<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 [_] 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
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No Filing 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 No.:
--------------------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------------------
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 16, 1998, 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 5, 1998, 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, 1997.
BY ORDER OF THE BOARD OF DIRECTORS
LOGO
/s/ H. Al Scott
H. Al Scott
Secretary
DATED: March 16, 1998
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 16, 1998
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 16, 1998, 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 meeting 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.
1
<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 5, 1998, there were 40,789,712/1/ 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 5, 1998.
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, 1998.
<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>
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.
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, 1998 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, 1998 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, 1997
-------------------------------
POSITIONS WITH COMPANY, DIRECTOR
NOMINEE AGE BUSINESS & DIRECTORSHIP SINCE DIRECTLY INDIRECTLY/1/ PERCENT
------- --- -------------------------------------- -------- --------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Goodwin L. 72 Chairman of the Board & President, 1983 229,090 20,735,974 51.40
Myrick/2/,/3/.......... President of Alabama Farmers
Federation and farmer; a control
person. Director: Compass Bank of the
South.
Jerry A. Newby/3/,/4/... 50 Farmer. 1993 11,435 6,361 .04
James Earl 74 Farmer, Director: Compass Bank of 1983 10,096 11,500 .05
Mobley/3/,/4/,/5/...... Dothan, Alabama; and First Federal
Savings & Loan Association of Russell
County, Alabama.
John W. 59 1992 33,735 100 .08
Morris/3/,/4/,/5/...... Farmer.
James A. Tolar, 63 Farmer, Director: Compass Bank of 1983 400 .00
Jr./3/,/4/............. Uniontown, Alabama.
Milborn N. 63 Farmer, Chairman of the Board Horizon 1983 147,910 .36
Chesser/3/,/4/......... Bank.
Young J. Boozer/3/,/4/.. 85 Retired Alfa Life Ins. Corp. Director: 1983 139,852 80,284 .54
Colonial Banc Group; and Colonial
Bank N.A., of Birmingham, Alabama.
B. Phil Richardson/5/... 72 Retired Ex. V. P. of Operations Alfa 1983 127,176 116,752 .60
Insurance Group.
Boyd E. Christenberry... 68 Retired Executive Vice President of 1983 231,011 60,462 .71
Marketing Alfa Insurance Group,
Director: Colonial Bank, Montgomery
Region.
John R. Thomas/3/,/4/... 55 Chairman, President & Chief Executive 1989 5,805 .01
Officer of Aliant National Corp. of
Alexander City, Alabama. Director:
Aliant National Corp., Russell
Corporation, Aliant Bank
James I. Harrison, Jr... 65 Chairman and CEO, Carport, Inc., 1995 3,114 .01
Director: AmSouth Bancorporation.
Ken Wallis.............. 56 Vice President and Treasurer, Ex. Vice 1997 37,829 2,320 .10
President, Operations and Assistant
to the President of Alfa Insurance
Group.
C. Lee Ellis/6/......... 46 Executive Vice President, Investments, 89,336 1,860 .22
Director: First Liberty Financial
Corporation.
Alvin H. Dees/6/........ 50 Executive Vice President, Marketing. 45,196 2,160 .12
J. Donald Price/6/...... 46 Senior Vice President, and CFO. 30,800 1,600 .08
Directors and Officers as a Group 1,142,785 21,019,373
(23 persons)
</TABLE>
(Footnotes on following page)
3
<PAGE>
- --------
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 and not a nominee for
director.
4
<PAGE>
Directors who are not salaried employees of the Company or its subsidiaries
receive a monthly retainer of $1,550. They also receive a fee of $800 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 1997.
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 seven times during 1997.
The Audit Committee which consists of Directors Mobley, Richardson and
Morris met four times in 1997.
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 conflicts 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
1997.
During 1997 all directors except directors Harrison and Thomas 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,
1997, 1996 and 1995.
EXECUTIVE COMPENSATION TABLE
1997 PROXY STATEMENT
<TABLE>
<CAPTION>
OTHER/1/ LONG TERM ALL/2/
BASE ANNUAL COMPENSATION OTHER
YEAR NAME - POSITION SALARY BONUS COMPENSATION OPTION COMPENSATION
---- --------------- ------ ----- ------------ ------------ ------------
<C> <S> <C> <C> <C> <C> <C>
1997 Goodwin L. Myrick....... $253,500 $274,030 $ 0 30,000 $550
1996 CEO and President $240,004 $255,277 $ 0 30,000 $550
1995 $222,899 $238,736 $52,331 30,000 $550
1997 Ken Wallis.............. $146,911 $182,455 $ 0 12,000 $738
1996 EVP -- Operations $124,902 $ 62,829 $ 0 5,000 $738
1995 $114,652 $ 57,711 $ 0 5,000 $738
1997 C. Lee Ellis............ $161,651 $ 83,852 $ 0 7,000 $738
1996 EVP -- Investments $154,209 $ 80,627 $ 0 7,000 $738
1995 $140,946 $ 76,723 $ 0 7,000 $738
1997 Alvin H. Dees........... $142,854 $ 71,352 $ 0 5,000 $738
1996 EVP -- Marketing $131,524 $ 65,762 $ 0 5,000 $738
1995 $121,221 $ 60,610 $ 0 5,000 $738
1997 Donald Price............ $129,332 $ 51,673 $ 0 2,500 $738
1996 SVP -- Finance and CFO $124,214 $ 49,685 $ 0 2,500 $738
1995 $120,891 $ 48,356 $ 0 2,500 $738
</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 1997 was
100% of each employee's contribution to the Plan up to a maximum of $1,000.
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 1997). 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 18 years, Ken Wallis 9
years, C. Lee Ellis 21 years, Alvin H. Dees 12 years and Donald Price 14
years.
6
<PAGE>
AMIC also provides a Non-Qualified Retirement Plan to supplement benefits
payable from the defined benefit plan for selected key employees of AMIC whose
benefits under the defined benefit plan are deemed to be inadequate to provide
sufficiently for their retirement at normal retirement date due to brevity of
service. Mr. Myrick and Mr. Wallis currently are participants in this plan.
AMIC maintains a Supplementary Retirement Plan to provide supplementary
benefits to each employee equal to the reduction of their defined benefit plan
benefits because of limitations provided by Section 401(a)(17) of the Internal
Revenue Code.
The following table shows the maximum estimated annual retirement benefit
payable from the Defined Benefit Plan and the Supplemental Executive
Retirement Plan 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>
150,000 45,000 60,000 75,000 90,000 105,000
200,000 60,000 80,000 100,000 120,000 140,000
250,000 75,000 100,000 125,000 150,000 175,000
300,000 90,000 120,000 150,000 180,000 210,000
350,000 105,000 140,000 175,000 210,000 245,000
400,000 120,000 160,000 200,000 240,000 280,000
450,000 135,000 180,000 225,000 270,000 315,000
500,000 150,000 200,000 250,000 300,000 350,000
550,000 165,000 220,000 275,000 330,000 385,000
</TABLE>
The following table lists all grants of options in 1997 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
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 0% ($) 5% ($) 10% ($)
---- ---------- ------------ --------- ---------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Goodwin L. Myrick....... 30,000 40.000% $12.00 2/18/07 $0 $226,402 $573,747
Ken Wallis.............. 12,000 16.000% $12.00 2/18/07 $0 $90,561 $229,499
C. Lee Ellis............ 7,000 9.333% $12.00 2/18/07 $0 $52,827 $133,874
Alvin H. Dees........... 5,000 6.667% $12.00 2/18/07 $0 $37,734 $95,625
Donald Price............ 2,500 3.333% $12.00 2/18/07 $0 $18,867 $47,812
</TABLE>
The above option grants were made on February 17, 1997 with the exercise
price being based on the bid price for said stock on the date of the grant.
The grants to Mr. Myrick were made as non-qualified options under the plan.
The options to the other executive officers were made as qualified incentive
stock options under the plan.
7
<PAGE>
The following table lists the aggregated fiscal year-end option values as of
December 31, 1997.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED FISCAL FISCAL
ON VALUE YEAR-END (#) YEAR-END ($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- -------- -------- -------------- -------------------
<S> <C> <C> <C> <C>
Goodwin L. Myrick.......... 0 $0 140,000/60,000 $1,106,716/$315,000
Ken Wallis................. 0 $0 17,999/17,001 $ 133,166/$89,225
C. Lee Ellis............... 0 $0 33,999/14,001 $ 271,049/$73,506
Alvin H. Dees.............. 0 $0 19,999/10,001 $ 152,397/$52,505
Donald Price............... 0 $0 12,999/5,001 $ 105,041/$26,256
</TABLE>
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.
8
<PAGE>
REPORT OF THE 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 as shown in
this Proxy Statement. The Committee is of the opinion that the Company must
provide a salary and benefits package which would provide adequate incentives
for employees of the Company to perform at the highest level.
The Committee noted that the Company has no direct employees and pays no
compensation directly 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.
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 generally 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.
In 1997, the Company's earnings reached record levels. The Company ended the
year with a strong underwriting profit. All of the Company's subsidiaries were
profitable during the year. In 1997 the Company's storm frequency and storm
severity decreased substantially from the previous two years. During 1997 the
Company made a major effort toward controlling expenses and loss ratios. The
Company continued to compare favorably to its peer group of other insurance
and financial institutions.
The Committee finds that the Chief Executive Officer and other executive
officers of the Company met the appropriate goals within their job
descriptions and each received an appropriate evaluation. The Committee noted
the Company's strong record of sound financial performance under the
leadership of the Chief Executive Officer and current executive officers of
the Company.
9
<PAGE>
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 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. 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
1997, thus the Chief Executive Officer and executive officers earned and were
paid their full bonus percentage for the year.
On February 18, 1997 the Compensation Committee recommended and the Board of
Directors approved additional awards under the 1993 Stock Incentive Plan.
Options were awarded to purchase 75,000 shares of its common stock at a
purchase price of $12.00 per share (100% of the market value on the date of
the grant) to thirteen (13) 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 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 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 23rd day of February, 1998.
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>
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE RETURNS AMONG
ALFA, NASDAQ INDEX AND INSUR INDEX
Measurement period Measurement PT -
(Fiscal Year Covered) 1992 FYE 1993 FYE 1994 FYE 1995 FYE 1996 FYE 1997
- --------------------- ---------------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ALFA A DATA $100 $ 98.618 $ 96.533 $151.947 $118.246 $166.237
NASDAQ INDEX B DATA $100 $114.796 $112.214 $158.699 $195.192 $239.527
INSUR INDEX C DATA $100 $106.956 $100.679 $143.014 $163.034 $239.181
</TABLE>
ASSUMES $100 INVESTED ON JANUARY 1, 1992 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, 1997 and January 1, 1996, 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 1999 must be received in writing at its offices
in Montgomery, Alabama, no later than December 10, 1998. 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 16, 1998.
13
<PAGE>
[LOGO OF ALFA CORPORATION APPEARS HERE]
ALFA CORPORATION
P. O. Box 11000
Montgomery, Alabama 36191-0001
<PAGE>
LOGO 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 16,
1998 and any adjournment thereof.
1. ELECTION OF DIRECTORS
( ) FOR ALL NOMINEES BELOW (EXCEPT AS MARKED TO THE
CONTRARY BELOW)
( ) WITHHOLD AUTHORITY 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: ________________, 1998 SIGNATURE IF HELD JOINTLY
