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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>
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INDEPENDENCE HOLDING COMPANY
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 22, 1998
------------------------
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 22, 1998 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 seven 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 April 27, 1998 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
April 29, 1998
<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 22, 1998 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, 1997, will first be mailed to stockholders of the
Company on or about May 8, 1998.
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 1998. 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 April 27, 1998
will be entitled to vote at the meeting. On that date, the Company had
outstanding and entitled to one vote per share, 7,435,669 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 1998. 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
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<PAGE>
Peat 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 April 27, 1998 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%
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, 1997, 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, 1997 (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 April 27, 1998. Except
2
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<PAGE>
as provided below, none of 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 ENTITLED TO VOTE
- ------------------------------------------------------------ --------- -----------------
<S> <C> <C>
Harold E. Johnson........................................... 11,500(1) *
Allan C. Kirkman............................................ 4,500(1) *
Steven B. Lapin............................................. 118,500(2) 1.6%
Donald T. Netter............................................ (3) --
Edward Netter............................................... (3) --
Edward J. Scheider.......................................... 76,736(1)(4) 1.0%
Roy T.K. Thung.............................................. 95,750(5) 1.3%
David T. Kettig............................................. 17,581(6) *
Teresa A. Herbert........................................... 15,550(7) *
All directors and executive officers as a group (10 persons) 350,117(1)(2)(3)(4)(5) 4.5%
(6)(7)(8)
</TABLE>
- ------------
(1) 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.
(2) Includes 68,750 shares of Common Stock subject to options granted to Mr.
Lapin in April 1995, all of which are presently exercisable, and 49,250
shares of Common Stock subject to options granted to Mr. Lapin in December
1995, of which two-thirds are presently exercisable and the balance will
vest in December 1998.
(3) 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% of the outstanding Common Stock as of
April 27, 1998. 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.
(4) Includes 33,500 shares of Common Stock owned by Mr. Scheider's wife, as to
which shares Mr. Scheider disclaims beneficial ownership.
(5) Includes 56,250 shares of Common Stock subject to options granted to Mr.
Thung in April 1995, all of which are presently exercisable, and 38,250
shares of Common Stock subject to options granted to Mr. Thung in December
1995, of which two-thirds are presently exercisable and the balance will
vest in December 1998.
(6) Includes 12,500 shares of Common Stock subject to options granted to Mr.
Kettig in April 1995, all of which are presently exercisable, and 4,581
shares of Common Stock receivable upon exercise of 3,000 Warrants.
(footnotes continued on next page)
3
<PAGE>
<PAGE>
(footnotes continued from previous page)
(7) Includes 2,500 shares of Common Stock subject to options granted to Ms.
Herbert in October 1988 and 12,500 shares of Common Stock subject to options
granted to Ms. Herbert in April 1995, all of which are presently
exercisable.
(8) Includes 10,000 shares of Common Stock subject to options granted to one
executive officer, all of which are presently exercisable.
* Represents less than 1% of the outstanding Common Stock.
PROPOSAL 1
NOMINEES FOR ELECTION AS DIRECTORS
Seven 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 79
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 54
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 52
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 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
4
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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; since June 1997, a director of American
Educational Products, Inc., a developer and producer of hands-on educational
materials; since January 1998, a director of The Aristotle Corporation
('Aristotle'), a holding company engaged in the design, manufacture and
marketing of women's intimate apparel.
DONALD T. NETTER, age 36
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 (and since January 1997, also President) of the
managing member of the general partner of the Dolphin limited partnerships; 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 65
Chairman and Chief Executive Officer
Director
Since December 1980, director of the Company; since August 1997, Chairman
of the Compensation Committee; 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; since January 1998, a director of
Aristotle.
EDWARD J. SCHEIDER, age 81
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 54
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 October 1993, Executive Vice President and Chief Financial
Officer of Geneve, prior to October 1993, Senior Vice President and Chief
Financial Officer of Geneve; since December 1996, director of Zimmerman.
5
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Between January 1, 1997 and December 31, 1997, the Board of Directors of
the Company met four 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. The Compensation Committee
of the Board, which exercises responsibility in respect of recommendations
concerning compensation matters, currently consists of Messrs. Edward Netter,
Johnson and Kirkman. The Compensation Committee, which was formed in August
1997, did not meet in 1997. 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.
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 entitled to receive 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 1997 Board meeting fully vested on February 13, 1998, and have an
exercise price of $10.25 per share.
EXECUTIVE OFFICERS
In addition to Messrs. Lapin, Edward Netter and Thung, listed above, who
also serve as directors of the Company, set forth below are each executive
officer's name, age, all positions and offices held with the Company, principal
occupations and business experience during the past five years. Officers are
elected by the Board of Directors, each to serve until his successor is elected
and has qualified, or until his or her earlier resignation, removal from office
or death.
TERESA A. HERBERT, age 36
Vice President and Controller
Since October 1991, Vice President and Controller of the Company.
DAVID T. KETTIG, age 39
Vice President -- Legal and Secretary
Since March 1992, Vice President -- Legal and Secretary of the Company;
since March 1992, Vice President -- Legal and Secretary of Geneve.
BRIAN R. SCHLIER, age 43
Vice President -- Taxation
Since May 1991, Vice President -- Taxation of the Company; for more than
the past five years, Director of Taxation of Geneve.
6
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation paid by the Company and its
subsidiaries to the Named Officers for services rendered for the last three
fiscal years.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------- ----------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION(2)
POSITION YEAR ($) ($) ($) ($) (#)(1) ($) ($)
- -------------------------- ---- ------- ------- ------------ ---------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward Netter ............ 1997 251,177 50,000 -- -- -- -- 6,565
Chairman and Chief 1996 251,177 50,000 -- -- -- -- 2,577
Executive Officer 1995 251,159 -- -- -- -- -- 2,584
Steven B. Lapin .......... 1997 250,930 157,500 -- -- -- -- 43,289
President and Chief 1996 250,930 210,000 -- -- -- -- 39,906
Operating Officer 1995 250,851 150,000 -- -- 118,000 -- 36,826
Roy T.K. Thung ........... 1997 200,932 126,000 -- -- -- -- 38,042
Executive Vice 1996 200,932 168,000 -- -- -- -- 35,092
President, 1995 200,853 120,000 -- -- 94,500 -- 32,410
Chief Financial Officer
and Treasurer
David T. Kettig .......... 1997 105,604 29,165 -- -- -- -- 2,719
Vice President -- 1996 105,604 29,165 -- -- -- -- 1,040
Legal and Secretary 1995 103,775 20,416 -- -- 12,500 22,500 1,051
Teresa A. Herbert ........ 1997 93,956 28,250 -- -- -- -- 1,596
Vice President 1996 93,956 28,250 -- -- -- -- 1,306
and Controller 1995 92,301 17,425 -- -- 12,500 22,250 1,291
</TABLE>
- ------------
(1) Adjusted for the Company's 1-for-2 reverse common stock split in June 1996.
(2) Amounts shown for 1995, 1996 and 1997 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
1995, 1996 and 1997 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, which were paid in full in 1995. The 1997 amounts shown for Messrs.
Netter and Kettig include profit-sharing contributions of $4,050 and $1,679,
respectively, by one of the Company's subsidiaries to their 401(k) accounts
with such subsidiary. Certain of the Named Officers also received
compensation and benefits during 1995, 1996 and 1997 from Geneve and/or its
affiliates (other than the Company) for services rendered to such companies,
which amounts are not included in this table.
7
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information concerning stock options
of the Named Officers who had options at December 31, 1997. No options were
exercised in 1997 by the Named Officers.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FY-END(#) FY-END($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------------- ----------- ----------- ------------- -----------------
<S> <C> <C> <C> <C>
Steven B. Lapin................................ 0 0 78,666/39,334 $437,521/$218,766
Roy T.K. Thung................................. 0 0 63,000/31,500 $351,284/$175,642
David T. Kettig................................ 0 0 8,333/4,167 $50,258/$25,132
Teresa A. Herbert.............................. 0 0 10,833/4,167 $52,368/$25,132
</TABLE>
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, 1997, Messrs. Lapin and Thung would have been entitled to receive
approximately $511,116 and $468,380, respectively, which amounts increase each
year they remain employed by the Company until they attain age 62. Of such
amounts, $40,973 and $35,726, respectively, were accrued in 1997 for Messrs.
Lapin and Thung.
BOARD COMPENSATION COMMITTEE 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 Compensation
Committee of the Company's Board of Directors. The Committee 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.
Management recommended to the Compensation Committee a bonus pool for the
Company's employees (including the executive officers) based on the Company's
performance in 1997 (including management's accomplishments in enhancing the
insurance group's capital position, strategically planning the direction of the
insurance group, and improving the Company's profitability). The amount of the
1997 pool was somewhat less than the 1996 pool in recognition of the efforts of
the executive officers in consummating the Zimmerman Sign Company spin-off in
1996. The amount of the 1997 bonus pool was approved by the disinterested
members of the Committee.
8
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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 Compensation Committee. Although Mr. Netter's bonus is based on
his individual performance as chief executive officer, in determining such
amount, the Committee at the same time takes into consideration Mr. Netter's
significant interest in the Company through his controlling ownership of Geneve.
MEMBERS OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
HAROLD E. JOHNSON ALLAN C. KIRKMAN EDWARD NETTER, Chairman
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
<TABLE>
<CAPTION>
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NASDAQ Stock $100 $115 $112 $159 $195 $240
Market (U.S)
Index
NASDAQ Insurance $100 $107 $101 $143 $163 $239
Stocks Index
Independence $100 $146 $122 $152 $151 $244
Holding Company
</TABLE>
* Assumes that dividends were reinvested and is based on a $100 investment on
December 31, 1992; indices data obtained from Center for Research in Security
Price (CRSP)
9
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RELATED PARTY TRANSACTIONS
The Company and Geneve operate under cost-sharing arrangements pursuant to
which certain items are allocated between the companies. During 1997, the
Company paid to Geneve or accrued for payment thereto approximately $189,000
under such arrangements, and paid or accrued approximately an additional $56,000
for the first quarter of 1998. Geneve also provides the Company the use of
office space as its corporate headquarters for annual consideration of $236,000.
In addition, certain directors, officers and/or employees of the Company or its
subsidiaries, who are also directors, officers and/or employees of Geneve,
received compensation and benefits from Geneve for services rendered thereto
since January 1, 1997. 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, 1997, 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-A, an investment partnership of
which Mr. Donald Netter is the Chairman, Chief Executive Officer and President
of the managing member of the general partner and 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 1998. It is anticipated that
representatives of Peat Marwick, who also served as the Company's auditors for
1997, 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 1999 must be received at the Company's principal
executive office not later than December 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
April 29, 1998
4409-PS-98
10
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APPENDIX 1
PROXY CARD
DETACH HERE
PROXY
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 22, 1998 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.
(see reverse side) CONTINUED AND TO BE SIGNED ON REVERSE SIDE (see reverse side)
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DETACH HERE
THE SHARES REPRESENTED BY THIS PROXY CARD WILL BE VOTED AS DIRECTED BELOW. IF NO
DIRECTION IS GIVEN AND THE PROXY CARD IS VALIDLY EXECUTED, THE SHARES WILL BE
VOTED FOR ALL LISTED PROPOSALS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' ALL PROPOSALS.
(1) To elect seven 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.
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, 1998
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To transact any other business that may properly come before the Annual
Meeting and any adjournment or postponement thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE DATE, SIGN AND RETURN. YOUR PROMPT ATTENTION WILL BE APPRECIATED.
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 ................................... , 1998
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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