plans.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS AT SERVICE
--------------------------------------
20 YEARS
FINAL AVERAGE EARNINGS 10 YEARS 15 YEARS OR MORE
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 200,000.............................................. $ 50,000 $ 75,000 $100,000
$ 400,000.............................................. $100,000 $150,000 $200,000
$ 600,000.............................................. $150,000 $225,000 $300,000
$ 800,000.............................................. $200,000 $300,000 $400,000
$1,000,000............................................. $250,000 $375,000 $500,000
$1,200,000............................................. $300,000 $450,000 $600,000
</TABLE>
The table illustrates straight life annuity annual benefits that would be
payable upon normal retirement at age 65 on January 1, 1995 to participants in
specified earnings and years of service classifications. Benefits shown are not
subject to offset for amounts payable under Social Security, but are subject to
reduction in the event of early retirement.
For purposes of the table, covered compensation consists of the amounts
disclosed in the Summary Compensation Table as salary and, for years after 1992,
bonus. The credited years of service for the named individuals are as
follows: Mr. Stonecipher, 2 years; Mr. Mlekush, 2 years; Mr. Blackwell, 37
years; Mr. Hopkins, 2 years; and Mr. Glass, 1 year.
Mr. Stonecipher is entitled to additional retirement benefits pursuant to the
terms of his employment agreement.
13
<PAGE> 15
EMPLOYMENT CONTRACTS
On March 1, 1993, David A. Stonecipher became the President and Chief Executive
Officer of the Corporation and Jefferson-Pilot Life Insurance Company pursuant
to an employment agreement dated August 11, 1992, which expires on December 31,
1997. Mr. Stonecipher's 1993 base salary under the agreement was $750,000 and is
subject to review and increase by the Compensation Committee in subsequent years
as appropriate. An annual bonus of up to 50% of base salary may be earned,
determined in accordance with a formula based on growth in EPS over the prior
year. A bonus of 30% of base salary was guaranteed for 1993. Pursuant to the
agreement, Mr. Stonecipher has been granted options to purchase at the market
price on the date of grant 75,000 shares of Common Stock under the Corporation's
Stock Option Plan. Mr. Stonecipher, currently age 53, is entitled to an annual
retirement benefit at age 65 equal to 67% (reduced in the case of termination of
service before age 65) of the average annual base salary and annual bonus
payments over the last 60 months of employment, reduced by other retirement
benefits received by Mr. Stonecipher from his former employer or under
retirement plans of the Corporation, including the pension plans described
above.
Messrs. Mlekush, Glass and Hopkins and one other executive officer joined the
Corporation in 1993 under three-year employment agreements providing for annual
salary, and guaranteed options over three years covering shares, as follows: Mr.
Mlekush, $325,000 and 35,000 shares; Mr. Glass, $300,000 and 40,000 shares; and
Mr. Hopkins, $265,000 and 30,000 shares. Base salaries are subject to review and
increase by the Compensation Committee in subsequent years as appropriate. The
agreements also provide that annual bonuses of up to 48% of base salary may be
earned in accordance with a formula based on growth in operating EPS and, in the
case of Mr. Mlekush, on growth in earnings from individual insurance operations
and annualized individual insurance premium sales, with guaranteed first year
bonuses of 30% of earned salary. The agreements also provide for participation
in the Long-Term Plan (except for Mr. Hopkins) and for transition payments,
moving expense reimbursements and certain foregone bonus reimbursements -- see
note (1) to the Summary Compensation Table.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Directors McColl, McCoy, Melvin and Spilman served as members of the
Compensation Committee of the Board during all of 1994. In addition, Directors
Belk and Cunningham joined the Committee on February 14, 1994 and served during
the remainder of 1994. Director McCoy served as Chairman of the Committee until
November 7, 1994 when Mr. Cunningham became Chairman. None of such persons was
an officer or employee of the Corporation or any of its subsidiaries.
Jefferson-Pilot Life Insurance Company ("Life Company"), a subsidiary of the
Corporation, leases office space in Greensboro, North Carolina to NationsBank,
N.A. (Carolinas) ("Bank"), a subsidiary of NationsBank Corporation, of which
Hugh L. McColl, Jr., a member of the Compensation Committee, is Chairman of the
Board and Chief Executive Officer (in addition to serving as Chief Executive
Officer of the Bank). With escalation, the annual rent now slightly exceeds
$600,000 for approximately 50,000 square feet. The space was leased to the Bank
in 1975 at rentals which at the time the lease agreement was negotiated were no
more or less favorable, in the opinion of management of the Life Company, than
those which an unaffiliated company would be required to pay for similar space.
The Life Company has for many years provided group life insurance to the
employees of NationsBank and its subsidiaries and administered the self-insured
medical plan for their employees. During 1994, the Life Company received from
NationsBank an aggregate of approximately $13.6 million in group life insurance
premiums (including employee-paid premiums) and administrative fees for
servicing the medical plan. The premiums and fees charged were negotiated in an
arms' length transaction. As a result, management believes that those premiums
and fees are no more or less favorable than those which an unaffiliated company
of comparable size would be charged for similar insurance and services.
The Corporation and its subsidiaries have a $100 million uncommitted line of
credit with NationsBank of Georgia, N.A., a subsidiary of NationsBank. Peak
borrowings in 1994 were $92 million. The Life Company also entered into reverse
repurchase transactions during 1994 with NationsBank. Amounts owing to
NationsBank
14
<PAGE> 16
under these agreements peaked at $50.7 million. No amounts were outstanding at
year end under either of these arrangements. Similar arrangements exist with
other financial institutions.
SHAREHOLDER RETURN
The following graph illustrates the cumulative total shareholder return on
Jefferson-Pilot's common stock compared to total returns on Standard & Poor's
500 Stock Index and on certain other similarly diversified life insurance
companies. The graph assumes that $100 was initially invested on December 31,
1989 and that all dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG JEFFERSON-PILOT CORPORATION, S&P 500 INDEX, AND SIMILARLY DIVERSIFIED
COMPANIES
<TABLE>
<CAPTION>
CUSTOM
COMPOSITE
MEASUREMENT PERIOD JEFFERSON- INDEX (10
(FISCAL YEAR COVERED) PILOT CORP. S&P 500 STOCKS)
<S> <C> <C> <C>
DEC '89 $100 $100 $100
DEC '90 $ 90 $ 97 $ 85
DEC '91 $143 $126 $124
DEC '92 $189 $136 $167
DEC '93 $190 $150 $174
DEC '94 $217 $152 $157
</TABLE>
The similarly diversified companies included in the custom composite index are
American General Corporation, American National Insurance Company, Providian
Corporation (formerly Capital Holding Corporation), The Liberty Corporation,
Lincoln National Corporation, ReliaStar Financial Corp. (formerly The NWNL
Companies, Inc.), Protective Life Corporation, Provident Life & Accident
Insurance Company of America (Class B Common), Torchmark Corporation, and USLife
Corporation. Each company is weighted according to its respective stock market
capitalization at the beginning of each calendar quarter included in the graph.
15
<PAGE> 17
PROPOSALS II AND III -- AMENDMENTS TO ARTICLES OF INCORPORATION TO
INCREASE AUTHORIZED COMMON STOCK AND TO AUTHORIZE PREFERRED STOCK
The Board of Directors has unanimously adopted and recommended for shareholder
approval, amendments to the Corporation's Articles of Incorporation to increase
the authorized common stock from 100,000,000 to 150,000,000 shares and to
authorize a class of 20,000,000 shares of preferred stock, for the reasons
discussed below. A copy of the proposed amendment to Article IV of the
Corporation's Articles of Incorporation is attached as Exhibit 1.
INCREASE IN AUTHORIZED COMMON STOCK
Article IV of the Articles currently provides for the issuance of up to
100,000,000 shares of common stock, $1.25 par value. As of March 6, 1995 the
Corporation had 48,457,231 common shares outstanding. There were an aggregate of
approximately 3,100,000 shares covered by the Corporation's amended Long Term
Stock Incentive Plan (approximately 2,900,000 shares) and its Non-Employee
Directors' Stock Option Plan (200,000 shares), in each case subject to
shareholder approval at this meeting. Accordingly, at March 6, 1995, there were
only approximately 48,450,000 shares of common stock authorized but not issued
or covered by these plans, and thus available for issuance for other corporate
purposes such as stock splits or stock dividends, acquisitions, the raising of
additional capital and other corporate purposes including the Corporation's
shareholder rights plan under which most of such shares might potentially become
issuable.
The Board believes that it is desirable to have additional shares of common
stock authorized to accommodate a possible future stock split and/or possible
future acquisitions and stock offerings and for other general corporate
purposes. The Board has no current commitments, agreements or plans to engage in
any of the above transactions, although the strategy for growth includes
analysis of acquisition opportunities. The Board believes that the proposed
increase in the number of authorized shares of common stock is desirable to
provide greater flexibility and efficient corporate management. Like the
presently authorized but unissued shares, the additional authorized shares would
be available for any proper corporate purpose without the delay and expense of
further action by the shareholders, unless such action is required by applicable
law or by the rules of the New York Stock Exchange. The additional shares of
common stock for which authorization is sought would be identical to the shares
of common stock now authorized. Holders of shares of the Corporation do not have
preemptive rights to subscribe to additional common stock which the Corporation
may issue.
ADDITION OF AUTHORIZED PREFERRED STOCK
Under the second proposed Amendment, the Board can authorize the issuance, at
any time or from time to time, of one or more series of preferred stock, without
further shareholder approval unless such approval is otherwise required. In
addition, subject to the limitations on voting rights described below, the Board
would determine all designations, relative rights, preferences and limitations
of such stock. This includes the designation of series and numbers of shares;
the dividend rights, if any; the rights upon liquidation or distribution of the
assets of the Corporation, if any; the conversion or exchange rights, if any;
the redemption provisions, if any; the sinking fund provisions, if any; the
voting rights, if any, provided that the holders of shares of preferred stock
will not be entitled to more than the lesser of (x) one vote per $100
liquidation value or (y) one vote per share, when voting as a class with the
holders of shares of common stock, and will not be entitled to vote separately
as a class except where the preferred stock is adversely affected (or where
North Carolina corporate law requires a class vote) or, if the Board so
provides, for the election of not more than two directors after default in
multiple dividends on the preferred stock. No holders of shares of the
Corporation will have any preemptive rights to acquire any of the preferred
stock.
16
<PAGE> 18
Well over one-half of the Corporation's peer group shown in the "Performance
Graph" above have the ability to issue some type of preferred stock without
further shareholder approval. The Board and management of the Corporation
believe that amending the Articles of Incorporation to permit the Board to
authorize the issuance of preferred stock will provide flexibility for future
acquisitions, corporate financings and other corporate purposes. If the
amendment is approved, the Board will be able to specify the precise
characteristics of preferred stock to be issued, depending on current market
conditions and the nature of specific transactions.
POSSIBLE ANTI-TAKEOVER USES
Although the proposed increase in authorized common stock and the addition of
preferred stock were not prompted by a belief that additional takeover defenses
are needed, and the Corporation is not aware of anyone contemplating a proposed
acquisition of control of the Corporation, the additional shares could be used
to oppose persons seeking to gain control of the Corporation without negotiating
with the Board by, for example, privately placing such shares with purchasers
who might side with the Board in opposing a hostile takeover bid or diluting the
stock ownership of a person or entity seeking to gain control of the
Corporation. Such uses of common or preferred stock could render more difficult
an unsolicited tender offer or other attempt to acquire control, as would the
Corporation's existing anti-takeover devices, including: the Corporation's
shareholder rights plan, the so-called "fair price" provisions in the Articles
requiring a supermajority shareholder vote to approve certain business
combinations with major shareholders, and the provisions of the Articles
establishing a "staggered" board of directors and a supermajority vote of
shareholders in order to remove directors or amend these provisions. The Board
and management believe that, as structured, the authorization of preferred stock
is in the best interest of shareholders and the Corporation, since it could not
disproportionately affect the voting power of existing shareholders, is
consistent with sound corporate governance principles, and will enable the
Corporation to structure flexible securities for use in possible acquisitions as
well as to take advantage of financing alternatives at lower effective cost.
Each of the proposed amendments will be adopted if the votes cast for it exceed
the votes cast against it at a shareholders' meeting at which a quorum is
present. They then will become effective upon filing with the North Carolina
Secretary of State.
THE BOARD RECOMMENDS A VOTE FOR EACH OF THE PROPOSED AMENDMENTS TO THE ARTICLES
OF INCORPORATION: TO INCREASE THE AUTHORIZED COMMON STOCK TO 150,000,000 SHARES,
AND TO AUTHORIZE A CLASS OF 20,000,000 SHARES OF PREFERRED STOCK.
17
<PAGE> 19
PROPOSAL IV -- APPROVAL OF AMENDMENT AND
RESTATEMENT OF LONG TERM STOCK INCENTIVE PLAN
On February 13, 1995 the Board of Directors, upon recommendation of its
Compensation Committee ("Committee"), adopted amendments to the Corporation's
Stock Option Plan and restated it as the Long Term Stock Incentive Plan
("Plan"), subject to approval by the shareholders. Certain key amendments
included in the Plan as restated are highlighted below and a general description
of the entire restated plan for which shareholder approval is sought follows.
The following summary description of the Plan is qualified in its entirety by
reference to the full text of the restated Plan, which is attached as Exhibit 2.
The Plan is intended to benefit the Corporation and its shareholders by
attracting, retaining and motivating highly qualified employees and by providing
increased incentive to such employees while also helping to align their
interests more closely with those of shareholders.
SUMMARY OF CERTAIN KEY AMENDMENTS
The first key amendment increases the number of shares of the Corporation's
common stock available for issuance under the Plan by 2,000,000 shares. As of
March 6, 1995, an aggregate of 564,337 shares were covered by outstanding
options, and only approximately 340,000 shares remained available for future
awards under the Plan prior to this amendment.
The other significant changes are:
1. The term of the Plan is extended from its current expiration date of May
1, 1999 to May 1, 2005, which is ten years from the date of the
shareholder vote on the amended Plan.
2. The number of option shares which could be awarded in any calendar year
to any one officer or employee is limited to 150,000 in order to comply
with an Internal Revenue Code requirement that a limit be included.
Presently, there is no limit on option awards to any individual.
3. The provision for automatic stock grants of 2,250 shares of common stock
to each new non-employee director of the Corporation is deleted.
Proposal V in this proxy statement covers a new 1995 Non-Employee
Directors' Stock Option Plan.
4. Substantial limitations on the existing authorization of stock grants
for officers and other employees have been added. Discretionary
unrestricted stock grants are no longer permitted, and the amended Plan
requires that grants either be restricted stock or stock paid out upon
the achievement of performance goals established by the Committee. In
addition, total stock grants under the amended Plan cannot exceed 10% of
the shares authorized under the Plan. Presently there are no limits on
stock grants.
5. Shares may be withheld to cover applicable withholding taxes.
SUMMARY OF THE PLAN
The Plan is administered by the Committee, which must be composed of
disinterested directors. The Committee selects the officers and other employees
of the Corporation and its subsidiaries to be granted options or other awards,
which may include stock appreciation rights ("SAR's"), restricted stock, and
awards of restricted or unrestricted stock upon the achievement of performance
goals established by the Committee. An option or other award may not be granted
to any individual who, immediately after the award, owns and/or holds options to
acquire 10 percent or more of the Corporation's common stock. Incentive stock
options qualifying under the Internal Revenue Code which first become
exercisable in any one year cannot exceed $100,000 of stock purchase price as to
each optionee. For purposes of the Plan, full-time life insurance sales
personnel of the Corporation's life insurance company subsidiaries are deemed
employees.
Under the amended Plan, as of March 6, 1995 approximately 2,900,000 shares of
the Corporation's common stock were reserved for Plan purposes, including
approximately 2,340,000 shares not yet subject to awards. Shares issued under
the Plan are authorized but unissued shares. Shares covered by options that
terminate
18
<PAGE> 20
unexercised will be available for further use under the Plan. To the extent
permitted by Rule 16b-3 of the Securities and Exchange Commission, any
previously acquired common stock of the Corporation that is tendered as payment
for an option, any restricted stock that fails to vest and any shares withheld
for taxes, will also be available for further use under the Plan. Adjustments
will be made in the number and kind of shares subject to the Plan and
outstanding awards, and in the exercise price of outstanding awards, in the
event of any change in the Corporation's outstanding shares by reason of any
stock split or stock dividend, recapitalization, merger, consolidation or other
similar change.
The option exercise price is set by the Committee but may not be less than 100%
of the fair market value of the common stock on the date of grant. Options may
be exercisable for such periods as the Committee determines, but for not more
than 10 years from the date of grant.
The share purchase price must be paid in full at the time of exercise of any
portion of an option. Payment may be in cash, shares of previously acquired
common stock of the Corporation having a fair market value at the time of
exercise equal to the exercise price, or a combination of the two. The Committee
may allow "pyramiding" in the exercise of stock options and permit the exercise
and simultaneous sale ("cashless exercise") of stock options through brokerage
firms.
The Committee may, for one or more option awards, require each optionee to
establish and maintain a stock purchase savings account in which payroll
deductions will accumulate so that on the stock option exercise date the account
balance will fully pay the exercise price. Interest on such accounts may be
credited as determined by the Committee.
SAR's may be granted, in the sole discretion of the Committee, separately or in
tandem with options. Generally, an SAR entitles an optionee to receive upon
exercise cash and/or shares of the Corporation's common stock equal to the
spread between the fair market value of the common stock on the exercise date
and on the date the SAR was granted. No SAR's have been granted in recent years
and none are now outstanding.
Options are non-transferable except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order, except in
special situations with specific Committee approval in each case.
Upon termination of an optionee's employment, options may be exercised for the
original option terms or for such shorter periods or subject to such limitations
as may be established by the Committee.
The Board of Directors may at any time amend or discontinue the Plan, but may
not revoke or alter the terms of any option previously granted without the
consent of the optionee. However, shareholder approval is required for any Plan
amendment that would increase the number of shares reserved for the Plan,
decrease the minimum option price, extend the Plan's duration, or materially
modify the requirements as to eligibility or materially increase the benefits
accruing to Plan participants.
No options may be granted under the amended plan after May 1, 2005.
Options granted in 1994 are shown in the "Option Grants During 1994" table
above. Long-term incentive awards providing for payouts 50% in stock for any
earned awards are shown in the "Long-Term Incentive Plans -- Awards in 1994"
table above, and unrestricted stock payouts made for 1994 based upon performance
against the goals set by the Committee for the 1993-94 cycle are shown in the
LTIP Payouts column of the "Summary Compensation Table" above. In February 1995,
executive officers as a group (seven persons) received options for 142,000
shares and the LTIP payouts of 4,483 shares, and other employees received
options for 115,000 shares. Awards under the Plan are determined by the
Committee in its sole discretion, and thus it is not possible to determine the
benefits or amounts that will be received by any individual employee or group of
employees in the future. As of March 6, 1995, the fair market value of the
Corporation's common stock, par value $1.25, was $56.50.
19
<PAGE> 21
CERTAIN FEDERAL TAX CONSEQUENCES
There are no tax consequences to the Corporation or the optionee at the time an
option is granted.
Upon the exercise of non-qualified options or SAR's, optionees recognize income
in an amount equal to the option or SAR "spread," that is, the difference
between the fair market value on the date of exercise and the exercise price.
The Corporation generally receives a deduction in the same amount.
On the other hand, an optionee is not taxed at the time an Incentive Stock
Option is exercised, although the alternative minimum tax may apply. If the
optionee holds the shares for the longer of one year from exercise or two years
from the option grant, the optionee generally does not recognize income until
the shares are sold (at which time the difference between the sale proceeds and
the exercise price is taxed as capital gain) and the Corporation does not
receive any deduction. If the holding period is not satisfied, the optionee
recognizes ordinary income, and the Corporation is entitled to a tax deduction,
to the extent of the lesser of the gain realized and the option spread at
exercise.
Restricted stock grants are taxed upon the vesting of shares in an amount equal
to the fair market value of the shares on the date they vest. The Corporation
receives a deduction in the same amount. This same tax treatment applies at the
time of delivery of shares as unrestricted stock grants paid out after
performance goals are achieved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDED AND
RESTATED LONG TERM STOCK INCENTIVE PLAN.
The affirmative vote of a majority of the shares present or represented and
entitled to vote at the meeting is required to approve the amended and restated
Plan. In accordance with Rule 16b-3, abstentions will be treated as present or
represented and entitled to vote, and broker non-votes will not be so treated.
20
<PAGE> 22
PROPOSAL V -- APPROVAL OF 1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
In November 1994, the Board's Compensation Committee recommended the adoption of
a stock option program for outside directors. On February 13, 1995, the Board of
Directors adopted, subject to approval by the Corporation's shareholders, the
Non-Employee Directors' Stock Option Plan ("Plan").
The Plan is designed to encourage directors to acquire increased ownership of
the Corporation's common stock, thereby helping to align the interests of
non-employee directors and the shareholders, and to assist in attracting and
retaining directors who have the experience, ability and skills necessary to
assist in the Corporation's sustained growth and prosperity.
Non-employee directors also receive cash remuneration for their services, as
described above under "Compensation of Directors."
DESCRIPTION OF THE PLAN
The following summary description of the Plan is qualified in its entirety by
reference to the full text of the Plan, which is attached as Exhibit 3.
The Plan provides for an initial award on February 13, 1995 of options to
purchase 5,000 shares of common stock of the Corporation and automatic yearly
awards of options to purchase 2,250 shares of common stock each year from 1996
through 1999. Awards are made to each active director serving on the Board at
the time of the award who is not an employee of the Corporation or any of its
subsidiaries or affiliates. Each new non-employee director will receive the
initial award of 5,000 shares on joining the Board, and in ensuing years will
receive the annual award. Assuming his election, Mr. Henderson will receive the
initial award on May 1, 1995 and annual awards commencing in 1996. The amounts
of future awards are subject to adjustment in the event of stock splits and
other changes in stock.
Each option permits the holder to purchase shares at their fair market value on
the date the option was awarded. Payment may be in cash, previously acquired
common stock or a combination of the two. The share purchase price must be paid
in full at the time of exercise of any portion of an option.
The Plan provides that the initial awards on February 13, 1995 will vest on the
date shareholder approval is given (shareholders will vote on May 1, 1995) and
will become exercisable six months after that date. Annual awards will vest and
become exercisable after one year. The initial award to any new director will
vest and become exercisable in equal annual installments over three years. If
there is a change in control of the Corporation as defined in the Plan, all
options will immediately vest and generally will become exercisable.
Annual option awards under the Plan will be made on the first regular quarterly
Board meeting date in each year from 1996 through 1999. The Plan will expire,
unless earlier terminated, on March 31, 1999.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
<TABLE>
<CAPTION>
NUMBER OF SHARES(1)
-------------------------------------
INITIAL ANNUAL
PLAN PARTICIPANTS OPTION AWARD OPTION AWARD
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Executive officers and other employees.................... 0 0
Each non-employee director................................ 5,000 2,250
Non-employee directors as a group(2)...................... 60,000(3) 27,000
</TABLE>
---------------
(1) Number of shares of common stock that can be purchased under each initial or
annual option.
(2) As of March 6, 1995; includes twelve non-employee directors.
(3) The option exercise price for the initial awards is $54.625, which is 100%
of the fair market value of the common stock on February 13, 1995.
As of March 6, 1995, the fair market value of the Corporation's common stock,
par value $1.25, was $56.50.
21
<PAGE> 23
All options will expire ten years after the date of grant, unless earlier
terminated. If a participating director terminates service on the Board as the
result of death, disability, retirement pursuant to Board policy or a change in
control, previously granted options will vest immediately. If a participating
director terminates service on the Board for any other reason, his or her
outstanding options may be exercised only to the extent that they were
exercisable at the time of such termination, and any unvested options are
forfeited. All options must be exercised within five years of termination of
Board service and in any event within the original ten-year option term. Each
option will be nontransferable other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order.
An aggregate of 200,000 shares of common stock are subject to the Plan. Shares
subject to options that terminate unexercised will be available for future
option grants. Adjustments will be made in the number and kind of shares subject
to the Plan, future awards and outstanding options, and in the purchase price of
outstanding options, in the event of any change in the Company's outstanding
shares by reason of any stock split or stock dividend, recapitalization, merger,
consolidation or other similar corporate change.
The Plan will be administered by a committee appointed by the Board and
consisting of directors and others who are not eligible to participate in the
Plan. The initial members of the committee are Messrs. Blackwell, Ferguson and
Stonecipher. The committee is authorized to interpret the Plan, establish and
amend rules relating to the Plan and make other determinations necessary or
advisable for the administration of the Plan, but will have no discretion with
respect to the selection of directors to receive options, the number of shares
subject to the Plan or to any option or the purchase price for shares subject to
option. The committee will also have no authority to increase Plan benefits
materially. The Board of Directors may terminate the Plan, but may amend the
Plan only in minor respects and cannot extend its duration, reduce the option
price, increase the shares reserved or increase Plan benefits materially.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The options granted under the Plan will be non-statutory options not intended to
qualify under Section 422A of the Internal Revenue Code. The grant of options
will not result in taxable income to the director or a tax deduction for the
Corporation. The exercise of an option will result in taxable ordinary income to
the director and a corresponding deduction for the Corporation, in each case
equal to the difference between the fair market value of the shares on the date
of exercise and the option exercise price.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1995 NON-EMPLOYEE
DIRECTORS' STOCK OPTION PLAN.
The affirmative vote of a majority of the shares present or represented and
entitled to vote at the meeting is required to approve the Plan. In accordance
with Rule 16b-3 of the Securities and Exchange Commission, abstentions will be
treated as present or represented and entitled to vote, and broker non-votes
will not be so treated.
22
<PAGE> 24
OTHER INFORMATION
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board has selected McGladrey &
Pullen, LLP as the Corporation's independent public accountants for the fiscal
year ending December 31, 1995. As in past years, representatives of McGladrey &
Pullen, LLP will be present at the Meeting. They will be given the opportunity
to make a statement and will be available to respond to appropriate questions.
EXPENSES AND METHODS OF SOLICITATION
The Corporation pays the costs of soliciting proxies. Brokerage houses and other
custodians, nominees and fiduciaries will be asked to forward solicitation
materials to the beneficial owners and will be reimbursed for their reasonable
expenses. The Corporation has retained Georgeson & Co. to perform various proxy
advisory and solicitation services for a total estimated fee of $17,500, plus
out-of-pocket expenses. In addition, directors, officers and other employees of
the Corporation and its subsidiaries may solicit proxies by mail, telephone,
telecopier or telegraph or in person.
CORPORATE GOVERNANCE MATTERS
Since their adoption by the Board of Directors in 1993, the Corporation has
complied in all material respects with the Statement of Principles referred to
on page 5, which was ratified at the 1993 Annual Meeting of Shareholders by the
affirmative vote of 94% of the votes cast. The Principles have not been
modified, amended or waived in any respect since their adoption. A copy of the
Principles is available upon request to the Secretary of the Corporation and
will be available for review by shareholders at the Meeting.
SHAREHOLDER PROPOSALS FOR THE 1996 ANNUAL MEETING
Jefferson-Pilot's 1996 annual meeting of shareholders is tentatively scheduled
for May 6, 1996. Any shareholder proposal to be presented at that meeting must
be received by the Corporation's secretary by November 29, 1995 in order to be
timely received for inclusion in the Corporation's proxy statement for that
meeting.
The Corporation's Articles of Incorporation and By-Laws provide that any
shareholder entitled to vote at an annual meeting may nominate at that meeting
one or more persons for election as directors only if written notice of such
shareholder's intent to make such nomination or nominations has been given to
the Secretary of the Corporation not later than 90 days in advance of such
meeting. The By-Laws similarly require 90 days' advance written notice to the
Secretary of any resolution to be presented at that meeting.
OTHER MATTERS
The Board of Directors is not aware of any other matters which may be presented
for action at the Meeting. Should any other matter requiring a vote of the
shareholders arise, the accompanying proxy will be voted with respect to the
matter, in accordance with the best judgment of the person or persons voting the
proxy, in the interest of the Corporation.
Whether or not you plan to attend the Meeting, please promptly sign, date and
return the enclosed proxy card.
By Order of the Board of Directors
Robert A. Reed
Vice President and Secretary
23
<PAGE> 25
EXHIBIT 1
PROPOSED AMENDMENTS TO THE ARTICLES
The full text of Article IV of the Articles of Incorporation of the Corporation,
as proposed to be amended, is set forth below:
ARTICLE IV
The corporation shall be authorized to issue One Hundred Fifty Million
(150,000,000) shares designated as common stock, with a par value of One and
25/100 Dollars ($1.25) per share, and Twenty Million (20,000,000) shares
designated as preferred stock, each with the following preferences, limitations
and relative rights:
(a) Each share of common stock shall have one vote, and, except as otherwise
provided in respect of any series of preferred stock hereafter established,
the exclusive voting power for all purposes shall be vested in the holders
of the shares of common stock. In the event of any liquidation, dissolution
or winding up of the corporation, whether voluntary or involuntary, the
holders of the shares of common stock shall be entitled to share ratably in
the net assets of the corporation, after payment or provision for payment
of the debts and other liabilities of the corporation and the amount, if
any, to which the holders of shares of preferred stock shall be entitled in
accordance with the preferences of such shares established by the Board of
Directors.
(b) The Board of Directors is authorized, subject to limitations prescribed by
the North Carolina Business Corporation Act and these Articles of
Incorporation, to adopt and file from time to time, without further
shareholder action, Articles of Amendment that authorize the issuance of
shares of preferred stock which may be divided into two or more series,
each with such designations, preferences, limitations and relative rights
as the Board of Directors may determine, including without limitation
dividend rights, if any, and the extent if any to which dividends are
cumulative, rights if any upon liquidation or distribution of the assets of
the corporation, conversion or exchange rights if any, redemption rights if
any, and voting rights if any, provided that the holders of preferred stock
will not be entitled to more than the lesser of (x) one vote per $100
liquidation value or (y) one vote per share, when voting as a class with
the holders of shares of common stock, and will not be entitled to vote
separately as a class except where the preferred stock is adversely
affected or, to the extent provided in said Articles of Incorporation, for
the election of not more than two directors after multiple dividend
defaults.
24
<PAGE> 26
EXHIBIT 2
JEFFERSON-PILOT CORPORATION
LONG TERM STOCK INCENTIVE PLAN
This Long Term Stock Incentive Plan (the "Plan") of Jefferson-Pilot Corporation
(the "Corporation") reflects amendments to and is a restatement, effective May
1, 1995, of the Corporation's Stock Option Plan (the "Original Plan").
1. PURPOSE OF THE PLAN.
The purpose of the Plan is to provide further incentive to, and to encourage
stock ownership by the officers and other employees of the Corporation and its
subsidiaries (the "Company"). The Plan is intended to benefit the Company and
its shareholders by attracting, retaining and motivating highly qualified
employees and by providing increased incentive to such employees while also
helping to align their interests more closely with those of shareholders.
2. ADMINISTRATION.
The Plan shall be administered by the Compensation Committee (the "Committee")
of the Corporation's Board of Directors (the "Board") exclusive of any member
who is not disinterested within the meaning of Rule 16b-3 ("Rule 16b-3") under
the Securities Exchange Act of 1934 (the "1934 Act"). The Committee shall have
exclusive authority to interpret the Plan, to establish and revise rules and
regulations relating to the Plan and its administration and to make any other
determination which it believes necessary or advisable for the administration of
the Plan. Decisions of the Committee shall be final and binding upon all persons
having an interest in the Plan.
Subject to the terms and conditions of the Plan, the Committee shall have the
exclusive authority to identify the employees eligible to receive awards under
the Plan and to make awards of stock options, stock appreciation rights and
stock grants. Consistent with the provisions of the Plan, the Committee shall
establish the terms, conditions and duration of each award made under the Plan.
3. ELIGIBILITY.
Awards under the Plan may be made only to employees of the Company. The
Committee may designate one or more classes of participants under the Plan.
"Employee" includes full-time life insurance agents who are employees for Social
Security tax purposes.
The aggregate number of shares covered by options awarded to an individual
during any calendar year shall not exceed 150,000.
No option or stock appreciation right may be granted to any person who,
immediately after the time of the award, owns 10 percent or more of the common
stock of the Corporation or one of its subsidiaries. For this purpose, all
outstanding options and stock appreciation rights awarded to an employee shall
be considered stock owned by the employee.
4. STOCK SUBJECT TO THE PLAN.
There shall be reserved for purposes of the Plan, subject to adjustment pursuant
to Section 12, two million shares of the common stock of the Corporation
("common stock") plus such number of shares of common stock as remain reserved
as of May 1, 1995 under the Original Plan. Any shares subject to an option or
other award under the Plan which for any reason expires or is terminated
unexercised or unvested as to such shares, any previously acquired common stock
that is tendered as payment for an option being exercised and any shares
withheld for taxes shall be available for further use under the Plan, to the
extent not restricted by Rule 16b-3.
25
<PAGE> 27
Restricted and unrestricted stock grants shall be limited to 10% of the total
shares reserved for the Plan, subject to adjustment pursuant to Section 12.
5. OPTION PRICE.
The exercise price of all options and stock appreciation rights awarded pursuant
to the Plan shall be set by the Committee and shall not be less than the Fair
Market Value of the common stock on the date the award is made.
"Fair Market Value" of the common stock on any date shall be the closing price
on that date (or if the Committee so determines as to ISO's, the mean between
the high and low trading prices) based upon its consolidated trading as
generally reported. For any date on which the stock is not traded, Fair Market
Value shall be such price on the next preceding trading day.
6. TYPES OF OPTIONS.
All stock options shall represent the right to purchase common stock and shall
be non-qualified stock options unless the Committee has specified, at the time
of grant, that options are Incentive Stock Options ("ISO's") under Section 422
of the Internal Revenue Code. The grant, exercise or lapse of an ISO (or
non-qualified stock option) shall not increase, decrease or otherwise affect the
terms or conditions attached to the grant, exercise or lapse of a non-qualified
stock option (or ISO).
The aggregate Fair Market Value (determined at the time the option is granted)
of the stock with respect to which ISO's first become exercisable by an employee
during any calendar year shall not exceed $100,000. If the Company establishes
any other ISO plan, the $100,000 limit shall apply to ISO's first exercisable in
any calendar year under all of the Company's plans.
7. LIMITATIONS ON EXERCISE.
Each option shall be exercisable for such period as the Committee shall
determine, but for not more than ten years after the date of grant thereof.
The Committee may allow an individual to exercise stock options and stock
appreciation rights after termination of employment in accordance with the
original terms of the award, and may provide for earlier termination or
expiration of the awards under specified circumstances.
8. EXERCISE OF OPTION.
The option price for the shares purchased under an option shall be paid in full
at the time of exercise, in cash or by the surrender of shares of common stock
of the Corporation valued at Fair Market Value on the date of exercise, or by
any combination of cash and such shares. Exercise shall be effective upon
receipt by the Secretary of the Corporation of notice of such exercise
accompanied by proper payment.
9. STOCK PURCHASE SAVINGS ACCOUNT
The Committee may require that any, certain classes or all employees receiving
specified options establish and maintain a Stock Purchase Savings Account. The
purpose of such account would be to accumulate by payroll deduction on the
exercise date of the option an amount sufficient to fully pay for the number of
shares optioned to the employee, including an allowance for interest on the
account at a rate and under conditions determined by the Committee.
10. STOCK APPRECIATION RIGHTS.
The Committee may grant stock appreciation rights to eligible employees, either
separately or in tandem with stock options. The Committee shall determine the
time and conditions of exercisability and whether the stock appreciation shall
be payable in common stock, cash or a combination of both. The grant, exercise
or lapse of
26
<PAGE> 28
a stock appreciation right shall not increase, decrease or otherwise affect the
terms or conditions attached to the grant, exercise or lapse of an ISO.
11. STOCK GRANTS.
The Committee may make stock grants to selected officers and other employees of
the Corporation and its subsidiaries to enable such persons to acquire stock on
such terms and conditions as the Committee determines are in the best interests
of the Company. Stock grants may be either Restricted Stock which vests over
time or subject to other conditions, or restricted or unrestricted stock paid
out upon the achievement of performance goals established by the Committee.
Discretionary, unrestricted stock grants are not permitted.
12. DILUTION AND OTHER ADJUSTMENTS.
In the event of any change in the outstanding shares of the common stock by
reason of any stock split, stock dividend, reorganization, recapitalization,
merger, consolidation, combination or exchange of shares, the sale, lease or
conveyance of all or substantially all of the assets of the Corporation, or
other similar corporate change, such equitable adjustments shall be made in the
Plan, in the number of shares reserved for the Plan and in the awards hereunder
including the exercise price and number of shares under outstanding options, as
the Committee determines are necessary or appropriate. Adjustments for stock
splits and stock dividends shall be automatic.
13. CHANGE IN CONTROL.
In the event of a Change in Control, options and stock appreciation rights may
become immediately exercisable and may remain exercisable for such periods not
exceeding the original terms thereof, restricted stock awards may immediately
vest, and long term incentive awards providing for restricted or unrestricted
stock payouts may be immediately settled, all as the Committee shall determine
either at or after the time of granting the options or making the respective
other awards. "Change in Control" means (i) a transaction under which any
"person" (as such term is used in Sections 13(d) and 14(d) of the 1934 Act) is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly of securities of the Corporation representing 25% or more
of the combined voting power of the Corporation's then outstanding securities;
(ii) the Corporation shall enter into an agreement to sell substantially all of
its assets or shall enter into any transaction which would result in the
Corporation's owning less than 50% of the outstanding common stock or other
ownership interest of Jefferson-Pilot Life Insurance Company; (iii) the
Corporation or Jefferson-Pilot Life Insurance Company or any other subsidiary of
the Corporation shall consummate a sale of substantially all of the assets of
the subsidiary or division ("business unit") in which the optionee is employed
or shall consummate any transaction which results in the Corporation's owning
less than 50% of the outstanding common stock or other ownership interest of the
business unit in which the optionee is employed; (iv) there shall be consummated
any consolidation or merger of the Corporation in which the holders of the
Corporation's capital stock immediately prior to the consummation of the
transaction do not hold more than 50% of the common stock of the surviving
corporation immediately after consummation of the transaction measured both in
voting power and in number of shares of common stock outstanding after such
transaction (treating as outstanding any common stock which would result from
the conversion of any outstanding convertible securities for both the voting
power and total outstanding common stock tests); (v) the shareholders of the
Corporation approve any plan or proposal for the liquidation or dissolution of
the Corporation or for any transaction specified in the preceding clause (iv);
or (vi) any other event or condition specified by the Committee as effectively
changing control of the Corporation.
14. MISCELLANEOUS PROVISIONS.
(a) Rights as Shareholder. An optionee shall have no rights as a holder of
common stock with respect to options or stock appreciation rights awarded
hereunder, unless and until certificates for shares of such stock are issued.
27
<PAGE> 29
(b) Non-Transferability. Options and stock appreciation rights shall not be
assignable or transferable otherwise than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order, and during an
optionee's lifetime shall be exercisable only by the optionee or a duly
appointed guardian or legal representative of the optionee. However, the
Committee may specify as to one or more optionees, that limited transfers shall
be permitted because of special circumstances.
(c) Agreements. All options and stock appreciation rights awarded under the
Plan shall be evidenced by agreements or notices containing such terms and
conditions (not inconsistent with the Plan) as the Committee shall specify.
(d) Government Regulations. The Plan and the awarding and exercise of options
hereunder shall be subject to all applicable Federal and state laws and all
rules and regulations issued thereunder, including registration and private
placement restrictions, and the Board in its discretion may, subject to the
provisions of Section 16 hereof, make such changes in the Plan (except such
changes which, by law or in order to maintain the exemption provided by Rule
16b-3, must be approved by the shareholders) or impose restrictions upon the
exercise of options as may be required to conform the Plan to such applicable
laws, rules and regulations.
(e) Costs, Expenses and Taxes. The costs and expenses of administering the Plan
shall be borne by the Company and not charged to any optionee. Income and other
taxes assessed on the spread when an option or stock appreciation right is
exercised and on stock grants shall be the responsibility of the person
exercising the option. Any tax withholding required by law may be paid through
the Corporation's withholding of shares otherwise issuable upon exercise, in
accordance with procedures established by the Committee and consistent with
Section 16.
(f) No Right to Continue as an Employee. Neither the Plan, nor the granting of
an option, stock appreciation right or stock grant or any other action taken
pursuant to the Plan, shall confer upon an optionee any right to remain an
employee or restrict the Company's right to take any personnel action with
respect to such optionee.
(g) Notice. Any notice required or permitted to be given to the Company under
the Plan, including notice of exercise of any awards, shall be in writing to the
Secretary of the Corporation and shall be effective upon receipt.
15. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Amendment of the Plan. The Board may amend, suspend or terminate the Plan
at any time and from time to time, provided however that without approval of the
Corporation's shareholders, no revision or amendment shall increase the number
of shares reserved for the Plan (except as provided in Section 12), reduce the
minimum exercise price specified in Section 5, extend the duration of the Plan,
change the designation of the class of employees eligible to receive options or
other awards (except as permitted by Rule 16b-3), or materially increase the
benefits accruing to participants under the Plan. Further, no amendment or
termination of the Plan may alter or impair any rights or obligations of any
award previously made without the consent of the awardee.
(b) Termination. The Plan (but not any awards theretofore made) shall in any
event terminate on, and no awards shall be made after, May 1, 2005.
16. COMPLIANCE WITH SEC REGULATIONS.
It is the Corporation's intent that the Plan comply in all respects with Rule
16b-3 and any related regulations and interpretations. If any provision of this
Plan is later found not to be in compliance with such Rule and regulations, the
provision shall be limited in application to persons not affected by Rule 16b-3
if Rule 16b-3 so permits, and otherwise shall be deemed null and void.
17. GOVERNING LAW.
The Plan shall be construed in accordance with and governed by the laws of the
State of North Carolina, excluding any choice of law provisions which may
indicate the application of the laws of another jurisdiction.
28
<PAGE> 30
EXHIBIT 3
JEFFERSON-PILOT CORPORATION
1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
1. PURPOSE.
The 1995 Non-Employee Directors' Stock Option Plan (the "Plan") of
Jefferson-Pilot Corporation (the "Corporation") is designed to encourage
directors to acquire increased ownership of the Corporation's common stock,
thereby helping to align the interests of non-employee directors and the
shareholders, and to assist in attracting and retaining directors who have the
experience, ability and skills necessary to assist in the Corporation's
sustained growth and prosperity.
2. EFFECTIVE DATE.
The Plan shall be effective on February 13, 1995, subject to the approval of the
Plan by the holders of at least a majority of the outstanding shares of the
Corporation's common stock present or represented and entitled to vote at the
1995 Annual Meeting of Shareholders. Awards of options made under the Plan on
its effective date are subject to shareholder approval of the Plan as provided
above. In the event such approval is not obtained, such options shall be null
and void.
3. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by a committee of at least three persons
appointed by the Board of Directors (the "Board") of the Corporation (the
"Committee"), who need not be directors and none of whom shall be eligible to
receive options under the Plan. Awards of stock options under the Plan and the
amount and nature of the awards shall be automatic as described in Section 6.
The Plan is intended to meet the requirements of Rule 16b-3(c)(2)(ii) adopted
under the Securities Exchange Act of 1934 (the "1934 Act") and accordingly is
intended to be self-governing. To this end the Plan requires no discretionary
action by any administrative body with regard to any transaction under the Plan.
To the extent, if any, that any questions of interpretation arise, they shall be
resolved by the Committee in its sole discretion and such determination shall be
final and binding upon all persons having an interest in the Plan. Any or all
powers and discretion vested in the Committee under this Plan may be exercised
by any one Committee member who is so authorized by the Committee. The Committee
shall have no discretion with respect to designating the recipient of an option,
the number of shares subject to an option, the date of award or the exercise
price of an option.
4. PARTICIPATION IN THE PLAN.
All members of the Corporation's Board who are not as of the date of any option
award employees of the Corporation or any of its subsidiaries or affiliates
shall be eligible to participate in the Plan ("Eligible Non-Employee Director").
5. NON-QUALIFIED STOCK OPTIONS.
All options awarded under the Plan shall be non-qualified stock options covering
shares of common stock of the Corporation.
6. TERMS, CONDITIONS AND FORM OF OPTIONS.
(a) Initial Option Awards. On February 13, 1995, an option to purchase 5,000
shares shall be automatically awarded to each Eligible Non-Employee Director.
Each such option shall vest on the date the Corporation's shareholders approve
the Plan in accordance with Section 2, and shall become exercisable six months
after such date.
29
<PAGE> 31
On the date that each new Eligible Non-Employee Director joins the Board, an
option to purchase 5,000 shares shall be automatically awarded to such director.
Such option will vest and become exercisable in three equal annual installments
commencing on the first anniversary of the date of award.
(b) Annual Option Awards. On the date of the first regular meeting of the Board
in each calendar year from 1996 through 1999, an option to purchase 2,250 shares
shall be automatically awarded to each Eligible Non-Employee Director other than
any such director who received an initial option award in the then preceding six
months. Each such option shall vest on the first anniversary of the date of
award.
(c) Exercise Price. The exercise price per share of stock for which each option
is exercisable shall be 100% of the fair market value per share on the date the
option is awarded, which shall be the closing price of the stock based upon its
consolidated trading as generally reported for that date. If there is no
reported trading for that date, such closing price for the next preceding
trading day shall be used.
(d) Term of Option. Each option shall terminate upon the expiration of ten
years from the date of award, and shall be subject to earlier termination as
hereinafter provided.
(e) Termination of Service. In the event of the termination of service on the
Board by the holder of any option, other than by reason of retirement pursuant
to Board policy, permanent disability, death or a Change in Control, the then
outstanding options of such optionee shall be exercisable only to the extent
that they were exercisable on the date of such termination, and any unvested
options shall be forfeited. In the event of termination of Board service of an
optionee by reason of retirement pursuant to Board policy, permanent disability,
death or a Change in Control, each of the then outstanding options of such
optionee shall immediately vest and become exercisable, provided however that no
option (even though exercisable) shall be exercised within six months after the
date it is awarded but that the Committee may settle such option in cash during
such period following a Change in Control.
(f) Exercise After Service Terminated. An optionee shall be entitled to
exercise all vested options within five years after termination of Board
service, but in no event after the expiration date of the option.
(g) Exercise of Options. The option price for the shares purchased shall be
paid in full at the time of exercise, in cash or by the surrender of shares of
common stock of the Corporation valued at their fair market value on the date of
exercise, or by any combination of cash and such shares. Exercise shall be
effective upon receipt by the Secretary of the Corporation of notice of such
exercise accompanied by proper payment.
7. SHARES OF STOCK SUBJECT TO THE PLAN.
The shares that may be purchased pursuant to options under the Plan shall not
exceed an aggregate of 200,000 shares of the Corporation's common stock. Any
shares subject to an option which for any reason expires or is terminated
unexercised as to such shares shall again be available for issuance under the
Plan.
8. DILUTION AND OTHER ADJUSTMENT.
In the event of any change in the outstanding shares of the Corporation's stock
by reason of any stock split, stock dividend, recapitalization, merger,
consolidation, combination or exchange of shares, the sale, lease or conveyance
of substantially all of the assets of the Corporation or other similar corporate
change, such equitable adjustments shall be made in the Plan, in the maximum
number of shares referred to in Section 7 and in the awards hereunder, including
future awards under Section 6 and the exercise price of outstanding options, as
the Committee determines are necessary or appropriate. In the event of any stock
split or stock dividend, such adjustments shall be self-operative and shall not
require any Committee action.
9. CHANGE IN CONTROL.
In the event of a Change in Control, options shall become immediately
exercisable and remain exercisable for the period specified in Section 6(f).
"Change in Control" means (i) a transaction under which any "person" (as such
term is used in Sections 13(d) and 14(d) of the 1934 Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly of securities of the Corporation
30
<PAGE> 32
representing 25% or more of the combined voting power of the Corporation's then
outstanding securities; (ii) the Corporation shall enter into an agreement to
sell substantially all of its assets or shall enter into any transaction which
would result in the Corporation's owning less than 50% of the outstanding common
stock or other ownership interest of Jefferson-Pilot Life Insurance Company;
(iii) there shall be consummated any consolidation or merger of the Corporation
in which the holders of the Corporation's capital stock immediately prior to the
consummation of the transaction do not hold more than 50% of the common stock of
the surviving corporation immediately after consummation of the transaction
measured both in voting power and in number of shares of common stock
outstanding after such transaction (treating as outstanding any common stock
which would result from the conversion of any outstanding convertible securities
for both the voting power and total outstanding common stock tests); or (iv) the
shareholders of the Corporation approve any plan or proposal for the liquidation
or dissolution of the Corporation or for any transaction specified in the
preceding clause (iii).
10. MISCELLANEOUS PROVISIONS.
(a) Rights as Shareholder. An optionee shall have no rights as a holder of the
Corporation's common stock with respect to options awarded hereunder, unless and
until certificates for shares of such stock are issued to the optionee.
(b) Non-Transferability. Options shall not be assignable or transferable
otherwise than by will or by the laws of descent and distribution or pursuant to
a qualified domestic relations order, and during an optionee's lifetime shall be
exercisable only by the optionee or a duly appointed guardian or legal
representative of the optionee.
(c) Agreements. All options awarded under the Plan shall be evidenced by
agreements or notices containing such terms and conditions (not inconsistent
with the Plan) as the Committee shall adopt.
(d) Government Regulations. The Plan and the awarding and exercise of options
hereunder shall be subject to all applicable Federal and state laws and all
rules and regulations issued thereunder, including registration and private
placement restrictions, and the Board in its discretion may, subject to the
provisions of Section 12 hereof, make such changes in the Plan (except such
changes which, by law or in order to maintain the exemption provided by Rule
16b-3 under the 1934 Act, must be approved by the shareholders) or impose
restrictions upon the exercise of options as may be required to conform the Plan
to such applicable laws, rules and regulations.
(e) Costs, Expenses and Taxes. The costs and expenses of administering the Plan
shall be borne by the Corporation and not charged to any optionee. Income and
other taxes assessed on the spread when an option is exercised shall be the
responsibility of the person exercising the option. Should any tax withholding
be required by law, such taxes may be paid through the Corporation's withholding
of shares otherwise issuable upon exercise, in accordance with procedures
established by the Committee and consistent with Section 12.
(f) No Right to Continue as a Director. Neither the Plan, nor the granting of
an option nor any other action taken pursuant to the Plan, shall constitute or
be evidence of any agreement or understanding, express or implied, that the
Corporation will retain a director for any period of time, or at any particular
rate of compensation.
11. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Amendment of the Plan. The Board may amend, suspend or terminate the Plan
at any time, provided, however, that without approval of the shareholders, no
revision or amendment shall increase the number of shares subject to the Plan
(except as provided in Section 8), extend the Plan's duration, reduce the option
price, change the designation of the class of directors eligible to receive
options, or materially increase the benefits accruing to participants under the
Plan. Further, no amendment or termination of the Plan may alter or impair any
rights or obligations of any option previously awarded without the consent of
the optionee. The Plan provisions may not be amended more than once every six
months, other than to comport with changes in the
31
<PAGE> 33
Internal Revenue Code or the rules thereunder or unless such amendment is
permitted by Rule 16b-3(c)(ii)(B) under the 1934 Act.
(b) Termination. The Plan (but not any options theretofore awarded) shall in
any event terminate on, and no options shall be granted after, March 31, 1999.
12. COMPLIANCE WITH SEC REGULATIONS.
It is the Corporation's intent that the Plan comply in all respects with Rule
16b-3 under the 1934 Act and any related regulations. If any provision of this
Plan is later found not to be in compliance with such Rule and regulations, the
provision shall be deemed null and void. All awards and exercises of options
under this Plan shall be executed in accordance with the requirements of Section
16 of the 1934 Act and regulations promulgated thereunder.
13. GOVERNING LAW.
The Plan shall be construed in accordance with and governed by the laws of the
State of North Carolina, excluding any choice of law provisions which may
indicate the application of the laws of another jurisdiction.
32
<PAGE> 34
EXHIBIT 4
PROXY JEFFERSON-PILOT CORPORATION (LOGO)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS ON MAY 1, 1995
The undersigned hereby constitute(s) and appoint(s) David A. Stonecipher,
William E. Blackwell and John D. Hopkins, and each or any of them, attorneys and
proxies of the undersigned, with full power of substitution to each, and with
all the powers the undersigned would possess if personally present, to vote all
shares of stock of Jefferson-Pilot Corporation the undersigned is entitled to
vote at the Annual Meeting of the Shareholders of Jefferson-Pilot Corporation to
be held on May 1, 1995, and at any adjournment thereof, upon the matters
referred to in the Notice of Meeting and Proxy Statement for said meeting and in
their discretion upon such other business as may properly come before the
meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN,
OR IF NO CHOICE IS SPECIFIED, FOR ALL THE PROPOSALS LISTED ON THE REVERSE SIDE.
DISCRETIONARY AUTHORITY IS HEREBY CONFERRED AS TO ALL OTHER MATTERS THAT MAY
COME BEFORE THE MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE FIVE PROPOSALS.
(IMPORTANT -- TO BE SIGNED AND DATED ON REVERSE SIDE)
SEE REVERSE SIDE
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE.
1. Election of four Class III Directors:
Nominees: Robert G. Greer, George W. Henderson, III, Hugh L. McColl, Jr. and
Martha A. Walls.
/ /FOR all listed nominees
------------------------------------
/ /FOR all listed nominees except as
/ /WITHHOLD AUTHORITY to vote noted above
for all listed nominees
2. Approval of Amendment to Articles of Incorporation of the Corporation to
increase the authorized Common Stock.
FOR / / AGAINST / / ABSTAIN / /
3. Approval of amendment to the Articles of Incorporation to authorize a new
class of preferred shares.
FOR / / AGAINST / / ABSTAIN / /
4. Approval of amendment and restatement of Long Term Stock Incentive Plan.
FOR / / AGAINST / / ABSTAIN / /
5. Approval of the 1995 Non-Employee Directors' Stock Option Plan.
FOR / / AGAINST / / ABSTAIN / /
/ / I plan to attend the meeting.
/ / See noted comments.
IMPORTANT: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. PERSONS SIGNING AS
ATTORNEY-IN-FACT, CORPORATE OFFICER OR IN A FIDUCIARY CAPACITY SHOULD STATE
THEIR TITLE. IF STOCK IS HELD BY JOINT TENANTS OR AS COMMUNITY PROPERTY, ALL
PARTIES SHOULD SIGN.
Date
------------------------------------------
Date
------------------------------------------
