<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
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 / /
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 Rule 14a-11(c) or Rule 14a-12
Conseco, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Conseco, Inc.
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which 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> 2
[Conseco, inc. Logo]
11825 NORTH PENNSYLVANIA STREET
CARMEL, INDIANA 46032
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 28, 1996
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Shareholders of Conseco,
Inc. (the "Company"), will be held at the Ritz Charles, 12156 North Meridian
Street, Carmel, Indiana, at 11:00 a.m., local time, on May 28, 1996, for the
following purposes:
1. To elect three directors for terms ending in 1999; and
2. To consider such other matters as may properly come before the
meeting.
Holders of record of outstanding shares of the common stock ("Common
Stock") and Preferred Redeemable Increased Dividend Equity Securities, 7%
PRIDES, Convertible Preferred Stock ("PRIDES") of the Company as of the close of
business on April 17, 1996, are entitled to notice of and to vote at the
meeting. Holders of Common Stock and PRIDES will vote together as a single class
at the meeting. Holders of Common Stock have one vote for each share held of
record, and holders of PRIDES have 4/5 of one vote for each share held of
record.
Whether or not you plan to be present at the meeting, please complete, sign
and return the enclosed form of proxy. No postage is required to return the form
of proxy in the enclosed envelope. The proxies of shareholders who attend the
meeting in person may be withdrawn and such shareholders may vote personally at
the meeting.
By Order of The Board of Directors
/s/ Larry W. Inlow
Lawrence W. Inlow, Secretary
April 24, 1996
Carmel, Indiana
<PAGE> 3
[Conseco, inc. Logo]
11825 NORTH PENNSYLVANIA STREET
CARMEL, INDIANA 46032
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Conseco, Inc. ("Conseco" or the "Company")
for the Annual Meeting of Shareholders (the "Annual Meeting") to be held at the
Ritz Charles, 12156 North Meridian Street, Carmel, Indiana on May 28, 1996, at
11:00 a.m., local time. It is expected that this Proxy Statement will be mailed
to the shareholders on or about April 25, 1996. Proxies are being solicited
principally by mail. Georgeson and Company, Inc. has been engaged to solicit
proxies and provide certain investor analysis services for the Company for a fee
of $8,000 plus reasonable out-of-pocket expenses. Directors, officers and
regular employees of Conseco may also solicit proxies personally by telephone,
telegraph or special letter. All expenses incident to the preparation and
mailing to the shareholders of the Notice, Proxy Statement and form of proxy are
to be paid by Conseco.
If the enclosed form of proxy is properly executed and returned in time for
the meeting, the named proxyholders will vote the shares represented by the
proxy in accordance with the instructions marked on the proxy. Proxies returned
unmarked will be voted in favor of the proposals referred to in the Notice of
Annual Meeting of Shareholders. A shareholder may revoke a proxy at any time
before it is exercised by mailing or delivering to Conseco a written notice of
revocation or a later-dated proxy, or by attending the meeting and voting in
person.
Only holders of record of shares of Conseco's common stock ("Common Stock")
and shares of Preferred Redeemable Increased Dividend Equity Securities, 7%
PRIDES, Convertible Preferred Stock ("PRIDES" and together with the Common
Stock, the "Conseco Voting Stock") as of the close of business on April 17,
1996, will be entitled to vote at the meeting. On such record date, Conseco had
41,427,554 shares of Common Stock and 4,370,000 shares of PRIDES outstanding and
entitled to vote. Holders of Common Stock and PRIDES will vote together as a
single class at the Annual Meeting. Each share of Common Stock will be entitled
to one vote with respect to each matter submitted to a vote at the meeting. Each
share of PRIDES will be entitled to 4/5 of one vote with respect to each matter
submitted to a vote at the meeting. The presence in person or by proxy of the
holders of Conseco Voting Stock entitled to cast a majority of the votes at the
Annual Meeting is necessary to constitute a quorum.
The election of Directors will be determined by the plurality of the votes
cast by the holders of shares present in person or by proxy and entitled to
vote. Consequently, the three nominees who receive the greatest number of votes
cast will be elected as Directors of the Company. Shares present which are
properly withheld as to voting with respect to any one or more nominees, and
shares present with respect to which a broker indicates that it does not have
authority to vote ("broker non-votes"), will not be counted. Action on any
matter, other than the election of directors, is approved if the votes cast in
favor of the action exceed the votes cast against it. Abstention from voting or
broker non-votes will have no effect since such actions do not represent votes
cast by shareholders.
1
<PAGE> 4
SECURITIES OWNERSHIP
OWNERSHIP OF CONSECO COMMON STOCK
The following table sets forth information as of April 17, 1996, regarding
ownership of Common Stock (excluding shares held by subsidiaries not entitled to
vote) by the only persons known to own beneficially more than 5 percent thereof,
by the Directors individually, by the executive officers named in the Summary
Compensation Table on page 9 individually, and by all executive officers and
Directors of Conseco as a group. Where any footnote indicates that shares
included in the table are owned by, or jointly with, family members or by an
affiliate of such person, the executive officer or Director may be deemed to
exercise shared voting and investment power with respect to those shares, unless
otherwise indicated. The amounts shown below for each of the Directors and
executive officers do not include (i) stock options which are not exercisable
within 60 days of April 17, 1996 providing for the right to purchase an
aggregate of 6,373,250 shares of Common Stock and (ii) an aggregate of
1,449,517.6 units (each representing one share of Common Stock) under Conseco's
Amended and Restated Stock Bonus and Deferred Compensation Program (the
"Deferred Compensation Program") and the Conseco 1994 Stock and Incentive Plan
(the "Stock Plan"). See footnote (2) to the Summary Compensation Table and
EXECUTIVE COMPENSATION, RELATED PARTY TRANSACTIONS AND OTHER INFORMATION --
Compensation of Directors. The executive officers and Directors do not own any
shares of any other class of equity securities of Conseco. All share and
per-share information in this Proxy Statement has been adjusted to reflect a
two-for-one stock split of the Common Stock effected April 1, 1996.
<TABLE>
<CAPTION>
SHARES OWNED AND
NATURE OF OWNERSHIP
-----------------------
NAME AND ADDRESS(1) NUMBER PERCENT
- ---------------------------------------------------------------------- --------- -------
<S> <C> <C>
Five-Percent Owners:
Stephen C. Hilbert.................................................. 2,840,360(2) 6.7%
11825 North Pennsylvania Street
Carmel, Indiana 46032
Alex. Brown Investment Management................................... 7,115,626(3) 17.2
135 East Baltimore Street
Baltimore, Maryland 21202
FMR Corp. .......................................................... 4,923,282(4) 11.7
82 Devonshire Street
Boston, Massachusetts 02109
Directors and Executive Officers:
Ngaire E. Cuneo..................................................... 360,066(5) *
David R. Decatur, M.D............................................... -- --
Rollin M. Dick...................................................... 1,366,204(6) 3.3
Louis P. Ferrero.................................................... 6,000(7) *
Donald F. Gongaware................................................. 1,533,172(8) 3.7
M. Phil Hathaway.................................................... 52,854(9) *
Stephen C. Hilbert.................................................. 2,840,360(2) 6.7
Lawrence W. Inlow................................................... 1,267,024(10) 3.0
James D. Massey..................................................... 8,000(11) *
Dennis E. Murray, Sr. .............................................. 612,750(12) 1.5
All executive officers and Directors as a group (10 persons)........ 8,046,430(13) 18.1
</TABLE>
- ------------
(1) Address given for five-percent owners only.
(2) Of these shares, 1,155,370 are subject to options held by Mr. Hilbert which
are exercisable within 60 days.
(3) According to a Schedule 13G dated February 21, 1996, filed with the
Securities and Exchange Commission, the holder is an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940. The
holder has indicated that it has sole voting power with respect to
2,141,356 of such shares and sole dispositive power as to all of the
shares.
(4) According to a Schedule 13G dated February 14, 1996, filed with the
Securities and Exchange Commission, in connection with beneficial ownership
at December 31, 1995, a wholly owned subsidiary of FMR Corp.,
2
<PAGE> 5
Fidelity Management & Research Company and an investment adviser registered
under Section 203 of the Investment Advisers Act of 1940, has sole power to
dispose of 4,572,826 of such shares and does not have sole voting power
with respect to any of such shares, which power resides with the Boards of
Trustees of the funds being advised. Such 4,572,826 shares include 500,226
shares of Common Stock resulting from the assumed conversion of 318,900
shares of Conseco's Series D Cumulative Convertible Preferred Stock
("Conseco Convertible Preferred"). Fidelity Management Trust Company, a
wholly owned subsidiary of FMR Corp. and a bank as defined in Section
3(a)(6) of the Securities Exchange Act of 1934, is the beneficial owner of
333,656 of such shares as a result of its serving as investment manager of
institutional accounts. Fidelity Management Trust Company has sole
dispositive power over all of such 333,656 shares and sole power to vote or
to direct the voting of 276,876 shares, and no power to vote or to direct
the voting of 56,780 shares. Such 333,656 shares includes 151,056 shares of
Conseco Common Stock resulting from the assumed conversion of 96,300 shares
of Conseco Convertible Preferred. Members of the Edward C. Johnson 3d
family and trusts for their benefit are the predominant owners of Class B
shares of common stock of FMR Corp., representing 49% of the voting power
of FMR Corp. Mr. Johnson 3d owns 12.0% and Abigail P. Johnson owns 24.5% of
the aggregate outstanding voting stock of FMR Corp. Mr. Johnson 3d is
Chairman of FMR Corp., and Abigail P. Johnson is a Director of FMR Corp.
The Johnson family group and all other Class B shareholders have entered
into a shareholder's voting agreement under which all Class B shares will
be voted in accordance with majority vote of Class B shares. Accordingly,
through their ownership of voting common stock and the execution of the
shareholder's voting agreement, members of the Johnson family may be
deemed, under the Investment Company Act of 1940, to form a controlling
group with respect to FMR Corp.
(5) Of these shares, 333,998 are subject to options held by Ms. Cuneo which are
exercisable within 60 days.
(6) Of these shares, 278,360 are owned by Mr. Dick's wife, 202,662 are owned by
a charitable foundation as to which shares he shares voting and investment
power, 418,650 are subject to options held by Mr. Dick which are
exercisable within 60 days and 508 are attributable to Mr. Dick's account
under the ConsecoSave Plan, a 401(k) savings plan. Mr. Dick expressly
disclaims beneficial ownership of all shares owned by his wife and the
charitable foundation.
(7) All of these shares are subject to options held by Mr. Ferrero which are
exercisable within 60 days.
(8) Of these shares, 62,000 are owned by Mr. Gongaware's wife, 140,000 are
owned by a charitable trust as to which he shares voting and investment
power, 36,000 are owned by irrevocable trusts as to which Mr. Gongaware's
wife has sole voting and investment power, 558,650 are subject to options
held by Mr. Gongaware which are exercisable within 60 days and 460 are
attributable to Mr. Gongaware's account under the ConsecoSave Plan. Mr.
Gongaware expressly disclaims beneficial ownership of all shares owned by
his wife and the trusts as to which she has sole voting and investment
power.
(9) Of these shares, 8,000 are owned by Mr. Hathaway's wife, and 6,000 are
subject to options held by Mr. Hathaway which are exercisable within 60
days. Mr. Hathaway expressly disclaims beneficial ownership of all shares
owned by his wife.
(10) Of these shares, 658,650 are subject to options held by Mr. Inlow which are
exercisable within 60 days and 508 are attributable to Mr. Inlow's account
under the ConsecoSave Plan.
(11) Of these shares, 6,000 are subject to options held by Mr. Massey which are
exercisable within 60 days.
(12) Of these shares, 592,000 are owned by retirement plan trusts as to which
Mr. Murray shares voting and investment power, and 6,000 are subject to
options held by Mr. Murray which were exercisable within 60 days.
(13) Includes 3,149,318 shares subject to outstanding stock options which are
exercisable within 60 days.
* Less than 1%.
OWNERSHIP OF BANKERS LIFE HOLDING CORPORATION COMMON STOCK
As of April 17, 1996, Conseco owned approximately 44.7 million (90.5%) of
the outstanding shares of common stock of Bankers Life Holding Corporation
("Bankers Common Stock"). As of such date, none of the Directors or executive
officers of Conseco owned any Bankers Common Stock except for 1,500 shares owned
by Mr. Murray (including 1,000 shares owned by his wife, as to which shares he
disclaims beneficial ownership).
3
<PAGE> 6
ELECTION OF DIRECTORS
The Board of Directors consists of nine members, divided into three classes
containing three members each. The three Directors elected at the Annual Meeting
will be elected to serve a term of three years expiring 1999, or will serve
until their successors are duly elected and qualified.
Unless authority is specifically withheld, the shares of Conseco Voting
Stock represented by the enclosed form of proxy will be voted in favor of all
nominees. Should any of the nominees become unable to accept election, the
persons named in the proxy will exercise their voting power in favor of such
person or persons as the management of Conseco may recommend. All of the
nominees have consented to being named in this Proxy Statement and to serve if
elected. The Board of Directors knows of no reason why any of its nominees would
be unable to accept election.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE NOMINEES
FOR DIRECTOR.
The following information regarding each person nominated for election as a
Director, and each person whose term will continue after the Annual Meeting,
includes such person's age, positions with Conseco, principal occupation and
business experience for the last five years, and tenure as a Director of
Conseco:
<TABLE>
<CAPTION>
CONSECO
DIRECTOR POSITIONS WITH CONSECO, PRINCIPAL TERM
NAME AND AGE SINCE OCCUPATION AND BUSINESS EXPERIENCE EXPIRING
- ----------------------------------- -------- --------------------------------------- --------
<S> <C> <C> <C>
Nominees for Election as Directors:
David R. Decatur, M.D., 57 (1)..... 1995 Since 1967, a physician practicing in 1999
Indianapolis, Indiana. From 1988 to
1992, President and Chief Executive
Officer of Decatur Fitness Systems,
Inc. (health and nutritional
products). Since 1991, President and
Chief Executive Officer of Innovative
Health Systems, Inc. (health and
nutritional products).
Louis P. Ferrero, 53 (2)........... 1988 Since 1995, President and Chief 1999
Executive Officer of Conseco Global
Investments, Inc., a subsidiary of
Conseco ("Conseco Global"). From 1982
to 1995, Chairman of the Board and
Chief Executive Officer of Anacomp,
Inc. (computer-based information
storage and management).
Donald F. Gongaware, 60............ 1985 Since 1985, Executive Vice President of 1999
Conseco. Also a Director of Bankers
Life Holding Corporation and American
Life Holding Company.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
CONSECO
DIRECTOR POSITIONS WITH CONSECO, PRINCIPAL TERM
NAME AND AGE SINCE OCCUPATION AND BUSINESS EXPERIENCE EXPIRING
- ----------------------------------- -------- --------------------------------------- --------
<S> <C> <C> <C>
Directors Whose Terms of Office
Will Continue After the Meeting:
Rollin M. Dick, 64................. 1986 Since 1986, Executive Vice President 1997
and Chief Financial Officer of Conseco.
Also a Director of Bankers Life
Holding Corporation, American Life
Holding Company, General Acceptance
Corporation and Brightpoint, Inc.
James D. Massey, 61 (3)(4)......... 1994 Retired. From 1986 to June 1992 1997
President and Deputy Chief Executive
Officer of Merchants National Corp.
and Chairman, President and Chief
Executive Officer of Merchants
National Bank (banking).
Dennis E. Murray, Sr., 56 (3)(4)... 1994 Since 1964, partner or principal of the 1997
Ohio law firm of Murray & Murray Co.,
L.P.A. and its predecessor.
Stephen C. Hilbert, 50............. 1979 Since 1979, Chairman of the Board and 1998
Chief Executive Officer, and since
1988 President, of Conseco. Also a
Director of Bankers Life Holding
Corporation and American Life Holding
Company.
Ngaire E. Cuneo, 45................ 1994 Since 1992, Executive Vice President, 1998
Corporate Development of Conseco.
From 1986 to 1992, Senior Vice
President and Corporate Officer of
General Electric Capital Corporation.
Also a Director of Bankers Life
Holding Corporation, American Life
Holding Company and Duke Realty
Investments, Inc.
M. Phil Hathaway, 66 (3)(4)........ 1984 Retired. Formerly, Treasurer of Cook 1998
Group, Inc. (medical equipment,
property and casualty insurance, and
real estate development operations).
</TABLE>
- ------------
(1) On March 31, 1992, Decatur Fitness Systems, Inc. filed for bankruptcy under
Chapter 7 of the U.S. Bankruptcy Code.
(2) On January 5, 1996, Anacomp, Inc. filed a pre-negotiated plan of
reorganization under Chapter 11 of the U.S. Bankruptcy Code.
(3) Member of Compensation Committee.
(4) Member of Audit Committee.
5
<PAGE> 8
EXECUTIVE COMPENSATION, RELATED PARTY TRANSACTIONS
AND OTHER INFORMATION
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors reviews and approves
compensation plans in which Conseco's officers and directors are entitled to
participate, the terms of employment contracts with Conseco's senior executive
officers and the annual cash bonuses paid to Conseco's executive vice
presidents. The Compensation Committee also administers the Stock Plan, Deferred
Compensation Program and other incentive plans. The Compensation Committee is
currently composed of three independent, non-employee members of the Board.
The compensation of the Company's Chief Executive Officer (the "CEO") is
established by the terms of his Employment Agreement dated January 1, 1987, as
amended (the "CEO Contract"). Under the CEO Contract, the major portion of the
CEO's cash compensation is tied directly to the Company's financial performance,
because his annual cash bonus is a fixed percentage (3 percent) of the Company's
consolidated pre-tax net profits for the year (before deduction of the bonus
payable to the CEO under the CEO Contract). For 1995, such consolidated pre-tax
net profits were $247.2 million, resulting in a bonus to the CEO of $7,416,286.
Conseco's Executive Vice Presidents ("EVPs"), all of whom are Named
Officers in the Summary Compensation Table, are employed under employment
agreements which provide for a base salary of $250,000 per year and annual cash
bonuses in the discretion of the Board of Directors. In 1994, the Compensation
Committee adopted the Performance-Based Compensation Bonus Plan for Executive
Vice Presidents (the "Bonus Plan") under which cash bonuses for the EVPs are
determined by a formula in compliance with Section 162(m) of the Internal
Revenue Code. The Bonus Plan was approved by the shareholders at the 1994 Annual
Meeting of Shareholders. The Compensation Committee has the sole discretion,
taking into account such subjective factors or other matters as they believe are
appropriate in the best interests of Conseco and its shareholders, to decrease
the bonus otherwise payable to an EVP under the Bonus Plan, if the CEO
recommends such a decrease.
The Bonus Plan provides for annual performance-based cash bonuses
determined based upon a percentage of Conseco's consolidated pre-tax net profits
for the year (before deduction of bonuses payable to the EVPs under the Bonus
Plan or to the CEO under the CEO Contract). Under the Bonus Plan, each of the
EVPs was entitled to receive for 1995 a performance-based cash bonus equal to 1
percent of the consolidated pre-tax net profits of Conseco. The Compensation
Committee adopted the 1 percent level for 1995 bonuses provided for in the Bonus
Plan based upon its subjective belief that providing significant awards to the
EVPs for Conseco's level of pre-tax net profits would provide appropriate
incentives to the EVPs to contribute to the performance of Conseco. The
consolidated pre-tax net profits of Conseco for 1995 were $256.4 million (before
deduction of bonuses payable to the EVPs and CEO), resulting in a bonus to each
EVP of $2,564,186 for 1995. Pursuant to the Bonus Plan, the bonuses for 1996
will be up to 1 percent of the consolidated pre-tax net profits of the Company
depending upon the return on equity ("ROE") of Conseco compared to the average
ROE of all publicly held life and health insurance companies and subject to
downward adjustment by the Compensation Committee as described above.
The Compensation Committee views the grant of stock options to be the
Company's key long-term incentive reward program for the Company's officers,
including the Named Officers. The Committee believes that because options are
granted with an exercise price equal to the market value of the Common Stock on
the date of grant, they are an effective incentive for officers to create value
for the Company's shareholders and are an excellent means of rewarding
executives who are in a position to contribute to the Company's long-term growth
and profitability. Options have been granted annually to the Company's officers
below the EVP level, based on a formula which relates the value of the options
granted to a percentage of the recipient's annual cash compensation. Options
have been granted periodically to the Named Officers as a reward for
contributing to the achievement of a specific project or transaction or
exceptional performance relative to targeted profit goals, or as an incentive to
future growth and profitability.
6
<PAGE> 9
The number of options granted to the CEO and the EVPs is not based on a
formula such as the one which is used to determine the number of options granted
to the other officers of the Company. The Compensation Committee determined the
number of options granted to the CEO and the EVPs in August 1995 based on the
recommendation of the CEO. In deciding to adopt the CEO's recommendation, the
Compensation Committee considered the Company's performance during 1994 and the
first half of 1995 including the successful completion of the program to
purchase additional ownership in Bankers Life Holding Corporation in July 1995
thereby increasing Conseco's ownership to above 80 percent of Bankers Life
Holding Corporation at that time; the anticipated closing of the acquisition of
the shares of common stock of CCP Insurance, Inc. not previously owned by
Conseco which was closed on August 31, 1995, and the acquisition of American
Life Group, Inc. by Conseco Capital Partners II, L.P. ("Partnership II"). The
Compensation Committee also considered the fact that the number of stock options
granted approximated the number of options to acquire shares of common stock of
CCP Insurance, Inc. that were held by the CEO and the EVPs prior to the merger
of CCP Insurance, Inc. into Conseco. The Compensation Committee believes options
previously granted provided appropriate incentives to the CEO and the EVPs to
make significant contributions to increases in the market capitalization of
Conseco. The Compensation Committee desired to continue such incentives.
The CEO, EVPs and outside Directors are eligible to receive annual stock
unit awards under the Stock Plan. The total amount awarded by Conseco in any
year, together with all prior stock unit awards under the Stock Plan and all
similar awards under the Deferred Compensation Program since January 1, 1989,
may not exceed Conseco's consolidated total net gains from the sale of
investments since January 1, 1989. Conseco's total award for a year is allocated
pro rata among the participants based on their relative salary, fee and bonus
compensation for the year. However, the amount awarded to a participant in any
year may not exceed the greater of $15,000 or 10 percent of his or her salary
and bonus compensation for such year, unless Conseco's earnings per share from
operations for such year exceed 110 percent of its earnings per share from
operations for the preceding year, in which case the amount awarded may not
exceed the greater of $30,000 or 20 percent of the participant's salary, fee and
bonus compensation for the year. The awards are converted each year to units
representing shares of Common Stock by dividing the amount of the awards by the
average market price per share for the Common Stock for the year. Each award
becomes vested only if the participant remains employed with Conseco for five
years after the award or dies, becomes disabled or attains age 60 while so
employed, or upon a change of control of Conseco. See -- Employment Contracts
and Change-In-Control Arrangements for the definition of change of control.
COMPENSATION COMMITTEE
James D. Massey, Chairman
M. Phil Hathaway
Dennis E. Murray, Sr.
7
<PAGE> 10
PERFORMANCE GRAPH
The Performance Graph compares Conseco's cumulative total shareholder
return on its Common Stock for a five-year period (December 31, 1990 to December
31, 1995) with the cumulative total return of the Standard & Poor's 500
Composite Stock Price Index (the "S&P 500 Index") and the Dow Jones Life
Insurance Index. The comparison for each of the periods assumes that $100 was
invested on December 31, 1990 in each of the Common Stock, the stocks included
in the S&P 500 Index and the stocks included in the Dow Jones Life Insurance
Index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG CONSECO, S&P 500 INDEX AND DOW JONES LIFE INSURANCE INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD DJ LIFE IN- S&P 500 IN-
(FISCAL YEAR COVERED) CONSECO, INC. SURANCE INDEX DEX
<S> <C> <C> <C>
1990 100 100 100
1991 442 149 130
1992 666 195 140
1993 798 194 155
1994 627 174 157
1995 914 242 215
</TABLE>
<TABLE>
<CAPTION>
Five-Year
Average Annual
1990 1991 1992 1993 1994 1995 Total Return
<S> <C> <C> <C> <C> <C> <C> <C>
Conseco, Inc. $100 $442 $666 $798 $627 $914 55.6%
DJ Life Insurance Index $100 $149 $195 $194 $174 $242 19.3%
S&P 500 Index $100 $130 $140 $155 $157 $215 16.6%
</TABLE>
8
<PAGE> 11
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth the cash compensation
and certain other components of the compensation of Stephen C. Hilbert, the
Chairman of the Board, President and Chief Executive Officer of Conseco, and the
other four most highly compensated executive officers of Conseco in 1995 (the
"Named Officers").
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------
AWARDS
-----------------------------------
NUMBER OF
ANNUAL COMPENSATION RESTRICTED SECURITIES UNDERLYING
NAME AND PRINCIPAL ----------------------------------- STOCK OPTIONS/SARS ALL OTHER
POSITION YEAR SALARY BONUS OTHER(1) AWARDS(2) (IN SHARES)(3) COMPENSATION(4)
- -------------------------- ---- -------- ----------- -------- ---------- --------------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen C. Hilbert........ 1995 $250,000 $ 7,416,286 $152,751 $2,355,190 500,000 $ 3,174
Chairman of the Board, 1994 250,000 9,481,116 166,649 768,371 2,844,000 4,134
President and 1993 250,000 14,107,372 152,103 2,244,645 500,000 4,011
Chief Executive Officer
Ngaire E. Cuneo........... 1995 250,000 2,564,186 864,557 200,000 959
Executive Vice President, 1994 250,000 2,504,608 217,506 300,000 752
Corporate Development 1993 250,000 3,750,000 784,021 200,000 38,899
Rollin M. Dick............ 1995 250,000 2,564,186 864,557 200,000 15,167
Executive Vice President
and 1994 250,000 2,504,608 217,506 844,000 11,057
Chief Financial Officer 1993 250,000 3,750,000 625,363 200,000 12,905
Donald F. Gongaware....... 1995 250,000 2,564,186 864,557 200,000 10,097
Executive Vice President
and 1994 250,000 2,504,608 217,506 764,000 9,170
Chief Operations Officer 1993 250,000 3,750,000 625,363 200,000 10,282
Lawrence W. Inlow......... 1995 250,000 2,564,186 864,557 200,000 5,269
Executive Vice President
and 1994 250,000 2,504,608 217,506 644,000 4,332
General Counsel 1993 250,000 3,750,000 625,363 200,000 5,775
</TABLE>
- ------------
(1) Amounts for 1995, 1994 and 1993 include $116,470, $116,470 and $120,429,
respectively, of imputed interest on a $1.9 million interest-free loan made
to Mr. Hilbert in 1988. The other Named Officers did not have other annual
compensation for 1995, 1994 or 1993 which is required to be listed under SEC
rules concerning executive officer and director compensation disclosure.
(2) The amounts shown for 1995 in this column represent the value of units (each
unit represents one share of Common Stock) awarded for 1995 under the Stock
Plan based on the market value of the Common Stock at March 31, 1996, the
date of award. The amounts shown for 1994 in this column represent the value
of stock units awarded for 1994 under the Stock Plan based on the market
value of the Common Stock at March 31, 1995, the date of award. The amounts
shown for 1993 in this column represent the value of stock units awarded for
1993 under the Deferred Compensation Program based on the market value of
the Common Stock at February 3, 1995. The award for 1993 was originally a
provisional award denominated in cash. Such provisional award was converted
to stock units at February 3, 1995. Dividends are paid on the stock units.
Units awarded to Messrs. Dick and Gongaware vest immediately pursuant to the
terms of the Stock Plan. The table below shows the aggregate holdings of
stock units at April 24, 1996 as if outstanding on December 31, 1995, the
aggregate value of such stock units as of December 31, 1995 for each Named
Officer and the number of such stock units vested (although in each case the
distribution of the Common Stock represented by such units has been deferred
at the election of the Named Officer).
<TABLE>
<CAPTION>
AGGREGATE
UNITS IN AGGREGATE
PARTICIPANT'S VALUE AT VESTED
ACCOUNT 12/31/95 UNITS
------------- ----------- ---------
<S> <C> <C> <C>
Stephen C. Hilbert..................................... 808,846.5 $25,327,006 397,247.0
Ngaire E. Cuneo........................................ 71,356.2 2,234,341 --
Rollin M. Dick......................................... 108,708.2 3,403,926 108,708.2
Donald F. Gongaware.................................... 226,157.0 7,081,541 226.157.0
Lawrence W. Inlow...................................... 195,167.8 6,111,192 92,837.0
</TABLE>
Stock units previously awarded to Messrs. Hilbert and Inlow and Ms. Cuneo
will vest in the next three years conditioned upon continued employment with
Conseco as follows:
<TABLE>
<CAPTION>
12/31/96 12/31/97 12/31/98
--------- --------- --------
<S> <C> <C> <C>
Stephen C. Hilbert......................................... 109,530.4 102,708.8 95,516.8
Ngaire E. Cuneo............................................ -- 4,511.2 31,979.0
Lawrence W. Inlow.......................................... 20,402.4 20,451.2 26,611.2
</TABLE>
(3) No stock appreciation rights have been granted.
9
<PAGE> 12
(4) For 1995, the amounts reported in this column represent amounts paid for the
Named Officers for group and individual life insurance premiums and the
employer contribution under the ConsecoSave Plan. The table below shows such
amounts for each Named Officer.
<TABLE>
<CAPTION>
LIFE INSURANCE GROUP LIFE CONSECOSAVE PLAN
PREMIUMS INSURANCE CONTRIBUTION
-------------- ---------- ----------------
<S> <C> <C> <C>
Stephen C. Hilbert............................ $ 3,000 $174 $ --
Ngaire E. Cuneo............................... 785 174 --
Rollin M. Dick................................ 10,715 702 3,750
Donald F. Gongaware........................... 6,395 702 3,000
Lawrence W. Inlow............................. 1,345 174 3,750
</TABLE>
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
Mr. Hilbert is employed pursuant to an employment agreement dated January
1, 1987, which provides for an annual base salary of $250,000, an annual bonus
equal to 3 percent of Conseco's annual pre-tax net profits, and certain
insurance and other fringe benefits. This agreement renews annually for a
five-year period, unless either party notifies the other, in which case the
agreement expires five years from the last renewal date. In February 1988, as a
reward for extraordinary efforts in accomplishing the acquisition of Western
National Life Insurance Company in 1987, in recognition of enhanced
responsibilities as a result of such acquisition, and in consideration of his
agreeing to enter into a covenant not to compete with Conseco, Conseco made a
$1,900,000 interest-free loan to Mr. Hilbert. See -- Certain Relationships and
Related Transactions.
Conseco has employment agreements with Messrs. Dick, Gongaware and Inlow
and Ms. Cuneo for terms ending December 31, 2001. Each employment agreement
provides for a minimum annual salary of $250,000, annual bonuses in the
discretion of the Board of Directors, and certain insurance and other fringe
benefits.
Each of the employment agreements described above includes provisions
pursuant to which the employee may elect to receive, in the event of a
termination of the agreement following a change in control of Conseco (a
"Control Termination"), a severance allowance equal to 60 months of his or her
monthly rate of salary, bonus and other benefits. For such purposes a Control
Termination includes a termination by the employee if his or her duties or
responsibilities are changed following a change in control. The employee also
may elect to have Conseco purchase all Common Stock and all options to purchase
Common Stock, without deduction of the applicable exercise prices, held by such
person at a price per share equal to the highest market price in the preceding
six months.
As defined in the employment agreement for Mr. Hilbert, "change in control"
means a change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
1934 Act. A "change in control" shall be deemed to have occurred if and when:
(i) any person is or becomes a beneficial owner, directly or indirectly, of
securities of Conseco representing 25 percent or more of the combined voting
power of Conseco's then outstanding securities; or (ii) individuals who were
members of the Board of Directors immediately prior to a meeting of the
shareholders of Conseco involving a contest for the election of directors shall
not constitute a majority of the Board of Directors following such election. The
employment agreements for the remaining Named Officers contain the same "change
in control" definition except no change in control shall have occurred pursuant
to: (i) a Rule 13e-3 transaction under the 1934 Act; or (ii) any person
becoming, with the approval of the Board of Directors of Conseco, the beneficial
owner of 25 percent or more but less than 50 percent of the combined voting
power of Conseco's then outstanding securities entitled to vote with respect to
the election of Conseco's Board of Directors and such person's ownership is for
investment purposes.
See the discussion under the table headed Option Grants in 1995 concerning
change-in-control provisions related to stock options. The stock units disclosed
in footnote (2) to the Summary Compensation Table must be paid out following a
change in control. For stock units under the Stock Plan, the definition of
change in control is the same as that disclosed below for the options granted in
1995. For stock units awarded under the Deferred Compensation Program, a change
in control will be deemed to have occurred if: (i) any "person," including a
"group" as determined in accordance with Section 13(d)(3) of the 1934 Act, is or
becomes the beneficial owner, directly or indirectly, of securities of Conseco
representing 30 percent or more of the combined voting power of Conseco's then
outstanding securities; (ii) as a result of, or in connection with, any tender
offer or exchange offer, merger or other business combination, sale of assets or
contested election, or
10
<PAGE> 13
any combination of the foregoing transactions (a "Transaction"), the persons who
were directors of Conseco before the Transaction shall cease to constitute a
majority of the Board of Directors of Conseco or any successor to Conseco; (iii)
Conseco is merged or consolidated with another corporation and, as a result of
the merger or consolidation, less than 70 percent of the outstanding voting
securities of the surviving or resulting corporation shall then be owned, in the
aggregate, by the former stockholders of Conseco, other than (a) affiliates
within the meaning of the 1934 Act or (b) any party to the merger or
consolidation; (iv) a tender offer or exchange offer is made and consummated for
the ownership of securities of Conseco representing 30 percent or more of the
combined voting power of Conseco's then outstanding voting securities; or (v)
Conseco transfers substantially all of its assets to another corporation which
is not a wholly-owned subsidiary of Conseco.
STOCK OPTIONS
The following table sets forth certain information concerning the exercise
in 1995 of options to purchase Common Stock by the five Named Officers and the
unexercised options to purchase Common Stock held by such individuals at
December 31, 1995.
AGGREGATED OPTION EXERCISES IN 1995 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS (IN SHARES) AT IN-THE-MONEY OPTIONS AT
NUMBER OF DECEMBER 31, 1995 DECEMBER 31, 1995(1)
SHARES ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen C. Hilbert...... -- -- 1,303,250 3,340,750 $26,138,984 $ 7,147,766
Ngaire E. Cuneo......... -- -- 253,250 546,750 2,363,984 2,379,766
Rollin M. Dick.......... -- -- 443,250 1,040,750 8,197,734 2,366,516
Donald F. Gongaware..... -- -- 583,250 960,750 12,367,109 2,231,516
Lawrence W. Inlow....... -- -- 683,250 840,750 15,367,734 2,029,016
</TABLE>
- ------------
(1) The value is calculated based on the aggregate amount of the excess of
$31.3125 (the closing sale price of Common Stock as reported by the NYSE for
the last business day of 1995) over the relevant exercise prices.
11
<PAGE> 14
The following table sets forth certain information concerning options to
purchase Common Stock granted in 1995 to the five Named Officers.
OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS GRANTED PER SHARE
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION GRANT DATE
NAME GRANTED 1995 PRICE(1) DATE PRESENT VALUE(2)
---- ---------- --------------- --------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Stephen C. Hilbert............ 492,000(3) 23.1% $24.125 8/25/05 $3,892,000
8,000(4) 0.4 24.125 8/25/05 63,000
Ngaire E. Cuneo............... 192,000(3) 9.0 24.125 8/25/05 1,519,000
8,000(4) 0.4 24.125 8/25/05 63,000
Rollin M. Dick................ 192,000(3) 9.0 24.125 8/25/05 1,519,000
8,000(4) 0.4 24.125 8/25/05 63,000
Donald F. Gongaware........... 192,000(3) 9.0 24.125 8/25/05 1,519,000
8,000(4) 0.4 24.125 8/25/05 63,000
Lawrence W. Inlow............. 192,000(3) 9.0 24.125 8/25/05 1,519,000
8,000(4) 0.4 24.125 8/25/05 63,000
</TABLE>
- ------------
(1) Exercise price is the average of the high and low sales prices as reported
by the NYSE for the date of grant.
(2) Valued using a modified Black-Scholes option pricing model. The exercise
price of each option is equal to the fair market value of the underlying
Common Stock on the date of grant. The assumptions used in the model were:
42.8% volatility (which was the volatility of the Common Stock for the
36-month period preceding the date of grant); a 6.2% risk-free rate of
return (which was the yield as of the date of grant on a U.S. Strip Treasury
zero-coupon bond expiring in February 2000); a .17% dividend yield (which
was the dividend yield on the date of grant); and a four and one-half year
average life for the options (which was the approximate average life of all
previously issued options that became vested prior to December 31, 1995). A
discount of 25% was applied to the option value yielded by the model to
reflect the non-transferability and the possibility of forfeiture of
employee options. Conseco's use of this model does not constitute an
acknowledgement that the resulting values are accurate or reasonable. The
actual gain executives will realize on the options will depend on the future
price of Common Stock and cannot be accurately forecasted by application of
an option pricing model.
(3) The options reported are non-qualified stock options which were vested at
the date of grant.
(4) The options reported are incentive stock options with 50% of such shares
becoming exercisable on each of January 1, 1999 and January 1, 2000.
The options granted in 1995 were under the Stock Plan. All outstanding
options under the Stock Plan immediately vest and become exercisable or
satisfiable upon the occurrence of a Change of Control. The Compensation
Committee, in its discretion, may determine that upon the occurrence of such a
transaction, each option outstanding shall terminate within a specified number
of days after notice to the holder thereof, and such holder shall receive, with
respect to each share of Common Stock subject to such option, cash in an amount
equal to the excess of: (i) the higher of (x) the Fair Market Value (as defined
in the Stock Plan) of such shares of Common Stock immediately prior to the
occurrence of such transaction or (y) the value of the consideration to be
received in such transaction for one share of Common Stock; over (ii) the price
per share, if applicable, of Common Stock set forth in such option. If the
consideration offered to shareholders of Conseco in any transaction described in
this paragraph consists of anything other than cash, the Compensation Committee
shall determine the fair cash equivalent of the portion of the consideration
offered which is other than cash. These provisions will not terminate any rights
of a holder to further payments pursuant to any agreement between Conseco and
such holder following a Change of Control. A "Change of Control" of Conseco is
deemed to occur under the Stock Plan if: (i) any person, becomes the beneficial
owner, directly or
12
<PAGE> 15
indirectly, of securities of Conseco representing 25 percent or more of the
combined voting power of Conseco's outstanding securities then entitled to vote
for the election of directors; or (ii) as the result of a tender offer, merger,
consolidation, sale of assets, or contest for election of directors, or any
combination of the foregoing transactions or events, individuals who were
members of the Board of Directors of Conseco immediately prior to any such
transaction or event shall not constitute a majority of the Board of Directors
following such transaction or event. However, no Change of Control shall be
deemed to have occurred if and when either: (i) any such change is the result of
a transaction which constitutes a "Rule 13e-3 transaction" as such term is
defined in Rule 13e-3 promulgated under the 1934 Act; or (ii) any such person
becomes, with the approval of the Board of Directors of Conseco, the beneficial
owner of securities of Conseco representing 25 percent or more but less than 50
percent of the combined voting power of Conseco's then outstanding securities
entitled to vote with respect to the election of its Board of Directors and in
connection therewith represents, and at all times continues to represent, in a
filing, as amended, with the SEC on Schedule 13D or Schedule 13G (or any
successor Schedule thereto) that "such person has acquired such securities for
investment and not with the purpose nor with the effect of changing or
influencing the control of Conseco, nor in connection with or as a participant
in any transaction having such purpose or effect," or words of comparable
meaning and import.
In the event of a Control Termination of the employment agreement of a
Named Officer (see -- Employment Contracts and Change-in-Control Arrangements)
each Named Officer may elect, within 60 days after such Control Termination, to
receive a lump sum payment from Conseco in return for surrender by the Named
Officer of all or any portion of the options then outstanding held by the Named
Officer to purchase shares of Common Stock ("Unexercised Options"). Unexercised
Options include all outstanding options whether or not then exercisable. For
each Unexercised Option to purchase one share of Common Stock, Conseco must pay
to the Named Officer an amount equal to the highest per share fair market value
of Common Stock on any day during the period beginning six months prior to the
date of the Named Officer's election pursuant to his or her employment
agreement. To compensate the Named Officer for loss of the potential future
speculative value of the Unexercised Options, no deduction may be made for the
exercise price per share for each Unexercised Option from the amount to be
received by the Named Officer.
COMPENSATION OF DIRECTORS
Directors who are not also employees of Conseco are entitled to receive an
annual fee of $25,000, a fee of $500 for each Board or committee meeting they
attend, and an annual fee of $3,000 for serving as chairman of a Board
committee. Directors are eligible to participate in and receive annual awards of
up to $30,000 under the Stock Plan. For 1995, 1,273.4 stock units were awarded
under the Stock Plan to each of Messrs. Decatur, Ferrero, Hathaway, Massey and
Murray. The Common Stock represented by the stock unit awards for 1995 had a
market value of $46,081 on March 31, 1996 (the date of award). Such stock unit
awards vest (assuming the Director continues in office) upon the earlier of (i)
the Director attaining the age of 60; (ii) the total and permanent disability of
the Director; (iii) the death of the Director; (iv) the occurrence of a Change
of Control (as defined in the second preceding paragraph); or (v) the fifth
anniversary of the end of the fiscal year for which the award was made. The
Stock Plan also provides for an annual grant to each non-employee director of
options to purchase 10,000 shares of Common Stock on the date of the annual
meeting of shareholders at a price equal to the market price of Common Stock on
the date of grant. Messrs. Hathaway, Massey and Murray each received such a
grant in 1995. The options vest 20 percent per year on each of the first five
anniversary dates of grant, subject to acceleration upon a Change of Control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The current members of the Compensation Committee are Messrs. Hathaway,
Massey and Murray, each of whom served on the Compensation Committee throughout
1995. Michael G. Browning served on the Compensation Committee until his
retirement from the Board on March 31, 1995. Mr. Ferrero served on the
Compensation Committee until he was employed by Conseco in October 1995. Mr.
Massey served as the Chairman of the Compensation Committee.
13
<PAGE> 16
Messrs. Ferrero and Murray are limited partners of Partnership II, as is
each Named Officer. In November 1995, each of them made additional investments
in American Life Holdings, Inc. ("ALH") through Partnership II. See -- Certain
Relationships and Related Transactions.
Conseco paid Anacomp, Inc. $268,578 in 1995 for microfiche and related
supplies. Mr. Ferrero, a Director of the Company and a previous member of the
Compensation Committee, was the Chairman of the Board and Chief Executive
Officer of Anacomp, Inc. until October 1995. In October 1995, Conseco hired Mr.
Ferrero to be the president of Conseco Global.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 1994, the Named Officers and Messrs. Ferrero and Murray made
personal commitments to invest in Partnership II. Organization of Partnership II
was completed in February 1994 with total capital commitments of $623.8 million
from investors. Partnership II completed the acquisition of ALH in September
1994. In connection with the purchase of additional shares of ALH common stock
by Partnership II on November 30, 1995, the Named Officers and Directors made
capital contributions to Partnership II in the following approximate amounts:
Mr. Hilbert, $588,700; Mr. Murray, $208,000 (including amounts of which Mr.
Murray disclaims beneficial ownership); Mr. Dick, $157,000; Mr. Gongaware,
$157,000; Mr. Inlow, $157,000; Ms. Cuneo, $78,500; and Mr. Ferrero, $39,200. On
November 30, 1995, Mr. Ferrero purchased from ALH 684 shares of ALH common stock
for $9,576 and a charitable foundation of which Mr. Dick is a trustee purchased
from ALH 3,759 shares of ALH common stock for $52,626. In March 1996, Conseco
announced that Partnership II would be dissolved. Accordingly, the partners have
no further commitment to make additional contributions of capital to Partnership
II.
On June 5, 1995, as part of Conseco's program to purchase additional shares
of Bankers Common Stock, Conseco acquired 200,000, 4,000 and 28,500 shares of
Bankers Common Stock from Mr. Hilbert, Ms. Cuneo and Mr. Dick, respectively, for
$19.875 per share. On June 22, 1995, as part of the same program, Mr. Gongaware
sold 10,000 shares of Bankers Common Stock to Conseco for $21.125 per share.
Each of such purchases was at the NYSE price for Bankers Common Stock on the
date of the transaction.
Effective October 1, 1995, Mr. Ferrero joined Conseco full-time as
President and CEO of Conseco Global in charge of the Company's international
investment activities. Accordingly, Mr. Ferrero now receives cash compensation
and other employee benefits pursuant to an employment agreement with the Company
and the Company's employee benefit programs in which he is eligible to
participate. In connection with the activities of Conseco Global, which will
focus initially on investments in the Far East, Mr. Ferrero relocated his
residence from Atlanta, Georgia to San Diego, California. In that connection,
the Company purchased Mr. Ferrero's Georgia residence in February 1996 for
$1,700,000, 85 percent of the average of the fair market values determined by
two independent certified real estate appraisers.
See -- Compensation Committee Interlocks and Insider Participation in
Compensation Decisions for information regarding purchases of services from
Anacomp, Inc. of which Mr. Ferrero was the Chairman of the Board and Chief
Executive Officer.
In February 1988, as a reward for extraordinary efforts in accomplishing
the acquisition of Western National Life Insurance Company in 1987, in
recognition of enhanced responsibilities as a result of such acquisition, and in
consideration of his agreeing to enter into a covenant not to compete with the
Company, the Company made a $1,900,000 interest-free loan to Mr. Hilbert. The
loan is evidenced by a secured promissory note which does not bear interest
prior to maturity and is payable in one installment due two years after
termination of Mr. Hilbert's employment agreement with the Company. The note
includes a covenant not to compete which continues in effect until maturity or
until the note is paid in full, if earlier. The note is secured by the pledge of
200,000 shares of Common Stock held by Mr. Hilbert.
14
<PAGE> 17
BOARD MEETINGS AND COMMITTEES
During 1995, the Board of Directors held six meetings. All Directors
attended at least 75 percent of the aggregate meetings of the Board and the
committees on which they served.
The Board has a Compensation Committee which held one meeting during 1995.
The Compensation Committee reviews and approves compensation plans in which
officers and directors are entitled to participate, the terms of employment
contracts with senior executive officers and the annual cash bonuses paid to
executive vice presidents. The Compensation Committee also administers the Stock
Plan and Conseco's other incentive plans. The Board also has an Audit Committee,
which held two meetings in 1995. The Audit Committee oversees Conseco's
accounting and financial reporting activities, including meeting with Conseco's
independent auditors and its Chief Financial Officer to review the scope, cost
and results of the independent audit and to review internal accounting controls,
policies and procedures. The Board selects the independent auditors, upon
recommendation of the Audit Committee. The members of these committees are
identified in the table below. See ELECTION OF DIRECTORS.
The Board of Directors does not have a nominating committee. The Board
reviews and approves all nominees for Directors and will consider candidates
whose names are submitted in writing by shareholders. See SHAREHOLDER PROPOSALS.
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires Conseco's Directors and executive officers, and each person who is the
beneficial owner of more than 10 percent of any class of Conseco's outstanding
equity securities, to file with the Securities and Exchange Commission ("SEC")
and the New York Stock Exchange ("NYSE") initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
Conseco. Specific due dates for these reports have been established by the SEC,
and Conseco is required to disclose in this Proxy Statement any failure by such
persons to file such reports for fiscal year 1995 by the prescribed dates.
Officers, Directors and greater than ten percent beneficial owners are required
by SEC regulations to furnish Conseco with copies of all reports filed with the
SEC pursuant to Section 16(a) of the 1934 Act. To Conseco's knowledge, based
solely on review of the copies of reports furnished to Conseco and written
representations that no other reports were required, all filings required
pursuant to Section 16(a) of the 1934 Act applicable to Conseco's officers,
Directors and greater than 10 percent beneficial owners were made for the year
ended December 31, 1995.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. served as the independent accountants to audit the
financial statements of Conseco for 1995 and have been selected by the Board of
Directors to serve as such for 1996. Representatives of Coopers & Lybrand L.L.P.
are expected to be present at the Annual Meeting, will have the opportunity to
make a statement if they so desire, and will be available to respond to
appropriate questions from the shareholders.
SHAREHOLDER PROPOSALS
Any proper proposal which a shareholder wishes to have included in the
Board's proxy statement and form of proxy for the 1997 Annual Meeting must be
received by Conseco by December 24, 1996.
ANNUAL REPORT
Conseco's Annual Report for 1995 is being mailed to the shareholders with
this Proxy Statement, but is not part of the proxy solicitation material.
15
<PAGE> 18
OTHER MATTERS
Management knows of no other matters which may be presented at the Annual
Meeting. If any other matters should properly come before the meeting, the
persons named in the enclosed form of proxy will vote in accordance with their
best judgment on such matters.
By Order of the Board of Directors
/s/ Lawrence W. Inlow
Lawrence W. Inlow, Secretary
April 24, 1996
16
<PAGE> 19
CONSECO, INC
11825 NORTH PENNSYLVANIA STREET, CARMEL, IN 46032
PROXY FOR 1996 ANNUAL MEETING OF SHAREHOLDERS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Each person signing this card on the reverse side hereby appoints as proxies
Rollin M. Dick, Donald F. Gongaware and Stephen C. Hilbert, or any of them,
with full power of substitution, to vote all shares of common stock and shares
of Preferred Redeemable Increased Dividend Equity Securities, 7% PRIDES,
Convertible Preferred Stock which such person is entitled to vote at the Annual
Meeting of Shareholders of Conseco, Inc., to be held at the Ritz Charles,
12156 North Meridian Street, Carmel, Indiana, at 11:00 a.m. local time on May
28, 1996, and any adjournments thereof.
The proxies are hereby authorized to vote as follows:
1. Election of David R. Decatur, Louis P. Ferrero and Donald F. Gongaware as
Directors for three-year terms expiring in 1999.
/ / FOR (except as shown on the line) / / WITHHELD (as to all nominees)
(To withhold authority to vote for single nominee, write that nominee's
name on this line:)
________________________________________________________________________________
2. In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting.
(PLEASE DATE AND SIGN ON REVERSE SIDE)
THE SHARES REPRESENTED BY THIS PROXY, UNLESS OTHERWISE SPECIFIED, SHALL BE
VOTED FOR ITEM 1.
Please sign below exactly as your
name appears on the label. When
signing as attorney, corporate officer
or fiduciary, please give full title
as such. The undersigned hereby
acknowledges receipt of the Notice
of the Annual Meeting and Proxy
Statement dated April 24, 1996.
Dated ________________________________
Signature(s)__________________________
______________________________________
PLEASE DATE, SIGN, AND RETURN THIS PROXY PROMPTLY.
