<PAGE>
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
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
ALFA CORPORATION
----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
ALFA CORPORATION
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(a)(1)(ii), 14a-6(i)(1), 14a-6(j)(2).
[_] $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;*
(4) Proposed maximum aggregate value of transaction:
- -------------
*Set forth the amount on which the filing fee is calculated and state how
it was determined
[X] 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.: Preliminary Proxy
Statement
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[LOGO OF ALFA CORP. APPEARS HERE]
ALFA CORPORATION
P. O. Box 11000
Montgomery, Alabama 36191-0001
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF ALFA CORPORATION:
Notice is hereby given that the Annual Meeting of the stockholders of Alfa
Corporation will be held at the Executive Offices of the Company, 2108 East
South Boulevard, Montgomery, Alabama, on April 18, 1996, at 10:00 a.m., for
the purpose of considering and acting upon the following:
(1) To elect a Board of Directors to serve until the next annual meeting of
stockholders.
(2) To receive the report of officers (without taking any action thereon) and
to transact such other business as may properly come before the meeting or
any adjournment thereof.
The close of business on March 14, 1996, has been fixed as the record date
for determination of stockholders entitled to notice of and to vote at the
Annual Meeting of Stockholders. The stock transfer books of the Company will
not be closed.
The Company's Proxy Statement is submitted herewith, together with the
Annual Report for the Year ended December 31, 1995.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Ken Wallis
-------------------
Ken Wallis
Secretary
DATED: March 21, 1996
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR SHARES
MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF
A QUORUM MAY BE ASSURED. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT
TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE MEETING.
<PAGE>
ALFA CORPORATION
P. O. Box 11000
Montgomery, Alabama 36191-0001
-------------------------
PROXY STATEMENT
-------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 18, 1996
This proxy statement is furnished to the stockholders of Alfa Corporation
(the "Company") in connection with the solicitation of proxies on behalf of
management of the Company for use only at the annual meeting of stockholders
to be held on April 18, 1996, and any and all adjournments thereof.
If the enclosed proxy form is properly executed and received by the Company
prior to the vote taken at such meeting, shares represented thereby will be
voted in the manner thereon, and in the absence of specification will be voted
FOR the election of all management nominees for directors. If any of the
management nominees should become unavailable to serve at the time of the
meeting, the shares represented by the proxies not withholding authority will
be voted for the remaining management nominees and for any substitute nominee
(or nominees, as the case may be) designated by the Board of Directors or in
the absence of such designation by the Board of Directors in accordance with
the judgment of the persons holding such proxies. Management has no reason to
believe that any management nominee will be unable or unwilling to serve as
director if elected. The Company will bear the cost arising in connection with
this solicitation. Abstentions and broker non-votes are each included in the
determination of the number of shares present and voting. Each is tabulated
separately. Abstentions are counted in tabulations of the votes cast on
proposals presented to shareholders, whereas broker non-votes are not counted
for purposes of determining whether a proposal has been approved.
REVOCABILITY OF PROXY
The stockholder giving the enclosed proxy for voting the shares thereby
represented has the power to revoke it at any time before it is exercised. The
proxy may be revoked by executing a subsequently dated proxy, or by other
written notice delivered to the Secretary of the Company, or by attendance at
the stockholders meetings and giving notice to the Secretary or inspector
appointed for the meeting of his intention to revoke the proxy. The executive
offices of the Company are located at 2108 East South Boulevard, P. O. Box
11000, Montgomery, Alabama 36191-0001.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS
All of the outstanding capital stock of the Company is $1.00 par value
common stock. Each share is entitled to one vote. At the close of business on
March 14, 1996, there were 40,786,312/1/ shares of stock outstanding and
entitled to vote. Stockholders entitled to vote in person or by proxy are
stockholders of record at the close of business on March 14, 1996.
The following table contains information concerning anyone known by the
Company to be beneficial owner of more than 5% of the Company's outstanding
common shares as of March 1, 1996.
<TABLE>
<CAPTION>
NUMBER OF
NAME AND ADDRESS SHARES OWNED PERCENT
- ---------------- ------------ -------
<S> <C> <C>
Alfa Mutual Ins. Co.
P. O. Box 11000
Montgomery, AL 36191..................................... 16,201,538 39.7
Alfa Mutual Fire Ins. Co.
P. O. Box 11000
Montgomery, AL 36191..................................... 4,515,286 11.1
</TABLE>
PROPOSAL 1
ELECTION OF DIRECTORS
The By-laws call for the election of directors annually. Accordingly, all of
the directors of the Company will stand for election.
All nominees of management for election as directors currently serve as
directors of the Company. The Board was increased to 12 members in January,
1996. Thomas H. Miller was elected to fill the new position on the Board.
Vote Required: The affirmative vote of the holders of a majority of the
Common Stock represented by proxy or in person at the meeting at which a
quorum is present shall be required for the election of directors. Proxies
solicited by Management will be voted FOR the election of management nominees
for directors, unless specified to the contrary in such proxies.
Your Board of Directors recommends that you vote FOR the election of
management nominees for directors.
The following table sets forth as of March 1, 1996, information concerning
each of the nominees' present offices and positions held with the Company, his
principal occupation or employment during the last five years, the date he
first became a director, directorships in other publicly held companies, and
the approximate number of shares beneficially owned by each of them. The
information presented below as to principal occupations and shares of stock
beneficially owned is as of March 1, 1996, and is based in part on information
received from the respective nominees and in part from the records of the
Company. The current term of each of the directors expires at the annual
meeting when their successors are elected.
- --------
/1/There are an additional 8,000 shares outstanding issued, upon organization
of the Company, to Alfa Life Insurance Corporation (ALIC), a subsidiary of the
Company which are not entitled to be voted or counted for quorum purposes as
long as they are owned by ALIC.
2
<PAGE>
<TABLE>
<CAPTION>
STOCK BENEFICIALLY OWNED
SINCE MARCH 1, 1996
--------------------------
POSITIONS WITH COMPANY, DIRECTOR
NOMINEE AGE BUSINESS & DIRECTORSHIP SINCE DIRECTLY INDIRECTLY/1/ PERCENT
------- --- ------------------------ -------- ---------- -------------- -------
<C> <C> <S> <C> <C> <C> <C>
Goodwin L. Myrick/3/ 70 Chairman of the Board & 1983 177,618 20,733,005 50.92
President, President of
Alabama Farmers
Federation and dairy
farmer; a control
person. Director:
Compass Banchares of the
South, Inc. and Compass
Bank of the South.
Jerry A. Newby/3/,/4/ 48 Farmer. 1993 8,360 3,090 .02
James Earl Mobley/3/,/4/,/5/ 72 Farmer, Director: 1983 6,096 13,900 .04
Compass Bank of Dothan,
Alabama; and First
Federal Savings & Loan
Association of Russell
County, Alabama.
John W. Morris/3/,/4/ 57 Farmer. 1992 31,849 100 .07
James A. Tolar, Jr./3/,/4/ 61 Farmer, Director: 1983 400 0 .00
Compass Bank of
Uniontown, Alabama.
Milborn N. Chesser/3/,/4/,/5/ 62 Farmer, Chairman of the 1983 144,146 .35
Board Horizon Bank.
Young J. Boozer/3/,/4/,/5/ 83 Retired Alfa Life Ins. 1983 198,222 37,000 .58
Corp. Director: Colonial
Banc Group; and Colonial
Bank N.A., of
Birmingham, Alabama.
B. Phil Richardson 70 Vice President and 1983 94,312 132,852 .40
Treasurer; Executive
Vice President of
Operations for Alfa
Insurance Group.
Boyd E. Christenberry 66 Retired Executive Vice 1983 197,000 62,308 .64
President of Marketing
Alfa Insurance Group,
Director: Colonial Bank,
Montgomery Region.
John R. Thomas/3/,/4/ 53 Chairman, President & 1989 3,841 .00
Chief Executive Officer
of Aliant National Corp.
of Alexander City,
Alabama. Director:
Aliant National Corp.,
Russell Corporation,
First Montgomery Bank,
and Elmore County Bank
James I. Harrison, Jr. 63 Chairman and CEO, Harco, 1995 2,040 .00
Inc., Director: Pharmacy
Direct Network,
Director: AmSouth
Bancorporation
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
STOCK BENEFICIALLY OWNED
SINCE MARCH 1, 1996
--------------------------
POSITIONS WITH COMPANY, DIRECTOR
NOMINEE AGE BUSINESS & DIRECTORSHIP SINCE DIRECTLY INDIRECTLY/1/ PERCENT
------- --- ------------------------ -------- ----------- -------------- -------
<C> <C> <S> <C> <C> <C> <C>
Thomas H. Miller 72 Farmer 1996 85,056 .21
C. Lee Ellis/6/ 44 Executive Vice 72,425 1,860 .18
President, Investments,
Director: First Liberty
Financial Corporation
Alvin H. Dees/6/ 48 Executive Vice President 34,811 2,160 .09
Marketing
Ken Wallis/6/ 54 Secretary, General 22,461 20 .05
Counsel and Vice
President, Governmental
Relations
Directors and Officers 1,078,637 21,073,786 54.31
as a Group
(23 persons)
</TABLE>
- --------
/1/Indirect beneficial ownership includes shares, if any, (a) owned as
Trustees in which the Director or officer or any member of his/her immediate
family has a beneficial interest, or (b) held in trust in which the Director
or officer has a beneficial interest, or (c) owned and traded in the name of
the spouse, minor children or other relative of the Director or officer living
in his home, or (d) owned by a corporation, partnership or other legal
organization in which the Director or officer has a substantial beneficial
interest, or (e) held in a 401(K) Plan Account maintained by Alfa Mutual
Insurance Company to which shares the Officer has no right to vote or to
direct when and under what price, terms, or conditions said shares are
purchased in said account.
/2/Includes 16,201,538 shares owned by Alfa Mutual Insurance Company and
4,515,286 shares owned by Alfa Mutual Fire Insurance Company of which he is
Chairman of the Board and President and has voting and investment authority.
/3/Member, Executive Committee.
/4/Member, Compensation Committee.
/5/Member, Audit Committee.
/6/Executive Officer of the Company but not a director.
4
<PAGE>
Directors who are not salaried employees of the Company or its subsidiaries
receive a monthly retainer of $1550. They also receive a fee of $600 per day,
plus reasonable expenses for attending a board meeting or committee meeting.
Salaried employees do not receive any fees but are reimbursed all reasonable
expenses incurred in attending meetings. When the director is also a director
of an associated company that meets contemporaneously with the board or
committee of the Company, such fees and expenses may be shared. The full Board
of Directors met 11 times during 1995.
The Executive Committee consists of Directors Myrick, Newby, Mobley, Morris,
Tolar, Chesser, Boozer and Thomas. The Executive Committee confers informally
with the President of the Company on a regular basis concerning important
business issues. The Executive Committee met one time during 1995.
The Audit Committee which consists of Directors Mobley, Christenberry, and
Morris met four times in 1995.
The responsibility of the Audit Committee is to monitor, oversee and approve
the activities of the external and internal audit functions, to make
appropriate reviews of all related party transactions of the Company, to
review potential conflict of interest situations where appropriate and to
perform other oversight functions as requested by the Board of Directors. The
Audit Committee is directed to meet quarter-annually and to render reports of
its meetings and any actions or recommendations to the Board of Directors.
The Compensation Committee consists of Directors Newby, Mobley, Morris,
Tolar, Chesser, Boozer and Thomas. The duty of the Compensation Committee is
to review compensation reimbursed by the Company to Alfa Mutual Insurance
Company under the Management and Operating Agreement and to provide such
reports as are necessary to comply with the Securities and Exchange Commission
Rules regarding executive compensation. The Compensation Committee met once in
1995.
During 1995 all directors attended at least 75% of the meetings of the Board
and all members of the Executive, Compensation and Audit Committees attended
at least 75% of the meetings of these respective committees.
5
<PAGE>
EXECUTIVE COMPENSATION
The Company's executive officers are employees of Alfa Mutual Insurance
Company (AMIC) and the Company pays no compensation directly to them. The
Company is a party to a Management and Operating Agreement with AMIC under
which it reimburses AMIC for allocated compensation costs incurred by AMIC in
furnishing management and operational services to the Company.
The following table shows the compensation reimbursed to AMIC for the
company's chief executive officer and the four remaining most highly
compensated executive officers for the three fiscal years ended December 31,
1995, 1994 and 1993.
<TABLE>
<CAPTION>
OTHER/1/ LONG TERM ALL/2/
BASE ANNUAL COMPENSATION OTHER
YEAR NAME - POSITON SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- ---- --------------------------- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
1995 Goodwin L. Myrick $222,899 $238,736 $52,231 30,000 $ 7,964/3/
1994 CEO and President 175,492 191,041 50,424 30,000 201,204/3/
1993 149,653 164,973 38,284 80,000 282,051/3/
1995 B. Phil Richardson 155,509 160,850 49,059 12,000 688/4/
1994 EVP -- Operations 125,933 133,968 0 12,000 588/4/
1993 113,898 144,950 24,010 40,000 16,916/4/
1995 C. Lee Ellis 140,946 76,723 0 7,000 3,510/4/
1994 EVP -- Investments 115,700 62,563 0 7,000 4,079/4/
1993 97,129 55,231 0 20,000 625/4/
1995 Alvin H. Dees 121,221 60,610 0 5,000 12,483/4/
1994 EVP -- Marketing 98,942 49,471 0 5,000 14,016/4/
1993 86,467 43,233 0 10,000 625
1995 Ken Wallis 114,652 57,711 0 5,000 62,712/3/
1994 Secretary, General Counsel, 92,952 46,788 0 5,000 8,607/3/
1993 V.P. Gov't Relations 63,871 40,928 0 8,000 625
</TABLE>
- --------
/1/Perquisites, tax gross ups and other in excess of $50,000 or 10% of salary
and bonus. This figure includes $31,681 reimbursed to AMIC for a residence
which is provided to Mr. Myrick by AMIC.
/2/Includes amounts reimbursed to AMIC as its share of the cost of AMIC's
matching contribution to a 401(K) Plan maintained by AMIC. The maximum
matching contribution out of the 401(K) Plan maintained by AMIC for 1995 was
100% of each employee's contribution to the Plan up to a maximum of $1,000.
/3/Also includes amounts paid to AMIC for a Non-Qualified Retirement Plan
(NRP) maintained by AMIC. The NRP supplements benefits payable from the
Defined Benefit Plan for selected key executive employees of AMIC designated
by its Board of Directors whose benefits under that Plan would be deemed
inadequate to provide sufficiently for their retirement at normal retirement
date due to brevity of service. Mr. Myrick, Ken Wallis and Marcia Martin are
participants in the NRP.
/4/Also includes amounts paid to AMIC for a Supplementary Retirement Plan
(SRP) maintained by AMIC for eligible employees. The SRP provides
supplementary benefits to each employee of AMIC at age 65 or upon delayed
retirement thereafter equal to the reduction of their defined benefit plan
benefits because of limitations provided by Section 401(a)(17) of the Internal
Revenue Code.
6
<PAGE>
The Company's executive officers are participants as employees of AMIC in a
defined benefit plan maintained by AMIC. AMIC's retirement plan provides
monthly benefits payable upon normal retirement at age 65 equal to the sum of
2% of the employee's average monthly earnings for the five highest consecutive
complete calendar years of earnings during his last ten years of employment
(all calendar years if less than five) multiplied by the number of years of
credited service (up to a maximum of 35 years in 1994). Under AMIC's
retirement plan there is no deduction for social security. With respect to the
executives named in the Summary Compensation Table, their years of credited
service for retirement purposes are: Goodwin L. Myrick 16 years, B. Phil
Richardson 35 years, C. Lee Ellis 19 years, Alvin H. Dees 10 years, and Ken
Wallis 7 years.
The following table shows the maximum estimated annual retirement benefit
payable at normal retirement age to employees on the higher salary
classifications.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ ------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
100,000 30,000 40,000 50,000 60,000 70,000
120,000 36,000 48,000 60,000 72,000 84,000
140,000 42,000 56,000 70,000 84,000 98,000
160,000 48,000 64,000 80,000 96,000 112,000
180,000 54,000 72,000 90,000 108,000 120,000
200,000 60,000 80,000 100,000 120,000 120,000
220,000 66,000 88,000 110,000 120,000 120,000
240,000 70,500 94,000 120,000 120,000 120,000
</TABLE>
The following table lists all grants of options in 1995 under the 1993 Stock
Incentive Plan for the officers listed in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION
---------------------------------- ------------------------
NUMBER OF % OF TOTAL OPTIONS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES PRICE EXPIRATION
NAME OPTIONS GRANTED IN FISCAL YEAR ($/SHARE) DATE 0% ($) 5% ($) 10% ($)
---- --------------- ------------------ --------- ---------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Goodwin L. Myrick....... 30,000 37.50% $11.50 3/26/05 $0 $216,894 $549,608
B. Phil Richardson...... 12,000 15.00% $11.50 3/26/05 $0 $ 86,757 $219,843
C. Lee Ellis............ 7,000 8.75% $11.50 3/26/05 $0 $ 50,608 $128,242
Alvin H. Dees........... 5,000 6.25% $11.50 3/26/05 $0 $ 36,149 $ 91,601
Ken Wallis.............. 5,000 6.25% $11.50 3/26/05 $0 $ 36,149 $ 91,601
</TABLE>
The above option grants were made on March 27, 1995 with the exercise price
being based on the bid price for said stock on the date of the grant. The
grants to Mr. Myrick and Mr. Richardson were made as non-qualified options
under the plan. The options to the other executive officers were made as
qualified incentive stock options under the plan.
7
<PAGE>
The following table lists the aggregated fiscal year-end option values as of
December 31, 1995.
AGGREGATE FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED VALUE OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
ON EXERCISE REALIZED YEAR-END (#) FISCAL YEAR-END ($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Goodwin L. Myrick....... 0 $0 63,333/76,667 $444,498/$458,502
B. Phil Richardson...... 0 $0 30,666/33,334 $216,995/$203,005
C. Lee Ellis............ 0 $0 15,666/18,334 $110,246/$110,254
Alvin H. Dees........... 0 $0 8,332/11,668 $ 57,742/$ 68,258
Ken Wallis.............. 0 $0 6,999/11,001 $ 47,944/$ 63,356
</TABLE>
8
<PAGE>
Notwithstanding anything to the contrary set forth in any of the Company's
--------------------------------------------------------------------------
previous filings under the Securities Act of 1933, as amended, or the Exchange
- ------------------------------------------------------------------------------
Act that might incorporate future filings, including this Proxy Statement, in
- -----------------------------------------------------------------------------
whole or in part, the following report and the Performance Graph shall not be
- -----------------------------------------------------------------------------
incorporated by reference into any such filings.
- ------------------------------------------------
REPORT OF COMMITTEE ON EXECUTIVE COMPENSATION
The following report was prepared by the Compensation Committee of the Board
of Directors after a detailed review of all items of executive compensation.
The committee believes that the Company's major goal in compensation should be
to provide an adequate salary and benefits package to attract and retain the
highest caliber of people.
The Committee noted that the Company has no direct employees and pays no
compensation to any of the executive officers of the Company. Alfa Mutual
Insurance Company (AMIC) is the statutory employer of all persons providing
services to the Company. AMIC owns approximately 40% of the outstanding common
stock of the Company. The Company and AMIC are parties to a Management and
Operating Agreement whereby AMIC provides management and operational services
to the Company including the use of employees. The Company reimburses AMIC for
the allocated costs and expenses of those services, including compensation
costs as well as other operational expenses. AMIC conducts allocation studies
of the usage of facilities and personnel to determine the amount of costs and
expenses to be charged to the Company. The Company and AMIC are also parties
to a Pooling Agreement. On October 1, 1994 the Company increased its
participation in the Pooling Agreement from 50% to 65%. The Committee noted
that part of the increase of compensation cost to the Company was due to the
Company's increased participation in the Pooling Agreement in 1994.
AMIC uses the services of Hay Associates Compensation and Management
Consultants to assist it in establishing compensation guidelines and amounts.
Compensation ranges are established based on comparisons to a peer group of
approximately 67 companies of comparable size engaged in the insurance and
financial services business. AMIC attempts to establish compensation at the
average of the other companies to which it compares.
Salary ranges are established for each job and compensation is based on
these ranges. All employees including executive officers of the Company are
evaluated annually. Increases in compensation are based on these evaluations.
The Chief Executive Officer is evaluated by the Board of Directors each
year. The chief executive officer is evaluated on the overall performance of
the Company and all of its subsidiaries. The Board evaluates the chief
executive officer on a broad range of factors relative to the Company's
financial strength and performance. This includes comparing the Company's
performance to other companies engaged in insurance and financial services.
All of these factors are given relatively equal weight by the Board in
evaluating the Chief Executive Officer's compensation. Particularly in 1995,
the Company's insurance subsidiaries were profitable even while the Alfa
Insurance group was faced with over $79 million of claims caused by Hurricane
Opal. Hurricane Opal was the largest single catastrophic event in the
Company's history.
The Company's premiums for 1995 increased 24.7%. The Company's capital and
surplus increased by almost $54 million or 21%. In addition all the other
Company's subsidiaries were profitable for the year.
9
<PAGE>
The Company's property and casualty subsidiaries continued to maintain their
A. M. Best rating of "A++" Superior. Alfa Life Insurance Company has a "A+"
Best rating. The Committee attributed the sound financial performance of the
Company to the leadership of the Chief Executive Officer and other executive
officers of the Company. Under the leadership of the current executive
officers, the Company has shown a consistent record of growth.
Section 162(m) of the Internal Revenue Code limits the deductibility of
compensation to an individual officer over $1 million. The committee noted
that none of the Executive Officers of the Company were compensated in excess
of $1 million, and thus the provisions of 162(m) are inapplicable.
Bonuses paid to the chief executive officer and other officers of the
Company are based on a written bonus plan which has been in effect for AMIC
since 1988. The chief executive officer's bonus is based solely on Company
success compared to its peer group. The bonuses of the other officers of the
Company are based one-half upon Company success when compared to its peer
group and one-half upon individual accomplishment within approved evaluation
standards for that particular job. If these goals are met, the bonus
percentages are set within the plan. The bonus plan has two evaluation
criteria in order for the chief executive officer and other executive officers
to earn their full bonus percentage. First AMIC's combined ratio is compared
to the combined ratio of Farm Bureau Insurance Companies across the United
States. AMIC's combined ratio must be in the top 25% of those companies.
Second AMIC's and the Company's return on equity are compared to Standard and
Poor's group of insurance companies which contains approximately 100 publicly
traded insurance companies. AMIC and the Company's return on equity must be in
the top 25% of this group of insurance companies. These two goals were met in
1995 when adjusted for the unusual storm losses and thus the chief executive
officer and executive officers earned and were paid their full bonus
percentage for the year.
On March 27, 1995 the Compensation Committee recommended and the Board of
Directors approved additional awards under the 1993 Stock Incentive Plan.
Options were awarded to purchase 80,000 shares of its common stock at a
purchase price of $11.50 per share (100% of the market value on the date of
the grant) to fourteen (14) officers of the company. The purpose of the Stock
Option Plan is to provide rewards and compensation for past services and
achievements and to provide incentives for future services. The Committee felt
that it was appropriate to make additional awards to the officers of the
Company based on the Company's financial performance and to provide incentive
to the officers to assure that the Company performs in the future at the
highest possible levels. In determining the number of grants to be made, the
Committee and the Board took into account the number of prior grants made. The
Compensation Committee and the Board deem it to be sound corporate policy to
reward executive management by the grant of options. This allows them to
participate in the long term growth in share value thus giving them an
increased incentive to perform at higher levels.
10
<PAGE>
The Committee is of the opinion that based on the long term performance of
the Company and its record of financial strength and growth that the
compensation of the Chief Executive Officer and other executive officers is
appropriate and reasonable. Also the compensation amounts compared favorably
to other companies of similar financial strength. The Company must provide
compensation at comparable levels in order to attract and retain the best
possible employees. The Committee believes that the objectives of the Company
and its compensation policy are being met.
COMPENSATION COMMITTEE
Jerry A. Newby
James E. Mobley
John W. Morris
James A. Tolar, Jr.
Milborn N. Chesser
Young J. Boozer
John R. Thomas
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION AND COMPENSATION
DECISIONS. Mr. Boozer who is a member of the Compensation Committee is retired
as Senior Vice President of Alfa Life Insurance Corporation, one of the
Company's subsidiaries. The Company is unaware of any other Compensation
Committee Interlocks between the members of the Compensation Committee and the
Executive Officers of the Company.
11
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ALFA CORPORATION, THE NASDAQ STOCK MARKET (US) INDEX & NASDAQ INSURANCE
STOCK INDEX**
<TABLE>
<CAPTION>
NASDAQ NASDAQ
STOCK MARKET INSURANCE
Measurement period (US) STOCK
(Fiscal year Covered) ALFA INDEX INDEX
- --------------------- ---------- ----------- ---------
<S> <C> <C> <C>
Measurement PT -
1990 100 100 100
1991 118.061 160.564 140.969
1992 274.678 186.866 190.793
1993 272.393 214.511 204.065
1994 268.405 209.686 192.042
1995 422.482 296.304 272.855
</TABLE>
ASSUMES $100 INVESTED ON JANUARY 1, 1991 IN ALFA CORPORATION COMMON STOCK, THE
NASDAQ STOCK MARKET (US) INDEX & NASDAQ INSURANCE STOCKS INDEX
* TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
** FISCAL YEAR ENDING DECEMBER 31
12
<PAGE>
STOCK OWNERSHIP REPORTING BY DIRECTORS AND OFFICERS
Section 16(a) of the Securities Exchange Act of 1934 requires that executive
officers and directors of the company file reports of stock ownership and
changes in ownership with the Securities and Exchange Commission on Forms 3
(Initial Statement of Ownership), 4 (Monthly Reports) and 5 (Annual Reports).
Based solely upon a review of copies of such reports and representations made
by directors and officers of the company, the company believes that during the
prior two fiscal years beginning January 1, 1995 and January 1, 1994, its
officers and directors complied with all Section 16(a) filing requirements.
The company has procedures in place to monitor Section 16(a) compliance and
also sends out regular reminders to directors and officers about their
reporting obligations under Section 16(a).
STOCKHOLDERS PROPOSALS
Stockholders are hereby notified that any proposals which they wish to have
included in the proxy and proxy statement for the annual meeting of the
stockholders of the Company in 1997 must be received in writing at its offices
in Montgomery, Alabama, no later than December, 10, 1996. To insure prompt
receipt by the Company, all such proposals should be sent by certified mail,
return receipt requested, addressed to Secretary, Alfa Corporation, P. O. Box
11000, Montgomery, Alabama 36191-0001. Proposals must comply with the
Securities and Exchange Commission proxy rules relating to stockholders'
proposals to be included in the proxy materials.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's principal auditors for the fiscal year just completed were
KPMG Peat Marwick LLP. The Board of Directors normally selects auditors at the
first regular board meeting following the annual meeting of the stockholders.
A representative of KPMG Peat Marwick LLP is expected to be present at the
stockholders meeting with the opportunity to make a statement, and also to
respond to appropriate questions.
OTHER PROPOSED ACTION
Management is not aware of any other matters to be brought before the
meeting. If other proper business or questions are presented at the meeting,
the persons holding the proxies will vote in accordance with their judgment on
such business or questions.
STOCKHOLDERS ARE URGED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE.
The date of this proxy statement is March 21, 1996.
13
<PAGE>
[LOGO OF ALPHA CORP. APPEARS HERE]
ALFA CORPORATION
P. O. Box 11000
Montgomery, Alabama 36191-0001
<PAGE>
[LOGO OF ALFA CORP. APPEARS HERE]
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE
MANAGEMENT
The undersigned hereby appoints Goodwin L.
Myrick, Young J. Boozer and Ken Wallis, or
any one of them, each with the power to
appoint his substitute, as proxies of the
undersigned to represent and to vote, as
designated below, all the shares of stock
which the undersigned is entitled to vote at
the Annual Meeting of the Stockholders of
Alfa Corporation to be held April 18, 1996
and any adjournment thereof.
1. ELECTION OF DIRECTORS
( ) FOR ALL NOMINEES BELOW ( ) WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE TO VOTE FOR ALL NOMINEES
CONTRARY BELOW) LISTED BELOW
GOODWIN L. MYRICK, JERRY A. NEWBY, JAMES EARL MOBLEY, JOHN W. MORRIS, JAMES A.
TOLAR, JR., MILBORN N. CHESSER, YOUNG J. BOOZER, B. PHIL RICHARDSON, BOYD E.
CHRISTENBERRY, JOHN R. THOMAS, JAMES I. HARRISON, JR., AND THOMAS MILLER.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
--------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
This proxy when properly signed will be voted in the manner directed herein. If
no direction is made, this proxy will be voted FOR the election of all above
listed nominees for directors.
<PAGE>
(PLEASE SIGN EXACTLY AS NAME APPEARS ON STOCK CERTIFICATE. WHEN SHARES ARE HELD
BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, AS
EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS
SUCH. IF A CORPORATION,
PLEASE SIGN IN FULL
CORPORATE NAME BY
PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN
IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.)
-----------------------------------------------
SIGNATURE
-----------------------------------------------
DATED: _______________, 1996 SIGNATURE IF HELD JOINTLY
