<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (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 Rule 14a-11(c) or Rule 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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 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 4, 1998
Dear Shareholder:
You are cordially invited to attend our 1998 Annual Meeting of Shareholders. We
will meet in Jefferson-Pilot's offices in Greensboro on Monday, May 4, 1998, at
10:00 A.M.
The matters we will be acting on at the meeting are described in the attached
Notice of Meeting and Proxy Statement.
Jefferson-Pilot's activities and performance during 1997 are reviewed in our
Annual Report to Shareholders.
Your vote is important. I urge you to vote your shares by proxy, even if you
plan to attend the meeting. This will ensure that your shares are voted. Please
fill out, sign and return your proxy card promptly.
On behalf of your Board of Directors, thank you for your continued support.
Sincerely,
/s/ David A. Stonecipher
David A. Stonecipher
President and CEO
March 31, 1998
<PAGE> 3
[Jefferson-Pilot Logo]
JEFFERSON-PILOT CORPORATION
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
<TABLE>
<S> <C>
DATE: MONDAY, MAY 4, 1998
TIME: 10:00 A.M.
PLACE: FOURTH FLOOR, JEFFERSON-PILOT BUILDING
100 NORTH GREENE STREET
GREENSBORO, NORTH CAROLINA
</TABLE>
At our Annual Meeting of Shareholders we will ask you to:
(1) elect four persons as Class III directors, each for a term of three
years; and
(2) transact any other business properly brought before the Meeting or any
adjournment of the Meeting.
If you were a shareholder of record at the close of business on March 2, 1998,
you may vote at our Annual Meeting or any adjournment of the Meeting.
Please promptly complete, date, sign and return the enclosed proxy card. You may
revoke your proxy at any time before it is voted at the meeting.
On behalf of the Board of Directors,
Robert A. Reed
Vice President and Secretary March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CONTENTS
Proxy Solicitation and Voting Information................... 3
Election of Directors....................................... 4
Stock Ownership............................................. 7
Executive Compensation...................................... 8
Other Information........................................... 15
</TABLE>
2
<PAGE> 4
PROXY STATEMENT
PROXY SOLICITATION AND VOTING INFORMATION
WHO IS ENTITLED TO VOTE?
Shareholders of record at the close of business on March 2, 1998 (the Record
Date) are entitled to vote at the Meeting. Each share of common stock is
entitled to one vote on each voting matter.
WHAT CONSTITUTES A QUORUM AT THE MEETING?
A majority of the outstanding shares of common stock, represented in person or
by proxy, will constitute a quorum for transacting business. On the Record Date,
70,888,685 shares were outstanding.
HOW DO I VOTE?
The enclosed proxy is solicited by our Board of Directors. To vote, please
complete, sign and date each proxy card you receive and return it in the prepaid
envelope. Proxies will be voted if properly signed, received prior to the close
of voting at the Meeting and not revoked. Where you specify a choice with
respect to any matter to be acted upon, your shares will be voted as you
specify. Unless you otherwise specify on the proxy, properly executed proxies
which are returned in a timely manner will be voted for all nominees for
director, and in accordance with the best judgment of the proxy holders on any
other matters properly brought before the meeting.
WHAT SHARES ARE INCLUDED IN THE PROXY CARD?
Proxies representing shares held of record also represent full and fractional
shares held under our Dividend Reinvestment Plan. Separate voting cards are
being furnished under our 401(k)/TeamShare Plan for employees and career agents
and under our Agents' Retirement Plan.
CAN I VOTE BY TELEPHONE OR ELECTRONICALLY?
Yes. If you are a registered shareholder (that is, you hold stock certificates
registered with our transfer agent in your own name or with others) you may vote
by telephone, or electronically through the Internet, by following the
instructions included with your proxy card.
If your shares are held in "street name," you will need to contact your broker
or other nominee to ask if you can vote by telephone or electronically. Brokers
and other nominees can vote electronically through their depositaries.
HOW CAN I REVOKE MY PROXY?
After you return a proxy you may revoke it at any time before its use. To revoke
it, you may (1) deliver a written notice of revocation to our corporate
secretary, (2) submit a properly executed, subsequently-dated proxy or (3) vote
in person at the Meeting.
WHO WILL COUNT THE VOTE?
Representatives of Georgeson & Company, Inc. will count the vote, and Georgeson
will serve as Inspector of Election.
WHAT VOTE IS REQUIRED TO APPROVE EACH MATTER?
The nominees receiving the highest number of votes will be elected directors.
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. Shareholders may not cumulate their votes.
3
<PAGE> 5
WILL ANY SHAREHOLDER PROPOSALS BE PRESENTED AT THE MEETING?
No. Our By-Laws require 90 days advance notice to our corporate secretary of any
resolution to be presented at the Meeting. He has not received any such notice.
WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
This indicates that your shares are registered differently and are in more than
one account. Please sign and return all proxy cards to ensure that all your
shares are voted. To provide better shareholder services in the future, we
encourage you to have all accounts registered in the same name and address. You
may do this by contacting our transfer agent, First Union, at 1-800-829-8432, or
by fax to 1-704-590-7618
WHAT ABOUT THE 1995 AND 1998 STOCK SPLITS?
All data in this Proxy Statement relating to our common stock and stock options
have been adjusted where necessary to reflect the three-for-two split of the
common stock in December 1995. The 1998 split is not reflected because the
additional shares will not be distributed until April 13.
ELECTION OF DIRECTORS
Our Board now has twelve directors, divided into three classes whose terms end
in successive years. The terms of the four Class III directors expire at the
1998 annual meeting. Two of these directors will not be standing for reelection:
Hugh L. McColl, Jr., Chief Executive Officer of NationsBank Corporation, and
Martha Ann Walls, President and Chief Executive Officer of Southern Newspapers,
Inc.
The remaining two members of Class III have been nominated to serve for a new
three year term that will end in 2001. Our newest director, Kenneth C. Mlekush,
was elected in February 1998 to fill the vacancy created when C. Randolph
Ferguson resigned as a director and Executive Vice President -- Group. Mr.
Mlekush also has been nominated to serve for this same three year term. The
Board also has nominated Patrick S. Pittard, President and Chief Executive
Officer of Heidrick & Struggles, an executive search firm, to serve as a new
director for this three year term. The Board expresses its appreciation for the
valued service of Randy Ferguson, Hugh McColl and Molly Walls to
Jefferson-Pilot.
If any nominee is unable or unwilling to serve as a director for any reason
(which is not anticipated), proxies will be voted for the election of any
substitute nominee designated by our Board of Directors or its Executive
Committee. If any director resigns, dies or is otherwise unable to serve out his
or her term, or the Board increases the number of directors, the Board may fill
the vacancy until the next annual meeting.
The table below presents certain information about these nominees and the other
directors whose terms of office will continue after the Meeting.
<TABLE>
<S> <C>
NOMINEES TO SERVE FOR A THREE-YEAR TERM EXPIRING 2001 -- CLASS III
ROBERT G. GREER Consultant in the formation of, and then Chairman since
age 63 September 1996 of the Bank of Tanglewood, N.A., Houston,
Director since 1975 Texas; Vice Chairman and Advisory Director, Northern Trust
Bank of Texas from August 1995 to May 1996; previously
Chairman of the Board of Tanglewood Bank
</TABLE>
4
<PAGE> 6
<TABLE>
<S> <C>
GEORGE W. HENDERSON, III Chairman and Chief Executive Officer, Burlington Industries
age 49 Inc. (manufacturer of textile products), Greensboro, NC
Director since 1995 since January 1, 1995; President and Chief Operating Officer
from April 1993; previously Group Vice President; also a
director since 1990
KENNETH C. MLEKUSH Executive Vice President of the Corporation since January 1,
age 59 1993; President of Jefferson-Pilot Life Insurance Company
Director since 1998 since February 9, 1998, previously Executive Vice
President -- Individual Operations
PATRICK S. PITTARD President and Chief Executive Officer of Heidrick &
age 52 Struggles (executive search firm), Atlanta, GA since January
Nominee 1997; previously its Managing Partner, North America since
1994, and prior thereto, Managing Partner of its Atlanta
office.
CONTINUING DIRECTORS FOR THE TERM EXPIRING 1999 -- CLASS I
WILLIAM PORTER PAYNE Vice Chairman of NationsBank Corporation since February
age 50 1997; President and Chief Executive Officer, Atlanta
Director since 1993 Committee for the Olympic Games, Atlanta, GA from January
1991 to January 1997
ROBERT H. SPILMAN Chairman of the Board of the Corporation since March 1993;
age 70 retired Chairman of the Board and Chief Executive Officer,
Director since 1984 Bassett Furniture Industries, Inc. (furniture manufacturer),
Bassett, VA
DAVID A. STONECIPHER President and CEO of the Corporation; President-Elect and
age 57 CEO-Elect from September 1992 to February 1993; President,
Director since 1993 GeorgiaUS (holding company), Atlanta, Georgia from February
1991 to August 1992 and Executive Vice President from April
1989
CONTINUING DIRECTORS FOR THE TERM EXPIRING 2000 -- CLASS II
EDWIN B. BORDEN President and Chief Executive Officer, The Borden
age 63 Manufacturing Co. (textile management company), Goldsboro,
Director since 1991 NC
WILLIAM H. CUNNINGHAM Chancellor, The University of Texas System, Austin, TX since
age 54 September 1992; previously President, the University of
Director since 1986 Texas at Austin
E. S. MELVIN President and Chief Executive Officer The Joseph M. Bryan
age 64 Foundation of Greater Greensboro, Inc. (private charitable
Director since 1986 foundation) since January 1997; Senior Vice President,
Central Carolina Bank & Trust Company from June 1993 to
December 1996; previously Chairman of the Board and Chief
Executive Officer, 1st Home Federal Savings and Loan
Association of the Carolinas, F.A.
DONALD S. RUSSELL, JR. Attorney in sole practice in Columbia, SC
age 58
Director since 1977
</TABLE>
- ---------------
(1) In addition to the directorships shown in the table, Mr. Borden is a
director of Carolina Power & Light Company, Mount Olive Pickle Company,
Ruddick Corporation, Triangle Bancorp and Winston Hotels, Inc.; Mr.
Cunningham is a director of thirty-two funds in the John Hancock family of
mutual funds, La Quinta Motor Inns, Inc. and Texas Commerce Bank (Advisory
Director); Mr. Henderson is a director of Wachovia Corporation; Mr. Melvin
is a director of Central Carolina Bank; Mr. Payne is a director of ACSYS,
Inc., Anheuser Busch, Inc. and Cousins Properties, Inc.; Mr. Russell is a
director of Piedmont Natural Gas Company; and Mr. Spilman is a director of
Dominion Resources, Inc., The Pittston Co. and Virginia Electric and Power
Company.
5
<PAGE> 7
WHAT COMMITTEES HAS THE BOARD APPOINTED?
Attendance by directors at 1997 meetings of the Board and of committees on which
they served averaged 93%. All directors attended at least 75% of the meetings of
the Board and of committees on which they served except Mr. McColl.
The Statement of Principles of Jefferson-Pilot Corporation with Respect to
Certain Corporate Governance Matters was adopted by the Board and ratified
overwhelmingly by shareholders in 1993. Under these Principles, the Audit,
Compensation and Conflict of Interests Committees may not include any inside
director -- no current or recent executive officer or any relative, or any other
director who is an executive officer of another public corporation on whose
board one of our executive officers and directors serves. Each of these
Committees is authorized to engage independent advisers with an appropriate
budget available for this purpose. The Nominating Committee may not include more
than one inside director.
Executive Committee -- met three times in 1997, and is composed of Directors
Spilman (Chairman), Borden, Cunningham, Greer and Stonecipher. This Committee
may exercise all of the powers and authority of the Board, except for the power
to issue stock or declare dividends and certain other powers specifically
reserved by North Carolina law to the Board.
Audit Committee -- met three times in 1997, and is composed of Directors Russell
(Chairman), Henderson, Melvin, Payne and Walls. This Committee recommends the
independent accountants to be appointed by the Board; approves the scope of the
accountants' examination and other services; reviews the financial statements,
including auditors' opinions and management letters, and reports to the Board
the Committee's recommendation; reviews financial and/or fiscal policies and
policy decisions; determines the duties and responsibilities of the chief
internal auditor, and approves his budget and the scope of his work; and,
through review of the results of internal and external audits, monitors internal
programs to ensure compliance with laws, regulations and our responsibilities
for financial reporting to the public.
Compensation Committee -- met three times in 1997, and is composed of Directors
Cunningham (Chairman), McColl, Melvin, Spilman and Walls. This Committee
approves salaries paid to senior executive officers; reviews our tax qualified
employee benefit plans; reviews all recommendations for changes in any plan
which must be approved by the Board; and determines awards for senior executive
officers under incentive plans including stock plans.
Nominating Committee -- met once in 1997, and is composed of Directors Spilman
(Chairman), Cunningham, Greer, Henderson, and McColl. This Committee recommends
to the Board nominees for election as directors and the composition of all
Committees of the Board other than the Executive and Nominating Committees. In
selecting director nominees, the Committee will consider nominees recommended in
writing by shareholders. The Committee will not be able to consider shareholder
recommendations received less than 120 days before shareholders meet to elect
directors.
Conflict of Interests Committee -- met once in 1997, and is composed of
Directors Walls (Chairperson), Borden, Melvin, Payne and Russell. This Committee
recommends policies or procedures designed to avoid conflicts of interest
involving our directors and officers, and is responsible for investigating any
complaints or activities involving actual or potential conflict and recommending
to the Board appropriate action relating to any conflict. This Committee also
annually reviews all significant relationships, direct or indirect, that
directors have with Jefferson-Pilot, based on surveys that all directors
complete. Based on this review and in accordance with our Statement of
Principles, the Committee then also makes any appropriate recommendation to the
Board concerning Committee assignments.
HOW ARE DIRECTORS COMPENSATED?
Cash. Directors who are not our employees receive an annual retainer of
$30,000, and a $1,000 fee for each Board or committee meeting they attend
(reduced to $500 for a committee meeting held in connection with a Board
meeting). Committee chairpersons receive an additional annual retainer of
$3,000. The Chairman of the Board receives an additional annual retainer of
$50,000.
6
<PAGE> 8
Directors may elect to defer receipt of some or all cash directors' fees.
Deferred accounts are credited, at the director's election, with either phantom
units for our common stock, or with interest at rates representative of market
rates. Deferred accounts are unfunded and are paid out in up to ten annual
installments after the director leaves the Board.
Stock Options. Non-employee directors receive non-discretionary stock option
awards, each exercisable at the fair market value of our common stock on the
award date. A new director receives an option to purchase 7,500 shares. All
directors receive an option for 3,375 shares on the first regular quarterly
Board meeting date in each year through 1999. The Non-Employee Directors' Stock
Option Plan, unless earlier terminated, expires on March 31, 1999.
STOCK OWNERSHIP
WHAT IS THE STOCK OWNERSHIP OF OUR DIRECTORS AND OFFICERS?
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED ON
MARCH 2,
NAME 1998(1)(2)
- --------------------------------------------------------------------------
<S> <C>
Directors and Nominee:
Edwin B. Borden............................................. 30,774
William H. Cunningham....................................... 18,797
Robert G. Greer............................................. 19,650
George W. Henderson, III.................................... 16,659
Hugh L. McColl, Jr.......................................... 17,682(2)
E. S. Melvin................................................ 27,633(2)
Kenneth C. Mlekush.......................................... 118,771
William Porter Payne........................................ 18,833
Patrick S. Pittard.......................................... 500
Donald S. Russell, Jr....................................... 22,687(2)
Robert H. Spilman........................................... 36,729
David A. Stonecipher........................................ 367,993
Martha A. Walls............................................. 45,089
Other officers named in compensation table:
Dennis R. Glass............................................. 118,335
John D. Hopkins............................................. 71,546
E. Jay Yelton............................................... 95,603
Directors, nominee and executive officers as a group (17
persons).................................................. 1,031,917
</TABLE>
- ---------------
(1) The individuals have sole voting and investment power over the shares,
except: Mr. Melvin: 710 total shares are held by his two sons and wife; Mr.
Spilman: 1,050 shares are held by his wife; Mr. Stonecipher: 3,000 shares
are held by his wife; and Ms. Walls: 30,053 shares are owned jointly with
her husband and 2,132 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 shares held for each officer under our
401(k)/TeamShare plan, share equivalent units under the directors' fee
deferral plan as follows: Mr. Borden, 24 shares; Mr. Henderson, 2,109
shares: Mr. Melvin, 2,236 shares; Mr. Spilman, 8,324 shares and Ms. Walls,
2,348 shares; and the following shares which the individuals had the right
to acquire within 60 days through the exercise of options: employee plan:
Mr. Stonecipher, 310,833; Mr. Glass, 109,583; Mr. Hopkins, 66,666; Mr.
Mlekush, 113,333; and Mr. Yelton, 87,083; non-employee director plan:
Messrs. Borden, Cunningham, Greer, Henderson, McColl, Melvin, Payne,
Russell and Spilman, 14,250 each; Ms. Walls, 6,750; and the group (both
plans), 822,498. Information for Mr. Pittard is as of March 31, 1998.
(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 Chief Executive Officer, holds 826,046
7
<PAGE> 9
shares (1.2%) for its own account, as to which he disclaims beneficial
ownership. Mr. Melvin reported that he is coexecutor of the estate of
Joseph M. Bryan, which owns 837,675 shares (1.2%), as to which Mr. Melvin
disclaims beneficial ownership. Mr. Russell reported that 111,375 shares
are held of record by his father under an arrangement under which Mr.
Russell has sole voting power, as to which shares Mr. Russell disclaims
beneficial ownership.
Jefferson-Pilot believes that all of our executive officers and directors
complied for 1997 with all applicable stock ownership reporting requirements
under Section 16(a) of the Securities Exchange Act of 1934.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
What are the principles of Jefferson-Pilot's executive pay program?
The executive compensation program is based on guiding principles designed to
align compensation with Jefferson-Pilot'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 our return to
shareholders by:
- providing base compensation levels that are competitive with that
provided in the various markets in which we compete for executive talent;
- rewarding executives for the achievement of specific corporate and unit
earnings goals, as well as market related goals necessary to build
shareholder 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 implementing the executive compensation program, the Compensation Committee
considers each of these principles, which are described in greater detail below.
How are competitive compensation levels determined?
The Committee establishes total compensation (base salary and incentive) targets
for executives for expected levels of performance. Published survey materials,
proxy statement analyses and counsel with consultants are used to establish
targeted compensation levels, including incentive compensation. Companies listed
as the "Similarly Diversified Companies" in the Performance Graph are included
in the compensation survey data, as are other companies. We use 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 (the 50 to 75 percent range) of
the relevant marketplace for each executive's area of responsibility (such as
life insurance or broadcasting). Actual total compensation of most of the
individuals named in the Summary Compensation Table for 1997, including Mr.
Stonecipher, fell within the second quartile of the relevant marketplace.
How are incentive and reward built into the compensation program?
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 75 percent of each executive officer's total targeted
compensation is based upon performance. Performance related elements include
annual bonus, as well as two forms of long term incentives under the Long Term
Stock Incentive Plan: long term incentive compensation plan (LTIP) payouts, and
stock options. LTIP was designed in combination with the expected value of stock
option grants such that competitive and performance-related long term incentive
opportunities are available.
Annual Bonus. The annual incentive compensation (bonus) plan is keyed to
competitive annual incentive norms and is based on the achievement of short term
goals consisting of operating income targets set for
8
<PAGE> 10
Jefferson-Pilot and each line of business. Additional short term goals such as
market share, premium growth and new business issued may also affect a specific
individual's incentive award. The short term goals for executives are developed
based on our annual budgets and operating plans. The weights accorded to the
goals vary depending on the participant's position. For most executive officers,
the 1997 bonuses reflected both good earnings growth and the extraordinary
effort expended in the Chubb Life acquisition and the integration of several
major acquisitions. The actual performance of Jefferson-Pilot and of the
individuals named in the Summary Compensation Table in 1997 resulted in annual
bonuses varying from 49% to 107% of base salary.
LTIP. LTIP payouts are based on cumulative growth in operating earnings per
share (EPS). Participants are eligible for an annual payment, 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. 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 three year measurement period. No LTIP payments will be
made if the CGR during the three years 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 LTIP participants due to differences in competitive
practice for the Chief Executive Officer position versus that of other executive
officers. Further details are provided with the Long Term Incentive Plans table
on page 12.
Stock Options. Awards of stock options are made in amounts that, when combined
with long term incentives under the LTIP plan, are designed to provide total
long term incentive compensation that is competitive with other large insurance
companies, based on data from industry surveys. Actual gains from stock options
depend 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.
Some of the stock options awarded in 1996 and 1997 to executive officers were
granted pursuant to employment agreements, which are described on page 13.
Are these plans designed to build equity ownership?
Sustained and increasing ownership of Jefferson-Pilot stock by our executives is
expected upon shares being earned through performance. Half of the LTIP value
earned is delivered in common shares. In the recent payout based on the three
year CGR through 1997, an aggregate of 8,054 shares were delivered to seven
executive officers. The direct link between shareholders and executives is
further strengthened by using stock options as an important incentive vehicle.
Expectations are established informally regarding the continued ownership of our
shares by executives during their employment.
What was the Chief Executive Officer's compensation for 1997?
Mr. Stonecipher's salary for 1997 reflected a 6.7% increase over his 1996
salary. Under his new employment agreement, which was negotiated on an arms'
length basis and entered into in September 1997, Mr. Stonecipher's bonus for
1997 was determined in accordance with a formula based on growth in operating
EPS over the prior year. In 1997, operating EPS increased 14.8% compared with
1996 results. In addition, under his employment agreement, Mr. Stonecipher
participates in LTIP and received a payout in early 1997 based on achievement of
above target CGR over the three year period 1995-97, and in February 1997 he
received a stock option to purchase 120,000 shares at the fair market value on
the award date. Additional options related to signing of his new employment
agreement are discussed on page 13.
Is all compensation tax deductible?
The Compensation Committee has taken steps to minimize any compensation that
would be non-deductible under Section 162(m) of the Internal Revenue Code. A
portion of Mr. Stonecipher's bonus for 1997 was deductible because it was earned
under his prior employment agreement which predated the adoption of Section
162(m). In the event that any material amount might potentially not be
deductible under
9
<PAGE> 11
Section 162(m), the Committee will consider what actions, if any, should be
taken to seek to make such compensation deductible without compromising its
ability to motivate and reward excellent performance.
COMPENSATION COMMITTEE
William C. Cunningham, Chairman
Hugh L. McColl, Jr.
E. S. Melvin
Robert H. Spilman
Martha Ann Walls
********
This table summarizes compensation for our chief executive officer, and for the
four other executive officers who were the highest paid for 1997 (Named
Officers).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------------
AWARDS(1) PAYOUTS
---------- -------
ANNUAL COMPENSATION SECURITIES LTIP ALL OTHER
-------------------- UNDERLYING PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) ($)(2) ($)(3)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David A. Stonecipher................. 1997 900,000 965,656 220,000(4) 540,000 7,024
President and Chief Executive 1996 843,650 633,000 125,000 484,930 6,750
Officer of the Corporation 1995 811,200 540,000 75,000 350,763 5,895
Kenneth C. Mlekush................... 1997 400,000 250,000 30,000 180,000 7,214
Executive Vice President of the 1996 365,500 200,000 38,750 157,567 6,039
Corporation 1995 351,500 200,000 30,000 113,991 5,700
Dennis R. Glass...................... 1997 350,000 200,000 30,000 157,500 3,518
Executive Vice President and 1996 327,600 150,000 38,750 141,228 2,314
Treasurer of the Corporation 1995 315,100 230,000 22,500 102,187 6,045
John D. Hopkins...................... 1997 325,000 160,000 25,000 -- 5,622
Executive Vice President and General 1996 312,000 130,000 38,750 -- 5,700
Counsel of the Corporation 1995 300,000 210,000 22,500 -- 6,045
E. Jay Yelton........................ 1997 310,000 175,000 25,000 139,500 5,230
Executive Vice President of the 1996 286,000 150,000 30,000 123,295 6,168
Corporation 1995 275,000 130,000 22,500 89,183 6,911
</TABLE>
- ---------------
(1) None of the Named Officers have been granted any stock appreciation rights
or restricted stock awards.
(2) LTIP payouts were made 50% in shares of our common stock.
(3) Company matching and gain sharing contributions to the 401(k)/TeamShare
Plan, and a portion of gain sharing paid in cash to all employees, are
listed.
(4) Includes 100,000 share option award effective upon signing of Mr.
Stonecipher's new employment agreement.
10
<PAGE> 12
LONG TERM STOCK INCENTIVE PLAN
This plan provides long term incentives, based on Jefferson-Pilot common stock
and on growth in operating earnings per share (EPS), to employees who may
influence the long term performance of Jefferson-Pilot and its subsidiaries. Key
features of the plan include stock options and long term incentive awards
(LTIP). 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 1997 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 1997
<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 1997 PRICE($) DATE ($)(1)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
David A. Stonecipher...................... 120,000 10.6% 57.875 2/10/07 1,672,800
100,000 8.9% 72.750 9/15/07 1,902,000
Kenneth C. Mlekush........................ 30,000 2.7% 57.875 2/10/07 418,200
Dennis R. Glass........................... 30,000 2.7% 57.875 2/10/07 418,200
John D. Hopkins........................... 25,000 2.2% 57.875 2/10/07 348,500
E. Jay Yelton............................. 25,000 2.2% 57.875 2/10/07 348,500
</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 1991 through December
1996; 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 become exercisable in one third increments over three years, or
upon earlier death, disability, retirement, termination of employment after
completion of the term of an employment agreement, or a change in control.
The following table shows stock option exercises during 1997 and the value of
unexercised options as of December 31, 1997.
AGGREGATED OPTION EXERCISES IN 1997
AND DECEMBER 31, 1997 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT 12-31-97(#) AT 12-31-97($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David A. Stonecipher..... -- -- 204,166 328,334 8,528,627 5,969,808
Kenneth C. Mlekush....... -- -- 87,916 55,834 3,626,234 1,312,517
Dennis R. Glass.......... -- -- 85,416 54,584 3,334,464 1,260,694
John D. Hopkins.......... 18,750 545,625 44,166 49,584 1,512,433 1,160,694
E. Jay Yelton............ -- -- 67,500 43,750 2,618,126 1,019,219
</TABLE>
11
<PAGE> 13
The following table and notes provide information with respect to LTIP.
LONG TERM INCENTIVE PLANS
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE UNDER NON-STOCK-
OR OTHER PRICE-BASED PLANS
NUMBER OF SHARES, PERIOD UNTIL ----------------------------------
UNITS OR OTHER MATURATION OR THRESHOLD TARGET MAXIMUM
NAME RIGHTS(#)(1) PAYOUT(2) ($)(3) ($)(3) ($)(3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
David A. Stonecipher................. -- 1997-1999 187,200 374,400 561,600
Kenneth C. Mlekush................... -- 1997-1999 69,000 138,000 207,000
Dennis R. Glass...................... -- 1997-1999 56,250 112,500 168,750
John D. Hopkins...................... -- -- -- -- --
E. Jay Yelton........................ -- 1997-1999 48,750 97,500 146,250
</TABLE>
- ---------------
(1) The LTIP does not provide for awards of shares, units or other rights
representing the right to receive compensation. LTIP provides for payouts
based on the compound growth rate ("CGR") in cumulative operating earnings
per share during the three year measurement 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 award.
(2) Amounts in the table are based on current (1998) 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, and service
to the end of the three year measurement period. 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
We provide executive retirement benefits under both a tax qualified plan and a
nonqualified supplemental benefit plan. The table includes benefits under both
plans.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------
20 YEARS
FINAL AVERAGE EARNINGS 10 YEARS 15 YEARS OR MORE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 300,000............................................... $ 75,000 $112,000 $150,000
$ 600,000............................................... $150,000 $225,000 $300,000
$ 900,000............................................... $225,000 $337,500 $450,000
$1,200,000............................................... $300,000 $450,000 $600,000
$1,500,000............................................... $375,000 $562,500 $750,000
$1,800,000............................................... $450,000 $675,000 $900,000
</TABLE>
The table illustrates straight life annuity benefits that would be payable
annually upon normal retirement at age 65 on January 1, 1998 to participants at
specified levels of earnings and years of service. Benefits shown are not
subject to offset for amounts payable under Social Security, but are reduced for
early retirement.
For purposes of this table, covered compensation consists of the amounts
disclosed in the Summary Compensation Table as salary and bonus. The credited
years of service for the Named Officers are: Mr. Stonecipher, 5 years; Mr.
Mlekush, 5 years; Mr. Hopkins, 5 years; Mr. Glass, 4 years; and Mr. Yelton, 4
years.
Mr. Stonecipher is entitled to additional retirement benefits under his
employment agreement.
12
<PAGE> 14
DO THE NAMED OFFICERS HAVE EMPLOYMENT CONTRACTS?
On March 1, 1993, David A. Stonecipher became President and Chief Executive
Officer of the Corporation under an employment agreement which was to expire on
December 31, 1997. A new employment agreement with Mr. Stonecipher was signed
effective September 15, 1997. It continues to provide for base salary, annual
bonus, LTIP and additional retirement benefits, and also for stock options
granted at fair market value for 200,000 shares, of which 100,000 were granted
upon signing with vesting in one third increments over three years, and 100,000
were granted on January 6, 1998 with vesting on December 31, 2002. The
Compensation Committee may review and increase his salary as appropriate. The
annual bonus as a percent of base salary is determined in accordance with a
formula based on growth in operating earnings per share over the prior year.
Under the agreement, all prior stock option awards and any discretionary award
of options for 1997 made in February 1998 (Mr. Stonecipher received options for
80,000 shares in February 1998) are fully vested.
Mr. Stonecipher, currently age 57, is entitled to an annual retirement benefit
at age 65 equal to 67% (reduced if he leaves earlier) of the average annual base
salary and annual bonus for the highest three of his last five years of
employment, reduced by other retirement benefits received by Mr. Stonecipher
from his former employer or under our retirement plans. Mr. Stonecipher may
elect to receive after retirement all or part of such retirement benefits as a
single life annuity, as a lump sum and/or as payments in installments. A lump
sum death benefit is payable if he dies during employment in an amount equal to
the present value of his retirement benefits accrued to the date of death.
If Mr. Stonecipher's employment is terminated by the Corporation other than for
good cause or if he resigns for good reason including following a change in
control, he will: (1) receive a lump sum payment equal to (a) the base annual
salary, and (b) 50% of the maximum bonus and LTIP payments, that he would have
received for the lesser of three years or until December 31, 2002; (2) be fully
vested in all stock options; and (3) become eligible for immediate retirement
with benefits computed as if his employment had continued through December 31,
2002. If Mr. Stonecipher's employment is terminated by the Corporation for good
cause or if he resigns following a demotion for good cause, items 1(a) and 2
through 4 above will apply except that his January 6, 1998 stock option will be
forfeited.
Messrs. Mlekush, Glass, Hopkins and Yelton joined the Corporation in 1993 under
three year employment agreements providing for specified annual salaries and for
guaranteed stock options over three years. Mr. Mlekush's agreement was renewed
at the end of 1995 for an additional three years, and in 1996 the agreements for
Messrs. Glass, Hopkins and Yelton were renewed for an additional three years. In
connection with each renewal, the Compensation Committee awarded a guaranteed
stock option for 7,500 shares exercisable at the fair market value on the award
date. The Compensation Committee may review and increase salaries in subsequent
years as appropriate. Annual bonuses may be earned in accordance with a formula
based on growth in operating EPS and/or other factors. Additional amounts may be
paid for exceptional individual and company performance. The agreements also
provide for LTIP (except for Mr. Hopkins).
IS THE COMPENSATION COMMITTEE INDEPENDENT?
Directors Cunningham, McColl, Melvin, Spilman and Walls served as members of the
Compensation Committee of the Board during all of 1997. None of them ever has
been an officer or employee of the Corporation or any of its subsidiaries or has
had any other significant relationship with Jefferson-Pilot requiring disclosure
under the proxy rules.
13
<PAGE> 15
WHAT HAS BEEN OUR SHAREHOLDER RETURN?
The graph shows the total shareholder return (stock price appreciation plus
reinvested dividends) for Jefferson-Pilot's common stock compared to two
indexes: the Standard & Poor's 500 Stock Index and an index of certain other
similarly diversified life insurance companies. The graph assumes that you
invested $100 in each on December 31, 1992.
COMPARISON OF FIVE YEAR TOTAL RETURN TO SHAREHOLDERS
AMONG JEFFERSON-PILOT CORPORATION, S&P 500 INDEX, AND SIMILARLY DIVERSIFIED
COMPANIES
<TABLE>
<CAPTION>
CUSTOM
MEASUREMENT PERIOD COMPOSITE INDEX
(FISCAL YEAR COVERED) JEFFERSON-PILOT S&P 500 (8 STOCKS)
<S> <C> <C> <C>
DEC. '92 100 100 100
DEC. '93 100 110 104
DEC. '94 115 112 95
DEC. '95 160 153 135
DEC. '96 199 189 159
DEC. '97 281 252 234
</TABLE>
The similarly diversified companies included in the custom composite index are
American General Corporation, American National Insurance Company, The Liberty
Corporation, Lincoln National Corporation, Protective Life Corporation,
Provident Life & Accident Insurance Company of America (Class B Common),
ReliaStar Financial Corp., and Torchmark Corporation. Each company is weighted
according to its respective stock market capitalization at the beginning of each
calendar quarter included in the graph. Two peer companies included in the
performance graph in prior years have been deleted; one is no longer publicly
held and the other sold its life insurance operations.
14
<PAGE> 16
OTHER INFORMATION
WHO ARE THE INDEPENDENT PUBLIC ACCOUNTANTS?
Upon recommendation of the Audit Committee, the Board has appointed Ernst &
Young LLP as the independent public accountants for the Corporation and its
consolidated subsidiaries for the fiscal year ending December 31, 1998.
Similarly, E & Y was appointed for 1996 and 1997.
Before 1996, our financial statements were audited by McGladrey & Pullen, LLP.
McGladrey expressed reliance for 1995 upon Arthur Andersen LLP, the auditors for
1995 for Alexander Hamilton Life Insurance Company of America following its
acquisition by the Corporation. The change in auditors reflected the
Corporation's increasing size and growing need for nationwide life insurance
industry resources for auditing and for other services such as those related to
acquisitions. The change was made following a selection process in which
McGladrey chose not to participate, although it remained willing to serve as our
auditors based on its existing life insurance industry resources.
Representatives of E & Y will be present at the Meeting, and will be given the
opportunity to make a statement and will be available to respond to appropriate
questions. Representatives of E & Y also have direct access to members of our
Audit Committee and regularly attend their meetings.
The reports of McGladrey on our financial statements for 1995 and for 1994, and
the report of Andersen for the period following the acquisition, did not contain
an adverse opinion or disclaimer of opinion. Further, neither was qualified or
modified as to uncertainty, audit scope or accounting principles, except for
explanatory statements in the McGladrey reports regarding a change of method of
accounting for investments in debt and marketable equity securities, which
resulted from the Corporation's adoption of SFAS 115 effective January 1, 1994.
Since January 1, 1994 there have been no disagreements between the Corporation
and McGladrey, and since the date of the acquisition there have been no
disagreements between Alexander Hamilton or the Corporation and Andersen, on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure. Similarly, there were no reportable events as to
either such accounting firm.
WHAT ARE THE EXPENSES AND METHODS OF THIS PROXY SOLICITATION?
Jefferson-Pilot pays the costs of soliciting proxies. We also will reimburse
brokerage houses and other custodians, nominees and fiduciaries for their
reasonable costs of forwarding solicitation materials to beneficial owners of
our stock.
We have retained Georgeson & Co. to perform various proxy advisory and
solicitation services for a total estimated fee of $12,500, plus out-of-pocket
expenses. In addition, our directors and employees may solicit proxies in
person, by mail or by telephone or other electronic means.
DOES JEFFERSON-PILOT HAVE ANY CORPORATE GOVERNANCE PRINCIPLES?
A portion of our Statement of Principles is described on page 5. Jefferson-Pilot
has complied with the Principles in all material respects. The Principles have
not been modified, amended or waived in any respect since their adoption, except
for the waiver approved by our Board on March 21, 1997 which permitted William
E. Blackwell, who turned age 65 on April 1, 1997, to continue to serve in his
various executive capacities including service as President of Jefferson-Pilot
Communications Company until a search was completed and his successor, Theresa
M. Stone, filled these positions. The Principles are available upon request to
our corporate secretary and will be available for review by shareholders at the
Meeting.
WHEN ARE SHAREHOLDER PROPOSALS DUE FOR THE 1999 ANNUAL MEETING?
Jefferson-Pilot's 1999 annual meeting of shareholders is scheduled for May 3,
1999. Any shareholder proposals to be included in our proxy statement for that
meeting must be received by our corporate secretary by December 1, 1998.
15
<PAGE> 17
The Corporation's Articles of Incorporation and By-Laws also require advance
notice for any director nominations or any resolutions to be presented at a
shareholders' meeting. Any shareholder entitled to vote at an annual meeting may
nominate at that meeting one or more persons for election as directors, but only
if written notice of the intent to make such nomination has been given to our
corporate secretary at least 90 days before the meeting. Similar 90 day advance
written notice to our secretary is required for any resolution to be presented
at the meeting.
WILL ANY OTHER MATTERS BE PRESENTED?
The Board of Directors is not aware of any matter to be voted on at the Meeting
other than the election of directors. If any other matter requires a shareholder
vote, the person or persons voting the proxies will vote, in accordance with
their best judgment, in the interest of the Corporation.
By Order of the Board of Directors
Robert A. Reed
Vice President and Secretary
16
<PAGE> 18
APPENDIX A
JEFFERSON PILOT FINANCIAL
INSTRUCTIONS FOR VOTING YOUR PROXY
Jefferson-Pilot Corporation is now offering shareholders of record three
alternative ways of voting your proxies:
- -By Telephone -Through the Internet -By Mail
(using a touch-tone telephone) (using a browser) (traditional method)
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you had returned your proxy card. We encourage you to
use these cost effective and convenient ways of voting, 24 hours a day, 7 days a
week.
TELEPHONE VOTING Available only until 5:00 p.m. (Eastern time on May 1, 1998)
- ----------------
- This method of voting is available for residents of the U.S. and Canada
- On a touch tone telephone, call TOLL FREE 1-888-836-5063, 24 hours a day,
7 days a week
- You will be asked to enter ONLY the control number shown below
- Have your proxy card ready, then follow these instructions:
OPTION 1: To vote as the Board of Directors Recommends, press 1
OPTION 2: If you choose to vote on each director nominee separately,
press 2
-- Your vote will be confirmed and cast as you directed
INTERNET VOTING Available only until 5:00 p.m. (Eastern time on May 1, 1998)
- ---------------
- Visit our Internet voting website at http://cybervote.georgeson.com
- Enter the Company Number AND Control Number shown below and follow the
instructions on your screen
- You would incur your usual Internet charges
VOTING BY MAIL
- --------------
- Simply mark, sign and date your proxy card and return it in the postage-
paid envelope
- If you are voting by telephone or the Internet, please do not mail your
proxy card
Our Annual Meeting of Shareholders will be held at 10:00 a.m. on May 4, 1998
at our offices at 100 North Greene Street, Greensboro, NC.
-------------- --------------
COMPANY NUMBER CONTROL NUMBER
-------------- --------------
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
Please mark
[X] votes as in
this example
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BELOW.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSAL 1.
JEFFERSON-PILOT'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1
-----------------------------------------------------------------------
1. Election of four Class III Directors: FOR WITHHOLD
Nominees: [ ] [ ]
Robert G. Greer
George W. Henderson, III
Kenneth C. Miskush
Patrick S. Pittard
[ ] I plan to attend the meeting.
[ ] See noted comments.
- ----------------------------------
FOR all listed nominees except as
noted above
DATE:_______________________, 1998
__________________________________
__________________________________
SIGNATURE(S)
IMPORTANT: Please sign exactly as
your name(s) appear(s) hereon. If
you are acting as an attorney-in-
fact, corporate officer or in a
fiduciary capacity, please indicate
the capacity in which you are
signing.
<PAGE> 19
[LOGO] JEFFERSON PILOT
FINANCIAL
JEFFERSON-PILOT CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS ON MAY 4, 1998
PROXY
The undersigned hereby constitute(s) and appoint(s) David A. Stonecipher, John
D. Hopkins and Robert A. Reed, and each or any of them, attorneys and proxies
of the undersigned, with full power of substitution of 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 Shareholders of Jefferson-Pilot Corporation to be held on
May 4, 1998, 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.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED, OR IF
NO CHOICE IS SPECIFIED, FOR ALL NOMINEES 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" THE PROPOSAL.
(IMPORTANT - TO BE SIGNED AND DATED ON REVERSE SIDE)
[SEE REVERSE]
SIDE
