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<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>
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INDEPENDENCE HOLDING COMPANY
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 22, 1999
------------------------
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, 1999 at
9:30 A.M., local time, at the Greenwich Civic Center, 90 Harding Road, Old
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, 1999 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 30, 1999
<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
Greenwich Civic Center, 90 Harding Road, Old Greenwich, Connecticut on June 22,
1999 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, 1998, will first be mailed to stockholders of the Company on or
about May 7, 1999.
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 LLP ('KPMG') as independent
auditors for the calendar year 1999. 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, 1999
will be entitled to vote at the meeting. On that date, the Company had
outstanding and entitled to one vote per share, 7,311,800 shares of Common
Stock, par value $1.00 per share ('Common Stock'). An additional 2,303,719
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 KPMG as independent auditors for the calendar
year 1999. 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 KPMG as independent auditors
requires the affirmative vote of a majority of the shares of Common Stock
present or represented at the meeting.
<PAGE>
<PAGE>
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, 1999 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 56%
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, 1998, 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, 1998 (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, 1999. Except
2
<PAGE>
<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........................................... 12,000(1) *
Allan C. Kirkman............................................ 5,000(1) *
Steven B. Lapin............................................. 118,500(2) 1.6%
Donald T. Netter............................................ (3) --
Edward Netter............................................... (3) --
Edward J. Scheider.......................................... 77,236(4) 1.1%
Roy T.K. Thung.............................................. 95,750(5) 1.3%
David T. Kettig............................................. 17,581(6) *
Teresa A. Herbert........................................... 13,050(7) *
All directors and executive officers as a group (10 persons) 349,117(1)(2)(3)(4)(5) 4.6%
(6)(7)(8)
</TABLE>
- ------------
(1) Constitutes or includes 5,000 shares of Common Stock subject to options
granted to each such director all of which, in each case, are presently
exercisable.
(2) Includes 68,750 shares of Common Stock subject to options granted to Mr.
Lapin in April 1995, and 49,250 shares of Common Stock subject to options
granted to Mr. Lapin in December 1995, all of which are presently
exercisable.
(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 56% of the outstanding Common Stock as of
April 27, 1999. 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, and 4,500 shares
of Common Stock subject to options granted to Mr. Scheider all of which are
presently exercisable.
(5) Includes 56,250 shares of Common Stock subject to options granted to Mr.
Thung in April 1995, and 38,250 shares of Common Stock subject to options
granted to Mr. Thung in December 1995, all of which are presently
exercisable.
(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.
(7) Constitutes 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.
3
<PAGE>
<PAGE>
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 80
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 55
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 53
President and Chief Operating Officer
Director
Since July 1991, director of the Company; for more than the past five
years, President and Chief Operating Officer of the Company; for more than the
past five years, President and Chief Operating Officer and a director of Geneve
Corporation, a private diversified holding company with principal offices in
Stamford, Connecticut, which is an affiliate of the Company ('Geneve'); 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.
DONALD T. NETTER, age 37
Director
Since November 1993, director of the Company; from January 1995 to December
31, 1996, Senior Vice President -- Investments of the Company; for more than the
past five years, 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. Mr. Donald T. Netter is the son of Mr. Edward Netter.
4
<PAGE>
<PAGE>
EDWARD NETTER, age 66
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 82
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 55
Executive Vice President,
Chief Financial Officer and Treasurer
Director
Since December 1990, director of the Company; for more than the past five
years, 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; for more than the past five years, Executive Vice President and
Chief Financial Officer of Geneve.
Between January 1, 1998 and December 31, 1998, 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 once. 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, met once in 1998. 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 1998 Board meeting fully vested on December 22, 1998, and have an
exercise price of $13.81 per share.
5
<PAGE>
<PAGE>
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 37
Vice President and Controller
For more than the past five years, Vice President and Controller of the
Company.
DAVID T. KETTIG, age 40
Vice President -- Legal and Secretary
For more than the past five years, Vice President -- Legal and Secretary of
the Company; since October 1998, Senior Vice President and Chief Administrative
Officer of Standard Security Life Insurance Company of New York, a wholly-owned
subsidiary of the Company ('Standard Security'); for more than the past five
years, Vice President -- Legal and Secretary of Geneve.
BRIAN R. SCHLIER, age 44
Vice President -- Taxation
For more than the past five years, Vice President -- Taxation of the
Company; for more than the past five years, Director of Taxation of Geneve.
ROY L. STANDFEST, age 35
Vice President -- Investments and Chief Investment Officer
Prior to August 1994, Associate Director in the fixed-income group of Bear
Stearns Asset Management, a money manager with principal offices in New York,
New York; from August 1994 to October 1996, Managing Director of MetLife
Investment Management Company, a fixed-income money manager affiliated with
MetLife Insurance Company with principal offices in White Plains, New York; from
September 1997 to March 1999, Vice President of Daiwa America Strategic Advisors
Corporation, a proprietary fixed-income trading group affiliated with Daiwa
Securities America with principal offices in New York, New York; since April
1999, Vice President -- Investments and Chief Investment Officer of the Company;
since April 1999, Vice President -- Investments and Chief Investment Officer 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
------------------------------------
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 .......... 1998 251,177 50,000 -- -- -- -- 6,369
Chairman and 1997 251,177 50,000 -- -- -- -- 6,565
Chief Executive 1996 251,177 50,000 -- -- -- -- 2,577
Officer
Steven B. Lapin ........ 1998 250,930 157,500 -- -- -- -- 46,777
President and 1997 250,930 157,500 -- -- -- -- 43,289
Chief Operating 1996 250,930 210,000 -- -- -- -- 39,906
Officer
Roy T.K. Thung ......... 1998 200,932 126,000 -- -- -- -- 41,058
Executive Vice 1997 200,932 126,000 -- -- -- -- 38,042
President, Chief 1996 200,932 168,000 -- -- -- -- 35,092
Financial Officer
and Treasurer
David T. Kettig ........ 1998 105,604 29,165 -- -- -- -- 2,630
Vice President -- 1997 105,604 29,165 -- -- -- -- 2,719
Legal and Secretary 1996 105,604 29,165 -- -- -- -- 1,040
Teresa A. Herbert ...... 1998 93,956 28,250 3,985 -- -- -- 1,193
Vice President 1997 93,956 28,250 -- -- -- -- 1,596
and Controller 1996 93,956 28,250 -- -- -- -- 1,306
</TABLE>
- ------------
(1) The amount shown represents the amount received by Ms. Herbert upon
retirement of certain stock options, as further described below.
(2) Amounts shown for 1996, 1997 and 1998 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
1996, 1997 and 1998 under Retirement Benefit Agreements with the Company
(described below under the heading 'Retirement Benefit Agreements'). The
amounts shown for Messrs. Netter and Kettig include profit-sharing
contributions of $4,050 and $1,679, respectively, in 1997 and 1998 by
Standard Security to their 401(k) accounts. Certain of the Named Officers
also received compensation and benefits during 1996, 1997 and 1998 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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<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, 1998. No options were
exercised in 1998 by the Named Officers; however, on October 5, 1998, Ms.
Herbert relinquished options to purchase 2,500 shares of the Company's Common
Stock in consideration for $3,985, which represented the difference between the
value of the Company's Common Stock on such date and the exercise price of such
options.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FY-END(#) FY-END($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------------------------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Steven B. Lapin........................................ 0 0 118,000/0 $892,380/0
Roy T.K. Thung......................................... 0 0 94,500/0 $715,995/0
David T. Kettig........................................ 0 0 12,500/0 $100,375/0
Teresa A. Herbert...................................... 0 0 12,500/0 $100,375/0
</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, 1998, Messrs. Lapin and Thung would have been entitled to receive
approximately $557,116 and $510,534, respectively, which amounts increase each
year they remain employed by the Company until they attain age 62. Of such
amounts, $44,661 and $38,942, respectively, were accrued in 1998 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 1998 (including management's accomplishments in enhancing the
insurance group's capital position, strategically
8
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<PAGE>
planning the direction of the insurance group, and improving the Company's
profitablity). The amount of the 1998 bonus pool was approved by the
disinterested members of the Committee.
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
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
NASDAQ STOCK NASDAQ INSURANCE INDEPENDENCE
MARKET INDEX STOCKS INDEX HOLDING COMPANY
------------ ----------------- ---------------
<S> <C> <C> <C>
1993.......... 100 100 100
1994.......... 98 94 83
1995.......... 138 134 104
1996.......... 170 152 103
1997.......... 209 224 168
1998.......... 293 199 196
</TABLE>
* Assumes that dividends were reinvested and is based on a $100 investment on
December 31, 1993; indices data obtained from Center for Research in Security
Price (CRSP)
9
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<PAGE>
RELATED PARTY TRANSACTIONS
The Company and Geneve operate under cost-sharing arrangements pursuant to
which certain items are allocated between the companies. During 1998, the
Company paid to Geneve or accrued for payment thereto approximately $225,000
under such arrangements, and paid or accrued approximately an additional $60,000
for the first quarter of 1999. 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, 1998. 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, 1998, 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 KPMG as the independent auditors of the
Company for the year 1999. It is anticipated that representatives of KPMG, who
also served as the Company's auditors for 1998, 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 2000 must be received at the Company's principal
executive office not later than December 31, 1999 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 30, 1999
4409-PS-99
10
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APPENDIX 1
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 Tuesday, June 22, 1999 at 9:30 A.M., E.D.T., at the Greenwich Civic
Center, 90 Harding Road, Old Greenwich, Connecticut and at any adjournment or
postponement thereof.
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 LLP as independent auditors for the fiscal
year ending December 31, 1999
[ ] 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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PLEASE SIGN THE PROXY EXACTLY AS YOUR NAME(S) Dated ................................... , 1999
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.
