<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
KEMPER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
KEMPER CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:1
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- -------------------------
1Set forth the amount on which the filing fee is calculated and state how it was
determined.
<PAGE> 2
[LOGO]
KEMPER CORPORATION
Long Grove, Illinois 60049--Telephone (708) 320-4700
December 2, 1994
Dear Fellow Kemper Stockholder,
Enclosed are proxy materials pertaining to our 1994 Annual Meeting of
Stockholders, now scheduled to be held on December 23, 1994. As most of you are
aware, this meeting had been scheduled earlier, adjourned and then postponed in
connection with the anticipated acquisition of the Company by Conseco, Inc. With
the termination last month of the Conseco merger agreement, we thought it
advisable to proceed with the meeting and deal with certain routine corporate
matters on which action had been delayed.
As announced on November 20, your Board of Directors has directed management and
the Company's advisors to pursue all appropriate actions to maximize value for
our stockholders. I can assure you we remain committed to that goal and are
working hard to achieve it.
Let me take this opportunity to thank each of you for your support during this
tumultuous year. Like you, I look forward to 1995 and with it a favorable
resolution of the issues we are now addressing.
Very truly yours,
David B. Mathis
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
-- IMPORTANT --
If your shares are held in "street name," only your bank or broker can vote your
shares. Please contact the person responsible for your account and instruct him
or her to vote the proxy card as soon as possible.
If you have any questions or need further assistance in voting your shares,
please call Kemper Corporation's proxy solicitor,
GEORGESON & COMPANY INC.
(toll free) at 1-800-223-2064.
<PAGE> 4
[LOGO]
KEMPER CORPORATION
Long Grove, Illinois 60049--Telephone (708) 320-4700
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS--DECEMBER 23, 1994
December 2, 1994
To Our Stockholders:
The postponed 1994 Annual Meeting of Stockholders of Kemper Corporation (the
"Company") will be held at 10:30 a.m. on Friday, December 23, 1994, in the
Stockholders Meeting Room on the 57th floor of The First National Bank of
Chicago, One First National Plaza (intersection of Clark and Madison), Chicago,
Illinois. The meeting is called for the purpose of considering and acting upon:
1. The election of directors.
2. The ratification of the appointment of KPMG Peat Marwick LLP as independent
auditors for 1994.
3. The transaction of such other business as may properly come before the
meeting or any adjournment(s) or postponement(s) thereof.
The close of business on December 1, 1994 was fixed by your Board of Directors
as the record date for the determination of stockholders entitled to notice of
the annual meeting and having the right to vote at the meeting.
The Board of Directors appreciates the interest of the stockholders in the
Company's affairs and encourages those entitled to vote at this annual meeting
to take the time to do so. Please complete, date and sign the enclosed proxy
card and return it promptly. A self-addressed return envelope, requiring no
postage if mailed in the United States, is enclosed for your use. You may revoke
your proxy at any time before the authority granted by it is exercised. If you
attend the annual meeting, you may vote in person although you have previously
returned an executed proxy.
Enclosed with these proxy materials is a copy of the Company's Form 10-Q, as
filed with the Securities and Exchange Commission on November 14, 1994, which
contains the most recently published financial information respecting the
Company. The Company previously distributed its 1993 Annual Report to
Stockholders on March 28, 1994. A copy of the annual report will be provided by
first-class mail without charge to any stockholder, including any beneficial
owner, upon oral or written request. Requests should be directed to John A.
Effrein, Director of Investor Relations, at the Company's address set forth
above or by phoning (708) 320-3435.
By Order of the Board of Directors
Kathleen A. Gallichio
Corporate Secretary
<PAGE> 5
KEMPER CORPORATION
Long Grove, Illinois 60049--Telephone (708) 320-4700 [LOGO]
PROXY STATEMENT AND FORM OF PROXY DATED DECEMBER 2, 1994,
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD DECEMBER 23, 1994
GENERAL INFORMATION
This proxy statement is being used in connection with the solicitation of
proxies on behalf of the Board of Directors for use at the annual meeting of
stockholders of Kemper Corporation (the "Company") on December 23, 1994. Only
the holders of the Company's common shares are entitled to vote at the annual
meeting, and such stockholders are being asked to vote upon: (i) the election of
directors and (ii) the ratification of the appointment of KPMG Peat Marwick LLP
as independent auditors for the Company for 1994. This proxy statement and the
accompanying proxy card are first being mailed to stockholders on or about
December 2, 1994.
Proxy cards properly executed and received prior to the time of the annual
meeting will be voted as directed. If no direction is made, the proxy will be
voted "FOR" any proposal for which no direction is indicated. Although a
stockholder may have submitted a proxy, such stockholder may vote in person at
the annual meeting if he or she desires. A stockholder voting by means of the
enclosed proxy card has the power to revoke it at any time before it is
exercised by delivering a written notice of revocation or a duly executed proxy
bearing a later date to the corporate secretary of the Company at the address of
the Company set forth above or by attending the annual meeting and voting in
person. Attendance at the annual meeting will not in and of itself constitute
revocation of a proxy.
As of the close of business on December 1, 1994, the record date for the
determination of stockholders entitled to vote at the annual meeting, there were
34,412,095 shares of Kemper Corporation $5.00 par value common stock issued and
outstanding. Each share of common stock issued and outstanding on the record
date entitles the holder to one vote on each matter to be acted upon at the
annual meeting. The presence in person or by proxy of a majority of the
outstanding shares of common stock will constitute a quorum for the transaction
of business at the annual meeting.
1
<PAGE> 6
As of December 1, 1994, the following were the only persons known to management
who may be deemed to beneficially own more than 5 percent of the Company's
outstanding voting securities:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
OF PERCENT
TITLE OF NAME AND ADDRESS BENEFICIAL OF
CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS(a)
- ------------- ---------------------------------------------------------- -----
<S> <C> <C> <C>
Common Stock Franklin Resources, Inc. 2,875,244(b) 8.4%
($5 par 777 Mariners Island Blvd.
value) P.O. Box 7777
San Mateo, California 94403-7777
Common Stock Southeastern Asset Management, Inc. 2,221,200(c) 6.5%
($5 par 860 Ridgelake Boulevard
value) Memphis, Tennessee 38120
</TABLE>
- ---------------
(a) Based on the number of shares of Kemper Corporation common stock outstanding
on December 1, 1994 and an assumption that share totals beneficially owned
have remained equal to those last reported to the Company.
(b) Franklin Resources, Inc. has reported that it or its investment advisory
subsidiaries have sole voting power as to 2,691,444 shares, shared voting
power as to 183,800 shares, sole dispositive power as to no shares and
shared dispositive power as to 2,875,244 shares.
(c) Southeastern Asset Management, Inc. has reported that, as an investment
advisor to various discretionary and non-discretionary accounts of its
clients, it has sole voting power as to 1,644,200 shares, shared voting
power as to 500,000 shares, no voting power as to 77,000 shares, sole
dispositive power as to 1,721,200 shares and shared dispositive power as to
500,000 shares.
RESCHEDULED MEETING/TERMINATION OF MERGER AGREEMENT
This proxy statement relates to the 1994 annual meeting of stockholders of the
Company that was originally scheduled to be held May 11, 1994. In connection
with an unsolicited proposal by General Electric Capital Corporation ("GECC") to
acquire the Company that was initiated in early 1994, the 1994 annual meeting
was adjourned, pursuant to an agreement between the Company and GECC, to August
22, 1994.
On June 26, 1994, the Company, Conseco, Inc., an Indiana corporation
("Conseco"), and a wholly owned subsidiary of Conseco entered into a merger
agreement pursuant to which the Company would have been acquired by Conseco (the
"Conseco Merger Agreement"). In light of the proposed merger, the Board of
Directors on July 19, 1994 postponed the 1994 annual meeting in order that
Company stockholders could vote at one time on the merger as well as on certain
general corporate matters.
On November 2, 1994, Conseco proposed that the Conseco Merger Agreement be
modified to, among other things, reduce the merger consideration to be received
by Company stockholders. While Conseco's proposed changes to the merger
agreement were being considered by the Board of Directors, it became clear to
both the Company and Conseco that the proposed merger, even under Conseco's
revised terms, could not be completed. Accordingly, on November 18, 1994, the
Company and Conseco mutually terminated the Conseco Merger Agreement. At the
same time, the Board of Directors directed management and the Company's advisors
to take all appropriate actions to maximize value for the Company's
stockholders.
As a result of the foregoing, the postponed 1994 annual meeting of stockholders
was rescheduled to be held December 23, 1994.
2
<PAGE> 7
ELECTION OF DIRECTORS
The Company's Second Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), provides that the Board of Directors shall be
divided as nearly as possible among three equal classes which are designated as
Class I, II or III, with each class serving for a three-year term of office. Any
person elected to fill a vacancy or a newly-created directorship holds office
for the remainder of the full term of the class to which such person is elected.
On March 17, 1994, the Board of Directors nominated John T. Chain Jr., George D.
Kennedy, David B. Mathis and Kenneth A. Randall, the current Class II directors,
to stand for re-election at the annual meeting and, if elected, to hold office
until the 1997 annual meeting of stockholders of the Company.
After the June 26, 1994 board meeting at which the Conseco Merger Agreement was
unanimously approved, Joseph E. Luecke retired from the Company's Board of
Directors to pursue more of a full-time retirement and to attend to various
personal and family matters. On September 7, 1994, the Company's Board of
Directors, on the recommendation of its Nominating Committee, reduced the number
of members of the Board of Directors to 12 in accordance with the Certificate of
Incorporation. The Board of Directors agreed that reducing the size of the board
was advisable, in lieu of filling the vacancy created by Mr. Luecke's
retirement, due to the then pendency of the Conseco merger and thus the
abbreviated term of office any replacement director could be expected to serve.
Given the ongoing uncertainties with respect to the Company's future ownership,
the Board of Directors does not presently contemplate any near-term changes in
board size or composition.
The persons named on the enclosed proxy card (Peter B. Hamilton, George D.
Kennedy and David B. Mathis) have agreed to represent stockholders submitting
properly executed proxy cards and to vote for the election of the four nominees
listed herein, unless otherwise directed by the authority granted or withheld on
the proxy cards. Although the Board of Directors has no reason to believe that
any of the nominees will be unable to serve as directors, if any one or more of
the nominees shall not be available for election, the persons named on the proxy
card have agreed to vote for the election of such other nominees as may be
proposed by the Board of Directors. The names of the four nominees for election
at this annual meeting, the names of the directors whose terms continue after
the meeting and the principal occupations of all such persons during the past
five years are as follows:
<TABLE>
<S> <C>
NOMINEES TO BE ELECTED FOR TERMS EXPIRING AT THE 1997 ANNUAL MEETING (CLASS II):
John T. Chain Jr. Age 59
Executive Vice President, Burlington Northern Railroad Co., Director since 1991
Fort Worth, TX (railroad transportation) since January 1991;
prior thereto, Commander in Chief, Strategic Air Command, and
Director, Joint Strategic Target Planning Staff. Director of
Northrop Corporation, RJR Nabisco Holdings and various
subsidiaries of Burlington Northern Railroad Co.
George D. Kennedy Age 68
Corporate Director. Prior to November 1994, Chairman of Director since 1982
Mallinckrodt Group Inc. (formerly, IMCERA Group, Inc.),
Mundelein, IL (mining, manufacturing). Director of American
National Can Company, Brunswick Corporation, Illinois Tool
Works, Inc., the Kemper National Insurance Companies, Scotsman
Industries, Inc. and Stone Container Corp.
David B. Mathis Age 56
Chairman of the Board and Chief Executive Officer of Kemper Director since 1989
Corporation since February 1992; prior thereto, President from
May 1990 to September 1992, and Chief Operating Officer from
May 1990 to February 1992; prior thereto, Executive Vice
President. Chairman of the Board and Chief Executive Officer of
Kemper Reinsurance Company until March 1990. Director of Kemper
Financial Companies, Inc. and several other Company
subsidiaries.
</TABLE>
3
<PAGE> 8
<TABLE>
<S> <C>
Kenneth A. Randall Age 67
Corporate Director. Director of Dominion Resources, Inc., Director since 1981
Dominion Energy, Inc. and Prime Retail, Inc., and trustee of
the principal Oppenheimer mutual funds.
DIRECTORS CONTINUING IN OFFICE WITH TERMS EXPIRING AT THE 1995 ANNUAL MEETING (CLASS I):
J. Reed Coleman Age 61
Chairman of the Board of Madison-Kipp Corporation, Madison, WI Director since 1968
(manufacturer of precision components serving the automotive
and durable goods industries). Director of the Kemper National
Insurance Companies, Lunar Corp., Madison-Kipp Corporation,
NIBCO, Inc., Regal-Beloit Corporation and Xeruca Corporation.
Raymond F. Farley Age 70
Corporate Director. Prior to January 1990, President and Chief Director since 1983
Executive Officer of S.C. Johnson & Son, Inc., Racine, WI
(manufacturer of household and commercial cleaners, wax,
insecticides and personal care products). Director of Hartmarx
Corporation, Johnson International, Inc., Johnson Worldwide
Associates and Snap-On Tools Corp.
Richard D. Nordman Age 48
President and Chief Operating Officer of Lawter International, Director since 1989
Inc., Northbrook, IL (manufacturer of products for the graphic
arts, adhesive and coatings industries). Director of Lawter
International, Inc.
Stephen B. Timbers Age 50
President and Chief Operating Officer of Kemper Corporation Director since 1992
since September 1992; Chief Investment Officer of Kemper
Corporation from May 1991 until May 1993. Senior Executive Vice
President and Chief Investment Officer of Kemper Financial
Services, Inc. ("KFS") from March 1990 until November 1993;
prior thereto, Executive Vice President and Chief Investment
Officer. Director of Kemper Financial Companies, Inc., several
other Company subsidiaries, Gillett Holdings, Inc. and LTV
Corporation.
DIRECTORS CONTINUING IN OFFICE WITH TERMS EXPIRING AT THE 1996 ANNUAL MEETING (CLASS III):
John H. Fitzpatrick Age 38
Executive Vice President and Chief Financial Officer of Kemper Director since 1990
Corporation since May 1993; prior thereto, Senior Vice
President and Chief Financial Officer from May 1990; prior
thereto, Vice President. Executive Vice President and Chief
Financial Officer of Kemper Financial Companies, Inc. since
January 1994. Director of Kemper Financial Companies, Inc. and
several other Company subsidiaries.
Peter B. Hamilton Age 48
Vice President and Chief Financial Officer of Cummins Engine Director since 1992
Company, Inc., Columbus, IN (manufacturer of diesel engines and
related products). Director of various corporations that are
wholly-owned by Cummins Engine Company, Inc.
Charles M. Kierscht Age 55
Executive Vice President since May 1993. Chairman of the Board, Director since 1991
President and Chief Executive Officer of Kemper Financial
Companies, Inc. since July 1991; prior thereto, Executive Vice
President.
</TABLE>
4
<PAGE> 9
<TABLE>
<S> <C>
Chairman, President and Chief Executive Officer of KFS since
July 1991; prior thereto, President and Chief Operating
Officer. President and director or trustee of all of the
registered investment companies which are managed by KFS.
Director of Kemper Financial Companies, Inc., several other
Company subsidiaries, Investors Fiduciary Trust Company, which
is indirectly 50 percent owned by the Company, and ICI Mutual
Insurance Company.
Daniel R. Toll Age 66
Corporate and civic director. Director of Brown Group, Inc., Director since 1986
A.P. Green Industries, Inc., Mallinckrodt Group Inc., the
Kemper National Insurance Companies, Lincoln National
Convertible Securities Fund, Inc., Lincoln National Income
Fund, Inc. and NICOR, Inc.
</TABLE>
Messrs. Chain, Coleman, Farley, Hamilton, Kennedy, Mathis, Nordman, Randall and
Toll are presently directors of Fidelity Life Association, a Company-affiliated
mutual life insurance company ("FLA").
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the shares of Kemper Corporation common stock
beneficially owned as of December 1, 1994 by the directors, nominees and other
persons within the group of five most highly-compensated executive officers of
the Company during 1993, and by all directors, nominees and the 1993 executive
officers of the Company as a group:
<TABLE>
<CAPTION>
SHARES OF $5 PAR VALUE COMMON PERCENT
NAME OF BENEFICIAL OWNER STOCK BENEFICIALLY OWNED OF CLASS
--------------------------------------------------------------- --------
<S> <C> <C>
John T. Chain Jr. 8,000(1) *
J. Reed Coleman 1,518,098(1)(3)(4)(5) 4.4%
Raymond F. Farley 8,750(1) *
John H. Fitzpatrick 145,834(2)(5) *
Peter B. Hamilton 7,000(1) *
George D. Kennedy 1,500,098(1)(4) 4.4%
Charles M. Kierscht 84,160(2)(6) *
David B. Mathis 300,156(2) *
Richard D. Nordman 9,000(1) *
Kenneth A. Randall 9,701(1) *
Stephen B. Timbers 99,000(2) *
Daniel R. Toll 1,501,098(1)(4) 4.4%
Kathleen A. Gallichio 86,837(2) *
Directors, nominees and executive
officers as a group (15
persons, including the above) 2,367,307(2)(4) 6.9%
</TABLE>
- -------------------------
* Less than 1%.
(1) Includes 8,000 shares which each of Messrs. Coleman, Farley, Kennedy,
Nordman, Randall and Toll, 7,000 shares which General Chain, and 6,000
shares which Mr. Hamilton, can acquire under stock options granted pursuant
to the Kemper Corporation Non-Management Director Stock Option Plan. All of
such options became exercisable in full when the approval of the Conseco
Merger Agreement in June, 1994, activated certain "change of control"
acceleration provisions under such plan. The directors as a group can thus
presently acquire 61,000 shares under these stock options.
(2) Includes the following number of shares which the following persons or
group have the right to acquire pursuant to stock options granted under the
Kemper Corporation 1982 Incentive Stock
5
<PAGE> 10
Option Plan, 1985 Amended Stock Option Plan or 1990 Stock Option Plan: Mr.
Fitzpatrick, 132,540 shares; Mr. Kierscht, 63,680 shares; Mr. Mathis,
256,765 shares; Mr. Timbers, 91,000 shares; Ms. Gallichio, 81,340 shares;
and all directors and executive officers as a group, 693,985 shares. All of
such options became exercisable in full in connection with the approval of
the Conseco Merger Agreement in June, 1994.
(3) Excludes 6,592 shares held in several trusts created by Lumbermens Mutual
Casualty Company ("Lumbermens"), principal company of the Kemper National
Insurance Companies, for the prospective retirement benefit of certain
Lumbermens officers. As a member of the distribution committee of these
trusts, Mr. Coleman presently shares voting and investment power over, but
disclaims beneficial ownership of, such shares.
(4) Includes 1,492,098 shares held by Lumbermens, the James S. Kemper
Foundation, American Manufacturers Mutual Insurance Company ("AMM"),
another of the Kemper National Insurance Companies, and several trusts
established for the benefit of Lumbermens' officers which certain of the
Company's directors, to the extent they are also members of Lumbermens' or
AMM's boards of directors, or trustees of the foundation, could be deemed
to control either through voting or dispositive power. Such directors
disclaim beneficial ownership of such shares.
(5) Includes shares owned by or for the benefit of the spouse, minor children
or other relatives of the director, nominee or executive officer.
(6) Mr. Kierscht beneficially owns 44,822.46 shares of Class B Common Stock of
Kemper Financial Companies, Inc. ("KFC"), a publicly-reporting subsidiary
of the Company, 1,024.23 shares owned directly and an aggregate of
43,798.23 shares which he: (i) can acquire within 60 days of November 1,
1994 upon the conversion of various presently convertible series of
Floating Rate Convertible Subordinated Debentures issued by KFC; or (ii)
can acquire within 60 days of November 1, 1994 pursuant to stock options
issued under KFC's 1986 and 1988 Stock Option Plans. KFC issued Debentures
to various officers and designated employees of its subsidiaries during a
period extending from 1986 through 1990. The Debentures were issued in
groups of five series (the series having staggered conversion and maturity
dates) and are convertible into shares of KFC Class B Common Stock based on
a formula price for such stock applicable when the particular series were
issued. Mr. Kierscht beneficially owns approximately 9.1% of KFC's
outstanding Class B Common Stock and approximately 1.7 percent of all
series of KFC Floating Rate Convertible Subordinated Debentures outstanding
at November 1, 1994, and he would own approximately 2.7 percent of the
outstanding KFC Class B Common Stock, assuming all of KFC's outstanding
convertible securities and options at such date, including Mr. Kierscht's,
had previously been converted or exercised. Also see COMPENSATION OF
EXECUTIVE OFFICERS later in this proxy statement.
COMMITTEES OF THE BOARD OF DIRECTORS
Effective January 14, 1994, the configuration and membership of the various
committees of the Board of Directors were changed to rebalance and streamline
board committee participation to promote efficiencies. Also see COMPENSATION OF
DIRECTORS later in this proxy statement.
The Company has a five-member Executive Committee presently consisting of
Messrs. Mathis (chairman), Chain, Farley, Kennedy and Timbers. The function of
the committee is to exercise the authority of the Board of Directors in the
management of the business and the affairs of the Company as necessary and
appropriate during the interim between meetings of the full board.
The Company has an Audit Committee composed of three non-management directors.
(A non-management director is one other than a present or past officer of the
Company or of any affiliate thereof.) Members currently serving on the committee
are Messrs. Coleman (chairman), Hamilton and Nordman. This committee oversees
the selection and retention of an independent auditor and has responsibility for
the content and oversight of the Company's audit program, including review of
7
<PAGE> 11
the effectiveness of corporate accounting and financial practices and the
adequacy of internal controls.
The Investment Committee of the Company (formerly the Finance Committee)
currently consists of three non-management directors: Messrs. Randall
(chairman), Farley and Toll. The function of the committee is to exercise the
authority of the Board of Directors principally in connection with the
supervision of investment policies and performance of the Company's life
insurance subsidiaries' portfolios, including the related activities of KFS,
investment adviser to the portfolios. Investments made under the committee's
general guidelines are approved by the respective investment committees and
boards of directors of the Company's life insurance subsidiaries.
The Corporate Public Policy Committee of the Company presently consists of three
non-management directors: Messrs. Chain (chairman), Kennedy and Randall. The
committee is responsible for review of corporate policies with respect to
corporate responsibility, legislative and regulatory matters and industry and
consumer relations. Commencing in 1994, the Corporate Public Policy Committee
maintains a regular subcommittee on Intercompany Conflicts, Accountability and
Relationships. The subcommittee will scrutinize, evaluate, avoid where possible
and resolve conflicts of interest among the Company or its subsidiaries and
those companies within the organization whose ownership constituencies and
interests are distinct from those of the Company and its stockholders; explore
the equities and ethical considerations applicable to intercompany dealings; and
review procedures and activities of management dealing with individual and
intercompany conflicts of interest. Mr. Kennedy is the representative of the
Company at subcommittee meetings, Mr. Randall represents FLA, and Mr. Kierscht
is the invited representative of KFC. While its functions are now exercised as a
subcommittee of the Corporate Public Policy Committee, during 1993, the Company
maintained a board Committee on Intercompany Conflicts, Accountability and
Relationships composed of a chairman and board representatives for the Company,
KFC and FLA. During 1993, Mr. Luecke was the chairman of the committee, Mr.
Farley was the representative of the Company, Mr. Kierscht represented KFC and
Mr. Nordman represented FLA.
The Committee on Compensation and Organization is currently comprised of three
non-management directors: Messrs. Kennedy (chairman), Chain and Farley. The
committee is responsible for reviewing with management (1) the overall
objectives, structure, cost and administration of the Company's compensation and
benefit programs, (2) executive management's performance and (3) officer
succession plans.
The Nominating Committee of the Company is composed of all non-management
directors not standing for re-election within one year and not serving on the
Executive Committee, except for the chairman who is appointed by the Board of
Directors. Members serving on the committee during 1994 have been Messrs. Toll
(chairman), Coleman, Hamilton and Nordman. The committee has the responsibility
of recommending nominees to the full board to fill directorships which expire at
the annual meeting of stockholders, board vacancies and newly-created
directorships. Any stockholder who wishes to have the committee consider a
candidate should submit in writing the name of the candidate along with any
biographical or other relevant information regarding the qualifications of such
individual and the written consent of the proposed candidate to serve if
nominated and elected. Such recommendations should be addressed to the Chairman
of the Nominating Committee, in care of the corporate secretary of the Company,
at the address appearing on the first page of this proxy statement.
During 1993, 11 Board meetings, 9 Executive Committee meetings, 6 Audit
Committee meetings, 4 Finance (now Investment) Committee meetings, 2 Corporate
Public Policy Committee meetings, 9 Committee on Compensation and Organization
meetings, 1 Nominating Committee meeting and 2 meetings of the Committee on
Intercompany Conflicts, Accountability and Relationships were held.
8
<PAGE> 12
EXECUTIVE OFFICERS OF KEMPER CORPORATION
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
KEMPER
CORPORATION PRINCIPAL BUSINESS EXPERIENCE
NAME, AGE AND POSITION OFFICER SINCE DURING PAST FIVE OR MORE YEARS(1)
- ------------------------------ ------------- -------------------------------------------------
<S> <C> <C>
David B. Mathis (56) 1989 Chairman of the Board and Chief Executive Officer
Chairman of the Board and from February 1992; prior thereto, President from
Chief Executive Officer May 1990 until February 1992 and Chief Operating
Officer from May 1990 until February 1992; prior
thereto, Executive Vice President. Chairman of
the Board and Chief Executive Officer of Kemper
Reinsurance Company until March 1990.
Stephen B. Timbers (50) 1991 President and Chief Operating Officer since
President, Chief Operating September 1992; Chief Investment Officer from May
Officer and Director 1991 until May 1993. Senior Executive Vice
President and Chief Investment Officer of KFS
from March 1990 until November 1993; prior
thereto, Executive Vice President and Chief
Investment Officer.
Charles M. Kierscht (55) 1993 Executive Vice President from May 1993. Also
Executive Vice President and Chairman of the Board, President and Chief
Director Executive Officer of KFC and KFS from July 1991;
prior thereto, Executive Vice President of KFC
and President and Chief Operating Officer of KFS.
John H. Fitzpatrick (38) 1986 Executive Vice President and Chief Financial
Executive Vice President, Officer from May 1993; prior thereto, Senior Vice
Chief Financial Officer and President and Chief Financial Officer from May
Director 1990; prior thereto, Vice President.
Alan J. Baltz (58) 1990 Senior Vice President from May 1990; prior
Senior Vice President thereto, Controller of Lumbermens.
Kathleen A. Gallichio (39) 1990 Senior Vice President from January 1994 and
Senior Vice President, General Counsel and Corporate Secretary from May
General Counsel and Corporate 1991; prior thereto, Corporate Counsel and
Secretary Corporate Secretary from May 1990; prior thereto,
Assistant General Counsel of Lumbermens.
John W. Burns (42) 1986 Treasurer from January 1994; prior thereto,
Treasurer Treasurer and principal accounting officer from
May 1990; prior thereto, Assistant Treasurer.
Treasurer of Lumbermens until May 1990.
</TABLE>
- -------------------------
(1) All executive officers have similar business experience with various Kemper
Corporation subsidiaries. Where indicated as having had business experience
with Lumbermens, the executive officers also had similar business experience
with Lumbermens' subsidiaries and affiliates.
9
<PAGE> 13
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------- ------------------------
NAME OTHER RESTRICTED STOCK
AND ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL COMPEN- AWARDS OPTIONS COMPEN-
POSITION YEAR SALARY($) BONUS($) SATION($)(1) ($)(2) (#) SATION($)(3)
- ------------------------ ------ --------- -------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
David B. Mathis, 1993 $ 531,308 $960,000 $193,357 $ 560,625(4) 45,000 $111,811
Chairman of the Board 1992 473,846 360,000 167,658 131,250 15,000 24,219
and Chief Executive 1991 400,000 480,000 164,503 253,750 25,000 53,329
Officer
Stephen B. Timbers, 1993 448,269 816,000(5) 25,508 560,625(4) 40,000 143,455
President and Chief 1992 412,500 500,000 7,706 110,250 10,000 106,789
Operating Officer 1991 360,000 307,200 6,744 119,625 10,000 57,344
Charles M. Kierscht, 1993 440,000 412,000(5) 17,980 149,500(4) 20,867 188,398
Executive Vice 1992 400,000 650,000 10,629 110,250 10,000 115,648
President 1991 387,500 300,000 13,415 119,625 10,000 190,466
John H. Fitzpatrick, 1993 240,462 360,000 21,117 373,750(4) 25,000 59,675(6)
Executive Vice 1992 210,000 210,000 11,176 84,000 8,600 15,072(6)
President and 1991 190,000 250,000 9,948 108,750 10,000 86,935(6)
Chief Financial
Officer
Kathleen A. Gallichio, 1993 200,385 175,000 16,873 224,250(4) 15,000 39,183
Senior Vice President, 1992 175,000 112,000 10,130 70,875 6,800 6,006
General Counsel and 1991 135,100 140,000 7,749 72,500 6,000 9,721
Corporate Secretary
</TABLE>
- ---------------
(1) The amounts disclosed in this column include:
(a) Compensation income reported in 1993 of $145,625, in 1992 of $132,750,
and in 1991 of $127,000, for Mr. Mathis based upon the market value on
the vesting date of restricted stock awarded in 1988, 1987 and 1986,
respectively, under the Kemper Corporation Senior Executive Long-Term
Incentive Plan.
(b) Compensation amounts paid to each of the named executive officers as
non-preferential dividend equivalents on shares of restricted stock
awarded at various times.
(c) The cash value of shares of Company common stock when awarded under the
Kemper Corporation Anniversary Award Program. Employees of the Company
or participating subsidiaries are awarded shares on an increasing scale
beginning with their 10th year of employment and every 5 years
thereafter, with a pro rata award at retirement.
(d) The taxable benefit from personal use of an employer-provided
automobile, adjusted for the related tax expense.
(2) The values shown are based on the closing price for the Company's common
stock on the date any restricted stock was awarded applied to the number of
award shares. A five-year restriction period on transfers or other
dispositions applied to all awards of restricted stock when made. All shares
reflected in the table which were awarded in 1991 and 1992 vested in full
when the approval of the Conseco Merger Agreement in June, 1994, activated
certain "change of control" acceleration provisions under the Kemper
Corporation 1989 Senior Executive Long-Term Incentive Plan. See footnote (4)
below for further information respecting the shares of restricted stock
awarded in 1993.
Until the shares of restricted stock vested, dividend equivalents,
calculated based on the amount of the per share dividend declared and paid
on the Company's common stock, were paid as additional compensation income
to the named individuals when dividends were paid to the Company's
stockholders. Participants may settle their tax obligations on the vesting
of restricted shares by utilizing a portion of the award shares.
As of December 31, 1993, Mr. Mathis held a total 42,000 shares of
restricted stock, with an aggregate value (based on the closing price for
the Company's common stock as of the date
10
<PAGE> 14
each award was granted) of $1,526,875; Mr. Timbers held a total 22,500
shares of restricted stock, with an aggregate value of $790,500; Mr.
Kierscht held a total 11,500 shares of restricted stock, with an aggregate
value of $379,375; Mr. Fitzpatrick held a total 16,200 shares of restricted
stock, with an aggregate value of $556,500; and Ms. Gallichio held a total
10,700 shares of restricted stock, with an aggregate value of $367,625. But
see footnote (4) below for further information respecting the cancellation
since year-end 1993 of the restricted stock awards made in 1993.
(3) Except for the amounts otherwise described in footnote (6) below with
respect to Mr. Fitzpatrick, this column includes only the amounts of
employer contributions and forfeitures allocated to the accounts of the
named persons under profit sharing plans maintained by the Company, in the
case of Messrs. Mathis, Timbers and Fitzpatrick and Ms. Gallichio, or by KFS
in the case of Mr. Kierscht, or under supplemental plans maintained by both
employers to provide benefits in excess of applicable ERISA limitations.
The Company's profit sharing plan was contributory, with the Company
matching 50 percent of participant 401(k) contributions. Participants may
elect 401(k) contributions of up to 5 percent of annual compensation.
Discretionary profit sharing contributions are considered by the Board of
Directors annually. A discretionary contribution of $1.95 for each 401(k)
dollar contributed was approved for eligible participants in the Company's
plan for 1993.
Under the provisions of the KFS profit sharing plan, the net profits of KFS
were sufficient for a 1993 contribution to be made to the accounts of
eligible participants in the amount of 15 percent of annual compensation.
Under both the Company and the KFS profit sharing plans, annual compensation
which is attributable to restricted stock vesting or stock option exercise
is not taken into account for employer contributions.
The Company's supplemental plan provides for an accelerated lump sum
distribution of vested amounts credited to that plan which are attributable
to the Company's profit sharing plan upon a "change of control". The
approval of the Conseco Merger Agreement in June, 1994, constituted such a
"change of control" under this plan.
Effective with the 1994 plan year, the Company and KFS adopted uniform
profit sharing provisions providing for a 50 percent match of the first 5
percent of participants' elective 401(k) contributions; a discretionary
year-end profit contribution of up to 7 1/2 percent of eligible annual
compensation based on the Company's level of attainment of profit
objectives; and a basic contribution of 5 percent of annual compensation (to
a separate money purchase pension plan account) for eligible employees who
continue employment through the end of each calendar year.
(4) Pursuant to the Conseco Merger Agreement, the restricted stock awards shown
in the table for 1993 were cancelled. Under the Kemper Corporation Bonus
Restoration Plan, on June 30, 1994, the Compensation and Organization
Committee of the Board of Directors (the "Committee"), in its discretion,
granted cash awards to the named individuals entitling each of them to
receive an amount in cash immediately prior to the effective time of the
then-planned Conseco merger equal to the product of the number of shares of
restricted stock previously granted to such individual under the 1993 Senior
Executive Long-Term Incentive Plan times the consideration payable in the
merger. As a result of the termination of the Conseco Merger Agreement, no
cash awards have been paid pursuant to the Kemper Corporation Bonus
Restoration Plan. The Committee is presently considering supplementing such
plan to, or adopting a new plan that would, provide for the payment of cash
awards under certain circumstances in order to effect, at least in part, the
restoration intended by such plan.
Cancelled and as yet unrestored restricted stock awards include the
following: Mr. Mathis--15,000 shares in 1993 and 9,200 shares in 1994; Mr.
Timbers--15,000 shares in 1993 and 7,800 shares in 1994; Mr. Kierscht--4,000
shares in each of 1993 and 1994;
11
<PAGE> 15
Mr. Fitzpatrick--10,000 shares in 1993 and 5,000 shares in 1994; and Ms.
Gallichio--6,000 shares in 1993 and 2,700 shares in 1994.
(5) Excludes a portion of Mr. Kierscht's bonuses earned in each of 1987 through
1989, $393,643 in the aggregate, and a portion of Mr. Timbers' bonuses
earned in the same years, $154,027 in the aggregate, deferred under a
mandatory contingent deferred plan maintained until December 31, 1990 by KFS
and paid in 1991.
(6) Includes $3,368, $3,368 and $61,135 paid to Mr. Fitzpatrick by the Company
in 1993, 1992 and 1991, respectively, to compensate him for the inability to
continue to accrue any potential additional value under the various
securities or options issued to him by KFC due to the mandatory redemption
or lapse of such securities or options when his employment with KFS
terminated in May 1990 upon commencement of his employment by the Company.
Mr. Timbers owned various KFC securities interests which became subject to
mandatory redemption or lapsed when his KFS employment terminated at
year-end 1992 upon commencement of his employment by the Company. During a
period extending to December 31, 2001, Mr. Timbers will, subject to
continued employment by the Company or one of its subsidiaries, be eligible
to elect to receive phantom compensation amounts from the Company based on
the future appreciation, if any, which may pertain to the interests in KFC
securities he previously owned. No such phantom compensation amounts were
paid during any of the years reported in the table.
OPTION GRANTS IN 1993
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE OF
- ------------------------------------------------------------------------------- ASSUMED ANNUAL
NUMBER % OF TOTAL RATES OF STOCK PRICE
OF SHARES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(4)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED(#)(1) FISCAL YEAR(2) ($/SH)(3) DATE 5%($) 10%($)
- ----------------------------- -------------- ----------- ------------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
David B.
Mathis 45,000 3.0% $38.375 April 30, 2003 $1,086,022 $2,752,194
Stephen B.
Timbers 40,000 2.7% $38.375 April 30, 2003 965,353 2,446,395
Charles M. 15,000 1.0% $38.375 April 30, 2003 362,007 917,398
Kierscht 5,867 .4% $41.75 September 1, 2003 154,045 390,382
John H.
Fitzpatrick 25,000 1.7% $38.375 April 30, 2003 603,346 1,528,997
Kathleen A.
Gallichio 15,000 1.0% $38.375 April 30, 2003 362,007 917,398
</TABLE>
- ---------------
(1) Each of the options reflected in the table, when granted, were subject to
installment vesting provisions whereby only a portion of the underlying
stock would become eligible for exercise on successive anniversaries of the
date of grant. However, such options became exercisable in full in
connection with the approval of the Conseco Merger Agreement in June, 1994.
(2) Based on 1,481,100 shares, the total number of shares under options granted
in 1993. This total includes 886,400 shares under options granted on
September 1, 1993 to employees of Kemper Securities, Inc. and subsidiary
employee holders of KFC Debentures under special incentive award programs.
Of the named executive officers, only Mr. Kierscht participated in this
award as a holder of KFC Debentures.
(3) The option exercise price assigned by the Committee was the last sale price
for Kemper Corporation common stock on the date of the respective grants.
(4) The assumed annual rates of stock price appreciation are prescribed in the
proxy rules and should not be construed to forecast any future appreciation
in the market price for the Company's common stock.
12
<PAGE> 16
The options disclosed in the preceding table contain a "reload" feature
which entitles an optionee who, within the first eight years after the date
the option was granted, pays all or any portion of the exercise price of an
option with shares of Company common stock to receive a new non-qualified
stock option to purchase a number of shares equal to the number of shares
of common stock tendered in payment. The new option will have an exercise
price equal to the fair market value of the common stock on the date of
such exercise by payment in shares, and is only exercisable as long as the
optionee continues to hold the shares issued on exercise of the initial
option. The new option would vest in installments identical to those first
applying to the option exercised. In no event, however, can any new option
granted under the "reload" feature be exercised beyond the ten-year term of
the initial option exercised.
AGGREGATED OPTION EXERCISES IN 1993
AND OPTION VALUES AT YEAR-END 1993
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS AT
AT FY-END(#) FY-END($)(1)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
David B. Mathis -- -- 146,955/87,510(2) $ 1,086,402/$358,898(2)
Stephen B. Timbers -- -- 12,500/47,500 25,000/ 75,000
Charles M. Kierscht -- -- 17,900/28,367(2) 116,584/ 75,000(2)
John H. Fitzpatrick -- -- 63,430/47,710 425,068/ 193,710
Kathleen A.
Gallichio -- -- 41,480/31,360 287,443/ 141,148
</TABLE>
- ---------------
(1) Based on a value per share of $36.25 as of December 31, 1993 over the
exercise price, if less.
(2) Where needed, the figures are adjusted to reflect the 3-for-1 stock split in
June 1986.
TERMINATION PROTECTION AGREEMENTS
The Company and 13 senior executives (the "Executives"), including the five
named executive officers, have entered into agreements (the "Agreements") dated
March 18, 1994 intended to encourage the Executives to remain with the Company
during periods of uncertainty with respect to the Company's ownership and to
enhance their abilities to act in the best interests of the Company and its
stockholders with respect to any offer for the Company, without being influenced
by any uncertainties surrounding their respective situations with the Company.
The Agreements may be unilaterally terminated by the Company upon at least one
year's advance notice. If effective on the date of a "Change of Control" of the
Company, the Agreements would remain in effect for three years or such longer
period as is necessary to give effect to their terms. "Change of Control" is
defined under the Agreements in the same manner as under the Company's existing
stock option and restricted stock plans, and the approval of the Conseco Merger
Agreement in June, 1994, constituted a Change of Control under the Agreements.
12
<PAGE> 17
Under the Agreements, an Executive would receive severance benefits if the
Company were to terminate his or her employment with the Company without Cause
(defined below) or if the Executive were to resign for Good Reason (defined
below) either within three years after a Change of Control or prior to a Change
of Control at the request of the acquiror. Such severance benefits would be: (i)
a payment equal to three times the sum of the Executive's base salary, target
bonus and target equity awards (i.e., the value of the Executive's target awards
of options and restricted stock under the Company's long-term stock award
program); (ii) a payment equal to three times the Executive's target profit
sharing contribution from the Company, reduced for each month of service after
the Change of Control; (iii) payment of a pro-rata portion of the Executive's
target bonus for the year of termination; (iv) continued welfare benefits for
three years (or, if shorter, until the Executive becomes covered under a new
employer's plan); (v) payment of any accrued but unpaid bonuses (for prior
years) and any deferred compensation; (vi) three years additional age and
service credit towards eligibility for post-retirement welfare benefits (offset
by additional age and participation actually credited after the Change of
Control); (vii) acceleration of vesting under the Company's supplemental
retirement plans, payment of the Executive's accrued benefit under these plans
and, to the extent the Executive is entitled to a benefit under the defined
benefit portion of any of these plans, three years additional age and service
credit towards eligibility for all purposes, including benefit accrual and
eligibility for early retirement (offset by additional age and service actually
credited after the Change of Control); and (viii) reimbursement for outplacement
counseling services. Any severance benefits payable are grossed-up to the extent
an Executive would be subject to an excise tax under Section 4999 of the
Internal Revenue Code due to the receipt thereof. The Agreements preserve any
applicable Change of Control provisions under other agreements or arrangements,
such as the Company's equity-based compensation programs. They also preserve the
Executive's indemnification rights, require the Company to maintain certain
directors' and officers' liability insurance coverage and impose certain
confidentiality obligations on the Executive.
Cause is defined generally as (i) willful malfeasance which has a material
adverse effect on the Company; or (ii) conviction of a felony. As to any
Executive, Good Reason is defined to be any of the following actions, without
the Executive's express prior written approval, other than due to the
Executive's permanent disability or death: (i) any diminution in the Executive's
titles, duties, responsibilities, status or reporting relationship from the
positions, duties, responsibilities, status or reporting relationship existing
immediately prior to the Change of Control; (ii) removal of the Executive from,
or any failure to re-elect the Executive to, any of the positions the Executive
holds immediately prior to the Change of Control; (iii) failure to pay the
Executive's base salary when due; (iv) any reduction of the Executive's base
salary, target bonus or target equity award; (v) a material reduction in the
Executive's employee or fringe benefits; (vi) a change of the Executive's
principal place of employment to a location more than 20 miles from the
Executive's principal place of employment immediately prior to the Change of
Control; or (vii) any material breach of any provision of the Agreement.
RETIREMENT PLAN
The following table shows the estimated annual pension benefits which would be
payable to a covered participant at normal retirement age under the final pay
formula contained in the Kemper Corporation Retirement Plan, a qualified defined
benefit plan, including any pension amounts which would be provided under the
Company's non-qualified supplemental retirement plan due to benefit limitations
imposed by ERISA. The Retirement Plan includes an alternative career average
benefit formula based on compensation earned during all years of plan
participation (1.85 percent of the participant's first $10,000 of eligible
compensation and 2.40 percent of eligible compensation above $10,000 for the
1993 plan year), but the Company estimates that the Retirement Plan's final pay
formula will produce the greater benefit to the persons identified in the
SUMMARY COMPENSATION TABLE who participate in the Retirement Plan.
13
<PAGE> 18
PENSION PLAN TABLE
<TABLE>
<CAPTION>
FIVE-YEAR YEARS OF PLAN PARTICIPATION
AVERAGE ------------------------------------------------------------
COMPENSATION 20 25 30 35 40
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 200,000 $ 38,110 $ 47,638 $ 57,165 $ 66,693 $ 76,220
250,000 48,110 60,138 72,165 84,193 96,220
300,000 58,110 72,638 87,165 101,693 116,220
350,000 68,110 85,138 102,165 119,193 136,220
400,000 78,110 97,638 117,165 136,693 156,220
450,000 88,110 110,138 132,165 154,193 176,220
500,000 98,110 122,638 147,165 171,693 196,220
600,000 118,110 147,638 177,165 206,693 236,220
700,000 138,110 172,638 207,165 241,693 276,220
800,000 158,110 197,638 237,165 276,693 316,220
900,000 178,110 222,638 267,165 311,693 356,220
1,000,000 198,110 247,638 297,165 346,693 396,220
</TABLE>
A participant's remuneration covered by the Retirement Plan's final pay formula
is his or her average annual salary plus bonus as reported in the SUMMARY
COMPENSATION TABLE, plus the value of any award received under the Company's
Anniversary Stock Award Program (except that bonuses were covered in the year
they were paid rather than when they accrued for purposes of the Retirement
Plan), for the 60 months preceding a participant's retirement or, in the case of
a participant who had participated in the plan for less than 60 months, the
period of his or her participation. Benefits shown were computed as a straight
life single annuity beginning at age 65, and would not be subject to reduction
for social security or other offset amounts. At December 31, 1993, the estimated
credited years of plan participation at normal retirement age for the named
executive officers participating in the Retirement Plan as of December 31, 1993
were as follows: 42 years for Mr. Mathis, 17 years for Mr. Timbers, 37 years for
Mr. Fitzpatrick and 31 years for Ms. Gallichio. Actual years of participation
for each individual were 33, 1, 10 and 5 years, respectively. Because KFS had
not adopted the Retirement Plan, Mr. Kierscht was not eligible to participate.
Mr. Timbers, formerly a KFS employee, commenced participation in the Retirement
Plan effective January 1, 1993.
The Company has announced an intent to terminate the Retirement Plan effective
December 14, 1994 and implemented a November 30 freeze in benefit accruals. In
conjunction with that action, the Company increased the career average benefit
formula for the 1994 plan year for participants who remained with the Company
through the benefit freeze date (to 3.45 percent of the participant's first
$10,000 of eligible compensation for the first nine months of the year and 4
percent of such eligible compensation above $10,000 or, if greater, the amount
which would have accrued through the freeze date under the regular formula). A
comparable increase in accrued benefit under the final pay formula will be
applied to participants in the supplemental plan who remained with the Company
through the November 30 benefit freeze date.
The Retirement Plan provides that, on the consummation of a "change of control"
of the Company or certain other enumerated pension allocation events such as
plan termination or cessation of benefit accruals, the following protections for
plan participants become effective: (i) participants become vested in all
accrued benefits regardless of length of service; (ii) plan assets are allocated
to provide the benefits accrued as of such date through the purchase of
irrevocable annuities; and (iii) surplus assets, if any, available after all
accrued benefits have been provided for are allocated to provide additional
accrued benefits for participants under the annuities or, to the extent a
portion of the assets cannot be allocated under the qualified plan because of
ERISA limitations, those amounts will be credited under the non-qualified
supplemental plan. Following the occurrence of a pension allocation event,
benefits credited to the supplemental plan which are attributable to the
Retirement Plan are valued on an actuarially equivalent lump sum basis and
distributed. The freezing of benefits on November 30, 1994 constituted a pension
allocation event under the Retirement Plan and the Company's non-qualified
supplemental retirement plan.
14
<PAGE> 19
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this proxy statement, in whole or in part, the following report and
the performance graph on page 18 shall not be incorporated by reference into any
such filings.
REPORT ON EXECUTIVE COMPENSATION OF THE COMMITTEE
ON COMPENSATION AND ORGANIZATION
COMPENSATION PHILOSOPHY
The Company's executive compensation program has traditionally been founded on
certain guiding principles designed to align compensation with the Company's
business strategy, performance and realization of stockholder value. Overall
objectives have been designed to:
- - Attract and retain key executives critical to the long-term success of the
Company;
- - Reinforce a common direction among the Company's distinct business units;
- - Reward executives for long-term strategic management by delivering appropriate
ownership interests in the Company;
- - Support a performance-oriented environment that differentiates rewards based
on contributions to business results;
- - Integrate the compensation program with the Company's strategic planning and
performance measurement process; and
- - Provide competitive total compensation opportunities consistent with those of
other leading diversified financial organizations.
Consistent with this policy, the Company has developed an overall compensation
strategy and corresponding compensation plans that tie a significant portion of
executive compensation to success in meeting specified performance goals as well
as in building stockholder value. As an executive's level of responsibility
increases, a greater portion of potential total compensation is based on
performance incentives and long-term equity awards and less on salary and
employee benefits, often causing greater variability in the individual's
compensation level from year to year.
In evaluating competitor practices, the Company's various operating subsidiaries
are compared with their specific industry peers while compensation elements for
executive officers of the Company are measured against those of diversified
financial companies. Each year, the Company has participated in several
compensation studies to determine the competitiveness of its executive
compensation program. The peer group used at the Company level consists of
approximately twenty selected diversified financial companies providing a
cross-section of the diversified financial services industry. The group
evaluated provides a relevant competitive frame of reference for the major
segments of the Company's business portfolio, including asset management,
securities brokerage and life insurance. Specific peer group companies have also
been selected on the basis of comparable asset size, business portfolio and
corporate strategy, and represent the Company's most direct competitors for
executive talent. Some of the companies comprising either the Dow Jones
Insurance (Full Line) Peer Group or the Dow Jones Financial Services
(Diversified) Peer Group are included within the industry peer group analyzed
for compensation purposes. While peer group financial performance has not been
directly analyzed, the influence of results on industry compensation practices
generally can be expected to produce an indirect effect over time.
COMPENSATION VEHICLES
Traditionally, the key elements of the Company's executive compensation program
have been base salary, annual incentive bonus and long-term equity awards.
15
<PAGE> 20
Base Salaries
Base salary levels for the Company's executive officers and subsidiary officers
have been normally positioned somewhat below those for comparable positions in
competitor companies. In determining base salary levels and annual salary
adjustments for executive officers, the Committee considers market compensation
comparisons as well as the individual's performance and relative contribution to
the organization. In the case of a head of a functional or operating unit, that
unit's operating results have also generally been considered.
Annual Incentive Bonus Awards
The Company's executives have been eligible for an annual cash bonus. Goals have
been established at the beginning of each year for the Company, and for each
functional and operating unit, to provide the basis for achieving bonus awards.
These include threshold, target and maximum performance goals which have been
clearly linked with resultant bonus opportunities at each level.
Bonus award opportunities throughout the Company have been generally positioned
above standard industry practices and have been contingent upon business
results. As such, a greater portion of the executive's compensation would be
placed at risk and tied more directly to operating performance. Bonus awards for
executives in a functional or operating unit have reflected results of the
particular unit whereas consolidated results have been the primary basis for
bonuses for the Company's officers and staff.
Long-Term Equity Awards
The Company's past practices respecting equity awards have been designed to
foster significant ownership interests in the Company common stock for key
executives, thereby promoting greater identity between the Company's management
and its stockholders. Two types of awards have been granted to executive
officers of the Company and its major functional and operating units as well as
to other key employees:
Stock Options--a right to purchase shares of common stock over a ten-year period
at the fair market value per share as of the date the option is granted; and
Restricted Stock Awards--shares of common stock which, when granted, provided
that the recipient could not sell or otherwise dispose of the shares awarded
until a requisite employment period had lapsed.
The Company's past practices in granting options and restricted stock have been
designed to provide opportunities fully competitive with those offered by other
diversified financial companies. In establishing grant levels, the executive's
responsibilities, past contributions to the Company and attainment of corporate
and personal objectives, together with the practices of the same peer companies
utilized for all aspects of the compensation program (verified by external
surveys), have been evaluated closely. The Committee has considered the
particular executive's accomplishments, as measured against preset three-year
goals focused on creating longer term stockholder value, in determining the
number of shares awarded. The measurement goals have been established for the
Company as well as for each executive officer and generally include important
strategic initiatives as measurement factors. Prior equity grants can and have
influenced the Committee's determination of grant levels for a given period,
particularly when evaluated against attainment of long-term performance
objectives over the multi-year cycle of the overall compensation program.
Tax Deductibility
Generally, under normal circumstances, the Committee seeks to preserve all
available tax deductions respecting each element of the Company's executive
compensation program. Earlier in 1994, the Committee had proposed various
measures designed to preserve the deductibility of the Company's annual
incentive bonus awards and the compensation income realized on the vesting of
its awards of restricted stock pursuant to Section 162(m) of the Internal
Revenue Code. Section 162(m), commencing from January 1, 1994, inhibits the
ability of public companies to deduct compensation
16
<PAGE> 21
expense in excess of $1.0 million paid in any taxable year to a chief executive
officer or any other person included within the five named executive officers
identified by a company as among its highest paid executive officers for such
year unless such compensation is sufficiently performance-based so as to
continue to qualify for deduction.
Due to the advisability of eliminating various compensation-related
uncertainties during the pendency of the then-planned Conseco merger, however,
the Committee endorsed the vesting of various outstanding long-term equity
awards as well as the provision of certain other payments. These measures, by
fixing the right to receive these compensation elements, preclude such forms of
compensation from being considered performance-based within the meaning of
Section 162(m). The Committee believes that, in the Company's present
circumstances, any desire to attempt to preserve tax deductibility is far
outweighed by the employee relations and business transition objectives
supported by these measures.
COMPENSATION OF THE CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
The Committee increased Mr. Mathis' base salary effective February 1, 1993 from
$480,000 to $530,000 to recognize his achievements in repositioning the Company
for the future as a focused financial services organization dedicated to
producing higher and more consistent earnings for its stockholders.
Mr. Mathis' bonus for 1993 reflects the fact the Company met or exceeded each of
its 1993 performance targets established early in the year. Under Mr. Mathis'
leadership, the Company exceeded its target operating earnings goal and its
objectives to increase the market price of the Company's common stock, both on
an absolute basis as well as relative to the Standard & Poor's 500 Index. The
Company also reduced its exposure to real estate-related assets beyond the level
the Committee set to qualify for maximum performance-based compensation and, by
divesting four major subsidiary operations in the year, met its targeted
restructuring goal. The Committee recognized these excellent accomplishments in
each of the measurement areas in establishing the bonus awards for Mr. Mathis as
well as the other named executive officers.
The significant progress over the three-year compensation plan cycle in the
Company's restructuring efforts as well as in the various categories underlying
the above-described performance targets, together with the overall improvements
in the Company's financial position, were all considered by the Committee in
establishing awards of stock options and restricted stock to Mr. Mathis and each
of the other named executive officers.
COMMITTEE ON COMPENSATION AND ORGANIZATION
Kemper Corporation's Committee on Compensation and Organization is comprised of
the following non-management directors:
George D. Kennedy (Chairman)
John T. Chain Jr.
Raymond F. Farley
17
<PAGE> 22
KEMPER CORPORATION VERSUS SELECTED COMPOSITE INDICES
Until it divested its reinsurance operations, risk management subsidiary and two
property-casualty subsidiaries during 1993, the Company believed the most
appropriate peer group for purposes of the following comparisons was the Dow
Jones Insurance (Full Line) Peer Group. With such divestitures completed and the
Company's focus on the asset management, life insurance and securities brokerage
businesses confirmed, the Company believes comparison to the Dow Jones Financial
Services (Diversified) Peer Group is now more appropriate. Both comparisons are
set forth below, but the Company expects comparison to only the diversified
financial services peer group will be presented in future periods.
FIVE-YEAR CUMULATIVE TOTAL RETURN(1)
1988-1993
<TABLE>
<CAPTION>
DOW JONES
FINANCIAL DOW JONES
SERVICES INSURANCE
(DIVERSI- (FULL LINE)
MEASUREMENT PERIOD KEMPER COR- FIED) PEER PEER GROUP
(FISCAL YEAR COVERED) PORATION S&P 500 GROUP (2) (3)
<S> <C> <C> <C> <C>
1988 100 100 100 100
1989 200 132 135 132
1990 104 128 110 99
1991 172 166 157 136
1992 138 179 183 162
1993 174 197 211 190
</TABLE>
- ---------------
(1) Assumes $100 invested on December 31, 1988 in Kemper Corporation common
stock, S&P 500, Dow Jones Financial Services (Diversified) Peer Group and
Dow Jones Insurance (Full Line) Peer Group. Also assumes reinvestment of
dividends on a quarterly basis.
(2) Dow Jones Financial Services (Diversified) Peer Group consisted of:
Alexander & Alexander Services Inc., American Express Company, Beneficial
Corp., Dreyfus Corporation, Federal Home Loan Mortgage Corporation, Federal
National Mortgage Association, Household International, Inc., Marsh and
McLennan Companies Inc., The Travelers Corp. and Student Loan Marketing
Association.
(3) Dow Jones Insurance (Full Line) Peer Group consisted of: Aetna Life &
Casualty Company, Aon Corporation, CIGNA Corporation, Kemper Corporation,
Lincoln National Corp., Transamerica Corporation and Unitrin Inc.
18
<PAGE> 23
COMPENSATION OF DIRECTORS
1993 COMPENSATION
During 1993, the Company paid all non-management directors an annual retainer of
$17,500. The Company paid the chairman of the Finance Committee an additional
annual retainer of $12,000 (earned and paid on a monthly basis) and the chairmen
of the Audit, Nominating and Corporate Public Policy Committees, and the
Committees on Compensation and Organization and Intercompany Conflicts,
Accountability and Relationships, an additional annual retainer of $7,500 each
(with these retainers paid semi-annually but earned 25 percent quarterly). The
Company also provided reimbursement for necessary travel and accommodation
expenses incurred for attendance at each meeting of the Board of Directors of
the Company or committee thereof, and paid the following meeting fees during
1993:
<TABLE>
<CAPTION>
MEETINGS 1993 COMPENSATION
- ------------------------------- ------------------------------------------------------------
<S> <C>
Board A fee of $1,000 for each meeting attended.
Executive Committee A fee of $1,500 for each meeting attended.
Audit Committee A fee of $750 for each meeting attended.
Corporate Public Policy A fee of $500 for each meeting attended.
Committee
Committee on A fee of $500 for each meeting attended.
Compensation and
Organization
Nominating Committee A fee of $1,000 for each meeting attended.
Finance Committee A fee of $500 for each meeting attended. The retainer paid
the chairman of the committee was in lieu of any meeting
fees.
</TABLE>
The Company paid a fee of $500 to its representative serving on the Committee on
Intercompany Conflicts, Accountability and Relationships for each meeting
attended during 1993.
1994 COMPENSATION
Effective January 14, 1994, the Board of Directors changed the membership and
configuration of its committees and the director compensation program. Such
changes were designed to rebalance and streamline board committee participation
to promote efficiencies; facilitate contemporaneous committee meetings to free
additional time for full board deliberations; de-emphasize meeting fees in favor
of standardized retainers to better equalize director compensation; and increase
total director compensation to better align with emerging standards for
financial services companies. The cash compensation program for non-management
directors was last amended in mid-1990.
As a result of these changes, effective January 1, 1994, all non-management
directors receive an annual retainer of $35,000 for board service and an
additional $15,000 annual retainer for committee service, the latter amount
applying regardless of the number of committees on which a director serves.
These retainers are earned quarterly but paid semi-annually.
19
<PAGE> 24
The Company continues to provide reimbursement for necessary travel and
accommodation expenses incurred for attendance at each meeting of the Board of
Directors or committee thereof, and now pays the following meeting fees:
<TABLE>
<CAPTION>
MEETINGS 1994 COMPENSATION
- ------------------------------- ------------------------------------------------------------
<S> <C>
Board A fee of $500 for each meeting attended.
Executive Committee A fee of $250 for each meeting attended.
Audit Committee A fee of $500 for each meeting attended.
Corporate Public Policy A fee of $1,000 for each meeting attended.
Committee
Committee on A fee of $250 for each meeting attended.
Compensation and
Organization
Investment Committee A fee of $500 for each meeting attended.
Nominating Committee A fee of $2,000 for each meeting attended.
</TABLE>
Other than the above compensation, non-management directors receive no
additional cash remuneration from the Company. Directors who are salaried
employees of the Company or any of its subsidiaries do not receive any annual
retainer or meeting fees for service as a director or on any board committee.
DIRECTOR STOCK OPTIONS
Until 1994, non-qualified stock options had automatically been granted once each
year under the Kemper Corporation Non-Management Director Stock Option Plan (the
"Director Plan") to the Company's non-management directors. Two types of
non-qualified stock options had been issuable under the Director Plan. An
initial option to purchase up to 5,000 shares of Kemper Corporation common stock
was granted to each of the Company's non-management directors elected or
continuing in office on May 16, 1990 and would be granted to any new
non-management director on the date of the organizational board meeting (the
board meeting immediately following the annual stockholders' meeting) at which
he or she first served as a member of the Company's Board of Directors.
Also, each non-management director annually received a non-qualified stock
option to purchase 1,000 shares of Kemper Corporation common stock on the date
of the organizational board meeting next following the date on which such
director received an initial option and on the date of each succeeding
organizational board meeting during the period of such director's incumbency. No
organizational board meeting has been convened thus far in 1994. As such, no
options have been granted under the Director Plan since May, 1993.
The option exercise price of each option granted under the Director Plan is
equal to the last sale price of the Company's common stock at the date of the
automatic grant. Shares purchased through the exercise of an option must be paid
for in full either in cash or with an amount of the Company's common stock
having a fair market value equal to the exercise price, or a combination of
both.
The Director Plan provides that each option granted thereunder has a ten-year
term and is not exercisable during the first year from the date the option was
granted. Thereafter, the director may purchase up to one-fourth of the shares
covered by the option in the second year after grant, up to an additional
one-fourth of the total shares in the third year after grant (one-half of the
total shares cumulatively), up to an additional one-fourth of the total shares
in the fourth year after grant (or cumulatively, for three-fourths) and become
fully exercisable in or after the fifth year following grant. Notwithstanding
these installment purchase provisions applicable to each of the options granted
under the Director Plan, such options become fully exercisable upon the
retirement of the director from the Company's board if such retirement occurs
after one year from the date the particular option was granted.
20
<PAGE> 25
Any option granted under the Director Plan also becomes fully exercisable upon
the occurrence of one of certain enumerated events resulting in a "change of
control" of the Company, provided such change of control event occurs at least
one year after the date the option was granted to a director. All the
outstanding director options, including those held by Mr. Luecke, became
exercisable in full in connection with the approval of the Conseco Merger
Agreement in June, 1994. The Director Plan contains standard anti-dilution
provisions. Subject to certain limitations, the Board of Directors may amend or
terminate the Director Plan at any time (although amendments may not be adopted
more frequently than once every six months), but such actions cannot adversely
affect any outstanding option.
OTHER DIRECTOR BENEFITS
Non-management directors may elect to participate in the Kemper Corporation
Director Deferred Compensation Plan prior to the commencement of any calendar
year in which director compensation is earned. A decision to defer compensation
is irrevocable once the relevant deferment period begins. The deferred
compensation and any earnings credited thereon can be accumulated in an Income
Account (credited at the prime rate of interest), a phantom Stock Unit Account
(credited with an amount based on the market performance and dividend rate of
Kemper Corporation common stock) or a combination of both. All deferred
compensation and any accumulated credited earnings have been payable to the
director either in quarterly payments, a single lump sum or partial lump sum
payments, in each case commencing with the first quarter following cessation of
service as a director or such later date(s) as earlier designated by the
director. The approval of the Conseco Merger Agreement in June, 1994, effected a
"change of control" under the Deferred Compensation Plan. As a result, each
participating non-management director will receive immediate payment of any
deferred amounts upon any resulting termination of board membership. John C.
Stetson deferred fees under this plan until his retirement from the board in
May, 1993.
The Kemper Corporation Director Retirement Plan provides that each
non-management director shall, upon the later of retirement or attaining age 72,
receive a retirement benefit payable quarterly for ten years or the number of
plan quarters in which the director served as a director of the Company,
whichever is less. Payments cease after the date of death of the director. The
retirement benefit presently accrues at $3,000 per quarter. The average of the
accrual rates for the last forty quarters of service (or the director's service
period, if less) determines the amount of the quarterly retirement benefit. The
approval of the Conseco Merger Agreement in June, 1994, effected a "change of
control" under the Director Retirement Plan. As a result, each non-management
director will receive the actuarial equivalent of his retirement benefit in a
lump sum upon any resulting termination of board membership.
During their periods of incumbency, the non-management directors are each
provided life insurance coverage (without cash value) in the amount of $50,000,
and accidental death and dismemberment insurance coverage while traveling on
Company business (without cash value) in the amount of $250,000, in each case
payable to the beneficiaries designated from time to time by each such director.
Such coverages are reduced to the extent coverage is provided by an employee or
retiree benefit plan sponsored by the Company or any of its subsidiaries.
DIRECTOR EMERITUS
Mr. Stetson, who served as a director of the Company from 1973 to 1977 and again
from 1979 to 1993 (having served as Secretary of the United States Air Force
during the interim), retired from the board effective with the May 12, 1993
annual meeting of stockholders and became director emeritus of the Company. As
director emeritus, Mr. Stetson may attend meetings of the board or any committee
on which he previously served prior to his retirement. He will be paid fees for
any meeting attended equal to those payable to directors and will continue to
receive the annual board retainer of $35,000. His participation in the Director
Deferred Compensation Plan and the Director Retirement Plan, as well as under
the insurance coverages afforded directors, terminated effective with the 1993
annual meeting. His outstanding stock options became exercisable in accordance
with their post-retirement exercise provisions and were exercised in April,
1994.
21
<PAGE> 26
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Stockholder action at the annual meeting is also requested with respect to the
ratification of board action appointing KPMG Peat Marwick LLP as independent
auditors for the Company for the calendar year ending December 31, 1994.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
stockholders' meeting, will have an opportunity to make a statement, if they so
desire, and will be available to respond to appropriate questions raised at the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF
KPMG PEAT MARWICK LLP.
OTHER BUSINESS
It is intended that proxies solicited by the Board, unless otherwise specified
therein, will be voted in accordance with the recommendations of the Board of
Directors.
As of December 2, 1994, the Board of Directors does not know of any other
business to be acted upon at the meeting. However, if any matters other than
those referred to above properly come before the meeting, the persons named in
the proxy card intend to vote on such matters in accordance with their best
judgment.
VOTING PROCEDURES
With regard to the election of directors, votes may be cast in favor of or
withheld from each nominee; votes that are withheld will be excluded entirely
from the vote and will have no effect. Abstentions may be specified on all
proposals except the election of directors and will be counted as present for
purposes of determining the existence of a quorum regarding the item on which
the abstention is noted. Abstentions on the ratification of appointment of
independent auditors will have the effect of a negative vote because such a
proposal requires the affirmative vote of a majority of shares present in person
or by proxy and entitled to vote.
Under the rules of the New York Stock Exchange, brokers who hold shares in
street name have the authority to vote on certain items when they have not
received instructions from beneficial owners. Brokers that do not receive
instructions who are present, in person or by proxy, at the meeting will be
counted as present for quorum purposes and will be entitled to vote on the
election of directors and the ratification of the appointment of independent
auditors. Under applicable Delaware law, a broker non-vote will have no effect
on the outcome of the election of directors or the ratification of appointment
of independent auditors.
COST AND METHOD OF SOLICITATION
In addition to the solicitation of proxies by use of the mails, proxies may also
be solicited by the Company and its directors, officers and employees (who will
receive no compensation therefor in addition to their regular salaries) by
telephone, telegram, facsimile transmission and other electronic communication
methods or personal interview. The Company will reimburse banks and brokers who
hold shares of the Company's stock in their name or custody, or in the name of
nominees for others, for their out-of-pocket expenses incurred in forwarding
copies of the proxy materials to those persons for whom they hold such shares.
The Company has retained Georgeson & Company Inc. ("Georgeson") to assist in the
solicitation of proxies. Pursuant to the Company's agreement with Georgeson,
they will provide various proxy advisory and solicitation services for the
Company at a cost of approximately $15,000, plus reasonable out-of-pocket
expenses.
22
<PAGE> 27
CERTAIN LEGAL PROCEEDINGS
Since March 15, 1994, the Company and certain of its directors, including
directors who are also executive officers, have been named defendants in six
complaints filed in the Court of Chancery in the State of Delaware. The
complaints were brought by stockholders of the Company, individually and
purportedly as class actions on behalf of all other stockholders of the Company.
The complaints allege breaches of fiduciary duty by the Company and its
directors arising primarily from the unsolicited proposal by GECC to acquire the
Company and the defendants' alleged wrongful actions with respect thereto. The
complaints seek injunctive relief prohibiting the Company from, among other
things, utilizing certain defensive measures. The complaints also seek damages
and other relief. On March 31, 1994, one of the complaints was amended to allege
further that, among other things, the preliminary proxy statement filed by the
Company in connection with the originally-scheduled 1994 annual meeting of
stockholders on May 11, 1994 (which was adjourned and then postponed as
described above) did not provide full and fair disclosure with respect to the
Agreements or the Board of Directors' unanimous decision to reject the GECC
proposal, and on April 4, 1994, plaintiffs filed a motion for expedited
discovery with respect to the amended allegations. The Court of Chancery granted
limited discovery with respect to the disclosure contained in the Company's
preliminary proxy statement concerning the Board's decision. On May 4, 1994, the
court heard oral argument on the motion for a preliminary injunction. As a
consequence of the letter agreement, dated May 8, 1994, between the Company and
GECC pursuant to which the Company and GECC agreed to adjourn the Company's
annual meeting of stockholders to be held on May 11, 1994, to August 22, 1994,
and following consultation with the parties, the Court of Chancery determined to
withhold issuance of an opinion with respect to plaintiffs' motion for a
preliminary injunction. Following Conseco's November 2, 1994 proposed
modification of the Conseco Merger Agreement, plaintiffs moved to file a further
amended complaint alleging, among other things, that "Conseco's revised offer in
essence constitutes a repudiation of its obligations under the merger agreement"
and that "Thus, the merger agreement and all its terms, including the bust up
fee, are null and void." The complaint seeks, among other things, equitable
relief ordering the individual defendants "to create an active auction of the
Company" and "to take all steps necessary to compel Conseco to carry out its
obligations under the merger agreement." The Company intends to continue to
vigorously contest these actions.
STOCKHOLDER LIST
A certified list of stockholders entitled to be present and vote at the annual
meeting will be available at the office of the Company's corporate secretary,
Long Grove, Illinois, and at the office of the Company's transfer agent, Harris
Trust and Savings Bank, 311 West Monroe Street, 11th floor, Chicago, Illinois,
for inspection by any stockholder during normal business hours from December 13,
1994 to one day prior to the date of the annual meeting and at the annual
meeting site on the day of the meeting.
STOCKHOLDER PROPOSALS
It is presently expected that the 1995 annual meeting of stockholders will be
held on May 17, 1995. Stockholder proposals intended to be presented at the next
annual meeting in 1995 should be directed to the corporate secretary of the
Company and must be received by the Company no later than January 31, 1995 for
inclusion in the proxy statement and proxy card relating to that meeting.
Kathleen A. Gallichio
Corporate Secretary
December 2, 1994
23
<PAGE> 28
- --------------------------------------------------------------------------------
NOTE: PLEASE MARK, DATE, SIGN AND RETURN PROMPTLY IN THE ENVELOPE PROVIDED.
KEMPER CORPORATION PROXY
KEMPER CENTER, LONG GROVE, ILLINOIS 60049
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
WHICH RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
The undersigned hereby appoints Peter B.
Hamilton, George D. Kennedy and David B.
Mathis, or any one of them, true and
lawful proxy and attorney in fact
for the undersigned, with power in each
to appoint a substitute, to vote all
shares of Kemper Corporation which the
undersigned is entitled to vote at the
1994 Annual Meeting of Stockholders to be
held in the stockholders meeting room on
the 57th floor of The First National Bank
of Chicago, One First National Plaza,
Chicago, Illinois, on December 23, 1994
at 10:30 a.m., and at any adjournment(s)
or postponement(s) thereof, as follows:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS / / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
</TABLE>
John T. Chain Jr., George D. Kennedy, David B. Mathis and Kenneth
A. Randall
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME BELOW.)
-------------------------------------------------------------------
2. THE RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS
INDEPENDENT AUDITORS FOR THE YEAR 1994.
/ / FOR / / AGAINST / / ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENT(S) OR POSTPONEMENT(S) THEREOF.
(CONTINUED ON OTHER SIDE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(CONTINUED FROM OTHER SIDE)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
Dated: , 1994
---------------------------
---------------------------
Signature of Stockholder(s)
NOTE: PLEASE DATE, SIGN YOUR NAME AS IT APPEARS HEREON AND RETURN
PROMPTLY. WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
- --------------------------------------------------------------------------------
