<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
ALFA CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Filing Fee Required.
[_] $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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF ALFA CORPORATION 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 24, 1997, 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, 1997, 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, 1996.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Ken Wallis
Ken Wallis
Secretary
DATED: March 21, 1997
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 24, 1997
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 24, 1997, 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 reflected 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 meeting and giving notice to the Secretary or inspector
appointed for the meeting of your 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, 1997, there were 40,786,712/1/ 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, 1997.
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, 1997.
<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 except for Ken Wallis. Ken Wallis is being nominated
to fill a vacancy on the board due to the death of Thomas H. Miller.
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, 1997 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, 1997 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 to Alfa Life
Insurance Corporation (ALIC), a subsidiary of the Company, upon organization
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/2/,/3/ 71 Chairman of the Board & 1983 237,697 20,733,400 50.92
President, President of
Alabama Farmers
Federation and dairy
farmer; a control
person. Director:
Compass Bank of the
South.
Jerry A. Newby/3/,/4/ 49 Farmer. 1993 11,124 6,187 .02
James Earl Mobley/3/,/4/,/5/ 73 Farmer, Director: 1983 10,096 11,500 .04
Compass Bank of Dothan,
Alabama; and First
Federal Savings & Loan
Association of Russell
County, Alabama.
John W. Morris/3/,/4/,/5/ 58 Farmer. 1992 32,895 100 .07
James A. Tolar, Jr./3/,/4/ 62 Farmer, Director: 1983 400 0 .00
Compass Bank of
Uniontown, Alabama.
Milborn N. Chesser/3/,/4/ 62 Farmer, Chairman of the 1983 144,154 .35
Board Horizon Bank.
Young J. Boozer/3/,/4/ 84 Retired Alfa Life Ins. 1983 188,971 37,000 .58
Corp. Director: Colonial
Banc Group; and Colonial
Bank N.A., of
Birmingham, Alabama.
B. Phil Richardson 71 Vice President and 1983 30,076 132,852 .40
Treasurer; Executive
Vice President of
Operations for Alfa
Insurance Group.
Boyd E. Christenberry/5/ 67 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/ 54 Chairman, President & 1989 4,962 .00
Chief Executive Officer
of Aliant National Corp.
of Alexander City,
Alabama. Director:
Aliant National Corp.,
Russell Corporation,
Aliant Bank.
James I. Harrison, Jr. 64 Chairman and CEO, Harco, 1995 3,054 .00
Inc., Director: AmSouth
Bancorporation
Ken Wallis/7/ 55 Secretary, General 38,970 .05
Counsel and
Vice President,
Governmental Relations
C. Lee Ellis/6/ 45 Executive Vice 88,399 1,860 .10
President, Investments,
Director: First Liberty
Financial Corporation
Alvin H. Dees/6/ 49 Executive Vice President 45,009 2,160 .04
Marketing
</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
- ------- --- --------------------------------- -------- ----------- -------------- -------
<S> <C> <C> <C> <C> <C> <C>
Directors and Officers as a Group 1,032,896 20,987,367 53.99
(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.
/7/Executive Officer of the Company and nominee for 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 1996
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 twice during 1996.
The Audit Committee which consists of Directors Mobley, Christenberry, and
Morris met four times in 1996.
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
1996.
During 1996 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,
1996, 1995 and 1994.
<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>
1996 Goodwin L. Myrick $240,004 $255,277 $46,778 30,000 $257,303/3/
1995 CEO and President $222,899 $238,736 $52,231 30,000 $ 47,964/3/
1994 175,492 191,041 50,424 30,000 201,204/3/
1996 B. Phil Richardson 161,467 168,864 0 12,000 688/4/
1995 EVP -- Operations 155,509 160,850 49,059 12,000 688/4/
1994 125,933 133,968 0 12,000 588/4/
1996 C. Lee Ellis 154,209 80,627 0 7,000 3,317/4/
1995 EVP -- Investments 140,946 76,723 0 7,000 3,510/4/
1994 115,700 62,563 0 7,000 4,079/4/
1996 Alvin H. Dees 131,524 65,762 0 5,000 11,386/4/
1995 EVP -- Marketing 121,221 60,610 0 5,000 12,483/4/
1994 98,942 49,471 0 5,000 14,016/4/
1996 Ken Wallis 124,902 62,829 0 5,000 92,736/3/
1995 Secretary, General Counsel, 114,652 57,711 0 5,000 62,712/3/
1994 V.P. Gov't. Relations 92,952 46,788 0 5,000 8,607/3/
</TABLE>
- --------
/1/Perquisites, tax gross ups and other in excess of $50,000 or 10% of salary
and bonus. This figure includes $31,619 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 1996 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 17 years, B. Phil
Richardson 35 years, C. Lee Ellis 20 years, Alvin H. Dees 11 years, and Ken
Wallis 8 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 90,000 108,000 125,000
200,000 60,000 80,000 100,000 120,000 125,000
220,000 66,000 88,000 110,000 125,000 125,000
240,000 70,500 94,000 120,000 125,000 125,000
</TABLE>
The following table lists all grants of options in 1996 under the 1993 Stock
Incentive Plan for the officers listed in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL OPTIONS RATES OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION
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% $12.25 4/18/06 $0 $255,552 $624,606
B. Phil Richardson...... 12,000 15.00% $12.25 4/18/06 $0 $102,221 $249,843
C. Lee Ellis............ 7,000 8.75% $12.25 4/18/06 $0 $ 59,629 $145,742
Alvin H. Dees........... 5,000 6.25% $12.25 4/18/06 $0 $ 42,592 $104,101
Ken Wallis.............. 5,000 6.25% $12.25 4/18/06 $0 $ 42,592 $104,101
</TABLE>
The above option grants were made on April 18, 1996 with the exercise price
being based on the bid price for said stock on the date of the grant. The
grants to Mr. Myrick and Mr. Richardson were made as non-qualified options
under the plan. The options to the other executive officers were made as
qualified incentive stock options under the plan.
7
<PAGE>
The following table lists the aggregated fiscal year-end option values as of
December 31, 1996.
AGGREGATE FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED VALUE OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
ON EXERCISE REALIZED YEAR-END (#) FISCAL YEAR-END ($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Goodwin L. Myrick....... 0 $0 110,000/60,000 $394,559/$45,000
B. Phil Richardson...... 0 $0 52,000/24,000 $193,905/$18,000
C. Lee Ellis............ 0 $0 26,999/14,001 $ 98,076/$10,501
Alvin H. Dees........... 0 $0 14,999/10,001 $ 51,704/$ 7,501
Ken Wallis.............. 0 $0 12,999/10,001 $ 41,705/$ 7,501
</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 which reviewed all items of Executive Compensation and Compliance
with the Rules of the Securities and Exchange Commission. 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 Company has no direct employees and pays no compensation to any of the
Executive Officers of the Company. Alfa Mutual Insurance Company (AMIC), an
affiliate, 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 cost and expenses of those services, including compensation cost as
well as other operational expenses. AMIC conducts allocations 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. The Company's participation in this Pooling Agreement
also directly affects cost of compensation in amounts reimbursed to AMIC for
compensation of its Executive Officers and employers.
The Committee understands that AMIC uses the services of Hay Associates
Compensation and Management Consultants to assist it in establishing
compensation guidelines and amounts. Compensation ranges are established for
each job within the Company. These compensation ranges are generally based on
comparisons to a peer group of approximately 67 companies of comparable size
engaged in the insurance and financial services business. The Committee
understands that AMIC attempts to establish its compensation near the average
of all of these companies to which it compares.
All employees including the chief executive officer and other executive
officers of the company are evaluated annually. These annual evaluations are
the basis for any increase in compensation.
The chief executive officer is evaluated by the Board of Directors of AMIC
each year. The chief executive officer's evaluation is based on the overall
performance of AMIC including all of its subsidiaries and associated
companies. The chief executive officer is evaluated on a broad range of
factors relative to the company's financial strength and performance,
including comparing the company's performance to other companies engaged in
insurance and financial services. Relatively equal weight is given to all
these factors in determining the chief executive officer's compensation. In
1995, Hurricane Opal was the single largest catastrophic event in company
history. Claims relating to Hurricane Opal substantially impacted the
Company's 1995 Financial Statements. In 1996, storm frequencies remained at
relatively high levels even though storm severity improved.
9
<PAGE>
The Committee found that in 1996 the company's financial performance
continued to be sound. The Company's premiums increased, investment income
increased and total revenues increased. All of the Company's subsidiaries were
profitable for the year. In addition the Company continued to compare
favorably to its peer group.
The Committee also found that the other executive officers of the company
met the appropriate goals within their job descriptions and each received an
appropriate evaluation. Again the Committee felt that the Company had a strong
record of sound financial performance under the leadership of the chief
executive officer and current executive officers of the company.
Section 162(m) of the Internal Revenue Code limits the deductibility of
compensation to an individual officer over $1 million dollars. None of the
executive officers of the company were compensated in excess of $1 million
dollars and thus the provisions of (S)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 companies writing similar insurance products across
the United States. This group consists of both publicly traded companies and
mutual companies. Second, the Company's return on equity is compared to a
broader group of publicly traded insurance companies. AMIC and the Company's
performance must be in the top 25% of these two groups of companies or in the
top 25% of one group and top 33% of the other. These criteria were met in 1996
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 April 18, 1996 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 $12.25 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 promote the interests of the Company and its shareholders by
encouraging stock ownership among key officers and employees, which in turn
provides for them additional incentive, personal interest, and an increased
desire to work toward the growth, development and financial success of the
Company. The Committee felt that it was appropriate to make additional awards
to the officers of the company based on the company's 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 the highest levels.
10
<PAGE>
The Committee specifically finds that the Compensation of the chief
executive officer and other executive officers is appropriate and reasonable
based on the size of the company and its financial performance. The Committee
finds that the company's cost of compensation compares favorably to other
companies within the insurance and financial services industry.
Signed this 18th day of February, 1997.
Jerry A. Newby
James E. Mobley
John W. Morris
James A. Tolar, Jr.
Milborn N. Chesser
Young J. Boozer
John R. Thomas
11
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ALFA CORPORATION, THE NASDAQ STOCK MARKET (US) INDEX &
NASDAQ INSURANCE STOCKS INDEX**
[LINE GRAPH APPEARS HERE]
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, 1996 and January 1, 1995, 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 1998 must be received in writing at its offices
in Montgomery, Alabama, no later than December, 10, 1997. 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 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, 1997.
13
<PAGE>
[LOGO OF ALFA CORPORATION APPEARS HERE]
ALFA CORPORATION
P. O. Box 11000
Montgomery, Alabama 36191-0001
<PAGE>
[LOGO OF ALFA
CORPORATION
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 24, 1997
and any adjournment thereof.
1. ELECTION OF DIRECTORS
( ) FOR ALL NOMINEES BELOW ( ) WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY BELOW) TO VOTE FOR ALL NOMINEES 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 KEN WALLIS
(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: _______________, 1997 SIGNATURE IF HELD JOINTLY
