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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
ALFA CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
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 27, 2000, 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 approve amendments to the Employee Stock Purchase Plan
(3) To approve the Employee Stock Bonus Plan
(4) 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 16, 2000, 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, 1999.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ H. Al Scott
----------------------------------
H. Al Scott
Secretary
DATED: March 23, 2000
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 27, 2000
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 27, 2000, 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 and FOR proposal 2
and proposal 3. 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 16, 2000, there were 39,227,994/1/ 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 16, 2000.
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, 2000.
<TABLE>
<CAPTION>
NUMBER OF
NAME AND ADDRESS SHARES OWNED PERCENT
- ---------------- ------------ -------
<S> <C> <C>
Alfa Mutual Ins. Co.
P. O. Box 11000
Montgomery, AL 36191..................................... 16,144,638 41.16
Alfa Mutual Fire Ins. Co.
P. O. Box 11000
Montgomery, AL 36191..................................... 3,972,986 10.13
</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. Dean Wysner and Steve Dunn were elected to the Board
to replace Directors Milborn Chesser and John Morris who resigned in December
1999.
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, 2000 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, 2000 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
AS OF MARCH 1, 2000
POSITIONS WITH COMPANY, DIRECTOR ---------------------------------
NOMINEE AGE BUSINESS & DIRECTORSHIP SINCE DIRECTLY INDIRECTLY/1/ PERCENT
------- --- ------------------------ -------- --------- ------------- -------
<C> <C> <S> <C> <C> <C> <C>
Jerry A. Newby/3/ ............. 52 Chairman of the Board & 1993 24,036 20,127,265/2/ 51.37
President, President of
Alabama Farmers
Federation and farmer
Hal F. Lee/3/,/4/,/5/ ......... 55 Farmer 1998 687 4,000 .01
Russell R. Wiggins/3/,/4/,/5/ . 50 Farmer 1999 4,674 .01
Dean Wysner/3/,/4/ ............ 53 Farmer 2000 200 .00
Steve Dunn/3/,/4/ ............. 43 Farmer 2000 180 .00
James A. Tolar, Jr./3/,/4/ .... 65 Farmer, Director: 1983 400 .00
Compass Bank of
Uniontown, Alabama
B. Phil Richardson/3/,/4/,/5/ . 74 Retired Ex. V. P. of 1983 185,176 35,752 .56
Operations Alfa
Insurance Group
Boyd E. Christenberry.......... 71 Retired Executive Vice 1983 231,312 60,462 .74
President of Marketing
Alfa Insurance Group,
Director: Colonial
Bank, Montgomery Region
John R. Thomas/3/,/4/ ......... 61 Chairman, President & 1989 7,412 .02
Chief Executive Officer
of Aliant Financial
Corp. of Alexander
City, Alabama.
Director: Aliant
Financial Corp.,
Russell Corporation,
Aliant Bank
James I. Harrison, Jr.......... 67 Chairman and CEO, 1995 5,424 .01
Carport, Inc.,
Director: AmSouth
Bancorporation
(Emeritus) Director
Nichols TXEN
C. Lee Ellis................... 48 Executive Vice 1999 127,237 6,860 .34
President, Investments,
Operations; Director
Alvin H. Dees/6/ .............. 53 Executive Vice President 77,776 2,100 .20
Marketing
Marcia P. Martin/6/ ........... 62 Sr. Vice President, 35,210 2,303 .10
Personnel
J. Donald Price/6/ ............ 48 Sr. Vice President, 48,800 1,600 .13
Finance, CFO
Directors and Officers 1,037,249 20,267,005 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 16,144,638 shares owned by Alfa Mutual Insurance Company and
3,972,986 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
<PAGE>
/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.
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 1999.
The Executive Committee during 1999 consisted of Directors Newby, Lee,
Wiggins, Morris, Tolar, Chesser, Richardson 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 1999.
The Audit Committee during 1999 consisted of Directors Morris, Richardson and
Lee and met four times.
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 quarterly and to render reports of its meetings
and any actions or recommendations to the Board of Directors.
The Compensation Committee during 1999 consisted of Directors Lee, Wiggins,
Morris, Tolar, Chesser, Richardson 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 1999.
During 1999 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.
4
<PAGE>
PROPOSAL 2
APPROVAL OF AMENDMENTS TO THE
EMPLOYEE STOCK PURCHASE PLAN
On January 17, 2000, the board of directors of the Company approved and
adopted amendments to the Alfa Corporation Employee Stock Purchase Plan (the
"Plan"). Under the Plan, eligible participants are provided a means of
purchasing shares of the Company's $1.00 par value common stock through payroll
deductions. The Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974. The proposed amendments to the Plan are
set out in Exhibit "A".
There are three amendments to the Plan to be approved. The first amendment
provides that the maximum monthly payroll deduction shall be the greater of
$1,000 or 10 percent of a participant's total monthly salary, wages or other
remuneration. The second amendment provides that the Company shall contribute
for each participant an amount of cash equal to 15 percent of the amount of
each participant's payroll deductions and such cash shall be used to acquire
Company stock under the Plan. The third amendment clarifies the duties of the
Servicing Broker (as described below) under the Plan.
ELIGIBILITY AND PARTICIPATION
Eligible participants in the Plan include officers, directors and employees
of the Company and its subsidiaries, officers, directors and employees of Alfa
Mutual Insurance Company ("AMIC") and officers, directors and employees of
Alabama Farmers Federation (the "Federation") who have served in that capacity
for a continual period of 90 days and have attained the age of majority in the
jurisdiction where they reside.
AMIC owns approximately 41% of the common stock of the Company, and Alfa
Mutual Fire Insurance Company ("AMFIC") owns approximately 10%. AMIC and AMFIC
share a common board of directors and executive officers. The board of
directors and the chief executive officer of the Federation also serve as the
board of directors and chief executive officer of AMIC. A majority of the board
of directors and all of the principal executive officers of the Company serve
as directors and officers of AMIC. Accordingly, AMIC, and the Federation may be
viewed as "parents" of the Company who, directly or indirectly, are in
"control" of the Company's operations and policies. The Company has no
employees on its payroll. All management and operational services of the
Company are provided to the Company by employees of AMIC. Under a Management
Services Agreement, the Company reimburses AMIC for the cost of services and
operational overhead allocable to its usage of AMIC supplied personnel and
facilities. In addition, the Company's property and casualty insurance
subsidiaries and AMIC, are parties to a Pooling Agreement pursuant to which
premium and investment income and costs of operation and losses are "pooled"
and divided among them in accordance with a fixed percentage division. See Note
2 of Notes to Consolidated Financial Statement, contained in the Company's 1999
ANNUAL REPORT TO SHAREHOLDERS.
Participation in the Plan is voluntary, and neither the Company, AMIC nor the
Federation makes any recommendations to eligible participants as to whether
they should or should not participate.
ENROLLMENT AND PAYROLL DEDUCTION
If an employee elects to participate in the Plan, he or she may enroll by
authorizing payroll withholdings of the amount specified in the enrollment form
and by authorizing the Servicing Broker to purchase in the open market shares
of the Company's stock for his or her account under the Plan. A participant's
minimum payroll deduction is $25.00 per month. As currently in effect, the
maximum monthly deduction is $1,000. The first amendment to the Plan provides
that the maximum monthly deduction shall be the greater of $1,000 or 10 percent
of the participant's total monthly salary, wages or other remuneration. This
amendment is contained in Section 5 of the Plan.
5
<PAGE>
An employee may revise or terminate his or her payroll deduction at any time
by written request. If any employee terminates deductions, he or she may not
again authorize payroll deductions for a period of six months after the
termination.
COMPANY CONTRIBUTIONS
Under the Plan currently in effect, neither the Company nor any other of the
participating employers make any matching contributions for participants'
accounts.
However, the second amendment to the Plan provides that there shall be
contributed for each participant an amount of cash equal to 15 percent of the
amount of each participant's payroll deduction. This contribution will be used
by the Servicing Broker to acquire Company common stock for the participant.
This amendment is contained at Section 7 of the Plan.
The Federation bears the costs and expenses of the Plan allocable to its
employee's participation in the Plan. The amount of cost borne by the Company
will vary from time to time depending upon the results of periodic time and
usage studies which fix the allocations of cost under the Management Services
Agreement and the pooling percentages established in the Pooling Agreement.
SERVICING BROKER
Under the Plan, the Company may, from time to time, appoint one or more
brokers to open and maintain accounts in the names of participants and to make
purchases of shares of the Company's stock on the open market.
Under the arrangement with the Servicing Broker, each month AMIC and the
Federation deliver to the Servicing Broker the payroll deductions. As promptly
as reasonably practicable, the Servicing Broker purchases the number of shares
which can be purchased for such amount at the current fair market value and
allocates such shares (including fractional shares up to the ten-thousandth of
a share) to each participant's account maintained by it in the proportion that
each participant's withholdings for that month bear to the total payroll
deductions for that month. AMIC (and, indirectly, the Company, under the
Management Services Agreement and Pooling Agreement described above) pays all
commissions and expenses with respect to the purchase of shares and the
maintenance of accounts, but all other relationships of broker and customer
are directly between the Servicing Broker and the participants in whose names
the accounts are maintained, and there is no agency relationship of Servicing
Broker to the Company.
As of March 1, 2000, the closing price of the Company's common stock as
listed on the Nasdaq National Market System was $16 7/8 per share.
The third amendment to the Plan makes it clear that the Servicing Broker has
sole authority to decide the amount of shares that shall be purchased on any
date and the price that shall be paid for such shares. The amendment also
makes it clear that it is intended that the Servicing Broker shall be an
"agent independent of the issuer" under SEC Regulation M. This means that the
Servicing Broker shall not be an affiliate of the Company and that neither the
Company nor any affiliate of the Company exercises direct or indirect control
or influence over the prices or amounts of securities to be purchased, the
timing or manner of the purchases, or the selection of any other broker or
dealer used by the Servicing Broker in making purchases.
REPORTS AND VOTING
Participants in the Plan receive periodic reports (at least annually) of the
common shares purchased for their accounts and of dividends and the
distributions received by the Servicing Broker and allocated to participants'
6
<PAGE>
accounts. The Company provides annual, quarterly and special reports and proxy
materials to the participants. Participants are entitled to vote the shares
held in their names by the Servicing Broker.
WITHDRAWAL FROM THE PLAN
Any shares held for the account of a participant may be withdrawn at any time
by giving instructions to the Servicing Broker. A participant may also sell
shares held in the account by instructing the Servicing Broker to sell such
shares and paying any applicable commissions or fees. Upon the death of a
participant, shares will be distributed to the executor or other personal
representative of the participant. Participants may not pledge or hypothecate
interests in the stock held for their account under the Plan.
TAX CONSEQUENCES
Payroll deductions made from a participant's periodic compensation in
accordance with his or her election under the Plan in order to acquire shares
of the Company's common stock are not deductible under the Internal Revenue
Code or the tax laws of Alabama, and payroll withholdings are made on all
taxable compensation paid to such persons, including the amounts withheld under
the Plan for a participant's account. A participant's basis in the shares held
in his or her account by the Servicing Broker is the actual costs of such
shares on the open market, and the participant will recognize gain or loss upon
his or her sale of such shares based upon such cost basis. Dividends received
on account of the shares held in a participant's account constitute taxable
income to each participant.
The amount of the matching contribution made on shares acquired under the
Plan will be taxable as ordinary income to the participant in the year in which
it is made. The amount of the contribution will be reflected on the
participant's Form W-2. The basis of the stock acquired for the participant
with the matching contribution will be the cost of the shares acquired on the
open market for the account of the participant.
The commissions and other costs and expenses of the Plan are deducible by
AMIC, and, under the Management Services Agreement and the Pooling Agreement
described above, share of such costs and expenses borne by the Company reduce
its taxable income for United States and state income tax purposes.
AMENDMENT OR TERMINATION
The Company may amend or terminate the Plan at any time. Termination will not
result in any forfeiture of the shares allocated to a participant's account
under the Plan or any rights accruing to those shares.
ACQUISITIONS BY MANAGEMENT
All eligible employees of the Company and its affiliates are eligible to
become participants in the Plan. It is not possible to determine how many
shares may be acquired in the Plan in the future.
VOTE REQUIRED
The approval of the amendments to the Employee Stock Purchase Plan requires
the affirmative vote of a majority of the shares of common stock present in
person or by proxy and voting at the Annual Meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
7
<PAGE>
PROSPOAL 3
APPROVAL OF THE
RESTRICTED STOCK BONUS PLAN
On January 17, 2000, the board of directors of the Company adopted the Alfa
Mutual Insurance Company Restricted Stock Bonus Plan (the "Bonus Plan"). Under
the Bonus Plan, as described below, employees of the Company may elect to
receive up to 50 percent of any bonus in shares of Company common stock, par
value $1.00 per share, plus receive a related employer contribution on amounts
received in stock. The Bonus Plan is not subject to the provisions of the
Employee Retirement Income Security Act of 1974. The Bonus Plan is set forth in
Exhibit B.
ELIGIBILITY AND PARTICIPATION
All persons who serve as officers or employees of the Company, AMIC or any
affiliate of such companies may participate in the Bonus Plan. For a further
description of the Company and certain relationships with its affiliates, see
"APPROVAL OF AMENDMENTS TO THE EMPLOYEE STOCK PURCHASE PLAN--Eligibility and
Participation."
Participation in the Bonus Plan is voluntary, and neither the Company nor any
of its affiliates makes any recommendations to eligible employees as to whether
they should participate in the Bonus Plan.
PAYMENT OF BONUSES
On an annual basis, each employee who is eligible to participate in the Bonus
Plan shall be given the right to receive up to 50 percent of any cash bonus
awarded to such employee in Company common stock. Generally, bonuses are
authorized for all employees on an annual basis, and are awarded solely at the
discretion of the compensation committee of AMIC. Employees may elect to
participate in the Bonus Plan annually prior to the granting of a bonus under
the plan, and failure to participate in one year does not preclude
participation in a subsequent year.
An employee who participates in the Bonus Plan may have the cash bonus
applied for the purchase of Company common stock in any amount up to 50 percent
of the amount of the cash bonus. Employees may change annually the amount of a
cash bonus that is used to acquire Company common stock, subject to the maximum
of 50 percent that may be used for such purpose.
COMPANY CONTRIBUTIONS
After employees have made elections to participate in the Bonus Plan, AMIC
shall contribute an amount of cash equal to 15 percent of that portion of the
cash bonus as to which all employees have elected to receive Company common
stock. The Servicing Broker shall acquire in the open market shares of Company
common stock at the current market value with such cash, and the shares
acquired will be allocated pro-rata to each employee who participates in the
Bonus Plan.
SERVICING BROKER
The trust referred to below at "Establishment of Trust" shall select a
Servicing Broker for purposes of the Bonus Plan. The Servicing Broker shall
have sole authority to decide the amount of shares that shall be purchased on
any date and the price that shall be paid for such shares. AMIC shall pay all
costs and commissions related to the acquisition of Company common stock by the
Servicing Broker. The Servicing Broker shall maintain such accounts for the
purchase of common stock as may be customary and provide such reports to the
trust as the trust may from time to time request.
AMIC pays all commissions and fees of the Servicing Broker in the acquisition
of stock under the Bonus Plan.
As of March 1, 2000, the closing price of the Company's common stock as
listed on the Nasdaq National Market System was $16 7/8 per share.
8
<PAGE>
RESTRICTIONS ON TRANSFER OF STOCK
Employees who elect to receive Company common stock in the Bonus Plan may not
sell or transfer that stock (including the common stock acquired for the
employee with the AMIC cash contribution) for a period of two years from the
date of acquisition. This restriction does not apply in the case of the death
or disability of an employee. After the two year restriction on resale or
transfer expires, employees may sell or transfer the stock held for their
account. Employees may not pledge or hypothecate interests in the stock held
for their account in the Bonus Plan.
ESTABLISHMENT OF TRUST
AMIC has established a trust pursuant to which all cash as to which employees
have elected to be exchanged for Company common stock plus all cash contributed
by AMIC pursuant to the Bonus Plan will be contributed. All shares of common
stock acquired for employees will be held by the trust until the restrictions
on sale or transfer of any shares have expired. Thereafter, an employee may
receive a certificate for any whole shares credited to the employee.
VOTING AND DIVIDENDS
All cash dividends paid by the Company upon shares of common stock held in
the Bonus Plan shall be reinvested in Company common stock and held pursuant to
the restrictions on transfer on the underlying shares to which they relate.
As long as any restrictions on transfer apply to any shares held in the Bonus
Plan, employees shall have no voting rights as to such shares.
TAX CONSEQUENCES
If the employee elects to participate in this plan, the amount of bonus the
employee receives in stock and the matching contribution will be taxed as
ordinary income in the year that the restriction on the stock ends.
The employee's basis in the shares of stock acquired under the Bonus Plan
will be the cost of the shares acquired on the open market for the account of
the employee.
AMENDMENT AND TERMINATION
The Bonus Plan may be amended at any time by the board of directors of AMIC.
The Bonus Plan may also be suspended or terminated at any time by the AMIC
board of directors.
Future amendments to the Bonus Plan may be made without submitting such
amendments for approval by the shareholders of the Company.
REPORTS
Employees participating in the Bonus Plan will receive from the trust
periodic reports (at least annually) regarding the number of shares of common
stock acquired on behalf of such employees and the purchase price of such
shares.
VOTE REQUIRED
The approval of the Bonus Plan requires the affirmative vote of a majority of
the shares of common stock present and voting at the annual meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
9
<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,
1999, 1998 and 1997.
EXECUTIVE COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER LONG TERM ALL
BASE ANNUAL COMPENSATION OTHER
YEAR NAME - POSITION SALARY BONUS COMPENSATION OPTIONS COMPENSATION
---- --------------- -------- -------- ------------ ------------ ------------
<C> <S> <C> <C> <C> <C> <C>
1999 Jerry Newby............. $220,704 $235,400 $ 0 30,000 $ 0
1998 CEO and President $ 5,923 $ 0 $ 0 0 $ 0
1997 $ 0 $ 0 $ 0 0 $ 0
1999 C. Lee Elis............. $183,676 $197,281 $ 0 25,000 $738
1998 EVP-Operations $168,046 $ 86,361 $ 0 12,000 $738
1997 $161,651 $ 83,852 $ 0 7,000 $738
1999 Alvin H. Dees........... $164,371 $ 98,792 $0 20,000 $738
1998 EVP-Marketing $153,145 $ 76,704 $ 0 8,000 $738
1997 $142,854 $ 71,352 $ 0 5,000 $738
1999 Donald Price............ $140,998 $ 68,857 $ 0 10,000 $738
1998 SVP-Finance $129,332 $ 51,673 $ 0 8,000 $738
1997 $129,332 $ 51,673 $ 0 2,500 $738
1999 Marcia Martin........... $140,610 $ 55,085 $ 0 7,500 $738
1998 SVP-Personnel $132,609 $ 53,222 $ 0 4,000 $738
1997 $128,567 $ 51,672 $ 0 2,500 $738
</TABLE>
- --------
/1/Perquisites, tax gross ups and other in excess of $50,000 or 10% of salary
and bonus.
/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 1999 was
100% of each employee's contribution to the Plan up to a maximum of $1,000.
/3/Mr. Ellis was Executive Vice President, Investments in 1998. He was promoted
to Executive Vice President, Operations in February, 1999.
10
<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). Under AMIC's retirement plan
there is no deduction for social security. With respect to the executive names
named in the Summary Compensation Table, their years of credited service for
retirement purposes are: Jerry A. Newby 0 years, C. Lee Ellis 23 years, Alvin
H. Dees 14 years, Marcia P. Martin 24 years and J. Donald Price 15 years.
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. Mrs. Martin is a participant in this plan.
AMIC maintains a Supplemental 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 Retirement Plan at
normal retirement age to employees in 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 1999 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
NUMBER OF % OF TOTAL VALUE AT ASSUMED ANNUAL
SECURITIES OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 0% ($) 5% ($) 10% ($)
- ---- ---------- ------------ --------- ---------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Jerry Newby............. 30,000 17.857% $16.4375 04/22/09 $0 $325,395 $810,231
C. Lee Ellis............ 25,000 14.881% $16.4375 04/22/09 $ 0 $271,162 $675,192
Alvin H. Dees........... 20,000 11.905% $16.4375 04/22/09 $ 0 $216,930 $540,154
Donald Price............ 10,000 5.952% $16.4375 04/22/09 $ 0 $108,465 $270,077
Marcia Martin........... 7,500 4.464% $16.4375 04/22/09 $ 0 $ 81,349 $202,558
</TABLE>
11
<PAGE>
The above option grants were approved on April 22, 1999. The grants were
made as non-qualified options under the plan.
The following table lists the aggregated fiscal year-end option values as of
December 31, 1999.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL FISCAL
SHARES YEAR-END (#) YEAR-END ($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ------------- ----------------
<S> <C> <C> <C> <C>
Jerry Newby........... 0 $ 0 0/30,000 $ 0/$ 0
C. Lee Ellis.......... 0 $ 0 49,666/35,334 $324,395/$33,726
Alvin H. Dees......... 0 $ 0 31,000/27,000 $189,014/$22,962
Donald Price.......... 0 $ 0 19,833/16,167 $127,943/$19,370
Marcia Martin......... 0 $ 0 18,500/11,000 $124,001/$11,482
</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.
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's
objective should be to provide incentives to encourage all the Company's
Executive Officers and other employees to perform at the highest level.
The Company has no direct employees and pays no compensation directly to any
of the Executive Officers of the 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
periodically 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's Property and Casualty insurance subsidiaries and AMIC
are also parties to a Pooling Agreement where certain costs and expenses are
pooled on a percentage basis.
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 various industry
and outside consultant salary surveys. AMIC generally attempts to establish
compensation within the same range as the surveys to which it compares.
12
<PAGE>
Salary ranges are established for each job and compensation is based on
these ranges. Job descriptions are prepared for each job within the Company and
these are used to develop compensation criteria for each particular job. 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.
Jerry A. Newby has been serving as President and Chief Executive Officer of
the Company since December of 1998. C. Lee Ellis has been serving as Executive
Vice President of Operations since March, 1999. Prior to that time, Mr. Ellis
was Executive Vice President of Investments.
In 1999, the Company again achieved record earnings. All of the Company's
subsidiaries were profitable in 1999. The Company's Property and Casualty
subsidiaries had a underwriting profit for the year. This was due in part to
the lack of major storms in the Company's area of operation in 1999 and also
efforts by management to control loss ratios and expenses. The Company
continued devoting resources and efforts to upgrading its information systems
to assure that the highest quality of service could be provided to its
customers. Also in 1999, a substantial amount of resources were devoted to
making sure that the Company would not experience problems relating to Y2K. In
fact, the Company did not experience any major disruptions to its business
related to Y2K.
The Company also compares itself to a peer group of other insurance and
financial institutions. The Company continues to compare favorably to its peer
group.
Based on these factors, the Committee is of the opinion that the Chief
Executive Officer and other Executive Officers met the appropriate goals within
their job descriptions and each received an appropriate evaluation. The
Committee is also of the opinion that in 1999 the compensation of the Executive
Officers of the Company was appropriate and reasonable based on the size of the
Company and its financial performance. The Committee also believes that the
Company's cost of compensation compares favorably to other companies within the
insurance and financial services industry.
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 were based on a written bonus plan which has been in effect for AMIC
since 1988. The Chief Executive Officer's bonus was based solely on Company
success compared to its peer group. The bonuses of the other Officers of the
Company were 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 were 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 1999,
thus the Chief Executive Officer and Executive Officers earned and were paid
their full bonus percentage for the year.
13
<PAGE>
On April 22, 1999 the Compensation Committee recommended and the Board of
Directors approved additional awards under the 1993 Stock Incentive Plan.
Options were awarded to purchase175,500 shares of its common stock at a
purchase price of $16.4375 per share to twenty (20) 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION AND COMPENSATION
DECISIONS. Mr. Richardson who is a member of the Compensation Committee is
retired as Executive Vice President, Operations of the Company. The Company is
unaware of any other Compensation Committee Interlocks between the members of
the Compensation Committee and the Executive Officers of the Company.
14
<PAGE>
[LOGO OF ALFA CORPORATION]
[GRAPH APPEARS HERE]
NASDAQ INSUR
ALFA INDEX INDEX
A B C
XLABELS DATA DATA DATA
------- ------- -------
1994 100 100 100
1995 157.405 141.335 142.048
1996 122.493 173.892 161.922
1997 172.208 213.073 237.522
1998 247.52 300.248 211.579
1999 171.085 542.43 164.286
15
<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, 1999 and January 1, 1998, 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 2001 must be received in writing at its offices
in Montgomery, Alabama, no later than December 10, 2000. 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
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 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 23, 2000.
16
<PAGE>
EXHIBIT A
ALFA CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
AMENDMENTS
JANUARY 17, 2000
The following amendments to the Employee Stock Purchase Plan of Alfa
Corporation are adopted and approved by the board of directors, subject to
approval by the stockholders of Alfa Corporation.
1. The second paragraph of Section 5 of the Plan is deleted in its
entirety and the following new paragraph is inserted in lieu thereof:
The minimum payroll deduction is $25 per month, and the maximum
monthly deduction is the greater of $1,000 or 10 percent of the
Eligible Participants' total monthly salary, wages or other
remuneration.
2. Section 7 of the Plan is deleted in its entirety and the following new
Section 7 is inserted in lieu thereof:
7. ALFA CORPORATION STOCK MATCH.
(a) There shall be contributed for each Participant an amount of cash equal
to 15 percent of the amount of each Participant's payroll deductions. Such
cash shall be delivered to the Servicing Broker promptly after the payroll
deductions are delivered to the Servicing Broker which shall use such cash to
purchase for each such Participant whole shares of Alfa Stock in accordance
with Section 9. The Servicing Broker shall have sole authority to decide the
amount of shares that shall be purchased on any date and the price that shall
be paid for such shares.
(b) For purposes of this Employee Stock Purchase Plan, it is intended that
the Servicing Broker shall be an "agent independent of the issuer" within the
meaning of SEC Regulation M, Rule 100(b).
A-1
<PAGE>
EXHIBIT B
ALFA MUTUAL INSURANCE COMPANY
RESTRICTED STOCK BONUS PLAN
JANUARY 17, 2000
RECITALS
Alfa Corporation has no direct employees. All of its management,
administrative, sales and other necessary services are provided to it by the
employees of Alfa Mutual Insurance Company (Mutual) under a Management Services
Contract between Alfa Corporation and Mutual and by certain independent
exclusive agents of Alfa Corporation. In addition, the executive officers of
Alfa Corporation hold the same or similar offices with Mutual. Substantially
all of Mutual's employees devote significant portions of their time and
energies to providing services for Alfa Corporation under the Management
Services Agreement under which Alfa Corporation reimburses its pro rata share
of Mutual payroll expense.
Mutual and Alfa Mutual Fire Insurance Company own and control approximately
51 percent of the outstanding shares of Alfa Corporation common stock, and six
of Mutual's directors also serve as directors of Alfa Corporation. Accordingly,
Mutual may be considered a "parent" of Alfa Corporation under applicable rules
and regulations of the Securities and Exchange Commission.
In addition, as a historical matter, the Board of Directors and Chief
Executive Officer of Mutual also serve as the Board of Directors and Chief
Executive Officer of Alabama Farmers' Federation. In 1947, the Federation
caused Mutual to be organized as an Alabama mutual insurance company to serve
the property, casualty and liability insurance needs of its members, and the
customers of Mutual's insurance products were limited to members of the
Federation. The Federation's Board of Directors and Chief Executive Officer
are, through long-standing custom, nominated and elected to serve as the Board
of Directors and Chief Executive Officer of Mutual. As a result of such common
control of Mutual and the Federation, the Federation may also be considered a
"parent" of Alfa Corporation under applicable rules and regulations of the
Securities and Exchange Commission.
Mutual desires to adopt and maintain this Restricted Stock Bonus Plan in
order to provide the Participants (as hereinafter defined) a means of
purchasing shares of Alfa Stock on the open market through payroll deduction
facilities provided by Mutual and the Federation.
THE PLAN
1. PURPOSE OF PLAN.
(a) Alfa Corporation and Mutual believe that the officers and employees of
Mutual (who are the sole providers of management and employee services to Alfa
Corporation under the Management Services Agreement) should be encouraged and
rewarded for their contributions. Mutual, at the request of the Federation,
also desires to provide to the Federation a means of rewarding its officers and
employees and reinforcing existing ties of loyalty and goodwill of those
employees and officers among the Federation's membership who traditionally have
formed a material base of insurance business for both Mutual and Alfa
Corporation.
(b) The purpose of this Plan is to promote the interests of Alfa Corporation
and its shareholders and the interests of Mutual and the Federation by making
available to Employees a means to invest in Alfa Corporation's common stock,
thereby (1) providing all Participants with a means of saving and investing for
their personal financial goals, (2) giving them as shareholders of Alfa
Corporation an increased personal interest in Alfa
A-2
<PAGE>
Corporation's profits and its continuing growth, development and financial
success, and (3) affording those who provide employment services to Alfa
Corporation additional incentive in their efforts on behalf of Alfa Corporation
and strengthening their desire to continue their employment with Mutual and
their continued provision of important services and contributions to Alfa
Corporation.
2. DEFINITIONS. The following definitions are applicable to the Plan:
"Affiliate" means any person that is an affiliate within the meaning of
Regulation C, Rule 405, of the Securities and Exchange Commission.
"Alfa Corporation" means Alfa Corporation, a Delaware corporation, and its
subsidiaries.
"Alfa Stock" means shares of common stock of Alfa Corporation, par value
$1.00 per share.
"Bonus" means the cash bonus that may be awarded to an Employee by the
Committee from time to time under Mutual's Bonus Plan. Under that plan, Bonuses
for a particular year are paid either in December of that year, or the
immediately following January, depending upon elections that Employees have
previously made.
"Committee" shall mean the compensation committee of the board of directors
of Mutual or such other committee as the board of directors may from time to
time designate.
"Employee" means any officer or employee of Mutual, Alfa Corporation or its
Affiliates.
"Federation" means Alabama Farmers' Federation.
"Mutual" means Alfa Mutual Insurance Company.
"Participant" means any Employee who participates in the Plan.
"Plan" means this Restricted Stock Bonus Plan.
"Servicing Broker" means a trustee, registered broker-dealer or other person
independent of Alfa Corporation selected by the Trust who shall be responsible
for acquiring Alfa Stock in accordance with the Plan.
"Trust" means the trust fund established pursuant to Section 3(d).
3. STOCK PURCHASE OPTION; DEFERRED COMPENSATION.
(a) Stock Election. Each Employee who is eligible for a Bonus shall be given
the opportunity to receive up to one-half of any Bonus in Alfa Stock. If an
Employee elects to receive up to one-half of a Bonus in Alfa Stock, the
Employee shall also be entitled to receive in accordance with Section 3(f) an
additional amount of Alfa Stock equal to 15 percent of the amount of Alfa Stock
represented by the Employee's election to receive Alfa Stock in lieu of cash.
(b) Annual Election. Each Employee shall have the right to elect to
participate in the Plan annually, assuming a Bonus is authorized by the
Committee. If the Employee desires to participate in the Plan, the Employee
shall make an election to participate by executing a written election form
acceptable to the Committee, designating the amount of the Bonus (not to exceed
50 percent of the Bonus) as to which the Participant has elected to receive
Alfa Stock. This election shall be made no later than five days prior to
receiving the notice of the award of a Bonus. In the election form, the
Participant shall also agree to the terms and conditions of the acquisition of
Alfa Stock under this Plan and such other matters as the Committee in its sole
discretion may
A-3
<PAGE>
determine. An election to receive Alfa Stock, once it has been made as to a
Bonus that has been declared, is irrevocable as to that Bonus. Nothing in this
Plan shall be construed as granting any right to an Employee to receive a
Bonus.
(c) Deferred Compensation. It is intended that the Alfa Stock acquired by an
Employee under this Plan be subject to deferred compensation treatment under
the Internal Revenue Code of 1986, as amended. Accordingly, Mutual shall
maintain an account which shall include any deferred compensation specified in
Section 3(b) plus any additional match credited to such deferred compensation
under Section 3(f). The account shall be a bookkeeping entry on the financial
statements of Mutual.
(d) Trust Fund. Mutual shall establish a Trust in the form specified in
Appendix A. Among other things, such Trust shall provide that Mutual shall
contribute to the Trust the sum of money equal to the amount of compensation
deferred by the Employee plus any applicable match. Mutual may establish a
single Trust for the investment of compensation deferred by all Employees
covered by the Plan, or it may establish individual trust funds for individual
Employees covered by the Plan. Any assets held in such Trust shall be used
exclusively for the purpose of paying benefits specified in the Plan to
Participants and their beneficiaries, except as provided below. Mutual shall
not pledge, assign or encumber the assets held in the Trust, except for payment
of benefits as specified herein. Notwithstanding the above, in the event of the
insolvency of Mutual, as defined in Section 3(a) of the trust agreement, the
assets held in the Trust shall be available to satisfy any judgment issued by
any court of law against Mutual or to pay other claims of creditors of Mutual.
Mutual shall not cause the assets in the Trust to be paid for any purpose other
than payment of benefits to covered Participants or their beneficiaries, unless
required to do so by a court of law. Upon receiving notice in any form that the
assets of the Trust have been attached or may be attached, by a court of law,
Mutual shall immediately notify each Participant who has an interest in the
Trust, so that the Participant may, if possible, petition the court to protect
his or her rights. In the event of the insolvency of Mutual, the Participants
shall not have an interest in the assets of the Trust that exceeds the interest
of any other general creditor of Mutual with respect to any unsecured asset of
Mutual.
(e) Purchase of Shares. For Bonuses that are due to be paid in December of
any year, Mutual shall transfer to the Trust an amount of cash equal to the
amount as to which elections have been made no later than three days after the
payment date of the bonus. For Bonuses that are not due to be paid until the
following January, such transfers shall be made on the first business day in
January. The Trust will make arrangements with the Servicing Broker to acquire
shares of Alfa Stock with the cash transferred to the Trust. The Servicing
Broker shall acquire whole shares of Alfa Stock in the open market at such
times and in such amounts as the Servicing Broker deems appropriate. The
Servicing Broker shall take reasonable steps to complete all purchases of Alfa
Stock within 30 days after the receipt by the Trust of the funds for such
purchases. The number of shares of Alfa Stock allocated to each Participant
shall be determined by dividing the dollar amount of the Bonus for that
Participant as to which the Participant has elected to receive Alfa Stock (not
to exceed 50 percent of the Bonus) by the average purchase price of all Alfa
Stock acquired by the Servicing Broker for the purchase period applicable to
that Bonus. The Trust shall be given notice by the Servicing Broker of the
number of shares of Alfa Stock acquired for such Participant promptly after all
acquisitions have been made.
(f) Alfa Stock Match. No later than three days after the payment date of the
bonus, Mutual shall transfer to the Trust an amount of cash equal to 15 percent
of that portion of the Bonus as to which Participants have elected to receive
Alfa Stock for Bonuses due to be paid in December of any year. A similar
transfer for Bonuses to be paid in January of any year shall be made on the
first business day of January. The Servicing Broker shall acquire whole shares
of Alfa Stock with such cash in accordance with Sections 3(e) and 8, and the
additional shares shall be allocated pro-rata to each Participant on the same
basis provided in Section 3(e).
A-4
<PAGE>
4. TERMS AND CONDITIONS OF RESTRICTED STOCK.
(a) Restriction on Transfer. Except as provided otherwise in Section 4(b), no
Participant may sell, transfer, hypothecate, pledge or otherwise dispose of any
shares of Alfa Stock acquired by such Participant under Section 3, including
shares acquired pursuant to Section 3(f), for a period of two years from the
date of such acquisition, and all of such shares shall be held in accordance
with the Trust.
(b) Death or Disability. The restriction of Section 4(a) shall not apply in
the case of the death or disability of the Participant. For this purpose,
"disability" means that the Participant is (i) unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to last for a continuous period of
not less than 12 months and (ii) has satisfied any requirement imposed by the
Committee in regard to evidence of such disability. The restriction of Section
4(a) shall continue to apply upon the retirement of a Participant or the
termination of the Participant's employment for any reason other than death or
disability.
(c) Dividends. All cash dividends paid by Alfa Corporation upon the shares of
Alfa Stock acquired by the Participant and held by the Trust under this Plan
shall be reinvested in Alfa Stock pursuant to the terms and conditions set
forth in Alfa Corporation's Dividend Reinvestment Plan. Any shares of Alfa
Stock acquired through the reinvestment of dividends on shares that are subject
to the restriction of Section 4(a), and any stock dividend distributed upon
shares of Alfa Stock that are subject to the restriction of Section 4(a), shall
be subject to the same restriction for as long as such restriction applies to
the underlying shares on which the dividends were paid or distributed.
(d) Voting. As long as the restrictions of Section 4(a) apply to shares held
in the Plan, Participants shall not have voting rights as to such shares.
(e) Certificates for Shares. Upon termination of the restrictions imposed by
Section 4(a), Mutual shall distribute to the Participant a certificate
representing the number of whole shares of Alfa Stock credited to a
Participant, including shares acquired upon the reinvestment of dividends,
provided that certificates representing shares of Alfa Stock subject to the
restriction of Section 4(a) may only be issued upon the termination of the
restriction imposed by Section 4(a). Any fractional shares held for the amount
of a Participant when a certificate is issued shall be paid to the Participant
in cash based upon the fair market value of the Alfa Stock at the time of the
payment.
(f) Distribution and Taxability. Upon the expiration date of the restrictions
set forth in Section 4(a), the shares shall become taxable and shall be
distributed to the Participant as set forth in Section 2 of the Trust.
5. TAX OBLIGATIONS. A Participant shall pay all applicable federal and state
withholding tax obligations ("Withholding Taxes") required to be withheld and
paid by Mutual under federal, state or local law, including appropriate tax
withholding respecting the Alfa stock match under Section 3(f). If the
Participant so elects, such obligation may be satisfied by the surrender of
shares of Alfa Stock acquired under this Plan in an amount equal to or greater
than the tax obligation.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any change in
the outstanding shares of Alfa Stock subsequent to the effective date of the
Plan by reason of any reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation or any
change in the corporate structure or shares of Alfa Corporation, the maximum
aggregate number and class of shares of Alfa Stock that may be acquired under
the Plan, or otherwise held for a Participant by the Servicing Broker, and the
number and class of shares which are subject to restriction under Section 4(a)
under the Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. Any shares of Alfa Stock or other securities
received as a result of any of the foregoing by a Participant with respect to
Alfa Stock that is subject to the restriction of
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<PAGE>
Section 4(a) shall be deposited with and held by the Servicing Broker in a
manner consistent with Section 4(a) hereof.
7. AMENDMENT AND TERMINATION. The Plan may be amended at any time by the
board of directors of Mutual. The Plan may be terminated or suspended by the
board of directors at any time. Such termination shall not affect any
restrictions previously imposed on shares acquired under the Plan or any
rights of a Participant under the Plan.
8. SERVICING BROKER. The Trust shall select a Servicing Broker for purposes
of this Plan. The Servicing Broker shall have sole authority to decide the
amount of shares that shall be purchased by the Servicing Broker on any date
and the price that shall be paid for such shares. Mutual shall pay all costs
and commissions related to the acquisition of Alfa Stock by the Servicing
Broker. The Servicing Broker shall maintain such accounts for the purchase of
Alfa Stock as may be customary and provide such reports to the Trust as the
Trust may from time to time request. There is no agency relationship between
the Servicing Broker, on the one hand, and the Committee, Alfa Corporation or
its Affiliates, on the other hand. For purposes of this Plan, it is intended
that each of the Trust and the Servicing Broker shall be an "agent independent
of the issuer" within the meaning of SEC Regulation M, Rule 100(b).
9. EMPLOYMENT RIGHTS AND OTHER BENEFIT PROGRAMS. The provisions of the Plan
shall not give any Participant any right to be retained in the employment of
Mutual, Alfa Corporation or any Affiliate. In the absence of any specific
agreement to the contrary, the Plan shall not affect any right of Mutual, Alfa
Corporation, or any Affiliate, to terminate, with or without cause, any
Participant's employment at any time. The Plan shall not replace any contract
of employment between Mutual, Alfa Corporation, or any Affiliate and any
Participant, but shall be considered a supplement thereto. The Plan is in
addition to, and not in lieu of, any other employee benefit plan or program in
which any Participant may be or become eligible to participate by reason of
employment with Mutual, Alfa Corporation or any Affiliate.
10. GOVERNING LAW. The Plan and all rights and awards hereunder shall be
construed in accordance with and governed by the laws of the State of Alabama
(except that matters of corporate law shall be interpreted in accordance with
the law of the State of Delaware).
11. SEVERABILITY. If any provision of the Plan is or becomes or is deemed to
be invalid, illegal, or unenforceable in any jurisdiction, such provision
shall be construed or deemed amended to conform to applicable laws, or if it
cannot be so construed or deemed amended without, in the determination of the
Committee, materially altering the purpose or intent of the Plan, such
provision shall be stricken as to such jurisdiction, and the remainder of the
Plan shall remain in full force and effect.
12. INTERPRETATION OF THE PLAN. The Committee shall have the right to
construe and interpret the provisions of the Plan, to establish rules and
regulations relating to interpretation and administration of the Plan, to
delegate administrative responsibilities it deems proper, and to perform all
other acts it deems necessary to carry out the purpose and intent of the Plan.
Without limiting the generality of the foregoing, the Committee may in its
sole discretion waive from time to time the restriction imposed by Section
4(a) of the Plan as to any or all Participants.
13. SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934. It is intended that
the Plan and any acquisitions of Alfa Stock by a Participant subject to
Section 16 of the Securities Exchange Act of 1934 be construed to meet
applicable requirements of Rule 16b-3(d) under that Act. If any provision of
the Plan or any acquisition of Alfa Stock by a Participant hereunder would
disqualify the Plan, or the acquisition or would otherwise not comply with
Rule 16b-3(d), such provision or acquisition shall be construed or deemed
amended to conform to Rule 16b-3(d) or such subsequent rule as may be in
effect from time to time.
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<PAGE>
[LOGO OF ALFA CORPORATION APPEARS HERE]
Alfa Corporation
P. O. Box 11000
Montgomery, Alabama 36191-0001
<PAGE>
ALFA CORPORATION
PROXY
[LOGO OF ALFA CORPORATION APPEARS HERE]
THIS PROXY IS SOLICITED ON BEHALF OF THE
MANAGEMENT
The undersigned hereby appoints Jerry A.
Newby, James A. Tolar, Jr., and H. Al
Scott, 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 27, 2000 and any adjournment thereof.
(Continued and to be dated and signed on the
reverse side.)
<TABLE>
<CAPTION>
1. ELECTION OF DIRECTORS
<S> <C> <C>
( ) FOR ALL NOMINEES LISTED BELOW ( ) WITHHOLD AUTHORITY ( ) *EXCEPTIONS
TO VOTE FOR ALL NOMINEES
LISTED BELOW
Nominees: Jerry A. Newby, Hal F. Lee, Russell R. Wiggins, Dean Wysner, James A.
Tolar, Jr., Steve Dunn, B. Phil Richardson, Boyd E. Christenberry,
John R. Thomas, James I. Harrison, Jr., and C. Lee Ellis
(INSTRUCTION: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that nominee's name in
the space provided below.)
*Exceptions
-----------------------------------------------------------------------------------------------------------------------
2. To approve amendments to the Employee Stock Purchase Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To approve the Employee Stock Bonus Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
4. 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.
</TABLE>
( ) Change of Address and
or Comments Mark Here
(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.)
Date: ______________________, 2000
__________________________________
Signature
__________________________________
Signature if held jointly
(X) Votes must be indicated
(x) in Black or Blue ink.
(Please sign, date and return this proxy in
enclosed postage prepaid envelope.)
