<PAGE> 1
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SCHEDULE 14 A
(RULE 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 sec. 240.14a-11(c) or sec. 240.14a-12
OHIO CASUALTY CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OHIO CASUALTY CORPORATION
(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) (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: ............................
(3) Filing Party: ........................................................
(4) Date Filed: ..........................................................
==============================================================================
<PAGE> 2
OHIO CASUALTY CORPORATION
136 North Third Street
Hamilton, Ohio 45025
NOTICE OF ANNUAL MEETING
OF
SHAREHOLDERS
To Be Held April 26, 2000
Hamilton, Ohio
March 24, 2000
To the Shareholders:
The Annual Meeting of Shareholders (the "Annual Meeting") of Ohio Casualty
Corporation (the "Company") will be held in the Ohio Casualty University
Auditorium, 9450 Seward Road, Fairfield, Ohio, 45014, on Wednesday, April 26,
2000, at 10:30 a.m., local time, for the following purposes:
(1) To elect the following three Directors for terms expiring
in 2003 (Class I):
Jack E. Brown Vaden Fitton Howard L. Sloneker III
(2) To approve an amendment to the Company's Code of Regulations
to permit electronic voting of shareholder proxies.
(3) To approve an amendment to the Amended Articles of Incorporation of
the Company to change the location of the Company's principal office.
(4) In their discretion, to consider and vote upon such other matters as
may properly come before the Annual Meeting or any adjournment thereof.
Holders of record of common shares of the Company as of the close of
business on March 1, 2000 are entitled to notice of and to vote at the Annual
Meeting and at any adjournment thereof. As of March 1, 2000, there were
60,073,504 common shares outstanding. Each common share is entitled to one
vote on all matters properly brought before the Annual Meeting.
By Order of the Board of Directors,
Howard L. Sloneker III, Secretary
EVERY SHAREHOLDER'S VOTE IS IMPORTANT. IF YOU ARE UNABLE TO BE PRESENT AT THE
ANNUAL MEETING, YOU ARE REQUESTED TO COMPLETE AND RETURN PROMPTLY THE ENCLOSED
PROXY CARD SO THAT YOUR COMMON SHARES WILL BE REPRESENTED. A POSTAGE PAID,
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
<PAGE> 3
OHIO CASUALTY CORPORATION
136 North Third Street
Hamilton, Ohio 45025
PROXY STATEMENT
---------------
ANNUAL MEETING OF SHAREHOLDERS
Approximate Date to Mail -- March 24, 2000
On behalf of the Board of Directors of Ohio Casualty Corporation (the
"Company"), a proxy card is solicited from you to be used at the Company's 2000
Annual Meeting of Shareholders (the "Annual Meeting") to be held on Wednesday,
April 26, 2000 at 10:30 a.m., local time, in the Ohio Casualty University
Auditorium, 9450 Seward Road, Fairfield, Ohio 45014, or at any adjournment
thereof.
Proxy cards in the form enclosed herewith are being solicited on behalf
of the Company's Board of Directors. Common shares represented by proxy cards,
which are properly executed and returned, will be voted at the Annual Meeting,
or any adjournment thereof, as directed. Common shares represented by proxy
cards properly executed and returned which indicate no direction will be voted
in favor of the nominees of the Board of Directors identified in the Notice of
Annual Meeting of Shareholders accompanying this Proxy Statement, and will be
voted for the proposals to amend the Amended Articles of Incorporation and to
amend the Code of Regulations of the Company. Any shareholder granting a
proxy has the power to revoke the same prior to its exercise by filing with the
Secretary of the Company a written revocation or duly executed proxy bearing a
later date or by giving notice of revocation in open meeting. ATTENDANCE AT
THE ANNUAL MEETING WILL NOT, IN AND OF ITSELF, CONSTITUTE REVOCATION OF A
PROXY.
VOTING AT ANNUAL MEETING
As of March 1, 2000, the record date fixed for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting, there
were outstanding 60,073,504 common shares, which is the only outstanding class
of capital stock of the Company. Each such common share is entitled to one
vote on all matters properly coming before the Annual Meeting.
A quorum for the Annual Meeting is a majority of the outstanding common
shares. Common shares represented by signed proxies that are returned to the
Company will be counted toward the quorum in all matters even though they are
marked "Abstain", "Against" or "Withhold Authority" on one or more or all
matters or they are not marked at all. Broker non-votes are also counted for
purposes of determining the presence or absence of a quorum. Broker non-votes
occur when brokers, who hold their customers' shares in street name, sign and
submit proxies for such shares on some matters, but not others. Typically,
this would occur when brokers have not received any instructions from their
customers, in which case the brokers, as the holders of record, are permitted
to vote on "routine" matters, which typically include the election of
directors, but not on non-routine matters.
1
<PAGE> 4
PRINCIPAL SHAREHOLDERS
The table below identifies the only persons known to the Company to own
beneficially (within the meaning of Rule 13d-3 under the Securities Exchange
Act of 1934) more than 5% of the Company's outstanding common shares.
<TABLE>
<CAPTION>
Common Shares Percent
Name and Address Beneficially of Common
of Beneficial Owner Owned Shares Date
------------------- ----- -------- ----
<S> <C> <C> <C>
FIRST FINANCIAL BANCORP 5,997,083(1) 9.98% 12-31-99
Third and High Streets
Hamilton, Ohio 45011
AMERICAN FINANCIAL GROUP, INC. 6,000,000(2) 9.08% 12-31-99
One East Fourth Street
Cincinnati, Ohio 45202
JOSEPH L. MARCUM 4,366,632(3) 7.27% 03-01-00
136 North Third Street
Hamilton, Ohio 45025
THE CHASE MANHATTAN BANK, N.A., 4,124,780(4) 6.87% 12-31-99
Trustee
1211 Avenue of the Americas
New York, New York 10036
AMVESCAP PLC 3,384,700(5) 5.63% 12-31-99
11 Devonshire Square
London EC2M 4YR
England
</TABLE>
____________________
(1) Based upon information contained in a Schedule 13G dated February 11,
2000, filed with the Securities and Exchange Commission by First
Financial Bancorp and its subsidiary, First National Bank of Southwestern
Ohio (the "Bank"). The Bank holds the reported shares as trustee under
various trust agreements and arrangements. The Bank reported that it has
sole voting power for 5,988,973 shares, sole dispositive power for
2,542,661 shares, and shared dispositive power for 2,668,878 shares.
798,038 shares are held under trust arrangements for certain directors of
the Company and their respective spouses, which shares are reported in the
following table showing share ownership by directors and executive officers
of the Company.
2
<PAGE> 5
(2) Based upon information contained in a Schedule 13G dated February 10,
2000, filed with the Securities and Exchange Commission by American
Financial Group, Inc. ("AFG") According to the Schedule 13G filing,
American Financial Group, Inc. reported shared dispositive power for
6,000,000 shares. All of these shares are covered by an unexercised
warrant issued by the Company to AFG on December 1, 1998 in connection
with the Company's acquisition of AFG's Commercial Lines business. The
exercise price of the warrant is $22.505 per share, and the warrant
expires on November 30, 2003.
(3) See share ownership information for Mr. Marcum in the following table.
(4) 2,370,316 shares are held as trustee for the Company's Employee Savings
Plan and 1,684,464 shares are held as trustee for the Company's Employees
Retirement Plan. Voting power with respect to shares held in the
Employee Savings Plan is exercised by the plan participants; investment
power with respect to these shares is held by plan participants subject
to limitations in the Plan. Voting and investment power with respect to
shares held in the Employees Retirement Plan is exercised by the
committee which administers the Employees Retirement Plan (the
"Retirement Committee"). The Retirement Committee consists of Joseph L.
Marcum, William L. Woodall and Howard L. Sloneker, III. Messrs. Marcum,
Woodall and Sloneker disclaim beneficial ownership of these shares.
(5) Based upon information contained in a Schedule 13G dated February 4,
2000, filed with the Securities and Exchange Commission by AMVESCAP PLC,
to report shareholdings by the following subsidiaries of AMVESCAP PLC:
AVZ, Inc.; AIM Management Group, Inc.; AMVESCAP Group Services, Inc.;
INVESCO, Inc.; INVESCO North American Holdings, Inc.; INVESCO Capital
Management, Inc.; and INVESCO Funds Group, Inc. AMVESCAP PLC reported
shared voting power for 3,384,700 shares and shared dispositive power for
3,384,700 shares.
SHAREHOLDINGS OF DIRECTORS, EXECUTIVE OFFICERS
AND NOMINEES FOR ELECTION AS DIRECTOR
As of March 1, 2000, the directors of the Company, including the three
persons intended by the Board of Directors to be nominated for election as
directors, the individuals named in the Summary Compensation Table, and all
executive officers and directors of the Company as a group, beneficially owned
common shares of the Company as set forth in the table below. All shareholding
totals have been adjusted for the 2-for-1 share split which occurred in July,
1999.
3
<PAGE> 6
<TABLE>
<CAPTION>
Shared Investment/
Number of Options Voting Power
Common Shares Exercisable Over Employees
Name of Beneficially Within Retirement Percent
Individual or Group Owned(1) 60 Days Plan Shares(2) Total of Class(3)
- ------------------- -------- ------- -------------- ----- -----------
<S> <C> <C> <C> <C> <C>
Terrence J. Baehr 500 6,000 6,500
Arthur J. Bennert 32,356 18,000 50,356
Jack E. Brown 2,200 12,000 14,200
Catherine E. Dolan 1,200 18,000 19,200
Wayne Embry 400 18,000 18,400
Vaden Fitton 450,854(4) 12,000 462,854
Joseph L. Marcum 2,676,168(4)(5)(6) 6,000 1,684,464 4,366,632 7.27%
Stephen S. Marcum 431,488(4)(6) 18,000 449,488
Lauren N. Patch 500,627(4)(7) 0 500,627
Stanley N. Pontius 3,548 18,000 21,548
Howard L. Sloneker III 443,411(7) 41,332 1,684,464 2,169,207 3.61%
William L. Woodall 41,400 18,000 1,684,464 1,743,864 2.90%
Thomas A. Hayes 5,342 0 5,342
John J. McGovern 442 24,000 8,441
Barry S. Porter 59,441(7) 47,998 107,439
Jerome S. Runnels 415 24,000 8,414
All Executive Officers
and Directors as a
Group (24 Persons) (8) 4,692,282 352,662 1,684,464 6,729,408 11.20%
</TABLE>
________________________________
(1) Unless otherwise indicated, each named person has voting and investment
power over the listed shares and such voting and investment power is
exercised solely by the named person or shared with a spouse.
(2) Includes 1,684,464 shares held in the Company's Employees Retirement Plan
as to which the named individuals share voting and investment power solely
by reason of being members of the Retirement Committee which administers
such Plan. See Note (5) of the preceding table. Messrs. Marcum, Woodall
and Sloneker disclaim beneficial ownership of these shares.
(3) Percentages are listed only for those individuals who are the beneficial
owners of more than 1% of the outstanding shares.
(4) Includes the following number of shares owned by family members as to
which beneficial ownership is disclaimed: Mr. Fitton, 203,362; Mr. Joseph
L. Marcum, 1,215,208; Mr. Stephen S. Marcum, 168,180; and Mr. Patch,
424,406.
(5) Includes 427,704 shares held by Mr. Marcum's wife in her capacity as a co-
trustee of the estate of Howard Sloneker as to which shares Mr. Marcum has
no voting or investment power.
(6) Includes 195,612 shares held as co-trustee of the Joseph L. and Sarah S.
Marcum Foundation as to which voting and investment power is shared by
Joseph L. and Stephen S. Marcum.
4
<PAGE> 7
(7) The share ownership for Messrs. Patch, Sloneker, Porter, Hayes, McGovern
and Runnels includes 10,498; 5,428; 21,489; 252; 263 and 274 shares,
respectively, held for the accounts of these individuals by the trustee of
the Company's Employee Savings Plan. Such persons have sole voting power
with respect to these shares and also hold investment power subject to
limitations in the Plan.
(8) The total includes the shareholdings of four executive officers, Messrs.
Patch, Hayes, McGovern and Runnels, who are no longer in the
employment of the Company. In addition, Mr. Porter is retiring effective
April 1, 2000.
ELECTION OF DIRECTORS
The Board of Directors intends that the three persons named under Class
I in the following table will be nominated for election at the Annual Meeting
for three-year terms expiring in 2003. The terms of the remaining directors in
Classes II and III will continue after the Annual Meeting. The common shares
represented by the accompanying proxy card will be voted for the election as
directors of the three nominees, unless otherwise instructed on the proxy card.
In the event that any one or more of the nominees unexpectedly becomes
unavailable for election, the common shares represented by the accompanying
proxy card will be voted in accordance with the best judgment of the proxy
holders for the election of the remaining nominees and for the election of any
substitute nominee or nominees designated by the Board of Directors. The
proxies will not be voted for more than three nominees.
Class I of the Board of Directors is currently comprised of four
directors, including the three nominees for election at the Annual Meeting and
Joseph L. Marcum. Mr. Marcum is not seeking re-election to the Board. The
Board of Directors intends to reduce the size of Class I from four directors to
three directors following the Annual Meeting.
Under Ohio law and the Company's Code of Regulations, the nominees
receiving the greatest number of votes will be elected as directors. Shares as
to which the authority to vote is withheld will be counted for quorum purposes
but will not be counted toward the election of the nominees.
<TABLE>
<CAPTION>
Position with Company and/or
Principal Occupation or Employment Director
Name and Age(1) During Last Five Years(2) Since
- --------------- -------------------------------------------------------- --------
<S> <C> <C>
Nominees: Class I --Terms Expiring in 2003:
Jack E. Brown, Chairman of the Board, BBI Marketing Services, Inc., Cincinnati, 1994
56 Ohio (professional marketing consulting firm).
Vaden Fitton, Director and Retired First Vice President of First National Bank 1967
71 of Southwestern Ohio, Hamilton, Ohio.
Howard L. Sloneker III, Senior Vice President, Secretary and Director of the Company, The 1983
43 Ohio Casualty Insurance Company, West American Insurance Company,
American Fire and Casualty Company, Ohio Security Insurance
Company, Avomark Insurance Company, Ohio Casualty of New Jersey,
Inc. and OCASCO Budget, Inc.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
Position with Company and/or
Principal Occupation or Employment Director
Name and Age(1) During Last Five Years(2) Since
- --------------- ------------------------------------------------------- --------
<S> <C> <C>
Directors Whose Terms Continue Beyond the Annual Meeting:
Class II: Terms Expiring in 2001
Wayne Embry, Executive Vice President and General Manager of the Cleveland 1991
63 Cavaliers (professional basketball franchise).
Stephen S. Marcum, Member of the law firm of Parrish, Fryman & Marcum Co., L.P.A., 1989
42 Hamilton, Ohio; such firm has provided legal services to the
Company and its subsidiaries during the last fiscal year and
continues to do so. Director of First Financial Bancorp and its
principal subsidiary, First National Bank of Southwestern Ohio,
Hamilton, Ohio.
Stanley N. Pontius, President and Chief Executive Officer of First Financial Bancorp 1994
53 and its principal subsidiary, First National Bank of Southwestern
Ohio.
William L. Woodall, President, Chief Executive Officer and Director of the Company, 1986
76 The Ohio Casualty Insurance Company, West American Insurance
Company, American Fire and Casualty Company, Ohio Security
Insurance Company, and OCASCO Budget, Inc.
Class III: Terms Expiring in 2002
Terrence J. Baehr, Vice President, Strategy and Solutions, Global Financial Services 1999
49 Sector for IBM Corporation since January, 2000; previously Vice
President, Insurance Industry, North and South America, 1998-1999
and General Manager, Insurance Industry, North America, 1995-1997
for IBM Corporation.
Arthur J. Bennert, Director of the Company, The Ohio Casualty Insurance Company, West 1989
73 American Insurance Company, American Fire and Casualty Company,
Ohio Security Insurance Company, and Ohio Casualty of New Jersey,
Inc; retired executive officer of the Company and its subsidiaries.
Catherine E. Dolan, Managing Director of the Financial Institutions Group, First Union 1994
42 National Bank, Charlotte, North Carolina.
</TABLE>
- ---------------------
(1) Ages are listed as of the date of the Annual Meeting.
(2) The Ohio Casualty Insurance Company, Ohio Security Insurance Company,
American Fire and Casualty Company, West American Insurance Company, OCASCO
Budget, Inc., Ohio Casualty of New Jersey, Inc. and Avomark Insurance Company
are subsidiaries of the Company.
OTHER DIRECTORSHIPS AND RELATED TRANSACTIONS AND RELATIONSHIPS
Wayne Embry is also a director of M. A. Hanna Company and Key Bank,
Commercial Line of Business; Vaden Fitton, Stephen S. Marcum and Stanley N.
Pontius are also directors of First Financial Bancorp.
Joseph L. Marcum, the Chairman of the Board of the Company, retired as
the Chief Executive Officer of the Company on December 31, 1993. In 1999, Mr.
Marcum received an annual benefit from the Company of $146,309 pursuant to the
Company's Employees Retirement Plan. See "Pension Plans".
Stephen S. Marcum is the son of Joseph L. Marcum.
6
<PAGE> 9
MEETINGS OF THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD
During 1999, the Board of Directors held five meetings. No director
attended less than 75% of the aggregate number of meetings of the Board of
Directors and the committees on which he or she served. The Board of
Directors has standing Audit, Executive Compensation and Nominating Committees.
The Audit Committee held five meetings during 1999. The members of the
Audit Committee are Terrence J. Baehr, Arthur J. Bennert, Jack E. Brown,
Catherine E. Dolan, Wayne Embry, Vaden Fitton and Stephen S. Marcum. The Audit
Committee's primary function is to meet with the independent auditors for the
Company and to review the Company's internal and independent auditing and
financial controls.
The Executive Compensation Committee held two meetings during 1999.
The members of the Executive Compensation Committee are Jack E. Brown, Vaden
Fitton, Stephen S. Marcum and Stanley N. Pontius. The Executive Compensation
Committee administers the Company stock option plans and carries out the
responsibilities described in the Report of the Executive Compensation
Committee in this Proxy Statement.
The Nominating Committee held three meetings during 1999. The members
of the Nominating Committee are Jack E. Brown, Wayne Embry, Vaden Fitton,
Joseph L. Marcum, Stephen S. Marcum, Stanley N. Pontius and Howard L.
Sloneker III. The Nominating Committee's responsibilities include the
selection of potential candidates for director and the recommendation of
candidates to the Board.
The Nominating Committee will consider nominees for director
recommended by shareholders for the 2001 Annual Meeting of Shareholders
provided that the names of such nominees are submitted not later than November
24, 2000, to Howard L. Sloneker III, Secretary, 9450 Seward Road, Fairfield,
Ohio 45014. Every submission must include a statement of the qualifications
of the nominee, a consent signed by the nominee evidencing a willingness to
serve as a director if elected, and a commitment by the nominee to meet
personally with the Nominating Committee members.
DIRECTORS' FEES AND COMPENSATION
Each director receives $25,000 for services as a director of the
Company. Each non-employee director of the Company also receives $1,500 per
meeting for attending meetings of the Board of Directors. Members of the Audit
Committee also receive $5,000 each for serving on that committee. In addition,
members of the Executive Compensation Committee and members of the Nominating
Committee receive $300 per meeting for each meeting attended. Joseph L. Marcum
was paid an additional $65,000 during 1999 as compensation for serving as the
Chairman of the Board.
On May 25, 1999, Arthur J. Bennert and Catherine E. Dolan, non-employee
directors of the Company, were each granted a non-qualified stock option (an
"NQSO") to purchase 6,000 common shares of the Company, at an exercise price of
$19.8125 per share, the closing market price of the common shares on the date
of grant, as adjusted for the 2-for-1 share split in July, 1999. On June 4,
1999, Terrence J. Baehr, a non-employee director of the Company, was also
granted an NQSO to purchase 6,000 common
7
<PAGE> 10
shares of the Company, at an exercise price of $19.4375 per share, the closing
market price of the common shares on the date of grant, as adjusted for the
2-for-1 share split in July, 1999. Any individual who becomes or is re-elected
a non-employee director is automatically granted an NQSO to purchase 6,000
common shares effective on the third business day following the first meeting
of the Board of Directors after his/her election or appointment to the Board.
The exercise price of each NQSO granted to a non-employee director is equal to
the fair market value of the common shares on the date of grant. NQSOs granted
to non-employee directors have terms of ten years (subject to earlier
termination in certain cases) and may not be exercised during the six months
following their date of grant.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table presents information concerning compensation
provided by the Company to its Chief Executive Officer and to each of the
Company's five most highly compensated executive officers, other than the
Chief Executive Officer, for services rendered in all capacities for each of
the Company's last three completed fiscal years (number of shares has been
adjusted for the 2-for-1 share split in July, 1999):
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------------------------------------ -----------------------------------
Other Securities Dividend
Annual Restricted Underlying Dividend Payment
Name and Salary Bonus Compensation Stock Options/ Payment Rights
Principal Position Year ($)(1) ($) ($)(3) Awards($)(4) SARs(#) Rights(#)(5) Payout($)(6)
- ------------------ ---- ------ ----- ------------ ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lauren N. Patch 1999 569,692 0 20,377 0 120,000 120,000 102,400
President and Chief 1998 530,000 32,124 60,601 60,722 30,000 30,000 0
Executive Officer(2) 1997 530,000 0 70,898 98,025 30,000 30,000 0
Thomas A. Hayes 1999 497,119 0 40,605 0 80,000 80,000 --
Chief Operating 1998 -- -- -- -- -- -- --
Officer (2)(7) 1997 -- -- -- -- -- -- --
Barry S. Porter 1999 279,537 0 9,821 0 24,000 24,000 34,132
Chief Financial Officer 1998 267,528 13,700 29,051 25,798 10,000 10,000 0
and Treasurer(2) 1997 258,000 0 32,463 40,165 10,000 10,000 0
John J. McGovern 1999 255,000 0 7,649 0 24,000 24,000 --
Senior Vice President(2) 1998 -- -- -- -- -- -- --
1997 -- -- -- -- -- -- --
Jerome Runnels
Senior Vice President(2) 1999 240,000 0 7,200 0 24,000 24,000 --
1998 -- -- -- -- -- -- --
1997 -- -- -- -- -- -- --
Howard L. Sloneker III 1999 224,543 0 7,073 0 24,000 24,000 25,465
Senior Vice President 1998 209,500 10,756 22,563 19,186 10,000 10,000 0
and Secretary 1997 197,698 0 23,488 27,760 10,000 10,000 0
</TABLE>
(1) Includes annual directors' fees for Messrs. Patch and Sloneker.
(2) Mr. Patch resigned as a director and executive officer of the Company
and its subsidiaries on February 17, 2000; Mr. Hayes retired as an executive
officer on November 17, 1999; Mr. Porter is retiring as an executive officer
effective April 1, 2000; Mr. McGovern retired as an executive officer
effective March 14, 2000 and Mr. Runnels retired as an executive officer
effective March 17, 2000. Mr. Hayes, Mr. McGovern and Mr. Runnels were not
executive officers of the Company in 1997 or 1998.
8
<PAGE> 11
(3) Includes for Messrs. Patch, Porter, Sloneker, Hayes, McGovern and Runnels
for 1999 the amount of $4,800 for each, contributed by the Company under
the Company's Employee Savings Plan. Also includes for Messrs. Patch,
Porter, Sloneker, Hayes, McGovern and Runnels for 1999 the amounts of
$15,577, $5,021, $2,273, $11,478, $2,849 and $2,400, respectively,
contributed by the Company under the Company's Supplemental Executive
Savings Plan.
(4) The aggregate values of all outstanding restricted stock awards at the
end of the fiscal year 1999 were $159,371, $65,601 and $46,374 for Messrs.
Patch, Porter, and Sloneker respectively. The number of the restricted
stock awards held by Messrs. Patch, Porter, and Sloneker at the end of
fiscal year 1999 was 9,980, 4,108 and 2,904, respectively. Both the value
and number of restricted stock awards have been adjusted for the share
split in July, 1999. Such restricted stock awards vest on the third
anniversary of the date of the grant so long as the executive officer is an
employee on such date (with earlier vesting occurring on retirement, death or
disability or termination of employment following a change of control).
During the restriction period, the executive officer will receive all
dividends paid on the shares.
(5) Dividend Payment Rights were granted to the named executive officers in
1997, 1998 and 1999. One third of these rights become effective on each
anniversary of the grant date. These rights entitle the holder, on the April
15th following the third anniversary of the grant date, to receive, for each
dividend payment right, an amount in cash equal to the aggregate amount of
dividends that the Company has paid on each common share from the date on which
such right becomes effective through the payout date, subject to restrictions.
(6) Amount shown reflects the payment of the Dividend Payment Rights granted
to the named executive officers in 1996.
(7) Amount shown does not include any severance payments made to Mr. Hayes
pursuant to the employment agreement discussed on page 11.
Option Grants in Last Fiscal Year
The following table sets forth information concerning the grant of
stock options during the last fiscal year to each of the executive officers of
the Company named in the Summary Compensation Table. No stock appreciation
rights were granted during the last fiscal year.
<TABLE>
<CAPTION>
% of Total Potential Realizable
Options Value at Assumed
Number of Granted Annual Rates of Stock
Shares to Price Appreciation for
Underlying Employees Exercise Option Term(2)
--------------
Options in Fiscal Price Expiration ($) ($)
Name Granted # (1) Year ($/Sh) Date 5% 10%
---- ------------- ---------- -------- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Lauren N. Patch (3) 120,000 16.60 20.3438 02-18-09 1,535,293 3,890,733
Thomas A. Hayes (3) 80,000 11.06 20.3438 02-18-09 1,023,529 2,593,822
John J. McGovern (3) 24,000 3.31 20.3438 02-18-09 307,059 778,147
Barry S. Porter (3) 24,000 3.31 20.3438 02-18-09 307,059 778,147
Jerome S. Runnels (3) 24,000 3.31 20.3438 02-18-09 307,059 778,147
Howard L. Sloneker III 24,000 3.31 20.3438 02-18-09 307,059 778,147
</TABLE>
9
<PAGE> 12
(1) All reported stock options were granted under the Ohio Casualty Corporation
1993 Stock Incentive Program at the fair market value of the underlying
option shares on the date of grant, become exercisable as to one-third of
the option shares on each of the first three anniversaries of the date of
grant and have a term of ten years. In the event of a change in control of
the Company, the stock options would become exercisable in full. Stock
options reported consist of incentive stock options and non-qualified stock
options.
(2) The dollar amounts under these columns are the result of calculations at
the 5% and 10% annual appreciation rates set by the Securities and Exchange
Commission for illustrative purposes, and, therefore, are not intended to
forecast future financial performance or possible future appreciation in the
price of the Company's common shares. Shareholders are therefore cautioned
against drawing any conclusions from the appreciation data shown, aside from
the fact that optionees will only realize value from the option grants shown
when the price of the Company's common shares appreciates, which benefits
all shareholders commensurately.
(3) Messrs. Patch, Hayes, McGovern and Runnels are no longer in the employment
of the Company, and their options have consequently expired. Mr. Porter is
retiring as an executive officer effective April 1, 2000.
Option Exercises in Last Fiscal Year
The following table sets forth for each of the executive officers of
the Company named in the Summary Compensation Table, the fiscal year-end value
of unexercised stock options held by such executive officers. None of these
individuals exercised any stock options during 1999.
<TABLE>
<CAPTION>
Aggregated Option Exercises in
Last Fiscal Year and Fiscal Year-End Option Value
---------------------------------------------------------
Number of Shares Underlying Value of Unexercised
Unexercised Options at In-the-Money Options
Fiscal Year-End(#) at Fiscal Year-End ($)(1)
--------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Lauren N. Patch 120,000 180,000 -- --
Thomas A. Hayes 0 0 -- --
Barry S. Porter 39,999 44,001 -- --
John J. McGovern 0 24,000 -- --
Jerome S. Runnels 0 24,000 -- --
Howard L. Sloneker III 33,333 44,001 -- --
</TABLE>
(1) "Value of Unexercised In-the-Money Options at Fiscal Year-End" is based
upon the fair market value of the Company's common shares on December 31, 1999
($15.969), less the exercise price of in-the-money options on December 31,
1999. Exercise prices of these options on December 31, 1999 ranged from
$17.500 to $23.469.
(2) See footnote (3) in the preceding table.
10
<PAGE> 13
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AGREEMENTS
Thomas A. Hayes, who served as Executive Vice President and Chief
Operating Officer of The Ohio Casualty Insurance Company ("OCIC") from December
1, 1998 to November 17, 1999, was a party to an Employment Agreement with OCIC.
The Employment Agreement provided for an initial term of thirty-six months and
specified an initial base annual salary of $550,000, an annual performance-
based cash bonus of between 30% and 90% of base annual salary and participation
in a long-term incentive program for senior executives. In accordance with the
terms of the Employment Agreement and as a result of Mr. Hayes' retirement from
employment, OCIC will continue to pay Mr. Hayes' base annual salary of $550,000
through November 30, 2001.
John J. McGovern and Jerome S. Runnels, who both served as Senior Vice
Presidents of OCIC, were also parties to Employment Agreements with OCIC.
These Employment Agreements were essentially identical except that Mr.
McGovern's Agreement provided for an initial term of two years and a base
annual salary of $255,000 and Mr. Runnels' Agreement provided for an initial
term of three years and a base annual salary of $240,000. Each of these
individuals was entitled under his Employment Agreement to an annual
performance-based cash bonus between 25% and 75% of his base annual salary and
to participate in a long-term incentive program for senior executive officers.
In accordance with the terms of the Employment Agreements, OCIC will continue
to pay Mr. McGovern and Mr. Runnels their base annual salaries through November
30, 2000 and November 30, 2001 respectively.
Pension Plans
The following table sets forth the estimated annual benefits payable
under the Employees Retirement Plan and The Ohio Casualty Insurance Company
Benefit Equalization Plan (the "Benefit Equalization Plan") to participants in
such plans, including the executive officers named in the Summary Compensation
Table, upon retirement in specified compensation and years of service
classifications:
<TABLE>
<CAPTION>
PENSION PLANS TABLE
15 20 25 30 35 40 45
Annual Earnings Years Years Years Years Years Years Years
- --------------- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
$125,000 $27,665 $36,887 $46,109 $55,331 $64,553 $73,774 $82,996
175,000 39,665 52,887 66,109 79,331 92,553 105,774 118,996
225,000 51,665 68,887 86,109 103,331 120,553 137,774 154,996
275,000 63,665 84,887 106,109 127,331 148,553 169,774 190,996
325,000 75,665 100,887 126,109 151,331 176,553 201,774 226,996
375,000 87,665 116,887 146,109 175,331 204,553 233,774 262,996
400,000 93,665 124,887 156,109 187,331 218,553 249,774 280,996
425,000 99,665 132,887 166,109 199,331 232,553 265,774 298,996
450,000 105,665 140,887 176,109 211,331 246,553 281,774 316,996
475,000 111,665 148,887 186,109 223,331 260,553 297,774 334,996
500,000 117,665 156,887 196,109 235,331 274,553 313,774 352,996
525,000 123,665 164,887 206,109 247,331 288,553 329,774 370,996
550,000 129,665 172,887 216,109 259,331 302,553 345,774 388,996
600,000 141,665 188,887 236,109 283,331 330,553 377,774 424,996
650,000 153,665 204,887 256,109 307,331 358,553 409,774 460,996
700,000 165,665 220,887 276,109 331,331 386,553 441,774 496,996
</TABLE>
11
<PAGE> 14
Retirement benefits under the Company's Employees Retirement Plan, a
defined benefit plan qualified under Section 401(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), are generally payable to full-time and
regular part-time salaried employees whose participation in the plan has
vested (currently requiring the completion of five years of service) upon
retirement at age 65 or in reduced amounts upon retirement prior to age 65 if
the participant has ten years of vested service. A retiree's benefit amount
is based upon his or her credited years of service and average annual
compensation (salary) for the five consecutive calendar years of highest
salary during the last ten years of service immediately prior to age 65 or,
if greater, the average annual compensation paid during the 60 consecutive
month period immediately preceding retirement or other termination of
employment. Such retirement benefits are calculated considering the retiree's
Social Security-covered compensation. Benefits figures shown in the table
above are computed on the assumption that participants retire at age 65 and
are entitled to a single life annuity.
Section 401(a)(17) of the Code limits compensation in excess of
$160,000 from being taken into account in determining benefits payable under a
qualified pension plan. As a result, the Benefit Equalization Plan was
adopted for those employees who are adversely affected by these provisions of
the Code. The Benefit Equalization Plan provides for payment of benefits that
would have been payable under the Employees Retirement Plan but for the
limitation on covered compensation imposed by the Code. Upon retirement,
participants receive the actuarial equivalent present value of the benefit
payable under the Benefit Equalization Plan in a lump sum.
At December 31, 1999, credited years of service and average annual
compensation for purposes of the Employees Retirement Plan and the Benefit
Equalization Plan for the executive officers named in the Summary Compensation
Table were: Lauren N. Patch, 23.5 years ($528,602); Barry S. Porter, 25.5
years ($267,742); Howard L. Sloneker III, 17.75 years ($188,290); Thomas A.
Hayes, .9167 year, ($115,712); John J. McGovern, 1 year ($54,335); and Jerome
S. Runnels, 1 year ($51,138). The compensation covered by the Employees
Retirement Plan and the Benefit Equalization Plan is the amount shown in the
Summary Compensation Table as salary, less any directors' fees.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
Executive Compensation Policies
The Company's executive compensation programs are designed to attract
and retain quality talent, and to motivate the Company's key employees to
maximize shareholder returns by achieving both the short-term and long-term
goals of the Company. The Executive Compensation Committee of the Board of
Directors (the "Committee"), consisting entirely of non-employee directors,
approves all of the policies under which compensation is paid or awarded to
the Company's executive officers.
The Committee believes that the Company's executive compensation
opportunities, including those for the Company's Chief Executive Officer
("CEO"), should create incentives for superior performance and consequences
for below-target performance. In 1996, the Company's executive compensation
program was re-designed to link each executive officer's compensation directly
to individual and Company performance. A significant portion of each
executive officer's total compensation is now variable and dependent upon the
attainment of annual objectives and long-term shareholder returns. The
compensation structure provides a portion of each executive officer's
compensation in stock thereby creating a mutuality of interest between
executive officers and shareholders.
12
<PAGE> 15
The Committee annually reviews the short-term and long-term
compensation levels for the CEO and other senior executives to consider and
implement any changes necessary to achieve its on-going objectives. In
determining the comparable compensation levels discussed further below, the
Committee considers information from surveys of compensation practices within
the property and casualty industry which surveys may include some or all of
the companies included in the Performance Graph on page 17.
The Committee has begun a comprehensive review to realign the current
compensation program and policies for the executive officers with corporate
objectives. It is anticipated that new policies and procedures will be
implemented in the current fiscal year. It is also anticipated that new
policies and procedures may vary substantially from those discussed below for
1999.
Specific Compensation Programs
There were three components to the Company's "pay for performance"
system established for the individuals named in the Summary Compensation Table
on page 8 and eight additional key executives (collectively called the
"executive officers"): (i) base salary established on an annual basis, (ii)
awards under the Annual Incentive Plan and (iii) awards under the Long-Term
Incentive Plan. Each component of the Company's executive compensation program
aims to accomplish a different purpose.
Base Salary. Base salary levels for the CEO and the other executive
officers of the Company are based on individual performance, the
responsibilities associated with an individual's position in the Company,
skill level and experience and potential future contribution, all of which are
reviewed annually and benchmarked against similar positions within the survey
companies. The base salary of the CEO is established by the Committee. The
base salaries of the other executive officers are established by the CEO on
an annual basis. Salary adjustments are based on individual performance, as
determined in accordance with the Company's executive performance evaluation
system, and reflective of competitive conditions existing at the time. In
1999, the executive officers (13 officers in addition to the CEO) received
an average increase in their base salaries of approximately 3.96% based on
performance evaluations.
Annual Incentive Plan Awards. The potential award opportunities for
each of the executive officers who participates in the Annual Incentive Plan
were determined at the beginning of the 1999 fiscal year. Potential award
opportunities for a fiscal year, which are expressed as a percentage of a
participant's salary for that fiscal year, are based on the participant's
level within the organization, with higher percentages being assigned to
executive officers who hold more senior positions. Actual awards are based on
a combination of individual and team performance. This balance supports the
accomplishment of overall objectives and rewards individual contributions by
the executives. Team performance, which accounts for up to 50% of the total
award potential, is based on the Company's actual performance against pre-
determined targets for premium growth, financial performance, reorganization,
and improvement of key processes for the Company. A performance threshold for
each measure ensures that no awards are made for substandard accomplishments.
If the performance threshold is achieved, each of the eligible executive
officers receives a team award, the amount of which depends on the extent to
which the Company's performance exceeds the threshold level and the potential
award opportunity assigned to that participant, as described above. The
Executive Compensation Committee determines, based on a recommendation from the
CEO, the level of funding for the individual award pool based on the
performanceachieved by the management team on a number of criteria such as the
achievement of pre-established Company and individual goals. The pool is
allocated among the participants on the basis of their performance evaluations
as determined by the CEO (the CEO's performance evaluation is conducted by
the Committee).
13
<PAGE> 16
Awards under the Annual Incentive Plan may be paid in cash, restricted
shares of Company stock or a combination thereof. Such restricted shares
may not be transferred by the participant for a three-year period following
the date of the grant, unless the participant dies or his employment is
terminated as a result of disability or retirement or following a change in
control of the Company. If the employment of the participant terminates for
any other reason during such three year period, the restricted shares will be
forfeited to the Company. The Committee has reserved the right to eliminate
restricted stock awards or make other modifications to the Annual Incentive
Plan.
Long-Term Incentive Plan. Awards under the Long-Term Incentive Plan
consist of incentive stock options, non-qualified stock options, or a
combination of both, and dividend payment rights, as described below. Stock
options are granted at market value on the date of grant and increase in value
only to the extent of appreciation in the Company's common shares. Stock
options expire at the end of ten years from the date of grant. Stock option
grants are generally made at the beginning of the fiscal year, although grants
may be made at different times to participants who are promoted or newly
hired. The number of stock options to be granted is based on the participant's
salary level and position. While it is the intention of the Committee to make
stock option grants annually, the Committee has reserved the right to eliminate
stock option awards or make other modifications in the Long-Term Incentive
Plan.
Dividend Payment Rights. In addition to stock options, the
participants in the Long-Term Incentive Plan may be granted dividend payment
rights. One-third of these rights become effective on each anniversary of the
grant date. These rights entitle the holder on the April 15th following the
third anniversary of the grant date (or earlier if the holder dies, becomes
disabled or retires or is terminated from employment after a change in
control of the Company) to receive, for each dividend payment right, an amount
in cash equal to the aggregate amount of dividends that the Company has paid
on each common share from the date on which the dividend payment right
becomes effective through the payout date. Unless the employment of the
holder of a dividend payment right terminates as a result of death,
disability, retirement at normal retirement age, or following a change in
control, the holder forfeits the right if his or her employment terminates
prior to the scheduled payout date. The employees to whom stock options and
dividend payment rights are to be awarded are determined annually by the
Committee for the executive officers, including the CEO, and by the CEO for
all other officers.
The Company's Annual Incentive Plan and its Long-Term Incentive Plan
are designed to provide participants with the opportunity to receive total
compensation targeted at the 75th percentile of salaries for similar positions
among the survey companies.
In view of the Company's financial performance during 1999, the
Committee has made a determination not to grant any awards under the Annual
Incentive Plan. Stock options and dividend payment rights were awarded to
executive officers in early 1999 based on an evaluation of individual
responsibilities and contributions.
Section 162(m) of the Code generally limits the corporate tax deduction
for the compensation paid to executive officers named in the Summary
Compensation Table in the proxy statement to $1 million, unless certain
requirements for qualifying compensation as "performance based" are met. The
compensation paid to each of the executive officers of the Company in 1999 was
less than the threshold for deductibility under Section 162(m).
14
<PAGE> 17
Bases for Chief Executive Officer Compensation
The Committee evaluates the performance of the CEO at least annually.
In 1999, Mr. Patch received a base salary of $545,000. The Company also granted
to Mr. Patch in early 1999, pursuant to the Long-Term Incentive Plan, incentive
stock options covering 14,740 common shares and non-qualified stock options
covering 105,260 common shares. The number of stock options granted to Mr.
Patch was based on his salary level and position with the Company. As
previously indicated, in establishing the compensation of Mr. Patch and the
other executive officers, the goal of the Committee has been to create a total
compensation opportunity through base salary and awards under the Annual
Incentive Plan and the Long-Term Incentive Plan which, if realized as a result
of the Company's performance, would result in total compensation being at the
75th percentile for similar positions at the survey companies.
The foregoing report on executive compensation is provided by the
following directors, who constituted the Executive Compensation Committee
during 1999:
Jack E. Brown Vaden Fitton Stephen S. Marcum Stanley N. Pontius
EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The directors of the Company who served as members of the Company's
Executive Compensation Committee during 1999 were Jack E. Brown, Vaden Fitton,
Stephen S. Marcum and Stanley N. Pontius. Mr. Fitton, Mr. Marcum and Barry S.
Porter, the Company's Chief Financial Officer and Treasurer, also served as
members of the Executive Compensation Committee of First Financial Bancorp
during 1999, whose President and Chief Executive Officer, Stanley N. Pontius,
is a member of the Executive Compensation Committee of the Company.
As indicated in the Executive Compensation Committee Report on
Executive Compensation, Lauren N. Patch, who served as the Company's President
and Chief Executive Officer in 1999, participated in decision-making regarding
the compensation of certain executive officers named in the Summary
Compensation Table other than his own. Mr. Patch was not a member of the
Executive Compensation Committee.
PROPOSAL 2
PROPOSED AMENDMENT TO THE COMPANY'S CODE OF REGULATIONS WHICH
WOULD PERMIT ELECTRONIC PROXY VOTING
Section 10 of Article I of the Company's Code of Regulations permits a
shareholder to vote by proxy, if the proxy is in writing and executed by the
shareholder. Effective September 13, 1999, the Ohio General Corporation Law
was amended to expand the methods a shareholder can use to grant a proxy. The
Ohio General Corporation Law now permits a shareholder to grant a proxy by any
verifiable communication authorized by the person granting the proxy. Any
transmission that creates a record capable of authentication that appears to
have been transmitted by the person granting a proxy is permitted, and would
include electronic mail and telephone, as well as traditional written proxies.
The Company's Code of Regulations currently does not provide for a shareholder
to grant a proxy by electronic mail, telephone or other electronic media. The
amendment to the Company's Code of Regulations would expressly authorize the
shareholder to utilize the more modern forms of proxy voting now permitted by
the Ohio General Corporation Law.
15
<PAGE> 18
The Board of Directors has approved, and recommends that the
shareholders of the Company adopt, an amendment to Section 10 of Article I of
the Company's Code of Regulations to permit a shareholder to use electronic
mail, telephone and other methods to grant a proxy. The proposed amendment to
the Company's Code of Regulations would provide that a shareholder could grant
a proxy by any method authorized by Ohio law. The text of Section 10 of
Article I would read as follows:
Section 10. Proxies. At meetings of the shareholders, any shareholder of
record entitled to vote may be represented and may vote by proxy or proxies
appointed by an instrument in writing signed by such shareholder or appointed
in any manner permitted by Ohio law. Any such instrument in writing or record
of any such appointment shall be filed with or received by the secretary of
the meeting before the person holding such proxy shall be allowed to vote
thereunder. No appointment of a proxy is valid after the expiration of eleven
months after it is made unless the writing or other communication which
appoints such proxy specifies the date on which it is to expire or the length
of time it is to continue in force.
Approval of the proposed amendment is being sought because the Ohio
General Corporation Law and the Code of Regulations require the approval of the
shareholders for any amendment to those Regulations. If adopted by the
shareholders, the proposed amendment to the Code of Regulations will become
effective immediately without any additional action by the Company.
The affirmative vote of the holders of not less than a majority of the
Company's outstanding common shares on the record date for the Annual Meeting
is required to amend the Code of Regulations. Under Ohio law and the Company's
Code of Regulations, abstentions and broker non-votes are counted as present;
and the effect of an abstention or non-vote is the same as a "no" vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF THE AMENDMENT TO
THE COMPANY'S CODE OF REGULATIONS.
PROPOSAL 3
PROPOSED AMENDMENT TO THE AMENDED ARTICLES OF INCORPORATION
OF THE COMPANY TO DESIGNATE FAIRFIELD, OHIO
AS THE PRINCIPAL OFFICE FOR PURPOSES OF OHIO LAW
The Ohio General Corporation Law requires that every corporation
incorporated in Ohio designate a place in Ohio where the principal office for
the corporation is to be located. The Company's Amended Articles of
Incorporation currently provide that the place in Ohio where the Company's
principal office is to be located is the City of Hamilton, County of Butler.
Although the Company continues to maintain business operations in
Hamilton, Ohio, its executive officers relocated to the Company's offices in
Fairfield, Ohio in 1999. The Company's Board of Directors proposes that the
City of Fairfield be designated as the place in the State of Ohio where the
principal office of the Company is to be located. The Company's Board of
Directors has approved, and recommends that the shareholders adopt, an
amendment to Article SECOND of the Amended Articles of Incorporation of the
Company (the "Amendment") to change the designated location of the Company's
principal office in Ohio from the City of Hamilton to the City of Fairfield.
The text of the Amendment, which would replace existing Article SECOND of
the Company's Amended Articles of Incorporation, is as follows:
16
<PAGE> 19
SECOND: The place in the State of Ohio where the principal office of
the corporation is to be located is the City of Fairfield, County of
Butler.
The Amendment requires the affirmative vote of the holders of a
majority of the outstanding common shares of the Company on the record date
for the Annual Meeting. Proxies will be voted for the Amendment unless
contrary instructions are set forth on the proxy card. Abstentions and
broker non-votes will have the same legal effect as a vote against the
Amendment. If adopted by the shareholders, the Amendment will become
effective as soon as it is filed with the Secretary of State of the State of
Ohio, which the Company expects to occur as soon as practical after
the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 3.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The following graph compares the five-year cumulative total shareholder
return, including reinvested dividends, of the Company's common shares with the
Dow Jones Equity Market Index and the Dow Jones Insurance Index for Property
and Casualty Companies (1):
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
-----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DJ EQUITY MARKET INDEX 100.00 137.67 169.39 226.91 291.91 351.37
DJ INSURANCE P&C 100.00 140.08 168.46 248.18 267.99 205.27
OHIO CASUALTY CORP 100.00 143.42 137.52 179.49 172.29 141.72
- --------------------
</TABLE>
(1) The Dow Jones Insurance Index for Property and Casualty Companies is
comprised of 11 companies that are traditionally considered as a peer
group of property and casualty insurance companies within the United
States. The companies making up the 1999 Index are Allstate Corp.;
American International Group Inc.; Chubb Corp.; Cincinnati Financial
Corp.; Loews Corp.; MBIA Inc.; Mercury General Corp.; Old Republic
International Corp.; Progressive Corp.; SAFECO Corp.; and The St. Paul Cos.
17
<PAGE> 20
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended December 31,
1999, accompanies this Proxy Statement.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of PricewaterhouseCoopers LLP has served as
independent public accountants of the Company and its subsidiaries and will
continue to serve as independent public accountants for 2000. A representative
of PricewaterhouseCoopers LLP will be present at the Annual Meeting with the
opportunity to make a statement and/or respond to appropriate questions from
the shareholders.
SHAREHOLDER PROPOSALS AND NOMINATIONS
Proposals of shareholders intended to be presented at the 2001 Annual
Meeting of Shareholders scheduled to be held on April 18, 2001, must be
received by the Company no later than November 24, 2000 for inclusion in the
Company's proxy statement and proxy relating to that meeting. Upon receipt of
any such proposal, the Company will determine whether or not to include such
proposal in the proxy statement and proxy in accordance with applicable rules
and regulations promulgated by the Securities and Exchange Commission.
In order for a shareholder to nominate a candidate for director at a
meeting of shareholders, under the Company's Code of Regulations, timely notice
of the nomination must be received by the Company in advance of the meeting.
Ordinarily, in the case of an annual meeting, such notice of a proposed
nomination must be received by the Company on or before the later of (1) the
first day of February immediately preceding such annual meeting or (2) the
sixtieth day prior to the first anniversary of the most recent annual meeting
of shareholders. The shareholder filing the notice of nomination must
describe various matters regarding the proposed nominee, including such
information as name, address, occupation and shares of the Company held.
These requirements are separate from the requirements a shareholder must meet
in order to have a proposed nominee considered by the Nominating Committee of
the Company's Board of Directors for nomination by the Board of Directors and
inclusion as a nominee in the Company's proxy statement.
The Securities and Exchange Commission has promulgated rules relating
to the exercise of discretionary voting authority pursuant to proxies solicited
by the Company's Board of Directors. If a shareholder intends to present a
proposal at the 2001 Annual Meeting of Shareholders and does not notify the
Company of such proposal by February 7, 2001, or if a shareholder intends to
nominate a director at the 2001 Annual Meeting and does not comply with the
notification requirements described in the preceding paragraph, the proxies
solicited by the Company's Board of Directors for use at the Annual Meeting
may be voted on such proposal or such nominee, as the case may be, without
discussion of the proposal or nominee in the proxy statement for that Annual
Meeting.
In each case, written notice must be given to the Secretary of the
Company, whose name and address are: Howard L. Sloneker III, Secretary, Ohio
Casualty Corporation, 9450 Seward Road, Fairfield, Ohio 45014.
18
<PAGE> 21
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission (SEC). Officers, directors and greater than ten percent
shareholders are required by SEC regulations to furnish the Company with
copies of all Forms 3, 4 and 5 they file.
Based on the Company's review of the copies of such forms it has
received, the Company believes that all of its officers, directors, and greater
than ten percent beneficial owners complied with all filing requirements
applicable to them with respect to transactions during fiscal 1999. An
exception is noted for Frederick W. Wendt, who was appointed an executive
officer in November, 1999. An inaccurate total of common stock ownership was
inadvertently reported on his initial Form 3 filing, which was corrected on
the Form 5 Annual Statement filed with the SEC in February, 2000.
OTHER MATTERS
The Company files annually with the Securities and Exchange Commission
an Annual Report on Form 10-K. This report includes financial statements and
financial statement schedules.
A SHAREHOLDER OF THE COMPANY MAY OBTAIN A COPY OF THE ANNUAL REPORT ON
FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES,
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999, WITHOUT CHARGE BY SUBMITTING A
WRITTEN REQUEST TO THE FOLLOWING ADDRESS:
OHIO CASUALTY CORPORATION
Attention: Howard L. Sloneker, III
Senior Vice President and Secretary
9450 Seward Road
Fairfield, Ohio 45014
Management and the Board of Directors of the Company know of no
business to be brought before the Annual Meeting other than as set forth in
this Proxy Statement. However, if any matters other than those referred to
in this Proxy Statement should properly come before the Annual Meeting, it is
the intention of the persons named in the enclosed proxy card to vote the
common shares represented by such proxy card on such matters in accordance
with their best judgment.
19
<PAGE> 22
EXPENSES OF SOLICITATION
The expense of proxy solicitation will be borne by the Company.
Proxies will be solicited by mail and may be solicited, for no additional
compensation, by officers, directors or employees of the Company or its
subsidiaries, by telephone, telegraph or in person. Brokerage houses and
other custodians, nominees and fiduciaries may be requested to forward
soliciting material to the beneficial owners of common shares of the Company,
and will be reimbursed for their related expenses. In addition, the Company
has retained Morrow & Co., Inc., a professional soliciting organization, to
assist in soliciting proxies from brokerage houses, custodians and nominees.
The fees and expenses of that firm in connection with such solicitation are
not expected to exceed $12,000.
By Order of the Board of Directors,
/s/ Howard L. Sloneker III
Howard L. Sloneker III, Secretary
March 24, 2000
20
<PAGE> 23
OHIO CASUALTY CORPORATION
This Proxy is solicited on behalf of the Board of Directors
ANNUAL MEETING OF SHAREHOLDERS APRIL 26, 2000
Each undersigned shareholder of Ohio Casualty Corporation (the "Company")
hereby constitutes and appoints Joseph L. Marcum and Howard L. Sloneker III,
or either one of them, with full power of substitution in each of them, the
proxy or proxies of the undersigned to vote at the Annual Meeting of
Shareholders (the "Annual Meeting") of the Company to be held in the Ohio
Casualty University Auditorium at Ohio Casualty Corporation, 9450 Seward Road,
Fairfield, Ohio 45014, on Wednesday, April 26, 2000, at 10:30 a.m., local
time, and at any adjournment thereof, all of the common shares of the Company
which the undersigned would be entitled to vote if personally present at such
Annual Meeting, or at any adjournment thereof, as follows:
(1) TO ELECT THE FOLLOWING THREE (3) NOMINEES AS DIRECTORS TO SERVE TERMS
EXPIRING IN 2003 (CLASS I):
[ ] FOR all nominees listed below (except as marked to the contrary below)*
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
Jack E. Brown Vaden Fitton Howard L. Sloneker III
* INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
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(2) TO APPROVE AN AMENDMENT TO THE COMPANY'S CODE OF REGULATIONS TO PERMIT
SHAREHOLDERS TO APPOINT PROXIES BY ANY METHOD PERMITTED BY OHIO LAW:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) TO APPROVE AN AMENDMENT TO ARTICLE SECOND OF THE AMENDED ARTICLES OF
INCORPORATION OF THE COMPANY TO CHANGE THE LOCATION OF THE COMPANY'S
PRINCIPAL OFFICE:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) IN THEIR DISCRETION, TO CONSIDER AND VOTE UPON SUCH OTHER MATTERS (NONE
KNOWN AT THE TIME OF SOLICITATION OF THIS PROXY) AS MAY PROPERLY COME
BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT THEREOF.
(Continued, and to be executed and dated on the reverse side)
(Continued from other side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFIC INDICATION ABOVE. IN THE ABSENCE OF SUCH INDICATION, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR NAMED IN
PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. IF ANY OTHER MATTERS ARE BROUGHT BEFORE
THE MEETING, OR IF A NOMINEE FOR ELECTION AS A DIRECTOR NAMED IN THE PROXY
STATEMENT IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, THE PROXY WILL
BE VOTED IN THE DISCRETION OF THE PROXIES ON SUCH MATTERS OR FOR SUCH
SUBSTITUTE NOMINEE(S) AS THE DIRECTORS MAY RECOMMEND.
All proxies previously given by the undersigned are hereby revoked. Receipt
of the accompanying Proxy Statement and the Annual Report of the Company for
the fiscal year ended December 31, 1999, is hereby acknowledged.
The signature or signatures to this
proxy must be the same as the name or
names which appear hereon. Persons
signing as administrators, trustees
or guardians should give full title
as such.
Dated: , 2000
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Signature(s) of Shareholder(s)
PLEASE MARK, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED STAMPED ENVELOPE.
