<PAGE>
<PAGE>
Section 240.14a-101 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
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
INDEPENDENCE HOLDING COMPANY
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
............................................................
(2) Aggregate number of securities to which transaction
applies:
.......................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
.......................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................
(3) Filing Party:
.......................................................
(4) Date Filed:
.......................................................
<PAGE>
<PAGE>
INDEPENDENCE HOLDING COMPANY
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 16, 1997
------------------------
To the Stockholders of
INDEPENDENCE HOLDING COMPANY:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
INDEPENDENCE HOLDING COMPANY (the 'Company') will be held on June 16, 1997 at
9:30 A.M., local time, at the Meeting Room, Greenwich Public Library, 101 West
Putnam Avenue, Greenwich, Connecticut for the following purposes:
1. To elect eight directors of the Company;
2. To vote upon a proposal to ratify the selection of independent
auditors; and
3. To transact such other business as may properly come before the
meeting and any adjournment thereof.
Only stockholders of record at the close of business on May 22, 1997 are
entitled to notice of, and to vote at, the Annual Meeting of Stockholders.
Your attention is directed to the Proxy Statement submitted with this
notice. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE DATE AND
SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
IN THE EVENT A STOCKHOLDER DECIDES TO ATTEND THE MEETING, SUCH STOCKHOLDER MAY
REVOKE SUCH PROXY AND VOTE SUCH SHARES IN PERSON. No postage need be affixed to
the enclosed envelope if mailed in the United States.
By Order of the Board of Directors
David T. Kettig
Secretary
May 27, 1997
<PAGE>
<PAGE>
INDEPENDENCE HOLDING COMPANY
96 CUMMINGS POINT ROAD
STAMFORD, CT 06902
203-358-8000
--------------------------
PROXY STATEMENT
--------------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Independence Holding Company (the 'Company') of
Proxies to be used at the Annual Meeting of Stockholders to be held at the
Meeting Room, Greenwich Public Library, 101 West Putnam Avenue, Greenwich,
Connecticut on June 16, 1997 at 9:30 A.M., local time. In addition to
solicitation of Proxies by mail, the directors, officers and employees of the
Company may solicit Proxies personally, by telephone, telefax or telegram. The
expense of all such solicitation, including the cost of preparing, printing and
mailing this Proxy Statement, will be borne by the Company. The Company will,
upon request, reimburse brokers, banks or other persons for their reasonable
out-of-pocket expenses in forwarding proxy material to beneficial owners of the
Company's shares. This Proxy Statement and the accompanying Proxy and the
Company's Annual Report to Stockholders, which contains financial statements for
the year ended December 31, 1996, will first be mailed to stockholders of the
Company on or about May 27, 1997.
If the enclosed form of Proxy is executed and returned, it will be voted as
directed by the stockholder. If no directions are given, Proxies will be voted
(i) for election as directors of all of the nominees specified therein and (ii)
for the ratification of the selection of KPMG Peat Marwick LLP ('Peat Marwick')
as independent auditors for the calendar year 1997. A Proxy may be revoked at
any time, insofar as the authority granted thereby has not been exercised at the
Annual Meeting of Stockholders, by filing with the Secretary of the Company a
written revocation or a duly executed Proxy bearing a later date. Any
stockholder present at the meeting may vote personally on all matters brought
before the meeting and, in that event, such stockholder's Proxy will not be used
at the meeting by holders of the Proxy.
Only stockholders of record as of the close of business on May 22, 1997
will be entitled to vote at the meeting. On that date, the Company had
outstanding and entitled to one vote per share, 7,431,769 shares of Common
Stock, par value $1.00 per share ('Common Stock'). An additional 2,188,950
shares of Common Stock are held in treasury by the Company and are not entitled
to vote. A majority of the outstanding shares will constitute a quorum at the
meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
Abstentions are counted in tabulations of the votes cast on proposals presented
to stockholders, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved.
If no contrary instruction is indicated, shares represented by properly
executed Proxies in the accompanying form of proxy will be voted by the persons
designated in the printed portion thereof (i) FOR the election of the nominees
named below to serve as directors for a one-year term, and (ii) and FOR the
ratification of the selection of Peat Marwick as independent auditors for the
calendar year 1997. Each director must be elected by the affirmative vote of a
plurality of the votes cast at the meeting by the holders of shares of Common
Stock represented in person or by Proxy. Approval of Peat
<PAGE>
<PAGE>
Marwick as independent auditors requires the affirmative vote of a majority of
the shares of Common Stock present or represented at the meeting.
Management does not know of any other matters to be brought before the
meeting at this time; however, if any other matters are brought before the
meeting, the proxy holder shall vote in his discretion with respect to the
matter. In the event a stockholder specifies a different choice on the Proxy,
such stockholder's shares will be voted or withheld in accordance with the
specifications so made. Should any nominee for director named herein become
unable or unwilling to accept nomination or election, it is intended that the
persons acting under proxy will vote for the election of such other person as
the Board of Directors of the Company may recommend unless the number of
directors is reduced by the Board of Directors. The Company has no reason to
believe that any nominee will be unable or unwilling to serve if elected to
office.
PRINCIPAL STOCKHOLDERS
Listed below are the number of shares of Common Stock beneficially owned as
of May 22, 1997 by the holders of more than 5% of the Common Stock of the
Company.
<TABLE>
<CAPTION>
COMMON STOCK
------------
<S> <C>
Geneve Holdings, Inc.(1) ..................................................... 4,092,906
96 Cummings Point Road 55.1%
Stamford, Connecticut 06902
</TABLE>
- ------------
(1) According to (i) information disclosed in Amendment No. 34 to Schedule 13D
dated January 7, 1997 of Geneve Holdings, Inc. (together with its affiliates
also referred to herein as 'Geneve') supplemented by (ii) information
provided to the Company by Geneve in response to a Company questionnaire, a
group consisting of Geneve and certain of its affiliates are the beneficial
owners of 4,092,906 shares of Common Stock. As of December 31, 1996, Geneve
did not own any of the Company's share purchase warrants (the 'Warrants').
Mr. Edward Netter, Chairman and Chief Executive Officer and a director of
the Company, is an executive officer and a director of Geneve. Mr. Donald T.
Netter, a director of the Company, is an executive officer of Geneve. Mr.
Edward Netter and members of his family (including Mr. Donald T. Netter)
control Geneve by virtue of their voting interest. Messrs. Edward Netter and
Donald T. Netter disclaim beneficial ownership as to the shares of Common
Stock owned by Geneve.
------------------------
To the best knowledge of the Company, Geneve has sole investment and voting
power with respect to the shares listed above, and no other person or persons
acting in concert own beneficially more than 5% of the Common Stock.
The following table sets forth for each director of the Company, the Chief
Executive Officer and the four other most highly compensated executive officers
of the Company for the year ended December 31, 1996 (the 'Named Officers'), and
for all directors and executive officers of the Company as a group, information
regarding beneficial ownership of Common Stock as of May 22, 1997. None of
2
<PAGE>
<PAGE>
the directors, Named Officers or directors and executive officers as a group
owns beneficially any Warrants.
<TABLE>
<CAPTION>
NUMBER
OF PERCENT OF CLASS
NAME SHARES(1) ENTITLED TO VOTE
- ------------------------------------------------------------- --------- ----------------
<S> <C> <C>
Harold E. Johnson............................................ 11,000(2) *
Allan C. Kirkman............................................. 4,500(2) *
Steven B. Lapin.............................................. 118,500(3) 1.6%
Donald T. Netter............................................. (4)
Edward Netter................................................ (4) --
Edward J. Scheider........................................... 76,236(2)(5) 1.0%
Roy T.K. Thung............................................... 95,750(6) 1.3%
F. Peter Zoch, III........................................... 1,500(7) *
David T. Kettig.............................................. 13,000(8) *
Teresa A. Herbert............................................ 15,550(9) *
All directors and executive officers as a group (11 persons) 346,036(1)(2)(3)(4)(5) 4.5%
(6)(7)(8)(9)(10)
</TABLE>
- ------------
(1) Adjusted for the Company's 1-for-2 reverse common stock split in June 1996.
(2) Constitutes or includes 4,500 shares of Common Stock subject to options
granted to each such director of which, in each case, all shares are
presently exercisable.
(3) Includes 68,750 shares of Common Stock subject to options granted to Mr.
Lapin in April 1995, of which two-thirds are presently exercisable and the
balance will vest in April 1998, and 49,250 shares of Common Stock subject
to options granted to Mr. Lapin in December 1995, of which one-third are
presently exercisable and the balance will vest ratably in December 1997
and 1998.
(4) As described in the table relating to Principal Stockholders, Geneve and
certain of its affiliates are the beneficial owners of 4,092,906 shares of
Common Stock, which represents 55.1% of the outstanding Common Stock as of
May 22, 1997. Mr. Edward Netter, Chairman and Chief Executive Officer and a
director of the Company, is an executive officer and a director of Geneve.
Mr. Donald T. Netter, a director of the Company, is an executive officer of
Geneve. Mr. Edward Netter and members of his family (including Mr. Donald
T. Netter) control Geneve by virtue of their voting interest. Messrs.
Edward Netter and Donald T. Netter disclaim beneficial ownership as to the
shares of Common Stock owned by Geneve.
(5) Includes 33,500 shares of Common Stock owned by Mr. Scheider's wife, as to
which shares Mr. Scheider disclaims beneficial ownership.
(6) Includes 56,250 shares of Common Stock subject to options granted to Mr.
Thung in April 1995, of which two-thirds are presently exercisable and the
balance will vest in April 1998, and 38,250 shares of Common Stock subject
to options granted to Mr. Thung in December 1995, of which one-third are
presently exercisable and the balance will vest ratably in December 1997
and 1998.
(7) Constitutes 1,500 shares of Common Stock subject to options granted to Mr.
Zoch, all of which shares are presently exercisable.
(footnotes continued on next page)
3
<PAGE>
<PAGE>
(footnotes continued from previous page)
(8) Includes 12,500 shares of Common Stock subject to options granted to Mr.
Kettig in April 1995, of which two-thirds are presently exercisable and the
balance will vest in April 1998.
(9) Includes 2,500 shares of Common Stock subject to options granted to Ms.
Herbert in October 1988, all of which shares are presently exercisable, and
12,500 shares of Common Stock subject to options granted to Ms. Herbert in
April 1995, of which two-thirds are presently exercisable and the balance
will vest in April 1998.
(10) Includes 10,000 shares of Common Stock subject to options granted to one
executive officer, of which two-thirds are presently exercisable and the
balance will vest in April 1998.
* Represents less than 1% of the outstanding Common Stock.
PROPOSAL 1
NOMINEES FOR ELECTION AS DIRECTORS
Eight directors will be elected at the meeting, each to hold office until
the next Annual Meeting of Stockholders and until such director's successor
shall be elected and shall qualify.
It is intended that shares represented by Proxies will be voted for the
election of the nominees named below. If at the time of the meeting any of the
nominees should be unwilling or unable to serve, the discretionary authority
provided in the Proxy will be exercised to vote for a substitute or substitutes,
as the Board of Directors recommends. The Board has no reason to believe that
any of the nominees will be unwilling or unable to serve as a director.
The persons named below have been nominated for election as directors. All
of such nominees presently serve as directors of the Company.
HAROLD E. JOHNSON, age 78
Director
Since November 1987, director of the Company; for more than five years
prior to retirement in 1983, Executive Vice President of The Continental
Corporation, a diversified insurance and financial holding company with
principal offices in New York, New York; since November 1993, director of Queens
County Bancorp, Inc., a banking holding company with principal offices in Queens
County, New York.
ALLAN C. KIRKMAN, age 53
Director
Since December 1980, director of the Company; for more than the past five
years, Executive Vice President of Mellon Bank, N.A., a national bank with
principal offices in Pittsburgh, Pennsylvania.
STEVEN B. LAPIN, age 51
President and Chief Operating Officer
Director
Since July 1991, director of the Company; since November 1993, President
and Chief Operating Officer of the Company; prior to November 1993, Executive
Vice President -- Operations of the
4
<PAGE>
<PAGE>
Company; since October 1993, President and Chief Operating Officer of Geneve
Corporation, a private diversified holding company with principal offices in
Stamford, Connecticut, which is an affiliate of the Company ('Geneve'); prior to
October 1993, Executive Vice President and Chief Operating Officer of Geneve;
for more than the past five years, director of Geneve; since August 1992,
director of Zimmerman Sign Company ('Zimmerman'), a provider of site
identification products and services, which became a publicly held company in
December 1996.
DONALD T. NETTER, age 35
Director
Since November 1993, director of the Company; from January 1995 to December
31, 1996, Senior Vice President -- Investments of the Company; since February
1994, Senior Vice President -- Investments of Geneve; since March 1996, Chairman
and Chief Executive Officer of the managing member of the general partner of
Dolphin Limited Partnership, an investment partnership which ceased to be an
affiliate of the Company in January 1997; from February 1992 to August 1993,
Senior Vice President and Treasurer of Damon Corp., a clinical laboratory
testing company with principal offices in Needham Heights, Massachusetts
('Damon'); prior to August 1993, a director of Damon. Mr. Donald T. Netter is
the son of Mr. Edward Netter.
EDWARD NETTER, age 64
Chairman and Chief Executive Officer
Director
Since December 1980, director of the Company; for more than the past five
years, Chairman and Chief Executive Officer of the Company; from December 1990
to November 1993, President of the Company; for more than the past five years,
Chairman, Chief Executive Officer and director of Geneve.
EDWARD J. SCHEIDER, age 80
Director
Since November 1987, director of the Company and Chairman of the Audit
Committee; for more than five years prior to retirement in March 1995, Vice
President of Kidder, Peabody & Co., Inc., an investment banking and brokerage
firm with principal offices in New York, New York.
ROY T.K. THUNG, age 53
Executive Vice President,
Chief Financial Officer and Treasurer
Director
Since December 1990, director of the Company; since November 1993,
Executive Vice President, Chief Financial Officer and Treasurer of the Company;
from May 1990 to November 1993, Senior Vice President, Chief Financial Officer
and Treasurer of the Company; from June 1983 to December 1986, director of the
Company; since November 1993, Executive Vice President and Chief Financial
Officer of Geneve, prior to November 1993, Senior Vice President and Chief
Financial Officer of Geneve; since December 1996, director of Zimmerman.
5
<PAGE>
<PAGE>
F. PETER ZOCH, III, age 54
Director
Since December 1980, director of the Company; from December 1990 to June
1993, Vice Chairman of the Board of the Company; for more than the past five
years, Chairman of the Executive Committee of the Company; prior to July 1992,
President and director of Geneve.
------------------------
Between January 1, 1996 and December 31, 1996, the Board of Directors of
the Company met six times. In addition, the Audit Committee of the Board, which
exercises responsibility in respect of the recommendation of the Company's
independent public auditors, the review of such auditor's audit and
recommendations concerning internal controls, met twice. The Audit Committee
currently consists of Messrs. Scheider and Johnson. Each director who has been
nominated for election as a director attended at least 75% of the Board meetings
and meetings of Committees on which such director served, other then Mr. Zoch
who attended 50% of such meetings.
Directors of the Company who are not also officers of the Company receive a
monthly fee of $500 plus $400 for each Board or Committee meeting attended.
Directors who are officers of the Company do not receive compensation for
serving as directors of the Company.
Pursuant to the Company's 1988 Stock Incentive Plan, directors of the
Company who are not also employees of the Company or a subsidiary ('Independent
Directors') are each granted non-qualified stock options with respect to 500
shares of Common Stock at the first meeting of the Board of Directors following
each Annual Meeting of Stockholders of the Company, which stock options vest six
months after date of grant. Outstanding options granted at such 1996 Board
meeting fully vested on March 13, 1997, and currently have an exercise price of
$8.41 per share.
EXECUTIVE OFFICERS
In addition to Messrs. Lapin, Edward Netter and Thung, listed above, who
also serve as directors of the Company, set forth below are each executive
officer's name, age, all positions and offices held with the Company, principal
occupations and business experience during the past five years. Officers are
elected by the Board of Directors, each to serve until his successor is elected
and has qualified, or until his earlier resignation, removal from office or
death.
TERESA A. HERBERT, age 35
Vice President and Controller
Since October 1991, Vice President and Controller of the Company.
DAVID T. KETTIG, age 38
Vice President -- Legal and Secretary
Since March 1992, Vice President -- Legal and Secretary of the Company;
since March 1992, Vice President -- Legal and Secretary of Geneve.
BRIAN R. SCHLIER, age 42
Vice President -- Taxation
Since May 1991, Vice President -- Taxation of the Company; for more than
the past five years, Director of Taxation of Geneve.
6
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation paid by the Company and its
subsidiaries to the Named Officers for services rendered for the last three
fiscal years.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
AWARDS PAYOUTS
----------------------- -------
ANNUAL COMPENSATION
--------------------------------------- (f) (g)
(e) RESTRICTED SECURITIES (h) (i)
(a) (c) (d) OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL (b) SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION(2)
POSITION YEAR ($) ($) ($) ($) (#)(1) ($) ($)
- -------------------------- ---- ------- ------- ------------ ---------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward Netter ............ 1996 251,177 50,000 -- -- -- -- 2,577
Chairman and Chief 1995 251,159 -- -- -- -- -- 2,584
Executive Officer 1994 251,040 50,000 -- -- -- -- 2,653
Steven B. Lapin .......... 1996 250,940 210,000 -- -- -- -- 39,906
President and Chief 1995 250,851 150,000 -- -- 118,000 -- 36,826
Operating Officer 1994 249,990 150,000 -- -- -- -- 113,108
Roy T.K. Thung ........... 1996 200,932 168,000 -- -- -- -- 35,092
Executive Vice 1995 200,853 120,000 -- -- 94,500 -- 32,410
President, Chief 1994 200,000 120,000 -- -- -- -- 98,953
Financial Officer and
Treasurer
David T. Kettig .......... 1996 105,604 29,165 -- -- -- -- 1,040
Vice President -- Legal 1995 103,775 20,416 -- -- 12,500 22,250 1,051
and Secretary 1994 99,455 23,332 -- -- -- -- (7,095)
Teresa A. Herbert ........ 1996 93,956 28,250 -- -- -- -- 1,306
Vice President and 1995 92,301 17,425 -- -- 12,500 22,250 1,291
Controller 1994 88,259 20,500 -- -- -- -- (6,848)
</TABLE>
- ------------
(1) Adjusted for the Company's 1-for-2 reverse common stock split in June 1996.
(2) Amounts shown for 1994, 1995 and 1996 for all of the Named Officers include
the dollar value of premiums paid for term life insurance. In addition,
amounts shown for Messrs. Lapin and Thung include amounts accrued during
1994, 1995 and 1996 under Retirement Benefit Agreements with the Company
(described below under the heading 'Retirement Benefit Agreements'). Amounts
shown for Mr. Kettig and Ms. Herbert also include the value of incentive
units based on the decrease in book value per share of the Company's Common
Stock for 1994; such units were paid in full in 1995. Certain of the Named
Officers also received compensation and benefits during 1994, 1995 and 1996
from Geneve and/or its affiliates (other than the Company) for services
rendered to such companies, which amounts are not included in this table.
7
<PAGE>
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information concerning stock options
of the Named Officers who had options at December 31, 1996. No options were
exercised in 1996 by the Named Officers.
<TABLE>
<CAPTION>
(d)
NUMBER OF (e)
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
(b) OPTIONS AT OPTIONS AT
SHARES (c) FY-END(#)(1) FY-END($)(2)
(a) ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- -------------------------------------------------- ----------- ----------- ------------- ---------------
<S> <C> <C> <C> <C>
Steven B. Lapin................................... 0 0 39,334/78,666 $18,620/$37,239
Roy T.K. Thung.................................... 0 0 31,500/63,000 $15,234/$30,469
David T. Kettig................................... 0 0 4,167/8,333 $3,386/$6,771
Teresa A. Herbert................................. 0 0 6,667/8,333 $3,386/$6,771
</TABLE>
- ------------
(1) Adjusted for the Company's 1-for-2 reverse common stock split in June 1996.
(2) Does not reflect adjustment in March 1997 to the exercise price of the
Company's stock options to reflect the distribution of all of the Company's
interest in Zimmerman.
RETIREMENT BENEFIT AGREEMENTS
In 1991, the Company entered into retirement benefit agreements with
Messrs. Lapin and Thung pursuant to which they are entitled to receive cash
payments, based upon their salaries, at such time as they retire or otherwise
terminate their employment with the Company. Such payments are fully vested.
Assuming that such individuals' employment with the Company had terminated on
December 31, 1996, Messrs. Lapin and Thung would have been entitled to receive
approximately $468,913 and $429,706, respectively, which amounts increase each
year they remain employed by the Company until they attain age 62. Of such
amounts, $37,590 and $32,776, respectively, were accrued in 1996 for Messrs.
Lapin and Thung.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
Management's recommendations as to the form and level of compensation of
the Company's executive officers are subject to the approval of the Company's
Board of Directors.
The Board of Directors has not retained a compensation consultant.
The Company's compensation policies seek to attract and retain key
executives necessary to the long-term success of the Company, to align
compensation with both annual and long-term strategic plans and goals and to
reward performance in the continued growth and success of the Company and in the
enhancement of shareholder values. In furtherance of these goals, the Company
has employed a combination of annual base salaries, which are set at levels
which management believes to be competitive with industry and regional pay
practices and economic conditions, and annual and longer term incentive
compensation, including options to purchase Common Stock.
Based on the Company's performance in 1996 (including management's
accomplishments in enhancing the insurance group's capital position,
strategically planning the direction of the insurance group, improving the
Company's profitability, and, in particular, consummating the Zimmerman common
stock distribution), management recommended to the Board of Directors a bonus
pool for the
8
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<PAGE>
Company's employees (including the executive officers). The amount of the 1996
bonus pool was approved by the disinterested members of the Board.
Specifically regarding the chief executive officer, Edward Netter, base
salary has been determined by considering Company and individual performance.
Mr. Netter's annual bonus payments are subject to approval by the disinterested
members of the Board of Directors. Although Mr. Netter's bonus is based on his
individual performance as chief executive officer, in determining such amount,
the Board at the same time takes into consideration Mr. Netter's significant
interest in the Company through his controlling ownership of Geneve.
MEMBERS OF THE BOARD OF DIRECTORS:
<TABLE>
<S> <C>
HAROLD E. JOHNSON EDWARD NETTER
ALLAN C. KIRKMAN EDWARD J. SCHEIDER
STEVEN B. LAPIN ROY T.K. THUNG
DONALD T. NETTER F. PETER ZOCH, III
</TABLE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the five year cumulative total
return of the Common Stock with that of the Nasdaq Stock Market (US) Index and
the Nasdaq Stock Market Insurance Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG INDEPENDENCE HOLDING COMPANY, NASDAQ STOCK MARKET (U.S.) INDEX
AND NASDAQ INSURANCE STOCKS INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NASDAQ Stock $100 $116 $134 $131 $185 $227
Market (U.S.)
Index
NASDAQ Insurance $100 $141 $191 $204 $192 $273
Stocks Index
Independence $100 $202 $294 $245 $306 $303
Holding Company
</TABLE>
* Assumes that dividends were reinvested and is based on a $100 investment on
December 31, 1991; indices data obtained from Center for Research in Security
Price (CRSP)
9
<PAGE>
<PAGE>
RELATED PARTY TRANSACTIONS
The Company and Geneve operate under cost-sharing arrangements pursuant to
which certain items are allocated between the companies. During 1996, the
Company paid to Geneve or accrued for payment thereto approximately $165,000
under such arrangements, and paid or accrued approximately an additional $41,000
for the first quarter of 1997. Geneve also provides the Company the use of
office space as its corporate headquarters for annual consideration of $236,000.
In addition, certain current or former directors, officers and/or employees of
the Company or its subsidiaries, who are also current or former directors,
officers and/or employees of Geneve, received compensation and benefits from
Geneve for services rendered thereto since January 1, 1996. The foregoing is
subject to the approval of the Audit Committee of the Board of Directors at
least annually, and management of the Company believes that the terms thereof
are no less favorable than could be obtained by the Company from unrelated
parties on an arm's length basis.
At various times since January 1, 1996, certain securities transfers were
made between the Company and/or certain of its subsidiaries, on the one hand,
and Geneve, on the other hand, at fair market value. The Company has invested as
a limited partner in Dolphin Limited Partnership ('Dolphin'), an investment
partnership of which Mr. Donald T. Netter is the Chairman and Chief Executive
Officer of the managing member of the general partner and, since January 1997,
the principal shareholder. Consistent with the terms of the partnership
agreement, in addition to other defined expenses, limited partners pay quarterly
a management fee based on their beginning capital accounts, and an annual
performance-based incentive allocation.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has selected Peat Marwick as the independent
auditors of the Company for the year 1997. It is anticipated that
representatives of Peat Marwick, who also served as the Company's auditors for
1996, will be present at the Annual Meeting of Stockholders and will have an
opportunity to make a statement if they so desire and to answer any appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' PROPOSAL 2.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder intends to present at the Annual Meeting
of Stockholders to be held in 1998 must be received at the Company's principal
executive office not later than January 31, 1998 in order to be includable in
the proxy material for such meeting.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
other business to be presented for action at the meeting. As to any business
which would properly come before the meeting, the Proxies confer discretionary
authority in the persons named therein and those persons will vote or act in
accordance with their best judgment with respect thereto.
By Order of the Board of Directors
DAVID T. KETTIG
Secretary
May 27, 1997
10
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APPENDIX 1
PROXY CARD
INDEPENDENCE HOLDING COMPANY
96 CUMMINGS POINT ROAD, STAMFORD, CONNECTICUT 06902
PROXY -- SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of Independence Holding Company (the 'Company')
hereby appoints Steven B. Lapin and David T. Kettig, and each or either of them,
the true and lawful proxies, agents and attorneys of the undersigned, each with
full power to act without the other and with full power of substitution to vote
all shares of the Company which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders of the Company to be
held on Monday, June 16, 1997 at 9:30 A.M., E.D.T., at the Meeting Room,
Greenwich Public Library, 101 West Putnam Avenue, Greenwich, Connecticut, and at
any adjournment or postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' ALL PROPOSALS.
(1) To elect eight directors.
[ ] FOR all nominees listed below (except as instructed below) [ ] WITHHOLD
AUTHORITY to vote for all nominees listed below
Harold E. Johnson, Allan C. Kirkman, Steven B. Lapin, Donald T. Netter, Edward
Netter, Edward J. Scheider, Roy T.K. Thung, F. Peter Zoch, III.
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name here:
...............................................................................
(2) To ratify the appointment of KPMG Peat Marwick LLP as independent auditors
for the fiscal year ending December 31, 1997
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To transact any other business that may properly come before the Annual
Meeting and any adjournment or postponement thereof.
(see reverse)
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The shares represented by this proxy card will be voted as directed above. IF NO
DIRECTION IS GIVEN AND THE PROXY CARD IS VALIDLY EXECUTED, THE SHARES WILL BE
VOTED FOR ALL LISTED PROPOSALS.
The undersigned hereby ratifies and confirms all that said proxies, agents
and attorneys, or any of them or their substitutes, lawfully may do at the
meeting and hereby revokes all proxies heretofore given by the undersigned to
vote at said meeting or any adjournment or postponement thereof.
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<S> <C>
PLEASE SIGN THE PROXY EXACTLY AS YOUR NAME(S) Dated ................................... , 1997
APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN (L.S.)
PERSONALLY. TRUSTEES AND OTHER FIDUCIARIES ................................................
SHOULD INDICATE THE CAPACITY IN WHICH THEY SIGN, (L.S.)
AND WHERE MORE THAN ONE NAME APPEARS, A MAJORITY ................................................
MUST SIGN. IF A CORPORATION, THE SIGNATURE
SHOULD BE THAT OF AN AUTHORIZED OFFICER WHO
SHOULD STATE HIS OR HER TITLE.
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PLEASE DATE, SIGN AND RETURN. YOUR PROMPT ATTENTION WILL BE APPRECIATED.
