KENTUCKY INVESTORS, INC.
200 CAPITAL AVENUE
FRANKFORT, KENTUCKY 40601
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 1998
TO THE SHAREHOLDERS OF
KENTUCKY INVESTORS, INC.
Notice is hereby given that the annual meeting of shareholders of Kentucky
Investors, Inc., a Kentucky corporation, (the "Company") will be held at the
Investors Heritage Life Insurance Company auditorium, Second and Shelby
Streets, Frankfort, Kentucky 40601, on Thursday, May 14, 1998, at 11:00 A.M.
(Eastern Daylight Time), for the following purposes:
(1) To elect three Directors to hold office for a term of three years
each or until their successors are duly elected and qualified; and
(2) To transact such other business as may properly come before the
meeting, or any adjournment thereof.
The Board of Directors, in accordance with the By-laws, has fixed the
close of business on April 3, 1998, as the record date for determining the
shareholders entitled to notice of and to vote at the meeting and any
adjournments thereof. The stock transfer books will not be closed.
It is hoped that you will attend the meeting, but if it is not your
intention to be present, you are respectfully requested to sign, date and
return the enclosed proxy immediately in the accompanying postage-prepaid
envelope. The proxy is being solicited by and on behalf of the Board of
Directors of the Company.
Your attention is directed to the Company's 1997 annual report and to the
proxy statement, both of which accompany this notice.
By Order of the Board of Directors
/s/
Wilma Yeary, CPS, Secretary
P.O. Box 717
Frankfort, Kentucky 40602
April 17, 1998
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS, MAY 14, 1998
The following information is furnished in connection with the solicitation
of the enclosed proxy by and on behalf of the Board of Directors of Kentucky
Investors, Inc. (the "Company" or "KII"), for use at the annual meeting of
shareholders of the Company to be held at the Investors Heritage Life Insurance
Company auditorium, Second and Shelby Streets, Frankfort, Kentucky 40601, on
Thursday, May 14, 1998, at 11:00 A.M. (Eastern Daylight Time), and at any
adjournment thereof, for the purposes set forth in the Notice of Annual
Meeting.
PROXY MAY BE REVOKED
A shareholder executing and returning the enclosed proxy may revoke such
proxy at any time prior to exercise of the authority thereby given by giving
written notice to the Secretary of the Company as provided by Kentucky Revised
Statutes 271B.7-220(6).
COST AND METHOD OF SOLICITATION
The Board of Directors intends to solicit proxies by use of the mails, and
all costs of soliciting proxies for this annual meeting will be borne by the
Company. The proxy statement and form of proxy will be mailed to the
shareholders on April 17, 1998.
VOTING SECURITIES
The Company has issued one class of capital stock. There are 1,160,000
shares outstanding of which 836,895 are entitled to one vote each, except that
in election of Directors, cumulative voting rights apply as provided by
Kentucky Revised Statutes 271B.7-280. Each shareholder shall have the right
to cast as many votes in the aggregate as he is entitled to vote, multiplied by
the number of Directors to be elected, and may cast the whole number for one
candidate or distribute such votes among two or more candidates. Investors
Heritage Life Insurance Company ("IHLIC"), 200 Capital Avenue, Frankfort,
Kentucky 40601 holds directly 228,920 shares or 20% of the stock of the
Company. Investors Underwriters, Inc. ("IUI"), 200 Capital Avenue, Frankfort,
Kentucky 40601 owns 94,185 shares or 8% of the stock of the Company. IHLIC
owns 603 shares or 96% of the stock of Investors Underwriters, Inc. HLW
Investment Corp., 200 Capital Avenue, Frankfort, Kentucky 40601 owns 130,824
shares or 11% of the Company. No other person is known by the Company to own
of record, or beneficially, more than 5% of the Company's capital stock except
as shown on the table below. The Board of Directors has fixed April 3, 1998,
as the record date for determining those eligible to vote, and only such
persons as are shareholders of record at the close of business on that day will
be entitled to vote at such meeting, and at any adjournment thereof.
THE PURPOSE OF THE MEETING SHALL BE:
(1) To elect three Directors to hold office for a term of three years
each or until their successors are duly elected and qualified; and
(2) To transact such other business as may properly come before the
meeting, or any adjournment thereof.
ELECTION OF DIRECTORS
The Articles of Incorporation provide that three Directors shall be
elected at each annual meeting for a term of three years.
The persons named in the proxy shall vote the shares represented by the
proxies returned and duly executed in favor of the election of the three
Directors named below, unless the authority is withheld, to hold office for
terms of three years each or until their successors are duly elected and
qualified. All nominees have consented to serve. In the event any of the
persons named below shall not be available, proxies will be voted for such
substitute nominee, or nominees, as the persons named in the proxy shall
designate.
The following information is given with respect to the nominees for
election as Directors and for each of the other Directors whose terms will
continue after the meeting except as noted. Each Director was elected to his
present term of office by vote of the shareholders at an annual meeting. Each
of the Directors has had the business experience indicated for more than five
years except for Gordon Duke. In 1992, Mr. Duke became President of Court Key
Inc. In February 1994, Mr. Duke became Executive Vice President, Asset
Management Division, for Webb Companies, Lexington, Kentucky.
Number of Shares of Capital Stock
of the Company and Its Subsidiaries
Beneficially Owned, Directly or
Indirectly, by Nominees and Other
Directors as of December 31, 1997
Name, Position Kentucky IHLIC Percentage
With the Company Director Investors, (73% Owned of Stock
& Business Experience Since Inc. (1) Subsidiary) Owned
============================================================================
NOMINEES:
*Dr. Jerry F. Howell, Jr. 1983 33,500 1,124 3%
Director. Professor Emeritus, Dept. of Biological and
Environmental Sciences, Morehead State University.
Director, IHLIC. Age 56.
aDavid W. Reed 1982 25,950 1,214 2%
Director. Independent Businessman. Age 43.
Helen S. Wagner 1986 30,000 2,500 3%
Director. Real Estate Broker,
Secretary/ (2) (3)
Treasurer, Wagner-Shuck Builders,
Inc. Director, IHLIC. Age 61.
Other Directors Whose Terms Will Continue After Meeting:
+Gordon Duke 1991 110 55 (-)
Director. Executive Vice President,
Asset Management Division, Webb
Companies. Age 52.
*+Robert M. Hardy, Jr. 1988 13,683 29 1%
aDirector & General Counsel.
Director & (4) (5)
General Counsel, IHLIC. Age 40.
*+Harry Lee Waterfield II 1963 777,798(6) 750,908(7) 67%
aChairman of the Board & (8)(9) (10)(11)
President. Chairman (12)(13) (14)(15)
of the Board, President & (16)(17) (18)
Chief Executive (19)(20)
Officer, IHLIC. Age 54. (21)(22)
+H. Glenn Doran 1963 20,000 783 2%
*Director. Chairman of the Board, Peoples
Bank of Murray. Director, IHLIC. Age 72.
aJerry F. Howell 1963 6,000 567 (-)
Director. Independent Investor. (23) (24)
Director, IHLIC. Age 83.
All Directors and Officers as a Group: 931,335
*Member of Executive Committee a Member of Nominating Committee
+Member of Finance Committee (-)Indicates less than 1%
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(1) At December 31, 1997, 836,895 shares were outstanding and entitled to
vote.
(2) Includes 8,936 shares of KII held in an irrevocable trust for the benefit
of the children of Helen S. Wagner.
(3) Includes 1,538 shares of IHLIC held in an irrevocable trust for the benefit
of the children of Helen S. Wagner.
(4) Includes 5,485 shares of KII held in Trust by Farmers Bank and Capital
Trust Company, Frankfort, Kentucky ("Farmers Bank") under Kentucky Investors,
Inc. and Affiliated companies 401(k) Savings Plan and Trust Agreement ("401(k)
Plan").
(5) Includes 18 shares of IHLIC held in trust by Farmers Bank under the 401(k)
Plan.
(6) Mr. Waterfield II is part of a group which includes HLW Investment Corp.,
HLW Corporation, RoseGayle Waterfield Hardy, Nancy Waterfield Walton, Harry Lee
Waterfield II Irrevocable Trust Funds 1, 2, 3 and 4, RoseGayle Waterfield
Hardy, Nancy Waterfield Walton and Harry Lee Waterfield II Trust dated
12/22/76, IHLIC, IUI, TAP & CO. and KII Employee Retirement Plan.
(7) Includes 7,900 shares of IHLIC owned by HLW Investment Corp. of which Mr.
Waterfield II is an officer.
(8) Includes 130,824 shares of KII owned by HLW Investment Corp. of which Mr.
Waterfield II is an officer.
(9) Includes 41,836 shares of KII owned by HLW Corporation of which Mr.
Waterfield II is an officer.
(10) Includes 642 shares of IHLIC owned by HLW Corporation of which Mr.
Waterfield II is an officer.
(11) Includes 3,038 shares of IHLIC held in the name of CEDE & Co., nominee
for the four separate Irrevocable Trusts for Harry Lee Waterfield II, RoseGayle
Waterfield Hardy and Nancy Waterfield Walton.
(12) Includes 15,222 shares of KII held in trust for the benefit of the
children of Harry Lee Waterfield.
(13) Includes 15,691 shares of KII held in Trust by Farmers Bank under the
401(k) Plan.
(14) Includes 200 shares of IHLIC held by Nancy Waterfield Walton - see
Footnote (6).
(15) Includes 241 shares of IHLIC held by RoseGayle Waterfield Hardy - see
Footnote (6).
(16) Includes 12,063 shares of KII held by Nancy Waterfield Walton - see
Footnote (6).
(17) Includes 9,502 shares of KII held by RoseGayle Waterfield Hardy - see
Footnote(6).
(18) Includes 72,745 or 6% of the shares of IHLIC held in the name of TAP &
CO. for the benefit of employees who participate in the 401(k) Plan. Mr.
Waterfield II is a member of the Administrative Committee which directs the
voting of these shares.
(19) Includes 228,920 shares of KII held by IHLIC and 94,185 shares of KII held
by IUI. Mr. Waterfield II is Chairman of both companies. The corporations have
the power to dispose of these shares.
(20) Includes 145,299 or 17% of the shares of KII, held in the name of TAP & CO
for the benefit of employees who participate in the 401(k) Plan. Mr. Waterfield
II is a member of the Administrative Committee which directs the voting of
these shares.
(21) Includes 32,559 shares of KII held in the name of CEDE & Co., nominee for
the twelve separate Irrevocable Trusts, three each (Funds 1, 2, 3 and 4) for
Harry Lee Waterfield II, RoseGayle Waterfield Hardy and Nancy Waterfield
Walton, respectively.
(22) Includes 31,000 shares of KII owned by the Kentucky Investors, Inc.,
Employee Retirement Plan of which Mr. Waterfield II is a member of the
Retirement Plan Committee.
(23) Held under Jerry F. Howell, Sr. revocable living trust agreement dated
3-7-96.
(24) Held under Jerry F. Howell, Sr. revocable living trust agreement dated
3-7-96.
Meetings of the Board of Directors are held on call and there is an
organizational meeting following the annual meeting of shareholders. The Board
had 8 meetings in 1997.
The Board has an Executive Committee that exercises the power of the
Board of Directors in management of the business affairs during intervals
between meetings of the Board. The Board considers the action of the Executive
Committee and has approval and veto power over its actions. The Executive
Committee met 2 times in 1997.
The Board of Directors has provided for a Finance Committee that meets on
call and reviews and makes recommendations concerning investments to the Board
of Directors. The Finance Committee met one time in 1997.
The Board of Directors has provided for a Nominating Committee that meets
on call and submits recommendations to the Board of Directors for members of
the Board to be submitted to the shareholders for election. The Nominating
Committee met one time in 1997.
No one except Jerry F. Howell and David Reed attended fewer than 75% of
the aggregate of the total number of Board and Committee meetings. The
Directors were paid $100 for each Board Meeting.
SHAREHOLDER PROPOSALS FOR THE 1999 MEETING
Shareholders who wish to suggest nominees or offer proposals intended to
be presented at the 1999 annual meeting must forward this information to the
Secretary of the Company no later than December 18, 1998.
COMPENSATION OF EXECUTIVE OFFICERS PAID BY THE CORPORATION AND ITS SUBSIDIARIES
The Company does not pay any of its executive officers a regular salary;
therefore, the Company does not have a Compensation Committee. The expense of
the retirement plan to Kentucky Investors, Inc., for its executive officers is
none. Seven executive officers of the Company, who also serve as Directors
and/or officers of IHLIC were compensated by IHLIC. The following SUMMARY
COMPENSATION TABLE sets forth each executive officer of the Company whose
aggregate direct compensation received from IHLIC exceeded $100,000.
NAME AND PRINCIPAL
POSITION YEAR SALARY($) BONUS
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Harry Lee Waterfield II 1997 $153,318.00(1) $25,377.00
President, Chairman of
the Board, & 1996 $148,109.00(1) $22,238.00
Chief Executive Officer
1995 $142,684.00(1) $21,330.00
(1) Amounts reported consist of director's fees from IHLIC and of contributions
made by IHLIC under the 401(k) Plan. The Plan is available to all employees of
IHLIC.
STOCK PERFORMANCE GRAPH
The following graph sets forth the cumulative total shareholder return
(assuming reinvestment of dividends) to the Company's shareholders during the
five year period ended December 31, 1997, as well as an overall stock market
index (Russell 2000) and the Company's peer group index selected on an industry
basis. The component companies utilized in the peer group include The Liberty
Corp., Realiastar Financial Corp., Provident Companies, Inc., Torchmark Corp.,
UNUM Corp., and Washington National Corp. The peer group utilized this year is
identical to last year's peer group with the exception of Pioneer Financial
Services, Inc. and USLife Corp. These companies were deleted due to the fact
that they were acquired by or merged with other companies and historical
returns are not maintained on companies that have been acquired or merged.
Therefore, no financial data was available. The market capitalization of the
peer group company is weighted in the performance graph presented on the next
page.
Comparison of Five-Year Cumulative Total Return*
Kentucky Investors, Inc., Russell 2000 Index, Peer Group
(Performance results through 12/31/97
The Performance Graph Appears Here.
1992 1993 1994 1995 1996 1997
KINV $100.00 $106.88 $110.04 $115.66 $121.26 $151.40
RUSSELL 2000 $100.00 $118.91 $116.55 $149.70 $174.30 $213.00
PEER GROUP $100.00 $ 94.61 $ 75.38 $110.29 $141.04 $218.56
Assumes $100.00 invested at the close of trading 12/91 in Investors Heritage
Life Insurance Company common stock, Russell 2000 Index, and Peer Group.
* Cumulative total return assumes reinvestment of dividends.
Source: Value Line, Inc.
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
AUDITORS
Ernst & Young, LLP, Louisville, Kentucky, is the independent auditing firm
for the Company and has been since 1981, including the most recent year of
1997. A representative is expected to be present at the shareholders' meeting
with the opportunity to make a statement and will respond to appropriate
questions. The services provided by Ernst & Young, LLP during 1997 consisted
of the audit of the Company's financial statements and audit of the Company's
employee benefit plans. No member of the firm of Ernst & Young, LLP has any
relationship with the Company other than the usual relationship that exists
between independent auditors and clients.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no other transactions to which the Company was or is to be a
party, in which any officer or Director or nominee for election as Director had
any direct or indirect material interest.
At the date of this proxy statement, management knows of no other matters
to come before the meeting. However, if any other matter properly comes before
the meeting, it is the intention of the persons named in the proxy statement to
vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
KENTUCKY INVESTORS, INC.
/s/
Wilma Yeary, CPS, Secretary
Frankfort, Kentucky
April 17, 1998
_ Proxy_ KENTUCKY INVESTORS, INC. _ Proxy_
200 CAPITAL AVENUE, FRANKFORT, KENTUCKY 40601
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Harry Lee Waterfield II and Jerry F. Howell, or
either of them, attorneys with full power of substitution to vote as proxies
for the undersigned at the annual meeting of shareholders of Kentucky
Investors, Inc. to be held on May 14, 1998, or at any adjournment thereof, and
vote as designated below with all powers the undersigned would possess, if
present, upon matters described in the notice of annual meeting and proxy
statement dated April 17, 1998 as follows:
(1) Election of Directors
- --------FOR all nominees listed below (except as marked to the contrary
below)
- -------- WITHHOLD AUTHORITY to vote for all nominees below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
Dr. Jerry F. Howell, Jr.
David W. Reed
Helen S. Wagner
(2) On any other matter which may come before the meeting in accordance with
their best judgement.
PLEASE SIGN, DATE AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
To be counted this proxy must be signed, dated and received by the Corporate
Secretary of Kentucky Investors, Inc., 200 Capital Avenue, P. O. Box 717,
Frankfort, Kentucky 40602, on or before May 14, 1998.
This proxy when properly executed will be voted in accordance with instructions
specified but in the absence of any instructions will be voted "FOR".
Please sign exactly as name appears on address. If shares of stock are held
jointly, all joint owners should sign. If signing as attorney, administrator,
executor, guardian, trustee or corporate officer, please add your title as
such.
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Shareholder's signature
Date -----------,1998
