<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or Section 240.14a-12
</TABLE>
SUNAMERICA INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
<TABLE>
<S> <C>
SUNAMERICA INC. ELI BROAD
Chairman and
1 SunAmerica Center Chief Executive Officer
Century City
Los Angeles CA 90067-6022
310.772.6000
</TABLE>
LOGO
December 31, 1996
Dear Fellow Shareholder:
Your officers and directors join me in inviting you to attend the 1997
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 ensure 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 Pacific Palisades Room in the Century
Plaza Hotel, Los Angeles, California at 2:00 p.m. on February 14, 1997.
Sincerely,
/s/ ELI BROAD
----------------------------
Eli Broad
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
SUNAMERICA INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 14, 1997
To the holders of the Common and Class B Common Stock of SunAmerica Inc.:
The Annual Meeting of Shareholders of SunAmerica Inc. will be held on
Friday, February 14, 1997, at 2:00 p.m. in the Pacific Palisades Room at the
Century Plaza Hotel, 2025 Avenue of the Stars, Los Angeles, California for the
following purposes:
(1) To elect ten directors for the ensuing year;
(2) To consider and vote upon a proposal to amend the Charter to increase
the Company's authorized Common Stock from 175,000,000 to 350,000,000
shares (the "Charter Amendment");
(3) To consider and vote upon the SunAmerica 1997 Employee Incentive Stock
Plan;
(4) To consider and vote upon the SunAmerica Long-Term Incentive Plan;
(5) To consider and vote upon an Amendment to the Long-Term Performance
Based Incentive Plan for the Chief Executive Officer (the "Incentive
Plan Amendment");
(6) To consider and vote upon the Non-Employee Directors' Stock Option Plan
(the "Director Plan"); and
(7) 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 December 10,
1996, 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
Senior Vice President and Secretary
Los Angeles, California
December 31, 1996
<PAGE> 4
SUNAMERICA INC.
1 SUNAMERICA CENTER
LOS ANGELES, CALIFORNIA 90067-6022
DECEMBER 31, 1996
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 14, 1997
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 (the "Annual Meeting") to be held on Friday,
February 14, 1997, 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, 1996,
including audited financial statements, is being mailed to shareholders
concurrently herewith.
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 108,866,188 shares of Common Stock, par value
$1.00 per share (the "Common Stock") and the 10,848,468 shares of
Nontransferable Class B Stock ("Class B Stock") outstanding at the close of
business on December 10, 1996, will be entitled to vote at the meeting.
At the Annual Meeting, shareholders will have the opportunity to (i) elect
ten directors for the ensuing year, (ii) approve the Charter Amendment; (iii)
approve the SunAmerica 1997 Employee Incentive Stock Plan; (iv) approve the
SunAmerica Long-Term Incentive Plan; (v) approve the Incentive Plan Amendment;
and (vi) approve the Director Plan. Each holder of Common Stock is entitled to
one vote for each share held and each holder of Class B Stock is entitled to ten
votes for each share held. There is no right to cumulate votes as to any matter.
Votes present in person or by proxy at the Annual Meeting will determine
whether or not a quorum is present and will be tabulated by the election
inspectors appointed for the meeting. Abstentions will be counted for purposes
of determining whether a quorum is present. The presence in person or by proxy
of stockholders entitled to cast a majority of all votes entitled to be cast at
the Annual Meeting constitutes a quorum.
The election of directors requires a plurality of the votes cast by the
holders of Common Stock and Class B Stock, voting together as a single class
with a quorum present. Abstentions and broker non-votes have no effect on the
plurality vote for the election of directors. Approval of the Charter Amendment
requires the affirmative vote of two-thirds of all votes entitled to be cast by
the holders of Common Stock and the Class B Stock, voting together as a single
class. In addition, the affirmative vote of a majority of all votes entitled to
be cast by holders of the Common Stock, voting
1
<PAGE> 5
as a separate class, and the affirmative vote of a majority of all votes
entitled to be cast by holders of the Class B Stock, voting as a separate class,
are required to approve the Charter Amendment. For purposes of the Charter
Amendment, abstentions and broker non-votes will be equivalent to a vote against
the proposal. Approval of the SunAmerica 1997 Employee Incentive Stock Plan, the
SunAmerica Long-Term Incentive Plan, the Incentive Plan Amendment and the
Director Plan requires the affirmative vote of a majority of votes cast by the
holders of Common Stock and Class B Stock, voting as a single class with a
quorum present. Abstentions and broker non-votes have no effect on the majority
vote required to approve these matters. In addition, the Board has conditioned
approval of the Incentive Plan Amendment on an affirmative vote of a majority of
the votes cast on the matter, other than the votes represented by the shares as
to which Mr. Broad has or shares the power to vote.
Mr. Broad, Chairman of the Board, President and Chief Executive Officer of
the Company, holds or exercises voting power over shares which represent
approximately 44.1% of the shares entitled to be cast for the election of the
Board of Directors, the Charter Amendment, the SunAmerica 1997 Employee
Incentive Stock Plan, the SunAmerica Long-Term Incentive Plan, the Incentive
Plan Amendment and the Director Plan. Mr. Broad intends to cast an affirmative
vote for each of the proposals.
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,
Vice Chairman, and Joseph M. Tumbler, Vice Chairman.
2
<PAGE> 6
ELECTION OF DIRECTORS
At the meeting, management will present as nominees and recommend to the
shareholders that each of the ten 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 William F.
Aldinger, III and Jay S. Wintrob, were elected to the Board of Directors 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 63, 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 of Kaufman and Broad Home Corporation; a former
Photo director of the Federal National Mortgage Association; the
Founding Chairman of The Museum of Contemporary Art (MOCA);
Chairman of the Los Angeles World Affairs Council; a director of
D.A.R.E. America; a trustee of the California Institute of
Technology, the Archives of American Art, The Smithsonian
Institution, and the Los Angeles County Museum of Art; a member
of the Board of Governors of The Music Center of Los Angeles; a
member of the California Business Roundtable; former Vice
ELI BROAD 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.
- ------------------------------------------------------------------------------
William F. Aldinger, III, age 49, has been Chairman and Chief
Executive Officer of Household International since 1994. Prior
to joining Household International, Mr. Aldinger was named
Executive Vice President of Wells Fargo Bank private banking
Photo group in 1986 and Vice Chairman for the private banking group
and the consumer credit group in 1992. He was appointed to head
the Wells Fargo Bank retail banking group and consumer credit
group in 1993. Mr. Aldinger is a member of the Board of Trustees
of Northwestern University and the Orchestral Association
Chicago Symphony Orchestra. He also serves as a member of the
Board of Directors of Stone Container Corporation, and the
combined Board of Directors of Children's Memorial Medical
WILLIAM F. Center/Children's Memorial Hospital and the Children's Memorial
ALDINGER, III Foundation. Mr. Aldinger was recently elected member of the
Listed Company Advisory Committee to the New York Stock
Exchange. Mr. Aldinger was elected a director of the Company in
November 1996.
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3
<PAGE> 7
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Karen Hastie-Williams, age 52, 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,
Photo and from 1977 to 1980 served as Chief Counsel to the United
States Committee on the Budget. She is a director of Crestar
Financial Services Corporation, the Federal National Mortgage
Association, Washington Gas and Light Company and Continental
Airlines, Inc. She also serves as Trustee of the NAACP Legal
Defense Fund, Inc., the Lawyers' Committee for Civil Rights
KAREN HASTIE- Under Law, the Enterprise Foundation and the Greater Washington
WILLIAMS 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 66, 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), Potomac Electric Power Company (PEPCO) and Salomon
Inc. He is a member of the Trustees' Council and co-chair of The
Circle of the National Gallery of Art. He also serves on the
governing boards of The Brookings Institution, The Enterprise
Foundation, The European Institute, Arena Stage, WETA, the
DAVID O. public television and radio stations in metropolitan Washington,
MAXWELL D.C. and is a Life Trustee of the Urban Institute. He has been a
director of the Company since 1985.
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Barry Munitz, Ph.D., age 54, 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
Aluminum and Simplicity Patterns. Dr. Munitz is Chair of the
American Council on Education, a director of KCET Public
BARRY MUNITZ Television, and Chair-elect of the California Business-Higher
Education Forum. He has been a director of the Company since
1994.
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4
<PAGE> 8
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Lester Pollack, age 63, has been Chief Executive Officer of
Centre Partners, L.P., since 1986 and a managing partner of
Lazard Freres & Co. LLC since 1986 and Senior Managing Director
of Corporate Advisors, L.P. since 1988. He is a director of
Photo Continental Cablevision, Inc., Polaroid Corporation, Sphere
Drake Holdings Ltd., Tidewater, Inc. and Parlex Corporation. Mr.
Pollack is a Trustee of New York University and a member of the
Council on Foreign Relations. He is the immediate past Chairman
LESTER of the Conference of Presidents of Major American Jewish
POLLACK Organizations. He has been a director of the Company since 1981.
- -------------------------------------------------------------------------------
Carl E. Reichardt, age 65, is retired Chairman and Chief
Executive Officer of Wells Fargo & Company and its principal
subsidiary, Wells Fargo Bank, having served in those positions
since 1983. Mr. Reichardt joined Wells Fargo & Company in 1970,
Photo was named Executive Vice President in 1973 and President of
Wells Fargo Bank in 1978. He is a director of ConAgra, Inc.,
Columbia/HCA Healthcare Corporation, Ford Motor Company, Pacific
Gas and Electric Company, McKesson Corporation, Newhall
CARL E. Management Corporation, and Wells Fargo & Company. He has been a
REICHARDT director of the Company since 1995.
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Sanford C. Sigoloff, age 66, 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
Photo 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
States Holocaust Memorial Council in Washington, D.C. Mr.
Sigoloff is a director of Kaufman and Broad Home Corporation,
Wickes Europe, PLC-London, England, Movie Gallery, Inc.,
ChatCom, Inc., Digital Video Systems, Inc., and the National
SANFORD C. Conference of Christians and Jews; a member of the California
SIGOLOFF 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 Management. He
has been a director of the Company since 1979.
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5
<PAGE> 9
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Harold M. Williams, age 68, 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
Dean of the Graduate School of Management at the University of
Photo California, Los Angeles, from 1970 to 1977. Prior to then, he
served as Chairman of the Board of Norton Simon, Inc. Mr.
Williams is currently on the Board of Directors of Times-Mirror
Corp. Mr. Williams also serves as a director of the Los Angeles
HAROLD M. Philharmonic and the Committee for Economic Development. He has
WILLIAMS been a director of the Company since 1992.
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Mr. Wintrob, age 39, is Vice Chairman of the Company and
President of SunAmerica Investments, Inc. Mr. Wintrob joined the
Company in 1987 and previously served as Executive Vice
President (1991-95). Prior to joining the Company, Mr. Wintrob
Photo was an attorney with O'Melveny & Myers in Los Angeles. He is a
director of the Los Angeles Area Chamber of Commerce and The
Wellness Community, and is President of the Board of Directors
of Bet Tzedek Legal Services - The House of Justice, a leading
JAY S. Los Angeles legal services organization. Mr. Wintrob previously
WINTROB has not served as a director of the Company.
- ------------------------------------------------------------------------------
The Company's Board of Directors held eight meetings during fiscal year
1996. 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 of Directors and committee
meetings. Other than Mr. Broad, directors for fiscal year 1996 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 has
implemented a Charitable Award Program which provides an aggregate $500,000
donation to up to five charitable organizations of the director's choice, upon
the death of a director. 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 year 1996 retirement benefits were paid to two former directors in the
amount of $12,500 each.
The Company's Board of Directors has several standing committees, including
a Personnel, Compensation and Stock Plan Committee, an Audit and Compliance
Committee and a Nominating Committee. The Personnel, Compensation and Stock Plan
Committee held two meetings during
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fiscal year 1996 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 Plan Committee are Directors
Maxwell (Chairman), Arnault, Hastie-Williams, Reichardt and Williams.
The Audit and Compliance Committee held two meetings during fiscal year
1996. 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, Munitz,
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 two meetings during fiscal year 1996. The Committee develops guidelines for
the composition of the Board of Directors, and proposes to the Board of
Directors 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 Pollack (Chairman), Hastie-Williams,
Maxwell, Munitz and Williams.
During the fiscal year ended September 30, 1996, 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 of
Directors on which he or she served (during the periods that he or she served).
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<PAGE> 11
BENEFICIAL OWNERSHIP OF SHARES
The following information is furnished as of December 11, 1996, 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 and its Class B 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 each
share of Common Stock. All share numbers contained below and elsewhere in this
Proxy Statement reflect a 2-for-1 stock split paid in the form of a stock
dividend on August 30, 1996.
<TABLE>
<CAPTION>
AMOUNT PERCENT
BENEFICIALLY OF
NAME OF BENEFICIAL OWNER OWNED(1) VOTE
---------------------------------------------------- ------------ -------
<S> <C> <C>
William F. Aldinger, III............................ -- --
Ronald J. Arnault................................... 12,000 *
Eli Broad........................................... 15,090,450(2) 44.1%
Michael L. Fowler................................... 43,584(3) *
Karen Hastie-Williams............................... 200 *
Gary W. Krat........................................ 393,184(4) *
David O. Maxwell.................................... 31,114 *
Barry Munitz........................................ 27,000 *
Lester Pollack...................................... 6,750 *
Carl E. Reichardt................................... 4,000 *
Richard D. Rohr..................................... 34,898(5) *
Sanford C. Sigoloff................................. 31,500 *
Joseph Tumbler...................................... 255,148(6) *
Harold M. Williams.................................. 1,500 *
Jay S. Wintrob...................................... 1,096,968(7) *
All directors and officers as a group (25
persons).......................................... 18,358,016(8) 45.6%
========= ====
</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, 5,930,156 shares are Common Stock, and 9,160,294 shares
are Class B Stock. Of the Common Stock, 715,872 shares represent restricted
shares granted under the Company's employee stock plans as to which Mr.
Broad has no investment power; 75,846 shares are registered in the name of a
corporation of which Mr. Broad is a director and has sole voting and
investment powers; 65,136 shares are held by a foundation of which Mr. Broad
is a director and shares voting and investment power; and 3,605,700 shares
represent employee stock options held by Mr. Broad which are or will become
exercisable on or before February 9, 1997 and as to which he has no voting
or investment power. Of the Class B Stock, 704,154 shares are held in the
name of a corporation of which Mr. Broad is a director and has sole voting
and investment powers; and 8,456,140 shares are held directly by Mr. Broad.
Mr. Broad has beneficial ownership of approximately 5.3% of the Common Stock
outstanding and 84.4% of the Class B Stock outstanding.
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<PAGE> 12
(3) Of these holdings, 30,000 shares represent restricted shares granted under
the Company's employee stock plans as to which Mr. Fowler has no investment
power; and 13,500 shares represent employee stock options held by Mr. Fowler
which are or will become exercisable on or before February 9, 1997, and as
to which he has no voting or investment power.
(4) Of these holdings, 177,000 shares represent restricted shares granted under
the Company's employee stock plans as to which Mr. Krat has no investment
power; and 191,100 shares represent employee stock options held by Mr. Krat
which are or will become exercisable on or before February 9, 1997, and as
to which he has no voting or investment power.
(5) Of these holdings, 29,624 shares are held by Mr. Rohr and his wife as
co-owners, and Mr. Rohr has shared voting and investment power with respect
thereto.
(6) Of these holdings, 225,000 represent restricted shares granted under the
Company's employee stock plans as to which Mr. Tumbler has no investment
power and 30,000 shares represent employee stock options held by Mr. Tumbler
which are or will become exercisable on or before February 9, 1997, as to
which he has no voting or investment power.
(7) Of these holdings, 379,890 shares represent restricted shares granted under
the Company's employee stock plans as to which Mr. Wintrob has no investment
power; and 555,000 shares represent employee stock options held by Mr.
Wintrob which are or will become exercisable on or before February 9, 1997,
and as to which he has no voting or investment power.
(8) Of these aggregate holdings 2,033,512 shares represent restricted shares
granted under the Company's employee stock plans as to which no investment
power is held; and 5,114,700 shares represent employee stock options held by
such persons which are or will become exercisable on or before February 9,
1997, and as to which no voting or investment power is held. All directors
and executive officers as a group have beneficial ownership of approximately
8.1% of the Common Stock outstanding, and 84.4% of the Class B Stock
outstanding.
The Company knows of no person who owned in excess of 5% of the outstanding
Common or Class B Stock except for Mr. Broad, whose business address is 1
SunAmerica Center, Los Angeles, California 90067-6022, and the Eli and Edythe L.
Broad 1980 Family Trust and the Eli Broad 1983 Trust, trusts formed by Mr. Broad
of which his estate is a beneficiary (the "Family Trusts"). The business address
of the Family Trusts is in care of the trustee, Cindy Quane, 1999 Avenue of the
Stars, Suite 3170, Los Angeles, California 90067. The Family Trusts beneficially
own, in the aggregate, 1,687,500 shares of Class B Stock, or approximately
15.56% of the Class B Stock outstanding and 4,773,824 shares of Common Stock, or
approximately 4.4% of the Common Stock outstanding.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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"), the Company believes that all of such forms were filed
on a timely basis by reporting persons.
9
<PAGE> 13
PROPOSAL FOR SHAREHOLDER APPROVAL TO AMEND
THE COMPANY'S CHARTER TO INCREASE THE NUMBER
OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has declared advisable and recommended an amendment
to the Company's Charter to increase the number of authorized shares of Common
Stock. The Board of Directors believes that the availability of additional
Common Stock will provide flexibility and allow the Company to issue Common
Stock, if, as and when the need arises. It is therefore proposed to amend the
Company's Charter to increase the number of authorized shares of Common Stock
from 175,000,000 to 350,000,000. The proposed amendment does not affect any
terms or rights of the outstanding shares of either Common Stock or Class B
Stock. Neither the holders of Common Stock nor the holders of Class B Stock have
preemptive rights.
The text of the proposed amendment is set forth below.
FIRST: The Charter of the Corporation is hereby amended by striking out the
first paragraph of Article Fifth of the Charter and inserting in lieu thereof
the following:
ARTICLE FIFTH: The total number of stock of all classes which the
Corporation has authority to issue is 410,000,000 shares, which consists of
350,000,000 shares of Common Stock of the par value of One Dollar ($1) each
for an aggregate par value of Three Hundred Fifty Million Dollars
($350,000,000), 25,000,000 shares of Nontransferable Class B Stock of the
par value of One Dollar ($1) each for an aggregate par value of Twenty Five
Million Dollars ($25,000,000), 15,000,000 shares of Transferable Class B
Stock of the par value of One Dollar ($1) each for an aggregate par value
of Fifteen Million Dollars ($15,000,000), and 20,000,000 shares of
Preferred Stock without par value.
As of November 30, 1996, of the 175,000,000 authorized shares of Common
Stock, 108,866,188 shares were outstanding. There were also 53,638,018 shares of
Common Stock (the "Reserved Shares") reserved for issuance under employee
benefit plans, upon exercise of employee stock options, upon conversion of the
Class B Stock, upon conversion of the Company's Series E Mandatory Conversion
Premium Dividend Preferred Stock (the "Series E Preferred Stock") and upon
conversion of the Company's 8 1/2% Premium Equity Redemption Cumulative Security
Units ("8 1/2% PERCS Units"). Taking into account the Reserved Shares and the
108,866,188 shares of outstanding Common Stock, as of November 30, 1996, the
total number of issued and reserved shares of Common Stock was 162,504,206. As
of November 30, 1996, the Company had outstanding 3,514,765 shares of 9 1/4%
Preferred Stock, Series B, 4,000,000 shares of Series E Preferred Stock and
11,500,000 8 1/2% PERCS Units.
The Board of Directors believes it is in the Company's best interest to
increase the number of authorized but unissued shares of Common Stock in order
to have additional authorized but unissued shares available for issuance to meet
business needs as they arise. The Board of Directors believes that the
availability of additional shares of Common Stock will provide the Company with
the flexibility to issue Common Stock for proper corporate purposes which may be
identified by the Board of Directors in the future, such as the declaration of
stock dividends or distributions, the sale of stock to obtain additional capital
funds and the issuance of such stock in connection with acquisitions of or
mergers with other companies. The Company recently filed with the Securities and
Exchange Commission a shelf registration statement (the "Registration
Statement") providing for the issuance, from time to time, of various securities
which may include Common Stock or securities convertible into Common Stock.
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<PAGE> 14
The authorized shares of Common Stock in excess of those issued will be
available for issuance at such time and for such corporate purposes as the Board
of Directors may deem advisable without further action by the Company's
shareholders, except as may be required by applicable laws or the rules of the
New York Stock Exchange. Upon issuance, such shares will have the same rights as
the outstanding shares of Common Stock.
The Board of Directors does not intend to issue any Common Stock or
securities convertible into Common Stock except on terms that it deems to be in
the best interests of the Company and its shareholders. Any future issuance of
Common Stock or securities convertible into Common Stock will be subject to the
rights of holders of outstanding shares of any preferred stock which the Company
may issue in the future. Other than the possible issuance of Common Stock as
contemplated by the Registration Statement, the Company's management has no
arrangements, agreements, understandings or plans at the present time for the
issuance or use of the additional shares of Common Stock to be authorized by the
proposed Charter Amendment.
Although an increase in the authorized shares of Common Stock could, under
certain circumstances, have an anti-takeover effect (for example, by diluting
the stock of a person seeking to effect a change in the composition of the Board
of Directors or contemplating a tender offer or other transaction for a
combination of the Company with another company), the proposed Charter Amendment
is not in response to any effort of which the Company is aware to accumulate the
Company's stock or obtain control of the Company, nor is it part of a plan by
management to recommend a series of similar amendments to the Board of Directors
and shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
CHARTER AMENDMENT.
PROPOSAL FOR SHAREHOLDER APPROVAL OF THE
SUNAMERICA 1997 EMPLOYEE INCENTIVE STOCK PLAN
GENERAL. The Board of Directors has adopted, subject to shareholder
approval, the SunAmerica 1997 Employee Incentive Stock Plan (the "Stock Plan").
Under the Stock Plan, stock options, limited stock appreciation rights,
restricted shares of Common Stock and stock units may be awarded to eligible
employees and other individuals. The Board believes that adoption of the Stock
Plan will serve a useful purpose in attracting and retaining key personnel and
in enhancing their interest in the Company's continued success, and that
approval of the Stock Plan is in the best interests of the Company and its
shareholders.
A summary description of the Stock Plan is set forth below. This
description is qualified by reference to the full text of the Stock Plan, which
is set forth as Appendix A to this Proxy Statement. Capitalized terms used but
not defined in this section are used with the meanings provided in the full text
of the Stock Plan. The Stock Plan is being submitted for shareholder approval
because such approval is required by regulations promulgated under Section
162(m) of the Internal Revenue Code (the "Code") and by the rules of the New
York Stock Exchange. If the Stock Plan is not approved by stockholders, it will
not be adopted.
ADMINISTRATION. The Stock Plan will be administered by the Personnel,
Compensation and Stock Plan Committee of the Board of Directors (the
"Compensation Committee"). Key employees of the Company and its subsidiaries and
other individuals who can make substantial contributions to the Company's
long-term profitability and value are eligible to participate in the Stock Plan.
It is estimated that approximately 200 persons will participate in the Stock
Plan.
11
<PAGE> 15
AUTHORIZED SHARES. The shares of Common Stock authorized for delivery under
the Stock Plan include 1,841,950 shares of Common Stock remaining available for
grant under the Company's 1988 Employee Stock Plan (the "1988 Plan") plus
5,658,050 additional shares for a total of 7,500,000 shares. If an option or
other award under the Stock Plan expires or otherwise terminates without the
issuance of Common Stock, the shares of Common Stock underlying any such award
shall be again available for options and awards under the Stock Plan. In the
event that an award under the Stock Plan or the 1988 Plan is exercised through
the delivery by the holder of Common Stock, or in the event that the holder's
tax liability arising out of such award is satisfied by the withholding of
shares of Common Stock by the Company, the number of shares authorized for
issuance under the Stock Plan shall be increased by the number of shares so
delivered or withheld. No person may receive options, limited stock appreciation
rights or restricted stock or stock unit awards under the Stock Plan in any year
covering more than 450,000 shares of Common Stock.
AMENDMENT; TERMINATION. No option or award may be granted after the
expiration of 15 years after the Stock Plan's approval by the shareholders. The
Stock Plan may be amended or terminated at any time by the Board of Directors
except that no amendment adversely affecting a participant's rights under an
outstanding award may become effective as to such participant without his or her
consent, and no such amendment may be made without shareholder approval if such
approval is necessary to qualify for or comply with any tax or regulatory
requirement for which or with which the Board of Directors deems it necessary or
desirable to qualify or comply.
OPTIONS. Stock options may be granted under the Stock Plan at the
discretion of the Compensation Committee. The Compensation Committee also has
discretion to fix the exercise price of the options, which, except in the case
of options adjusted for extraordinary events and the case of options granted in
substitution for options of an acquired company, shall not be less than 100% of
the fair market value of the underlying Common Stock at the time such option is
granted. In addition, except in those limited circumstances, once an option has
been granted, its exercise price cannot be reduced. The Compensation Committee
has broad discretion as to the terms and conditions upon which options granted
shall be exercisable and may provide that an option will become exercisable, or
its exercisability will be accelerated, upon the satisfaction of performance
objectives established by the Compensation Committee. Under no circumstances
will an option have a term exceeding 10 years from date of grant. The option
exercise price may be satisfied in cash or by exchanging shares of Common Stock
owned by the optionee, or by a combination of cash and shares. The closing price
of the Common Stock on December 20, 1996 was $43.50 per share.
LIMITED STOCK APPRECIATION RIGHTS. The Compensation Committee may determine
at the time of grant of an option or thereafter to grant a limited stock
appreciation right relating to an option which shall only be exercisable during
the 91 day period commencing upon the occurrence of a Change of Ownership of the
Company (as defined in the Stock Plan). Upon the exercise of a limited stock
appreciation right, the optionee is entitled to receive a cash payment from the
Company equal to the excess of the fair market value of a share of Common Stock
or the Offer price per Share, whichever is higher, over the option price of the
related option. The term "Offer Price per Share" is defined to mean the higher
of (i) the fair market value of a share of Common Stock on the date of exercise
of the limited stock appreciation right or (ii) the highest price per share for
Common Stock paid or to be paid in the transaction, if any, giving rise to the
Change of Ownership, provided that any securities or property which are part of
the consideration paid or to be paid in such a transaction are to be valued at
the highest of (A) the valuation placed on such securities or property by the
company, person or other entity engaging in such transaction or (B) the
valuation placed on such securities or property by the Compensation Committee.
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<PAGE> 16
RESTRICTED SHARES. Awards of restricted shares under the Stock Plan will be
made at the discretion of the Compensation Committee and will consist of shares
of Common Stock granted to a participant and covered by a stock restriction
agreement. At the time of an award, a participant will have the benefits of
ownership in respect of such shares, including the right to vote such shares and
receive dividends thereon and other distributions, subject to the restrictions
set forth in the Stock Plan and in the stock restriction agreement. The shares
will be legended and held in escrow by the Company and may not be sold,
transferred or disposed of until such restrictions have lapsed. Each award may
be subject to a lapsing formula pursuant to which the restrictions on
transferability lapse over a particular time period, which period may be
shortened as to all or part of the shares if specified performance objectives
are achieved. The Compensation Committee has broad discretion as to the specific
terms and conditions of each award, including applicable rights upon certain
terminations of employment.
STOCK UNIT AWARDS. The Stock Plan also authorizes the Compensation
Committee to grant to participants, either alone or in addition to options and
awards of restricted shares thereunder, awards of Common Stock or Units that are
valued in whole or in part by reference to the value of Common Stock ("Stock
Unit Awards"). The Compensation Committee has discretion to determine the
participants to whom Stock Unit Awards are to be made, the times at which such
awards are to be made, the size of such awards and all other conditions of such
awards, including any restrictions, deferral periods or performance
requirements. The provisions of the Stock Unit Awards will be subject to such
rules and regulations as the Compensation Committee shall determine at the time
of grant. For example, Stock Unit Awards may, but need not provide that (i) the
participant is not permitted to sell, transfer, pledge or assign any shares
involved prior to the date on which such shares are issued, or, if later, the
date on which any applicable restriction, performance or deferral period lapses,
(ii) the participant has the right to receive currently or on a deferred basis
interest or dividends, or interest or dividend equivalents, and (iii) such
awards are subject to forfeiture provisions, all as the Compensation Committee
shall determine.
PERFORMANCE CRITERIA. The Compensation Committee may, as noted above,
determine that the vesting or exercisability of an option or award under the
Stock Plan shall be conditioned, or accelerated, upon the satisfaction of
specified Performance Objectives over a specified Performance Period. Vesting of
a portion of the stock options granted at the beginning of fiscal year 1997 may
be accelerated based on specified levels of the Company's Total Return to
Shareholders as compared with the S&P Index Total Return to Shareholders and
vesting of another portion may be accelerated based on the Company's earnings
per share. For this purpose, "earnings per share" shall mean the Company's
aggregate earnings per share from continuing operations before the cumulative
effect of a change in accounting principles and before extraordinary items.
Vesting of a portion of the stock options granted to a certain named executive
officer may be accelerated based on specified levels of pretax income of certain
subsidiaries of the Company and vesting of another portion may be accelerated
based on specified levels of sales of financial products offered by the
Company's subsidiaries.
Other criteria upon which awards may be conditioned include return on
equity or investment; growth in book value or net worth; achievement of a
specified stock price; pretax or after tax earnings of the Company or any
subsidiary, division, department or operation thereof; pretax or after tax
income of the Company or any subsidiary; specified levels of sales of any of the
financial products offered by the Company's subsidiaries; and relative
performance of any of the Company's mutual funds or other financial products as
compared with appropriate benchmarks. With respect to awards to participants who
are not expected to be subject to Section 162(m) of the Code at the
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<PAGE> 17
time of payment of such award, the Compensation Committee may select such other
measures of Company performance as it determines to be appropriate.
The Compensation Committee has the discretion to provide financing to a
participant in a principal amount sufficient for the purchase of shares pursuant
to an option and/or to pay the amount of taxes required to be withheld in
connection with option exercises, awards of restricted shares and Stock Unit
Awards. The Compensation Committee also has the discretion to permit a
participant to satisfy such tax withholding obligations, in whole or in part, by
having the Company withhold shares with a value equal to the amount of taxes
required by law to be withheld. Any award or option granted under the Stock Plan
may provide for dividends or dividend equivalents payable in cash, Common Stock
or other securities or property, on a current or deferred basis, all as
determined by the Compensation Committee.
CHANGE OF OWNERSHIP; OTHER ADJUSTMENTS. If a Change of Ownership of the
Company, as defined in the Stock Plan, occurs, all restrictions on outstanding
awards of restricted stock and stock units lapse and all outstanding options
previously granted under the Stock Plan shall become exercisable for a period of
91 days.
If the Compensation Committee determines that any stock dividend,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares, warrants or
rights offering to purchase Common Stock at a price substantially below fair
market value, or other similar corporate event affects the Common Stock such
that an adjustment is required in order to preserve the benefits intended under
the Stock Plan, then the Compensation Committee has discretion to make equitable
adjustments in the number and kind of shares subject to the Stock Plan or
outstanding options and awards and the respective option exercise prices and/or,
if appropriate, to provide for the payment of cash to a participant.
NEW PLAN BENEFITS. If the Stock Plan is approved by the shareholders, the
persons and groups named below will receive the option grants set forth below:
<TABLE>
<CAPTION>
NAME AND POSITION OPTIONS
------------------------------------------------------------------ -------
<S> <C>
Jay S. Wintrob, Vice Chairman..................................... 110,000
Joseph M. Tumbler, Vice Chairman.................................. 100,000
Gary W. Krat, Senior Vice President............................... 40,000
Michael Fowler, Vice President.................................... 15,000
Executive Group................................................... 487,500
Non-Executive Officer Employee Group.............................. 287,500
</TABLE>
These options vest and become exercisable nine years from the date of
grant, subject to earlier vesting upon the achievement of specified performance
objectives at the end of fiscal 2001, as described above. The options terminate
ten years from the date of grant. The exercise price of each option is $40.75
per share, which was the fair market value of the Common Stock on the date of
grant.
FEDERAL INCOME TAX CONSEQUENCES. (1) Options: Except as provided below,
when an optionee exercises an option, the difference between the option price
and any higher market value of the Common Stock on the date of exercise will be
ordinary income to the optionee and will be allowed as a deduction for Federal
income tax purposes to the Company or its subsidiary. When an optionee disposes
of Common Stock acquired by the exercise of the option, any amount received in
excess of the market value of the Common Stock on the date of exercise will be
treated as long or short term capital gain, depending upon the holding period of
the Common Stock, which commences upon exercise of the option. If the amount
received is less than the market value of the
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<PAGE> 18
Common Stock on the date of exercise, the loss will be treated as long or short
term capital loss, depending upon the holding period of such stock.
(2) Limited stock appreciation rights: When an optionee exercises a limited
stock appreciation right under the Stock Plan, the amount of cash received will
be ordinary income to the optionee and will be allowed as a deduction for
Federal income tax purposes to the Company or its subsidiary.
(3) Restricted Stock: In the absence of an election by a participant, as
explained below, the grant of shares pursuant to an award will not result in
taxable income to the participant or a deduction to the Company or subsidiary in
the year of the grant. The value of the shares will be taxable to a participant
in the year in which the restrictions lapse. Alternatively, a participant may
elect to treat as income in the year of grant the fair market value of the
shares on the date of grant. If such an election were made, a participant would
not be allowed to deduct at a later date the amount included as taxable income
if he should forfeit the shares to the Company. The amount of ordinary income
recognized by a participant is generally deductible by the Company in the year
the income is recognized by the participant. Prior to the lapse of restrictions,
dividends paid on the shares subject to such restrictions will be taxable to the
participant in the year received and the Company or subsidiary will be allowed a
corresponding deduction.
(4) Stock Unit Awards: When a participant receives cash or shares free of
restrictions or when such restrictions lapse, the amount of cash and the fair
market value of the shares will be ordinary income to the participant and the
Company or subsidiary will be allowed a corresponding deduction.
(5) Special rule if option price is paid for in shares: To the extent that
an optionee pays all or part of the option price by tendering shares of Common
Stock owned by the optionee, the normal rules described in (1) apply except that
a number of shares of Common Stock received upon such exercise equal to the
number of shares of Common Stock surrendered as payment of the option price will
have the same tax basis and tax holding period as the shares of Common Stock
surrendered.
The foregoing discussion summarizes the Federal income tax consequences of
the Stock Plan based on current provisions of the Code which are subject to
change. The summary does not cover any State or local tax consequences of
participation in such Stock Plan.
The Stock Plan is not qualified under Section 401(a) of the Code and is not
subject to any provision of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA").
THE BOARD RECOMMENDS A VOTE FOR ADOPTION OF THE STOCK PLAN.
PROPOSAL FOR SHAREHOLDER APPROVAL
OF THE SUNAMERICA LONG-TERM INCENTIVE PLAN
The Board of Directors has adopted, subject to shareholder approval, the
SunAmerica Long-Term Incentive Plan (the "Long-Term Plan"). The following
summary of the Long-Term Plan is qualified in its entirety by reference to the
text thereof which is attached as Appendix B to this Proxy Statement.
Capitalized terms used but not defined in this section are used with the
meanings provided in the full text of the Long-Term Plan.
The purpose of the Long-Term Plan is to establish an incentive arrangement
for senior management of the Company that will induce and reward extraordinary
and superior long-term performance of the Company. Approximately 40 senior
executives of the Company, including the named executive officers, are eligible
to participate in the Long-Term Plan.
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<PAGE> 19
The Long-Term Plan is intended to result in "qualified performance-based
compensation" for purposes of Section 162(m) of the Code. The Long-Term Plan is
being presented for shareholder approval because such approval is one of the
requirements of regulations promulgated under Section 162(m) of the Code. If the
Long-Term Plan is not approved by shareholders, it will not be adopted.
Maximum Awards for named executive officers under the Long-Term Plan are
established by the Compensation Committee prior to the end of the first fiscal
quarter of the first fiscal year of a Performance Period (or at such other time
as may be permitted or required by Section 162(m) of the Code). The maximum
Award that may be earned with respect to any Performance Period by any
participant is $15,000,000.
Awards will be conditioned upon the achievement of specified Performance
Objectives over a specified Performance Period. A portion of the Awards granted
at the beginning of fiscal year 1997 may be earned based on specified levels of
the Company's Total Return to Shareholders, as compared with the S&P Index Total
Return to Shareholders and another portion may be earned based on the Company's
earnings per share. For this purpose, "earnings per share" shall mean the
Company's aggregate earnings per share from continuing operations before the
cumulative effect of a change in accounting principles and before extraordinary
items. A portion of the Award granted to a certain named executive officer may
be earned based on specified levels of pretax income of certain subsidiaries of
the Company and a portion may be earned based on specified levels of sales of
financial products offered by the Company's subsidiaries. The Performance Period
for Awards granted at the beginning of fiscal year 1997 is the five year period
ending September 30, 2001.
Other criteria upon which Awards may be conditioned include return on
equity or investment; growth in book value or net worth; achievement of a
specified stock price; pretax or after tax earnings of the Company or any
subsidiary, division, department or operation thereof; pretax or after tax
income of the Company or any subsidiary; specified levels of sales of any of the
financial products offered by the Company's subsidiaries; and relative
performance of any of the Company's mutual funds or other financial products as
compared with appropriate benchmarks. With respect to Awards to participants who
are not expected to be subject to Section 162(m) of the Code at the time of
payment of their Award, the Compensation Committee may select such other
measures of corporate, subsidiary, division or business unit performance as it
determines to be appropriate.
If the Long-Term Plan is approved by the shareholders, the persons or
groups named below will receive the Awards set forth below. Receipt of the
Awards, or portions thereof, is conditioned upon the achievement of specified
Performance Objectives measured over the five fiscal year Performance Period
ending in 2001.
<TABLE>
<CAPTION>
NAME LONG-TERM AWARD
----------------------------------------------------------- -----------------
<S> <C>
Jay S. Wintrob............................................. $ 4,482,500
Joseph M. Tumbler.......................................... 4,075,000
Gary W. Krat............................................... 1,630,000
Michael Fowler............................................. 611,250
Executive Group............................................ 19,865,625
Non-Executive Employee Group............................... 11,715,625
</TABLE>
The Long-Term Plan will be administered by the Compensation Committee,
which shall have complete authority to interpret and administer the Long-Term
Plan and to establish, amend and
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<PAGE> 20
rescind any rules and regulations relating to it; provided, however, that the
Compensation Committee may not increase the amount paid to any participant
expected to be subject to Section 162(m) of the Code under the Long-Term Plan
above the level that is earned under the Long-Term Plan's preestablished
performance goals.
The Compensation Committee may determine to pay Awards in cash or in Common
Stock of the Company, valued at 100% of fair market value at the time of
payment. Also, participants may be given an opportunity to defer payments, in
which event any such deferrals shall be governed by the terms of the SunAmerica
Executive Savings Plan. All deferred amounts will be paid immediately in the
event of a Change of Ownership of the Company, as defined in the Long-Term Plan.
The Long-Term Plan may be amended, modified or terminated by the
Compensation Committee at any time. No such amendment shall adversely affect the
rights of a participant in respect of an Award earned and deferred by such
participant, without his or her consent. Any such amendment or modification will
be subject to shareholder approval if in the Compensation Committee's discretion
such approval is necessary or desirable to ensure continued compliance with
Section 162(m) of the Code or for any other reason.
Neither the adoption of the Long-Term Plan nor the payment of Awards
thereunder shall preclude the Company from adopting or establishing other
incentive plans or arrangements, and such plans or arrangements may be generally
applicable or applicable only in specific cases.
The Long-Term Plan is not qualified under Section 401(a) of the Code and is
not subject to any provision of ERISA.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE SUNAMERICA
LONG-TERM INCENTIVE PLAN.
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<PAGE> 21
PROPOSAL FOR SHAREHOLDER APPROVAL OF AN AMENDMENT TO THE LONG-TERM
PERFORMANCE-BASED INCENTIVE PLAN FOR THE CHIEF EXECUTIVE OFFICER
In 1994, the Company adopted, with shareholder approval, a long-term
stock-based incentive plan (the "Incentive Plan") for Eli Broad, the Chairman,
President and Chief Executive Officer of the Company. The Incentive Plan's
purpose was, and continues to be, to reward Mr. Broad and provide incentives for
continuing the Company's superior performance and achieving significant gains in
shareholder wealth. In an effort to reduce the accounting charges to the
Company's earnings resulting from the issuance of restricted shares under the
Incentive Plan, while at the same time serving the Incentive Plan's original
goals, the Board of Directors, including the Compensation Committee, which is
composed of outside directors, has approved and recommended for shareholder
approval the Incentive Plan Amendment.
The Board has, with Mr. Broad's concurrence, conditioned approval of the
Incentive Plan Amendment on the affirmative vote of a majority of the votes cast
on the matter, other than the votes represented by the shares as to which Mr.
Broad has or shares the power to vote.
As currently structured, awards under the Incentive Plan, if earned, are
made annually in the form of restricted stock and stock options. The primary
change in the Incentive Plan contained in the proposed amendment is to eliminate
future grants of restricted stock, and to provide that the entire annual award
under the Incentive Plan be paid in the form of stock options. Due to the manner
in which awards are calculated under the Incentive Plan (as described below),
this modification also requires an increase in the number of shares authorized
for issuance, but not yet issued or otherwise granted, under the Incentive Plan
from 1,800,000 to 2,700,000.
All stock options awarded under the Incentive Plan will have an exercise
price equal to the market value of a share of Company Common Stock on the date
the options are granted. Unlike restricted shares, the options will be valuable
to Mr. Broad only if the stock price increases after the date of grant. Mr.
Broad supports the Incentive Plan Amendment, because he believes it is in the
best interest of all shareholders (including himself) to reduce the accounting
charges resulting from the issuance of restricted Shares under the Incentive
Plan, and because he believes the aggregate value of the stock options that
could be awarded under the Incentive Plan Amendment will ultimately equal or
exceed the value of the restricted shares he would otherwise be awarded under
the Incentive Plan.
The following summary of the Incentive Plan and the Incentive Plan
Amendment is qualified by reference to the full text of the Incentive Plan, as
amended and restated, which is included in this Proxy Statement as Appendix C.
Awards under the Incentive Plan are made and will continue to be made as
soon as possible following the end of each fiscal year of the Incentive Plan if
and only if the "Ending Market Value" (as defined below) of the Company's Common
Stock exceeds its "Beginning Market Value" (as defined below) by an amount
greater than the S&P 500 Index Total Return to Shareholders over the comparable
period. The award is then determined as 2% of the amount by which the Ending
Market Value exceeds the Beginning Market Value increased by the S&P 500 Index
Total Return to Shareholders. Expressed as a formula:
AWARD = SunAmerica Ending Market Value
minus (SunAmerica Beginning Market Value X
(1 + S&P 500 Index Total Return to Shareholders)) times .02
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<PAGE> 22
The Incentive Plan currently provides that 50% of the award, if earned,
will be paid in the form of restricted shares, with the number of shares
determined by dividing 50% of the Award Amount by the average closing price of
the Company's Common Stock during the twenty trading days commencing nine
trading days prior to the last trading day of the relevant period (the "Ending
Stock Price"). The remainder of the award will be paid in stock options. The
exercise price of each stock option is the fair market value of a share of the
Company's Common Stock on the date of grant. The number of shares subject to
such options is determined by dividing 50% of the Award Amount by the Ending
Stock Price and multiplying that amount by three. (This formula reflects a
general standard of valuation that across a broad number of companies, stock
options with a 10-year term are worth approximately one-third of the market
value of the underlying stock on date of grant.)
Under the proposed amendment, 100% of the award will be paid in stock
options, determined in the same manner, i.e. the number of shares will be
determined by dividing the Award Amount by the Ending Stock Price and
multiplying by three, and the exercise price will be fair market value on the
date of grant. All options will be immediately exercisable and will have a term
equal to 10 years from date of grant. The closing price of the Company's Common
Stock on December 20, 1996 was $43.50 per share.
"Beginning Market Value" for a fiscal year means the average closing price
of the Company's Common Stock for each of the twenty trading days commencing ten
trading days prior to the first trading day of the relevant period (the
"Beginning Stock Price") multiplied by the weighted average number of shares of
Common Stock outstanding during such period, computed in the manner used to
determine net income per common share in the Company's financial statements (the
"Weighted Average Shares"), except that the Beginning Stock Price for a
particular period shall never be less than the Ending Stock Price for any
previously elapsed period with respect to which an Award was made under the
Incentive Plan.
"Ending Market Value" for a fiscal year means the Ending Stock Price
multiplied by the Weighted Average Shares outstanding during such period. Ending
Market Value is adjusted for the payment of cash dividends during the fiscal
year, assuming such dividends have been reinvested in Common Stock on the date
paid to shareholders using the methodology consistent with the determination of
the S&P 500 Index Total Return to Shareholders.
The first award under the amended Incentive Plan will be made for fiscal
year 1997. Thereafter, an award will be made for fiscal year 1998, which is the
last fiscal year the Incentive Plan will be in effect. Awards under the amended
Incentive Plan are not yet determinable. If the first award under the amended
Incentive Plan were measured for fiscal year 1996, it would have resulted in the
grant to Mr. Broad of options to acquire 1,480,464 shares of stock at an
exercise price of $38 per share. The actual award for 1997 under the amended
Incentive Plan will be no more than 1,350,000 shares and may be smaller than
this amount, or may not be earned at all. Since it is not known if the Company's
performance as measured under the amended Incentive Plan will exceed the S&P 500
Index Total Return to Shareholders in any year of the Incentive Plan, or if it
does so, by how much, the actual number of shares to be issued under the amended
Incentive Plan is not yet determinable. However, no more than 1,350,000 shares
will be subject to stock options issued with respect to any year of the amended
Incentive Plan; provided, however, that this number may increase to the extent
that an award in a prior fiscal year results in options covering fewer than
1,350,000 shares.
If Mr. Broad's employment terminates during a fiscal year, or in the event
of a "covered transaction," as described in the amended Incentive Plan,
including a sale of substantially all of the Company's assets or a merger of the
Company, he will be entitled to an award based on the
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<PAGE> 23
performance of the Company's Common Stock versus the S&P 500 Index Total Return
to Shareholders through such date, unless his employment was terminated by the
Company for "Cause" or by Mr. Broad without "Good Reason", as such terms are
defined in the amended Incentive Plan.
The Incentive Plan and Options and Restricted Stock Awards thereunder may
be amended by the Committee at any time, subject to Mr. Broad's consent if such
amendment would adversely affect his rights under the Incentive Plan or any such
award.
The Company has registered the shares of stock reserved under the Incentive
Plan with the Securities and Exchange Commission, and intends to register the
additional shares covered by the Incentive Plan Amendment.
The Incentive Plan will be in lieu of future grants of stock options,
restricted stock or other long-term compensation to Mr. Broad, so long as the
Incentive Plan is in effect, except that Mr. Broad will continue to receive his
present salary of $600,000 per year and participate with other executives in the
annual incentive compensation plan and executive perquisites. To the extent that
the annual increase in the market value of the Company's stock exceeds the
annual increase in the S&P 500 Index Total Return to Shareholders, the awards
under the amended Incentive Plan, made in the form of stock options granted at
the then market value, may be significant. The options will be valuable to Mr.
Broad only if the stock price appreciates after the options are granted. The
options will be exercisable for up to ten years, thereby extending past Mr.
Broad's expected retirement date and resulting in the probability that some
portion of the value of this compensation plan will be subject to the
performance of the Company's stock price under Mr. Broad's successor.
For the federal income tax consequences of Options and Restricted Stock
Awards under the Incentive Plan, please see "Federal Income Tax Consequences"
under the "Proposal for Shareholder Approval of the SunAmerica 1997 Employee
Incentive Stock Plan" above.
VOTE REQUIREMENT
Approval of the Incentive Plan Amendment requires the affirmative vote of a
majority of the votes cast by the holders of Common Stock and Class B Stock,
voting as a single class with a quorum present. For purposes of the vote on the
Incentive Plan Amendment, abstentions and broker non-votes have no effect on the
number of affirmative votes needed to approve the proposed amendment. In
addition, because Mr. Broad is the sole participant in the Incentive Plan, and
with his concurrence, the Board has conditioned approval on the affirmative vote
of a majority of the votes cast on the matter, other than the votes represented
by the shares as to which Mr. Broad has or shares the power to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE INCENTIVE PLAN
AMENDMENT.
20
<PAGE> 24
PROPOSAL FOR SHAREHOLDER APPROVAL OF
THE NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
The Board of Directors has adopted, subject to shareholder approval, the
Non-Employee Directors' Stock Option Plan (the "Director Plan"). The purposes of
the Director Plan are to attract and retain the services of experienced and
knowledgeable non-employee directors, to encourage eligible directors of the
Company to acquire a proprietary and vested interest in the growth and
performance of the Company, and to generate an increased incentive for directors
to contribute to the Company's future success and prosperity, thus enhancing the
value of the Company for the benefit of its shareholders.
A description of the Director Plan is set forth below. This description is
qualified by reference to the full text of the Director Plan, which is set forth
as Appendix D to this Proxy Statement. The Board of Directors is submitting the
Director Plan for shareholder approval because it believes that the shareholders
should be able to determine whether the plan is adopted. Also, such approval is
required by the rules of the New York Stock Exchange. If the Director Plan is
not approved by shareholders, it will not be adopted.
TYPE OF OPTIONS. The Director Plan authorizes the grant of nonqualified
stock options. "Nonqualified" stock options are not intended to qualify as
"incentive" stock options under Section 422 of the Code. Stock options entitle
the holder to purchase shares of common stock of the Company at an exercise
price and subject to such other terms as are set forth in the option agreement.
AUTHORIZED SHARES AND ADJUSTMENTS. The Director Plan authorizes 250,000
shares of Common Stock for grant pursuant to options. If a stock option is
terminated without issuance of shares, the unissued shares subject to such award
shall again be available for grant under the Director Plan. The number and kind
of shares authorized under the Director Plan and the number and kind of shares
comprised in an award to a director, as described below under "Annual Grants",
shall be appropriately adjusted for any increase or decrease in the number of
outstanding shares resulting from certain corporate events, such as a stock
dividend, stock split, reorganization, spinoff, merger or reclassification of
shares.
ELIGIBILITY. The award of options under the Director Plan is limited to
non-employee directors of the Company. There are currently eight such eligible
directors.
ADMINISTRATION. The Director Plan is administered by the Board of
Directors. Subject to the terms of the Director Plan, the Board shall have the
power to interpret the provisions and supervise the administration of the
Director Plan.
TERMS OF OPTIONS. Two types of option awards are granted under the Director
Plan: grants upon a non-employee director's being elected or reelected to the
Board of Directors, and options granted in lieu of cash compensation. Each of
these is described below. A Director may make payment of the option price in
cash, common stock of the Company, or such other consideration as the Board of
Directors may specify, or any combination thereof, having a fair market value on
the exercise date equal to the total option price. The closing price of the
Common Stock on December 20, 1996 was $43.50 per share.
ANNUAL GRANTS. Each non-employee Director who is elected to the Board of
Directors at an Annual Meeting of Shareholders shall be granted an option to
acquire 1,000 shares as of such date and shall be granted an option to acquire
1,000 shares as of each subsequent Annual Meeting at which he or she is
re-elected. The exercise price will be the fair market value of the Common Stock
21
<PAGE> 25
of the Company on the date of grant. Annual option grants will become
exercisable in equal installments on each of the first three anniversaries of
the date of grant, and will be exercisable thereafter until the tenth
anniversary of the date of grant.
OPTIONS IN LIEU OF CASH COMPENSATION. In addition to the annual grants
described above, an option will be granted to any non-employee director who
prior to his or her election or reelection to the Board of Directors files with
the Company an election to receive stock options in lieu of all or a portion of
the annual retainer to be earned for a period of 12 months beginning on such
date of election or reelection to the Board of Directors. Such options will be
granted as of the date of Annual Meeting of Shareholders at which such director
is elected or reelected. With respect to each such option, the number of option
shares will be equal to (a) 2.5 times the elected portion of the director's
annual retainer for the applicable year divided by (b) the fair market value of
the Common Stock of the Company on the date of the grant. The exercise price
will be the fair market value of the Common Stock of the Company on the date of
grant. The option will become exercisable in equal installments on the last day
of each of the four fiscal quarters of the Company ending after the date of the
grant and will expire ten years from the date of grant.
TERMINATION OF SERVICE AS A DIRECTOR. If a director's service is terminated
by death or disability, the director or his or her beneficiary will have the
right to exercise any option to the extent it was exercisable at the date of
such termination of service and, with respect to any option or a portion of the
option that was not exercisable, the director or his or her beneficiary will
have the right to exercise a prorated number of shares, based on the portion of
the vesting period served prior to such termination. The right to exercise an
option to such extent will continue for ten years from the date of grant. If a
Director's service is terminated for any other reason, he or she shall retain
the right to exercise any option, to the extent it was exercisable on the date
of termination, for 180 days from the date of such termination.
CHANGE OF OWNERSHIP. The Director Plan provides that upon a Change of
Ownership of the Company, as defined in the Director Plan, all outstanding
options shall become immediately exercisable.
NEW PLAN BENEFITS. If the Director Plan is approved by shareholders, the
non-employee directors as a group will receive the option grants set forth
below, assuming that each such director standing for election is elected, at an
exercise price equal to the fair market value of the Common Stock on the date of
the Annual Meeting of Shareholders:
<TABLE>
<CAPTION>
NAME OPTIONS
------------------------------------------------------------ -------
<S> <C>
William F. Aldinger, III.................................... 1,000
Karen Hastie-Williams....................................... 1,000
David O. Maxwell............................................ 1,000
Barry Munitz................................................ 1,000
Lester Pollack.............................................. 1,000
Carl E. Reichardt........................................... 1,000
Sanford C. Sigoloff......................................... 1,000
Harold M. Williams.......................................... 1,000
Non-Employee Director Group................................. 8,000
</TABLE>
The number of additional options that any non-employee director may receive
in lieu of an annual retainer is a function of such director's election and the
Common Stock market value at date of grant and is thus not ascertainable.
22
<PAGE> 26
AMENDMENT AND TERMINATION. The Board of Directors may amend or discontinue
the Director Plan at any time, provided that no amendment may impair the rights
of an option holder without his or her consent, and further provided that any
amendment shall be subject to approval of the stockholders if such approval is
required to comply with or qualify for any tax or regulatory requirement with
which or for which the Board of Directors deems it necessary or desirable to
comply or qualify.
TAX CONSEQUENCES. The following are the federal tax consequences generally
arising with respect to awards granted under the Director Plan. The grant of an
annual stock option will create no tax consequences for the recipient or the
Company. Similarly, with respect to options granted in lieu of cash
compensation, it is intended that neither the election to receive such an option
nor the grant of such an option will create any immediate tax consequences for
the recipient or the Company. Upon exercise of an option, the optionee will
recognize ordinary income in the amount by which the market value of the Company
common stock purchased, valued on the date of exercise, exceeds the exercise
price of the Option, and the Company will generally be entitled to a deduction
of the same amount.
The Director Plan is not qualified under Section 401(a) of the Code and is
not subject to any provisions of ERISA.
THE COMPANY RECOMMENDS A VOTE FOR ADOPTION OF THE DIRECTOR PLAN.
23
<PAGE> 27
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 COMPENSATION(3)
- ----------------------- ------ -------- ---------- --------------- ---------- --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Eli Broad, Chairman 1996 $600,000 $2,332,320 $ 90,665 $9,376,272 740,232 $ 35,245
President and CEO 1995 600,000 1,527,720 94,043 4,200,624 609,768 -- 36,764
1994 600,000 1,205,520 79,727 6,168,750 1,350,000 -- 38,481
Jay S. Wintrob, 1996 $375,000 $1,360,520 -- -- 60,000 -- 19,509
Vice Chairman(4) 1995 375,000 891,170 -- $3,237,500 75,000 -- 20,342
1994 352,083 703,220 -- 1,361,250 67,500 -- 20,328
Joseph M. Tumbler, 1996 $375,000 $1,360,520 -- -- 40,000 -- 12,750
Vice Chairman(5) 1995 149,279 852,903 -- $3,656,250 150,000 -- 135,250
1994 -- -- -- -- -- -- --
Gary W. Krat, 1996 $250,000 $ 841,289 -- -- 20,000 -- 10,000
Senior Vice 1995 250,000 924,330 -- $1,369,375 30,000 -- 10,417
President(6) 1994 250,000 761,841 -- -- 37,000 -- 22,254
Michael Fowler, 1996 $200,000 $2,726,348 -- -- -- -- 7,500
Vice President(7) 1995 160,000 2,896,048 -- $ 512,500 -- -- 6,672
1994 160,000 1,553,626 -- -- -- -- 6,837
</TABLE>
- ---------------
(1) The amount indicated for Mr. Broad represents the incremental cost to the
Company of providing executive medical insurance, group term life insurance,
expenses relating to financial planning, 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 316,744 shares of restricted stock were awarded in fiscal year
1996 under the 1988 Employee Stock Plan and the Incentive Plan. As of the
end of fiscal year 1996, the aggregate restricted stock holdings consisted
of 2,777,938 shares worth $96,186,103 at the then current market value (as
represented by the closing price of the Company's Common Stock on September
30, 1996), without giving effect to the diminution of value attributable to
the restriction on such stock. Such amount includes $25,018,709 for Mr.
Broad (722,562 shares, not including deferred shares described below),
$13,300,363 for Mr. Wintrob (384,126 shares), $7,790,625 for Mr. Tumbler
(225,000 shares), $6,128,625 for Mr. Krat (177,000 shares) and $1,038,750
for Mr. Fowler (30,000 shares). 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, as adjusted for relevant stock splits, of the
shares awarded. Regular dividends are paid on the restricted stock and the
deferred shares reported on this column.
In 1994, under the terms of the Long-Term Performance-Based Incentive Plan,
Mr. Broad was awarded 450,000 deferred shares. 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
24
<PAGE> 28
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.
The deferred shares award is indicated in the chart above, although Mr.
Broad will not receive the shares until some time in the future.
Under the 1995 Performance Stock Plan and the 1988 Employee Stock Plan, the
Company may award "super shares" which represent the opportunity to earn
additional shares of Common Stock upon the achievement of specified
enhanced performance objectives. These enhanced performance objectives
exceed the performance objectives required for a lapse of restrictions on
the restricted shares otherwise awarded under the plans. During fiscal year
1995 Messrs. Tumbler and Wintrob each received a super share award of
112,500 shares, Mr. Krat received a super share award of 53,700 shares and
Mr. Fowler received a super share award of 15,000 shares. An award of super
shares does not entitle the holder to any rights of ownership and dividends
are not paid on these shares. The super share awards are not indicated in
the chart above. In order for the Company to obtain more favorable
accounting treatment, certain outstanding restricted stock and "super
share" awards that provided for vesting solely on the achievement of
performance objectives have been amended to provide for vesting upon
continued employment through the tenth anniversary of such amendment, with
accelerated vesting upon satisfaction of the performance objectives.
(3) 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. The amount indicated for Mr. Tumbler in
1995 represents a one time moving allowance of $100,000 and other costs paid
by the Company to cover incidental relocation expenses incurred when he
joined the Company.
(4) Mr. Wintrob and the Company have entered into an agreement which becomes
effective if there is a "change of control," as described in the agreement,
of the Company prior to April 17, 2000. The agreement provides for Mr.
Wintrob's continued employment with the Company for five years following
such change of control. If Mr. Wintrob's employment is terminated during
such five year period by the Company "without cause" or by Mr. Wintrob for
"good reason," each as defined in the agreement, Mr. Wintrob's restricted
stock and stock options will vest and he will receive severance, based on
the remaining term of the agreement, equal to a minimum of one and a maximum
of two times his average annual cash compensation earned during the
preceding three fiscal years.
(5) Mr. Tumbler joined the Company in May 1995 and therefore there is no
compensation information to disclose for fiscal year 1994. Mr. Tumbler
received a one-time bonus in the amount of $500,000 when he joined the
Company which is reflected in the Bonus column for fiscal year 1995. Mr.
Tumbler is currently employed under an agreement with the Company which
provides that if his employment is terminated by the Company without cause,
as defined in his agreement, he will receive a lump-sum payment of $375,000
and monthly payments in the amount of $31,250 per month for up to 24 months.
(6) Mr. Krat is currently employed under an agreement with the Company through
fiscal year 1997 pursuant to which he is eligible for incentive compensation
tied to the pretax income of the Company's broker-dealers and sales by the
broker-dealers' 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.
25
<PAGE> 29
(7) Mr. Fowler is currently employed under an agreement with the Company
pursuant to which he is eligible for incentive compensation tied to the
pretax profits of the business unit he manages. This portion of Mr. Fowler's
incentive compensation for fiscal 1996 is payable 50% on September 30, 1996,
30% on September 30, 1997 and 20% on September 30, 1998 and requires
continued employment with the Company through the payout date. The portion
of Mr. Fowler's incentive compensation for fiscal 1995 which was tied to the
pretax profits of the business unit he manages was payable 50% on September
30, 1995, 30% on September 30, 1996 and 20% on September 30, 1997. The
portion of Mr. Fowler's incentive compensation for fiscal 1994 which was
tied to the pretax profits of the business unit he manages was payable 67%
on September 30, 1994, 25% on September 30, 1995 and 8% on September 30,
1996.
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. If
shareholders approve the 1997 Employee Incentive Stock Plan, no further awards
will be made under the Company's 1988 Employee Stock Plan.
The SunAmerica 1997 Employee Incentive Stock Plan, the Long-Term Plan and
the Director Plan each contain change of ownership provisions as described in
each respective plan document set forth in Appendices A, B and D, respectively.
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 or
the Board of Directors or other Directors nominated by three-quarters of the
current members of 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) 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 pretax 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.
The Company has provided financing to pay the amount of taxes due upon the
vesting of restricted stock awards. The loans provided for interest at the rate
of 8% per annum. The Company made a loan to James R. Belardi, Executive Vice
President, during the fiscal year 1995 which was repaid during fiscal year 1996.
The maximum loan outstanding during fiscal year 1996 was $208,200.
26
<PAGE> 30
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT
% OF TOTAL ASSUMED ANNUAL RATES OF
OPTIONS EXERCISE OR STOCK PRICE APPRECIATION
OPTIONS GRANTED TO BASE PRICE FOR OPTION TERMS(4)
GRANTED(#) EMPLOYEES IN PER SHARE EXPIRATION ---------------------------
NAME (1)(2) FISCAL YEAR ($/SH)(3) DATE 5%($) 10%($)
- ------------------- ---------- ------------ ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Eli Broad 740,232 41.0% $ 38.00 10/14/06 $17,691,545 $44,828,450
Jay S. Wintrob 60,000 3.3% 30.69 8/01/06 1,158,000 2,934,600
Joseph M. Tumbler 40,000 2.2% 30.69 8/01/06 772,000 1,956,400
Gary W. Krat 20,000 1.1% 30.69 8/01/06 386,000 978,200
Michael Fowler -- -- -- N/A N/A N/A
</TABLE>
- ---------------
(1) All options granted in 1996, other than to Eli Broad, were awarded under the
1988 Employee Stock Plan and are exercisable in cumulative 20% installments
commencing one year from the 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 year 1996. Pursuant to the terms of the plan, Mr.
Broad's options were granted following the 1996 fiscal year end. The options
granted to Mr. Broad are exercisable immediately.
(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 the fair market value of the Common Stock at the
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 -- -- 3,605,700 78,000 $63,215,606 $ 1,983,210
Jay S. Wintrob -- -- 555,000 199,500 16,633,365 2,991,608
Joseph M. Tumbler -- -- 30,000 160,000 550,050 2,357,600
Gary W. Krat -- -- 191,100 96,500 5,401,049 1,684,324
Michael Fowler -- -- 13,500 3,000 390,848 83,625
</TABLE>
- ---------------
(1) Represents the difference between the closing price of the Company's Common
Stock on September 30, 1996 and the exercise price of the options.
27
<PAGE> 31
PERSONNEL, COMPENSATION AND STOCK PLAN COMMITTEE
REPORT TO SHAREHOLDERS ON EXECUTIVE COMPENSATION
The report of the Personnel, Compensation and Stock Plan Committee (the
"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 1934
Act, 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 performance as measured by the value
delivered to shareholders. This belief has been adhered to by developing
incentive pay programs which provide competitive compensation and reflect
Company or business unit performance in their payout. 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 should provide incentives for
consistent high performance and 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 purposes of establishing these levels,
the Company compares compensation data of companies that compete in the
Company's primary lines 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 near the median of
relevant industry levels. Consistent with the philosophy of linking compensation
to financial results, in 1994 the Company adopted a biannual
28
<PAGE> 32
salary review process for its executives. Hence, in 1996 the Company's
executives did not receive base salary increases. When base salaries for
executives are reviewed by the Committee on a biannual basis, such base salaries
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
competitive pay levels.
In 1996, 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 approved by shareholders in 1994,
Mr. Broad's base salary will be held at $600,000 through 1998.
ANNUAL INCENTIVES
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 the generation of consistent earnings
growth. 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 each fiscal year. 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 in 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.
In 1996, 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. Mr. Broad's
portion of the pool has remained unchanged since 1994. At the same time because
of substantially increased earnings and a higher return on equity, the total
award to Mr. Broad for fiscal year 1996 increased 52.7% from his award for
fiscal year 1995.
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, SunAmerica Affordable Housing, 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 sold by the Company's broker-dealers and pretax
income of the Company's broker-dealers. The incentive pay to Messrs. Fowler and
Krat is a function of the success of the business units each manages, which
success contributes directly to the short- and long-term success and
profitability of the Company and, hence, its value to the shareholders.
LONG-TERM INCENTIVES
Provided through annual grants of stock options and through periodic stock
and stock unit ("phantom 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 and phantom stock awards are subject to
performance vesting criteria established by the Committee, which generally
require the Company to meet specified performance targets with regard to
earnings growth and
29
<PAGE> 33
total shareholder return before such awards are earned by the executives. In
certain cases, in order for the Company to obtain more favorable accounting
treatment for the awards, the Committee has granted stock and phantom stock
awards which vest over a substantial period of time based on continued
employment, with achievement of the performance criteria accelerating the time
at which such awards would otherwise be earned.
Stock options are granted at the prevailing market value and will only have
value if the Company's stock price increases. Generally, stock option grants
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 and phantom stock to be
granted based on the expected value equal to the 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. Larger
than normal option and phantom stock grants also may be awarded to recognize a
promotion, outstanding sustained performance by an individual, at the time of
recruitment, or otherwise as a retention device for a valued employee.
CEO COMPENSATION
The Company's Board of Directors reviewed the Chairman, President 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 lines 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, in 1994 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 in which Mr. Broad's shares did not participate, approved the
Incentive Plan for Mr. Broad. The Incentive Plan is in lieu of 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 depend on
the shareholder returns in that the restricted shares awarded under the
Incentive Plan will be subject to a holding period, during which period the
shares remain forfeitable, which expires on Mr. Broad's death, disability,
retirement, termination of employment by the Company without cause, termination
of employment by Mr. Broad with good reason, or upon a change of ownership of
the Company. Therefore, during the period of his continued employment, Mr.
Broad's restricted shares continue to be subject to market risk. Further, the
options will be valuable to Mr. Broad only if the stock price appreciates after
the options are granted. For fiscal 1996, Mr. Broad received an award under the
Incentive Plan of an option grant of 740,232 shares and 246,744 restricted
shares.
In order to reduce the accounting charges resulting from the issuance of
restricted shares under the Incentive Plan, the Company is proposing for
shareholder approval certain amendments to the Incentive Plan. Under the
proposed amendments, future grants of restricted shares under the Incentive Plan
will be suspended, and all awards under the Incentive Plan, if earned based on
the Company's outperforming the S&P 500 Index, will be paid exclusively in stock
options. The exercise
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price of the options will continue to be the fair market value of the underlying
stock on the date of the grant, and the number of shares subject to the options
will be calculated in the manner currently provided under the Incentive Plan for
the portion of any earned award paid in stock options.
TOTAL COMPENSATION
In aggregate, 82.7% of the named executives' cash compensation for 1996 is
from incentives directly tied to Company performance. The Chairman, President
and Chief Executive Officer received 79.5% 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
employed by 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 Budget 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 PLAN COMMITTEE
David O. Maxwell, Chairman
Ronald J. Arnault
Karen Hastie-Williams
Carl E. Reichardt
Harold M. Williams
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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 500 Index and the S&P Financial Index during
the 1996 fiscal year.
SUNAMERICA INC. STOCK PRICE PERFORMANCE
[GRAPHIC CHART]
9/91 9/92 9/93 9/94 9/95 9/96
---- ---- ---- ---- ---- ----
SunAmerica Inc. $100 $149 $299 $279 $427 $713
S&P 500 $100 $111 $125 $130 $169 $203
S&P Financial $100 $117 $160 $148 $210 $263
*Total Return assumes $100 invested on September 30, 1991 in SunAmerica
Inc., S&P 500 Index and S&P Financial Index, including reinvestment of
dividends.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In August and September 1996, the Company and certain of its subsidiaries
entered into a series of agreements with a special purpose vehicle formed to
invest in a portfolio consisting primarily of high yield debt securities (the
"CBO Issuer"). Of the $500 million aggregate par amount of securities sold by
the CBO Issuer, $64.275 million were purchased directly or indirectly by the
Company and certain of its life insurance subsidiaries. Simultaneously, Mr.
Broad, Mr. Wintrob and certain other key employees purchased approximately $3.5
million of securities sold by the CBO Issuer. At the same time, the Company and
various of its life insurance subsidiaries sold at fair market value
approximately $240 million of high yield debt securities then held by such
companies to the CBO Issuer. A portion of these securities had been purchased
specifically for sale to the CBO Issuer. In addition, a subsidiary of the
Company acts as investment adviser to the CBO Issuer. It is the Company's belief
that the portions of this transaction which involved related parties were on
terms no less favorable from the Company's perspective than those that would
have been available from unaffiliated parties.
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, 1996, are included on pages 21 through 49 of the Company's 1996
Annual Report to Shareholders, which is being mailed to all stockholders of
record concurrently herewith. 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 1996. 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 1998 ANNUAL MEETING
Any proposal of a shareholder intended to be presented at the Company's
1998 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 September 1, 1997.
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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, 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 will use the services of Corporate Investor Communications, Inc., a
professional soliciting organization, to assist in obtaining in person or by
proxy the largest number of Shareholder vote as is possible. The Company
estimates its expenses for solicitation 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.
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APPENDIX A
SUNAMERICA
1997 EMPLOYEE INCENTIVE STOCK PLAN
SECTION 1. Purpose. The purpose of the SunAmerica 1997 Employee Incentive
Stock Plan (the "Plan") is to promote the success of SunAmerica Inc. (the
"Company") by providing a method whereby key employees of the Company and its
subsidiaries and certain other individuals may be encouraged to invest in the
Common Stock, $1.00 par value, of the Company, increase their proprietary
interest in its business, remain in the employ of the Company or its
subsidiaries, and increase their personal interests in the continued success and
progress of the Company.
SECTION 2. Definitions. As used in this Plan, the following terms shall
have the indicated meanings:
Adjusted Pretax Income: The pretax income of the Company or a selected
Subsidiary, increased by any interest expense on subordinated debt payable
to the Company, and reduced by the product of (a) and (b), where (a) is a
specified hurdle rate and (b) is the shareholders' equity of the Company or
the selected Subsidiary at the beginning of the Performance Period,
increased by the book value of any subordinated debt payable to the
Company, also at beginning of the Performance Period.
Award: An award of Restricted Shares under Section 7 and a Stock Unit
Award granted pursuant to Section 8.
Beginning Market Value: The average closing price of a share 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.
Book Value: The product of (a) divided by (b), where (a) is Adjusted
Shareholders' Equity, which is defined as the sum of total shareholders'
equity as presented in the financial statements of the Company or any
selected subsidiary, less the liquidation preference of preferred stock
(except those issues of preferred stock that are convertible to common
stock and are treated as common stock equivalents in the Company's
computation of earnings per share), plus the book value of any issue of
debt convertible to common stock that is treated as a common stock
equivalent in the Company's computation of earnings per share, and (b) is
the number of common and Class B shares outstanding on the specified
measurement date, adjusted to include the number of shares that would be
issued on such measurement date on an assumed conversion of any issue
convertible to common stock.
Code: The Internal Revenue Code of 1986, as amended.
Committee: The Personnel, Compensation and Stock Plan Committee of the
Board.
Covered Officer: At any date, (i) any individual who, with respect to
the previous fiscal year of the Company, is a "covered employee" of the
Company within the meaning of Section 162(m); provided, however, that the
term "Covered Officer" shall not include any such individual who is
designated by the Committee, in its discretion, at the time of grant of any
Option or Award or at any subsequent time, as reasonably expected not to be
such a "covered
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employee" with respect to the taxable year of the Company in which the
Company's deduction, if any, in respect of such Option or Award arises, and
(ii) any individual who is designated by the Committee, in its discretion,
at the time of grant of any Option or Award or at any subsequent time, as
reasonably expected to be such a "covered employee" with respect to such
taxable year of the Company.
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.
Ending Market Value: The average closing price of a share 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 Performance Options, Restricted
Shares or Stock Unit Awards, a schedule which is a basis for establishing
the extent to which an Option may be exercisable, or the number of shares
of Stock or Stock Unit Awards which may be released from the restrictions
of an Award or paid pursuant to the satisfaction of payment conditions
thereunder, unless such vesting is accelerated, such restrictions are
earlier released or such payment conditions are earlier satisfied due to
the achievement of Performance Objectives or as otherwise provided in the
Plan or in the applicable Option or Award Agreement. The Committee, in its
discretion, shall determine whether a Performance Option, Restricted Share
or Stock Unit Award shall be subject to a Lapsing Formula. A Lapsing
Formula may differ from Participant to Participant and from Award to Award.
Limited Stock Appreciation Right: A right granted pursuant to Section
6(c) to receive cash in certain circumstances with respect to a related
Option.
Net Worth: Total shareholders' equity of the Company or any selected
subsidiary as presented in the consolidating financial statements of the
Company.
Option: A right to buy Stock granted pursuant to Section 6(a) or (b).
Option Agreement: The agreement or other instrument evidencing the
grant of an Option pursuant to Section 6(a) or (b), which may, but need
not, be executed or acknowledged by a Participant.
Participant: A key employee of the Company and its subsidiaries or
other individual who, in the Committee's judgment, can make substantial
contributions to the Company's long-term profitability and value, who in
either case has been selected by the Committee to receive an award
hereunder.
Performance Objectives: Performance Objectives shall be stated as
specified levels of (i) Earnings Per Share, (ii) Total Return to
Shareholders as measured against the S&P Index Total Return to Shareholders
(or other appropriate index selected by the Committee), (iii) Return on
Equity (or return on investment), (iv) growth in Book Value, (v) growth in
Net Worth, (vi) Stock price, (vii) Pretax Earnings (or after tax earnings)
of the Company or any Subsidiary, division, department or operation
thereof, (viii) Adjusted Pretax Income (or after tax income) of the Company
or any Subsidiary, (ix) sales of any of the financial products offered by
the Company's Subsidiaries, and (x) performance of any of the Company's
mutual
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funds as compared with appropriate benchmarks, or a combination of any of
the foregoing as determined by the Committee. In the case of Participants
other than Covered Officers, Performance Objectives may include such other
criteria as the Committee may determine in its discretion as the
appropriate performance measures for the Company or of any Subsidiary or
division, department or operation of the Company. With reference to a
particular Award of Performance Options, Restricted Shares or Stock Unit
Awards, the threshold, target and super Performance Objectives are the
criteria established by the Committee which, if achieved, accelerate or
cause the vesting of a specified portion of the Performance Options, the
release from restrictions of a specific percentage of the Restricted Shares
or the payment of a specified percentage of Stock Unit Awards. The
Performance Objectives shall be specified in an Option or Award Agreement
and may differ from Participant to Participant and from award to award.
Performance Objectives may relate to separate performance objectives for
the Company or any Subsidiary or for any division, department or operation
of the Company or any Subsidiary.
Performance Option: An Option, the exercisability of which is
conditioned or accelerated upon the satisfaction of Performance Objectives
in accordance with Section 6(b).
Performance Period: With reference to a particular Performance Option,
Option or Award, the period of time within which the Performance Objectives
are to be achieved, as determined by the Committee. The Performance Period
may differ from Participant to Participant and from award to award.
Plan: The SunAmerica 1997 Employee Incentive Stock Plan, as it may be
amended from time to time.
Pretax Earnings: The pretax earnings of the Company or any selected
subsidiary as presented in the consolidating financial statements of the
Company.
Restricted Shares: An award granted under Section 7.
Return on Equity: The sum of each fiscal year's income before the
cumulative effect of any change in accounting principles and extraordinary
items for a Performance Period, divided by Adjusted Shareholders' Equity at
the beginning of each fiscal year in the Performance Period, further
adjusted to exclude net unrealized gains and losses on debt and equity
securities available for sale.
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 and including the last day of the Performance Period.
Section 162(m): Section 162(m) of the Code and the rules and other
authorities thereunder promulgated by the Internal Revenue Service of the
Department of the Treasury.
Stock: Common Stock, par value $1.00 per share, of SunAmerica Inc.
Stock Restriction Agreement: With respect to a particular Award under
Section 7 or 8, the agreement or other instrument evidencing the grant of
such Awards, which may, but need not, be executed or acknowledged by a
Participant.
Stock Unit Award: An award granted under Section 8.
Subsidiary: A subsidiary of SunAmerica Inc. within the meaning of
Section 425(f) of the Code.
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Substitute Award: An Option or Award granted in assumption of, or in
substitution for, an outstanding award previously granted by a company
acquired by the Company or with which the Company combines.
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 Option or Award.
Total Return to Shareholders: The quotient, expressed as a percentage
of (a) the amount by which the Ending Market Value of Stock exceeds its
Beginning Market Value divided by (b) the 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.
SECTION 3. Administration. (a) The Committee shall have full power and
authority, subject to such orders or resolutions not inconsistent with the
provisions of the Plan as may from time to time be issued or adopted by the
Board, to grant to eligible persons Restricted Stock Awards, Stock Unit Awards,
Options and Limited Stock Appreciation Rights pursuant to the provisions of the
Plan, to fix the exercise price and other terms of Options, to fix the terms of
any Restricted Stock Award or Stock Unit Award in a manner consistent with the
terms of Section 7 or 8, to prescribe, amend and rescind rules and regulations,
if any, relating to the Plan, to interpret the provisions of the Plan, Stock
Restriction Agreements and Option Agreements issued under the Plan, to amend
such Option Agreements and Stock Restriction Agreements from time to time
subject to the provisions of the Plan, and to supervise the administration of
the Plan. No member of the Committee shall be eligible to receive Awards or
Options.
(b) All decisions made by the Committee pursuant to the provisions of the
Plan and related orders or resolutions of the Board shall be final, conclusive
and binding on all persons, including the Company, its stockholders, employees
and optionees.
(c) Each person who is or shall have been a member of the Committee or of
the Board shall be indemnified and held harmless by the Company from any loss,
cost, liability or expense that may be imposed upon or reasonably incurred by
him or her in connection with any claim, action, suit or proceeding to which he
or she may be a party by reason of any action taken or any failure to act under
the Plan. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or Bylaws, or as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
SECTION 4. Shares Subject to the Plan. (a) The shares of Stock to be
delivered upon exercise of Options granted under the Plan or pursuant to Awards
may be made available from the authorized but unissued shares of the Company.
(b) Subject to adjustments made pursuant to the provisions of Section 4(c),
the aggregate number of shares of Stock to be delivered pursuant to Awards and
upon exercise of all Options which may be granted under the Plan shall not
exceed 7,500,000 shares of Stock composed of 1,841,950 shares of Stock remaining
available for grant under the Company's 1988 Employee Stock Plan (the "1988
Plan") plus 5,658,050 additional shares. If an Option or Award granted under the
Plan or the 1988 Plan shall expire or terminate for any reason, or if an Award
granted under either Plan is forfeited, the shares subject to but not delivered
under such Option or forfeited Award shall be available for other Awards or
Options and associated Limited Stock Appreciation Rights granted
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to the same Participant or other Participants. In the event that any Option or
other Award granted hereunder is exercised through the delivery of shares of
Stock, or in the event that the holder's tax liability arising out of such
Option or Award is satisfied by the withholding of shares of Stock by the
Company, the number of shares available for Options and Awards under the Plan
shall be increased by the number of shares so surrendered or withheld.
Notwithstanding the foregoing and subject to adjustment as provided in paragraph
(c) below, the number of shares in respect of which Options, Limited Stock
Appreciation Rights and Awards of Restricted Stock and Stock Units may be
granted under the Plan to any Participant in any year shall not exceed 450,000.
(c) In the event that the Committee shall determine that any stock
dividend, extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares, warrants or
rights offering to purchase Stock at a price substantially below fair market
value, or other similar corporate event affects the Stock such that an
adjustment is required in order to preserve the benefits or potential benefits
intended to be made available to Participants under this Plan, then the
Committee shall, in its sole discretion, subject to approval by the Board, and
in such manner as the Committee may deem equitable, adjust any or all of (1) the
number and kind of shares which thereafter may be awarded or optioned and sold
or made the subject of Limited Stock Appreciation Rights under the Plan, (2) the
number and kind of shares subject to outstanding Options, Awards and Limited
Stock Appreciation Rights, and (3) the option price with respect to any of the
foregoing and/or, if deemed appropriate, make provision for a cash payment to a
Participant, including to reflect such an event occurring prior to an Award, the
grant of which was intentionally deferred in anticipation of such event;
provided, however, that the number of shares subject to any Option or Award
shall always be a whole number.
SECTION 5. Eligibility and Extent of Participation. (a) The persons
eligible to receive Awards, Options and associated Limited Stock Appreciation
Rights under the Plan shall consist of 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.
(b) Subject to the limitations of the Plan, the Committee shall, after such
consultation with and consideration of the recommendations of management as the
Committee considers desirable, select from eligible persons those Participants
to be granted Options and Awards and determine the time when each Option and
Award shall be granted, the number of shares of Stock subject to each Option and
Award and whether Limited Stock Appreciation Rights should be granted in
connection with such Option, the number of shares of Stock for each Award and
the restrictions associated with such Option or Award. Both Options and Awards
may be granted to the same Participant.
SECTION 6. Grants of Options and Limited Stock Appreciation Rights.
(a) Grant of Options. Options to purchase shares of Stock may be granted to
Participants by the Committee from time to time at its sole discretion, provided
that grants of Performance Options shall generally be made at the beginning of a
Performance Period but may, in the Committee's discretion, be made from time to
time during the term of a Performance Period. Each Option shall be evidenced by
an Option Agreement which shall contain such terms and conditions as may be
approved by the Committee. The Committee in its sole discretion may determine
the conditions, if any, upon which the Option will become exercisable, including
without limitation whether any Performance Option shall be subject to a Lapsing
Formula. Neither the execution of any Option Agreement nor the granting of any
Option evidenced thereby shall constitute or be evidence of any agreement or
other understanding, express or implied, on the part of the Company or any
Subsidiary to employ an individual for any specific period.
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(b) Performance Options. Each Performance Option shall be subject to
Performance Objectives which may be achieved by the Company during the
Performance Period with respect to which the grant is made. At the discretion of
the Committee, a Performance Option may be subject to a Lapsing Formula. The
Committee shall establish the Performance Objectives and the Lapsing Formula, if
any, prior to the beginning of each Performance Period. Once established,
Performance Objectives and Lapsing Formulas may not be changed, adjusted or
amended during the term of a Performance Period or thereafter, except as
provided below. The Option Agreement with respect to any Performance Options
shall specify the Lapsing Formula, if any, the Performance Period and the
Performance Objectives. After the close of, and, if appropriate, during the term
of, each Performance Period, and at appropriate times based on the Lapsing
Formula, if any, the Committee shall determine whether the Performance
Objectives have been satisfied with respect to a portion or all of the shares of
Stock covered by the Performance Option. The Committee may make adjustments or
modifications, and its determination thereof shall be conclusive, in the Lapsing
Formula, Performance Objectives or Performance Period to give effect to the
intent of this Plan in connection with any event affecting the performance
criteria established as the Performance Objectives, including without
limitation, any reorganization, recapitalization, merger, consolidation,
offering of additional shares of Stock or other changes in the Company's
shareholders' equity by means other than earnings, or any similar event. No such
adjustment shall be made if it would reduce the benefits otherwise accruing to
existing Participants under the Plan.
(c) Grant of Limited Stock Appreciation Rights in the Event of Change of
Ownership. If deemed by the Committee to be in the best interests of the
Company, any Option granted on or after the effective date of the Plan may
include a Limited Stock Appreciation Right at the time of grant of the Option;
also, the Committee may grant a Limited Stock Appreciation Right with respect to
any unexercised Option at any time after granting such Option prior to the end
of its term, provided such Option was granted after the effective date of the
Plan. Such Limited Stock Appreciation Rights shall be subject to such terms and
conditions not inconsistent with the Plan as the Committee shall impose,
provided that:
(1) A Limited Stock Appreciation Right shall be exercisable only
during the 91 day period specified in the last sentence of Section 9(a);
and
(2) A Limited Stock Appreciation Right shall, upon its exercise,
entitle the optionee to whom such Limited Stock Appreciation Right was
granted to receive an amount of cash equal to the amount by which the
"Offer Price per Share" (as such term is hereinafter defined) shall exceed
the exercise price of the associated Option, multiplied by the number of
shares of Stock with respect to which such Limited Stock Appreciation Right
was exercised. Upon the exercise of a Limited Stock Appreciation Right, any
associated Option shall cease to be exercisable to the extent of the shares
of Stock with respect to which such Limited Stock Appreciation Right was
exercised. Upon the exercise or termination of an associated Option, any
related Limited Stock Appreciation Right shall terminate to the extent of
the shares of Stock with respect to which such associated Option was
exercised or terminated.
The term "Offer Price per Share" as used in this Section 6(c) shall mean
with respect to a Limited Stock Appreciation Right the higher of (i) the fair
market value per share of Stock on the date of exercise of such Limited Stock
Appreciation Right or (ii) the highest price per share for Stock paid or to be
paid in the transaction, if any, giving rise to the event specified in clauses
(1) or (2) (as the case may be) of Section 9(a) which triggered the
exercisability of such Limited Stock Appreciation Right. For purposes of clause
(ii) above, any securities or property which are part of the consideration paid
or to be paid in such transactions shall be valued in determining the Offer
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Price per Share at the highest of (A) the valuation placed on such securities or
property by the company, person or other entity engaging in such transaction, or
(B) the valuation placed on such securities or property by the Committee.
(d) Option Price. The price at which each share of Stock may be purchased
upon exercise of a particular Option shall be as specified by the Committee, in
its sole discretion, at the time such Option is granted and, except in the case
of Substitute Awards and except in connection with an adjustment provided for in
Section 4(c), shall not be less than 100% of the fair market value of a share of
Stock at the time such Option is granted.
(e) Exercise.
(1) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may, in its sole discretion, specify
in the applicable Option Agreement or thereafter; provided, however, that
in no event may any Option granted hereunder be exercisable after the
expiration of 10 years from the date of such grant. Subject to the
foregoing, each Option Agreement shall specify the effect thereon of the
death, retirement or other termination of employment of the optionee. In
addition, the Committee may impose such other conditions with respect to
the exercise of Options, including without limitation, any relating to the
application of Federal or state securities laws, as it may deem necessary
or advisable.
(2) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor, or adequate provision
for such payment, is received by the Company. Such payment may be made in
cash, or its equivalent, or by exchanging shares of Stock owned by the
optionee (which are not the subject of any pledge or other security
interest), or by a combination of the foregoing, provided that the combined
value of all cash and cash equivalents and the fair market value of any
such Stock so tendered to the Company, valued as of the date of such
tender, is at least equal to such option price. No optionee or the legal
representative, legatee or distributee of an optionee shall be deemed to be
a holder of any shares subject to any Option prior to the issuance of such
shares upon exercise of such Option.
(f) Transferability of Options. Except as may otherwise be provided in any
Option Agreement at the time of grant or at any time thereafter, an Option
granted under the Plan, and any related Limited Stock Appreciation Right, may
not be transferred except by will or the laws of descent and distribution and,
during the lifetime of the person to whom granted, may be exercised only by such
person.
SECTION 7. Awards. (a) Grant of Restricted Stock Awards.
(1) Selection of Participants. Subject to the terms of this Plan, the
Committee shall select those eligible individuals to whom Awards shall be
granted for each Performance Period. Awards shall generally be made at the
beginning of a Performance Period but may, in the Committee's discretion,
be made from time to time during the term of a Performance Period.
(2) Award of Shares. The Committee shall determine the number of
shares of Stock covered by each Award. After the close of, and if
appropriate, during the term of, each Performance Period, and at
appropriate times based on the Lapsing Formula, if any, the Committee shall
determine whether the restrictions set forth in Section 7(e) hereof or any
Stock Restriction Agreement shall lapse with respect to a portion or all of
the shares covered by an Award.
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(3) Form of Instrument. Each Award shall be made pursuant to a Stock
Restriction Agreement in a form prescribed by the Committee. Such
instrument shall specify the Lapsing formula, if any, the Performance
Period and the Performance Objectives.
(b) Lapsing Formula and Performance Objectives. The Committee shall
establish the Lapsing Formula, if any, and the Performance Objectives prior to
the beginning of each Performance Period.
(c) Rights with Respect to Shares. Subject to Section 7(d), each
Participant to whom an Award has been made shall have absolute ownership of such
shares including the right to vote the same and to receive dividends and other
distributions thereon, subject, however, to the terms, conditions and
restrictions described in this Plan and in the Stock Restriction Agreement.
(d) Escrow. Shares of Stock issued pursuant to an Award shall be held in
the Company until such time as the Committee shall have determined that the
restrictions applicable to such Award shall have lapsed or until the shares
subject to such Award are forfeited pursuant to the Plan or the applicable Stock
Restriction Agreement.
(e) Restrictions Applicable to Awards. Unless otherwise specified in the
applicable Stock Restriction Agreement and subject to such additional terms,
conditions and restrictions as may be determined by the Committee and specified
in the applicable Stock Restriction Agreement, until the restrictions set forth
in this Section 7(e) shall lapse pursuant to Section 7(f), shares of Stock
awarded to a Participant pursuant to an Award:
(1) shall not be sold, assigned, transferred, pledged, hypothecated or
disposed of, and
(2) shall be forfeited and 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 or other service to the Company upon which an Award is based shall
terminate with or without cause or as a result of any event or for any
other reason.
(f) Lapse of Restrictions.
(1) Lapse of Restrictions Due to Achievement of Performance
Objectives. As soon as practicable after the close of each Performance
Period or prior thereto, if the Committee in its discretion deems it
appropriate, the Committee shall determine whether the Performance
Objectives established for such Performance Period have been achieved.
(2) Lapse of Restrictions Based on Lapsing Formula. As to any shares
covered by an Award subject to a Lapsing Formula to which the restrictions
imposed on such Award have not lapsed pursuant to paragraph (1) of this
Section 7(f), such restrictions shall lapse in accordance with the Lapsing
Formula for such Award.
(g) Restrictive Legends. Certificates for shares of Stock delivered
pursuant to Awards shall bear an appropriate legend referring to the terms,
conditions and restrictions described in this Plan and in the applicable Stock
Restriction Agreement. Any attempt to dispose of any such shares of Stock in
contravention of the terms, conditions and restrictions described in this Plan
or in the applicable Stock Restriction Agreement shall be ineffective. Any
shares of Stock of the Company or other property, including cash, received by a
Participant as a dividend or as a result of any stock split, combination,
exchange of shares, reorganization, merger, consolidation or similar event with
respect to shares of Stock received pursuant to an Award shall have the same
status and bear the same legend and be held in escrow pursuant to Section 7(d)
as the shares received pursuant to the Award unless otherwise determined by the
Committee at the time of such event.
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(h) 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 may, at any time and 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 to the
Committee during the lifetime of the Participant.
(i) Adjustments to Lapsing Formula, Performance Period and Performance
Objectives. The Committee may make adjustments or modifications, and its
determination thereof shall be conclusive, in the Lapsing Formula, Performance
Objectives or Performance Period to give effect to the intent of this Plan in
connection with any event affecting the performance criteria established as the
Performance Objectives, including without limitation, any reorganization,
recapitalization, merger, consolidation, offering of additional shares of Stock
or other changes in the company's shareholder's equity by means other than
earnings, or any similar event. No such adjustment shall be made if it would
reduce the benefits otherwise accruing to existing Participants under the Plan.
SECTION 8. Stock Unit Awards. (a) Grant of Stock Unit Awards. In addition
to granting Options, Limited Stock Appreciation Rights and Awards of Restricted
Shares under Section 7, the Committee shall have authority to grant to
Participants Stock Unit Awards which can be in the form of Stock or units, the
value of which is based, in whole or in part, on the value of Stock. Subject to
the provisions of the Plan, including Section 8(b) below, Stock Unit Awards
shall be subject to such terms, restrictions, conditions, vesting requirements
and payment rules (all of which are sometimes hereinafter collectively referred
to as "rules") as the Committee may determine in its sole discretion, all such
rules applicable to a particular Stock Unit Award to be reflected in writing and
furnished to the Participant at the time of grant. The rules need not be
identical for each Stock Unit Award.
(b) Rules. Unless otherwise specified in the applicable Stock Restriction
Agreement, a Stock unit Award shall be subject to the following rules:
(1) Any shares of Stock which are part of a Stock Unit Award may not
be assigned, sold, transferred, pledged or otherwise encumbered prior to
the date on which the shares are issued or, if later, the date provided by
the Committee at the time of the Award.
(2) Stock Unit Awards may provide for the payment of cash
consideration by the person to whom such Award is granted or provide that
the Award, and Stock to be issued in connection therewith, if applicable,
shall be delivered without the payment of cash consideration.
(3) Stock Unit Awards may relate in whole or in part to certain
performance criteria established by the Committee at the time of grant.
(4) Stock Unit Awards may provide for deferred payment schedules,
vesting over a specified period of employment, the payment (on a current or
deferred basis) of dividend equivalent amounts, with respect to the number
of shares of Stock covered by the Award, and elections by the employee to
defer the payment of the Award or the lifting of restrictions on the Award,
if any.
(5) In such circumstances as the Committee may deem advisable, the
Committee may waive or otherwise remove, in whole or in part, any
restrictions or limitation to which a Stock Unit Award was made subject at
the time of grant.
SECTION 9. Change of Ownership; Termination of Employment. (a)
Notwithstanding anything to the contrary in this Plan, unless otherwise
specifically determined by the Committee at the time of
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grant, all Options theretofore granted and not fully exercisable shall become
exercisable in full, the restrictions on all outstanding Awards shall lapse and
the Performance Objectives with respect to any Award shall be deemed to have
been satisfied upon the occurrence of a Change of Ownership. A "Change of
Ownership" shall be deemed to have occurred if either (1) individuals who, as of
the effective date of this Plan, constitute the Board of Directors of the
Company (the "Board of Directors" generally and as of the date hereof the
"Incumbent Board") cease for any reason to constitute at least a majority of the
directors constituting the Board of Directors, provided that any person becoming
a director subsequent to the effective date on 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 then directors who are members of the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is (A) in connection with the acquisition by a
third person, including a "group" as such term is used in Section 13(d) of the
Securities Exchange Act or 1934, as amended (the "Act"), of beneficial
ownership, directly or indirectly, of 20% or more of the combined 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 Board of Directors who are members of the Incumbent Board), or
(B) 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
(2) the Board of Directors (a majority of which shall consist of directors who
are members of the Incumbent Board) has determined that a Change of Ownership
triggering the exercisability of Options and the lapse of restrictions on Awards
as described in this Section 9 shall have occurred. Options which become fully
exercisable by reason of events specified in clauses (1) or (2) shall remain
exercisable for 90 days following the date on which they become so exercisable,
after which they will revert to being exercisable in accordance with their
original terms; provided, however, that no Option which has previously been
exercised or has expired or otherwise terminated shall become exercisable by
virtue of this Section nor shall this Section permit exercise of any Option
during the portion, if any, of such 90 day period which follows the termination
or expiration of any such Option.
(b) For purposes of this Plan and any Option or Award hereunder,
termination of employment shall not be deemed to occur upon the transfer of any
optionee from the employ of the Company to the employ of any Subsidiary or
affiliate. For purposes of this Plan, "affiliate" means (1) any entity 50% or
more of the voting interest in which is owned, directly or indirectly, by an
entity which owns, directly or indirectly, 50% or more of the voting interest in
the Company and (2) any entity which owns, directly or indirectly, 50% or more
of the voting interest in the Company.
SECTION 10. Delivery of Shares. No shares of Stock shall be delivered
pursuant to an Award or any exercise of an Option until the requirements of such
laws and regulations as may be deemed by the Committee to be applicable thereto
are satisfied.
SECTION 11. Withholding of Taxes. (a) As a condition to the making of an
Award, to the lapse of the restrictions pertaining to an Award, or to the
delivery of shares in connection with the exercise of an Option, 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 with respect to such shares of Stock.
(b) Financing. If requested by a Participant who exercises an Option or who
has received Stock pursuant to an Award, the Committee may in its discretion
provide financing to the Participant in a principal amount sufficient for the
purchase of shares of Stock pursuant to such Option exercise
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and to pay the amount of taxes required by law to be withheld with respect to
such Option exercise or 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 Option or Award shall in no way obligate the Company or the Committee to
provide any financing whatsoever upon the lapse of restrictions on shares or the
exercise of such Option.
(c) Withholding of Shares.
(1) If requested by a Participant who acquires shares of Stock upon
the exercise of an Option or who has received shares of Stock pursuant to
an Award with respect to which the restrictions shall have lapsed, the
Committee may in its discretion permit the Participant to satisfy any tax
withholding obligations, in whole or in part, by having the Company
withhold a portion of such shares with a value equal to the amount of taxes
required by law to be withheld.
(2) Requests by a Participant to have shares of Stock withheld shall
be (a) made prior to the Tax Date and (b) irrevocable.
(d) Dividend Equivalents. In the sole discretion of the Committee, an
Option or Award may provide the Participant with dividends or dividend
equivalents, payable in cash, shares of Stock, other securities or other
property, on a current or deferred basis.
SECTION 12. Amendments, Suspension or Discontinuance. The Board of
Directors may amend, suspend, or discontinue the Plan. Notwithstanding the
foregoing, provided that no such amendment, suspension or discontinuation shall
be made without shareholder approval if the Board determines that such approval
is necessary or desirable to comply with any tax or regulatory requirement with
which the Board deems it necessary or desirable for the Plan to comply.
SECTION 13. Term of Plan. The Plan shall become effective on the date it is
approved and adopted by the Board, subject to its subsequent approval by
shareholders of the Company. No Option or Award shall be granted under the Plan
after the date that is 15 years after the date on which the Plan is approved by
the Company's shareholders or after such earlier date as the Committee may
decide, in its sole discretion.
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APPENDIX B
SUNAMERICA
LONG-TERM INCENTIVE PLAN
SECTION 1. Purpose. The purpose of the SunAmerica Long-Term Incentive Plan
(the "Plan") is to provide incentives for senior executives and other key
employees whose performance in fulfilling the responsibilities of their
positions can have a major impact on the profitability and future growth of
SunAmerica Inc. (the "Company") and its subsidiaries.
SECTION 2. Definitions. For the purposes of the Plan, the following terms
shall have the meanings indicated:
Adjusted Pretax Income: The pretax income of the Company or a selected
Subsidiary, increased by any interest expense on subordinated debt payable
to the Company, and reduced by the product of (a) and (b), where (a) is a
specified hurdle rate and (b) is the shareholders' equity of the Company or
the selected Subsidiary at the beginning of the Performance Period,
increased by the book value of subordinated debt payable to the Company,
also at the beginning of the Performance Period.
Award: A maximum bonus, expressed in dollars, which may be earned
under an award granted by the Committee to a Participant pursuant to
Section 4(a) or Section 4(d).
Beginning Market Value: The average closing price of a share 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 of Directors: The Board of Directors of the Company.
Book Value: The product of (a) divided by (b), where (a) is Adjusted
Shareholders' Equity, which is defined as the sum of total shareholders'
equity as presented in the financial statements of the Company or any
selected subsidiary, less the liquidation preference of preferred stock
(except those issues of preferred stock that are convertible to common
stock and are treated as common stock equivalents in the Company's
computation of earnings per share), plus the book value of any issue of
debt convertible to common stock that is treated as a common stock
equivalent in the Company's computation of earnings per share, and (b) is
the number of common and Class B shares outstanding on the specified
measurement date, adjusted to include the number of shares that would be
issued on such measurement date on an assumed conversion of any issue
convertible to common stock.
Code: The Internal Revenue Code of 1986, as amended.
Committee: The Committee designated pursuant to Section 3. Until
otherwise determined by the Board of Directors, the Personnel, Compensation
and Stock Plan Committee shall be the Committee under the Plan.
Covered Officer: At any date, (i) any individual who, with respect to
the previous fiscal year of the Company, is a "covered employee" of the
Company within the meaning of Section 162(m), as hereinafter defined;
provided, however, that the term "Covered Officer" shall not include any
such individual who is designated by the Committee, in its discretion, at
the time of any Award or at any subsequent time, as reasonably expected not
to be such a "covered employee" with respect to the current taxable year of
the Company, and (ii) any individual who is designated by the Committee, in
its discretion, at the time of any Award or at
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any subsequent time, as reasonably expected to be such a "covered employee"
with respect to the current taxable year of the Company or with respect to
the taxable year of the Company in which any applicable Award will be paid.
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.
Ending Market Value: The average closing price of a share 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.
Net Worth: Total shareholders' equity of the Company or any selected
subsidiary as presented in the consolidating financial statements of the
Company.
Participant: A senior executive or other key employee of the Company
selected by the Committee in accordance with Section 4(a) or Section 4(d)
who receives an Award.
Performance Objectives: Performance Objectives shall be stated as
specified levels of (i) Earnings Per Share, (ii) Total Return to
Shareholders as measured against the S&P Index Total Return to Shareholders
(or other appropriate index selected by the Committee), (iii) Return on
Equity (or return on investment), (iv) growth in Book Value, (v) growth in
Net Worth, (vi) Stock price, (vii) Pretax Earnings (or after tax earnings)
of the Company or any Subsidiary, division, department or operation
thereof, (viii) Adjusted Pretax Income (or after tax income) of the Company
or any Subsidiary, (ix) sales of any of the financial products offered by
the Company's Subsidiaries, and (x) performance of any of the Company's
mutual funds or other financial products as compared with appropriate
benchmarks, or a combination of any of the foregoing as determined by the
Committee. In the case of Participants other than Covered Officers,
Performance Objectives may include such other criteria as the Committee may
determine in its discretion as the appropriate performance measure for the
Company or of any Subsidiary or division, department or operation of the
Company. The Performance Objectives shall be specified for each Award in an
agreement between the Company and the Participant and may differ from
Participant to Participant and from Award to Award. Performance Objectives
may relate to separate performance objectives for the Company or any
Subsidiary or for any division, department or operation of the Company or
any Subsidiary.
Performance Period: October 1, 1996 through September 30, 2001, or a
portion thereof, or any other period of five fiscal years, or portion
thereof, as established by the Committee.
Plan: The SunAmerica Long-Term Incentive Plan, as it may be amended
from time to time.
Pretax Earnings: The pretax earnings of the Company or any selected
subsidiary as presented on the consolidating financial statements of the
Company.
Return on Equity: The sum of each fiscal year's income before the
cumulative effect of any change in accounting principles and extraordinary
items for a Performance Period, divided by Adjusted Shareholders' Equity at
the beginning of each fiscal year in the Performance Period, further
adjusted to exclude net unrealized gains and losses on debt and equity
securities available for sale.
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
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from the first day of the Performance Period to and including the last day
of the Performance Period.
Section 162(m): Section 162(m) of the Code and the rules and other
authorities thereunder promulgated by the Internal Revenue Service of the
Department of the Treasury.
Stock: The Common Stock, par value $1.00 per share, of SunAmerica Inc.
Subsidiary: A subsidiary of SunAmerica Inc. within the meaning of
Section 425(f) of the Code.
Total Return to Shareholders: The quotient, expressed as a percentage
of (a) the amount by which the Ending Market Value of Stock exceeds its
Beginning Market Value divided by (b) the 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.
SECTION 3. Administration. (a) Subject to the authority and powers of the
Board of Directors in relation to the Plan as hereinafter provided, the Plan
shall be administered by a Committee designated by the Board of Directors
consisting of two or more members of the Board of Directors each of whom is an
"outside director" within the meaning of Section 162(m). The Committee shall
have full authority to interpret the Plan and from time to time to adopt such
rules and regulations for carrying out the Plan as it may deem best; provided,
however, that the Committee may not exercise any authority otherwise granted to
it hereunder if such action would have the effect of increasing the amount of an
Award to any Covered Officer.
(b) All determinations by the Committee shall be made by the affirmative
vote of a majority of its members, but any determination reduced to writing and
signed by a majority of the members shall be fully as effective as if it had
been made by a majority vote at a meeting duly called and held. All decisions by
the Committee pursuant to the provisions of the Plan and all orders or
resolutions of the Board of Directors pursuant thereto shall be final,
conclusive and binding on all persons, including the Participants, the Company
and its subsidiaries and shareholders.
SECTION 4. Eligibility for and Payment of Awards. (a) Subject to the
provisions of the Plan, the Committee may select officers or employees
(including officers or employees who are also directors) of the Company or any
of its subsidiaries who will be eligible to earn Awards under the Plan with
respect to the Performance Period, and determine the amount of such Awards and
the conditions under which they may be earned.
(b) Subject to the provisions of the Plan, Awards that are earned with
respect to the Performance Period shall be paid to each Participant, at the
discretion of the Committee, either in cash or Stock at such time as is
established by the Committee. If the payment is made in Stock, for purposes of
determining how many shares of such Stock shall be granted in lieu of cash, the
Stock shall be valued as of the date the Committee determines an Award has been
earned.
(c) Notwithstanding the provisions of Section 4(b), if, prior to the date
established by the Committee for any Performance Period, a Participant shall so
elect, in accordance with procedures established by the Committee, all or any
part of an Award to such Participant with respect to such Performance Period
shall be deferred and paid in one or more periodic installments in accordance
with the SunAmerica Inc. Executive Savings Plan or deferred on such other terms
as the Committee determines.
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(d) Notwithstanding the provisions of Sections 4(a), 4(b) and 10(a) hereof,
any Award to any Covered Officer shall be granted in accordance with the
provisions of this Section 4(d). Subject to the discretion of the Committee as
set forth in Section 10(b) hereof, the maximum Award that may be earned with
respect to a Performance Period is $15,000,000. Any provision of the Plan to the
contrary notwithstanding, no Covered Officer shall be entitled to any payment of
an Award with respect to a Performance Period unless the members of the
Committee shall have certified that the Performance Objectives have been
achieved for such Performance Period.
SECTION 5. Each Award shall be paid upon the achievement of Performance
Objectives at the end of the Performance Period, each as specified in an
agreement in a form prescribed by the Committee. Such agreement shall set forth
the Performance Objectives, the Performance Period and any other circumstances
or events not otherwise set forth in the Plan resulting in the payment of an
Award.
SECTION 6. Termination of Employment. Except as set forth in Section 7 of
this Agreement, upon termination of the Participant's employment with the
Company with or without cause or as a result of any event or otherwise for any
reason, the Participant's right, title and interest in any portion of the Award
as to which the conditions to payment have not been satisfied shall terminate
without payment of consideration by the Company.
SECTION 7. Effect of Certain Terminations of Employment or Other Services.
(a) Termination Due to Death or Retirement. If the Participant's employment
with the Company terminates at any time because of death, or retirement on or
after the Participant's normal retirement date (as defined in accordance with
the Company's retirement policies), a pro rata portion of the Award as to which
the conditions to payment have not been satisfied shall be held subject to the
terms and conditions of this Agreement and the remaining portion of the Award
shall be canceled and all rights of the Participant to payment in respect
thereof shall terminate without any payment of consideration by the Company on
the date of such event. The portion of the Award which shall remain subject to
this Agreement shall be determined by multiplying the total amount of the Award
granted hereunder by a fraction, the numerator of which is the number of days
elapsed in the Performance Period as of the date of such event and the
denominator of which is the total number of days in the Performance Period;
provided, however, that the Committee may, in its sole discretion and subject to
the approval of the Board, continue a greater percentage of the Award under this
Agreement.
(b) Termination for Reasons Other Than Death or Retirement. If
Participant's employment with the Company terminates for any reason other than
those set forth in Section 7(a) above, and whether or not the termination is
initiated by the Participant or the Company, any portion of the Award as to
which the conditions to payment have not been satisfied at the date of such
termination shall be canceled and all rights of the Participant to payment in
respect thereof shall terminate without any payment of consideration by the
Company. Notwithstanding the foregoing, the Committee may, in its sole
discretion and subject to approval of the Board, waive automatic forfeiture as
to some or all of the Award and, to that extent, continue the Award and other
rights hereunder in the same manner as set forth in Section 7(a) above. Any such
waiver in one instance shall not be deemed a waiver or require a similar waiver
in any other instance.
SECTION 8. Change of Ownership. Notwithstanding any provision of this
Agreement to the contrary, all conditions to the payment of an Award shall be
satisfied upon the occurrence of a Change of Ownership. A Change of Ownership
shall be deemed to have occurred if either (1) individuals who, as of the
initial effective date of the Plan, constitute the Board (as of the date of the
Plan, the "Incumbent Board") cease for any reason to constitute at least a
majority of the
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directors constituting the Board, provided that any person becoming a director
subsequent to the initial effective date of the 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 then directors who are members of the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is (A) in connection with the acquisition by a
third person, including a "group" as such term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended (the "Act"), of beneficial
ownership, directly or indirectly, of 20% or more of the combined 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 Board who are members of the Incumbent Board), or (B) 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 the Plan,
considered as though such person were a member of the Incumbent Board, or (2)
the Board (a majority of which shall consist of directors who are members of the
Incumbent Board) has determined that a Change of Ownership triggering the
satisfaction of such payment conditions as described in Section 9 of the Plan
shall have occurred.
SECTION 9. General Provisions.
(a) If the specified Performance Objectives for any Performance Period
shall have been affected by special factors (including material changes in
accounting policies or practices, material acquisitions or dispositions of
property, or other unusual items) which in the Committee's judgment should or
should not be taken into account, in whole or in part, in the equitable
administration of the Plan, the Committee may, for any purpose of the Plan,
adjust such Performance Objectives and make payments and reductions accordingly
under the Plan.
(b) Notwithstanding the provisions of subparagraph (a) above, the amount
available for the grant of an Award under the Plan with respect to a Performance
Period to a Covered Officer shall not exceed the amount described in Section
4(d)(i) and any adjustments made in accordance with or for the purposes of
subparagraph (a) shall be disregarded for purposes of calculating such amount.
(c) No portion of any Award under the Plan may be assigned or transferred
otherwise than by will or by the laws of descent and distribution prior to the
payment thereof.
(d) All payments made pursuant to the Plan shall be subject to withholding
in respect of income and other taxes required by law to be withheld, in
accordance with procedures to be established by the Committee.
(e) The selection of an individual for participation in the Plan shall not
give such Participant any right to be retained in the employ of the Company or
any of its subsidiaries, and the right of the Company or any such subsidiary to
dismiss or discharge any such Participant, or to terminate any arrangement
pursuant to which any such Participant provides services to the Company, is
specifically reserved. The benefits provided for Participants under the Plan
shall be in addition to, and in no way preclude, other forms of compensation to
or in respect of such Participants.
(f) The Board of Directors and the Committee shall be entitled to rely on
the advice of counsel and other experts, including the independent public
accountants for the Company. No member of the Board of Directors or of the
Committee or any officers of the Company or its subsidiaries shall be liable for
any act or failure to act under the Plan, except in circumstances involving bad
faith on the part of such member or officer.
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(g) Nothing contained in the Plan shall prevent the Company or any
subsidiary or affiliate of the Company from adopting or continuing in effect
other compensation arrangements, which arrangements may be either generally
applicable or applicable only in specific cases.
SECTION 10. Amendment and Termination of the Plan. The Board of Directors
may at any time terminate, in whole or in part, or from time to time amend the
Plan, provided that, except as otherwise provided in the Plan, no such amendment
or termination shall adversely affect the rights of any Participant under any
Awards earned and deferred by a Participant pursuant to Section 4(c). In the
event of such termination, in whole or in part, of the Plan, the Committee may
in its sole discretion direct the payment to Participants of any Awards not
theretofore paid out prior to the respective dates upon which payments would
otherwise be made hereunder to such Participants, in a lump sum or installments
as the Committee shall prescribe with respect to each such Participant. The
Board may at any time and from time to time delegate to the Committee any or all
of its authority under this Section 6. Any amendment to the Plan that would
affect any Covered Officer shall be approved by the Company's shareholders if,
in the discretion of the Committee, such approval is necessary or desirable to
insure continued compliance with Section 162(m) or for any other reason.
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APPENDIX C
SUNAMERICA INC.
LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN
AMENDED AND RESTATED 1997
SECTION 1. Purpose. The purpose of this Long-Term Performance-Based
Incentive Plan (the "Plan") is to advance the interests of SunAmerica Inc. (the
"Company") by providing Mr. Eli Broad, Chairman, President and Chief Executive
Officer of the Company with a compensation arrangement that rewards him for
significant gains in shareholder wealth as measured by the performance of the
Company's Common Stock ("Stock") against the S&P 500 Index Total Return to
Shareholders, as defined in Section 5.2(d).
The Plan is intended to accomplish these goals by enabling the Company to
grant Awards in the form of Options and Restricted Stock, all as more fully
described below.
SECTION 2. Administration. Unless otherwise determined by the Board of
Directors of the Company (the "Board"), the Plan will be administered by a
Committee of the Board designated for such purpose (the "Committee"). The
Committee shall consist of at least two directors. A majority of the members of
the Committee shall constitute a quorum, and all determinations of the Committee
shall be made by a majority of its members. Any determination of the Committee
under the Plan may be made without notice or meeting of the Committee by a
writing signed by a majority of the Committee members. So long as the Stock is
registered under the Securities Exchange Act of 1934 (the "1934 Act"), all
members of the Committee shall be disinterested persons within the meaning of
Rule 16b-3 under the 1934 Act and outside directors within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The Committee will have authority, not inconsistent with the express provisions
of the Plan and in addition to other authority granted under the Plan, to (a)
grant Awards at such time or times as they are earned in accordance with the
Plan, (b) prescribe the form or forms of instruments that are required or deemed
appropriate under the Plan, including any required written notices and
elections, and change such forms from time to time; (c) adopt, amend and rescind
rules and regulations for the administration of the Plan; and (d) interpret the
Plan and decide any questions and settle all controversies and disputes that may
arise in connection with the Plan. Such determinations and actions of the Board,
and all other determinations and actions of the Board made or taken under
authority granted by any provision of the Plan, will be conclusive and will bind
all parties. Nothing in this paragraph shall be construed as limiting the power
of the Committee to make adjustments under Section 8.6.
Transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent
that no such determination has been made by the Board or the Committee and any
provision of the Plan or action by the Committee or Board fails to so comply,
such actions shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee.
SECTION 3. Effective Date and Term of Plan. The Plan as amended and
restated will become effective on the date on which such amended and restated
Plan is approved by the Shareholders of the Company. Awards under the Plan as
amended and restated will be made for fiscal years 1997 and 1998.
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SECTION 4. Shares Subject to the Plan. Subject to the adjustment as
provided in Section 8.6 below, the aggregate number of shares of Stock subject
to Award during any year of the Plan shall not exceed 900,000 for fiscal years
prior to 1997 and 1,350,000 for fiscal years 1997 and 1998, plus the Carryover
Amount. The "Carryover Amount" is 1,350,000 shares (as adjusted for stock splits
through the effective date of this amended and restated Plan) for each fiscal
year of the Plan commencing on or after October 1, 1996 and ending prior to the
year for which the Award is being made, reduced by the number of shares of Stock
for which Awards have been made during any fiscal year.
No fractional shares of Stock will be delivered under the Plan.
SECTION 5. Participation and Awards
5.1 Participation
Mr. Eli Broad, Chairman, President and Chief Executive Officer of the
Company, is the sole participant in the Plan. Mr. Broad will receive an Award
under the Plan following the end of each fiscal year, beginning with the year
ending September 30, 1994, when and only if the Ending Market Value of the Stock
exceeds its Beginning Market Value by an amount greater than the S&P 500 Index
Total Return to Shareholders over the comparable period. The first Award under
the Plan will be based on a Beginning Market Value as of October 1, 1992 and an
Ending Market Value as of September 30, 1994. Thereafter, Awards will be based
on the Beginning Market Value and the Ending Market Value for each fiscal year.
5.2 Determination of Awards
(a) Award. Promptly following the end of each fiscal year of the Plan, the
Committee shall determine whether Ending Market Value exceeds Beginning Market
Value for such period. If Ending Market Value is less than or equal to Beginning
Market Value, no Award will be made. If Ending Market Value exceeds Beginning
Market Value, the Committee shall then determine the "S&P Return Value" for such
period in the manner described below. If the Ending Market Value exceeds the S&P
Return Value, Mr. Broad will be entitled to receive an Award, as specified
below, valued at two percent (2%) of such excess (the "Award Amount"). To the
extent required under the Code, the Committee shall certify the achievement of
the performance goals.
(b) Beginning Market Value. For purposes of this Plan, "Beginning Market
Value" means the average closing price of the Stock for each of the 20 trading
days commencing 10 trading days prior to the first trading day of the relevant
period (the "Beginning Stock Price") multiplied by the weighted average number
of shares of Stock outstanding during such period, computed in the manner used
to determine net income per common share in the Company's financial statements
(the "Weighted Average Shares") except that the Beginning Stock Price for a
particular period shall never be less than the Ending Stock Price for any
previously elapsed period with respect to which an Award was made under in the
Plan.
(c) Ending Market Value. For purposes of this Plan, "Ending Market Value"
means the average closing price of the Stock for each of the 20 trading days
commencing 9 trading days prior to the last trading day of the relevant period
(the "Ending Stock Price") multiplied by the Weighted Average Shares outstanding
during such period. Ending Market Value shall be adjusted for the payment of
cash dividends during the period, assuming such dividends had been reinvested in
Stock on the date paid to stockholders using the methodology consistent with the
determination of the S&P 500 Index Total Return to Shareholders.
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(d) S&P 500 Index Total Return to Shareholders. For purposes of this Plan,
"S&P 500 Index Total Return to Shareholders" for a particular period shall mean
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 period in question to the last day.
(e) S&P Return Value. For purposes of this Plan, "S&P Return Value" means
Beginning Market Value multiplied by the sum of one (1) plus the S&P 500 Index
Total Return To Shareholders, provided that the S&P Return Value for a period
under the Plan may never be less than the Beginning Market Value for such
period.
5.3 Payment of Awards
The Award to be made following any fiscal year prior to fiscal year 1997
shall consist of:
(a) that number of shares of Restricted Stock as are determined by
dividing fifty percent (50%) of the Award Amount by the Ending Stock Price
for the period; and
(b) Options covering a number of shares of Stock equal to three times
the number of shares of Restricted Stock determined above.
The Award to be made following any fiscal year beginning with fiscal year
1997 shall consist of Options covering a number of shares of Stock equal to
three times the number obtained by dividing the Award Amount by the Ending Stock
Price for the period.
The Restricted Stock and Options shall be granted upon the terms and
conditions set forth below.
5.4 Deferred Shares
(a) Awards in Lieu of Restricted Stock. If the Committee determines that
the payment of an Award, in whole or in part, in shares of Restricted Stock
would result in the Company not being able to take a tax deduction under Section
162(m) of the Code upon the vesting of such Restricted Stock or otherwise would
not be in the best interests of the Company, it may elect instead to pay the
Restricted Stock portion of the Award in an equivalent number of Deferred
Shares. Deferred Shares represent the right to receive the stated number of
shares of Stock on the date that is 18 months following the date that Mr. Broad
ceases to be an executive officer of the Company or earlier upon the same events
described in this Plan for the vesting of Restricted Stock. In the event that
any Deferred Shares are awarded pursuant to this Section 5.4(a), all references
to Restricted Stock in this Plan shall be deemed to apply, insofar as they are
applicable, to the Deferred Shares.
(b) Dividend Equivalents. In the event that a dividend is paid or property
is distributed (including, without limitation, shares of Stock) with respect to
a share of Stock while a Deferred Share is outstanding, Mr. Broad shall receive
with respect to each Deferred Share then outstanding:
(i) in the case of a cash dividend, or a distribution of property
other than Stock, dividend equivalents in cash or such property which shall
be paid concurrently with the payment of the dividend on the Stock, and
(ii) in the case of Stock dividends, a number of additional Deferred
Shares equal to the number of whole or fractional shares of Stock that
would have been paid if the Deferred Shares had been Stock outstanding on
the date of distribution.
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Any additional Deferred Shares issued under this Section 5.4(b) shall be subject
to the same terms and conditions, including with respect to vesting, forfeiture
and distribution, as apply to the Deferred Shares in respect of which they are
issued.
5.5 Awards for Partial Years
If Mr. Broad's employment is terminated during any fiscal year of the Plan
other than by the Company for Cause or by Mr. Broad without Good Reason, Mr.
Broad will be entitled to receive an Award based on the performance of the Stock
versus the S&P 500 Index through the date of termination. In addition, on the
day prior to the consummation of any "covered transaction" (as defined in
Section 7.3), Mr. Broad will be entitled to receive an Award based on the
performance of the Stock versus the S&P 500 Index through such date. All such
Awards shall be treated as Awards paid with respect to fiscal years beginning
with fiscal year 1997.
SECTION 6. Types of Awards
6.1 Options
(a) Nature of Options; Grant Date. An Option will entitle Mr. Broad to
purchase Stock at a specified exercise price. The grant date for each Option
shall be the last trading day used to determine the Ending Stock Price used in
calculating the Award.
(b) Exercise Price. The exercise price of an Option will be the fair market
value of the Stock subject to the Option, determined as of the grant date. In no
case may the exercise price paid for Stock which is part of an original issue of
authorized Stock be less than the par value per share of the Stock.
(c) Duration of Options. The latest date on which an Option may be
exercised will be the tenth anniversary of the day immediately preceding the
date the Option was granted.
(d) Exercise of Options. Options granted under any Award will be
exercisable immediately upon such grant. Any exercise of an Option must be in
writing, delivered or mailed to the Company, accompanied by (1) any documents
required by the Committee and (2) payment in full in accordance with paragraph
(e) below for the number of shares for which the Option is exercised.
(e) Payment for Stock. Stock purchased on exercise of an Option must be
paid for as follows: (1) in cash or by check (acceptable to the Company in
accordance with guidelines established for this purpose), bank draft or money
order payable to the order of the Company; or (2)(i) through the delivery of
shares of Stock which have been outstanding for at least six months and which
have a fair market value on the last business day preceding the date of exercise
equal to the exercise price, or (ii) by delivery of an unconditional and
irrevocable undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the exercise price, or (iii) by any combination of the
permissible forms of payment.
6.2 Restricted Stock
(a) Nature of Restricted Stock Award. The portion of the Award paid in
Restricted Stock entitles Mr. Broad to receive shares of Stock subject to the
restrictions described in paragraph (c) below ("Restricted Stock").
(b) Rights as a Stockholder. Mr. Broad will have all the rights of a
stockholder with respect to the Stock granted in connection with an Award,
including voting and dividend rights, subject to the
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restrictions described in paragraph (c) below. Certificates evidencing shares of
Restricted Stock will remain in the possession of the Company until such shares
are free of such restrictions, at which time such certificates will be delivered
to Mr. Broad.
(c) Restrictions. Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of until the earliest of (i) Mr.
Broad's termination of employment (A) by reason of death, Disability or normal
retirement in accordance with the policies set by the Board of Directors, (B) by
the Company other than for Cause or (C) by Mr. Broad for Good Reason (each a
"Qualifying Termination") and (ii) a Change of Ownership of the Company. If the
Company terminates Mr. Broad's employment for Cause or if Mr. Broad terminates
his employment other than for Good Reason or in connection with an event
described in clause (A) above, any shares of Restricted Stock that he then holds
subject to restrictions will be forfeited to the Company.
(d) Cause. For purposes of this Plan, "Cause" means (i) conviction of a
felony or other crime involving fraud, dishonesty or moral turpitude, (ii) fraud
with respect to the business of the Company, or (iii) gross neglect of duties of
the office specified in writing by the Board. For purposes of this Plan, Mr.
Broad shall not be deemed to have been terminated for Cause until the later to
occur of (i) the 30th day after notice of termination is given and (ii) the
delivery to him of a copy of a resolution duly adopted by the affirmative vote
of not less than a majority of the Company's directors at a meeting called and
held for that purpose, and at which Mr. Broad together with his counsel was
given an opportunity to be heard, finding that Mr. Broad was guilty of conduct
described in the definition of "Cause" above, and specifying the particulars
thereof in detail.
(e) Good Reason. For purposes of this Plan, "Good Reason" means the
voluntary termination by Mr. Broad of his employment (1) to enter public service
or (2) within 120 days after the occurrence without his express written consent
of any of the following events, provided that Mr. Broad gives notice to the
Company at least 30 days in advance requesting that the situation be remedied,
and the situation remains unremedied upon expiration of such 30-day period:
(i) Mr. Broad's removal from, or any failure to reelect him to, the
positions of Chairman of the Board, President or Chief Executive Officer,
except in connection with his termination for Cause or Disability or
termination by him other than for Good Reason; or
(ii) reduction in Mr. Broad's rate of Base Salary for any fiscal year
to less than 100 percent of the rate of Base Salary paid to him in fiscal
1993; or
(iii) failure of the Company to continue in effect any retirement,
life insurance, medical insurance or disability plan in which Mr. Broad was
participating on the date of Board adoption of this Plan unless the Company
provides Mr. Broad with a plan or plans that provide substantially similar
benefits; or
(iv) a Change of Ownership; or
(v) any purported termination by the Company of Mr. Broad's employment
for Cause that is not effected in compliance with paragraph (d) of this
Section 6.2.
(f) Change of Ownership. For purposes of this Plan, a "Change of Ownership"
shall be deemed to have occurred (1) if individuals who, as of the effective
date of this Plan, constitute the Board of Directors of the Company (the "Board
of Directors" generally and as of the date hereof the "Incumbent Board") cease
for any reason to constitute at least a majority of the directors constituting
the Board of Directors, 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 sharehold-
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ers, was approved by a vote of at least three-quarters ( 3/4) of the then
directors who are members of the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is (A) in
connection with the acquisition by a third person, including a "group" as such
term is used in Section 13(d)(3) of the 1934 Act, of beneficial ownership,
directly or indirectly, of 20% or more of the combined voting securities
ordinarily having the rights to vote for the election of directors of the
Company (unless such acquisition of beneficial ownership was approved by a
majority of the Board of Directors who are members of the Incumbent Board), or
(B) 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 1934 Act) shall be, for purposes of this
Plan, considered as though such person were a member of the Incumbent Board, or
(2) on the day prior to the consummation of any "covered transaction" (as
defined in Section 7.3).
(g) Disability. For purposes of this Plan, "Disability" means an illness,
injury, accident or condition of either a physical or psychological nature as a
result of which Mr. Broad is unable to perform substantially the duties and
responsibilities of his position for 180 days during a period of 365 consecutive
calendar days.
(h) Notice of Election. If Mr. Broad makes an election under Section 83(b)
of the Code with respect to Restricted Stock, he must provide a copy thereof to
the Company within 10 days of the filing of such election with the Internal
Revenue Code.
SECTION 7. Events Affecting Outstanding Options
7.1 Qualifying Termination
If Mr. Broad's employment with the Company terminates in connection with a
Qualifying Termination, he (or his executor or administrator or the person or
persons to whom the Option is transferred by will or the applicable laws of
descent and distribution) may exercise all or any Options he then holds at any
time prior to the expiration of their respective terms.
7.2 Termination of Employment (Other than a Qualifying Termination).
If Mr. Broad's employment with the Company terminates other than in
connection with a Qualifying Termination, all Options will continue to be
exercisable for a period of ninety days following the termination and shall
thereupon terminate, unless the termination was by the Company for Cause, in
which case all such Options shall immediately terminate. In no event, however,
shall an Option remain exercisable beyond the latest date on which it could have
been exercised without regard to this Section 7.
7.3 Certain Corporate Transactions.
In the event of a consolidation or merger in which the Company is not the
surviving corporation or which results in the acquisition of substantially all
the Company's outstanding Stock by a single person or entity or by a group of
person and/or entities acting in concert, or in the event of the sale or
transfer of substantially all the Company's assets or a dissolution or
liquidation of the Company (a "covered transaction"), all outstanding Options
will terminate as of the effective date of the covered transaction.
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SECTION 8. General Provisions
8.1 Documentation of Awards.
Awards will be evidenced by such written instruments, if any, as may be
prescribed by the Committee from time to time.
8.2 Rights as a Stockholder.
Except as specifically provided by the Plan, the receipt of an Award will
not give Mr. Broad rights as a stockholder; he will obtain such rights, subject
to any limitations imposed by the Plan or the instrument evidencing the Award,
upon actual receipt of Stock.
8.3 Conditions on Delivery of Stock.
The Company will not be obligated to deliver any shares of Stock pursuant
to the Plan or to remove restrictions from shares previously delivered under the
Plan (a) until all conditions of the Award have been satisfied or removed, (b)
until, in the opinion of the Company's counsel, all applicable federal and state
laws and regulations have been complied with, (c) if the outstanding Stock is at
the time listed on any stock exchange, until those shares to be delivered have
been listed or authorized to be listed on such exchange upon official notice of
notice of issuance, and (d) until all other legal matters in connection with the
issuance and delivery of such shares have been approved by the Company's
counsel. If the sale of Stock has not been registered under the Securities Act
of 1933, as amended, the Company may require, as a condition to exercise of the
Award, such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and may require that the
certificates evidencing such Stock bear an appropriate legend restricting
transfer.
8.4 Tax Withholding.
Upon the lapse of restrictions on the Restricted Stock and the exercise of
any Options, the Committee will have the right to require that Mr. Broad or his
representative remit to the Company an amount sufficient to satisfy the
withholding requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery of any Stock.
If and to the extent that such withholding is required, the Committee may permit
Mr. Broad or such other person to elect at such time and in such manner as the
Committee provides to have the Company hold back from the shares to be
delivered, or to deliver to the Company, Stock having a value calculated to
satisfy the withholding requirement.
8.5 Nontransferability of Awards.
Any derivative security issued under this Plan shall not be transferable by
Mr. Broad other than by will or the laws of descent and distribution, to the
extent such restriction on transferability is among the conditions necessary to
secure the benefits of Rule 16b-3 or to exempt the grant of the derivative
security from the operation of Section 16(b) under the 1934 Act. To the extent
that such restriction on transferability is not among such conditions, Options
granted hereunder shall be transferable to the extent determined by the
Committee. The designation of a beneficiary shall not constitute a transfer in
violation of these provisions.
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8.6 Adjustments.
(a) In the event of a stock dividend, stock split or combination of shares,
recapitalization or other change in the Company's capitalization, or other
distribution to common stockholders other than normal cash dividends, after the
effective date of the Plan, the Committee will make any appropriate adjustments
to the maximum number of shares that may be delivered under the Plan under
Section 4 above.
(b) In any event referred to in paragraph (a), the Committee will also make
any appropriate adjustments to the number and kind of shares of stock or
securities subject to Awards then outstanding or subsequently granted, any
exercise prices relating to Awards and any other provision included in or
relating to the calculation of Awards (including the Beginning Stock Price
determined in accordance with Section 5.2(b)) affected by such change. The
Committee may also make appropriate adjustments to take into account material
changes in law or in accounting practices or principles, mergers, consolidation,
acquisition, dispositions or similar corporate transactions, or any other event,
if it is determined by the Committee that adjustments are appropriate to avoid
distortion in the operation of the Plan and to preserve (but not enhance) the
benefits under the Plan.
8.7 Employment Rights, Etc.
Neither the adoption of the Plan nor the grant of Awards will confer upon
Mr. Broad any right to continued retention by the Company as an employee or
otherwise, or affect in any way the right of the Company to terminate an
employment relationship at any time.
8.8 Deferral of Payments.
The Committee may agree at any time, upon Mr. Broad's request but subject
to its discretion, to defer the date on which any payment under an Award will be
made.
SECTION 9. Effect, Discontinuance, Cancellation, Amendment and
Termination. The Committee may at any time or times amend the Plan or any
outstanding Award for any purpose which may at the time be permitted by law,
provided that (except to the extent expressly required or permitted by the Plan)
no such amendment will, without Mr. Broad's consent, amend the Plan or any
outstanding Award so as to adversely affect his rights under the Plan or any
outstanding Awards.
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APPENDIX D
SUNAMERICA
NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN
SECTION 1. Purpose. The purposes of the SunAmerica Non-Employee Directors'
Stock Option Plan (the "Plan") are to attract and retain the services of
experienced and knowledgeable non-employee directors, to encourage eligible
directors of SunAmerica Inc. (the "Company") to acquire a proprietary and vested
interest in the growth and performance of the Company, and to generate an
increased incentive for directors to contribute to the Company's future success
and prosperity, thus enhancing the value of the Company for the benefit of its
shareholders.
SECTION 2. Definitions. As used in the Plan, the following terms shall have
the meaning set forth below:
Annual Retainer: The amount that an Eligible Director would be
entitled to receive for serving as a director in the year following an
Election Date, but shall not include fees associated with service on any
committee of the Board, any meeting fees, or any fees associated with other
services to be provided to the Company.
Board: The Board of Directors of the Company.
Code: The Internal Revenue Code of 1986, as amended from time to time.
Common Stock: The common stock, par value $1.00 per share, of the
Company.
Company: SunAmerica Inc.
Effective Date: February 14, 1997, the effective date of the Plan.
Election Date: With respect to an Option hereunder, the date of the
election or re-election of the Director which entitles the Director to an
Option grant hereunder in accordance with Sections 5 and 6.
Eligible Director: Each director of the Company who is not an employee
of the Company or any of the Company's subsidiaries (as defined in Section
424(f) of the Code).
Exchange Act: The Securities Exchange Act of 1934, as amended.
Fair Market Value: With respect to the Common Stock (i) the average of
the high and low prices of the Common Stock on the date on which such value
is determined, as reported on the consolidated tape of New York Stock
Exchange issues or, if there shall be no trades on such date, on the date
nearest preceding such date; (ii) if the Common Stock is not then listed
for trading on the New York Stock Exchange, the average of the high and low
prices of the Common Stock on the date on which such value is determined,
as reported on another recognized securities exchange or on the Nasdaq
National Market if the Common Stock shall then be listed and traded upon
such exchange or system, or if there shall be no trades on such date, on
the date nearest preceding such date; or (iii) the mean between the bid and
asked quotations for such stock on such date (as reported by a recognized
stock quotation service) or, in the event that there shall be no bid or
asked quotations on such date, then upon
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the basis of the mean between the bid and asked quotations on the date
nearest preceding such date.
Option: Any right granted to a Participant allowing such Participant
to purchase Shares at such price or prices and during such period or
periods as set forth under the Plan. All Options shall be non-qualified
options not entitled to special tax treatment under Section 422 of the
Code.
Option Agreement: A written agreement, contract or other instrument
evidencing an Option granted hereunder which may, but need not, be signed
by the Participant.
Participant: An Eligible Director who receives an Option under the
Plan.
Shares: Shares of the Common Stock.
SECTION 3. Administration. The Plan shall be administered by the Board.
Subject to the terms of the Plan, the Board shall have the power to interpret
the provisions and supervise the administration of the Plan.
SECTION 4. Shares Subject to the Plan.
(a) Total Number. Subject to adjustment as provided in this Section,
the total number of Shares as to which Options may be granted under the
Plan shall be 250,000 Shares. Any Shares issued pursuant to Options
hereunder may consist, in whole or in part, of authorized unissued shares.
(b) Reduction of Shares Available. (i) The grant of an Option will
reduce the Shares as to which Options may be granted by the number of
Shares subject to such Option.
(c) Increase of Shares Available. The lapse, cancellation, or other
termination of an Option that has not been fully exercised shall increase
the available Shares by the number of Shares that have not been issued upon
exercise of such Option.
(d) Other Adjustments. The total number and kind of Shares available
for Options under the Plan and the number and kind of Shares comprised in
an annual award to any Eligible Director under Section 5(a) shall be
appropriately adjusted by the Board for any increase or decrease in the
number of outstanding Shares resulting from a stock dividend, subdivision,
combination of Shares, reclassification, or other change in corporate
structure affecting the Shares or for any conversion of the Shares into or
exchange of the Shares for other shares as a result of any merger or
consolidation (including a sale of assets) or other recapitalization.
SECTION 5. Options. Options shall be granted to Eligible Directors as
follows:
(a) Elected Directors. Each Eligible Director who is elected or
re-elected to the Board at an annual meeting of the Company's shareholders
on or after the date hereof shall be granted an Option to acquire 1,000
Shares on such Election Date and shall be granted an Option to acquire
1,000 Shares on each Election Date as of which he or she is re-elected.
(b) Terms and Conditions. Any Option granted under this Section 5
shall be subject to the following terms and conditions:
(i) Option Price. The purchase price per Share under an Option
granted under this Section 5 shall be 100% of the Fair Market Value of a
Share on the date of the grant of the Option.
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(ii) Exercisability. An Option granted under this Section 5 shall
be exercisable (A) with respect to the nearest number of whole Shares
not to exceed 33% of the Shares subject to the Option granted hereunder,
on the first anniversary of the date of grant of such Option; (B) with
respect to the nearest number of whole Shares not to exceed an
additional 33% of the Shares subject to the Option granted hereunder, on
the second anniversary of date of the grant of such Option; and (C) with
respect to the remainder of the Shares covered by the Option on the
third anniversary of date of grant of such Option. Notwithstanding the
foregoing, Options granted to a director whose service is terminated due
to retirement at age 70 shall become exercisable on the date of
termination.
SECTION 6. Options in Lieu of Cash Compensation. Options shall be granted
to Directors in lieu of cash compensation as follows:
(a) Election to Receive Option. Options shall be granted automatically
to (a) any Eligible Director who, prior to February 14, 1997, and (b) any
Eligible Director elected thereafter who, prior to the Election Date on
which such director is elected or re-elected to the Board by the Company's
shareholders, files with the Secretary of the Company an election to
receive stock options in lieu of all or a portion of his or her Annual
Retainer with respect to the 12 month period beginning on such Election
Date. Each Eligible Director making an election under this Section 6(a) as
of an Election Date shall be granted an option as of such Election Date for
the number of Shares determined under Section 6(b) below.
(b) Option Formula. The number of Option shares granted on an Election
Date to any Eligible Director under this Section 6 shall be equal to the
nearest number of whole Shares determined in accordance with the following
formula:
<TABLE>
<C> <C> <S>
(Elected Portion)(2.5)
------------------------- = Number of Shares
(Fair Market Value)
</TABLE>
where Elected Portion refers to the portion of Annual Retainer elected
under Section 6(a) and Fair Market Value refers to the Fair Market Value of
a Share on the date of grant.
(c) Option Price. The purchase price per Share covered by each Option
granted under this Section 6 shall be the Fair Market Value of a Share on
the date of grant.
(d) Exercisability. An Option granted under this Section 6 shall
become exercisable in four substantially equal installments (ignoring any
fractional shares that result) on the last day of each of the four fiscal
quarters of the Company ending after the date of the grant.
SECTION 7. General Terms. The following provisions shall apply to any
Option granted under the Plan:
(a) Option Period. Each Option shall expire ten years from its date of
grant. Each Option shall be subject to termination before its date of
expiration as hereinafter provided.
(b) Termination of Service as a Director. If a Participant's service
as a Director is terminated for any reason other than death or disability,
the Participant or his or her beneficiary shall have the right to exercise
any Option to the extent it was exercisable at the date of such termination
of service and shall not have been exercised. The right to exercise such
Option to the extent set forth herein shall continue for 180 days from the
date of termination.
(c) Death or Disability. If the Participant's service as a Director is
terminated by death or disability, the participant or his or her
beneficiary shall have the right to exercise any Option to
D-3
<PAGE> 66
the extent it was exercisable at the date of such termination, together
with a portion of the Shares subject to any Option granted pursuant to
Section 5 that would have become exercisable on the next anniversary of the
date of grant of such Option, such portion to be determined by multiplying
(i) the total number of Shares subject to such Option which would have
vested on the next anniversary of the grant date had such termination not
occurred by (ii) a fraction equal to (A) the total of number of completed
months of service from date of grant of such Option to the date of such
termination divided by (B) the number of months from date of grant of such
Option to the date such Option would have otherwise become exercisable;
provided that an Option may not be exercised with respect to a fraction of
a Share. The right to exercise such Option to the extent set forth herein
shall continue until the expiration of the Option.
(d) Method of Exercise. Any Option may be exercised by the Participant
(or his or her beneficiary, if applicable) in whole or in part at such time
or times and by such methods as the Board may specify. The applicable
Option Agreement may provide that the Participant may make payment of the
Option price in cash, Shares, or such other consideration as the Board may
specify, or any combination thereof, having a Fair Market Value on the
exercise date equal to the total option price.
SECTION 8. Change of Ownership.
(a) Immediate Vesting. Notwithstanding any other provision of the Plan
to the contrary, upon a Change of Ownership, as defined below, all
outstanding Options shall vest and become immediately exercisable.
(b) Change of Ownership. A "Change of Ownership" shall be deemed to
have occurred if either (i) individuals who, as of the initial effective
date of this Plan, constitute the Board (as of such initial effective date
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 initial 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 (a) 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 (b) 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 (ii) 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 or satisfaction of
conditions as described in this Section 8 shall have occurred.
SECTION 9. Amendments and Termination. The Board may amend, alter, or
discontinue the Plan, but no amendment, alteration, or discontinuance shall be
made (i) without the consent of the affected Participant if such action would
impair the rights of a Participant under an Option theretofore granted, or (ii)
without the approval of the stockholders if such approval is required to comply
with or qualify for any tax or regulatory requirement with which or for which
the Board deems it necessary or desirable to comply or qualify.
D-4
<PAGE> 67
SECTION 10. General Provisions.
(a) No Assignment. No Option shall be assignable or transferable by a
Participant otherwise than by will or by the laws of descent and
distribution. Each Option shall be exercisable, during the Participant's
lifetime, only by the Participant or, if permissible under applicable law,
by the Participant's guardian or legal representative.
(b) Compliance Requirements. All certificates for Shares delivered
under the Plan pursuant to any Option shall be subject to such
stock-transfer orders and other restrictions as the Board may deem
advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the
Shares are then listed, and any applicable federal or state securities law,
and the Board may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions. The
Company shall not be required to issue or deliver any Shares under the Plan
prior to the completion of any registration or qualification of such Shares
under any federal or state law, or under any ruling or regulation of any
governmental body or national securities exchange that the Board in its
sole discretion shall deem to be necessary or appropriate.
(c) Other Plans. Nothing contained in this Plan shall prevent the
Board from adopting other or additional compensation arrangements, subject
to shareholder approval if such approval is required by applicable law or
the rules of any stock exchange on which the Common Stock is then listed;
and such arrangements may be either generally applicable or applicable only
in specific cases.
(d) Governing Law. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Maryland and applicable federal
law.
(e) Conformity With Law. If any provision of this Plan is or becomes
or is deemed invalid, illegal or unenforceable in any jurisdiction, or
would disqualify the Plan or any Option under any law deemed applicable by
the Board, such provision shall be construed or deemed amended in such
jurisdiction to conform to applicable laws or if it cannot be construed or
deemed amended without, in the determination of the Board, materially
altering the intent of the Plan, it shall be stricken and the remainder of
the Plan shall remain in full force and effect.
SECTION 11. Effective Date and Expiration. The SunAmerica Non-Employee
Directors' Stock Option Plan shall be effective upon approval by the Company's
shareholders. Options may be granted at any time after the Effective Date and
prior to termination of the Plan by the Board. The Plan will expire when no
Shares are available for issuance.
D-5
<PAGE> 68
SUNAMERICA INC.
COMMON STOCK
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 14, 1997
The undersigned hereby appoints Eli Broad, Chairman of the Board,
President and Chief Executive Officer, Joseph M. Tumbler, Vice Chairman, and Jay
S. Wintrob, Vice Chairman, 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 SunAmerica Inc. the undersigned is entitled to
vote at said Company's annual meeting of shareholders to be held on February 14,
1997 and at all adjournments thereof.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement for such meeting, dated
December 31, 1996.
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, 3, 4, 5 and 6 and on such other
matters as may properly come before the meeting.
(Continued and to be dated and signed on the reverse side.)
SUNAMERICA INC.
P.O. Box 11256
New York, N.Y. 10203-0256
<PAGE> 69
<TABLE>
<CAPTION>
<S> <C>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSALS LISTED BELOW:
1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below for all nominees listed below
Nominees: Eli Broad, William F. Aldinger, III, Karen Hastie-Williams,
David O. Maxwell, Barry Munitz, Lester Pollack, Carl E. Reichardt,
Sanford C. Sigoloff, Harold M. Williams, Jay S. Wintrob
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions
------------------------------------------------------------------------------
2. Approval of the Charter Amendment to increase the Company's authorized Common Stock from
175,000,000 to 350,000,000 shares.
FOR AGAINST ABSTAIN
3. Approval of the 1977 Employee Incentive Stock Plan.
FOR AGAINST ABSTAIN
4. Approval of the SunAmerica Long-Term Incentive Plan.
FOR AGAINST ABSTAIN
5. Approval of the Amendment to the Long-Term Performance-Based Incentive Plan for the
Chief Executive Officer.
FOR AGAINST ABSTAIN
6. Approval of the Non-Employee Directors' Stock Option Plan.
FOR AGAINST ABSTAIN
Change of Address and or Comments Mark Here
(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.
Dated , 1997
------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(Please sign, date and return this proxy Votes must be indicated
in the enclosed postage prepaid envelope.) (X) in Black or Blue ink. X
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 70
SUNAMERICA INC.
NONTRANSFERABLE CLASS B STOCK
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 14, 1997
The undersigned hereby appoints Eli Broad, Chairman of the Board,
President and Chief Executive Officer, Joseph M. Tumbler, Vice Chairman, and Jay
S. Wintrob, Vice Chairman, 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 SunAmerica Inc. the undersigned is entitled to
vote at said Company's annual meeting of shareholders to be held on February 14,
1997 and at all adjournments thereof.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement for such meeting, dated
December 31, 1996.
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, 3, 4, 5 and 6 and on such other
matters as may properly come before the meeting.
(Continued and to be dated and signed on the reverse side.)
SUNAMERICA INC.
P.O. Box 11256
New York, N.Y. 10203-0256
<PAGE> 71
<TABLE>
<CAPTION>
<S> <C>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSALS LISTED BELOW:
1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below for all nominees listed below
Nominees: Eli Broad, William F. Aldinger, III, Karen Hastie-Williams,
David O. Maxwell, Barry Munitz, Lester Pollack, Carl E. Reichardt,
Sanford C. Sigoloff, Harold M. Williams, Jay S. Wintrob
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions
------------------------------------------------------------------------------
2. Approval of the Charter Amendment to increase the Company's authorized Common Stock from
175,000,000 to 350,000,000 shares.
FOR AGAINST ABSTAIN
3. Approval of the 1977 Employee Incentive Stock Plan.
FOR AGAINST ABSTAIN
4. Approval of the SunAmerica Long-Term Incentive Plan.
FOR AGAINST ABSTAIN
5. Approval of the Amendment to the Long-Term Performance-Based Incentive Plan for the
Chief Executive Officer.
FOR AGAINST ABSTAIN
6. Approval of the Non-Employee Directors' Stock Option Plan
FOR AGAINST ABSTAIN
Change of Address and or Comments Mark Here
(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.
Dated , 1997
------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(Please sign, date and return this proxy Votes must be indicated
in the enclosed postage prepaid envelope.) (X) in Black or Blue ink. X
- -------------------------------------------------------------------------------------------
</TABLE>
