<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
SUNAMERICA INC.
- - - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
SUNAMERICA INC.
- - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(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:*
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
- - - --------
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
[_] 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:_____________________________________________________________
Notes:
<PAGE>
NOTICE OF SUNAMERICA INC.
1995 ANNUAL MEETING
OF SHAREHOLDERS
AND PROXY STATEMENT
[LOGO OF SUNAMERICA]
<PAGE>
SUNAMERICA INC. ELI BROAD
1 SunAmerica Center Chairman and
Century City Chief
Los Angeles CA 90067-6022 Executive
310.772.6000 Officer
[LOGO OF SUNAMERICA]
December 23, 1994
Dear Fellow Shareholder:
Your officers and directors join me in inviting you to attend the 1995 Annual
Meeting of Shareholders of SunAmerica Inc. The formal notice of this meeting
and the Proxy Statement accompany this letter.
By attending the meeting you will have an opportunity to hear the plans for
our Company's future, to meet your officers and directors and to participate in
the business of the meeting. If it is not possible for you to attend, please
return the enclosed proxy immediately to insure that your shares will be voted.
Since mail delays occur frequently, it is important that the proxy be returned
well in advance of the meeting.
We look forward to seeing you in the Champagne Room at The Regent Beverly
Wilshire, Beverly Hills, California at 1:30 p.m. on January 27, 1995.
Sincerely,
/s/ ELI BROAD
Eli Broad
Chairman of the Board, President and
Chief Executive Officer
<PAGE>
SUNAMERICA INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 27, 1995
To the holders of the Common, Class B Common and Series C Preferred Stock of
SunAmerica Inc.:
The Annual Meeting of Shareholders of SunAmerica Inc. will be held on Friday,
January 27, 1995, at 1:30 p.m. in the Champagne Room at The Regent Beverly
Wilshire, 9500 Wilshire Boulevard, Beverly Hills, California for the following
purposes:
(1) To elect nine (9) directors for the ensuing year;
(2) To consider and vote upon the Annual Performance Incentive
Compensation Plan;
(3) To consider and vote upon the 1995 Performance Stock Plan; and
(4) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on November 30, 1994,
as the record date for determination of shareholders entitled to notice of and
to vote at the annual meeting or any adjournment thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED STAMPED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
Susan L. Harris
Vice President and Secretary
Los Angeles, California
December 23, 1994
<PAGE>
SUNAMERICA INC.
1 SUNAMERICA CENTER
LOS ANGELES, CALIFORNIA 90067-6022
DECEMBER 23, 1994
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JANUARY 27, 1995
To Our Shareholders:
Your Board of Directors furnishes this Proxy Statement in connection with its
solicitation of your Proxy in the form enclosed to be used at the Company's
annual meeting of shareholders to be held on Friday, January 27, 1995, at the
time and place and for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders.
The Company's Annual Report for the fiscal year ended September 30, 1994,
including audited financial statements, is being mailed to shareholders
concurrently with this Proxy Statement.
We cordially invite you to attend the meeting. Whether or not you plan to
attend, we urge you to date, sign and return your Proxy promptly in the
envelope enclosed. You may revoke your Proxy at any time prior to its exercise
at the annual meeting by notice to the Company's Secretary, or by timely
delivery to the Company of a subsequently dated and executed Proxy and, if you
attend the meeting, you may vote your shares in person.
Only holders of record of the 28,966,171 shares of Common Stock, the
6,826,439 shares of Nontransferable Class B Stock ("Class B Stock") and the
486,800 shares of Adjustable Rate Cumulative Preferred Stock, Series C (the
"Series C Preferred Stock") outstanding at the close of business on November
30, 1994, will be entitled to vote at the meeting.
At the annual meeting, all shareholders, voting together, and not by classes,
will have the opportunity to elect nine directors for the ensuing year and to
approve the Annual Performance Incentive Compensation Plan and the 1995
Performance Stock Plan. Each shareholder of Common Stock is entitled to one
vote for each share held. Each shareholder of Class B Stock is entitled to ten
votes for each share held. Each shareholder of Series C Preferred Stock is
entitled to one-tenth of one vote for each share held. There is no right to
cumulate voting as to any matter.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the election inspectors appointed for the meeting and will determine whether or
not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum. If a broker indicates on the Proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with
respect to that matter.
The election of directors requires a plurality of the votes cast with a
quorum present. Abstentions and broker non-votes have no effect on the
plurality vote for the election of directors. Approval of the Annual
Performance Incentive Compensation Plan requires the affirmative vote of the
majority of votes
1
<PAGE>
of shares present or represented and entitled to vote. Abstentions and broker
non-votes have no effect on the majority vote required to approve this matter.
Approval of the 1995 Performance Stock Plan requires the affirmative vote of
the majority of the votes of shares present or represented and entitled to
vote. For purposes of determining the number of votes present and entitled to
vote on the 1995 Performance Stock Plan, abstentions will be counted and will
therefore be an equivalent to a vote against, but broker non-votes will not be
counted.
Mr. Broad, Chairman of the Board, President and Chief Executive Officer of
the Company, holds or exercises voting power over shares which represent
approximately 55.9% of the shares entitled to be cast for the election of the
Board of Directors, the Annual Performance Incentive Compensation Plan and the
1995 Performance Stock Plan. Mr. Broad intends to cast an affirmative vote for
each of the nominees, thereby assuring the election of each nominee to the
Board of Directors. Mr. Broad intends to cast an affirmative vote for the
Annual Performance Incentive Compensation Plan and the 1995 Performance Stock
Plan, thereby assuring passage of both matters.
The persons named as proxies in the enclosed forms are Messrs. Eli Broad,
Chairman of the Board, President and Chief Executive Officer; Jay S. Wintrob,
Executive Vice President; and James R. Belardi, Senior Vice President and
Treasurer.
ELECTION OF DIRECTORS
At the meeting, management will present as nominees and recommend to the
shareholders that each of the nine persons listed below be elected to serve for
a term of one year and until their successors are duly elected and qualified.
Each nominee has agreed to serve if elected. All nominees, except Barry Munitz,
were elected to the Board at the last shareholders' meeting. Should any nominee
become unable to serve as a director, the persons named in the enclosed form of
Proxy will, unless otherwise directed, vote for the election of such other
person for such office as the present Board of Directors may recommend in place
of such nominee.
The following sets forth certain biographical information, present
occupation, and business experience for the past five years for each of the
nominees:
- - - --------------------------------------------------------------------------------
Eli Broad, age 61, a co-founder of the Company in 1957, is
presently Chairman of the Board of Directors, President and
Chief Executive Officer. Among other activities, Mr. Broad is
Founder-Chairman and Chairman of the Executive Committee of
Kaufman and Broad Home Corporation; a director of the Federal
National Mortgage Association; the Founding Chairman of The
Museum of Contemporary Art (MOCA); Chairman of the Los Angeles
[PHOTO] World Affairs Council; a director of D.A.R.E. America, a trustee
of the California Institute of Technology; a trustee of the
ELI BROAD Archives of American Art, The Smithsonian Institution, and the
American Federation of Arts; a member of the California Business
Roundtable; former Vice Chairman of the Board of Trustees of the
California State University system; and former Chairman and a
life trustee of Pitzer College. The Eli Broad College of
Business and Graduate School of Management at his alma mater,
Michigan State University, are named in his honor. Mr. Broad has
been a director of the Company since 1961.
2
<PAGE>
- - - --------------------------------------------------------------------------------
Ronald J. Arnault, age 51, has been an Executive Vice President
and a director of Atlantic Richfield Company (ARCO) since 1987
and Chief Financial Officer since 1992. He is Chairman of the
Board of Vastar Resources, Inc. and a director of ARCO Chemical
[PHOTO] Company. Previously, he held various assignments with ARCO since
joining that company in 1969. Mr. Arnault is a member of the
RONALD J. Board of Governors and former Chairman of The Music Center of
ARNAULT Los Angeles County. He is also a member of the Board of Trustees
of the Brookings Institution and of Occidental College, a member
of the Wharton Graduate Executive Board, as well as being a
member of the Board of Directors of the Center Theater Group and
The French Foundation for Alzheimer Research. He was elected a
director of the Company in July 1992.
- - - --------------------------------------------------------------------------------
Karen Hastie-Williams, age 50, has been a partner with the law
firm of Crowell & Moring since December 1982. Prior to joining
Crowell & Moring, Ms. Williams was Administrator of the Office
of Federal Procurement Policy, Office of Management and Budget,
and from 1977 to 1980 served as Chief Counsel to the United
States Committee on the Budget. She is a director of Crestar
[PHOTO] Financial Services Corporation, the Federal National Mortgage
Association, Washington Gas and Light Company and Continental
KAREN Airlines, Inc. She also serves as Trustee of the NAACP Legal
HASTIE- Defense Fund, Inc., the Lawyers' Committee for Civil Rights
WILLIAMS Under Law, the Enterprise Foundation and the Greater Washington
Research Center and as Chair of the Black Student Fund. Ms.
Williams is a member of the National, American and Washington
bar associations and the Consultant Advisory Panel of the
Comptroller General of the United States. She has been a
director of the Company since 1994.
- - - --------------------------------------------------------------------------------
David O. Maxwell, age 64, is retired Chairman and Chief
Executive Officer of the Federal National Mortgage Association
(Fannie Mae), having served from 1981-1991. He is a director of
Corporate Partners, L.P., Financial Security Assurance Holdings
[PHOTO] Ltd. (FSA), Hechinger Company, Kaufman and Broad Home
Corporation and Potomac Electric Power Company (PEPCO). He is a
DAVID O. member of the Trustees' Council and co-chair of The Circle of
MAXWELL the National Gallery of Art. He also serves on the governing
boards of The Brookings Institution, The Enterprise Foundation,
The European Institute, the Alliance to End Childhood Lead
Poisoning, Arena Stage, WETA, the public television and radio
stations in metropolitan Washington, D.C. and is a Life Trustee
of the Urban Institute. He has been a director of the Company
since 1985.
3
<PAGE>
- - - -------------------------------------------------------------------------------
Barry Munitz, Ph.D., age 53, has been Chancellor and Chief
Executive Officer of The California State University System
since 1991. From 1982 to 1991, he was President and Chief
Operating Officer of Federated Development Co., Vice Chairman,
[PHOTO] MAXXAM, Inc., Chairman and Chief Executive Officer, United
Financial Group; and Director, Charter BancShares, Kaiser
BARRY Aluminum and Simplicity Patterns. Dr. Munitz is a director of
MUNITZ the California Economic Development Corporation, KCET Public
Television, the California Institute for Federal Policy Research
and director and vice chair/chair-elect of the American Council
on Education. Dr. Munitz was elected director of the Company in
April 1994.
- - - -------------------------------------------------------------------------------
Lester Pollack, age 61, has been Chief Executive Officer of
Centre Partners, L.P., since 1986 and a general partner of
Lazard Freres & Co. since 1986 and Senior Managing Director of
Corporate Advisors, L.P. since 1988. He is a director of Kaufman
and Broad Home Corporation, Continental Cablevision, Inc.,
[PHOTO] Polaroid Corporation, Loews Corporation, Sphere Drake Holdings
Ltd., Tidewater, Inc., CNA Financial Corporation and Parlex
LESTER Corporation. Mr. Pollack is a Trustee of New York University and
POLLACK a member of the Board of Directors of the United Way of Tri-
State, Inc. and of the Council on Foreign Relations. He is the
Chairman of the Conference of Presidents of Major American
Jewish Organizations. He has been a director of the Company
since 1981.
- - - -------------------------------------------------------------------------------
Richard D. Rohr, age 68, has been a partner with the law firm of
Bodman, Longley & Dahling in Detroit, Michigan since 1958 and
[PHOTO] has served as Managing Partner and Chairman of the firm's
Executive Committee since 1975. He was a director of
RICHARD D. Manufacturers National Corporation and Manufacturers Bank, N.A.
ROHR and, following the merger of those entities into Comerica, is
now a director of Comerica Bank. Mr. Rohr is a trustee of the
Detroit Bar Association Foundation and a member of the Detroit,
Michigan and American Bar Associations. He has served as adjunct
professor at the University of Michigan Law School and Wayne
State University Law School. He has been a director of the
Company since 1964 and an assistant secretary of the Company
since 1970.
- - - -------------------------------------------------------------------------------
Sanford C. Sigoloff, age 64, has been Chairman, President and
Chief Executive Officer of Sigoloff & Associates, Inc. since
1989 and was President and Chief Executive Officer of LJ Hooker
Corporation, Inc. from 1989 to 1992. He was Chairman, President
and Chief Executive Officer of Wickes Companies, Inc., a retail
and wholesale merchandiser, from 1982 to 1988. In 1988 Mr.
Sigoloff received a Presidential appointment to the United
[PHOTO] States Holocaust Memorial Council in Washington, D.C. Mr.
Sigoloff is a director of Kaufman and Broad Home Corporation,
SANFORD C. Wickes Europe, PLC-London, England, K-tel International, Inc.,
SIGOLOFF Movie Gallery Inc. and the National Conference of Christians and
Jews; a member of the California State Board of Education; a
trustee of the UCLA Foundation and the Medical Centers of
Cedars-Sinai and Chaim Sheba; a member of the Executive
Committee of the City of Hope and the Executive Board of the
American Jewish Committee; a national trustee and Vice President
of the National Jewish Hospital and Research Center-National
Asthma Center. Mr. Sigoloff is also a professor at the UCLA John
E. Anderson Graduate School of Business. He has been a director
of the Company since 1979.
4
<PAGE>
- - - -------------------------------------------------------------------------------
Harold M. Williams, age 66, has been Chief Executive Officer of
The J. Paul Getty Trust since 1981. He served as the Chairman of
the Securities and Exchange Commission from 1977 to 1981 and
[PHOTO] Dean of the Graduate School of Management at the University of
California, Los Angeles from 1970 to 1977. Prior to then, he
HAROLD M. served as Chairman of the Board of Norton Simon, Inc. Mr.
WILLIAMS Williams is currently on the Boards of Directors of Times-Mirror
Corp. and American Medical International. Mr. Williams also
serves as a director of the Los Angeles Philharmonic and the
Committee for Economic Development. He has been a director of
the Company since 1992.
The Company's Board of Directors held six meetings during fiscal 1994. In
addition, management confers frequently with its directors on an informal
basis to discuss Company affairs. Directors are reimbursed for travel and
other expenses related to attendance at Board and committee meetings. Other
than directors who are also officers of the Company, and as otherwise
indicated, directors for fiscal 1994 received a quarterly retainer of $6,250,
plus $1,000 for each meeting of the Board or of a Board committee attended; if
two such meetings were held on the same day, only $500 was paid for the second
meeting. Additionally, each committee chairman received a quarterly retainer
of $1,250. Directors may defer all or a portion of their fees until a later
specified event, such as retirement. The Company also has a retirement benefit
for directors who serve a minimum of three years, which is the continuation of
one-half the annual retainer for each year of service up to a maximum of ten
years. During fiscal 1994 retirement benefits were paid to a former director
in the amount of $12,500.
The Company's Board of Directors has several standing committees, including
a Personnel, Compensation and Stock Option Committee, an Audit and Compliance
Committee and a Nominating Committee. The Personnel, Compensation and Stock
Option Committee held two meetings during fiscal 1994 to review, discuss and
advise management and to make recommendations to the Board of Directors
regarding compensation and other employment benefits afforded officers and
employees of the Company. The current members of the Personnel, Compensation
and Stock Option Committee are Directors Pollack (Chairman), Hastie-Williams
and Maxwell.
The Audit and Compliance Committee held two meetings during fiscal 1994. The
function of the Audit and Compliance Committee is to review and approve the
selection of and all services performed by the Company's independent
accountants, to meet and consult with, and to receive reports from, the
Company's independent accountants, its financial and accounting staff and its
controls evaluation and audit department and to review and act or report to
the Board of Directors with respect to the scope of audit procedures,
accounting practices, and internal accounting and financial controls of the
Company. The committee's current members are Directors Rohr (Chairman),
Arnault, Sigoloff and Williams.
The Nominating Committee oversees the election of Directors and reviews
Company policy as it relates to the Board of Directors. The Nominating
Committee held one meeting during fiscal 1994. The Committee develops
guidelines for the composition of the Board, and proposes to the Board
prospective candidates. The Nominating Committee does not entertain
nominations to the Board of Directors made by shareholders. The current
members of the Nominating Committee are Directors Maxwell (Chairman), Pollack
and Williams.
During the fiscal year ended September 30, 1994, each director attended 75%
or more of the aggregate of (1) the total number of meetings of the Board of
Directors (held during the period for which he or she has been a director) and
(2) the total number of meetings held by all committees of the Board on which
he or she served (during the periods that he or she served), except for Karen
Hastie-Williams.
5
<PAGE>
BENEFICIAL OWNERSHIP OF SHARES
The following information is furnished as of December 10, 1994, to indicate
beneficial ownership by each Director, nominee and certain Executive Officers,
individually, and all Executive Officers and directors of the Company, as a
group, of shares of the Company's Common Stock or its Class B Stock. None of
the Directors or Executive Officers own any shares of the Series C Preferred
Stock. The Class B Stock is convertible at any time by the holder thereof into
Common Stock. Each share of Class B Stock has 10 times the voting rights of
each share of Common Stock and receives a dividend equal to 90% of any cash
dividend paid on the Common Stock.
<TABLE>
<CAPTION>
AMOUNT BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER OWNED(1) VOTE
------------------------ ------------------- ----------
<S> <C> <C>
Ronald J. Arnault 4,000 *
James R. Belardi 64,527(2) *
Eli Broad 6,500,803 56.0%(3)
Michael L. Fowler 1,027 *
Karen Hastie-Williams -0- *
Gary W. Krat 76,927(4) *
David O. Maxwell 10,371 *
Barry Munitz 5,300 *
Lester Pollack 2,250 *
Richard D. Rohr 14,108(5) *
Sanford C. Sigoloff 10,500 *
Harold M. Williams 500 *
Jay S. Wintrob 262,027(6) *
All directors and officers as a group (21
persons) 7,182,672 56.7%(7)
========= ====
</TABLE>
- - - ---------------------
* Less than 1%.
(1) Unless otherwise indicated, (i) beneficial ownership is direct, (ii) the
person indicated has sole voting and investment power and (iii) the shares
are Common Stock.
(2) Of these holdings, 25,000 represent restricted shares granted under the
Company's employee stock plans as to which Mr. Belardi has no investment
power; 34,500 represent stock options held by Mr. Belardi which are or will
become exercisable on or before February 10, 1995 and to which he has no
voting or investment power.
(3) Of these holdings, 1,109,041 shares are Common Stock, and 5,391,762 shares
are Class B Stock. Of the Common Stock, 93,084 shares represent restricted
shares granted under the Company's employee stock plans as to which Mr.
Broad has no investment power; 337,500 are held by a trust formed by Mr.
Broad of which he is a beneficiary; and 639,900 shares represent employee
stock options held by Mr. Broad which are or will become exercisable on or
before February 10, 1995 and to which he has no voting or investment power.
Of the Class B Stock, 562,500 shares are held by a trust formed by Mr.
Broad of which he is a beneficiary; 21,712 shares are held by a foundation
of which Mr. Broad is a director and as to which he has shared voting and
investment power; and 1,935,000 shares are registered in the name of a
corporation as to which Mr. Broad exercises voting and investment power.
Mr. Broad has beneficial ownership of approximately 3.8% of the Common
Stock outstanding and 79% of the Class B Stock outstanding.
(4) Of these holdings, 50,000 shares represent restricted shares granted under
the Company's employee stock plans as to which Mr. Krat has no investment
power; 26,900 represent employee stock options held by Mr. Krat which are
or will become exercisable on or before February 10, 1995 and to which he
has no voting or investment power.
(5) Of these shares, 12,383 shares are held by Mr. Rohr and his wife as co-
owners, and Mr. Rohr has shared investment and voting power with respect
thereto.
6
<PAGE>
(6) Of these holdings, 91,454 shares represent restricted shares granted under
the Company's employee stock plans as to which Mr. Wintrob has no
investment power; 137,000 shares represent employee stock options held by
Mr. Wintrob which are or will become exercisable before February 10, 1995,
and as to which he has no voting or investment power.
(7) Of these aggregate holdings, 980,676 shares represent employee stock
options held by such persons which are or will become exercisable before
February 10, 1995, and as to which no voting or investment power is held;
and 347,038 shares represent restricted shares granted under the Company's
employee stock plans as to which no investment power is held. All directors
and officers as a group have beneficial ownership of approximately 6.0% of
the Common Stock outstanding, and 79% of the Class B Stock outstanding.
As of December 10, 1994, except for Mr. Broad and certain trusts for the
benefit of the family of Donald Kaufman, the co-founder of the Company, each of
whose business address is 1 SunAmerica Center, Century City, Los Angeles,
California 90067-6022, the Company knew of no person who owned in excess of 5%
of the outstanding Class B Stock. The trusts referred to above for the benefit
of the family of Donald Kaufman beneficially own in the aggregate 909,327
shares of Class B Stock, or approximately 13.3% of the Class B Stock
outstanding.
Based on certain public reports, the Company believes that as of September
30, 1994, Fidelity Management & Research Corporation, located at 82 Devonshire
Street, Boston, Massachusetts 02109, exercised investment discretion over
2,500,700 shares of the Company's Common Stock, or approximately 8.6% of the
Common Stock outstanding.
Based upon its review of Forms 3, 4 and 5 and any amendments thereto
furnished to the Company pursuant to Section 16 of the Securities Exchange Act
of 1934 (the "1934 Act"), all of such forms were filed on a timely basis by
reporting persons.
APPROVAL OF THE ANNUAL PERFORMANCE BASED
INCENTIVE COMPENSATION PLAN
Following adoption of Internal Revenue Code (the "Code") Section 162(m) the
Board of Directors and the Personnel, Compensation and Stock Option Committee
(the "Compensation Committee") determined that it was in the best interest of
the Company to seek shareholder approval of the Company's Annual Performance
Incentive Compensation Plan (the "PIC Plan"), which is an annual cash bonus
plan. The PIC Plan will become effective upon the affirmative vote of the
majority of the votes of shares voting at the Annual Meeting.
The PIC Plan is intended to reflect the Company's belief that management's
contribution to shareholder returns, by increasing stock price and dividends,
comes from maximizing earnings and the quality of those earnings. The PIC Plan
rewards outstanding performance on the part of those key executives whose
decisions and actions most significantly affect the growth, profitability and
efficient operation of the Company. The Compensation Committee of the Board of
Directors will administer the PIC Plan, the major provisions of which are as
follows:
ELIGIBILITY AND LIMITATION OF AWARDS. The PIC Plan provides performance-based
incentive compensation awards to officers and other key employees in a position
to have a direct and significant impact on the Company's long term objectives.
Approximately 20 officers and key employees will
7
<PAGE>
participate in awards under the PIC Plan. Awards for these individuals are
based on a certain pre-established percentage of the overall award pool
available, such percentage being determined by the Compensation Committee. A
portion of the award pool is reserved for discretionary awards to other
employees of the Company. No participant may receive an award in excess of 25%
of the total pool available for awards under the PIC Plan. All awards will be
paid in cash as soon as practical after the final performance goals are
calculated and satisfied.
DETERMINATION OF AWARD. Based on the Company's philosophy that management's
contribution to shareholder returns comes from maximizing earnings and the
quality of those earnings, awards under the PIC Plan in any fiscal year are
funded through a pre-established percentage of the Company's pretax income
which exceeds a threshold return on equity. The percentage and threshold
targets are established at the beginning of each fiscal year by the
Compensation Committee. If the Company does not meet the target return on
equity there will be no awards under the PIC Plan.
ESTIMATE OF BENEFITS. The annual cash bonus awards payable under the PIC Plan
in the future are not currently determinable. However, awards were made under
the PIC Plan for fiscal 1994. The dollar value of awards to each of the Chief
Executive Officer and the four most highly compensated individuals were as
follows: (1) Eli Broad, $1,205,520; (2) James R. Belardi, $251,150; (3) Michael
Fowler, $50,230; (4) Gary W. Krat, $200,920; and (5) Jay S. Wintrob, $703,220.
The dollar value of awards made to all current executive officers as a group,
totaling 12 people, including the five individuals listed above, equaled
$3,516,100; the dollar value of awards made to all current non-executive
officer employees as a group, totaling 5 people, equaled $875,886. Other than
Eli Broad, no directors participate in the PIC Plan.
AMENDMENT AND TERMINATION OF THE PIC PLAN. The PIC Plan may be amended or
discontinued by the Board of Directors. To retain the deductibility of
compensation awarded under the PIC Plan for the Chief Executive Officer and the
four most highly compensated executive officers, any amendment to the PIC Plan
which substantially increases the cost to the Company must be approved by
shareholders.
FEDERAL INCOME TAX CONSEQUENCES. It is the Company's intention that the PIC
Plan be constructed and administered in a manner which maximizes the
deductibility of compensation for the Company under Internal Revenue Code
Section 162(m).
APPROVAL OF THE 1995 PERFORMANCE STOCK PLAN
On November 3, 1994, the Compensation Committee approved, subject to
shareholder approval, the 1995 Performance Stock Plan (the "Stock Plan"). The
Stock Plan was adopted to create shareholder value by providing incentives to
key individuals by rewarding outstanding performance and by enhancing the
interest of such individuals in the Company's continued success by providing a
proprietary interest in the Company. Benefits under the Stock Plan are tied
directly to the Company's performance, as measured over the five fiscal years
ending September 30, 1999 (the "Performance Period"). The Stock Plan will also
provide a vehicle to attract and retain key executives who are responsible for
moving the Company forward.
8
<PAGE>
Six Hundred Fifty Thousand (650,000) shares of the Company's Common Stock,
par value $1.00 per share, are reserved for issuance under the Stock Plan. The
Stock Plan will become effective upon the affirmative vote of the majority of
the votes of shares voting at the Annual Meeting. The Stock Plan, will be
administered by the Compensation Committee of the Board of Directors. The
following summary of the Stock Plan is qualified in its entirety by the full
text which is attached hereto as Appendix A:
ELIGIBILITY AND LIMITATION OF AWARDS. The Stock Plan provides restricted
stock awards and an opportunity to earn shares free of restrictions to certain
key employees who, in the Compensation Committee's judgment, can make a
substantial contribution to the Company's long-term profitability and value.
Approximately 25 key employees will be eligible to participate in the Stock
Plan and all awards under the Stock Plan are at the discretion of the
Compensation Committee. No participant may receive an award in excess of
150,000 shares under the Stock Plan.
DETERMINATION OF AWARD. Each award under the Stock Plan is composed of (1)
shares of stock which are subject to certain restrictions on transfer, which
restrictions lapse upon the achievement of specified performance objectives
and/or due to the passage of time (the "Restricted Shares") and (2) the
opportunity to earn additional shares upon the achievement of specified
enhanced performance objectives (the "Super Shares"). At the time of the grant
of an award, a participant will have the benefits of ownership in respect of
the Restricted Shares, including the right to vote such shares and receive
dividends thereon, subject to the restrictions set forth in the Stock Plan and
any corresponding stock agreement. The Restricted Shares will be held in escrow
by the Company and may not be sold, transferred or disposed of until such
restrictions have lapsed. Super Shares will not be granted or issued unless and
until the enhanced performance objectives are achieved.
Generally, Restricted Shares will be subject to a time lapsing formula
pursuant to which the restrictions on transferability lapse over time, unless
the restrictions have earlier lapsed as to all or part of the shares due to
achievement of specified performance objectives during the Performance Period.
The Compensation Committee may award Restricted Shares which are not subject to
a time lapsing formula if, in the discretion of the Compensation Committee, it
would result in the Company not being able to take a tax deduction under
Section 162(m) of the Code.
Each award of Restricted Shares (whether or not subject to a Lapsing Formula)
will be subject to certain performance objectives which may be achieved by the
Company during the Performance Period. The performance objectives will be based
upon (a) specified levels of aggregate Earnings Per Share (as defined in the
Stock Plan) of the Company for all fiscal years within the Performance Period
and (b) the Company's Total Return to Shareholders (as defined in the Stock
Plan) over the Performance Period. Notwithstanding the foregoing, for key
executives of business units who are not considered at the time of an award to
be "executive officers" of the Company, the Compensation Committee may
determine in its discretion that the performance objectives should be based on
different performance criteria for the Company, any subsidiary or any division
of the Company.
Super Shares will be issued only upon the achievement of specified enhanced
performance objectives based on the same performance measurements for awards of
Restricted Shares (e.g. Earnings Per Share and Total Return to Shareholders).
The enhanced performance objectives will exceed the performance objectives
required for a lapse of restrictions on the Restricted Shares.
9
<PAGE>
ESTIMATE OF BENEFITS. The Compensation Committee approved awards under the
Stock Plan in November 1994, subject to shareholder approval of the Stock Plan
at the annual meeting. The following table sets forth the awards that the
individuals and groups referred to below will receive if the Stock Plan is
approved by shareholders:
1995 PERFORMANCE STOCK PLAN
<TABLE>
<CAPTION>
POTENTIAL
RESTRICTED SHARES SUPER SHARES
NAME AND POSITION AWARDED DOLLAR VALUE/1/ AWARD/2/ DOLLAR VALUE/3/
----------------- ----------------- --------------- ------------ ---------------
<S> <C> <C> <C> <C>
James R. Belardi, Senior
Vice President &
Treasurer 20,000 $ 782,500 10,000 $ 391,250
Gary W. Krat, Senior
Vice President 35,000 1,369,375 17,500 684,688
Jay S. Wintrob,
Executive
Vice President 50,000 1,956,250 25,000 978,125
All Current Executive
Officers as a Group
(including individuals
listed above)(11) 205,000 8,020,625 102,500 4,010,313
All Current Non-
Executive Officer
Employees as a
Group(10) 147,500 5,770,938 73,750 2,885,469
</TABLE>
- - - ---------------------
/1/ These amounts represent the dollar value of the awards on the date of grant,
without giving effect to the diminution of value attributable to the
restriction on such stock.
/2/ Super Shares will be issued after the Performance Period and only upon the
achievement of enhanced performance objectives.
/3/ These amounts represent the dollar value of the potential Super Shares award
on the date the opportunity to earn such shares was granted.
Eli Broad, the Chief Executive Officer, Michael Fowler and directors will not
participate in awards under the Stock Plan.
AMENDMENT AND TERMINATION OF THE STOCK PLAN. The Stock Plan may be amended,
suspended or discontinued by the Board of Directors at any time. However, the
Board may not, without the prior approval of shareholders, make any amendment
that under applicable law requires shareholder approval.
TERMINATION OF EMPLOYMENT. If a participant's employment or other service to
the Company is terminated by death or retirement on or after age 65, a
proportionate number of Restricted Shares and Super Shares (equal to the number
of days elapsed in the Performance Period as of the date of such event divided
by the total number of days in the Performance Period) will be held subject to
the terms and conditions of the Stock Plan and any applicable stock agreement.
The remaining Restricted Shares will be returned to the Company and the
opportunity to earn the remaining Super Shares will be forfeited. The
Compensation Committee may, in its sole discretion, continue restrictions on
any greater number of shares in any award under the Stock Plan. The
Compensation Committee also has discretion to continue restrictions as to some
or all Restricted Shares and to extend the opportunity to earn Super Shares in
the event of termination of employment or other service for reasons other than
death or retirement on or after age 65. Barring the exercise of such
discretion, Restricted Shares subject to restrictions and all Super Shares are
automatically forfeited upon the happening of such a termination event.
10
<PAGE>
CHANGE OF OWNERSHIP. The Stock Plan contains a Change of Ownership provision
pursuant to which certain restrictions on Restricted Shares awarded under the
Stock Plan will lapse upon the occurrence of certain events. The Change of
Ownership provision is defined in the Stock Plan but generally covers the
situation where either (1) the current members of the Board of Directors or
other Directors elected by three-quarters of the current members or their
respective replacements (excluding certain individuals who took office in
connection with an acquisition of 20% or more of the Company's voting
securities or in connection with an election contest) cease to represent a
majority of the Board or (2) the Board determines that a Change of Ownership
has occurred.
FEDERAL TAX CONSEQUENCES. In the absence of an election by the holder as
explained below, the grant of Restricted Shares pursuant to an award will not
result in taxable income to the holder or a deduction to the Company in the
year of the grant. The value of the Restricted Shares will be taxable to the
holder in the year in which the relevant restrictions lapse and, with respect
to Super Shares, in the year issued. Alternatively, the holder may elect to
treat as income in the year of grant the fair market value of the Restricted
Shares on the date of grant, provided the holder makes the election within 30
days after the date of such grant. If such an election were made, the holder
would not be allowed to deduct at a later date the amount included as taxable
income if he or she should forfeit the Restricted Shares to the Company. The
amount of ordinary income recognized by the holder is generally deductible by
the Company in the year the income is recognized by the holder, provided that
for the individuals identified in Section 162(m) of the Code, the Stock Plan
satisfies the requirements thereof. Prior to the lapse of restrictions,
dividends paid on the Restricted Shares subject to such restrictions will be
taxable to the holder as additional compensation in the year received free of
restrictions, and the Company will be allowed a corresponding deduction.
11
<PAGE>
EXECUTIVE COMPENSATION
The following table details annual and long term compensation paid during the
Company's three most recent fiscal years to the Company's Chief Executive
Officer and the four most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------- -----------------------------
AWARDS PAYOUTS
------------------ ----------
RESTRICTED
FISCAL OTHER ANNUAL STOCK STOCK LTIP ALL OTHER
NAME & POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS(2) OPTIONS PAYOUTS(3) COMPENSATION(4)
- - - ------------------------ ------ -------- ---------- --------------- ---------- ------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Eli Broad, Chairman, 1994 $600,000 $1,205,520 $79,727 $6,168,750 450,000 -0- $38,481
President & CEO 1993 595,833 970,320 78,916 1,781,250 40,000 $669,100 44,234
1992 566,667 693,868 87,380 -0- 115,000 -0- 42,228
Jay S. Wintrob, 1994 $352,083 $ 703,220 $1,361,250 22,500 -0- $20,328
Executive Vice 1993 270,833 485,160 1,187,500 20,000 $535,280 19,736
President 1992 241,667 346,934 -0- 25,000 -0- 17,779
Gary W. Krat, 1994 $250,000 $ 761,841 -0- 12,500 -0- $22,254
Senior Vice 1993 250,000 657,594 -0- 12,500 $250,193 15,000
President (5) 1992 225,000 300,000 $1,031,250 25,000 -0- 13,160
Michael Fowler, 1994 $160,000 $1,553,626 -0- -0- -0- $ 6,861
Vice President (6) 1993 160,000 917,830 -0- -0- $133,820 8,868
1992 150,667 421,654 -0- 5,000 -0- 9,040
James R. Belardi, 1994 $147,500 $ 251,150 $ 362,500 7,500 -0- $ 6,837
Senior Vice President & 1993 132,917 161,720 356,250 6,000 $133,820 7,975
Treasurer 1992 121,583 98,000 -0- 7,500 -0- 7,295
</TABLE>
- - - ---------------------
(1) The amount indicated for Mr. Broad represents the incremental cost to the
Company of providing executive medical insurance, expenses relating to
certain club memberships, expenses associated with his use of a company car
and a $60,000 allowance for certain expenses incurred in connection with
Mr. Broad's New York apartment. While other officers enjoy certain
perquisites, such perquisites do not exceed the lesser of $50,000 or 10% of
such officer's salary and bonus.
(2) A total of 60,000 shares of restricted stock were awarded in fiscal 1994.
Last year the shareholders approved the Long-Term Performance-Based
Incentive Compensation Plan pursuant to which Mr. Broad could receive stock
option grants and restricted stock awards. Pursuant to that plan, the
Compensation Committee of the Board of Directors retained discretion to
award deferred shares in lieu of restricted stock in order to maintain the
deductibility of such compensation under Code Section 162(m). An award of
deferred shares grants Mr. Broad the right to receive the stock 18 months
after he is no longer an executive officer of the Company due generally to
his death, disability or normal retirement or if there is a Change of
Ownership, as defined in the plan and more specifically below. For fiscal
1994, based on the Company's performance during the fiscal years 1993 and
1994, Mr. Broad was awarded a total of 150,000 deferred shares which are
indicated in the chart above, although Mr. Broad will not receive the
shares until some time in the future. As of the end of fiscal 1994, the
aggregate restricted stock holdings consisted of 514,538 shares worth
$21,417,644 at the then current market value (as represented by the closing
price of the Company's Common Stock on September 30, 1994), without giving
effect to the diminution of value attributable to the restriction on such
stock. Such amount includes $3,874,622 for Mr. Broad
12
<PAGE>
(93,084 shares, not including his deferred shares), $3,806,773 for Mr.
Wintrob (91,454 shares), $2,081,250 for Mr. Krat (50,000 shares) and
$1,040,675 for Mr. Belardi (25,000 shares). Mr. Fowler has not been granted
any restricted stock awards. The amount reported in the table represents the
market value (as represented by the closing price of the Company's Common
Stock on date of grant) of the shares awarded. Regular dividends are paid on
the restricted stock and the deferred shares reported on this column.
(3) Certain key employees participated in a five-year incentive plan which
provided for the payment of cash bonuses following the 1993 fiscal year end
based on the achievement of high levels of performance by the Company as
measured by pre-tax income after return on shareholders equity over the
five fiscal years ended September 30, 1993. Participants received 100% of
their potential award if employed by the Company through September 30,
1993, 50% if employed through September 30, 1992 and 25% if employed
through September 30, 1991.
(4) These amounts represent the Company's contributions to the Company's Profit
Sharing and Retirement Plan and its Supplemental Deferred Compensation Plan
and the portion of interest earned on certain deferred compensation above
120% of the applicable federal rate.
(5) Mr. Krat is currently employed under an agreement with the Company through
fiscal 1997 pursuant to which he is eligible for incentive compensation
tied to the pre-tax income of the Company's broker-dealers and sales of the
Company's annuity and mutual fund products. Mr. Krat's agreement also
provides that if his employment is terminated prior to the agreement's
stated termination, under certain circumstances and subject to certain non-
compete provisions, he will receive his then current base salary for a
period of twelve months.
(6) Mr. Fowler is currently employed under an agreement with the Company
pursuant to which he is eligible for incentive compensation tied to the
pre-tax profits of the business unit he manages. This portion of Mr.
Fowler's incentive compensation for fiscal 1994 is payable 50% on September
30, 1994, 30% on September 30, 1995 and 20% on September 30, 1996 and
requires continued employment with the Company through the payout date. The
portion of Mr. Fowler's incentive compensation for fiscal 1993 which was
tied to the pre-tax profits of the business unit he manages was payable 50%
on September 30, 1993, 30% on September 30, 1994 and 20% on September 30,
1995. The portion of Mr. Fowler's incentive compensation for fiscal 1992
which was tied to the pre-tax profits of the business unit he manages was
payable 67% on September 30, 1992, 25% on September 30, 1993, and 8% on
September 30, 1994.
The Company's 1988 Employee Stock Plan, pursuant to which stock option grants
and restricted stock awards are made to certain key employees, contains a
Change of Ownership provision relating to certain stock option grants. The
Change of Ownership provision is defined in the plan but generally covers the
situation where either (1) the current members of the Board of Directors or
other Directors elected by three-quarters of the current members or their
respective replacements (excluding certain individuals who took office in
connection with an acquisition of 20% or more of the Company's voting
securities or in connection with an election contest) cease to represent a
majority of the Board or (2) the Board determines that a Change of Ownership
has occurred.
The Long-Term Performance-Based Incentive Plan pursuant to which stock option
grants and restricted stock awards are made to the Chief Executive Officer also
contains a Change of Ownership provision relating to vesting of restricted
stock awards. The Change of Ownership provision is defined in the plan but
generally covers the situation where either (1) the current members of the
Board of Directors or other Directors nominated by three-quarters of the
current members or their respective replacements (excluding certain individuals
who took office in connection with an acquisition of 20% or
13
<PAGE>
more of the Company's voting securities or in connection with an election
contest) to become Board members cease to represent a majority of the Board or
(2) a consolidation or merger in which the surviving entity is not the Company
or the acquisition of substantially all of the Company's assets, or a
dissolution or liquidation of the Company.
The Company also maintains a non-qualified Executive Deferred Compensation
Plan pursuant to which selected key employees defer receipt of a certain amount
of pre-tax income, plus a Company matching contribution, received over a seven-
year period until retirement, termination or certain other events, including a
Change in Control. A Change in Control is defined generally in the plan to
include the acquisition by a person or "group" of 25% or more of the Company's
voting power, a change in a majority of the then incumbent board unless
approved by two-thirds of the incumbent board and the Company ceasing to be
publicly owned. No new contributions to the Executive Deferred Compensation
Plan may be made, but the Company continues to pay interest on prior
contributions.
14
<PAGE>
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
% OF TOTAL ASSUMED ANNUAL RATES OF
OPTIONS EXERCISE OR STOCK PRICE APPRECIATION
OPTIONS GRANTED TO BASE PRICE FOR OPTION TERMS(4)
GRANTED (#) EMPLOYEES IN PER SHARE EXPIRATION ------------------------------
NAME (1)(2) FISCAL YEAR ($/SH)(3) DATE 5%($) 10%($)
- - - ---------------- ----------- ------------ ----------- ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Eli Broad 450,000 55.9% $40.00 10/13/04 $ 11,320,103 $ 28,687,364
Jay S. Wintrob 22,500 2.8% 45.06 7/29/04 637,605 1,615,816
Gary W. Krat 12,500 1.6% 45.06 7/29/04 354,225 897,675
Michael Fowler -0- -0- -0- N/A N/A N/A
James R. Belardi 7,500 0.9% 45.06 7/29/04 212,535 538,605
</TABLE>
- - - ---------------------
(1) All options granted in 1994, other than to Eli Broad, were awarded under
the 1988 Employee Stock Plan and are exercisable in cumulative 20%
installments commencing one year from date of grant, with full vesting
occurring on the fifth anniversary date. Mr. Broad's stock option grant was
awarded under the Long-Term Performance-Based Incentive Plan based on the
Company's performance during fiscal years 1993 and 1994. Pursuant to the
terms of the plan, Mr. Broad's options were granted following the 1994
fiscal year end. The options granted to Mr. Broad are exercisable
immediately and may be exercised any time up to ten years after the grant
is made.
(2) Under the terms of the Company's 1988 Employee Stock Plan, the Compensation
Committee retains discretion, subject to plan limits, to modify the terms
of outstanding options and to reprice the options.
(3) All options were granted at market value (average of high and low stock
prices for the Company's Common Stock as reported in the Wall Street
Journal) at date of grant. The exercise price and tax withholding
obligations related to exercise may be paid by delivery of already owned
shares or by offset of the underlying shares, subject to certain
conditions.
(4) Gains are reported net of the option exercise price, but before taxes
associated with exercise. THESE AMOUNTS REPRESENT CERTAIN ASSUMED RATES OF
APPRECIATION ONLY. ACTUAL GAINS, IF ANY, ON STOCK OPTION EXERCISES ARE
DEPENDENT ON THE FUTURE PERFORMANCE OF THE COMMON STOCK, OVERALL STOCK
CONDITIONS, AS WELL AS THE OPTIONHOLDERS' CONTINUED EMPLOYMENT THROUGH THE
VESTING PERIOD. THE AMOUNTS REFLECTED IN THIS TABLE MAY NOT NECESSARILY BE
ACHIEVED.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED,
OPTIONS HELD AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR END (#) FISCAL YEAR END ($)(1)
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - - ------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Eli
Broad -0- $ -0- 626,900 151,000 $5,881,149 $3,471,615
Jay S.
Wintrob -0- -0- 137,000 69,500 4,464,685 972,385
Gary W.
Krat 4,000 146,980 26,900 52,300 716,152 918,406
Michael
Fowler 3,000 104,625 1,000 7,500 21,375 204,848
James
R.
Belardi -0- -0- 34,500 21,300 1,102,037 282,210
</TABLE>
- - - ---------------------
(1) Represents the difference between the closing price of the Company's Common
Stock on September 30, 1994 and the exercise price of the options.
15
<PAGE>
PERSONNEL, COMPENSATION AND STOCK OPTION COMMITTEE
REPORT TO SHAREHOLDERS ON EXECUTIVE COMPENSATION
The report of the Personnel, Compensation and Stock Option Committee on
Executive Compensation shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
The Company has long believed that a strong, explicit link should exist
between executive compensation and the value delivered to shareholders. This
belief has been adhered to by developing incentive pay programs which provide
competitive compensation and mirror Company performance. Both short-term and
long-term incentive compensation are based on direct, explicit links to Company
performance and the value received by shareholders.
COMPENSATION PHILOSOPHY
In designing its compensation programs, the Company follows its belief that
compensation should reflect the value created for shareholders while supporting
the Company's strategic goals. In doing so, the compensation programs reflect
the following themes:
. Compensation should be meaningfully related to the value created for
shareholders.
. Compensation programs should support the short- and long-term strategic
goals and objectives of the Company.
. Compensation programs should reflect and promote the Company's values,
and reward individuals for outstanding contributions to the Company's
success.
. Short- and long-term compensation play a critical role in attracting and
retaining well qualified executives.
. While compensation opportunities should be based on individual
contribution, the actual amounts earned by executives in variable
compensation programs should be dictated solely by the financial results
of the Company or, in certain cases, by the results of the business unit
for which the executive is responsible.
PAY MIX AND MEASUREMENTS
SunAmerica Inc.'s executive compensation is based on three components, each
of which is intended to serve the overall compensation philosophy.
BASE SALARY. Base salary is targeted at the competitive median for
competitors in diversified financial services. For the purpose of establishing
these levels, the Company compares compensation data of companies that compete
in the Company's primary line of business, i.e., annuities, insurance, asset
management, and retail brokerage services.
The Company reviews the competitiveness of its management pay programs
periodically. The Company positions its base salary levels at or near the
median of relevant industry levels. Salaries for executives are reviewed by the
Committee on an annual basis and may be increased at that time based on: 1) the
Committee's agreement that the individual's contribution to the Company has
increased; and 2) increases in median competitive pay levels.
16
<PAGE>
In 1994, the Chairman, President and Chief Executive Officer's annual base
salary was not increased. In accordance with the Long-Term Performance Based
Incentive Plan for the Chief Executive Officer that shareholders approved last
year, Mr. Broad's base salary will be held at $600,000 through 1998.
ANNUAL INCENTIVES for executives are intended to reflect the Company's belief
that management's contribution to shareholder returns (via increased stock
price and dividends) comes from maximizing earnings and the quality of those
earnings. Accordingly, the Annual Performance Incentive Compensation Plan is
funded from a preset portion of the Company's pretax income which exceeds a
threshold return on equity. The percentage and threshold are established at the
beginning of the fiscal year. Individual awards for senior management are based
upon predetermined percentages of the total pool based on the individual's
position and the Committee's assessment of such individual's contribution to
such position.
The Company believes that this program provides an excellent link between the
value created for shareholders and the incentives paid to executives. Under
this plan, executives do not receive any incentives until a specified return on
equity is received by shareholders. After that point, additional returns are
allocated on a consistent basis to shareholders and the management pool.
Over the last few years, the Company has increased the return on equity
threshold allocated to shareholders before the management pool is funded,
ensuring an increasing flow of net income to shareholders. In 1994, the
threshold return on equity was maintained at 12.5% and the total management
incentive pool was held at 8% of pretax income earned in excess of the level
required to meet the threshold return on equity. For 1994, Mr. Broad's portion
of the pool was unchanged from 1993. At the same time because of substantially
increased earnings and a higher return on equity, the total award to Mr. Broad
increased 24.2%.
In addition to the incentive pool described above, certain employees who are
engaged in running specific lines of business receive incentive pay which is
tied to the business results of such lines of business. Mr. Fowler is entitled
to participate in an incentive pool funded by the profits of the business unit
he manages, after allowing the Company to achieve what the Committee deems to
be an acceptable rate of return from this business. Mr. Krat is entitled to
additional compensation tied to sales of the Company's annuity and mutual fund
products and pretax income of the Company's broker-dealers. The incentive pay
to Mssrs. Fowler and Krat are a function of the success of the business units
each manages and therefore contributes directly to the short- and long-term
success and profitability of the Company and hence its value to shareholders.
LONG-TERM INCENTIVES. Provided through annual grants of stock options and
through periodic stock grants to the named executives and others, this
component is intended to retain and motivate executives to improve long-term
stock market performance. Stock options are granted at the prevailing market
value and will only have value if the Company's stock price increases.
Generally, grants made vest in equal amounts over five years; executives must
be employed by the Company at the time of vesting in order to exercise the
options.
The Committee determines the number of options to be granted based on the
expected value equal to competitive median for the comparative group. If the
Company stock price increases faster than for competitors, executive gains can
be higher than the competitive median. Outstanding historical performance by an
individual is additionally recognized through larger than normal option grants.
17
<PAGE>
For a period of time, the Company's Board of Directors reviewed the Chairman
and Chief Executive Officer's compensation as compared to that of chief
executive officers of a selected group of diversified financial services
companies that compete in the Company's primary line of business, i.e.,
annuities, insurance, asset management, and retail brokerage services. In
light of the Company's significant shareholder returns, which substantially
outperformed those of the competing companies and the S&P 500 Index over the
prior five year period, and in light of the considerable shareholder returns
generated during Mr. Broad's tenure as CEO which dates to the Company's
founding, last year the Committee and the Board proposed to the shareholders
for approval a compensation arrangement (the "Incentive Plan") for Mr. Broad
that rewards him for the Company continuing to achieve significant gains in
shareholder wealth through fiscal year 1998. Awards under the Incentive Plan
are contingent upon the Company outperforming the S&P 500 Index. The S&P 500
Index was selected because it reflects the broad choice of stock investment
alternatives available to shareholders and because it is independently
calculated and widely available. The shareholders, by an independent vote,
approved the Incentive Plan for Mr. Broad. The Incentive Plan is in lieu of
any other long term incentive programs including grants of stock options and
restricted stock awards under the Company's other plans. The ultimate value of
the awards will be dependent upon the shareholder returns in that the
restricted shares awarded under the Incentive Plan will be subject to a
holding period which generally expires on Mr. Broad's death, disability or
retirement, thereby being subject to market risk. Further, the options will be
valuable to Mr. Broad only if the stock price appreciates after the options
are granted. In 1994, Mr. Broad received an award under the Incentive Plan
covering two fiscal periods of an option grant of 450,000 shares and 150,000
deferred shares.
TOTAL COMPENSATION
In aggregate, 74.8% of the named executives' cash compensation for 1994 is
from incentives directly tied to Company performance. The Chairman, President
and Chief Executive officer received 66.8% of his cash compensation from
incentives. Due to the long period during which stock options can be exercised
under the Incentive Plan and the long holding period before the lapsing of
restrictions on stock awards, the potential value of this portion of Mr.
Broad's compensation is difficult to quantify. Specifically, the restricted
stock is subject to a holding period which will not lapse until Mr. Broad is
no longer acting Chairman of the Company. Further the stock options will be
exercisable for up to ten years after grant, extending past Mr. Broad's
expected retirement date, and have value only if the stock price appreciates
after the date of grant.
OMNIBUS BUDGET RECONCILIATION ACT OF 1993
A feature of the Omnibus Reconciliation Act of 1993 limits deductibility of
certain compensation for the Chief Executive Officer and the additional four
highest paid executive officers to $1 million per year, effective for tax
years beginning on or after January 1, 1994. The Committee intends to
establish and maintain compensation programs which maximize the creation of
long-term shareholder value. Further, the Committee intends to take the
necessary steps to qualify most compensation approaches to ensure
deductibility except in those limited cases where the Committee believes
shareholder interests are best served by retaining flexibility of approach.
PERSONNEL, COMPENSATION AND
STOCK OPTION COMMITTEE
November 4, 1994 Lester Pollack, Chairman
Karen Hastie-Williams
David O. Maxwell
18
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the 1934
Act, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
The graph below compares cumulative total return* of SunAmerica Inc., the S&P
500 Index and the S&P Financial Index. The Company believes that this
information demonstrates that the compensation earned by its executive officers
compares very favorably to the Company's shareholder value and specifically
that the Company outperformed the S&P Financial Index during the 1994 fiscal
year.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG SUNAMERICA INC, S&P 500 INDEX AND S&P FINANCIAL
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period SUNAMERICA S&P S&P
(Fiscal Year Covered) INC. 500 INDEX FINANCIAL
- - - --------------------- ---------- --------- ---------
<S> <C> <C> <C>
Measurement Pt- 09/30/1989 $100 $100 $100
FYE 09/30/1990 $ 55 $ 91 $ 64
FYE 09/30/1991 $152 $119 $101
FYE 09/30/1992 $227 $132 $118
FYE 09/30/1993 $455 $149 $161
FYE 09/30/1994 $425 $155 $149
</TABLE>
*Total Return assumes $100 invested on September 30, 1989 in SunAmerica Inc.,
S&P 500 Index and S&P Financial Index, including reinvestment of dividends.
19
<PAGE>
FINANCIAL STATEMENTS
The Company's audited consolidated financial statements and notes thereto,
including selected financial data and management's discussion and analysis of
financial condition and results of operations for the fiscal year ended
September 30, 1994, are included on pages 21 through 45 of the Company's 1994
Annual Report to Shareholders, which was mailed concurrently with this proxy
statement to all stockholders of record. Additional copies of the Annual Report
are available without charge upon request. The financial statements, the report
of independent accountants thereon, selected financial data and management's
discussion and analysis of financial condition and results of operations
included in the Annual Report are incorporated herein by reference.
INDEPENDENT ACCOUNTANTS
The firm of Price Waterhouse LLP served as the Company's independent
accountants for 1994. This firm has advised the Company that it has no direct
or indirect financial interest in the Company. Representatives of this firm are
expected to be present at the annual meeting, with the opportunity to make a
statement, should they desire to do so, and will be available to respond to
appropriate questions from shareholders.
OTHER MATTERS
The Board of Directors knows of no business other than that described herein
that will be presented for consideration at the annual meeting. If, however,
other business shall properly come before the meeting, the persons named in the
enclosed form of Proxy intend to vote the shares represented by said Proxies on
such matters in accordance with their judgment in the best interest of the
Company.
SHAREHOLDERS' PROPOSALS FOR 1995 ANNUAL MEETING
Any proposal of a shareholder intended to be presented at the Company's 1996
Annual Meeting of Shareholders must be received by the Company for inclusion in
the proxy statement and form of proxy for that meeting no later than August 20,
1995.
METHOD OF PROXY SOLICITATION
The entire cost of preparing, assembling, printing and mailing the Notice of
Meeting, this Proxy Statement, the Proxy itself, and the cost of soliciting
Proxies relating to the meeting, if any, will be borne by the Company. In
addition to use of the mails, proxies may be solicited by officers, directors,
and other regular employees of the Company by telephone, telegraph, or personal
solicitation, and no additional compensation will be paid to such individuals.
The Company estimates its expenses for such services will not exceed $25,000.
The Company will, if requested, reimburse banks, brokerage houses, and other
custodians, nominees and certain fiduciaries for their reasonable expenses
incurred in mailing proxy material to their principals.
SUNAMERICA INC.
20
<PAGE>
APPENDIX A
SUNAMERICA
1995 PERFORMANCE STOCK PLAN
1.PURPOSE.
The purpose of the SunAmerica 1995 Performance Stock Plan is to promote the
success of SunAmerica Inc. by providing a method whereby officers and other key
employees of the Company may increase their proprietary interest in its
business, be encouraged to remain in the employ of the Company and increase
their personal interests in the continued success and progress of the Company.
2.DEFINITIONS.
As used in this Plan or a Stock Agreement under this Plan, the following
terms shall have the indicated meanings:
Award: An award under this Plan which consists of Restricted Shares and
an opportunity to earn Super Shares.
Beginning Market Value: The average closing price of the Stock for each
of the twenty trading days commencing ten trading days prior to the first
trading day of the Performance Period multiplied by the Weighted Average
Shares.
Board: The board of directors of SunAmerica Inc.
Code: The Internal Revenue Code of 1986, as amended.
Committee: The Personnel, Compensation and Stock Option Committee of the
Board, or such successor committee as the Board may appoint to administer
this Plan. The Committee shall consist of two or more directors, each of
whom is a "disinterested person," as such term is defined in Rule 16b-3 of
the Securities Exchange Act of 1934 as amended (the "Act").
Company: SunAmerica Inc. and its Subsidiaries.
Earnings Per Share: The Company's aggregate earnings per share from
continuing operations before the cumulative effect of a change in
accounting principles and before extraordinary items, as reported in the
Company's consolidated financial statements.
Ending Market Value: The average closing price of the Stock for each of
the twenty trading days commencing nine trading days prior to the last
trading day of the Performance Period multiplied by the Weighted Average
Shares. Ending Market Value shall be adjusted for the payment of cash
dividends during the Performance Period, assuming such dividends had been
reinvested in Stock on the date paid to Shareholders using the methodology
consistent with the determination of the S&P 500 Index Total Return to
Shareholders.
Lapsing Formula: With reference to Restricted Shares, a schedule which is
a basis for establishing the number of shares of Stock which may be
released from the restrictions of an Award, unless such restrictions are
earlier released due to the achievement of Performance Objectives or as
otherwise provided in the Plan or in the applicable Stock Agreement.
Restricted Shares need not be subject to a Lapsing Formula if, in the
discretion of the Committee, it furthers the purposes of the Committee in
the case of an Award or Awards intended to satisfy the requirements for
performance-based compensation under Section 162(m) of the Code.
A-1
<PAGE>
Participant: An officer or other key employee of the Company selected to
participate in this Plan pursuant to its terms.
Performance Objectives: Performance Objectives shall be stated as
specified levels of Earnings Per Share or Total Return to Shareholders as
measured against the S&P Index Total Return to Shareholders, or a
combination thereof as determined by the Committee, or in the case of
Participants who are not considered at the time of an Award to be
"executive officers" (as such term is defined in Rule 3b-7 under the
Securities Exchange Act of 1934) of SunAmerica Inc., such other criteria as
the Committee may determine in its discretion as the appropriate other
performance measure for the Award based on other performance criteria for
the Company or for any subsidiary or division, department or operation of
the Company. With reference to a particular Award of Restricted Shares, the
threshold and target Performance Objectives are the criteria established by
the Committee which, if achieved, accelerate or cause the release of a
specific percentage of the Restricted Shares from the restrictions of an
Award and any Lapsing Formula. With reference to a particular Award of
Super Shares, the Super Performance Objective is the criteria established
by the Committee which causes the issuance of Super Shares. The Performance
Objectives shall be specified in a Stock Agreement and may differ from
Participant to Participant and from Award to Award.
Performance Period: The Performance Period shall be October 1, 1994
through September 30, 1999, or a portion thereof as established by the
Committee.
Plan: The SunAmerica 1995 Performance Stock Plan, as it may be amended
from time to time.
Restricted Shares: A portion of an Award represented by shares of Stock,
which are issued and outstanding, but which remain subject to the risk of
forfeiture and restrictions on transfer, until the achievement of specified
Performance Objectives or, for certain Awards, the passage of time pursuant
to a Lapsing Formula, or the occurrence of other events resulting in the
lapse of restrictions appreciable to such Award under the Plan or under the
applicable Stock Agreement.
S&P Index Total Return to Shareholders: The Standard & Poor's 500 Index
Total Return to Shareholders as determined by Standard & Poor's Compustat
(or its successor), measured from the first day of the Performance Period
to the last day of the Performance Period.
Stock: Common stock, par value $1.00 per share, of SunAmerica Inc.
Super Performance Objectives: With reference to a particular Award of
Super Shares, the Super Performance Objectives and the criteria established
by the Committee which exceed the target Performance Objectives, the
achievement of which will cause the issuance of Super Shares. The Super
Performance Objectives shall be specified in a Stock Agreement and may
differ from Participant to Participant and from Award to Award.
Super Shares: A portion of an Award represented by shares of Stock issued
free of restrictions only upon the achievement of specified Super
Performance Objectives.
Stock Agreement: With reference to a particular Award, the agreement
between the Company and the Participant containing, among other provisions,
(i) the restrictions set forth in or pursuant to Section 7, the Lapsing
Formula, if any, and the Performance Objectives which, if achieved during
the Performance Period with respect to which they were awarded, shall cause
the lapsing of restrictions imposed upon all or part of the Restricted
Shares covered by an Award, and (ii) the Super Performance Objectives
which, if achieved during the Performance Period with respect to which they
were awarded, shall cause the issuance of Super Shares.
A-2
<PAGE>
Subsidiary: A subsidiary of SunAmerica Inc. within the meaning of Section
425(f) of the Code.
Tax Date: The date on which taxes of any kind are required by law to be
withheld with respect to shares of Stock subject to an Award.
Total Return to Shareholders: The amount (expressed as a percentage) by
which the Ending Market Value of the Stock exceeds its Beginning Market
Value.
Weighted Average Shares: The weighted average number of shares of Stock
outstanding during the Performance Period, computed in the manner used to
determine primary earnings per common share in the Company's financial
statements.
3.EFFECTIVE DATE AND TERM.
This Plan shall become effective upon its adoption by the Board on November
4, 1994, subject to approval by the shareholders, and shall continue in effect
until all shares of Stock reserved for issuance hereunder have been issued and
all restrictions on transfer of such shares have lapsed or the applicable
Awards have otherwise terminated. Notwithstanding the foregoing, no Award shall
be granted under the Plan after the date that is five (5) years after the date
on which the Plan is approved by the Company's shareholders or after such
earlier date as the Committee or the Board may decide, in its sole discretion.
4.SHARES RESERVED UNDER PLAN.
The aggregate number of shares of Stock which may be awarded under this Plan
shall not exceed 650,000 shares, subject to adjustment as provided in this
Plan. The shares of Stock which may be granted pursuant to Awards shall consist
of either authorized but unissued shares of Stock or shares of Stock which have
been issued and which shall have been heretofore or hereafter reacquired by the
Company. The total number of shares authorized under this Plan shall be subject
to increase or decrease in order to give effect to the adjustment provisions of
Section 16.A and to give effect to any amendment adopted as provided in Section
14. If any Award granted under this Plan shall expire, terminate or be canceled
for any reason without the shares subject to such Award having been issued and
freed of restrictions in full, the corresponding number of shares shall again
be available for purposes of this Plan.
The maximum number of shares of Stock which may be awarded under this Plan to
any individual shall not exceed 150,000, subject to adjustment as provided in
this Plan.
5.ELIGIBILITY.
Participation in this Plan is limited to officers and other key employees of
the Company and other individuals who, in the Committee's judgment, can make
substantial contributions to the Company's long-term profitability and value.
Nothing in this Plan or in a Stock Agreement shall in any manner be construed
(i) to limit in any way the right of the Company to terminate a Participant's
employment at any time, without regard to the effect of such termination or any
rights such Participant would otherwise have under this Plan, or (ii) to give
any right to such Participant to remain employed by the Company in any
particular position or at any particular rate of compensation.
A-3
<PAGE>
6.GRANT OF AWARDS.
A. Selection of Participants. Subject to the terms of this Plan, the
Committee shall select those Participants to whom Awards shall be granted.
Awards shall generally be made at the beginning of the Performance Period but
may, in the Committee's discretion, be made from time to time during the term
of the Performance Period.
B. Award of Shares. Each Award shall be composed of Restricted Shares and an
opportunity to earn Super Shares. An Award shall not require payment of any
consideration by the Participant, other than continued service with the Company
as set forth in this Plan or any Stock Agreement.
C. Form of Instrument. Each Award shall be made pursuant to a Stock Agreement
in a form prescribed by the Committee. Such instrument shall specify the
restrictions set forth in or pursuant Section 7.C, a Lapsing Formula, if
applicable, and the applicable Performance Objectives and any other
circumstances or events not otherwise set forth in the Plan resulting in the
lapsing of restrictions or vesting of benefits under an Award.
7.RESTRICTED SHARES.
A. Lapsing Formula. Generally, Restricted Shares shall be subject to a
Lapsing Formula pursuant to which the restrictions set forth in or pursuant to
Section 7.C shall lapse, unless such restrictions have earlier lapsed as to all
or part of the shares due to achievement of Performance Objectives during the
Performance Period or pursuant to this Plan or the applicable Stock Agreement.
The Committee may grant Restricted Shares which are not subject to a Lapsing
Formula.
B. Performance Objectives. Each Award of Restricted Shares (whether or not
subject to a Lapsing Formula) shall be subject to the achievement by the
Company of Performance Objectives during the Performance Period.
C. Rights with Respect to Restricted Shares. Each Participant to whom an
Award of Restricted Shares has been made shall have beneficial ownership of
such shares including the right to vote the same and to receive dividends
thereon, subject, however, to the following terms, conditions and restrictions
and such additional terms, conditions and restrictions as may be determined by
the Committee and included in the Stock Agreement:
Until the restrictions set forth in or pursuant to this Section 7.C shall
lapse pursuant to Sections 9, 10, 11 or the terms of a particular Stock
Agreement, Restricted Shares shall be held in escrow by the Company and (i)
shall not be sold, assigned, transferred, pledged, hypothecated or otherwise
disposed of, and (ii) except as set forth in Sections 9, 10, 11 or the terms of
a particular Stock Agreement, shall be returned to the Company, and all rights
of the Participant to such shares shall terminate without any payment of
consideration by the Company, if the Participant's continuous employment with
the Company shall terminate with or without cause or as a result of any event
or otherwise for any reason.
8.SUPER SHARES.
A. Performance Objectives. Super Shares shall be issued upon the Committee's
certification of the achievement of the Super Performance Objectives. Super
Performance Objectives shall be measured over the Performance Period unless
otherwise provided in a Stock Agreement.
A-4
<PAGE>
B. Rights with Respect to Super Shares. No participant shall have any right,
title or interest in Super Shares until such shares have been issued. All
Awards of Super Shares shall, prior to issuance of such Shares, be
nontransferable except by will or laws of descent and distribution or other
permissible exception expressly authorized by the Committee in the Stock
Agreement or any written amendment thereto.
9.DETERMINATION OF AWARDS.
A. Determination at End of Performance Period. As soon as practicable after
the close of the Performance Period, or prior thereto if the Committee in its
discretion deems it appropriate, the Committee shall determine whether the
Performance Objectives and the Super Performance Objectives have been achieved.
Each Participant who has received an Award shall be notified as to whether the
Performance Objectives and Super Performance Objectives established for the
Performance Period have been achieved and the number of Restricted Shares, if
any, with respect to which the restrictions of Section 7.C have lapsed and the
number of Super Shares, if any, to be issued.
B. Treatment of Restricted Shares After Performance Period. As to any
Restricted Shares covered by an Award which have not had the restrictions
imposed by Section 7.C removed as of the last day of the Performance Period, if
such shares are subject to a Lapsing Formula, such restrictions shall lapse in
accordance with such Lapsing Formula and, if such shares are not subject to a
Lapsing Formula, all right, title and interest of the Participant in such
shares shall thereupon terminate.
10.CHANGE OF OWNERSHIP.
Notwithstanding any provision of Section 7 or any other provision of this
Plan or any provision in any grant or award hereunder to the contrary, all of
the restrictions on the Restricted Shares granted under this Plan shall lapse
upon the occurrence of a Change of Ownership. A "Change of Ownership" shall be
deemed to have occurred if either (A) individuals who, as of the effective date
of this Plan, constitute the Board (as of the date hereof the "Incumbent
Board") cease for any reason to constitute at least a majority of the directors
constituting the Board, provided that any person becoming a director subsequent
to the effective date of this Plan whose election, or nomination for election
by the Company's shareholders, was approved by a vote of at least three-
quarters ( 3/4) of the directors comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is
(1) in connection with the acquisition by a third person, including a "group"
as such term is used in Section 13(d)(3) of the Act, of beneficial ownership,
directly or indirectly, of 20% or more of the combined voting power of the
Company's outstanding voting securities ordinarily having the right to vote for
the election of directors of the Company (unless such acquisition of beneficial
ownership was approved by a majority of the Incumbent Board), or (2) in
connection with an actual or threatened election contest relating to the
election of the directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Act) shall be, for purposes of this
Plan, considered as though such person were a member of the Incumbent Board, or
(B) the Board (a majority of which should consist of directors who are members
of the Incumbent Board) has determined that a Change of Ownership triggering
the lapse of restrictions as described in this Section 10 shall have occurred.
A-5
<PAGE>
11.EFFECT OF CERTAIN TERMINATION OF EMPLOYMENT OR OTHER SERVICES.
A. Termination Due to Death or Retirement. Unless the Committee otherwise
provides in the applicable Stock Agreement, where a Participant's employment
with the Company upon which an Award is based terminates at any time because of
death, or retirement on or after such Participant's normal retirement date (as
defined in accordance with the Company's retirement policies), a proportionate
number of the Restricted Shares as to which the restrictions shall not have
lapsed shall be held subject to the terms and conditions of this Plan and the
applicable Stock Agreement and the remaining shares shall be returned to the
Company and all rights of the Participant to such shares shall terminate
without any payment of consideration by the Company on the date of such event.
The number of shares which shall remain subject to this Plan and the applicable
Stock Agreement shall be a fraction of the total number of shares (both
Restricted Shares as to which restrictions shall not have lapsed and Super
Shares not yet issued) equal to the number of days elapsed in the Performance
Period as of the date of such event divided by the total number of days in the
Performance Period; provided, however, that the Committee may, in its sole
discretion, continue a greater number, or all, of the shares of any particular
Award. Unless otherwise provided in the applicable Stock Agreement, the
continuing shares shall continue to vest only upon satisfaction of the
applicable Performance Objectives.
B. Termination for Reasons Other Than Death or Retirement. Unless the
Committee otherwise provides in the applicable Stock Agreement, where a
Participant's employment with the Company upon which an Award is based
terminates for any reason other than one set forth in Section 11.A above, and
whether or not the termination is initiated by the Participant or the Company,
any Restricted Shares at the date of such termination shall be returned to the
Company and all rights of the Participant to such shares and to any Super
Shares shall terminate without any payment of consideration by the Company.
Notwithstanding the foregoing, the Committee may, in its sole discretion, waive
automatic termination as to some or all shares then subject to restrictions and
to any Super Shares and, to that extent, continue the restrictions or other
vesting conditions in the same manner as set forth in Section 11.A above.
12.DELIVERY OF SHARES.
A. Delivery. No shares of Common Stock shall be delivered pursuant to an
Award until the requirements of all laws and regulations as may be deemed by
the Committee to be applicable thereto are satisfied.
B. Restrictions Upon Grant of Awards. If the Board in its discretion
determines that the listing upon the New York Stock Exchange, the Pacific Stock
Exchange or any other exchange, or participation in NASDAQ or the registration
or qualification under any Federal or state laws of any shares of Stock to be
granted pursuant to this Plan (whether to permit the grant of Awards or the
resale or other disposition of any such shares of Stock by or on behalf of
Participants receiving such shares) is necessary or desirable prior to delivery
of the certificates for such shares of Stock, then delivery shall not be made
until such listing, participation, registration or qualification shall have
been completed. In such connection, the Company agrees that; it will use its
best efforts to effect any such listing, participation, registration or
qualification; provided, however, that the Company shall not be required to use
its best efforts to effect such registration under the Securities Act of 1933,
as amended, other than on Form S-8, as presently in effect, or such other forms
as may be in effect from time to time calling for information comparable to
that presently required to be furnished under Form S-8.
A-6
<PAGE>
C. Restrictions Under Resale of Unregistered Stock. If the shares of Stock
that have been granted to a Participant pursuant to the terms of this Plan are
not registered under the Securities Act of 1933, as amended, pursuant to an
effective registration statement, such Participant, if the Committee shall deem
it advisable, may be required to represent and agree in writing (i) that any
shares of Stock acquired by such Participant pursuant to this Plan will not be
sold except pursuant to an effective registration statement under the
Securities Act of 1933, as amended, or pursuant to an exemption from
registration under said Act and (ii) that such Participant is acquiring such
shares of Stock for his or her own account and not with a view to the
distribution thereof.
D. Restrictive Legends. Certificates for Restricted Shares delivered pursuant
to Awards shall bear an appropriate legend referring to the terms, conditions
and restrictions described in this Plan and in the Stock Agreement. Any attempt
to dispose of any such shares of Stock in contravention to the terms,
conditions and restrictions described in this Plan or in the Stock Agreement
shall be ineffective. Any shares of Stock of the Company or other property or
rights received by a Participant as a stock dividend or as a result of any
stock split, combination, exchange of shares, reorganization, merger,
consolidation or similar event with respect to Restricted Shares shall have the
same status and bear the same legend and be held in escrow pursuant to Section
7.C as the Restricted Shares received pursuant to the Award.
13.FINANCING AND WITHHOLDING.
A. Withholding of Taxes. As a condition to the making of an Award or to the
lapse of the restrictions pertaining to Restricted Shares or to the issuance of
Super Shares, the Company may require the Participant to pay to the Company, or
make arrangements satisfactory to the Committee regarding payment of, any taxes
of any kind required by law to be withheld or paid with respect to such shares
of Stock.
B. Financing. If requested by a Participant who has received Stock pursuant
to an Award, the Committee may in its discretion provide financing to the
Participant in a principal amount sufficient to pay the amount of taxes
required by law to be withheld with respect to such receipt of shares of Stock.
Any such loan shall be subject to all legal requirements, and restrictions
pertinent thereto, including if applicable, Regulation G promulgated by the
Federal Reserve Board. The grant of an Award shall in no way obligate the
Company or the Committee to provide any financing whatsoever upon the lapse of
restrictions on Restricted Shares or upon the issuance of Super Shares.
C. Withholding of Shares.
(i) If requested by Participant who has received shares of Stock pursuant
to an Award with respect to which the restrictions shall have lapsed or
Super Shares, the Committee may in its discretion permit the Participant to
satisfy any tax withholding obligations, in whole or in part, by having the
Company acquire, in the case of Restricted Shares, or withhold in the case
of Super Shares, a portion of such shares with a value equal to the amount
of taxes required by law to be withheld.
(ii) Requests by a Participant to have shares of Stock so acquired or
withheld shall be(a) made prior to the Tax Date, and (b) irrevocable. In
addition, in the event the Participant is an officer or director of the
Company within the meaning of Section 16 of the Act, the Committee may
impose such other limitations as it deems appropriate for Section 16
compliance.
A-7
<PAGE>
14.AMENDMENTS, SUSPENSION OR DISCONTINUANCE.
The Board may amend, suspend, or discontinue the Plan. Notwithstanding the
foregoing, the Board may not, without the prior approval of the shareholders of
the Company, make any amendment that under applicable law requires shareholder
approval.
15.ADMINISTRATION OF PLAN.
A. Powers of the Committee. This Plan shall be administered by the Committee.
Subject to the express provisions of this Plan, the Committee, in its sole and
absolute discretion, shall be authorized and empowered to do all things
necessary or desirable in connection with the administration of this Plan,
including, without limitation, the following:
(i) adopt, amend and rescind rules, regulations and procedures relating
to this Plan and its administration of the Awards granted under this Plan;
(ii) determine which persons meet the eligibility requirements of Section
5 under this Plan and to which of such persons, if any, Awards will be
granted under this Plan;
(iii) grant Awards to persons determined to be eligible and determine the
terms and conditions of such Awards, including but not limited to the
number of Restricted Shares or Super Shares, and the times at which and
conditions upon which Awards vest, expire or terminate, or restrictions
thereon will lapse, or acceleration of the receipt of benefits, or the
lapse of restrictions pursuant to such Award upon the occurrence of
specified events deemed appropriate by the Committee (including, without
limitation, a change of control of the Company) or in other circumstances
or upon the occurrence of other events including those of a personal
nature, as deemed appropriate by the Committee;
(iv) establish criteria for the vesting of Awards, including the
applicable Performance Objectives and Super Performance Objectives and
determine the achievement thereof;
(v) determine whether, and the extent to which, adjustments are required
pursuant to Section 16 hereof or an amendment to an Award is appropriate;
(vi) interpret and construe this Plan and the terms and conditions of any
Award granted hereunder, whether before or after the termination of this
Plan; and
(vii) determine the circumstances under which, consistent with the
provisions of this Plan, any outstanding Award and the applicable Stock
Agreement will be amended; which authority (except as to clause (ii) and,
insofar as an initial grant is made, (iii) above) shall remain in effect so
long as any Award remains outstanding under this Plan.
B. Determinations. Any action taken by, or inaction of, the Company, the
Board or the Committee relating or pursuant to this Plan shall be within the
absolute discretion of that entity or body and shall be conclusive and binding
upon all persons. No member of the Board or officer of the Company shall be
liable for any such action or inaction of the entity or body, of another
person, or except in circumstances involving bad faith, of himself or herself.
In making any determination or in taking or not taking any action under this
Plan, the Board and the Committee may obtain and may rely upon the advice of
experts, including professional advisors to the Company. No director, officer
or agent of the Company shall be liable for any such action or determination
taken or made or omitted in good faith. The Committee may delegate ministerial,
nondiscretionary functions to individuals who are officers or employees of the
Company.
A-8
<PAGE>
16.MISCELLANEOUS PROVISIONS.
A. Adjustments.
(i) Changes From Material Acquisitions, Dispositions, Recapitalization,
and Other Events. In the event of a change in capitalization, a material
acquisition or disposition of business or assets, a material reorganization
or restructuring, or any extraordinary gain or loss that affects the
Company (on a consolidated basis) or the applicable business entity and
that was not anticipated by the Committee in setting the specific
Performance Objectives and threshold and target Super Performance
Objectives for the Performance Period, the Committee, subject to Section
16.C, may make adjustments to the Performance Objectives or the number of
shares subject to the Award, applied as of the date of such event, based
solely on objective criteria, so as to neutralize, in the Committee's best
judgment, the effect of the change on the applicable Performance Objectives
and total amount of the Award for the Performance Period.
(ii) If (A) the outstanding shares of Stock (the "outstanding shares")
(1) are increased, decreased, exchanged or converted as a result of a stock
split (including a split in the form of a stock dividend), reverse stock
split, or the like or (2) are exchanged for or converted into cash,
property or a different number or kind of securities (or if cash, property
or securities are distributed in respect of the outstanding shares), as a
result of a reorganization, merger, consolidation, recapitalization,
restructuring, or reclassification, or (B) substantially all of the
property and assets of the Company are sold, then, unless the terms of such
transaction shall otherwise provide, the Committee shall make equitable,
appropriate and proportionate adjustments in (x) the number and type of
shares or other securities or cash or other property that may be acquired
pursuant to an Award of Super Shares previously granted under this Plan,
and (y) the maximum number and type of shares or other securities that may
be issued pursuant to Awards thereafter granted under this Plan, and (z)
such other terms as necessarily are affected by such event.
(iii) Accounting Matters. Similar changes with respect to the Performance
Objectives shall be made in the case of material changes in accounting
policies or practices affecting the Company, to the extent any thereof was
not anticipated at the time the specific performance levels were set, based
on objective criteria so as to neutralize, in the Committee's best
judgment, the effect of the change or event on the applicable Performance
Objectives for the Performance Period.
B. Designation of Beneficiaries. A Participant may designate a beneficiary or
beneficiaries to receive such Participant's Stock hereunder in the event of
such Participant's death, and Participant may, from time to time, change any
such beneficiary designation. All beneficiary designations and changes therein
shall be in writing and shall be effective only if and when delivered by the
Committee during the lifetime of the Participant.
C. Limitation on Changes Materially Adverse to a Participant. No amendment or
termination of the Plan or change in or affecting any outstanding Award shall
deprive in any material respect the Participant, without the consent of such
Participant, of any of his or her rights or benefits under or with respect to
the Award. Adjustments contemplated by Section 16.D shall not be deemed to
constitute a change requiring such consent.
A-9
<PAGE>
D. Plan Construction. It is the intent of the Company that this Plan and
Awards hereunder satisfy and be interpreted in a manner that in the case of
recipients who are or may be subject to Section 16 of the Act satisfies the
applicable requirements of Rule 16b-3 so that such persons will be entitled to
the benefits of Rule 16b-3 or other exemptive rules under Section 16 of the Act
and will not be subjected to avoidable liability thereunder. It is further the
intent of the Company that specific Awards under this Plan that are designated
as performance-based for purposes of Section 162(m) of the Code be designed and
construed in a manner that satisfies the requirements thereof. If any provision
of this Plan or of any Award would otherwise frustrate or conflict with the
intent expressed above, that provision to the extent possible shall be
interpreted and deemed amended so as to avoid such conflict.
E. Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed to
limit the authority of the Board or the Committee to grant awards or authorize
any other compensation, with or without reference to stock, under any other
plan, agreement or authority.
A-10
<PAGE>
1 SUNAMERICA CENTER
CENTURY CITY
LOS ANGELES, CALIFORNIA 90067-6022
(310) 772-6000
<PAGE>
GRAPHICS APPENDIX
SUNAMERICA INC.
<TABLE>
<CAPTION>
PAGE WHERE
GRAPHIC OR IMAGE NARRATIVE DESCRIPTION OR
MATERIAL APPEARS CROSS REFERENCE
- - - ----------------- -------------------------------------------------
<C> <S>
PAGES 2,3,4 AND 5 PHOTOS ON EACH MEMBER OF THE BOARD OF DIRECTORS
APPEARS BESIDE HIS OR HER RESPECTIVE BIOGRAPHICAL
INFORMATION.
</TABLE>
<PAGE>
SUNAMERICA INC.
COMMON STOCK
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 27, 1995
The undersigned hereby appoints Eli Broad, Jay S. Wintrob and James R.
Belardi, and each of them, as proxies with full power of substitution and
revocation, to vote in the name, place and stead of the undersigned, with all
powers the undersigned would possess if personally present, all of the shares
of Common Stock of SunAmerica Inc. the undersigned is entitled to vote at said
Company's annual meeting of shareholders to be held on January 27, 1995 or at
any and all adjournments thereof, as follows:
(1) ELECTION OF [_] FOR all nominees [_] WITHHOLD
DIRECTORS listed AUTHORITY to vote
below (except as for all nominees
marked to the listed below
contrary below)
ELI BROAD, RONALD J. ARNAULT, KAREN HASTIE-WILLIAMS, DAVID O. MAXWELL, BARRY
MUNITZ, LESTER POLLACK, RICHARD D. ROHR, SANFORD C. SIGOLOFF, HAROLD M. WILLIAMS
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list above.)
(2) Approval of the Annual Performance Incentive Compensation Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Approval of the 1995 Performance Stock Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders and Proxy Statement for such meeting, dated December 23, 1994.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED
AS DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
INDICATED, IT WILL BE VOTED FOR PROPOSALS 1, 2 AND 3 AND ON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING.
Dated: _______, 1995
____________________
____________________
Please sign EXACTLY
as your name appears
hereon)
When signing as
attorney, executor,
administrator,
trustee or
guardian, please
give full title. If
more than one
trustee, all should
sign. All joint
owners should sign.
If a corporation,
sign in full
corporate name by
President or other
authorized officer.
If a partnership,
sign in partnership
name by authorized
person.
IMPORTANT INFORMATION IS CONTAINED ON THE OTHER SIDE OF THIS CARD. PLEASE READ
BOTH SIDES OF THIS CARD, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE.
<PAGE>
SUNAMERICA INC.
NONTRANSFERABLE CLASS B STOCK
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 27, 1995
The undersigned hereby appoints Eli Broad, Jay S. Wintrob and James R.
Belardi, and each of them, as proxies with full power of substitution and
revocation, to vote in the name, place and stead of the undersigned, with all
powers the undersigned would possess if personally present, all of the shares
of Nontransferable Class B Stock of SunAmerica Inc. the undersigned is entitled
to vote at said Company's annual meeting of shareholders to be held on January
27, 1995 or at any and all adjournments thereof, as follows:
(1) ELECTION OF [_] FOR all nominees [_] WITHHOLD
DIRECTORS listed AUTHORITY to vote
below (except as for all nominees
marked to the listed below
contrary below)
ELI BROAD, RONALD J. ARNAULT, KAREN HASTIE-WILLIAMS, DAVID O. MAXWELL, BARRY
MUNITZ, LESTER POLLACK, RICHARD D. ROHR, SANFORD C. SIGOLOFF, HAROLD M. WILLIAMS
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list above.)
(2) Approval of the Annual Performance Based Incentive Compensation Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Approval of the 1995 Performance Stock Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders and Proxy Statement for such meeting, dated December 23, 1994.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED
AS DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
INDICATED, IT WILL BE VOTED FOR PROPOSALS 1, 2 AND 3 AND ON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING.
Dated: _______, 1995
____________________
____________________
Please sign EXACTLY
as your name appears
hereon)
When signing as
attorney, executor,
administrator,
trustee or
guardian, please
give full title. If
more than one
trustee, all should
sign. All joint
owners should sign.
If a corporation,
sign in full
corporate name by
President or other
authorized officer.
If a partnership,
sign in partnership
name by authorized
person.
IMPORTANT INFORMATION IS CONTAINED ON THE OTHER SIDE OF THIS CARD. PLEASE READ
BOTH SIDES OF THIS CARD, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE.
<PAGE>
SUNAMERICA INC.
SERIES C PREFERRED STOCK
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 27, 1995
The undersigned hereby appoints Eli Broad, Jay S. Wintrob and James R.
Belardi, and each of them, as proxies with full power of substitution and
revocation, to vote in the name, place and stead of the undersigned, with all
powers the undersigned would possess if personally present, all of the shares
of Series C Preferred Stock of SunAmerica Inc. the undersigned is entitled to
vote at said Company's annual meeting of shareholders to be held on January 27,
1995 or at any and all adjournments thereof, as follows:
(1) ELECTION OF [_] FOR all nominees [_] WITHHOLD
DIRECTORS listed AUTHORITY to vote
below (except as for all nominees
marked to the listed below
contrary below)
ELI BROAD, RONALD J. ARNAULT, KAREN HASTIE-WILLIAMS, DAVID O. MAXWELL, BARRY
MUNITZ, LESTER POLLACK, RICHARD D. ROHR, SANFORD C. SIGOLOFF, HAROLD M. WILLIAMS
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list above.)
(2) Approval of the Annual Performance Incentive Compensation Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Approval of the 1995 Performance Stock Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders and Proxy Statement for such meeting, dated December 23, 1994.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED
AS DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
INDICATED, IT WILL BE VOTED FOR PROPOSALS 1, 2 AND 3 AND ON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING.
Dated: _______, 1995
____________________
____________________
Please sign EXACTLY
as your name appears
hereon)
When signing as
attorney, executor,
administrator,
trustee or
guardian, please
give full title. If
more than one
trustee, all should
sign. All joint
owners should sign.
If a corporation,
sign in full
corporate name by
President or other
authorized officer.
If a partnership,
sign in partnership
name by authorized
person.
IMPORTANT INFORMATION IS CONTAINED ON THE OTHER SIDE OF THIS CARD. PLEASE READ
BOTH SIDES OF THIS CARD, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE.
